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

 
FORM 10-Q
 

Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 20172018
Commission file number 1-10312
 

financialappendix930a45.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 CD
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, 2017August 6, 2018
Common Stock, $1.00 Par Value   121,501,638117,348,421


Table of Contents
 
    Page
Part I.
Financial Information 
  Index of Defined Terms
i
 Item 1.Financial Statements (Unaudited) 
  Consolidated Balance Sheets as of June 30, 20172018 and December 31, 20162017
1
  Consolidated Statements of Income for the Six and Three Months Ended June 30, 20172018 and 20162017
2
  Consolidated Statements of Comprehensive Income for the Six and Three Months Ended June 30, 20172018 and 20162017
3
  Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 20172018 and 20162017
4
  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 20172018 and 20162017
5
  Notes to Unaudited Interim Consolidated Financial Statements
76
 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4344
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk
71
 Item 4.Controls and Procedures
71
     
Part II.
Other Information 
 Item 1.Legal Proceedings
72
 Item 1A.Risk Factors
72
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
7275
 Item 3.Defaults Upon Senior Securities
7375
 Item 4.Mine Safety Disclosures
7375
 Item 5.Other Information
7375
 Item 6.Exhibits
7476
 Signatures
7577
     
     
     
     
     
     
     
     
     


SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
ALCO – Synovus' Asset Liability Management Committee
AOCI - Accumulated other comprehensive income
ASC – Accounting Standards Codification
ASU – Accounting Standards Update
ATM – Automatic teller machine
Basel III – A global regulatory frameworkThe third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements
BOLI – Bank-Owned Life InsuranceBank-owned life insurance
BOV – Broker’s opinion of value
bpbp(s) – Basis point (bps - basis points)point(s)
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 World's Foremost Bank ("WFB") and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association.  As a part of this transaction, Synovus Bank retained WFB’s $1.10 billion brokered time deposit portfolio and received a $75.0 million fee from Cabela’s Incorporated and Capital One.  Throughout this Report, we refer to this transaction as the “Cabela’s Transaction” and the associated $75.0 million fee received from Cabela’s and Capital One as the “Cabela’s Transaction Fee”
Code – Internal Revenue Code 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 – economicEconomic value of equity
Exchange Act – Securities Exchange Act of 1934, as amended
FASB – Financial Accounting Standards Board
FCB - FCB Financial Holdings, Inc.
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 (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms.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
Federal Tax Reform – Enactment of H.R. 1, formerly known as the Tax Cuts and Jobs Act, on December 22, 2017, legislation in which a number of changes were made under the Internal Revenue Code, including a reduction of the corporate income tax rate, significant limitations on the deductibility of interest, allowance of the expensing of capital expenditures, limitation on

i
Table of Contents

deductibility of FDIC insurance premiums, and limitation of the deductibility of certain performance-based compensation, among others
FFIEC – Federal Financial Institutions Examination Council
FHLB – Federal Home Loan Bank
FICO – Fair Isaac Corporation
FTE – Fully taxable-equivalent
GA DBF – Georgia Department of Banking and Finance
GAAP – Generally Accepted Accounting Principles in the United States of America
GGL – governmentGovernment 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."Global One"

i
Table of Contents

GSE – Government sponsored enterprise
HELOC – Home equity line of credit
LIBOR – London Interbank Offered Rate
LTV – Loan-to-collateral value ratio
Merger Agreement – Agreement and Plan of Merger by and among Synovus, FCB and Azalea Merger Sub Corp. dated as of July 23, 2018
Merger – The proposed merger of Azalea Merger Sub Corp. with and into FCB pursuant to the terms and conditions of the Merger Agreement, with FCB continuing as the surviving entity. Immediately thereafter, FCB will merge with and into Synovus, with Synovus continuing as the surviving entity
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
OTC– Over-the-counter
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
Series D Preferred Stock – Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, $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' 20162017 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 20162017
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus

ii
Table of Contents

Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – Troubled debt restructuring (as defined in ASC 310-40)
the Treasury – United States Department of the Treasury
VIE – Variable interest entity, as defined in ASC 810-10
Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively
Visa Class A shares – Class A shares of common stock issued by Visa are publicly traded shares which are not subject to restrictions on sale
Visa Class B shares – Class B shares of common stock issued by Visa which are subject to restrictions with respect to sale until all of the Covered Litigation has been settledsettled. Class B shares will be convertible into Visa Class A shares using a then current conversion ratio upon the lifting of restrictions with respect to sale of Visa Class B shares
Visa Derivative – A derivative contract with the purchaser of Visa Class B shares which provides for settlements between the purchaser and Synovus based upon a change in the ratio for conversion of Visa Class B shares into Visa Class A shares
Warrant – A warrant issued to the Treasury by Synovus to purchase up to 2,215,820 shares of Synovus common stock at a per share exercise price of $65.52 expiring on December 19, 2018, as was issued by Synovus to Treasury in 2008 in connection with the Capital Purchase Program, promulgated under the Emergency Stabilization Act of 2008

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

iiiii
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, 2016June 30, 2018 December 31, 2017
ASSETS      
Cash and cash equivalents$377,213
 395,175
Cash and due from banks$404,080
 $397,848
Interest bearing funds with Federal Reserve Bank468,148
 527,090
613,082
 460,928
Interest earning deposits with banks6,012
 18,720
33,754
 26,311
Federal funds sold and securities purchased under resale agreements46,847
 58,060
40,872
 47,846
Trading account assets, at fair value3,045
 9,314
Total cash, cash equivalents, restricted cash, and restricted cash equivalents(1)
1,091,788
 932,933
Mortgage loans held for sale, at fair value61,893
 51,545
53,673
 48,024
Investment securities available for sale, at fair value3,827,058
 3,718,195
3,929,962
 3,987,069
Loans, net of deferred fees and costs24,430,512
 23,856,391
25,134,056
 24,787,464
Allowance for loan losses(248,095) (251,758)(251,725) (249,268)
Loans, net$24,182,417
 23,604,633
24,882,331
 24,538,196
Cash surrender value of bank-owned life insurance547,261
 540,958
Premises and equipment, net416,364
 417,485
428,633
 426,813
Goodwill57,092
 59,678
57,315
 57,315
Other intangible assets11,843
 13,223
10,458
 11,254
Other real estate19,476
 22,308
Deferred tax asset, net320,403
 395,356
182,983
 165,788
Other assets890,155
 813,220
555,901
 513,487
Total assets$30,687,966
 30,104,002
$31,740,305
 $31,221,837
LIABILITIES AND SHAREHOLDERS' EQUITY      
Liabilities      
Deposits:      
Non-interest bearing deposits$7,363,476
 7,085,804
$7,630,491
 $7,686,339
Interest bearing deposits, excluding brokered deposits16,387,032
 16,183,273
16,961,187
 16,500,436
Brokered deposits1,468,308
 1,378,983
1,851,010
 1,961,125
Total deposits25,218,816
 24,648,060
26,442,688
 26,147,900
Federal funds purchased and securities sold under repurchase agreements150,379
 159,699
207,580
 161,190
Long-term debt2,107,245
 2,160,881
1,656,647
 1,706,138
Other liabilities213,579
 207,438
265,696
 245,043
Total liabilities$27,690,019
 27,176,078
28,572,611
 28,260,271
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 D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2018195,138
 —
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at June 30, 2018 and December 31, 2017125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 143,077,973 issued at June 30, 2018 and 142,677,449 issued at December 31, 2017; 117,841,369 outstanding at June 30, 2018 and 118,897,295 outstanding at December 31, 2017143,078
 142,678
Additional paid-in capital3,029,754
 3,028,405
3,045,014
 3,043,129
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 – 25,236,604 shares at June 30, 2018 and 23,780,154 shares at December 31, 2017(916,484) (839,674)
Accumulated other comprehensive loss(47,865) (55,659)(125,720) (54,754)
Retained earnings457,523
 351,767
700,688
 544,207
Total shareholders’ equity2,997,947
 2,927,924
3,167,694
 2,961,566
Total liabilities and shareholders' equity$30,687,966
 30,104,002
$31,740,305
 $31,221,837
      
See accompanying notes to unaudited interim consolidated financial statements.
(1) See "Note 1 - Significant Accounting Policies" of this Report for information on Synovus' change in presentation of cash and cash equivalents.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands, except per share data)2017 2016 2017 20162018 2017 2018 2017
Interest income:              
Loans, including fees$511,319
 462,892
 $261,971
 232,974
$585,396
 $511,319
 $300,056
 $261,971
Investment securities available for sale40,099
 33,655
 20,266
 16,685
47,812
 40,099
 23,884
 20,266
Trading account assets49
 34
 21
 12
220
 49
 166
 21
Mortgage loans held for sale972
 1,238
 505
 650
936
 972
 557
 505
Federal Reserve Bank balances2,515
 2,019
 1,304
 1,020
4,568
 2,515
 2,818
 1,304
Other earning assets2,957
 1,878
 1,443
 1,052
4,036
 2,957
 2,353
 1,443
Total interest income557,911
 501,716
 285,510
 252,393
642,968
 557,911
 329,834
 285,510
Interest expense:              
Deposits35,075
 32,214
 18,118
 16,200
58,975
 35,075
 32,600
 18,118
Federal funds purchased and securities sold under repurchase agreements84
 96
 45
 51
310
 84
 203
 45
Long-term debt31,728
 29,763
 16,250
 14,693
24,822
 31,728
 12,454
 16,250
Total interest expense66,887
 62,073
 34,413
 30,944
84,107
 66,887
 45,257
 34,413
Net interest income491,024
 439,643
 251,097
 221,449
558,861
 491,024
 284,577
 251,097
Provision for loan losses18,934
 16,070
 10,260
 6,693
24,566
 18,934
 11,790
 10,260
Net interest income after provision for loan losses472,090
 423,573
 240,837
 214,756
534,295
 472,090
 272,787
 240,837
Non-interest income:              
Service charges on deposit accounts39,593
 39,950
 19,820
 20,240
39,938
 40,370
 19,999
 20,252
Fiduciary and asset management fees24,676
 22,854
 12,524
 11,580
27,419
 24,676
 13,983
 12,524
Card fees21,032
 19,885
 10,833
 10,041
Brokerage revenue14,436
 13,821
 7,210
 7,338
17,596
 14,436
 8,900
 7,210
Mortgage banking income11,548
 11,425
 5,784
 5,941
9,887
 11,548
 4,839
 5,784
Bankcard fees16,438
 16,718
 8,253
 8,346
Investment securities gains (losses), net7,667
 67
 (1) —
(Decrease) increase in fair value of private equity investments, net(3,166) (278) (1,352) 113
Income from bank-owned life insurance7,949
 6,328
 3,733
 3,272
Investment securities (losses) gains, net(1,296) 7,667
 (1,296) (1)
Decrease in fair value of private equity investments, net(3,093) (3,166) (37) (1,352)
Other fee income11,033
 10,084
 6,164
 5,280
9,877
 11,033
 5,259
 6,164
Other non-interest income18,314
 16,392
 10,299
 9,048
11,124
 7,762
 7,174
 4,807
Total non-interest income140,539
 131,033
 68,701
 67,886
140,433
 140,539
 73,387
 68,701
Non-interest expense:              
Salaries and other personnel expense212,404
 198,419
 105,213
 97,061
225,583
 212,404
 111,863
 105,213
Net occupancy and equipment expense59,264
 53,360
 29,933
 26,783
64,134
 59,264
 32,654
 29,933
Third-party processing expense26,223
 22,814
 13,620
 11,698
29,012
 26,223
 15,067
 13,620
FDIC insurance and other regulatory fees13,645
 13,344
 6,875
 6,625
13,335
 13,645
 6,543
 6,875
Professional fees12,907
 13,307
 7,551
 6,938
11,789
 12,907
 6,284
 7,551
Advertising expense11,258
 9,761
 5,346
 7,351
10,312
 11,258
 5,220
 5,346
Valuation adjustment to Visa derivative2,328
 —
 2,328
 —
Foreclosed real estate expense, net3,582
 7,272
 1,448
 4,588
749
 3,582
 (107) 1,448
Earnout liability adjustment1,707
 —
 1,707
 —
—
 1,707
 —
 1,707
Merger-related expense86
 —
 —
 —
Loss on early extinguishment of debt, net—
 4,735
 —
 —
Fair value adjustment to Visa derivative—
 720
 —
 360
Restructuring charges, net6,524
 6,981
 13
 5,841
(212) 6,524
 103
 13
Other operating expenses41,533
 46,131
 20,041
 21,366
42,204
 41,619
 24,102
 20,041
Total non-interest expense389,133
 376,844
 191,747
 188,611
399,234
 389,133
 204,057
 191,747
Income before income taxes223,496
 177,762
 117,791
 94,031
275,494
 223,496
 142,117
 117,791
Income tax expense75,635
 64,773
 41,788
 33,574
61,146
 75,635
 30,936
 41,788
Net income147,861
 112,989
 76,003
 60,457
214,348
 147,861
 111,181
 76,003
Dividends on preferred stock5,119
 5,119
 2,559
 2,559
5,119
 5,119
 2,559
 2,559
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$209,229
 $142,742
 $108,622
 $73,444
Net income per common share, basic$1.17
 0.85
 $0.60
 0.46
$1.77
 $1.17
 $0.92
 $0.60
Net income per common share, diluted1.16
 0.85
 0.60
 0.46
1.75
 1.16
 0.91
 0.60
Weighted average common shares outstanding, basic122,251
 126,164
 122,203
 125,100
118,531
 122,251
 118,397
 122,203
Weighted average common shares outstanding, diluted123,043
 126,778
 123,027
 125,699
119,229
 123,043
 119,139
 123,027
              
See accompanying notes to unaudited interim consolidated financial statements.

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

 Six Months Ended June 30,
 2017 2016
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$223,496
 (75,635) 147,861
 177,762
 (64,773) 112,989
Net change related to cash flow hedges:           
Reclassification adjustment for losses realized in net income130
 (50) 80
 337
 (130) 207
Net unrealized gains on investment securities available for sale:           
Reclassification adjustment for net gains realized in net income(7,667) 2,952
 (4,715) (67) 26
 (41)
Net unrealized gains arising during the period20,250
 (7,797) 12,453
 66,215
 (25,493) 40,722
Net unrealized gains12,583
 (4,845) 7,738
 66,148
 (25,467) 40,681
Post-retirement unfunded health benefit:           
Reclassification adjustment for gains realized in net income(40) 16
 (24)��(104) 40
 (64)
Actuarial gains arising during the period—
 —
—
—
 —
 —
 —
Net unrealized (realized) gains$(40) 16
 (24) (104) 40
 (64)
Other comprehensive income$12,673
 (4,879) 7,794
 66,381
 (25,557) 40,824
Comprehensive income    $155,655
     153,813
            

Three Months Ended June 30,Six Months Ended June 30,
2017 20162018 2017
(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
$275,494
 $(61,146) $214,348
 $223,496
 $(75,635) $147,861
Net change related to cash flow hedges:                     
Reclassification adjustment for losses realized in net income65
 (25) 40
 64
 (25) 39
—
 —
 —
 130
 (50) 80
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 (losses) gains on investment securities available for sale:           
Reclassification adjustment for net losses (gains) realized in net income1,296
 (336) 960
 (7,667) 2,952
 (4,715)
Net unrealized (losses) gains arising during the period(86,921) 22,512
 (64,409) 20,250
 (7,797) 12,453
Net unrealized (losses) gains(85,625) 22,176
 (63,449) 12,583
 (4,845) 7,738
Post-retirement unfunded health benefit:                     
Reclassification adjustment for gains realized in net income(20) 8
 (12) (10) 4
 (6)(68) 22
 (46) (40) 16
 (24)
Actuarial gains arising during the period—
 —
—
—
 —
 —
 —
Net unrealized (realized) gains$(20) 8
 (12) (10) 4
 (6)(68) 22
 (46) (40) 16
 (24)
Other comprehensive income$11,196
 (4,310) 6,886
 19,098
 (7,353) 11,745
Other comprehensive (loss) income$(85,693) $22,198
 $(63,495) $12,673
 $(4,879) $7,794
Comprehensive income   $82,889
     72,202
    $150,853
     $155,655
                     
Three Months Ended June 30,
2018 2017
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$142,117
 $(30,936) $111,181
 $117,791
 $(41,788) $76,003
Net change related to cash flow hedges:           
Reclassification adjustment for losses realized in net income—
 —
 —
 65
 (25) 40
Net unrealized (losses) gains on investment securities available for sale:

 

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

        
Reclassification adjustment for gains realized in net income(34) 9
 (25) (20) 8
 (12)
Net unrealized (realized) gains(34) 9
 (25) (20) 8
 (12)
Other comprehensive (loss) income$(24,214) $6,271
 $(17,943) $11,196
 $(4,310) $6,886
Comprehensive income    $93,238
     $82,889
           
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 D Preferred Stock Series C Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance at December 31, 2015$125,980
 140,592
 2,989,981
 (401,511) (29,819) 174,973
 3,000,196
Net income—
 —
 —
 —
 —
 112,989
 112,989
Other comprehensive income, net of income taxes—
 —
 —
 —
 40,824
 —
 40,824
Cash dividends declared on common stock -$0.24 per share—
 —
 —
 —
 —
 (30,015) (30,015)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)
Repurchases of common stock—
 —
 

 (171,547)��—
 —
 (171,547)
Restricted share unit activity—
 298
 (4,814) —
 —
 (89) (4,605)
Stock options exercised—
 118
 1,917
 —
 —
 —
 2,035
Share-based compensation net tax benefit—
 —
 52
 —
 —
 —
 52
Share-based compensation expense—
 —
 6,849
 —
 —
 —
 6,849
Balance at June 30, 2016$125,980
 141,008
 2,993,985
 (573,058) 11,005
 252,739
 2,951,659
             
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
—
 —
 —
 —
 —
 —
 147,861
 147,861
Other comprehensive income, net of income taxes—
 —
 —
 —
 7,794
 —
 7,794
—
 —
 —
 —
 —
 7,794
 —
 7,794
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 (36,696) (36,696)—
 —
 —
 —
 —
 —
 (36,696) (36,696)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Repurchases of common stock—
 —
 —
 (45,349) —
 —
 (45,349)—
 —
 —
 —
 (45,349) —
 —
 (45,349)
Restricted share unit activity—
 330
 (7,850) —
 —
 (290) (7,810)—
 —
 330
 (7,850) —
 —
 (290) (7,810)
Stock options exercised—
 143
 2,361
 —
 —
 —
 2,504
—
 —
 143
 2,361
 —
 —
 —
 2,504
Share-based compensation expense—
 —
 6,838
 —
 —
 —
 6,838
—
 —
 —
 6,838
 —
 —
 —
 6,838
Balance at June 30, 2017$125,980
 $142,499
 3,029,754
 (709,944) (47,865) 457,523
 2,997,947
$—
 $125,980
 $142,499
 $3,029,754
 $(709,944) $(47,865) $457,523
 $2,997,947
                            
Balance at December 31, 2017$—
 $125,980
 $142,678
 $3,043,129
 $(839,674) $(54,754) $544,207
 $2,961,566
Cumulative effect adjustment from adoption of ASU 2014-09—
 —
 —
 —
 —
 —
 (685) (685)
Reclassification from adoption of ASU 2018-02—
 —
 —
 —
 —
 (7,588) 7,588
 —
Cumulative effect adjustment from adoption of ASU 2016-01—
 —
 —
 —
 —
 117
 (117) —
Net income—
 —
 —
 —
 —
 —
 214,348
 214,348
Other comprehensive loss, net of income taxes—
 —
 —
 —
 —
 (63,495) —
 (63,495)
Cash dividends declared on common stock - $0.50 per share—
 —
 —
 —
 —
 —
 (59,185) (59,185)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Issuance of Series D Preferred Stock, net of issuance costs195,138
 —
 —
 —
 —
 —
 —
 195,138
Repurchases of common stock—
 —
 —
 —
 (76,810) —
 —
 (76,810)
Restricted share unit activity—
 —
 289
 (8,220) —
 —
 (349) (8,280)
Stock options exercised—
 —
 111
 1,785
 —
 —
 —
 1,896
Share-based compensation expense—
 —
 —
 8,320
 —
 —
 —
 8,320
Balance at June 30, 2018$195,138
 $125,980
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
               
See accompanying notes to unaudited interim consolidated financial statements.



SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Six Months Ended June 30,
(in thousands)2017 2016
Operating Activities   
Net income$147,861
 112,989
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses18,934
 16,070
Depreciation, amortization, and accretion, net29,334
 28,506
Deferred income tax expense70,484
 61,283
Decrease in trading account assets6,269
 4,096
Originations of mortgage loans held for sale(325,094) (320,304)
Proceeds from sales of mortgage loans held for sale323,861
 299,186
Gain on sales of mortgage loans held for sale, net(7,049) (6,946)
Increase in other assets(14,525) (33,152)
(Decrease) increase in other liabilities(9,667) 13,162
Investment securities gains, net(7,667) (67)
Losses and write-downs on other real estate, net2,856
 6,089
Decrease in fair value of private equity investments, net3,166
 278
Losses and write-downs on other assets held for sale, net—
 7,902
Loss on early extinguishment of debt, net—
 4,735
Share-based compensation expense6,838
 6,849
Net cash provided by operating activities$245,601
 200,676
Investing Activities   
Net decrease (increase) in interest earning deposits with banks12,708
 (7,154)
Net decrease (increase) in federal funds sold and securities purchased under resale agreements11,213
 (7,866)
Net decrease (increase) in interest bearing funds with Federal Reserve Bank58,942
 (74,519)
Proceeds from maturities and principal collections of investment securities available for sale313,902
 443,128
Proceeds from sales of investment securities available for sale338,381
 243,609
Purchases of investment securities available for sale(748,754) (623,046)
Proceeds from sales of loans10,747
 7,739
Proceeds from sales of other real estate5,492
 16,282
Net increase in loans(612,309) (660,778)
Purchases of bank-owned life insurance policies(75,000) —
Net increase in premises and equipment(15,386) (16,769)
Proceeds from sales of other assets held for sale3,158
 296
Net cash used in investing activities$(696,906) (679,078)
Financing Activities   
Net increase in demand and savings deposits367,450
 595,342
Net increase in certificates of deposit202,927
 87,466
Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements(9,320) 70,154
Repayments on long-term debt(1,128,591) (1,455,067)
Proceeds from issuance of long-term debt1,075,000
 1,400,000
Dividends paid to common shareholders(18,349) (30,015)
Dividends paid to preferred shareholders(5,119) (5,119)
Stock options exercised2,504
 2,035
Repurchases of common stock(45,349) (171,547)
Restricted stock activity(7,810) (4,605)
Net cash provided by financing activities$433,343
 488,644
(Decrease) increase in cash and cash equivalents(17,962) 10,242
Cash and cash equivalents at beginning of period395,175
 367,092
Cash and cash equivalents at end of period$377,213
 377,334

Six Months Ended June 30,
(in thousands)2018 2017
Operating Activities   
Net income$214,348
 $147,861
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses24,566
 18,934
Depreciation, amortization, and accretion, net28,661
 29,334
Deferred income tax expense5,222
 70,484
Originations of mortgage loans held for sale(286,070) (325,094)
Proceeds from sales of mortgage loans held for sale287,175
 323,861
Gain on sales of mortgage loans held for sale, net(6,198) (7,049)
Increase in other assets(52,294) (4,124)
Increase (decrease) in other liabilities8,292
 (9,667)
Investment securities losses (gains), net1,296
 (7,667)
Share-based compensation expense8,320
 6,838
Net cash provided by operating activities233,318
 243,711
   
Investing Activities   
Proceeds from maturities and principal collections of investment securities available for sale294,152
 313,902
Proceeds from sales of investment securities available for sale35,066
 338,381
Purchases of investment securities available for sale(367,458) (748,754)
Proceeds from sales of loans13,954
 10,747
Proceeds from sales of other real estate4,631
 5,492
Net increase in loans(382,086) (612,309)
Purchases of bank-owned life insurance policies, net of settlements1,783
 (73,110)
Net increase in premises and equipment(26,780) (15,386)
Proceeds from sales of other assets held for sale2,106
 3,158
Net cash used in investing activities(424,632) (777,879)
   
Financing Activities   
Net (decrease) increase in demand and savings deposits(39,614) 367,450
Net increase in certificates of deposit334,130
 202,927
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements46,390
 (9,320)
Repayments and redemption of long-term debt(2,330,052) (1,128,591)
Proceeds from issuance of long-term debt2,280,000
 1,075,000
Dividends paid to common shareholders(47,510) (18,349)
Dividends paid to preferred shareholders(5,119) (5,119)
Proceeds from issuance of Series D Preferred Stock195,138
 —
Stock options exercised1,896
 2,504
Repurchase of common stock(76,810) (45,349)
Taxes paid related to net share settlement of equity awards(8,280) (7,810)
Net cash provided by financing activities350,169
 433,343
Increase/(decrease) in cash and cash equivalents including restricted cash158,855
 (100,825)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period(1)
932,933
 999,045
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period(1)
$1,091,788
 $898,220
      
Supplemental Cash Flow Information      
Cash paid during the period for:      
Income tax payments, net$8,768
 5,849
$38,619
 $8,768
Interest paid67,007
 64,424
80,884
 67,007
Non-cash Activities      
Premises and equipment transferred to other assets held for sale—
 18,677
785
 —
Other assets held for sale transferred to premises and equipment4,450
 —
—
 4,450
Loans foreclosed and transferred to other real estate5,516
 8,631
7,561
 5,516
Loans transferred to other loans held for sale at fair value10,584
 7,314
5,233
 10,584
ASU 2014-09 cumulative effect adjustment to opening balance of retained earnings(685) —
Equity investment securities available for sale transferred to other assets at fair value3,162
 —
Dividends declared on common stock during the period but paid after period-end18,349
 —
29,510
 18,349
   
See accompanying notes to unaudited interim consolidated financial statements.
(1) See "Note 1 - Significant Accounting Policies" of this Report for information on Synovus' change in presentation of cash and cash equivalents.

Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Significant Accounting 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 248250 branches and 327334 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' 20162017 Form 10-K. There
In connection with the adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed its presentation of cash and cash equivalents, effective January 1, 2018, to include cash and due from banks as well as interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements, which are inclusive of any restricted cash and restricted cash equivalents. Prior to 2018, cash and cash equivalents only included cash and due from banks. Prior periods have been revised to maintain comparability. Excluding the aforementioned presentation change, there have been no significant changes to the accounting policies as disclosed in Synovus' 20162017 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 June 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.agreements, and is inclusive of any restricted cash and restricted cash equivalents. Restricted cash and restricted cash equivalents primarily relate to cash held on deposit with the Federal Reserve to meet reserve requirements as well as cash posted as collateral for derivatives in a liability position. At June 30, 20172018 and December 31, 2016,2017, interest bearing funds with the Federal Reserve Bank included $120.5$35.7 million and $130.0$8.6 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $5.9$2.7 million and $5.6$5.9 million at June 30, 20172018 and December 31, 2016,2017, respectively, which are pledged as collateral in connection with certain letters of credit. Federal funds sold include $43.3$30.6 million and $56.1$43.8 million at June 30, 20172018 and December 31, 2016,2017, 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.
Income Taxes
On December 22, 2017, Federal Tax Reform was enacted into law. The new legislation included a decrease in the corporate federal income tax rate from 35% to 21% effective January 1, 2018. Under ASC 740, the effects of the changes in tax rates and laws are recognized in the period in which the new legislation is enacted. Therefore, Synovus was required to remeasure its deferred tax assets and liabilities and record the adjustment to income tax expense effective December 22, 2017. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since Federal Tax Reform was enacted late in 2017, management expects that certain deferred tax assets and liabilities will continue to be evaluated in the context of Federal Tax Reform through the date of the filing of our 2017 federal income tax return, and may change as a result of evolving management interpretations, elections, and assumptions, as well as new guidance that may be issued by the Internal Revenue Service.   Accordingly, the federal income tax expense of $47.2 million

recorded in 2017 relating to the effects from Federal Tax Reform is considered provisional. Management expects to complete its analysis within the measurement period in accordance with SAB 118.  
Recently Adopted Accounting Standards Updates
DuringASU 2014-09, Revenue from Contracts with Customers (Topic 606) issued by the FASB in May 2014, and all subsequent ASUs that modified 606. ASU 2014-09 implements a common revenue standard that establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts to provide goods or services to customers. The core principle of the revenue model is that a company will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The scope of the guidance explicitly excludes net interest income as well as many other revenues from financial assets. Management reviewed its revenue streams and contracts with customers and did not identify material changes to the timing or amount of revenue recognition. Synovus adopted these ASUs on the required effective date of January 1, 2018 utilizing the modified retrospective method of adoption.  The adoption resulted in a cumulative effect adjustment of ($685) thousand to the opening balance of retained earnings.  Beginning January 1, 2018, in connection with the adoption of this standard, Synovus began including merchant discounts and other card-related fees in card fees. For periods prior to January 1, 2018, these amounts were previously presented in other non-interest income and have been reclassified for comparability. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - Non-interest Income" for the required disclosures in accordance with this ASU.
ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued final guidance on reclassification of tax effects stranded in other comprehensive income due to Federal Tax Reform. The guidance provides entities the option to reclassify the tax effects that are stranded in accumulated other comprehensive income, or AOCI, as a result of Federal Tax Reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018; early adoption is permitted. Synovus elected to early adopt ASU 2018-02 as of January 1, 2018 and elected to reclassify the income tax effects of Federal Tax Reform from AOCI to retained earnings. For Synovus, tax effects stranded in AOCI due to Federal Tax Reform totaled $7.6 million at December 31, 2017 and primarily related to unrealized losses on the available-for-sale investment securities portfolio. The reclassification adjustment resulted in an increase to retained earnings as of January 1, 2018 of $7.6 million and a corresponding decrease to AOCI for the same amount.
ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements2016-01 that included targeted amendments to Employee Share-Based Payment Accounting. accounting guidance for recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-09 simplifies various aspects2016-01 requires equity investments (except those accounted for under the equity method of accounting or consolidated) to be measured at fair value with changes in fair value recognized in net income. This ASU requires a cumulative-effect adjustment to retained earnings as of the accountingbeginning of the reporting period of adoption to reclassify the cumulative change in fair value of equity securities previously recognized in AOCI. ASU 2016-01 became effective for employee share-based payment transactionsSynovus on January 1, 2018. The adoption of the guidance resulted in a transfer of investments in mutual funds of $3.2 million, at fair value, from investment securities available for both publicsale to other assets and nonpublic entities, includinga $117 thousand cumulative-effect adjustment that decreased retained earnings, with offsetting related adjustments to deferred taxes and AOCI. ASU 2016-01 also emphasizes 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 includes aexisting requirement to record all tax effects associated with share-based compensation throughuse an exit price concept to measure fair value for disclosure purposes in determining the income statement. Prior to 2017, tax benefits in excessfair value of compensation cost (“windfalls”) and tax deficiencies (“shortfalls”) were recorded in equity. Duringloans. Determination of the six and three months ended June 30, 2017, Synovus recognized $4.5 million and $378 thousand, respectively, of income tax benefits from excess tax benefits that occurred during the six months ended June 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 calculationfair value under the treasury stockexit price method to exclude future excess tax benefits as partrequires judgment because substantially all of the assumed proceeds. Synovus elected to retain its existing accounting policy election to estimate award forfeitures.

During 2015,loans within the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classificationloan portfolio do not have observable market prices. The adoption of Deferred Taxes, which became effective January 1, 2017. ASU 2015-17 requires that 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 nothis guidance did not have a significant 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.Synovus' fair value disclosures.
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.

Note 2 - Acquisitions
Cabela's Transaction
On September 25, 2017, Synovus' wholly owned subsidiary, Synovus Bank, completed the acquisition of certain assets and assumption of certain liabilities of World's Foremost Bank, or WFB. Immediately following the closing of this transaction, Synovus Bank sold WFB’s credit card assets and related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation.
Synovus retained WFB’s $1.10 billion brokered time deposits portfolio, which had a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83% as of September 25, 2017. The transaction was accounted for as an assumption of a liability (accounted for under the asset acquisition model). In accordance with ASC 820, Fair Value Measurements and Disclosures, the brokered time deposit portfolio was recorded at $1.10 billion, which was the amount of cash received for the deposits and represented the estimated fair value of the deposits at the transaction date. Additionally, Synovus received a $75.0 million transaction fee from Cabela’s Incorporated and Capital One, which was recognized into earnings on September 25, 2017 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 lendedprovided financing primarily to commercial entities, with all loans fully collateralized by cash value life insurance policies and/or annuities issued by investment grade life insurance companies. Under the terms of the merger agreement, Synovus acquired Global One for an up-front payment of $30 million, consisting of the issuance of 821 thousand shares of Synovus common stock valued at $26.6 million and $3.4 million in cash, with additional payments to Global One's former shareholders over the nexta three to five yearsyear period based on earnings from the Global One business, as further discussed below.
The acquisition of Global One constituted a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as shown in the following table.on October 1, 2016. The determination of fair value required management to make estimates about discount rates, future expected earnings and cash flows, market conditions, future loan growth, and other future events that are highly subjective in nature and subject to change. These fair value estimates reflect measurement period adjustmentsDuring the three months ended September 30, 2017, Synovus completed the determination of the final allocation of the purchase price with respect to the amounts reported as of December 31, 2016, the most significant of which consist of a reduction in goodwill of $2.6 millionassets acquired 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
(in thousands) Fair Value
Assets acquired:  
Cash and due from banks $9,554
      Commercial and industrial loans(1)
 357,307
Goodwill(2)
 32,661
Other intangible assets 12,500
Other assets 3,904
Total assets acquired $415,926
Liabilities assumed:  
Notes payable(3)
 $358,560
Contingent consideration 12,234
Deferred tax liability, net 3,229
Other liabilities 11,903
Total liabilities assumed $385,926
Consideration paid $30,000
   
Cash paid $3,408
Fair value of common stock issued 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.liabilities assumed.
Under the terms of the merger agreement, the purchase price includes additional annual payments ("Earnout Payments") to Global One's former shareholders over the nexta three to five years,year period, 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 The first annual Earnout Payment of existing borrower relationships (11 years useful life), trade name (10 years useful life),stock and distribution network (8 years useful life) withcash valued at $6.4 million was made during November 2017. The balance of the earnout liability at June 30, 2017 net carrying values of $10.12018 was $11.3 million $1.0 million, and $544 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: Theestimated fair value of the contingent consideration, which represents the fair value of the above referencedremaining 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. Future changes in the fair value of the contingent consideration will be recognized in earnings until the contingent consideration arrangement is settled.Payments.
Note 3 - Share Repurchase Program
Synovus' Board of Directors authorized an up to $200 millionOn January 23, 2018, Synovus announced a share repurchase program that will expire at the end of 2017. This program was announced on January 17, 2017.up to $150 million to be completed during 2018. As of June 30, 2017,2018, Synovus had repurchased under this program a total of $45.3$76.8 million, or 1.11.5 million shares of its common stock, at an average price of $42.04$52.72 per share.

Note 4 - Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at June 30, 20172018 and December 31, 20162017 are summarized below.
 June 30, 2018
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses  Fair Value
U.S. Treasury securities $122,800
 $—
 $(2,167) $120,633
U.S. Government agency securities 40,753
 181
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies 111,406
 107
 (3,569) 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,614,668
 59
 (87,882) 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,159,859
 139
 (43,550) 1,116,448
State and municipal securities 115
 —
 —
 115
Corporate debt and other debt securities 17,000
 186
 (143) 17,043
Total investment securities available for sale $4,066,601
 $672
 $(137,311) $3,929,962
        
 June 30, 2017 December 31, 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
 $83,608
 $—
 $(934) $82,674
U.S. Government agency securities 12,088
 223
 —
 12,311
 10,771
 91
 —
 10,862
Mortgage-backed securities issued by U.S. Government agencies 132,710
 640
 (1,125) 132,225
 121,283
 519
 (1,362) 120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,881,234
 6,169
 (30,998) 2,856,405
 2,666,818
 5,059
 (31,354) 2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 734,804
 84
 (12,468) 722,420
 1,135,259
 144
 (23,404) 1,111,999
State and municipal securities 290
 —
 —
 290
 180
 —
 —
 180
Corporate debt and other securities 20,279
 205
 (210) 20,274
 20,320
 294
 (223) 20,391
Total investment securities available for sale $3,864,898
 7,321
 (45,161) 3,827,058
 $4,038,239
 $6,107
 $(57,277) $3,987,069
                
 December 31, 2016
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $108,221
 225
 (644) 107,802
U.S. Government agency securities 12,727
 266
 —
 12,993
Mortgage-backed securities issued by U.S. Government agencies 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
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 905,789
 1,214
 (16,561) 890,442
State and municipal securities 2,780
 14
 —
 2,794
Equity securities 919
 2,863
 —
 3,782
Corporate debt and other securities 20,247
 —
 (407) 19,840
Total investment securities available for sale $3,768,618
 11,114
 (61,537) 3,718,195
        
At June 30, 20172018 and December 31, 2016,2017, investment securities with a carrying value of $1.731.35 billion and $2.04$2.00 billion, respectively, were pledged to secure certain deposits and securities sold under repurchase agreements as required by law and contractual agreements.
Synovus has reviewed investment securities that are in an unrealized loss position as of June 30, 20172018 and December 31, 20162017 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 June 30, 2017,2018, Synovus had 9280 investment securities in a loss position for less than twelve months and 355 investment securities in a loss position for twelve months or longer.

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 20172018 and December 31, 20162017 are presented below.
June 30, 2017June 30, 2018
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
$72,386
 $1,378
 $29,255
 $789
 $101,641
 $2,167
Mortgage-backed securities issued by U.S. Government agencies95,492
 1,125
 —
 —
 95,492
 1,125
23,240
 632
 67,765
 2,937
 91,005
 3,569
Mortgage-backed securities issued by U.S. Government sponsored enterprises2,161,449
 30,998
 —
 —
 2,161,449
 30,998
1,703,526
 49,197
 812,767
 38,685
 2,516,293
 87,882
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises668,342
 11,678
 23,212
 790
 691,554
 12,468
609,505
 21,190
 412,961
 22,360
 1,022,466
 43,550
Corporate debt and other securities—
 —
 5,069
 210
 5,069
 210
Corporate debt and other debt securities—
 —
 1,857
 143
 1,857
 143
Total$2,989,625
 44,161
 28,281
 1,000
 3,017,906
 45,161
$2,408,657
 $72,397
 $1,324,605
 $64,914
 $3,733,262
 $137,311
                      
December 31, 2016December 31, 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$64,023
 644
 —
 —
 64,023
 644
$34,243
 $443
 $29,562
 $491
 $63,805
 $934
Mortgage-backed securities issued by U.S. Government agencies128,121
 1,240
 3,626
 114
 131,747
 1,354
36,810
 357
 55,740
 1,005
 92,550
 1,362
Mortgage-backed securities issued by U.S. Government sponsored enterprises2,123,181
 42,571
 —
 —
 2,123,181
 42,571
1,271,012
 10,263
 929,223
 21,091
 2,200,235
 31,354
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises682,492
 15,653
 24,801
 908
 707,293
 16,561
653,781
 9,497
 426,237
 13,907
 1,080,018
 23,404
Corporate debt and other securities14,952
 48
 4,888
 359
 19,840
 407
—
 —
 5,097
 223
 5,097
 223
Total$3,012,769
 60,156
 33,315
 1,381
 3,046,084
 61,537
$1,995,846
 $20,560
 $1,445,859
 $36,717
 $3,441,705
 $57,277
                      

The amortized cost and fair value by contractual maturity of investment securities available for sale at June 30, 20172018 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 June 30, 2018
(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
 Total
Amortized Cost                    
U.S. Treasury securities$18,791
 64,702
 —
 —
 —
 83,493
$18,993
 $103,807
 $—
 $—
 $122,800
U.S. Government agency securities1,000
 5,612
 5,476
 —
 —
 12,088
2,330
 6,437
 31,986
 —
 40,753
Mortgage-backed securities issued by U.S. Government agencies—
 —
 34,868
 97,842
 —
 132,710
—
 —
 27,725
 83,681
 111,406
Mortgage-backed securities issued by U.S. Government sponsored enterprises47
 2,262
 535,035
 2,343,890
 —
 2,881,234
1
 1,471
 615,334
 1,997,862
 2,614,668
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 22,173
 712,631
 —
 734,804
—
 —
 17,355
 1,142,504
 1,159,859
State and municipal securities110
 180
 —
 —
 —
 290
115
 —
 —
 —
 115
Corporate debt and other securities—
 —
 15,000
 2,000
 3,279
 20,279
Corporate debt and other debt securities—
 —
 15,000
 2,000
 17,000
Total amortized cost$19,948
 72,756
 612,552
 3,156,363
 3,279
 3,864,898
$21,439
 $111,715
 $707,400
 $3,226,047
 $4,066,601
                    
Fair Value                    
U.S. Treasury securities$18,791
 64,342
 —
 —
 —
 83,133
$18,993
 $101,640
 $—
 $—
 $120,633
U.S. Government agency securities1,004
 5,682
 5,625
 —
 —
 12,311
2,337
 6,455
 32,142
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies—
 —
 35,007
 97,218
 —
 132,225
—
 —
 27,266
 80,678
 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises48
 2,390
 529,968
 2,323,999
 —
 2,856,405
1
 1,520
 596,366
 1,928,958
 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 21,950
 700,470
 —
 722,420
—
 —
 16,855
 1,099,593
 1,116,448
State and municipal securities110
 180
 —
 —
 —
 290
115
 —
 —
 —
 115
Corporate debt and other securities—
 —
 15,205
 1,927
 3,142
 20,274
Corporate debt and other debt securities—
 —
 15,186
 1,857
 17,043
Total fair value$19,953
 72,594
 607,755
 3,123,614
 3,142
 3,827,058
$21,446
 $109,615
 $687,815
 $3,111,086
 $3,929,962
                    
Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the six and three months ended June 30, 20172018 and 20162017 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale. On January 1, 2018, Synovus transferred $3.2 million, at fair value, from investment securities available for sale to other assets upon adoption of ASU 2016-01.
 Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30,
(in thousands) 2017 2016 2017 2016 2018 2017 2018 2017
Proceeds from sales of investment securities available for sale $338,381
 243,609
 $55,752
 —
 $35,066
 $338,381
 $35,066
 $55,752
Gross realized gains on sales 7,942
 954
 239
 —
 —
 7,942
 —
 239
Gross realized losses on sales (275) (887) (240) —
 (1,296) (275) (1,296) (240)
Investment securities gains, net $7,667
 67
 $(1) —
Investment securities (losses) gains, net $(1,296) $7,667
 $(1,296) $(1)
                

Note 5 - Restructuring Charges
For the six and three months ended June 30, 20172018 and 2016,2017, total restructuring charges consist of the following components:
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2017 2016 2017 2016
Severance charges$6,453
 —
 $—
 —
Lease termination charges—
 31
 —
 (13)
Asset impairment charges—
 6,866
 —
 5,821
Loss (gain) on sale of assets held for sale, net(4) 13
 (4) 13
Other charges75
 71
 17
 20
Total restructuring charges, net$6,524
 6,981
 $13
 5,841
        
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2018 2017 2018 2017
Severance charges$—
 $6,453
 $—
 $—
Other charges, net(212) 71
 103
 13
Total restructuring charges, net$(212) $6,524
 $103
 $13
        
For the six months ended June 30, 2018, Synovus recorded net lease termination accrual reversals of $377 thousand related to branches closed in prior years offset somewhat by other property related charges of $165 thousand. During the first quarter ofsix months ended June 30, 2017, Synovus recorded severance charges of $6.5 million including $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered to Synovus employees during the first quarter of 2017. 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. For the three months ended June 30, 2016, Synovus recorded restructuring charges of $5.8 million with $4.8 million of those charges related to Synovus' corporate real estate optimization activities and $1.0 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 six and three months ended June 30, 20172018 and 2016:2017:
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2016$81
 3,968
 4,049
Accruals for voluntary and involuntary termination benefits6,453
 —
 6,453
Payments(2,803) (438) (3,241)
Balance at June 30, 2017$3,731
 3,530
 7,261
      
Balance at April 1, 20176,315
 3,689
 10,004
Payments(2,584) (159) (2,743)
Balance at June 30, 2017$3,731
 3,530
 7,261
      
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2017$336
 $3,276
 $3,612
Accruals for lease terminations—
 (377) (377)
Payments(336) (1,031) (1,367)
Balance at June 30, 2018$—
 $1,868
 $1,868
      
Balance at April 1, 2018—
 2,506
 2,506
Payments—
 (638) (638)
Balance at June 30, 2018$—
 $1,868
 $1,868
      
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2015$1,930
 4,687
 6,617
Accruals for lease terminations—
 31
 31
Payments(1,337) (343) (1,680)
Balance at June 30, 2016$593
 4,375
 4,968
      
Balance at April 1, 20161,533
 4,545
 6,078
Accruals for lease terminations—
 (13) (13)
Payments(940) (157) (1,097)
Balance at June 30, 2016$593
 4,375
 4,968
      
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2016$81
 $3,968
 $4,049
Accrual for voluntary and involuntary termination benefits6,453
 —
 6,453
Payments(2,803) (438) (3,241)
Balance at June 30, 2017$3,731
 $3,530
 $7,261
      
Balance at April 1, 20176,315
 3,689
 10,004
Payments(2,584) (159) (2,743)
Balance at June 30, 2017$3,731
 $3,530
 $7,261
      
All other charges were paid in the quarters thatin which 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 June 30, 20172018 and December 31, 2016.2017.
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 June 30, 2018 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total 
Commercial, financial and agricultural$7,170,877
 $18,425
 $547
 $18,972
 $81,231
 $7,271,080
 
Owner-occupied4,994,038
 4,180
 98
 4,278
 6,076
 5,004,392
 
Total commercial and industrial12,164,915
 22,605
 645
 23,250
 87,307
 12,275,472
 
Investment properties$6,028,397
 3,482
 72
 3,554
 3,712
 6,035,663
 5,505,409
 1,838
 611
 2,449
 1,738
 5,509,596
 
1-4 family properties818,327
 8,657
 101
 8,758
 8,535
 835,620
 715,154
 2,309
 —
 2,309
 3,247
 720,710
 
Land and development529,967
 1,964
 126
 2,090
 10,931
 542,988
 407,639
 1,602
 —
 1,602
 4,624
 413,865
 
Total commercial real estate7,376,691
 14,103
 299
 14,402
 23,178
 7,414,271
 6,628,202
 5,749
 611
 6,360
 9,609
 6,644,171
 
Commercial, financial and agricultural6,915,588
 14,670
 765
 15,435
 69,550
 7,000,573
 
Owner-occupied4,715,325
 9,291
 801
 10,092
 24,918
 4,750,335
 
Total commercial and industrial11,630,913
 23,961
 1,566
 25,527
 94,468
 11,750,908
 
Home equity lines1,533,528
 8,286
 705
 8,991
 20,648
 1,563,167
 1,430,778
 8,450
 362
 8,812
 14,265
 1,453,855
 
Consumer mortgages2,444,866
 7,141
 623
 7,764
 18,035
 2,470,665
 2,741,064
 4,805
 244
 5,049
 4,822
 2,750,935
 
Credit cards223,092
 1,550
 1,258
 2,808
 —
 225,900
 235,406
 1,793
 1,225
 3,018
 —
 238,424
 
Other consumer loans1,021,355
 7,197
 99
 7,296
 2,988
 1,031,639
 1,783,466
 8,990
 135
 9,125
 1,325
 1,793,916
 
Total consumer5,222,841
 24,174
 2,685
 26,859
 41,671
 5,291,371
 6,190,714
 24,038
 1,966
 26,004
 20,412
 6,237,130
 
Total loans$24,230,445
 62,238
 4,550
 66,788
 159,317
 24,456,550
(1 
) 
$24,983,831
 $52,392
 $3,222
 $55,614
 $117,328
 $25,156,773
(1 
) 
    ��                  
December 31, 2016 December 31, 2017 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total 
Commercial, financial and agricultural$7,097,127
 $11,214
 $1,016
 $12,230
 $70,130
 $7,179,487
 
Owner-occupied4,830,150
 6,880
 479
 7,359
 6,654
 4,844,163
 
Total commercial and industrial11,927,277
 18,094
 1,495
 19,589
 76,784
 12,023,650
 
Investment properties$5,861,198
 2,795
 —
 2,795
 5,268
 5,869,261
 5,663,665
 2,506
 90
 2,596
 3,804
 5,670,065
 
1-4 family properties873,231
 4,801
 161
 4,962
 9,114
 887,307
 775,023
 3,545
 202
 3,747
 2,849
 781,619
 
Land and development591,732
 1,441
 —
 1,441
 16,233
 609,406
 476,131
 1,609
 67
 1,676
 5,797
 483,604
 
Total commercial real estate7,326,161
 9,037
 161
 9,198
 30,615
 7,365,974
 6,914,819
 7,660
 359
 8,019
 12,450
 6,935,288
 
Commercial, financial and agricultural6,846,591
 9,542
 720
 10,262
 59,074
 6,915,927
 
Owner-occupied4,601,356
 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
 
Home equity lines1,585,228
 10,013
 473
 10,486
 21,551
 1,617,265
 1,490,808
 5,629
 335
 5,964
 17,455
 1,514,227
 
Consumer mortgages2,265,966
 7,876
 81
 7,957
 22,681
 2,296,604
 2,622,061
 3,971
 268
 4,239
 7,203
 2,633,503
 
Credit cards229,177
 1,819
 1,417
 3,236
 —
 232,413
 229,015
 1,930
 1,731
 3,661
 —
 232,676
 
Other consumer loans809,419
 5,771
 39
 5,810
 2,954
 818,183
 1,461,223
 10,333
 226
 10,559
 1,669
 1,473,451
 
Total consumer4,889,790
 25,479
 2,010
 27,489
 47,186
 4,964,465
 5,803,107
 21,863
 2,560
 24,423
 26,327
 5,853,857
 
Total loans$23,663,898
 61,971
 3,135
 65,106
 153,378
 23,882,382
(2 
) 
$24,645,203
 $47,617
 $4,414
 $52,031
 $115,561
 $24,812,795
(2 
) 
                       
(1) Total before net deferred fees and costs of $26.0$22.7 million.
(2) Total before net deferred fees and costs of $26.0$25.3 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 (homehome equity lines and consumer mortgages)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 June 30, 2018 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Commercial, financial and agricultural$6,996,081
 $107,251
 $164,581
 $3,167
 $—
 $7,271,080
 
Owner-occupied4,873,936
 63,373
 67,010
 73
 —
 5,004,392
 
Total commercial and industrial11,870,017
 170,624
 231,591
 3,240
 —
 12,275,472
 
Investment properties$5,952,286
 61,451
 21,926
 —
 —
 6,035,663
 5,422,727
 51,279
 35,590
 —
 —
 5,509,596
 
1-4 family properties788,665
 24,169
 22,559
 227
 —
 835,620
 698,532
 9,245
 12,933
 —
 —
 720,710
 
Land and development477,974
 40,576
 21,227
 3,211
 —
 542,988
 369,071
 29,612
 12,053
 3,129
 —
 413,865
 
Total commercial real estate7,218,925
 126,196
 65,712
 3,438
 —
 7,414,271
 6,490,330
 90,136
 60,576
 3,129
 —
 6,644,171
 
Commercial, financial and agricultural6,710,038
 124,412
 160,354
 5,629
 140
(3) 
7,000,573
 
Owner-occupied4,590,414
 52,101
 106,410
 1,410
 —
 4,750,335
 
Total commercial and industrial11,300,452
 176,513
 266,764
 7,039
 140
 11,750,908
 
Home equity lines1,535,583
 —
 24,812
 373
 2,399
(3) 
1,563,167
 1,435,724
 —
 16,599
 175
 1,357
(3) 
1,453,855
 
Consumer mortgages2,450,658
 —
 19,528
 313
 166
(3) 
2,470,665
 2,743,245
 —
 7,588
 102
 —
(3) 
2,750,935
 
Credit cards224,643
 —
 445
 —
 812
(4) 
225,900
 237,198
 —
 447
 —
 779
(4) 
238,424
 
Other consumer loans1,028,493
 —
 2,808
 299
 39
(3) 
1,031,639
 1,792,568
 —
 1,087
 257
 4
(3) 
1,793,916
 
Total consumer5,239,377
 —
 47,593
 985
 3,416
 5,291,371
 6,208,735
 —
 25,721
 534
 2,140
 6,237,130
 
Total loans$23,758,754
 302,709
 380,069
 11,462
 3,556
 24,456,550
(5 
) 
$24,569,082
 $260,760
 $317,888
 $6,903
 $2,140
 $25,156,773
(5 
) 
                       
December 31, 2016 December 31, 2017 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Commercial, financial and agricultural$6,929,506 $115,912 $132,818 $1,251 $—
 $7,179,487 
Owner-occupied4,713,877
 50,140
 80,073
 73
 —
 4,844,163
 
Total commercial and industrial11,643,383
 166,052
 212,891
 1,324
 —
 12,023,650
 
Investment properties$5,794,626
 43,336
 31,299
 —
 —
 5,869,261
 5,586,792
 64,628
 18,645
 —
 —
 5,670,065
 
1-4 family properties826,311
 33,928
 26,790
 278
 —
 887,307
 745,299
 19,419
 16,901
 —
 —
 781,619
 
Land and development514,853
 60,205
 27,361
 6,987
 —
 609,406
 431,759
 33,766
 14,950
 3,129
 —
 483,604
 
Total commercial real estate7,135,790
 137,469
 85,450
 7,265
 —

7,365,974
 6,763,850
 117,813
 50,496
 3,129
 —

6,935,288
 
Commercial, financial and agricultural6,642,648
 126,268
 140,425
 6,445
 141
(3) 
6,915,927
 
Owner-occupied4,462,420
 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
 
Home equity lines1,589,199
 —
 22,774
 2,892
 2,400
(3) 
1,617,265
 1,491,105
 —
 21,079
 285
 1,758
(3) 
1,514,227
 
Consumer mortgages2,271,916
 —
 23,268
 1,283
 137
(3) 
2,296,604
 2,622,499
 —
 10,607
 291
 106
(3) 
2,633,503
 
Credit cards230,997
 —
 637
 —
 779
(4) 
232,413
 230,945
 —
 399
 —
 1,332
(4) 
232,676
 
Other consumer loans814,844
 —
 3,233
 42
 64
(3) 
818,183
 1,470,944
 —
 2,168
 329
 10
(3) 
1,473,451
 
Total consumer4,906,956
 —
 49,912
 4,217
 3,380
 4,964,465
 5,815,493
 —
 34,253
 905
 3,206
 5,853,857
 
Total loans$23,147,814
 324,593
 387,117
 19,337
 3,521
 23,882,382
(6 
) 
$24,222,726
 $283,865
 $297,640
 $5,358
 $3,206
 $24,812,795
(6 
) 
                       
(1) Includes $235.8$209.6 million and $256.6$190.6 million of Substandard accruing loans at June 30, 20172018 and December 31, 2016,2017, respectively.
(2) The loans within this risk grade are on non-accrual status. Commercial loans generally have an allowance for loan losses in accordance with ASC 310, and retail loans generally have an allowance for loan losses equal to 50% of the loan amount.
(3) The loans within this risk grade are on non-accrual status and have an allowance for loan losses equal to the full loan amount.
(4) Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan losses equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy.
(5) Total before net deferred fees and costs of $26.0$22.7 million.
(6) Total before net deferred fees and costs of $26.0$25.3 million.

The following table details the changes in the allowance for loan losses by loan segment for the six and three months ended June 30, 2018 and 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 Six Months Ended June 30, 2018
(in thousands)Commercial Real Estate Commercial & Industrial Retail TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$81,816
 125,778
 44,164
 251,758
$126,803
 $74,998
 $47,467
 $249,268
Charge-offs(3,207) (19,535) (9,656) (32,398)(23,786) (2,446) (9,894) (36,126)
Recoveries3,648
 3,282
 2,871
 9,801
3,995
 6,964
 3,058
 14,017
Provision for loan losses(4,730) 13,912
 9,752
 18,934
23,323
 (4,311) 5,554
 24,566
Ending balance(1)
$77,527
 123,437
 47,131
 248,095
$130,335
 $75,205
 $46,185

$251,725
Ending balance: individually evaluated for impairment4,386
 7,226
 1,038
 12,650
$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$73,141
 116,211
 46,093
 235,445
$120,861
 $70,518
 $45,414
 $236,793
Loans:              
Ending balance: total loans(1)(2)
$7,414,271
 11,750,908
 5,291,371
 24,456,550
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment 73,638
 122,889
 31,688
 228,215
$107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$7,340,633
 11,628,019
 5,259,683
 24,228,335
$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
              
As of and For The Six Months Ended June 30, 2016As Of and For The Six Months Ended June 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Retail TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$87,133
 122,989
 42,374
 252,496
$125,778
 $81,816
 $44,164
 $251,758
Charge-offs(9,277) (10,661) (7,148) (27,086)(19,535) (3,207) (9,656) (32,398)
Recoveries6,690
 4,342
 2,564
 13,596
3,282
 3,648
 2,871
 9,801
Provision for loan losses(5,187) 12,963
 8,294
 16,070
13,912
 (4,730) 9,752
 18,934
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
$123,437
 $77,527
 $47,131
 $248,095
Ending balance: individually evaluated for impairment12,515
 14,221
 1,691
 28,427
$7,226
 $4,386
 $1,038
 $12,650
Ending balance: collectively evaluated for impairment$66,844
 115,412
 44,393
 226,649
$116,211
 $73,141
 $46,093
 $235,445
Loans:              
Ending balance: total loans(1)(3)
$7,507,695
 10,955,430
 4,625,410
 23,088,535
$11,742,945
 $7,422,234
 $5,291,371
 $24,456,550
Ending balance: individually evaluated for impairment112,954
 119,805
 37,788
 270,547
$122,889
 $73,638
 $31,688
 $228,215
Ending balance: collectively evaluated for impairment$7,394,741
 10,835,625
 4,587,622
 22,817,988
$11,620,056
 $7,348,596
 $5,259,683
 $24,228,335
              
(1)(1) As of and for the six months ended June 30, 20172018 and 2016,2017, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $26.0$22.7 million.
(3) Total before net deferred fees and costs of $27.6$26.0 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 June 30, 2018
(in thousands)Commercial Real Estate Commercial & Industrial Consumer TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$78,314
 127,096
 48,104
 253,514
$134,745
 $73,991
 $49,028
 $257,764
Charge-offs(1,299) (12,642) (5,722) (19,663)(15,770) (523) (5,211) (21,504)
Recoveries759
 1,458
 1,767
 3,984
1,635
 480
 1,560
 3,675
Provision for loan losses(247) 7,525
 2,982
 10,260
9,725
 1,257
 808
 11,790
Ending balance(1)
$77,527
 123,437
 47,131
 248,095
$130,335
 $75,205
 $46,185
 $251,725
Ending balance: individually evaluated for impairment4,386
 7,226
 1,038
 12,650
$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$73,141
 116,211
 46,093
 235,445
$120,861
 $70,518
 $45,414
 $236,793
Loans:              
Ending balance: total loans(1)(2)
$7,414,271
 11,750,908
 5,291,371
 24,456,550
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment 73,638
 122,889
 31,688
 228,215
$107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$7,340,633
 11,628,019
 5,259,683
 24,228,335
$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
              
As Of and For The Three Months Ended June 30, 2016As Of and For The Three Months Ended June 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Consumer TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$84,557
 124,878
 45,081
 254,516
$127,096
 $78,314
 $48,104
 $253,514
Charge-offs(7,455) (5,136) (3,180) (15,771)(12,642) (1,299) (5,722) (19,663)
Recoveries5,397
 3,078
 1,163
 9,638
1,458
 759
 1,767
 3,984
Provision for loan losses(3,140) 6,813
 3,020
 6,693
7,525
 (247) 2,982
 10,260
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
$123,437
 $77,527
 $47,131
 $248,095
Ending balance: individually evaluated for impairment12,515
 14,221
 1,691
 28,427
$7,226
 $4,386
 $1,038
 $12,650
Ending balance: collectively evaluated for impairment$66,844
 115,412
 44,393
 226,649
$116,211
 $73,141
 $46,093
 $235,445
Loans:              
Ending balance: total loans(1)(3)
$7,507,695
 10,955,430
 4,625,410
 23,088,535
$11,742,945
 $7,422,234
 $5,291,371
 $24,456,550
Ending balance: individually evaluated for impairment112,954
 119,805
 37,788
 270,547
$122,889
 $73,638
 $31,688
 $228,215
Ending balance: collectively evaluated for impairment$7,394,741
 10,835,625
 4,587,622
 22,817,988
$11,620,056
 $7,348,596
 $5,259,683
 $24,228,335
              
(1) (1For)As of and for the three months ended June 30, 20172018 and 2016,2017, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $26.0$22.7 million.
(3) Total before net deferred fees and costs of $27.6$26.0 million.
















The tables below summarize impaired loans (including accruing TDRs) as of June 30, 20172018 and December 31, 2016.2017.
Impaired Loans (including accruing TDRs)
June 30, 2017 
Six Months Ended
June 30, 2017
 Three Months Ended June 30, 2017June 30, 2018 Six Months Ended June 30, 2018 Three Months Ended June 30, 2018
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income RecognizedRecorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
With no related allowance recorded                          
Commercial, financial and agricultural$21,549
 $32,458
 $—
 $11,129
 $—
 $13,575
 $—
Owner-occupied—
 —
 —
 —
 —
 —
 —
Total commercial and industrial21,549
 32,458
 —
 11,129
 —
 13,575
 —
Investment properties$—
 —
 —
 246
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
1-4 family properties253
 2,582
 —
 380
 —
 257
 —
—
 —
 —
 —
 —
 —
 —
Land and development2,226
 5,539
 —
 2,193
 —
 2,246
 —
—
 —
 —
 19
 —
 —
 —
Total commercial real estate2,479
 8,121
 —
 2,819
 —
 2,503
 —
—
 —
 —
 19
 —
 —
 —
Commercial, financial and agricultural
26,913
 33,098
 —
 22,956
 —
 26,202
 —
Owner-occupied13,824
 20,250
 —
 10,383
 —
 11,910
 —
Total commercial and industrial40,737
 53,348
 —
 33,339
 —
 38,112
 —
Home equity lines1,064
 1,064
 —
 1,060
 —
 1,064
 —
—
 —
 —
 1,423
 —
 724
 —
Consumer mortgages744
 941
 —
 744
 —
 744
 —
62
 87
 —
 1,330
 —
 1,780
 —
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Total consumer1,808
 2,005
 —
 1,804
 —
 1,808
 —
62
 87
 —
 2,753
 —
 2,504
 —
Total impaired loans with no
related allowance recorded
$45,024
 63,474
 —
 37,962
 —
 42,423

—
$21,611
 $32,545
 $—
 $13,901
 $—
 $16,079

$—
With allowance recorded                          
Commercial, financial and agricultural$45,171
 $45,385
 $6,813
 $62,564
 $428
 $57,930
 $155
Owner-occupied40,824
 40,884
 2,660
 38,073
 730
 38,432
 373
Total commercial and industrial85,995
 86,269
 9,473
 100,637
 1,158
 96,362
 528
Investment properties$29,168
 29,168
 1,175
 29,575
 597
 29,264
 306
24,218
 24,218
 1,659
 23,604
 418
 24,439
 220
1-4 family properties15,879
 15,893
 448
 16,995
 386
 16,133
 250
10,458
 10,458
 309
 11,466
 442
 11,217
 226
Land and development26,112
 26,168
 2,763
 27,381
 299
 26,366
 126
19,129
 20,869
 2,720
 18,280
 150
 18,428
 74
Total commercial real estate71,159
 71,229
 4,386
 73,951
 1,282
 71,763
 682
53,805
 55,545
 4,688
 53,350
 1,010
 54,084
 520
Commercial, financial and agricultural
46,569
 46,887
 5,524
 46,455
 787
 48,959
 436
Owner-occupied35,583
 35,594
 1,702
 42,814
 674
 38,318
 336
Total commercial and industrial82,152
 82,481
 7,226
 89,269
 1,461
 87,277
 772
Home equity lines7,135
 7,135
 171
 8,197
 465
 7,680
 229
3,915
 3,915
 174
 3,822
 76
 3,262
 30
Consumer mortgages18,762
 18,762
 598
 19,720
 183
 19,009
 92
18,767
 18,767
 350
 19,283
 394
 19,459
 199
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 4,985
 —
Other consumer loans3,983
 3,984
 269
 4,692
 132
 4,380
 59
4,932
 4,938
 248
 5,188
 143
 —
 72
Total consumer29,880
 29,881

1,038
 32,609
 780
 31,069
 380
27,614
 27,620

772
 28,293
 613
 27,706
 301
Total impaired loans with
allowance recorded
$183,191
 183,591
 12,650
 195,829
 3,523
 190,109
 1,834
$167,414
 $169,434
 $14,933
 $182,280
 $2,781
 $178,152
 $1,349
Total impaired loans                          
Commercial, financial and agricultural$66,720
 $77,843
 $6,813
 $73,693
 $428
 $71,505
 $155
Owner-occupied40,824
 40,884
 2,660
 38,073
 730
 38,432
 373
Total commercial and industrial107,544
 118,727
 9,473
 111,766
 1,158
 109,937
 528
Investment properties$29,168
 29,168

1,175
 29,821
 597

29,264
 306
24,218
 24,218

1,659
 23,604
 418

24,439
 220
1-4 family properties16,132
 18,475

448
 17,375
 386

16,390
 250
10,458
 10,458

309
 11,466
 442

11,217
 226
Land and development28,338
 31,707

2,763
 29,574
 299

28,612
 126
19,129
 20,869

2,720
 18,299
 150

18,428
 74
Total commercial real estate73,638
 79,350

4,386
 76,770
 1,282

74,266
 682
53,805
 55,545

4,688
 53,369
 1,010

54,084
 520
Commercial, financial and agricultural
73,482
 79,985

5,524
 69,411
 787

75,161
 436
Owner-occupied49,407
 55,844

1,702
 53,197
 674

50,228
 336
Total commercial and industrial122,889
 135,829

7,226
 122,608
 1,461

125,389
 772
Home equity lines8,199
 8,199

171
 9,257
 465

8,744
 229
3,915
 3,915

174
 5,245
 76

3,986
 30
Consumer mortgages19,506
 19,703

598
 20,464
 183

19,753
 92
18,829
 18,854

350
 20,613
 394

21,239
 199
Credit cards—
 —

—
 —
 —

—
 —
—
 —

—
 —
 —

4,985
 —
Other consumer loans3,983
 3,984

269
 4,692
 132

4,380
 59
4,932
 4,938

248
 5,188
 143

—
 72
Total consumer31,688
 31,886

1,038
 34,413
 780

32,877
 380
27,676
 27,707

772
 31,046
 613

30,210
 301
Total impaired loans$228,215
 247,065

12,650
 233,791
 3,523

232,532
 1,834
$189,025
 $201,979

$14,933
 $196,181
 $2,781

$194,231
 $1,349
                          

Impaired Loans (including accruing TDRs)
December 31, 2016 Year Ended December 31, 2016December 31, 2017 Year Ended December 31, 2017
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income RecognizedRecorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized
With no related allowance recorded                  
Commercial, financial and agricultural$8,220
 $9,576
 $—
 $21,686
 $—
Owner-occupied—
 —
 —
 6,665
 —
Total commercial and industrial8,220
 9,576
 —
 28,351
 —
Investment properties$748
 793
 —
 2,013
 —
—
 —
 —
 123
 —
1-4 family properties643
 2,939
 —
 1,021
 —
—
 —
 —
 323
 —
Land and development2,099
 7,243
 —
 6,769
 —
56
 1,740
 —
 1,816
 —
Total commercial real estate3,490
 10,975
 —
 9,803
 —
56
 1,740
 —
 2,262
 —
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
 —
2,746
 2,943
 —
 1,205
 —
Consumer mortgages744
 814
 —
 870
 —
—
 —
 —
 496
 —
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
—
 —
 —
 —
 —
Total consumer1,795
 1,865
 —
 1,915
 —
2,746
 2,943
 —
 1,701
 —
Total impaired loans with no
related allowance recorded
$28,751
 40,794
 —
 26,433
 —
$11,022
 $14,259
 $—
 $32,314
 $—
With allowance recorded                  
Commercial, financial and agricultural$65,715
 $65,851
 $7,406
 $50,468
 $1,610
Owner-occupied37,399
 37,441
 2,109
 40,498
 1,382
Total commercial and industrial103,114
 103,292
 9,515
 90,966
 2,992
Investment properties$31,489
 31,489
 2,044
 42,659
 1,436
23,364
 23,364
 1,100
 28,749
 1,144
1-4 family properties23,642
 23,649
 769
 39,864
 855
15,056
 15,056
 504
 16,257
 925
Land and development32,789
 32,788
 5,103
 25,568
 995
18,420
 18,476
 2,636
 23,338
 404
Total commercial real estate87,920
 87,926
 7,916
 108,091
 3,286
56,840
 56,896
 4,240
 68,344
 2,473
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
5,096
 5,096
 114
 7,476
 334
Consumer mortgages20,953
 20,953
 673
 20,993
 1,014
18,668
 18,668
 569
 19,144
 896
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other consumer loans5,140
 5,140
 167
 5,062
 303
5,546
 5,546
 470
 4,765
 266
Total consumer35,731
 35,731
 1,811
 35,723
 1,749
29,310
 29,310
 1,153
 31,385
 1,496
Total impaired loans with
allowance recorded
$220,745
 223,512
 18,111
 248,082
 8,196
$189,264
 $189,498
 $14,908
 $190,695
 $6,961
Total impaired loans                  
Commercial, financial and agricultural$73,935
 $75,427
 $7,406
 $72,154
 $1,610
Owner-occupied37,399 37,441 2,109 47,163 1,382
Total commercial and industrial111,334 112,868 9,515 119,317 2,992
Investment properties$32,237
 32,282
 2,044
 44,672
 1,436
23,364 23,364 1,100 28,872 1,144
1-4 family properties24,285
 26,588
 769
 40,885
 855
15,056
 15,056
 504
 16,580
 925
Land and development34,888
 40,031
 5,103
 32,337
 995
18,476
 20,216
 2,636
 25,154
 404
Total commercial real estate91,410
 98,901
 7,916
 117,894
 3,286
56,896
 58,636
 4,240
 70,606
 2,473
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
7,842
 8,039
 114
 8,681
 334
Consumer mortgages21,697
 21,767
 673
 21,863
 1,014
18,668
 18,668
 569
 19,640
 896
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other consumer loans5,140
 5,140
 167
 5,062
 303
5,546
 5,546
 470
 4,765
 266
Total consumer37,526
 37,596
 1,811
 37,638
 1,749
32,056
 32,253
 1,153
 33,086
 1,496
Total impaired loans$249,496
 264,306
 18,111
 274,515
 8,196
$200,286
 $203,757
 $14,908
 $223,009
 $6,961
                  

The average recorded investment in impaired loans was $290.3$233.8 million and $281.9$232.5 million respectively for the six and three months ended June 30, 2016.2017. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the six and three months ended June 30, 2016.2017. Interest income recognized for accruing TDRs was $4.0$3.5 million and $2.0$1.8 million respectively for the six and three months ended June 30, 2016.2017. At June 30, 20172018 and December 31, 2016,2017, impaired loans of $60.8$63.7 million and $53.7$49.0 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 six and three months ended June 30, 20172018 and 20162017 that were reported as accruing or non-accruing TDRs.
TDRs by Concession Type    
Six Months Ended June 30, 2017 Six Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 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
 
Land acquisition1
 —
 —
 135
 135
 
Total commercial real estate17
 —
 2,089
 648
 2,737
 
Commercial, financial and agricultural28
 —
 5,760
 6,279
 12,039
 14
 $—
 $—
 $1,565
 $1,565
 
Owner-occupied1
 —
 —
 22
 22
 6
 —
 4,799
 684
 5,483
 
Total commercial and industrial29
 —
 5,760
 6,301
 12,061
 20
 —
 4,799
 2,249
 7,048
 
Home equity lines—
 —
 —
 —
 —
 
Consumer mortgages1
 —
 —
 9
 9
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans8
 —
 —
 570
 570
 
Total retail9
 —
 —
 579
 579
 
Total TDRs55
 $—
 7,849
 7,528
 15,377
(1 
) 
         
Three Months Ended June 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties—
 $—
 —
 —
 —
 3
 —
 6,011
 2,215
 8,226
 
1-4 family properties8
 —
 478
 196
 674
 7
 —
 965
 492
 1,457
 
Land and development1
 —
 —
 135
 135
 3
 —
 —
 1,786
 1,786
 
Total commercial real estate9
 —
 478
 331
 809
 13
 —
 6,976
 4,493
 11,469
 
Commercial, financial and agricultural10
 —
 1,895
 740
 2,635
 
Owner-occupied1
 —
 —
 22
 22
 
Total commercial and industrial11
 —
 1,895
 762
 2,657
 
Home equity lines—
 —
 —
 —
 —
 3
 —
 172
 148
 320
 
Consumer mortgages1
 —
 —
 9
 9
 14
 —
 4,695
 87
 4,782
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans5
 —
 —
 295
 295
 31
 —
 925
 821
 1,746
 
Total consumer6
 —
 —
 304
 304
 48
 —
 5,792
 1,056
 6,848
 
Total TDRs26
 $—
 2,373
 1,397
 3,770
(1 
) 
81
 $—
 $17,567
 $7,798
 $25,365
(1 
) 
                   
Three Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Commercial, financial and agricultural5
 $—
 $—
 $576
 $576
 
Owner-occupied4
 —
 2,094
 592
 2,686
 
Total commercial and industrial9
 —
 2,094
 1,168
 3,262
 
Investment properties2
 —
 6,011
 256
 6,267
 
1-4 family properties1
 —
 —
 492
 492
 
Land and development3
 —
 —
 1,786
 1,786
 
Total commercial real estate6
 —
 6,011
 2,534
 8,545
 
Home equity lines3
 —
 172
 148
 320
 
Consumer mortgages7
 —
 2,963
 87
 3,050
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans17
 —
 388
 313
 701
 
Total consumer27
 —
 3,523
 548
 4,071
 
Total TDRs42
 $—
 $11,628
 $4,250
 $15,878
(1 
) 
          
(1)No net charge-offs were recorded during the six and three months ended June 30, 2018 upon restructuring of these loans.

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




TDRs by Concession Type  
 Six Months Ended June 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties3
 $—
 1,826
 148
 1,974
 
1-4 family properties19
 —
 3,490
 1,164
 4,654
 
Land acquisition11
 —
 —
 1,269
 1,269
 
Total commercial real estate33
 —
 5,316
 2,581
 7,897
 
Commercial, financial and agricultural45
 —
 13,948
 4,845
 18,793
 
Owner-occupied6
 —
 2,667
 550
 3,217
 
Total commercial and industrial51
 —
 16,615
 5,395
 22,010
 
Home equity lines3
 —
 224
 —
 224
 
Consumer mortgages6
 —
 354
 51
 405
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans17
 —
 324
 1,534
 1,858
 
Total retail26
 —
 902
 1,585
 2,487
 
Total TDRs110
 $—
 22,833
 9,561
 32,394
(2 
) 
           
 Three Months Ended June 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties1
 $—
 1,389
 —
 1,389
 
1-4 family properties12
 —
 3,095
 324
 3,419
 
Land and development5
 —
 —
 734
 734
 
Total commercial real estate18
 —
 4,484
 1,058
 5,542
 
Commercial, financial and agricultural15
 —
 1,934
 1,458
 3,392
 
Owner-occupied2
 —
 1,132
 102
 1,234
 
Total commercial and industrial17
 —
 3,066
 1,560
 4,626
 
Home equity lines1
 —
 28
 —
 28
 
Consumer mortgages3
 —
 200
 51
 251
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans10
 —
 94
 1,449
 1,543
 
Total consumer14
 —
 322
 1,500
 1,822
 
Total TDRs49
 $—
 7,872
 4,118
 11,990
(2 
) 
           
(2) No net charge-offs were recorded during the six and three months ended June 30, 2016 upon restructuring of these loans.

For both the six and three months ended June 30, 2017,2018 there were threeeight defaults with a recorded investment of $292 thousand$10.5 million 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 defaultthree defaults for both the six and three months ended June 30, 20162017 with a recorded investment of $92$292 thousand.
If, at the time a loan was designated as a TDR, the loan was not already impaired, the measurement of impairment that resulted from the TDR designation closely approximates the reserve derived through specific loan measurement of impairment in accordance with ASC 310-10-35. Generally, the change in the allowance for loan losses resulting from such TDR designation is not significant. At June 30, 2017,2018, the allowance for loan losses allocated to accruing TDRs totaling $167.4$125.3 million was $8.5$6.5 million compared to accruing TDRs of $195.8$151.3 million with an allocated allowance for loan losses of $9.8$8.7 million at December 31, 2016.2017. 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 six and three months ended June 30, 20172018 and 2016.2017.
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$(12,217) (44,324) 882
 (55,659)
Other comprehensive income before reclassifications—
 12,453
 —
 12,453
Balance at December 31, 2017$(12,137) $(43,470) $853
 $(54,754)
Other comprehensive income (loss) before reclassifications—
 (64,409) —
 (64,409)
Amounts reclassified from accumulated other comprehensive income (loss)—
 960
 (46) 914
Net current period other comprehensive loss—
 (63,449) (46) (63,495)
Reclassification from adoption of ASU 2018-02—
 (7,763) 175
 (7,588)
Cumulative-effect adjustment from adoption of ASU 2016-01—
 117
 —
 117
Balance as of June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
       
Balance as of April 1, 2018$(12,137) $(96,647) $1,007
 $(107,777)
Other comprehensive income (loss) before reclassifications—
 (18,878) —
 (18,878)
Amounts reclassified from accumulated other comprehensive income (loss)80
 (4,715) (24) (4,659)—
 960
 (25) 935
Net current period other comprehensive income80
 7,738
 (24) 7,794
—
 (17,918) (25) (17,943)
Balance as of June 30, 2017$(12,137) (36,586) 858
 (47,865)
Balance as of June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
              
Balance as of April 1, 2017$(12,177) (43,444) 870
 (54,751)
Other comprehensive income before reclassifications—
 6,857
 —
 6,857
Amounts reclassified from accumulated other comprehensive income (loss)40
 1
 (12) 29
Net current period other comprehensive income40
 6,858
 (12) 6,886
Balance as of June 30, 2017$(12,137) (36,586) 858
 (47,865)
       

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$(12,504) (18,222) 907
 (29,819)
Balance at December 31, 2016$(12,217) $(44,324) $882
 $(55,659)
Other comprehensive income before reclassifications—
 40,722
 —
 40,722
—
 12,453
 —
 12,453
Amounts reclassified from accumulated other comprehensive income (loss)207
 (41) (64) 102
80
 (4,715) (24) (4,659)
Net current period other comprehensive income207
 40,681
 (64) 40,824
80
 7,738
 (24) 7,794
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
Balance as of June 30, 2017$(12,137) $(36,586) $858
 $(47,865)
              
Balance as of April 1, 2016$(12,336) 10,747
 849
 (740)
Other comprehensive income (loss) before reclassifications—
 11,712
 —
 11,712
Balance as of April 1, 2017$(12,177) $(43,444) $870
 $(54,751)
Other comprehensive income before reclassifications—
 6,857
 —
 6,857
Amounts reclassified from accumulated other comprehensive income (loss)39
 —
 (6) 33
40
 1
 (12) 29
Net current period other comprehensive income (loss)39
 11,712
 (6) 11,745
40
 6,858
 (12) 6,886
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
Balance as of June 30, 2017$(12,137) $(36,586) $858
 (47,865)
              

In accordance with ASC 740-20-45-11(b), a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income is charged directly to other comprehensive income (loss). During the years 2010 and 2011, Synovus recorded a deferred tax asset valuation allowance associated with net unrealized 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 debtavailable for sale securities as

a single portfolio. As of June 30, 2017,2018, the ending balance in net unrealized gains (losses) on cash flow hedges and net unrealized gains (losses) on investment securities available for sale includes unrealized losses of $12.1 million and $13.3 million, respectively, related to the residual tax effects remaining in OCI due to athe 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 Six Months Ended June 30, 
 2017 2016  2018 2017 
Net unrealized gains (losses) on cash flow hedges:          
Amortization of deferred losses $(130) (140) Interest expense $—
 $(130) Interest expense
Amortization of deferred losses —
 (197) Loss on early extinguishment of debt, net
 50
 130
 Income tax (expense) benefit —
 50
 Income tax (expense) benefit
 $(80) (207) Reclassifications, net of income taxes $—
 $(80) 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
Realized (losses) gains on sale of securities $(1,296) $7,667
 Investment securities gains, net
 (2,952) (26) Income tax (expense) benefit 336
 (2,952) Income tax (expense) benefit
 $4,715
 41
 Reclassifications, net of income taxes $(960) $4,715
 Reclassifications, net of income taxes
Post-retirement unfunded health benefit:          
Amortization of actuarial gains $40
 104
 Salaries and other personnel expense $68
 $40
 Salaries and other personnel expense
 (16) (40) Income tax (expense) benefit (22) (16) Income tax (expense) benefit
 $24
 64
 Reclassifications, net of income taxes $46
 $24
 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 June 30, 
 2017 2016  2018 2017 
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
Realized losses on sale of securities $(1,296) $(1) Investment securities gains, net
 —
 —
Income tax (expense) benefit 336
 —
 Income tax (expense) benefit
 $(1) —
Reclassifications, net of income taxes $(960) $(1) 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 (9) (8) Income tax (expense) benefit
 $12
 6
Reclassifications, net of income taxes $25
 $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 enterprisesGSEs and agencies, obligations of states and municipalities, collateralized mortgage obligations issued by U.S. Government sponsored enterprises,GSEs, and mortgage loans held-for-sale are generally included in this category.
Level 3Unobservable inputs that are supported by little, if any, market activity for the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow models and similar techniques, and may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. These methods of valuation may result in a significant portion of the fair value being derived from unobservable assumptions that reflect Synovus' own estimates for assumptions that market participants would use in pricing the asset or liability. This category primarily includes collateral-dependent impaired loans, other loans held for sale, other real estate, certain equity investments,corporate securities, private equity investments, GGL/SBA loan servicing assets, and contingent consideration.the earnout liability.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1615 - Fair Value Accounting" to the consolidated financial statements of Synovus' 20162017 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 June 30, 20172018 and December 31, 2016,2017, 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 six and three months ended June 30, 20172018 and year ended December 31, 2016 were inconsequential.2017.
June 30, 2017June 30, 2018
(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
$—
 $17,164
 $—
 $17,164
Mortgage-backed securities issued by U.S. Government agencies—
 577
 —
 577
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises
—
 386
 —
 386
—
 409
 —
 409
State and municipal securities—
 1,072
 —
 1,072
—
 2,495
 —
 2,495
Other investments906
 —
 —
 906
Total trading securities$—
 3,045
 —
 3,045
$906
 $20,645
 $—
 $21,551
Mortgage loans held for sale—
 61,893
 —
 61,893
—
 53,673
 —
 53,673
Investment securities available for sale:              
U.S. Treasury securities83,133
 —
 —
 83,133
120,633
 —
 —
 120,633
U.S. Government agency securities—
 12,311
 —
 12,311
—
 40,934
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies—
 132,225
 —
 132,225
—
 107,944
 —
 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,856,405
 —
 2,856,405
—
 2,526,845
 —
 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 722,420
 —
 722,420
—
 1,116,448
 —
 1,116,448
State and municipal securities—
 290
 —
 290
—
 115
 —
 115
Corporate debt and other securities(1)
3,142
 15,205
 1,927
 20,274
Corporate debt and other debt securities(1)
—
 15,186
 1,857
 17,043
Total investment securities available for sale$86,275
 3,738,856
 1,927
 3,827,058
$120,633
 $3,807,472
 $1,857
 $3,929,962
Private equity investments

 —
 15,698
 15,698
—
 —
 12,678
 12,678
Mutual funds3,124
 —
 —
 3,124
Mutual funds held in rabbi trusts12,867
 —
 —
 12,867
13,638
 —
 —
 13,638
GGL/SBA loans servicing asset—
 —
 4,297
 4,297
—
 —
 4,186
 4,186
Derivative assets:              
Interest rate contracts—
 15,332
 —
 15,332
—
 10,034
 —
 10,034
Mortgage derivatives(2)
—
 1,393
 —
 1,393
—
 1,302
 —
 1,302
Total derivative assets$—
 16,725
 —
 16,725
$—
 $11,336
 $—
 $11,336
Liabilities              
Trading account liabilities—
 12,328
 —
 12,328
Earnout liability(3)
—
 —
 13,941
 13,941
—
 —
 11,348
 11,348
Derivative liabilities:              
Interest rate contracts—
 13,389
 —
 13,389
—
 19,303
 —
 19,303
Mortgage derivatives(2)
—
 248
 —
 248
Visa derivative—
 —
 5,053
 5,053
—
 —
 5,943
 5,943
Total derivative liabilities$—
 13,389
 5,053
 18,442
$—
 $19,551
 $5,943
 $25,494
              

December 31, 2016December 31, 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:              
Mortgage-backed securities issued by U.S. Government agencies—
 3,460
 —
 3,460
$—
 $3,002
 $—
 $3,002
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises—
 3,438
 —
 3,438
—
 296
 —
 296
State and municipal securities—
 426
 —
 426
Other investments1,890
 100
 —
 1,990
522
 —
 —
 522
Total trading securities$1,890
 7,424
 —
 9,314
$522
 $3,298
 $—
 $3,820
Mortgage loans held for sale—
 51,545
 —
 51,545
—
 48,024
 —
 48,024
       
Investment securities available for sale:              
U.S. Treasury securities107,802
 —
 —
 107,802
82,674
 —
 —
 82,674
U.S. Government agency securities—
 12,993
 —
 12,993
—
 10,862
 —
 10,862
Mortgage-backed securities issued by U.S. Government agencies—
 174,202
 —
 174,202
—
 120,440
 —
 120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,506,340
 —
 2,506,340
—
 2,640,523
 —
 2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 890,442
 —
 890,442
—
 1,111,999
 —
 1,111,999
State and municipal securities—
 2,794
 —
 2,794
—
 180
 —
 180
Equity securities3,782
 —
 —
 3,782
Corporate debt and other securities(1)
3,092
 14,952
 1,796
 19,840
3,162
 15,294
 1,935
 20,391
Total investment securities available for sale$114,676
 3,601,723
 1,796
 3,718,195
$85,836
 $3,899,298
 $1,935
 $3,987,069
Private equity investments—
 —
 25,493
 25,493
—
 —
 15,771
 15,771
Mutual funds held in rabbi trusts11,479
 —
 —
 11,479
14,140
 —
 —
 14,140
GGL/SBA loan servicing asset—
 —
 4,101
 4,101
Derivative assets:              
Interest rate contracts—
 17,157
 —
 17,157
—
 10,786
 —
 10,786
Mortgage derivatives(2)
—
 3,466
 —
 3,466
—
 936
 —
 936
Total derivative assets$—
 20,623
 —
 20,623
$—
 $11,722
 $—
 $11,722
       
Liabilities              
Trading account liabilities—
 1,000
 —
 1,000
Earnout liability(3)
—
 —
 14,000
 14,000
—
 —
 11,348
 11,348
Derivative liabilities:              
Interest rate contracts—
 17,531
 —
 17,531
—
 12,638
 —
 12,638
Mortgage derivatives(2)
—
 129
 —
 129
Visa derivative—
 —
 5,768
 5,768
—
 —
 4,330
 4,330
Total derivative liabilities$—
 17,531
 5,768
 23,299
$—
 $12,767
 $4,330
 $17,097
              
(1) Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate.
(2) Mortgage derivatives consist of customer interest rate lock commitments that relate to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third-party investors.
(3) 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 Statementsconsolidated statements of Income.income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.
Changes in Fair Value Included in Net Income              
For the Six Months Ended June 30, For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended June 30,
(in thousands)2017 2016 2017 20162018 2017 2018 2017
Mortgage loans held for sale$954
 1,850
 $(249) 878
$155
 $954
 $40
 $(249)
              
Mortgage Loans Held for Sale  
(in thousands)As of June 30, 2017 As of December 31, 2016As of June 30, 2018 As of December 31, 2017
Fair value$61,893
 51,545
$53,673
 $48,024
Unpaid principal balance60,508
 51,114
52,333
 46,839
Fair value less aggregate unpaid principal balance$1,385
 431
$1,340
 $1,185
      

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 Sheetsconsolidated balance sheet for the six and three months ended June 30, 20172018 and 20162017 (including the change in fair value), for financial instruments of a material nature that are classified by Synovus within Level 3 of the fair value hierarchy and are measured at fair value on a recurring basis. Transfers between fair value levels are recognized at the end of the reporting period in which the associated changes in inputs occur. During the six and three months ended June 30, 20172018 and 2016,2017, Synovus did not have any transfers between levels in the fair value hierarchy. For the six and three months ended June 30, 2018, total net losses included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018 was $6.2 million and $2.7 million, respectively. For the six and three months ended June 30, 2017, total net losses included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017 was $2.4 million and $2.1 million, respectively.
  
 Six Months Ended June 30, 2017
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, January 1,$1,796
 25,493
 (5,768) (14,000) —
Total gains (losses) realized/unrealized:         
Included in earnings    —
 (3,166) —
 (1,707) (694)
Unrealized gains (losses) included in other comprehensive income131
 —
 —
 —
 —
Additions—
 —
 —
 —
 539
Sales and settlements—
 (6,629) 715
 —
 —
Transfer from amortization method to fair value—
 —
 —
 —
 4,452
Measurement period adjustments related to Global One acquisition—
 —
 —
 1,766
 —
Ending balance, June 30,$1,927
 15,698
 (5,053) (13,941) 4,297
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (3,166) —
 (1,707) (694)
          
          
 Three Months Ended June 30, 2017
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, April 1,$1,851
 23,679
 (5,412) (11,421) 4,178
Total gains (losses) realized/unrealized:         
Included in earnings    —
 (1,352) —
 (1,707) (376)
Unrealized gains (losses) included in other comprehensive income76
 —
 —
 —
 —
Additions—
 —
 —
 —
 495
Sales and settlements—
 (6,629) 359
 —
 —
Measurement period adjustments related to Global One acquisition—
 —
 —
 (813) —
Ending balance, June 30,$1,927
 15,698
 (5,053) (13,941) 4,297
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (1,352) —
 (1,707) (376)
          
  
 Six Months Ended June 30, 2018
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, January 1, 2018$1,935
 $15,771
 $(4,330) $(11,348) $4,101
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (3,093) (2,328) —
 (734)
Unrealized losses included in other comprehensive income(78) —
 —
 —
 —
Additions—
 —
 —
 —
 819
Settlements—
 —
 715
 —
 —
Ending balance, June 30, 2018$1,857
 $12,678
 $(5,943) $(11,348) $4,186
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(3,093) $(2,328) $—
 $(734)
          
 Three Months Ended June 30, 2018
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset
Beginning balance, April 1, 2018$1,852
 $12,715
 $(3,974) $(11,348) $3,971
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (37) (2,328) —
 (312)
Unrealized gains included in other comprehensive income5
 —
 —
 —
 —
Additions—
 —
 —
 —
 527
Settlements—
 —
 359
 —
 —
Ending balance, June 30, 2018$1,857
 $12,678
 $(5,943) $(11,348) $4,186
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(37) $(2,328) $—
 $(312)
          


      
 Six Months Ended June 30, 2017
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, January 1, 2017$1,796
 $25,493
 $(5,768) $(14,000) $—
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (3,166) —
 (1,707) (694)
Unrealized gains (losses) included in other comprehensive income131
 

 —
 —
 —
Additions—
 —
 —
 —
 539
Sales and settlements—
 (6,629) 715
 —
 —
Transfer from amortization method to fair value—
 —
 —
 —
 4,452
Measurement period adjustments related to Global One acquisition—
 —
 —
 1,766
 —
Ending balance, June 30, 2017$1,927
 $15,698
 $(5,053) $(13,941) $4,297
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017$—
 $—
 $—
 $(1,707) $(694)
          
 Three Months Ended June 30, 2017
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, April 1, 2017$1,851
 $23,679
 $(5,412) $(11,421) $4,178
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (1,352) —
 (1,707) (376)
Unrealized gains included in other comprehensive income76
 —
 —
 —
 —
Additions—
 —
 —
 —
 495
Sales and settlements—
 (6,629) 359
 —
 —
Measurement period adjustments related to Global One acquisition—
 —
 —
 (813) —
Ending balance, June 30, 2017$1,927
 $15,698
 $(5,053) $(13,941) $4,297
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017$—
 $—
 $—
 $(1,707) $(376)
          
(1) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.
(2) Effective January 1, 2017, Synovus elected the fair value option for determining the value of the GGL/SBA loans servicing asset. 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, 2016
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative
Beginning balance, January 1,$1,745
 27,148
 (1,415)
Total gains (losses) realized/unrealized:     
Included in earnings    —
 (278) (720)
Unrealized gains (losses) included in other comprehensive income(120) —
 —
Settlements—
 (4) 720
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)
      
      
 Three Months Ended June 30, 2016
(in thousands)
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:     
Included in earnings    —
 113
 (360)
Unrealized gains (losses) included in other comprehensive income(13) —
 —
Settlements—
 (4) 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)
      



The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a recurring basis.
June 30, 2017December 31, 2016
Valuation TechniqueSignificant Unobservable InputRange/Weighted AverageRange/Weighted Average
Assets and liabilities
measured at fair value
on a recurring basis
Investment Securities Available for Sale - Other Investments:
Trust preferred securitiesDiscounted cash flow analysisCredit spread embedded in discount rate392 bps442 bps
Private equity investmentsIndividual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companiesN/AN/A
Discount for lack of liquidity(1)
N/A15%
GGL/SBA loans servicing assetDiscounted cash flow analysisDiscount rate Prepayment speeds12.01% 6.75%N/A
Earnout liabilityOption 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 liabilityDiscounted 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 years1-5 years
    June 30, 2018 December 31, 2017
  Valuation TechniqueSignificant Unobservable Input
Level 3
Fair Value
 Range or Weighted Average 
Level 3
Fair Value
 Range or Weighted Average
Assets and liabilities
measured at fair value
on a recurring basis
          
           
Investment Securities Available for Sale - Other Investments:          
           
Trust preferred securities Discounted cash flow analysisCredit spread embedded in discount rate$1,857 438 bps $1,935 398 bps
           
Private equity investments Individual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies12,678 N/A 15,771 N/A
           
GGL/SBA loans servicing asset Discounted cash flow analysisDiscount rate Prepayment speeds4,186 13.40% 8.64% 4,101 13.16% 7.50%
           
Earnout liability Option pricing methods and Monte Carlo simulationFinancial projections of Global One11,348 N/A 11,348 N/A
           
Visa derivative liability Discounted cash flow analysisEstimated timing of resolution of covered litigation, future cumulative deposits to the litigation escrow for settlement of the covered litigation, and estimated future monthly fees payable to the derivative counterparty5,943 1-3 years 4,330 1-4 years
           
(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-recurringassets are not measured at fair value on an ongoing basis. Non-recurring fair value adjustments typically are a result of the application of lower of cost or fair value accounting 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.six months ended June 30, 2018 and year ended December 31, 2017.


June 30, 2017 December 31, 2016June 30, 2018 December 31, 2017
(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
$—
 $—
 $12,820
 $12,820
 $—
 $—
 $3,603
 $3,603
Other loans held for sale—
 —
 —
 —
 —
 —
 10,197
 10,197
Other real estate—

—

12,367

12,367
 —
 —
 19,305
 19,305
—
 —
 —
 —
 —
 —
 3,363
 3,363
Other assets held for sale—
 —
 —
 —
 —
 —
 12,083
 12,083
—
 —
 695
 695
 —
 —
 5,334
 5,334
                              
* Collateral-dependent impaired loans that were written down to fair value during the period.

    Other real estate (ORE) properties are included in other assets on the consolidated balance sheet. The carrying value of ORE at June 30, 2018 and December 31, 2017 was $6.3 million and $3.8 million, respectively.
The following table presents fair value adjustments recognized in earnings for the six and three months ended June 30, 2018 and 2017 and 2016 for the assets measured at fair value on a non-recurring basis.basis still held at period-end.
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2017 2016 2017 20162018 2017 2018 2017
Impaired loans*
$5,808
 1,162
 $5,776
 —
$7,548
 $5,808
 $6,828
 $5,776
Other loans held for sale3,519
 —
 —
 —
—
 3,519
 —
 —
Other real estate518
 3,306
 280
 2,053
—
 518
 —
 280
Other assets held for sale238
 6,625
 —
 5,593
499
 238
 499
 —
              
* Collateral-dependent impaired loans that were written down to fair value during the period.

    

















The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a non-recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments.
    June 30, 20172018 December 31, 20162017
  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%68% (38%)
0% - 10% (7%)
 
0%-52% (25%-50% (15%)
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
N/A
 N/A
5% - 99% (54%)
0% - 10% (2%)
       
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%)N/A
0% - 10% (7%)N/A
 
0%-10% (5%-85% (35%)
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
27%-43% (42%)
0%-10% (7%)
 
0%-81% (47%21%-52% (25%)
0%-10% (7%)
       
(1) The range represents management's estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.
(2) Synovus also makes adjustments to the values of the assets listed above for reasons including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical condition of the property, and other factors.

Fair Value of Financial Instruments
The following table presents the carrying and fair values of financial instruments at June 30, 20172018 and December 31, 2016.2017. 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 June 30, 20172018 and December 31, 20162017 are as follows:
June 30, 2017June 30, 2018

(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
 —
 —
Interest bearing funds with Federal Reserve Bank468,148
 468,148
 468,148
 —
 —
Interest earning deposits with banks6,012
 6,012
 6,012
 —
 —
Federal funds sold and securities purchased under resale agreements46,847
 46,847
 46,847
 —
 —
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,091,788
 $1,091,788
 $1,091,788
 $—
 $—
Trading account assets3,045
 3,045
 —
 3,045
 —
21,551
 21,551
 906
 20,645
 —
Mortgage loans held for sale61,893
 61,893
 —
 61,893
 —
53,673
 53,673
 —
 53,673
 —
Other loans held for sale127
 127
 —
 127
 —
2,733
 2,733
 —
 —
 2,733
Investment securities available for sale3,827,058
 3,827,058
 86,275
 3,738,856
 1,927
3,929,962
 3,929,962
 120,633
 3,807,472
 1,857
Private equity investments15,698
 15,698
 —
 —
 15,698
12,678
 12,678
 —
 —
 12,678
Mutual funds3,124
 3,124
 3,124
 —
 —
Mutual funds held in rabbi trusts12,867
 12,867
 12,867
 —
 —
13,638
 13,638
 13,638
 —
 —
Loans, net of deferred fees and costs24,430,512
 24,191,120
 —
 —
 24,191,120
Loans, net24,882,331
 24,732,689
 —
 —
 24,732,689
GGL/SBA loans servicing asset4,297
 4,297
 —
 —
 4,297
4,186
 4,186
 —
 —
 4,186
Derivative assets16,725
 16,725
 —
 16,725
 —
11,336
 11,336
 —
 11,336
 —
                  
Financial liabilities         
 
 
 
  
Trading account liabilities12,328
 12,328
 —
 12,328
 —
         
Non-interest bearing deposits7,363,476
 7,363,476
 —
 7,363,476
 —
7,630,491
 7,630,491
 —
 7,630,491
 —
Interest bearing deposits17,855,340
 17,852,694
 —
 17,852,694
 —
Non-time interest bearing deposits13,958,048
 13,958,048
 —
 13,958,048
 —
Time deposits4,854,149
 4,826,356
 —
 4,826,356
 —
Total deposits$26,442,688
 $26,414,895
 $—
 $26,414,895
 $—
Federal funds purchased, other short-term borrowings and other short-term liabilities150,379
 150,379
 150,379
 —
 —
207,580
 207,580
 207,580
 —
 —
Long-term debt2,107,245
 2,155,543
 —
 2,155,543
 —
1,656,647
 1,658,790
 —
 1,658,790
 —
Other liabilities13,941
 13,941
 —
 —
 13,941
Earnout liabilities11,348
 11,348
 —
 —
 11,348
Derivative liabilities18,442
 18,442
 —
 13,389
 5,053
25,494
 25,494
 —
 19,551
 5,943
                  

December 31, 2016December 31, 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$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
 —
 —
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$932,933
 $932,933
 $932,933
 $—
 $—
Trading account assets9,314
 9,314
 1,890
 7,424
 —
3,820
 3,820
 522
 3,298
 —
Mortgage loans held for sale51,545
 51,545
 —
 51,545
 —
48,024
 48,024
 —
 48,024
 —
Other loans for sale11,356
 11,356
 —
 —
 11,356
Investment securities available for sale3,718,195
 3,718,195
 114,676
 3,601,723
 1,796
3,987,069
 3,987,069
 85,836
 3,899,298
 1,935
Private equity investments25,493
 25,493
 —
 —
 25,493
15,771
 15,771
 —
 —
 15,771
Mutual funds held in rabbi trusts11,479
 11,479
 11,479
 —
 —
14,140
 14,140
 14,140
 —
 —
Loans, net of deferred fees and costs23,856,391
 23,709,434
 —
 —
 23,709,434
Loans, net24,538,196
 24,507,141
 —
 —
 24,507,141
GGL/SBA loans servicing asset4,101
 4,101
 —
 —
 4,101
Derivative assets20,623
 20,623
 —
 20,623
 —
11,722
 11,722
 —
 11,722
 —
                  
Financial liabilities                  
Trading account liabilities1,000
 1,000
 —
 1,000
 —
         
Non-interest bearing deposits7,085,804
 7,085,804
 —
 7,085,804
 —
7,686,339
 7,686,339
 —
 7,686,339
 —
Interest bearing deposits17,562,256
 17,560,021
 —
 17,560,021
 —
Non-time interest bearing deposits13,941,814
 13,941,814
 —
 13,941,814
 —
Time deposits4,519,747
 4,523,661
 —
 4,523,661
 —
Total deposits$26,147,900
 $26,151,814
 $—
 $26,151,814
 $—
Federal funds purchased, other short-term borrowings and other short-term liabilities159,699
 159,699
 159,699
 —
 —
161,190
 161,190
 161,190
 —
 —
Long-term debt2,160,881
 2,217,544
 —
 2,217,544
 —
1,706,138
 1,721,814
 —
 1,721,814
 —
Other liabilities14,000
 14,000
 —
 —
 14,000
Earnout liabilities11,348
 11,348
 —
 —
 11,348
Derivative liabilities23,299
 23,299
 —
 17,531
 5,768
17,097
 17,097
 —
 12,767
 4,330
                  
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 June 30, 20172018 and December 31, 2016,2017, 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 June 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 six months ended June 30, 2017.
Fair Value Hedges
As of June 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 six months ended June 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.consolidated balance sheet. Fair value changes are recorded as a component of non-interest income. As of June 30, 2017,2018, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.49$1.67 billion, an increase of $160.4$201.4 million compared to December 31, 2016.2017.
Visa Derivative
In conjunction with the sale of Class B shares of common stock issued by Visa to Synovus as a Visa USA member, Synovus entered into a derivative contract with the purchaser, which provides for settlements between the parties based upon a change in the ratio for conversion of Visa Class B shares to Visa Class A shares. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The litigation escrow is funded by proceeds from Visa’s conversion of Class B shares. The fair value of the derivative contract was $5.1$5.9 million and $5.8$4.3 million at June 30, 20172018 and December 31, 2016,2017, respectively. The fair value of the derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. During the three months ended June 30, 2018, Synovus recorded a $2.3 million valuation adjustment to the Visa derivative following Visa's announcement on June 26, 2018 that it would deposit $600 million into its litigation escrow account. Management believes that the estimate of Synovus' exposure to the Visa indemnification and fees associated with the Visa derivative is adequate based on current information, including Visa's recent announcements and disclosures. However, future developments in the litigation could require potentially significant changes to Synovus' estimate. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1918 - Visa Shares and Related Agreements" of Synovus' 20162017 Form 10-K for further information.
Mortgage Derivatives
Synovus originates first lien residential mortgage loans for sale into the secondary market. Mortgage loans are sold by Synovus for conversion to securities and the servicing of these loans is generally sold to a third-party servicing aggregator, or Synovus sells the mortgage loans as whole loans to investors either individually or in bulk on a servicing released basis.
Synovus enters into interest rate lock commitments for residential mortgage loans which commits it to lend funds to a potential borrower at a specific interest rate and within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that, if originated, will be held for sale, are considered derivative financial instruments under applicable accounting guidance. Outstanding interest rate lock commitments expose Synovus to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan.
At June 30, 20172018 and December 31, 2016,2017, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $87.8$69.7 million and $88.2$49.3 million, respectively. Fair value adjustments related to these commitments resulted in a gain of $366 thousand and a loss of $(416) thousand and a gain of $1.2 million for the six months ended June 30, 20172018 and 2016,2017, respectively, which was recorded as a component of mortgage banking income in the Consolidated Statementsconsolidated statements of Income.income.
At June 30, 20172018 and December 31, 2016,2017, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $102.5$86.0 million and $126.5$72.5 million, respectively. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding rate lock commitments, which guarantee a certain interest rate if the loan is ultimately funded or granted by Synovus as a mortgage loan held for sale. The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. Fair value adjustments related to these outstanding commitments to sell mortgage loans resulted in a loss of $(1.7) million$(119) thousand and $(1.6)$(1.7) million for the six months ended June 30, 20172018 and 2016,2017, respectively, which were recorded as a component of mortgage banking income in the Consolidated Statementsconsolidated statements of Income.

income.
Collateral Requirements
Pursuant to the Dodd-Frank Act, certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of June 30, 2017,2018, collateral totaling $43.3$30.6 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. At June 30, 2018 and December 31, 2017, Synovus had a variation margin of $8.9 million and $1.5 million, respectively, reducing the derivative asset.

The impact of derivative instruments on the Consolidated Balance Sheets at June 30, 20172018 and December 31, 20162017 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 June 30, 2018 December 31, 2017 Location on Consolidated Balance Sheets June 30, 2018 December 31, 2017
Derivatives not designated
as hedging instruments:
                
Interest rate contractsOther assets $15,332
 17,157
 Other liabilities 13,389
 17,531
Other assets $10,034
 $10,786
 Other liabilities $19,303
 $12,638
Mortgage derivativesOther assets 1,393
 3,466
 Other liabilities —
 —
Other assets 1,302
 936
 Other liabilities 248
 129
Visa derivative —
 —
 Other liabilities 5,053
 5,768
 —
 —
 Other liabilities 5,943
 4,330
Total derivatives not
designated as hedging
instruments
 $16,725
 20,623
 18,442
 23,299
 $11,336
 $11,722
 $25,494
 $17,097
                
The pre-tax effect of fair value hedges on the Consolidated Statementsconsolidated statements of Incomeincome for the six and three months ended June 30, 20172018 and 20162017 is presented below.
 Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands) Six Months Ended June 30, Six Months Ended June 30,
Derivatives not designated as hedging instruments 2017 2016 2018 2017
Interest rate contracts(1)
 Other non-interest income $(1) 33
 Other non-interest income $(9) $(1)
Mortgage derivatives(2)
 Mortgage banking income (2,073) (485) Mortgage banking income 247
 (2,073)
Total $(2,074) (452) $238
 $(2,074)
        
      Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
 Gain (Loss) Recognized in Income
(in thousands) Three Months Ended June 30, Three Months Ended June 30,
Derivatives not designated as hedging instruments Location of Gain (Loss) Recognized in Income 2017 2016 Location of Gain (Loss) Recognized in Income 2018 2017
Interest rate contracts(1)
 Other non-interest income $—
 27
 $(16) $—
Mortgage derivatives(2)
 Mortgage banking income (289) (335) (680) (289)
Total $(289) (308) $(696) $(289)
        
(1) Gain (loss) represents net fair value adjustments (including credit related adjustments) for customer swaps and offsetting positions.
(2) Gain (loss) represents net fair value adjustments recorded for interest rate lock commitments and commitments to sell mortgage loans to third-party investors.
During the six months ended June 30, 2017 and 2016, Synovus reclassified $873 thousand and $950 thousand, respectively, from hedge-related basis adjustment, a component of long-term debt, as a reduction to interest expense. During the six months ended June 30, 2016, Synovus reclassified $1.3 million from hedge-related basis adjustment, as a reduction to loss on early extinguishment of debt, net. As of June 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 six and three months ended June 30, 20172018 and 2016.2017.

Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands, except per share data)2017 2016 2017 20162018 2017 2018 2017
Basic Net Income Per Common Share:              
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$209,229
 $142,742
 $108,622
 $73,444
Weighted average common shares outstanding122,251
 126,164
 122,203
 125,100
118,531
 122,251
 118,397
 122,203
Net income per common share, basic$1.17
 0.85
 $0.60
 0.46
$1.77
 $1.17
 $0.92
 $0.60
Diluted Net Income Per Common Share:              
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$209,229
 $142,742
 $108,622
 $73,444
Weighted average common shares outstanding122,251
 126,164
 122,203
 125,100
118,531
 122,251
 118,397
 122,203
Potentially dilutive shares from outstanding equity-based awards792
 614
 824
 599
Potentially dilutive shares from outstanding equity-based awards and Earnout Payments698
 792
 742
 824
Weighted average diluted common shares123,043
 126,778
 123,027
 125,699
119,229
 123,043
 119,139
 123,027
Net income per common share, diluted$1.16
 0.85
 $0.60
 0.46
$1.75
 $1.16
 $0.91
 $0.60
              
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 stock options and restricted share units is reflected in diluted net income per common share, unless the impact is anti-dilutive, by application of the treasury stock method.
As of June 30, 20172018 and 2016,2017, 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 20172018 and 2016,2017 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 June 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. At June 30, 2018, Synovus had a total of 4.9 million shares of its authorized but unissued common stock reserved for future grants under the 2013 Omnibus 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 grantedVesting for grants made in 2018 accelerates upon retirement for plan participants who have reached age 65 and who also have no less than 10 years of service at exercise prices which equal the fair valuedate of a share of common stock on the grant-date.their election to retire. Market restricted share units and performance share units are granted at a defined target level and are compared annually to required market and performance metrics to determine finalactual 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$8.3 million and $3.5$4.4 million for the six and three months ended June 30, 2017,2018, respectively, and $6.8 million and $3.5 million for the six and three months ended June 30, 2016,2017, respectively. Accelerated share-based compensation expense associated with the provision in 2018 of a retirement vesting provision was approximately $200 thousand and $30 thousand for the six and three months ended June 30, 2018 for retirement eligible employees.
Stock Options
No stock option grants were made during the six months ended June 30, 2017.2018. At June 30, 2017,2018, there were 826655 thousand outstanding stock options to purchase shares of common stock with a weighted average exercise price of $17.81$16.92 per share.
Restricted Share Units, Performance Share Units, and Market Restricted Share Units
During the six months ended June 30, 2017,2018, Synovus awarded 230234 thousand restricted share units that have a service-based vesting period of three years and awarded 7387 thousand performance share units that vest upon service and performance conditions.

Synovus also granted 7358 thousand market restricted share units during the six months ended June 30, 2017.2018. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was $41.93$47.67 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) and return on average tangible common equity (ROATCE) performance is evaluated each year over a three-year performance period, with share distribution determined at the end of the three years. The number of performance share units that will ultimately vest ranges from 0% to 150% of target based on Synovus' three-year weighted average ROAA (as defined) and ROATCE (as defined). The market restricted share units have a three-year service-based vesting component as well as a total shareholder return multiplier. The number of market restricted share units that will ultimately vest ranges from 75% to 125% of target based on Synovus' total shareholder return. At June 30, 2017,2018, including dividend equivalents granted, there were 983910 thousand restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of $32.82$40.82 per share.

Note 12 - Non-interest Income

The following table reflects revenue disaggregated by revenue type and line of business for the six and three months ended June 30, 2018 and 2017.

Non-interest Income by Line of Business

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

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

Non-interest Income by Line of Business

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

$2,301

$25,901

$30,327

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

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

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

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

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

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

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

Other Fees: Other fees primarily consist of revenues generated from safe deposit box rental fees and lockbox services. Fees are recognized over time, on a monthly basis, as Synovus' performance obligation for services is satisfied. Payment is received upfront for safe deposit box rentals and in the following month for lockbox services.
Contract Balances
A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. Synovus' non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after Synovus satisfies its performance obligation and revenue is recognized. Synovus does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2018 and December 31, 2017, Synovus did not have any significant contract balances.
Note 1213 - 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) canmay 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.consolidated balance sheet. Additionally, unearned fees relating to letters of credit are recorded within other liabilities on the Consolidated Balance Sheets.consolidated balance sheet. These amounts are not material to Synovus' Consolidated Balance Sheets.consolidated balance sheet.
Unfunded lending commitments and letters of credit and lending commitments at June 30, 20172018 and December 31, 20162017 are presented below.
(in thousands)June 30, 2017 December 31, 2016
Letters of credit*$155,542
 150,948
Commitments to fund commercial real estate, construction, and land development loans1,427,947
 1,394,162
Unused credit card lines1,152,324
 1,103,431
Commitments under home equity lines of credit1,126,766
 1,096,052
Commitments to fund commercial and industrial loans5,039,168
 4,792,834
Other loan commitments308,386
 307,772
Total unfunded lending commitments and letters of credit$9,210,133
 8,845,199
    
(in thousands)June 30, 2018 December 31, 2017
Letters of credit*$179,860
 $153,372
Commitments to fund commercial and industrial loans5,361,671
 5,090,827
Commitments to fund commercial real estate, construction, and land development loans1,652,834
 1,567,583
Commitments under home equity lines of credit1,179,074
 1,137,714
Unused credit card lines743,376
 779,254
Other loan commitments365,861
 351,358
Total unfunded lending commitments and letters of credit$9,482,676
 $9,080,108
    
* Represent the contractual amount net of risk participations of approximately $61$70 million and $83$77 million at June 30, 20172018 and December 31, 2016,2017, respectively.

Merchant Services

In accordance with credit and debit card association rules, Synovus sponsors merchant processing servicers that process credit and debit card transactions on behalf of various merchants. In connection with these services, a liability may arise in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder's favor. If the merchant defaults on its obligation to reimburse the cardholder, the cardholder, through its issuing bank, generally has until six months after the date of the transaction to present a chargeback to the merchant processor, which is primarily liable for any losses on covered transactions. However, if the merchant processor fails to meet its obligation to reimburse the cardholder for disputed transactions, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus mitigates this risk through its contractual arrangements with the merchant processing servicers and the merchants and by withholding future settlements, by retaining cash reserve accounts or by obtaining other security. During the six months ended June 30, 2018 and 2017, the sponsored entities processed and settled $34.35 billion and $30.42 billion, respectively, in total transactions. For the six months ended June 30, 2018 and 2017, Synovus incurred an immaterial amount of losses in connection with these chargebacks. During July 2018, Synovus began to accrue a receivable for chargebacks associated with one merchant processing relationship.

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 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 June 30, 20172018 are adequate. The actual costs of resolving legal claims may be higher or lower than the amounts accrued.
In addition, where Synovus determines that there is a reasonable possibility of a loss in respect of legal matters, Synovus considers whether it is able to estimate the total reasonably possible loss or range of loss. An event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely.” An event is “remote” if “the chance of the future event or future eventevents 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$5 million in excess of the amounts accrued, if any, related to those matters. This estimated aggregate range is based upon information currently available to Synovus, and the actual losses could prove to be lower or higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations for any particular period.
Synovus intends to vigorously pursue all available defenses to these legal matters, but will also consider other alternatives, including settlement, in situations where there is an opportunity to resolve such legal matters on terms that Synovus considers to be favorable, including in light of the continued expense and distraction of defending such legal matters. Synovus maintains insurance coverage, which may be available to cover legal fees, or potential losses that might be incurred in connection with such legal matters. The above-noted estimated range of reasonably possible losses does not take into consideration insurance coverage which may or may not be available for the respective legal matters.

Note 14 - Agreement with World's Foremost Bank and Capital One BankSubsequent Events

Pending Acquisition of FCB Financial Holdings, Inc.

On April 17, 2017,July 23, 2018, Synovus Bank entered into a definitive agreementthe Merger Agreement by and among Synovus, FCB and Azalea Merger Sub Corp.  pursuant 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,which Synovus will sellacquire FCB in a reverse triangular merger. At 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 brokeredeffective 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,Merger, each outstanding share of FCB Class A common stock, par value $0.001 per share, will be converted into the right to receive, without interest, 1.055 shares of Synovus will receive $75 million in consideration from Cabela's and Capital One upon closing. Closingcommon stock, par value $1.00 per share.  The Merger Agreement has been unanimously approved by both companies’ Board of theDirectors.  The transaction is subject to customary regulatory approvalsclosing conditions, including approval of Synovus and FCB shareholders and approval of state and federal regulators, and is expected to close by the satisfactionfirst quarter of other2019. 

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


Redemption of Series C Preferred Stock

On August 1, 2018, Synovus redeemed all 5,200,000 outstanding shares of Series C Preferred Stock for a cash price of $25.00 per share, without interest, for an aggregate redemption price of $130 million and paid a dividend of $2.6 million on the Series C Preferred Stock. The transactionredemption of the Series C Preferred Stock was funded primarily with proceeds from Synovus' public offering of $200 million of Series D Preferred Stock completed on June 21, 2018. Concurrent with the redemption, Synovus will recognize an extinguishment loss of $4.1 million to net income available to common shareholders. The $4.1 million extinguishment loss will be accounted for as an assumption of liabilities pursuantrecognized in a manner similar to the asset acquisition model andtreatment of dividends paid on preferred stock during 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, includingthree months ending September 30, 2018.

repayment of any cash amounts paid and return of any assets and liabilities transferred, such that Cabela’s, WFB, Capital One and Synovus will be in 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 value 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.





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
affectimpact 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 regulatory initiatives and 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 operating or security systems as a result of cyber-attacks, which could disrupt our businesses, result in the disclosurecyber attacks or misuse of confidential or proprietary information, damage our reputation, increase our costs or cause losses;similar acts;

(12)our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "ransomware", "hacking" and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage of our systems, increased costs, significant losses, or adverse effects to our reputation;
(13) the 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 Federal Tax Reform could have an adverse impact on our business or our customers, including with respect to demand and pricing for our loan products;
(15) the risk that we could realize losses if we determine to sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;
(14)(16) the risk that we may be exposed to potential losses in the event of fraud on cash accounts and/or theft;theft, or in the event that a third party vendor or obligor fails to pay amounts due to us under that relationship;
(15)(17) 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;operations or realize anticipated benefits from such transactions;
(16)(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 CD 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 ofwe may be required to take additional charges with respect to our deferred tax assets as a result of Federal Tax Reform in the future, could be subject to comprehensive tax reform;event our estimates prove inaccurate;
(24)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)(26) the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;
(26)(27) risks related to the fluctuation in our stock price;
(27)(28) the effects of any damages to our reputation resulting from developments related to any of the items identified above;
(29)the risk that the required shareholder approvals of the Merger with FCB may not be obtained;
(30)the risk that Synovus or FCB may be unable to obtain all of the regulatory approvals required to complete the Merger;

(31)the risk that the other conditions to closing the Merger with FCB may not be satisfied;
(32)the risk that the length of time necessary to consummate the Merger with FCB may be longer than anticipated for various reasons;
(33)the risk that the businesses of Synovus and FCB will not be integrated successfully or that the integration may take longer than expected;
(34)the risk that the cost savings, synergies, growth, and other benefits from the Merger with FCB may not be fully realized or may take longer to realize than expected;
(35)the risk that management’s time and attention will be diverted to issues associated with the Merger with FCB rather than our ongoing businesses;
(36)the risk that costs associated with the integration of the businesses of Synovus and FCB will be higher than anticipated;
(37)the risk of litigation arising in connection with the Merger and that could cause the transaction to be more costly than expected or delay its completion;
(38)the risk that events could lead to the termination of the Merger Agreement (or otherwise result in payment of termination fee);
(39)the risk of business disruption following the Merger; and
(28)(40) other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in "Risk"Part I - Item 1A. Risk Factors" of this Report.

For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I-Item 1A. Risk Factors” and other information contained in Synovus' 20162017 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 248250 branches and 327334 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee.
The following financial review summarizes the significant trends, changes in our business, transactions, and other matters affecting Synovus’ results of operations for the six and three months ended June 30, 20172018 and financial condition as of June 30, 20172018 and December 31, 2016.2017. 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’ 20162017 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
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,Six Months Ended June 30, Three Months Ended June 30,
(dollars in thousands, except per share data)2017 2016 Change 2017 2016 Change2018 2017 Change 2018 2017 Change
Net interest income$491,024
 439,643
 11.7 % $251,097
 221,449
 13.4 %$558,861
 $491,024
 13.8 % $284,577
 $251,097
 13.3 %
Provision for loan losses18,934
 16,070
 17.8 10,260
 6,693
 53.3
24,566
 18,934
 29.7 11,790
 10,260
 14.9
Non-interest income140,539
 131,033
 7.3 68,701
 67,886
 1.2
140,433
 140,539
 (0.1) 73,387
 68,701
 6.8
Adjusted non-interest income(1)
136,038
 131,244
 3.7 70,054
 67,773
 3.4
144,822
 136,038
 6.5 74,720
 70,054
 6.7
Total revenues(2)
623,896
 570,609
 9.3 319,799
 289,335
 10.5
700,590
 623,896
 12.3 359,260
 319,799
 12.3
Non-interest expense389,133
 376,844
 3.3 191,747
 188,611
 1.7
399,234
 389,133
 2.6 204,057
 191,747
 6.4
Adjusted non-interest expense(1)
382,048
 361,587
 5.7 191,442
 182,410
 5.0
400,561
 382,048
 4.8 202,734
 191,442
 5.9
Income before income taxes223,496
 177,762
 25.7 117,791
 94,031
 25.3
275,494
 223,496
 23.3 142,117
 117,791
 20.7
Net income147,861
 112,989
 30.9 76,003
 60,457
 25.7
214,348
 147,861
 45.0 111,181
 76,003
 46.3
Net income available to common shareholders142,742
 107,870
 32.3 73,444
 57,898
 26.9
209,229
 142,742
 46.6 108,622
 73,444
 47.9
Net income per common share, basic1.17
 0.85
 36.6 0.60
 0.46
 29.9
1.77
 1.17
 51.2 0.92
 0.60
 52.7
Net income per common share, diluted1.16
 0.85
 36.3 0.60
 0.46
 29.6
1.75
 1.16
 51.3 0.91
 0.60
 52.7
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)
1.78
 1.17
 52.1 0.92
 0.61
 52.6
Net interest margin(3)
3.82% 3.46% 36  bps 3.86% 3.51% 35  bps
Net charge-off ratio(3)
0.18
 0.19
 (1) 0.29
 0.26
 3
Return on average assets(3)
1.38
 0.98
 40
 1.42
 1.00
 42
Adjusted return on average assets(1)(3)
1.40
 0.99
 41
 1.43
 1.01
 42
Efficiency ratio56.97
 62.31
 (534) 56.78
 59.90
 (312)
Adjusted efficiency ratio(1)
56.90
 60.87
 (397) 56.41
 59.56
 (315)
                      
(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.gains (losses), 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 ChangeJune 30, 2018 March 31, 2018 Sequential Quarter Change June 30, 2017 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$25,134,056
 $24,883,037
 $251,019
 $24,430,512
 $703,544
Total average loans24,946,307
 24,852,399
 93,908
 24,350,004
 596,303
Total deposits25,218,816
 25,105,712
 113,104
 23,925,922
 1,292,89426,442,688
 26,253,507
 189,181
 25,218,816
 1,223,872
Total average deposits24,991,708
 24,918,855
 72,853
 23,608,027
 1,383,68126,268,074
 25,788,073
 480,001
 24,991,708
 1,276,366
Average core deposits(1)
23,612,149
 23,538,068
 74,081
 22,271,027
 1,341,12224,345,157
 23,836,163
 508,994
 23,612,149
 733,008
Average core transaction deposits(1)
18,409,170
 18,147,856
 261,314
 16,849,367
 1,559,803
                  
Non-performing assets ratio0.73% 0.77
 (4) bps
 0.81
 (8) bps
0.50% 0.53% (3) bps 0.73% (23) bps
Non-performing loans ratio0.65
 0.65
 —
 0.67
 (2) bps
0.47
 0.48
 (1) 0.65
 (18)
Past due loans over 90 days0.02
 0.01
 1 bp
 0.03
 (1) bp
0.01
 0.02
 (1) 0.02
 (1)
                  
Common equity Tier 1 capital (transitional)$2,838,616
 $2,801,073
 $37,543
 $2,734,983
 $103,633
Tier 1 capital$2,734,983
 2,758,794
 (23,811) 2,627,572
 107,4113,156,805
 2,924,109
 232,696
 2,829,340
 327,465
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
 193,2583,668,904
 3,442,921
 225,983
 3,340,155
 328,749
Common equity Tier 1 capital ratio (transitional)10.12% 10.09% 3  bps 10.02% 10  bps
Tier 1 capital ratio10.02%
 10.18
 (16) bps
 10.06
 (4) bps
11.25
 10.53
 72
 10.37
 88
Common equity Tier 1 capital ratio (transitional)10.37
 9.86
 51 bps
 10.01
 36 bps
Total risk-based capital ratio12.24
 12.08
 16 bps
 12.05
 19 bps
13.08
 12.40
 68
 12.24
 84
Total shareholders’ equity to total assets ratio9.77
 9.66
 11 bps
 10.02
 (25) bps
9.98
 9.39
 59
 9.77
 21
Tangible common equity to tangible assets ratio(1)
9.15
 9.04
 11 bps
 9.52
 (37) bps
Tangible common equity ratio(1)
8.77
 8.79
 (2) 9.15
 (38)
Return on average common equity
(2)
10.34
 9.97
 37 bps
 8.26
 208 bps
15.39
 14.62
 77
 10.34
 505
Return on average tangible common equity(1)
10.62
 10.26
 36 bps
 8.33
 229 bps
Adjusted return on average common equity(1)(2)
15.59
 14.86
 73
 10.49
 510
Adjusted return on average tangible common equity(1)(2)
15.97
 15.23
 74
 10.75
 522
                  
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Quarter annualized


Results for the Six and Three Months Ended June 30, 20172018
For the six months ended June 30, 2017, netNet income available to common shareholders for the first six months of 2018 was $142.7$209.2 million, or $1.16$1.75 per diluted common share, an increase of 32.3%46.6% and 36.3%51.3%, respectively, compared to the first six months of 2017. Net income available to common shareholders for the second quarter of 2018 was $108.6 million, or $0.91 per diluted common share, an increase of 47.9% and 52.7%, respectively, compared to the second quarter of 2017. Return on average assets for the six months ended June 30, 2018 was 1.38%, up 40 basis points from the same period of 2017, and return on average assets for the second quarter of 2018 was 1.42%, up 42 basis points from the second quarter of 2017. Results for the first half of 2018 were driven by revenue growth and also reflect the benefit from a lower effective tax rate, due to the reduction of the Federal tax rate.
Total revenues, excluding investment securities losses, for the first half of 2018 were $700.6 million, up 12.3% compared to the same period in 2017. Total revenues, excluding investment securities losses, for the second quarter were $359.3 million, up 12.3% compared to the second quarter a year ago. Net interest income for the first half of 2018 was $558.9 million, an increase of $67.8 million, or 13.8%, compared to $491.0 million for the same period in 2017. The net interest margin was 3.82% for the six months ended June 30, 2018, an increase of 36 basis points from 3.46% for the six months ended June 30, 2017. The yield on earning assets was 4.39%, up 46 basis points compared to the six months ended June 30, 2016. For2017 and the three months ended June 30, 2017, net income availableeffective cost of funds increased 10 basis points to common shareholders0.57%. The yield on loans was $73.4 million, or $0.60 per diluted common share,4.79%, an increase of 26.8% and 29.6%, respectively, compared to the three months ended June 30, 2016. For the six and three months ended June 30, 2017, results include an income tax benefit of $4.5 million and $378 thousand, respectively,48 basis points from adoption of a new accounting standard update effective January 1, 2017 which includes a requirement to record all tax effects associated with share-based compensation through the income statement.
Total revenues of $623.9 million for the six months ended June 30, 2017 are up 9.3% compared toand the yield on investment securities was 2.34%, an increase of 25 basis points from the six months ended June 30, 2016. Total revenues of $319.8 million for the three months ended June 30, 2017 are up 10.5% vs. the same time period in 2016 with2017. On a sequential quarter basis, net interest income increased by $10.3 million and non-interest income excluding net investment securities gains growing 13.4% and 3.4%, respectively, from the prior year. Net interest income was $251.1 million for the three months ended June 30, 2017, up $29.6 million, or 13.4%, compared to the three months ended June 30, 2016. The net interest margin increased by 8 basis points to 3.86%. The yield on earning assets was 3.51% for the three months ended June 30, 2017, an increase of 94.47%, up 16 basis points from the first quarter of 2017 and 242018. This increase was driven by an 18 basis points from 3.27%point increase in loan yields. The effective cost of funds was 0.61% for the second quarter of 2016. The yield on earning assets was 3.99%,2018, up 118 basis points from the first quarter of 20172018. The recent rate increases favorably impacted net interest income and net interest margin for 2018.
Non-interest income for the first six months of 2018 was $140.4 million compared to $140.5 million for the first six months of 2017. Non-interest income for the second quarter of 2018 was $73.4 million, up 26 basis points$4.7 million, or 6.8%, compared to the second quarter of 2016 and the effective cost of funds was up two basis points from both first quarter 2017 and second quarter 2016 at 0.48%. The yield on loans was 4.36%, an increase of 11 basis points sequentially and 21 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 second quarter of 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve.
Non-interest income for the six and three months ended June 30, 2017 was $140.5 million and $68.7 million, respectively, up $9.5 million, or 7.3%, and up $815 thousand, or 1.2%, compared to the six and three months ended June 30, 2016, respectively.2017. Adjusted non-interest income, which excludes net investment securities gains (losses) and decrease in fair value of private equity investments, net was up $4.8$8.8 million, or 3.7%, and up $2.3 million, or 3.4%6.5%, for the first six months of 2018 compared to 2017 and three months ended June 30, 2017,up $4.7 million, or 6.7%, for the second quarter of 2018 compared to the second quarter of 2017. Synovus experienced growth in multiple categories during the first half of 2018 compared to the same periods a year ago.time period in 2017 including an increase of $6.6 million, or 16.0%, in combined fiduciary and asset management fees, brokerage, and insurance revenues. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" of this Report for applicable reconciliation to GAAP measure.
Non-interest expense for the first six and three months ended June 30, 2017 was $389.1of 2018 increased $10.1 million, and $191.7 million, respectively,or 2.6%, compared to $376.8 millionthe first six months of 2017 and $188.6 million for the six and three months ended June 30, 2016, respectively. Adjusted non-interest expense for the sixsecond quarter of 2018 increased $12.3 million, or 6.4%, compared to the second quarter of 2017. The second quarter of 2018 included a $2.3 million expense for a valuation adjustment to the Visa derivative, offset in part by a $1.4 million benefit from a recovery of litigation settlement expense. The first quarter of 2018 included a $2.6 million reduction in litigation contingency accruals and three months ended June 30,the first quarter of 2017 included $6.5 million in restructuring charges. Adjusted non-interest expense, which excludes restructuring charges, net, loss on early extinguishment of debt, net, litigation settlement expense, merger-related expense, fair valuevaluation adjustment to Visa derivative, andrestructuring charges, net, amortization of intangibles, and litigation settlement/contingency expense, increased $20.5$18.5 million, or 5.7%4.8%, and $9.0 million, or 5.0%, compared to the same periods in 2016, respectively. Synovus has generated positive operating leverage throughfor 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 million and $5 million of the increase for the six and three months ended June 30, 2017, respectively,2018 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 feesfirst half of third-party lending partnerships increased by $2.2 million and $1.2 million2017. Strong operating leverage for the first half of 2018 resulted in an efficiency ratio of 56.97%, improved from 62.31% for the first half of 2017. The adjusted efficiency ratio for the first six and three months ended June 30, 2017, respectively, compared toof 2018 was 56.90%, down 397 basis points from the same periods in 2016,period a year ago. See "Part II - Item 7. Management's Discussion and Global One operating expenses accounted for $1.8 millionAnalysis of Financial Condition and $568 thousandResults of the increase compared to the six and three months ended June 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 million and $1.9 million compared to the six and three months ended June 30, 2016, respectively. See "Non-GAAPOperations - Non-GAAP Financial Measures" inof this Report for the applicable reconciliation to the most comparable GAAP measure.measures.
Credit quality metrics continued to be favorable during the three months endedsecond quarter of 2018 with a reduction in both the non-performing loan ratio and non-performing asset ratio. Non-performing loans were $117.3 million at June 30, 2018, down $2.8 million, or 2.3%, from the prior quarter and down $42.0 million from June 30, 2017. The non-performing assetsloan ratio declined 4 basis points to 0.73%,was 0.47% at June 30, 2018, as compared to 0.77%0.48% in the prior quarter and 0.65% a year ago. Total non-performing assets were $126.3 million at June 30, 2018, down $4.8 million, or 3.7%, from the prior quarter and down $52.6 million, or 29.4%, from a year ago. The non-performing assets ratio was 0.50% at June 30, 2018, down 83 basis points from 0.81%the prior quarter and down 23 basis points from a year ago. Net charge-offs for the six months ended June 30, 20172018 were $22.6$22.1 million, or 0.19%0.18% as a percentage of average loans annualized, compared to $13.5$22.6 million, or 0.12%0.19%, as a percentage of average loans annualized for the six months ended June 30, 2016. The $9.1 million or 67.5% increase from 2016 is primarily the result2017. Loans past due over 90 days were 0.01% of charge-offs on a legacy credit that was fully reservedtotal loans at June 30, 2018 as well as a reduction in recoveries.compared to 0.02% at June 30, 2017. For the six months ended June 30, 2017,2018, the provision for loan losses was $18.9$24.6 million, an increase of $2.9$5.6 million, or 17.8%29.7%, compared to the six months ended June 30, 20162017. The increase in provision expense for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily due to loan growth as well as a decline in recoveries.slightly increased level of charge-offs above reserves. The allowance for loan losses at June 30, 2018 was $251.7 million, or 1.00% of total loans, compared to $249.3 million, or 1.01% of total loans, at December 31, 2017 wasand $248.1 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 million, or 1.11% of total loans, at June 30, 2016.     2017.
During the first quarter of 2017, Synovus recorded restructuring charges of $6.5 million consisting primarily of termination benefits incurred in conjunction with a voluntary early retirement program offered during the quarter. This program was part of Synovus' ongoing efficiency initiatives. During the first half of 2016, Synovus recorded restructuring charges of $7.0 million consisting primarily of asset impairment charges related to corporate real estate optimization activities and branch closures.

At June 30, 2017,2018, total loans were $24.43$25.13 billion, an increase of $574.1$346.6 million, or 4.9%2.8% annualized, and $1.37 billion$703.5 million or 5.9%2.9%, compared to December 31, 20162017 and June 30, 2016,2017, respectively. Year-over-year loan growth was driven by a $795.5$532.5 million or 7.3%4.5% increase in C&I loans and a $666.0$945.8 million or 14.4%17.9% increase in consumer loans, with our lending partnerships growing $744.4 million and mortgage loans growing $280.3 million. This growth was partially offset by a $93.4$778.1 million or 1.2%10.5% decline in CRE loans.
During the second quarter of 2017,2018, total average deposits increased $72.9$480.0 million, or 1.2%7.5% annualized, compared to the first quarter of 2017,2018, and increased $1.38$1.28 billion, or 5.9%5.1%, compared to the second quarter of 2016.2017. Average brokered deposits declined $29.0 million compared to the prior quarter. Average core transaction deposits, during the second quarter of 2018, increased $261.3$509.0 million, or 5.8%8.6% annualized, compared to the prior quarter, and were up $1.56 billion,increased $733.0 million, or 9.3%3.1%, compared to the second quarter of 2016.2017. During the first quarter of 2018, Synovus obtained FDIC approval to report deposits related to our sweep money market product, offered by Synovus Securities, as a component of core deposits. This product was reported as a brokered deposit through February of 2018. The second quarter average balance in these accounts totaled $310.0 million, and resulted in an increase of $198.0 million in average core deposits for the three months ended June 30, 2017 comparedquarter, due to the three months ended June 30, 2016 was due to growth in average core transaction deposits, which represented 73.7% of average deposits for the second quarter of 2017 compared to 71.4% a year ago.reclassification. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
During January 2016,On June 21, 2018, Synovus repurchased $124.7completed a public offering of $200 million of its subordinated notes that maturedFixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the redemption of all of the outstanding shares of Series C Preferred Stock on June 15, 2017 in conjunction with Synovus' cash tender offer that commenced on DecemberAugust 1, 2018 for an aggregate redemption price of $130 million.
On January 23, 2015 and expired on January 22, 2016. Results for the six months ended June 30, 2016 included2018, Synovus announced a $4.7 million pre-tax loss relating to this tender offer.
During the six months ended June 30, 2017, Synovus repurchased $45.3 million in common stock under the current share repurchase program which authorizes repurchases of up to $200$150 million to be completed during 2018. As of the Company'sJune 30, 2018, Synovus had repurchased under this program a total of $76.8 million, or 1.5 million shares of its common stock, to be executed during 2017.at an average price of $52.72 per share. Additionally, during the first quarter of 2017,2018, Synovus increased the quarterly common stock dividend by 25%67% to $0.15$0.25 per share effective with the quarterly dividend declared during the first quarter of 2017.2018. Total shareholders'shareholders’ equity was $3.00 billion at June 30, 2017, compared to $2.93 billion at December 31, 2016, and $2.95$3.17 billion at June 30, 2016.2018 and $3.0 billion at December 31, 2017. Return on average common equity annualized for the second quarter of 2018 was 10.34% at June 30, 2017, compared to 9.42% at December 31, 2016, and 8.26% at June 30, 2016. Return15.39%, an increase of 505 basis points from the same period in 2017. Adjusted return on average common equity annualized for the second quarter of 2018 was 15.59%, an improvement of 510 basis points from the same period in 2017. Adjusted return on average tangible common equity annualized for the second quarter of 2018 was 10.62% at June 30, 2017, compared to 9.65% at December 31, 2016, and 8.33% at June 30, 2016. 15.97%, an increase of 522 basis points from the same period in 2017. See "Non-GAAPNon-GAAP Financial Measures" in this Report for applicable reconciliation to the most comparable GAAP measures.
2018 Expectations
For the full year 2018 as compared to the full year 2017, management expectations are noted below:
Average loan growth of 4% to 6%
Average total deposits growth of 4% to 6%
Net interest income growth of 11% to 13%
•
Adjusted non-interest income(1) growth of 4% to 6%
Total non-interest expense growth of 0% to 3%
Effective income tax rate of 23% to 24%
Net charge-off ratio of 15 to 25 bps
Common share repurchases of up to $150 million
(1)See Non-GAAP Financial Measures" in this Report for applicable reconciliation to the most comparable GAAP measure.

2017 Outlook
For 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%
Total non-interest expense growth of 2% to 4%
Effective income tax rate of 34% to 35%
Net charge-off ratio 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 six months ended June 30, 2017,2018, total assets increased $584.0$518.5 million from $30.10$31.22 billion at December 31, 20162017 to $30.69$31.74 billion. The principal componentcomponents of this increase waswere an increase in loans, net of deferred fees and costs, of $574.1 million. Additionally, investment securities available for sale, at fair value, increased by $108.9$346.6 million and Synovus increased its investmentan increase in BOLI policies by $75.0 million duringinterest bearing funds with the six months ended June 30, 2017.Federal Reserve of $152.2 million. An increase of $570.8$294.8 million in deposits and Synovus' $200 million preferred stock issuance completed on June 21, 2018 provided the primary funding source for the growth in loans and investments.assets.

Loans
The following table compares the composition of the loan portfolio at June 30, 2017,2018, December 31, 2016,2017, and June 30, 2016.2017.
(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
June 30, 2018 December 31, 2017 
June 30, 2018 vs.
December 31, 2017 % Change(1)
 June 30, 2017 
June 30, 2018 vs.
June 30, 2017
% Change
Commercial, financial and agricultural$7,271,080
 $7,179,487
 2.6 % $6,993,817
 4.0 %
Owner-occupied5,004,392
 4,844,163
 6.7
 4,749,128
 5.4
Total commercial and industrial12,275,472
 12,023,650
 4.2
 11,742,945
 4.5
Investment properties$6,035,663
 5,869,261
 5.7 % 5,850,970
 3.2 %5,509,596
 5,670,065
 (5.7) 6,035,664
 (8.7)%
1-4 family properties835,620
 887,307
 (11.7) 967,334
 (13.6)720,710
 781,619
 (15.7) 836,826
 (13.9)
Land and development542,988
 609,406
 (22.0) 689,391
 (21.2)413,865
 483,604
 (29.1) 549,744
 (24.7)
Total commercial real estate7,414,271
 7,365,974
 1.3
 7,507,695
 (1.2)6,644,171
 6,935,288
 (8.5) 7,422,234
 (10.5)
Commercial, financial and agricultural7,000,573
 6,915,927
 2.5
 6,596,835
 6.1
Owner-occupied4,750,335
 4,636,016
 5.0
 4,358,595
 9.0
Total commercial and industrial11,750,908
 11,551,943
 3.5
 10,955,430
 7.3
Home equity lines1,563,167
 1,617,265
 (6.7) 1,657,109
 (5.7)1,453,855
 1,514,227
 (8.0) 1,563,167
 (7.0)
Consumer mortgages2,470,665
 2,296,604
 15.3
 2,132,114
 15.9
2,750,935
 2,633,503
 9.0
 2,470,665
 11.3
Credit cards225,900
 232,413
 (5.7) 236,034
 (4.3)238,424
 232,676
 5.0
 225,900
 5.5
Other consumer loans1,031,639
 818,183
 52.6
 600,153
 71.9
1,793,916
 1,473,451
 43.9
 1,031,639
 73.9
Total consumer5,291,371
 4,964,465
 13.3
 4,625,410
 14.4
6,237,130
 5,853,857
 13.2
 5,291,371
 17.9
Total loans24,456,550
 23,882,382
 4.8
 23,088,535
 5.9
25,156,773
 24,812,795
 2.8
 24,456,550
 2.9
Deferred fees and costs, net(26,038) (25,991) 0.4
 (27,627) (5.8)(22,717) (25,331) (20.8) (26,038) (12.8)
Total loans, net of deferred fees and costs$24,430,512
 23,856,391
 4.9 % 23,060,908
 5.9 %$25,134,056
 $24,787,464
 2.8 % $24,430,512
 2.9 %
                  
(1) Percentage changes are annualized
At June 30, 2017,2018, total loans were $24.43$25.13 billion, an increase of $574.1$346.6 million, or 4.9%2.8% annualized, and $1.37 billion$703.5 million or 5.9%2.9%, compared to December 31, 20162017 and June 30, 2016,2017, respectively. Year-over-year loan growth was driven by a $795.5$532.5 million or 7.3%4.5% increase in C&I loans and a $666.0$945.8 million or 14.4%17.9% increase in consumer loans, with our lending partnerships growing $744.4 million and mortgage loans growing $280.3 million. This growth was partially offset by a $93.4$778.1 million or 1.2%10.5% decline in CRE loans.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at June 30, 20172018 were $19.17$18.92 billion, or 78.4%75.3% of the total loan portfolio, compared to $18.92$18.96 billion,, or 79.2%76.5%, at December 31, 20162017 and $18.46$19.17 billion, or 80.0%78.4%, at June 30, 2016.2017.
At June 30, 20172018 and December 31, 2016,2017, Synovus had 2730 and 2925, respectively, commercial loan relationships respectively, with total commitments of $50 million or more (including amounts funded). The average funded balance of these relationships atwas approximately $35 million for both June 30, 20172018 and December 31, 2016 was approximately $34 million.2017.
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 marketportfolio. The following table shows the composition of the 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 the following table (aggregatedportfolio 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 divisionsmarkets and the Corporate Banking Group to commercial customers primarily to finance capital expenditures, including real property, plant and equipment, or as a source of working capital. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. As of June 30, 2017,2018, 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$12.28 billion, representing 48.1%48.8% of the total loan portfolio, grew $199.0$251.8 million, or 3.5%4.2% annualized, from December 31, 20162017 and $795.5$532.5 million, or 7.3%4.5%, from June 30, 2016.2017. 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.was broad-based, driven by small business, premium finance, and senior housing.

Commercial and Industrial Loans by IndustryJune 30, 2017 December 31, 2016June 30, 2018 December 31, 2017
(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%$2,863,586
 23.3% $2,764,907
 23.0%
Manufacturing928,275
 7.9
 872,559
 7.5
1,015,076
 8.3
 930,751
 7.7
Retail trade870,760
 7.4
 905,083
 7.8
840,398
 6.8
 857,348
 7.1
Real estate and rental and leasing805,709
 6.9
 771,188
 6.7
828,961
 6.8
 851,303
 7.1
Finance and insurance722,162
 6.1
 764,811
 6.6
782,753
 6.4
 780,279
 6.5
Other services778,208
 6.3
 761,916
 6.3
Professional, scientific, and technical services711,833
 6.1
 681,529
 5.9
727,213
 5.9
 771,809
 6.4
Wholesale trade705,147
 6.0
 645,124
 5.6
687,157
 5.6
 675,741
 5.6
Real estate other587,531
 5.0
 517,426
 4.5
597,073
 4.9
 586,707
 4.9
Accommodation and food services537,025
 4.6
 530,232
 4.6
586,609
 4.8
 562,877
 4.7
Construction464,747
 3.9
 465,632
 4.0
536,779
 4.4
 500,091
 4.2
Transportation and warehousing423,253
 3.6
 397,357
 3.4
494,487
 4.0
 427,608
 3.6
Other industries452,432
 3.7
 438,312
 3.6
Agriculture, forestry, fishing, and hunting373,340
 3.2
 387,589
 3.4
322,286
 2.6
 349,181
 2.9
Administration, support, waste management, and remediation272,302
 2.3
 287,391
 2.5
263,902
 2.1
 273,189
 2.3
Educational services239,964
 2.0
 222,516
 1.9
259,170
 2.1
 259,367
 2.2
Information222,223
 1.9
 240,437
 2.1
239,382
 2.0
 232,264
 1.9
Other services802,345
 6.8
 810,437
 7.0
Other industries443,656
 3.8
 458,060
 4.0
Total commercial and industrial loans$11,750,908
 100.0% $11,551,943
 100.0%$12,275,472
 100.0% $12,023,650
 100.0%
              
(1) Loan balance in each category expressed as a percentage of total C&I loans.
At June 30, 2017, $7.002018, $7.27 billion of C&I loans, or 28.7%28.9% of the total loan portfolio, represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, cash surrender value of life insurance, and other business assets.
At June 30, 2017, $4.752018, $5.00 billion of C&I loans, or 19.4%19.9% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. The primary sourcefinancing of repaymentowner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on these loans is revenue generatedcash flow from products or services offered byoperations of the business or organization.to repay the debt. The secondary source of repayment on these loans is the underlying real estate. These loans are predominately secured by owner-occupied 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$6.64 billion, representing 30.3%26.4% of the total loan portfolio, increased $48.3decreased $291.1 million, or 1.3%8.5% annualized, from December 31, 20162017 and decreased $93.4$778.1 million, or 1.2%10.5%, from June 30, 2016.2017. The $291.1 million decline from a year ago was driven by strategic reductionsa $160.5 million decrease in 1-4 family properties as well as landthe Investment Properties portfolio and development loans, partially offset by growtha $69.7 million decrease in investment properties.the non-strategic Land and Development portfolio. The decline in CRE is largely the result of the continued higher velocity of pay-off activity across the portfolio.
Investment Properties 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.commercial development properties. Total investment properties loans as of June 30, 20172018 were $6.04$5.51 billion,, or 81.4%82.9% of the total CRE portfolio and 24.7%21.9% of the total loan portfolio, compared to $5.87$5.67 billion, or 79.7%81.8% of the total CRE portfolio and 24.6%22.9% of the total loan portfolio at December 31, 2016, an increase2017, a decrease of $166.4$160.5 million, or 5.7% annualized driven by strong growthprimarily due to a decline in theoffice buildings and multi-family investment property category.properties. Synovus' investment properties portfolio is well diversified by property type, geography (primarily within Synovus' primary market areas of Georgia, Alabama, Tennessee, South Carolina, Florida, and Florida)Tennessee), and tenants. The investment properties loans are primarily secured by the property being financed by the loans; however, these loans may also be secured by real estate or other assets beyond the property being financed.
1-4 Family Properties Loans
1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans to real estate investors and are almost always secured by the underlying property being financed by such loans. These properties are primarily located

in the markets served by Synovus. Construction loans are generally interest-only loans and typically have maturities of three years or less, and commercial mortgage loans generally have maturities of three to five years, with amortization periods of up to fifteen

to twenty years. At June 30, 2017,2018, 1-4 family properties loans totaled $835.6$720.7 million,, or 11.3%10.8% of the total CRE portfolio and 3.4%2.9% of the total loan portfolio, compared to $887.3$781.6 million, or 12.0%11.3% of the total CRE portfolio and 3.7%3.2% of the total loan portfolio at December 31, 2016.2017.
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 valueLTV of the collateral and the capacity of the guarantor(s). Total land and development loans were $543.0$413.9 million at June 30, 2017,2018, or 2.2%1.6% of the total loan portfolio, a decline of $66.4$69.7 million, or 22.0%29.1% annualized, from December 31, 2016.2017. 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 June 30, 20172018 totaled $5.29$6.24 billion, representing 21.6%24.8% of the total loan portfolio compared to $4.96$5.85 billion,, or 20.8%23.6% of the total loan portfolio at December 31, 2016,2017, and $4.63$5.29 billion, or 20.0%21.7% of the total loan portfolio at June 30, 2016.2017. Consumer loans increased $326.9$383.3 million, or 13.3%13.2% annualized, from December 31, 20162017 and $666.0$945.8 million, or 14.4%17.9%, from June 30, 2016 as a result of the strategic initiative to diversify the composition of the loan portfolio.2017. Consumer mortgages grew $174.1$117.4 million or 15.3%9.0% annualized, from December 31, 2016,2017, and $338.6$280.3 million, or 15.9%11.3%, from June 30, 2016 primarily due to2017 given solid production in the private wealth management and physician categories as well as the continued recruitingaddition 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.originators. HELOCs decreased $60.4 million or 8.0% from December 31, 2017. Credit card loans totaled $225.9$238.4 million at June 30, 2017,2018, including $58.4$67.8 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$320.5 million, or 52.6%43.9% annualized, from December 31, 2016,2017, and $431.5$762.3 million, or 71.9%73.9%, from June 30, 20162017 primarily 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 June 30, 2017,2018, these partnerships had combined balances of $699.5 million,$1.4 billion, or 2.9%5.7% of the total loan portfolio.
Consumer loans, including those through our lending partnerships, are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores. Synovus makes consumer lending decisions based upon a number of key credit risk determinants including FICO scores as well as loan-to-value and debt-to-income ratios. Risk levels 1-6 (descending) are assigned to consumer loans based upon a risk score matrix. At least annually, the consumer loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores so that management can evaluate ongoing consistency or negative migration in the quality of the portfolio, which impacts the allowance for loan losses. The most recent credit score refresh was completed as of June 30,December 31, 2017. Revolving lines of credit are regularlywere 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,As of the most recent FICO score refresh on March 31, 2018, weighted-average FICO scores within the residential real estate portfolio were 761774 for HELOCs and 770785 for consumer mortgages. Conservative debt-to-income ratios (average HELOC debt to income ratio of loans originated) were maintained in the 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 53.7% and 58.3% 55.6% at June 30, 20172018 and December 31, 2016, respectively, and2017, respectively. Additionally, we maintained loan-to-value ratios based upon prudent guidelines were maintained to ensure consistencyconsistency with Synovus' overall risk philosophy. At June 30, 2017, 36%2018, 35% of home equity line balances were secured by a first lien, and 64% were65% 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 develop or offer specific higher-risk consumer loans,sub-prime, alt-A, no documentation or stated income residential real estate loan products. Synovus estimates that, as of June 30, 2017,2018, it had $100.7$83.7 million of higher-risk consumer loans (1.9%(1.3% of the consumer portfolio and 0.4%0.3% of the total loan portfolio) compared to $108.8$100.7 million as of June 30, 2016.2017. Included in these amounts as of both June 30, 20172018 and 20162017 are approximately $9 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)
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
Interest bearing demand deposits 4,837,053
 19.4
 4,784,329
 19.2 4,488,135
 18.2 4,233,310
 17.9
Money market accounts, excluding brokered deposits 7,427,562
 29.7
 7,424,627
 29.8 7,359,067
 29.8 7,082,759
 30.0
Savings deposits 805,019
 3.2
 909,660
 3.7 908,725
 3.7 746,225
 3.2
Time deposits, excluding brokered deposits 3,243,670
 13.0
 3,245,306
 13.0 3,244,373
 13.2 3,278,396
 13.9
Brokered deposits 1,379,559
 5.5
 1,380,787
 5.5 1,380,932
 5.6 1,337,001
 5.6
Total average deposits 24,991,708
 100.0% 24,918,855
 100.0 24,661,265
 100.0 23,608,027
 100.0
Average core deposits(2)    
 23,612,149
 94.5
 23,538,068
 94.5 23,280,334
 94.4 22,271,027
 94.3
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
                 
 Composition of Average Deposits
 
 (dollars in thousands)June 30, 2018 
%(1)
 March 31, 2018 
%(1)
 December 31, 2017 
%(1)
 June 30, 2017 
%(1)
 Non-interest bearing demand deposits$7,539,451
 28.7% $7,391,696
 28.7% $7,621,147
 29.0% $7,298,845
 29.2%
 Interest bearing demand deposits5,001,825
 19.0
 5,032,000
 19.5
 4,976,239
 18.9
 4,837,053
 19.4
 Money market accounts, excluding brokered deposits7,791,107
 29.7
 7,561,554
 29.3
 7,514,992
 28.6
 7,427,562
 29.7
 Savings deposits829,800
 3.2
 811,588
 3.1
 804,853
 3.0
 805,019
 3.2
 Time deposits, excluding brokered deposits3,182,974
 12.1
 3,039,325
 11.8
 3,170,445
 12.1
 3,243,670
 13.0
 Brokered deposits1,922,917
 7.3
 1,951,910
 7.6
 2,198,333
 8.4
 1,379,559
 5.5
 Total average deposits$26,268,074
 100.0% $25,788,073
 100.0% $26,286,009
 100.0% $24,991,708
 100.0%
 
Average core deposits (2)    
$24,345,157
 92.7% $23,836,163
 92.4% $24,087,676
 91.6% $23,612,149
 94.5%
                 
(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 second quarter of 2017,2018, total average deposits increased $72.9$480.0 million, or 1.2%7.5% annualized, compared to the first quarter of 2017,2018, and increased $1.38$1.28 billion, or 5.9%5.1%, compared to the second quarter of 2016.2017. Average brokered deposits declined $29.0 million compared to the prior quarter. Average core transaction deposits, during the second quarter of 2018, increased $261.3$509.0 million, or 5.8%8.6% annualized, compared to the prior quarter, and were up $1.56 billion,increased $733.0 million, or 9.3%3.1%, compared to the second quarter of 2016.2017. During the first quarter of 2018, Synovus obtained FDIC approval to report deposits related to our sweep money market product, offered by Synovus Securities, as a component of core deposits. This product was reported as a brokered deposit through February of 2018. The second quarter average balance in these accounts totaled $310.0 million, and resulted in an increase of $198.0 million in average core deposits for the three months ended June 30, 2017 comparedquarter, due to the three months ended June 30, 2016 was due to growth in average core transaction deposits, which represented 73.7% of average deposits for the second quarter of 2017 compared to 71.4% a year ago.reclassification. 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 28.7% for both the three months ended June 30, 2018 and three months ended March 31, 2018 and 29.2% for the three months ended June 30, 2017, compared to 28.8% for the three months ended March 31, 2017, and 29.4% for the three months ended June 30, 2016.2017.
Average time deposits of $100,000 and greater for the three months ended June 30, 2017,2018, March 31, 2017,2018, and June 30, 20162017 were $2.86$3.68 billion, $2.79$3.42 billion, and $2.90$2.86 billion, respectively, and included average brokered time deposits of $815.5 million, $761.2 million,$1.66 billion, $1.53 billion, and $885.6$815.5 million, respectively. These larger deposits represented 11.4%14.0%, 11.2%13.3%, and 12.3%11.4% of total average deposits for the three months ended June 30, 2017,2018, March 31, 2017,2018, and June 30, 2016,2017, respectively, and included brokered time deposits which represented 3.3%6.3%, 3.1%5.9%, and 3.8%3.3% of total average deposits for the three months ended June 30, 2017,2018, March 31, 2017,2018, and June 30, 2016,2017, respectively. Given the growth in core transaction deposits, Synovus continues to decrease its reliance on higher cost time deposits.
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 million as of June 30, 2017. 

During the second quarter of 2017,2018, total average brokered deposits represented 5.5%7.3% of Synovus' total average deposits compared to 5.5%7.6% and 5.6%5.5% of total average deposits the previous quarter and the second quarter a year ago, respectively.

Non-interest Income
Non-interest income for the first six and three months ended June 30, 2017of 2018 was $140.4 million compared to $140.5 million and $68.7for the first six months of 2017. Non-interest income for the second quarter of 2018 was $73.4 million, respectively, up $9.5$4.7 million, or 7.3%, and up $815 thousand, or 1.2%6.8%, compared to the six and three months ended June 30, 2016, respectively.second quarter of 2017. Adjusted non-interest income, which excludes net investment securities gains (losses) and decrease in fair value of private equity investments, net was up $4.8$8.8 million, or 3.7%, and up $2.3 million, or 3.4%6.5%, for the first six months of 2018 compared to 2017 and three months ended June 30, 2017,up $4.7 million, or 6.7%, for the second quarter of 2018 compared to the second quarter of 2017. Synovus experienced growth in multiple categories during the first half of 2018 compared to the same periods a year ago.time period in 2017 including an increase of $6.6 million, or 16.0%, in combined fiduciary and asset management fees, brokerage, and insurance revenues. See "Non-GAAP"Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" inof 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,
Non-interest incomeSix Months Ended June 30, Three Months Ended June 30,
(in thousands)2017 2016 % Change 2017 2016 % Change2018 2017 % Change 2018 2017 % Change
Service charges on deposit accounts$39,593
 39,950
 (0.9)% $19,820
 20,240
 (2.1)%$39,938
 $40,370
 (1.1)% $19,999
 $20,252
 (1.2)%
Fiduciary and asset management fees24,676
 22,854
 8.0
 12,524
 11,580
 8.2
27,419
 24,676
 11.1
 13,983
 12,524
 11.6
Card fees21,032
 19,885
 5.8
 10,833
 10,041
 7.9
Brokerage revenue14,436
 13,821
 4.4
 7,210
 7,338
 (1.7)17,596
 14,436
 21.9
 8,900
 7,210
 23.4
Mortgage banking income11,548
 11,425
 1.1
 5,784
 5,941
 (2.6)9,887
 11,548
 (14.4) 4,839
 5,784
 (16.3)
Bankcard fees16,438
 16,718
 (1.7) 8,253
 8,346
 (1.1)
Investment securities gains (losses), net7,667
 67
 nm
 (1) —
 nm
Income from bank-owned life insurance7,949
 6,328
 25.6
 3,733
 3,272
 14.1
Investment securities (losses) gains, net(1,296) 7,667
 nm
 (1,296) (1) nm
Decrease in fair value of private equity investments, net(3,166) (278) nm
 (1,352) 113
 nm
(3,093) (3,166) nm
 (37) (1,352) nm
Other fee income11,033
 10,084
 9.4
 6,164
 5,280
 16.7
9,877
 11,033
 (10.5) 5,259
 6,164
 (14.7)
Other non-interest income18,314
 16,392
 11.7
 10,299
 9,048
 13.8
11,124
 7,762
 43.3
 7,174
 4,807
 49.2
Total non-interest income$140,539
 131,033
 7.3 % $68,701
 67,886
 1.2 %$140,433
 $140,539
 (0.1)% $73,387
 $68,701
 6.8 %
                      
Principal Components of Non-interest Income
Service charges on deposit accounts for the six and three months ended June 30, 20172018 were down $357$432 thousand, or 0.9%1.1%, and down $420$253 thousand, or 2.1%1.2%, respectively, compared to the six and three months ended June 30, 2016.2017. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were $17.9 million and $8.9 million for the six and three months ended June 30, 2017, respectively,2018 were down $411$267 thousand, or 2.2%1.5%, and $249$241 thousand, or 2.7%, respectively, compared to the six and three months ended June 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.2017. Account analysis fees were $12.3 million and $6.2 million for the six and three months ended June 30, 2017, respectively,2018 were up $260$171 thousand, or 2.2%1.4%, and down $35$284 thousand, or 0.6%4.6%, respectively, compared to the six and three months ended June 30, 2016, respectively.2017. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposit and saving accounts, for the six and three months ended June 30, 20172018 were $9.4 million and $4.7 million, down $207$336 thousand, or 2.2%3.3%, and $136$297 thousand, or 2.8%5.8%, compared to the same periods in 2016.2017.
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$2.7 million, or 8.0%11.1%, and $944 thousand,$1.5 million, or 8.2%11.6%, for the six and three months ended June 30, 2017,2018, respectively, compared to the six and three months ended June 30, 2016.2017. The year-over-year increase iswas driven by growth in totalassets under management. Total assets under management which ended the quarter at $12.43(including brokerage assets under management) increased by 16% year-over-year to approximately $14.4 billion, an increase of 10.3% from June 30, 2016, from higher equity marketsdue to overall market conditions, increased productivity as well as increased banker productivity, as Synovus continues to benefit fromthe addition of new talent additions.talent.
Brokerage revenue, which consists primarily of brokerage commissions, was $14.4Card fees totaled $21.0 million and $7.2$10.8 million for the six and three months ended June 30, 2017,2018, respectively, compared to $19.9 million and $10.0 million for the same periods in 2017. Card fees consist primarily of credit card interchange fees, debit card interchange fees, and merchant discounts. Card fees are reported net of certain associated expense items including customer loyalty program expenses and network expenses.
Brokerage revenue was $17.6 million and $8.9 million for the six and three months ended June 30, 2018, respectively, up $615 thousand,$3.2 million, or 4.4%21.9%, and down $128 thousand,up $1.7 million, or 1.7%23.4%, compared to the six and three months ended June 30, 2016,2017, respectively. The increase for the first half ofin 2018 from 2017 compared to the first half of 2016 iswas largely driven by growth in brokerage assets under management which ended the quarter at $2.12 billion, an increase of 19.4% from June 30, 2016, as well as increased banker productivity, as Synovus continuesdue primarily to benefit from new talent additions. Brokerage revenue consists primarily of brokerage commissions. Additionally, brokerage revenue includes advisory fees earned from the management of customer assets.

Mortgage banking income was $11.5decreased $1.7 million, or 14.4%, and $5.8$945 thousand, or 16.3%, compared to the six and three months ended June 30, 2017, respectively, reflecting softer production volume in a rising interest rate environment.
Income from bank-owned life insurance increased $1.6 million, or 25.6%, and $461 thousand, or 14.1%, compared to the six and three months ended June 30, 2017, respectively, due to additional investments in bank-owned life insurance policies during the first quarter of 2017, increases in the cash surrender value of these policies, and death benefits.
Investment securities losses of $1.3 million for the six and three months ended June 30, 2017, respectively, compared2018 included a loss of $1.3 million from a strategic sale to $11.4 million and $5.9 million for the same periods in 2016. During the second quarter of 2017, mortgage production

excludingimprove portfolio loan production increased 7.2% sequentially and declined 7.2% from the same time period in 2016, reflecting a decline in refinancing volume. Total mortgage production for the first half of 2017 was $635.9 million (which includes $310.0 million of portfolio loans), down 0.8% from the first half of 2016.
Bankcard fees totaled $16.4 million and $8.3 million for the six and three months ended June 30, 2017, respectively, compared to $16.7 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 million, up $105 thousand, or 1.2%, and $4.4 million, up $70 thousand, or 1.6%, for the six and three months ended June 30, 2017, respectively, compared to the same periods in 2016. Credit card interchange fees were $11.1 million, down $108 thousand, or 1.0%, and $5.6 million, down $100 thousand, or 1.7%, for the six and three months ended June 30, 2017, respectively, compared to the same periods in 2016.
performance. Investment securities gains, net of $7.7 million for the six months ended June 30, 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.
Private equity investments consist of an equity method investment in a venture capital fund. The net loss of $3.1 million for the first half of 2018 consisted mostly of net unrealized losses on certain investments within the fund. The net loss of $3.2 million during the first half of 2017 consisted mostly of realized losses on sales of investments within the fund.
Other 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 higherlower by $949$1.2 million, or 10.5%, and $905 thousand, or 9.4%14.7%, and $884 thousand, or 16.7%, forcompared to the six and three months ended June 30, 2017, respectively, compareddue primarily to the same periods in 2016 driven by higher customer swap dealer fees and syndication arranger fees.fees in 2017.
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 $1.9Other non-interest income was up $3.4 million, or 11.7%43.3%, and $1.3$2.4 million, or 13.8%49.2%, compared to the six and three months ended June 30, 2017, respectively, due primarily to higher insurance commissions, higher gains on sales of GGL/SBA loans, and miscellaneous items.
Non-interest Expense
Non-interest expense for the first six months of 2018 increased $10.1 million, or 2.6%, compared to the first six months of 2017 and non-interest expense for the second quarter of 2018 increased $12.3 million, or 6.4%, compared to the second quarter of 2017. The second quarter of 2018 included a $2.3 million expense for a valuation adjustment to the Visa derivative offset in part by a $1.4 million benefit from a recovery of litigation settlement expense. The first quarter of 2018 included a $2.6 million reduction in litigation contingency accruals and the first quarter of 2017 included $6.5 million in restructuring charges. Adjusted non-interest expense, which excludes valuation adjustment to Visa derivative, restructuring charges, net, amortization of intangibles, and litigation settlement/contingency expense increased $18.5 million, or 4.8%, for the first half of 2018 compared to the first half of 2017. Strong operating leverage for the first half of 2018 resulted in an efficiency ratio of 56.97%, improved from 62.31% for the first half of 2017. The adjusted efficiency ratio for the first six months of 2018 was 56.90%, down 397 basis points from the same period a year ago. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" of this Report for applicable reconciliation to GAAP measures.
The following table summarizes the components of non-interest expense.
Non-interest Expense

           
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2018 2017 % Change 2018 2017 % Change
Salaries and other personnel expense$225,583
 $212,404
 6.2 % $111,863
 $105,213
 6.3 %
Net occupancy and equipment expense64,134
 59,264
 8.2
 32,654
 29,933
 9.1
Third-party processing expense29,012
 26,223
 10.6
 15,067
 13,620
 10.6
FDIC insurance and other regulatory fees13,335
 13,645
 (2.3) 6,543
 6,875
 (4.8)
Professional fees11,789
 12,907
 (8.7) 6,284
 7,551
 (16.8)
Advertising expense10,312
 11,258
 (8.4) 5,220
 5,346
 (2.4)
Valuation adjustment to Visa derivative2,328
 —
 nm
 2,328
 —
 nm
Foreclosed real estate expense, net749
 3,582
 (79.1) (107) 1,448
 (107.4)
Earnout liability adjustment—
 1,707
 nm
 —
 1,707
 nm
Restructuring charges, net(212) 6,524
 nm
 103
 13
 nm
Other operating expenses42,204
 41,619
 1.4
 24,102
 20,041
 20.3
Total non-interest expense$399,234
 $389,133
 2.6 % $204,057
 $191,747
 6.4 %
            
Salaries and other personnel expenses increased $13.2 million, or 6.2%, and $6.7 million, or 6.3%, for the six and three months ended June 30, 2018, respectively, compared to the same periods in 2017, primarily due to talent additions and higher incentive compensation expense.
Net occupancy and equipment expense increased $4.9 million, or 8.2%, and $2.7 million, or 9.1%, during the six and three months ended June 30, 2017,2018, respectively, compared to the same periods in 2016, was due2017 driven primarily to growth in BOLI revenues, gains on sales of GGL/SBA loans, and insurance revenues. BOLI revenues grew $1.5 million and $863 thousand during the six and three months ended June 30, 2017, respectively, driven by additional investments in BOLI policies. Gains from the sale of GGL/SBA loans were up $1.2 million compared to 2016 on a year-to-date basis and for the second 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 in 2016.
Non-interest Expense
Non-interest expense for the six and three months ended June 30, 2017 was $389.1 million and $191.7 million, respectively, compared to $376.8 million and $188.6 million for the six and three months ended June 30, 2016, respectively. Adjusted non-interest expense for the six and three months ended June 30, 2017, which excludes restructuring charges, net, loss on early extinguishment of debt, net, litigation settlement expense, merger-related expense, fair value adjustment to Visa derivative, and amortization of intangibles, increased $20.5 million, or 5.7%, and $9.0 million, or 5.0%, compared to the same periods in 2016, respectively. Synovus has generated 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 million and $5 million of the increase for the six and three months ended June 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 million and $1.2 million for the six and three months ended June 30, 2017, respectively, compared to the same periods in 2016, and Global One operating expenses accounted for $1.8 million and $568 thousand of the increase compared to the six and three months ended June 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 million and $1.9 million compared to the six and three months ended June 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 six and three months ended June 30, 2017 and 2016.
Non-interest Expense

           
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2017 2016 % Change 2017 2016 % Change
Salaries and other personnel expense$212,404
 198,419
 7.0 % $105,213
 97,061
 8.4 %
Net occupancy and equipment expense59,264
 53,360
 11.1
 29,933
 26,783
 11.8
Third-party processing expense26,223
 22,814
 14.9
 13,620
 11,698
 16.4
FDIC insurance and other regulatory fees13,645
 13,344
 2.3
 6,875
 6,625
 3.8
Professional fees12,907
 13,307
 (3.0) 7,551
 6,938
 8.8
Advertising expense11,258
 9,761
 15.3
 5,346
 7,351
 (27.3)
Foreclosed real estate expense, net3,582
 7,272
 (50.7) 1,448
 4,588
 (68.4)
Earnout liability adjustment1,707
 —
 nm
 1,707
 —
 nm
Merger-related expense86
 —
 nm
 —
 —
 —
Loss on early extinguishment of debt, net—
 4,735
 nm
 —
 —
 —
Fair value adjustment to Visa derivative—
 720
 nm
 —
 360
 nm
Restructuring charges, net6,524
 6,981
 (6.5) 13
 5,841
 nm
Other operating expenses41,533
 46,131
 (10.0) 20,041
 21,366
 (6.2)
Total non-interest expense$389,133
 376,844
 3.3 % $191,747
 188,611
 1.7 %
            
Salaries and other personnel expenses increased $14.0 million, or 7.0%, and $8.2 million, or 8.4%, for the six and three months ended June 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 million, or 11.1%, and $3.2 million, or 11.8%, for the six and three months ended June 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 248 locations at June 30, 2017 compared to 253 branches a year ago.   investments. 
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$2.8 million, or 14.9%10.6%, and $1.9$1.4 million, or 16.4%10.6%, forduring the six and three months ended June 30, 2017,2018, respectively, compared to the same periods in 2016, driven by2017. The increase is primarily due to an increase of $2.2$2.5 million and $1.2$1.1 million for the six and three months ended June 30, 2017,2018, respectively, compared to the same periods in 2016,2017, from servicing chargesservicing fees associated with loan growth from Synovus' two consumer-based lending partnerships.
FDIC insurance and other regulatory fees increased by $301 thousand, or 2.3%, and $250 thousand, or 3.8%, forDuring the six and three months ended June 30, 2017, compared2018, Synovus recorded a $2.3 million valuation adjustment 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 requiredVisa derivative following Visa's announcement on June 26, 2018 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 banksit 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.deposit $600 million into its litigation escrow account.
Professional fees forFor the six months ended June 30, 2017 were down $4002018, Synovus recorded net lease termination accrual reversals of $377 thousand or 3.0%, 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 period in 2016, driven by increases in consulting expense 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 periodbranches closed in 2016 due primarily to a timingprior years offset somewhat by other property related increase as Synovus incurred expenses during the first quartercharges 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 six and three months ended June 30, 2017, respectively, compared to the same periods in 2016 due to lower disposition-related costs. ORE balances declined $13.8 million to $19.5 million at June 30, 2017 compared to prior year.
$165 thousand. During the second quarter of 2017, Synovus recorded contingent consideration expense of $1.7 million resulting from an update 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" 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 six months ended June 30, 2016 included a $4.7 million pre-tax loss relating to this tender offer.
    For the six months ended June 30, 2017, Synovus recorded severance charges of $6.5 million including $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered to Synovus employees during the first quarter. This program was partquarter of Synovus' ongoing efficiency initiatives. For2017.
Other operating expenses for the six and three months ended June 30, 2016, Synovus recorded restructuring charges2018 included a benefit of $5.8$4.0 million with $4.8and $1.4 million, of those charges related to Synovus' corporate real estate optimization activitiesrespectively, from recoveries and $1.0 million associated with branch closures. Restructuring charges associated with branch closures during the first quarter of 2016 totaled $1.1 million.
reductions in litigation contingency accruals. Other operating expenses for the six and three months ended June 30, 2017 included a $2.4 million gain from the settlement of a contingent receivable while the six months ended June 30, 2016 included litigation settlement expense of $2.7 million recognized during the first quarter of 2016.
The efficiency ratio improved to below 60% at 59.90% in the second quarter of 2017, down from 65.11% a year ago. The adjusted efficiency ratio was 59.56% in the second quarter of 2107, compared to 63.00% in the second 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 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.receivable.
Income Tax Expense
Income tax expense was $61.1 million and $30.9 million for the six and three months ended June 30, 2018, respectively, representing an effective tax rate of 22.2% and 21.8% for the respective periods. Income tax expense was $75.6 million and $41.8 million for the six and three months ended June 30, 2017, respectively, representing an effective tax ratesrate of 33.8% and 35.5% duringfor the respective periods compared to incomeperiods. The effective tax expense of $64.8 million and $33.6 millionrate is lower for the six and three months ended June 30, 2016, respectively, representing2018 due to Federal Tax Reform that reduced the federal statutory rate from 35% to 21% for tax years beginning after December 31, 2017.
The effective tax ratesrate is affected by many factors including, but not limited to, the level of 36.4%pre-tax income, bank-owned life insurance, tax-exempt interest and 35.7% duringnondeductible expenses. In addition, the respective periods.effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as tax benefits related to share-based compensation, jurisdiction statutory tax rate changes, valuation allowance changes and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.

The effective income tax rate decrease for the first half of 2017 compared to the same period in 2016 was primarily due to adoption of the new accounting standard update for share-based compensation 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 six and three months ended June 30, 2017, the impact from the adoption of the new accounting standard update was an2018 included a net discrete income tax benefit of $4.5$2.8 million predominantly resulting from tax benefits associated with the exercise and $378 thousand, respectively. Synovus currently estimates that the benefit from this accounting standard update for the remaindervesting of 2017 will be less than $1.0 million per quarter.employee equity awards.

CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
Synovus continuously monitors the quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics and maintains an allowance for loan losses that management believes is sufficient to absorb probable losses inherent in its loan portfolio. Credit quality metrics have remained favorable during the first six months of 2017.2018.
The table below includes selected credit quality metrics.
Credit Quality Metrics  
(dollars in thousands)June 30, 2017 December 31, 2016 June 30, 2016June 30, 2018 December 31, 2017 June 30, 2017
Non-performing loans $159,317
 153,378
 154,072
$117,328
 $115,561
 $159,317
Impaired loans held for sale(1)
127
 —
 —
2,733
 11,278
 127
Other real estate19,476
 22,308
 33,289
6,288
 3,758
 19,476
Non-performing assets $178,920
 175,686
 187,361
$126,349
 $130,597
 $178,920
Non-performing loans as a % of total loans0.65% 0.64
 0.67
0.47% 0.47
 0.65
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.73
 0.74
 0.81
0.50
 0.53
 0.73
Loans 90 days past due and still accruing$4,550
 3,135
 5,964
$3,222
 4,414
 4,550
As a % of total loans0.02% 0.01
 0.03
0.01% 0.02
 0.02
Total past due loans and still accruing$66,788
 65,106
 55,716
$55,614
 52,031
 66,788
As a % of total loans0.27% 0.27
 0.24
0.22% 0.21
 0.27
Net charge-offs, quarter$15,679
 8,319
 6,133
$17,829
 8,979
 15,679
Net charge-offs/average loans, quarter0.26% 0.14
 0.11
0.29% 0.15
 0.26
Net charge-offs, year-to-date$22,597
 28,738
 13,490
$22,109
 69,675
 22,597
Net charge-offs/average loans, year-to-date0.19% 0.12
 0.12
0.18% 0.29
 0.19
Provision for loan losses, quarter$10,260
 6,259
 6,693
$11,790
 8,564
 10,260
Provision for loan losses, year-to-date18,934
 28,000
 16,070
24,566
 67,185
 18,934
Allowance for loan losses248,095
 251,758
 255,076
251,725
 249,268
 248,095
Allowance for loan losses as a % of total loans1.02% 1.06
 1.11
1.00% 1.01
 1.02
          
(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 $126.3 million at June 30, 2018, a $4.2 million, or 3.3%, decrease from $130.6 million at December 31, 2017 and a $52.6 million, or 29.4%, decrease from $178.9 million at June 30, 2017, a $3.2 million, or 1.8%, increase from $175.7 million at December 31, 2016 and a $8.4 million, or 4.5%, decrease from $187.4 million at June 30, 2016.2017. The year-over-year decline in non-performing assets was driven by the continued resolution of problem assets, including workouts and dispositions.accelerated dispositions in conjunction with the balance sheet restructuring actions in the third quarter of 2017. Total non-performing assets as a percentage of total loans, other loans held for sale, and other real estate were 0.50% at June 30, 2018 compared to 0.53% at December 31, 2017 and 0.73% at June 30, 2017 compared to 0.74% at December 31, 2016 and 0.81% at June 30, 2016.
Retail Trade Loan Portfolio
As of June 30, 2017, loans in the retail trade industry consisted of $870.8 million of C&I loans and $864.9 million of CRE (investment properties) loans. These portfolios are well-diversified geographically. Based on an analysis of these portfolios as of June 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 June 30, 2017, these portfolios had non-performing loans of $6.0 million, 0.03% of loans past due 90 days or more, and 0.16% of loans past due 30 days or more as a percentage of total retail trade loans outstanding.2017.
Troubled Debt Restructurings
Accruing TDRs were $125.3 million at June 30, 2018, compared to $151.3 million at December 31, 2017 and $167.4 million at June 30, 2017 compared to $195.8 million at December 31, 2016 and $205.2 million at June 30, 2016.. Accruing TDRs declined $28.4$26.0 million, or 14.5%17.2%, from December 31, 20162017 and $37.8$42.1 million, or 18.4%25.1%, from a year ago primarily due to lowercontinued decline in TDR inflows, fewer TDRs having to retain theloans qualifying for removal of TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.

At June 30, 2017,2018, the allowance for loan losses allocated to these accruing TDRs was $8.5$6.5 million compared to $9.8$8.7 millionat December 31, 20162017 and $12.7$8.5 million at June 30, 2016.2017. Accruing TDRs are considered performing because they are performing in accordance with the restructured terms. At June 30, 20172018 and December 31, 2016, 98%2017, 97% 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 at low and consisted of threelevels. There were eight defaults with a recorded investment of $292 thousand for the six months ended June 30, 2017 compared to one default with a recorded investment of $92 thousand2018 and three defaults for the six months ended June 30, 2016.2017.

Accruing TDRs by Risk GradeJune 30, 2017 December 31, 2016 June 30, 2016June 30, 2018 December 31, 2017 June 30, 2017
(dollars in thousands)Amount % Amount % Amount %Amount % Amount % Amount %
Pass$69,943
 41.8% 81,615
 41.7 64,314
 31.3$57,013
 45.5% $57,136
 37.8% $69,943
 41.8%
Special Mention20,550
 12.3
 29,250
 14.9 33,744
 16.519,799
 15.8
 15,879
 10.5
 20,550
 12.3
Substandard accruing76,902
 45.9
 84,911
 43.4 107,107
 52.248,498
 38.7
 78,256
 51.7
 76,902
 45.9
Total accruing TDRs$167,395
 100.0% 195,776
 100.0 205,165
 100.0$125,310
 100.0% $151,271
 100.0% $167,395
 100.0%
                   
Accruing TDRs Aging by Portfolio Class
June 30, 2017June 30, 2018
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total Current 30-89 Days Past Due 90+ Days Past Due Total 
Commercial, financial and agricultural$11,302
 $817
 $—
 $12,119
 
Owner-occupied36,388
 62
 —
 36,450
 
Total commercial and industrial47,690
 879
 —
 48,569
 
Investment properties$27,991
 —
 —
 27,991
 24,218
 —
 —
 24,218
 
1-4 family properties15,483
 397
 —
 15,880
 10,347
 111
 —
 10,458
 
Land and development22,908
 —
 —
 22,908
 15,281
 589
 —
 15,870
 
Total commercial real estate66,382
 397
 —
 66,779
 49,846
 700
 —
 50,546
 
Commercial, financial and agricultural36,248
 1,517
 —
 37,765
 
Owner-occupied34,480
 —
 —
 34,480
 
Total commercial and industrial70,728
 1,517
 —
 72,245
 
Home equity lines6,571
 344
 —
 6,915
 1,312
 1,108
 333
 2,753
 
Consumer mortgages17,193
 538
 —
 17,731
 18,572
 195
 —
 18,767
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans3,669
 56
 —
 3,725
 4,630
 45
 —
 4,675
 
Total consumer27,433
 938
 —
 28,371
 24,514
 1,348
 333
 26,195
 
Total accruing TDRs$164,543
 2,852
 —
 167,395
 $122,050

$2,927
 $333

$125,310
 
                
December 31, 2016December 31, 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 
Commercial, financial and agricultural$33,789
 $1,161
 $44
 $34,994
 
Owner-occupied35,554
 —
 —
 35,554
 
Total commercial and industrial69,343
 1,161
 44
 70,548
 
Investment properties$30,182
 133
 —
 30,315
 21,398
 —
 —
 21,398
 
1-4 family properties22,694
 —
 —
 22,694
 14,865
 191
 —
 15,056
 
Land and development26,015
 10
 —
 26,025
 14,835
 381
 —
 15,216
 
Total commercial real estate78,891
 143
 —
 79,034
 51,098
 572
 —
 51,670
 
Commercial, financial and agricultural31,443
 798
 —
 32,241
 
Owner-occupied52,333
 —
 —
 52,333
 
Total commercial and industrial83,776
 798
 —
 84,574
 
Home equity lines7,526
 412
 —
 7,938
 5,096
 —
 —
 5,096
 
Consumer mortgages18,518
 572
 —
 19,090
 18,588
 80
 —
 18,668
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans5,013
 127
 —
 5,140
 5,097
 192
 —
 5,289
 
Total consumer31,057
 1,111
 —
 32,168
 28,781
 272
 —
 29,053
 
Total accruing TDRs$193,724
 2,052
 —
 195,776
 $149,222
 $2,005
 $44
 $151,271
 
                
Non-accruing TDRs were $10.1$30.4 million at June 30, 20172018 compared to $11.4$11.7 million at December 31, 2016.2017. Non-accruing TDRs generally may be returned to accrual status if there has been a period of performance, consisting usually of at least a six month sustained period of repayment performance in accordance with the terms of the agreement.
Potential Problem Loans
Potential problem loans are defined by management as being certain performing loans with a well-defined weakness where there is known information about possible credit problems of borrowers which causes management to have concerns about the ability of such borrowers to comply with the present repayment terms of such loans. Potential problem commercial loans consist of commercial Substandard accruing loans but exclude loans 90 days past due and still accruing interest and accruing TDRs

classified as Substandard since these loans are disclosed separately. Potential problem commercial loans were $149.2$153.5 million at June 30, 20172018 compared to $162.0$103.3 million and $144.1$149.2 million at December 31, 20162017 and June 30, 2016,2017, respectively. Synovus cannot predict whether these potential problem loans ultimately will become non-performing loans or result in losses.
Net Charge-offs
Net charge-offs for the six months ended June 30, 20172018 were $22.6$22.1 million, or 0.19%0.18% as a percentage of average loans annualized, compared to $13.5$22.6 million, or 0.12%0.19%, as a percentage of average loans annualized for the six months ended June 30, 2016. The $9.1 million or 67.5% increase from 2016 is primarily the result of charge-offs on a legacy credit that was fully reserved as well as a reduction in recoveries.2017.
Provision for Loan Losses and Allowance for Loan Losses
For the six months ended June 30, 2017,2018, the provision for loan losses was $18.9$24.6 million, an increase of $2.9$5.6 million, or 17.8%29.7%, compared to the six months ended June 30, 20162017. The increase in provision expense for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily due to loan growth as well as a decline in recoveries.slightly increased level of charge-offs above reserves.
The allowance for loan losses at June 30, 2018 was $251.7 million, or 1.00% of total loans, compared to $249.3 million, or 1.01% of total loans, at December 31, 2017 wasand $248.1 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 million, or 1.11% of total loans, at June 30, 2016.  2017.
Capital Resources
Synovus and Synovus Bank are required to comply with capital adequacy standards established by their primary federal regulator, the Federal Reserve. Synovus and Synovus Bank measure capital adequacy using the standardized approach to the Basel III Final Rule. Synovus has always placed great emphasis on maintaining a solid capital base and continues to satisfy applicable regulatory capital requirements.
At June 30, 2017,2018, Synovus and Synovus Bank's capital levels remained strong and each exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.

Capital Ratios      
(dollars in thousands) June 30, 2017 December 31, 2016June 30, 2018 December 31, 2017
Tier 1 capital   
Common equity Tier 1 capital (transitional)   
Synovus Financial Corp.$2,734,983
 2,685,880$2,838,616
 $2,763,168
Synovus Bank3,098,126
 3,187,5833,285,713
 3,155,163
Common equity Tier 1 capital (transitional)   
Tier 1 capital   
Synovus Financial Corp.2,829,340
 2,654,2873,156,805
 2,872,001
Synovus Bank3,098,126
 3,187,5833,285,713
 3,155,163
Total risk-based capital      
Synovus Financial Corp.3,340,155
 3,201,268
3,668,904
 3,383,081
Synovus Bank3,348,941
 3,441,563
3,537,812
 3,406,243
Tier 1 capital ratio   
Common equity Tier 1 capital ratio (transitional)   
Synovus Financial Corp.10.02% 10.07
10.12% 9.99%
Synovus Bank11.37
 11.97
11.72
 11.43
Common equity Tier 1 ratio (transitional)   
Tier 1 capital ratio   
Synovus Financial Corp.10.37
 9.96
11.25
 10.38
Synovus Bank11.37
 11.97
11.72
 11.43
Total risk-based capital to risk-weighted assets ratio      
Synovus Financial Corp.12.24
 12.01
13.08
 12.23
Synovus Bank12.29
 12.93
12.61
 12.33
Leverage ratio      
Synovus Financial Corp.9.30
 8.99
10.03
 9.19
Synovus Bank10.20
 10.68
10.45
 10.12
Tangible common equity to tangible assets ratio (1)
      
Synovus Financial Corp.9.15
 9.09
8.77
 8.79
      
(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.
DuringOn June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the six months ended June 30, 2017,redemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.
On January 23, 2018, Synovus repurchased $45.3 million in common stock under the currentannounced a 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$150 million of the Company's common stock to be executedcompleted during 2017.2018. As of June 30, 20172018, Synovus had repurchased under this program a total of $76.8 million, or 1.5 million shares of its common stock, at an average price of $52.72 per share. As of June 30, 2018 and August 4, 2017,6, 2018, the remaining authorization under this program was $154.7$73.2 million and $141.3$44.6 million, respectively.
As of June 30, 2017,2018, total disallowed deferred tax assets were $142.0$63.6 million or 0.52%0.23% of risk-weighted assets, compared to $218.3$70.4 million, or 0.82%0.25% of risk-weighted assets, at December 31, 2016.2017. Disallowed deferred tax assets for CET1 were $113.6$50.9 million at June 30, 20172018 compared to $131.0$56.3 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.2017. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Income Taxes" in Synovus' 20162017 Form 10-K for more information on Synovus' net deferred tax asset.

At June 30, 2018, Synovus' CET1 ratio was 10.02% at June 30, 201710.12% under the Basel III transitional provisions, and the estimated fully phased-in CET1 ratio as of June 30, 2017, was 9.82%10.06%, both of which are well in excess of regulatory requirements.requirements including the capital conservation buffer. On November 21, 2017, federal banking regulators adopted a final rule to extend the regulatory capital transition for certain items applicable during 2017 to future periods for banking organizations (such as Synovus) that are not subject to the advanced approaches capital rule. This reduced the capital impact to Synovus in 2018 from the fully phased-in implementation of Basel III that was originally required. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Management currently believes, based on internal capital analysisanalyses and earnings projections, that Synovus' capital position is adequate to meet current and future regulatory minimum capital requirements.
Dividends
Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely 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 2017,2018, Synovus increased the quarterly common stock dividend by 25%67% to $0.15$0.25 per share effective with the quarterly dividend declared during the first quarter of 2017.2018.
Synovus' ability to pay dividends on its capital stock, consisting of the common stock and the Series C Preferred Stock,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."below. During the first quarter of 2017, Synovus Bank paid upstream cash dividends of $100.0 million to Synovus and during the second quarter of 2017, Synovus Bank made upstream cash distributions to Synovus totaling $200.0 million including cash dividends of $65.2 million. Additionally, during the second quarter of 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the yearsix months ended December 31, 2016,June 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0$110.0 million. For the year ended December 31, 2017, Synovus Bank and non-bank subsidiaries made upstream cash distributions to the Parent Company totaling $451.0 million with $180.0 million paid during the first six monthsincluding cash dividends of 2016.$283.2 million.
    Synovus declared dividends of $0.30$0.50 and $0.24$0.30 per common share for the six months ended June 30, 20172018 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 million on its Series C Preferred Stock during both the six months ended June 30, 20172018 and 2016.2017.
On June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the redemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.
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 divisionslocal markets monitors deposit flows and evaluates local market conditions in an effort to retain and grow deposits.
Synovus Bank also generates liquidity through the national deposit markets through the issuance of brokered certificates of deposit and money market accounts. Synovus Bank accesses these funds from a broad geographic base to diversify its sources of funding and liquidity. On September 25, 2017, Synovus Bank completed the Cabela's Transaction and thereby retained WFB's $1.10 billion brokered time deposit portfolio with a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83 percent. Synovus Bank has the capacity to access funding through its membership in the FHLB System.system. At June 30, 2017,2018, based on currently pledged collateral, Synovus Bank had access to incremental funding of $480 million,of $1.26 billion, subject to FHLB credit policies, through utilization of FHLB advances.

In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. During the first quarter of 2017, Synovus Bank paid upstream cash dividends of $100.0 million to Synovus

and during the second quarter of 2017, Synovus Bank made upstream cash distributions to Synovus totaling $200.0 million including cash dividends of $65.2 million. Additionally, during the second quarter of 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the yearsix months ended December 31, 2016,June 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0$110.0 million. For the year ended December 31, 2017, Synovus Bank and non-bank subsidiaries made upstream cash distributions to the Parent Company totaling $451.0 million with $180.0 million paid during the first six monthsincluding cash dividends of 2016.$283.2 million. Synovus' ability to receive dividends from Synovus Bank in future periods will depend on a number of factors, including, without limitation, Synovus Bank's future profits, asset quality, liquidity, and overall condition. In addition, GA DBF rules and related statutes contain limitations on payments of dividends by Synovus Bank without the approval of the GA DBF. During
On June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the second quarter, Synovus' parent companyredemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.
On November 1, 2017, Synovus issued $300.0 million aggregate principal amount of 3.125% senior notes maturing in 2022 in a public offering with aggregate proceeds of $296.9 million, net of discount and debt issuance costs. On November 9, 2017, Synovus redeemed all of the $300.0 million aggregate principal amount of its 7.875% senior notes due 2019 at a "make whole" premium. 2017 results included a loss of $23.2 million related to early extinguishment of these notes. Additionally, during 2017, Synovus paid off the remaining balance of $278.6 million of its subordinated notes at their maturity date of June 15, 2017.
Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank 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' 20162017 Form 10-K. Furthermore, Synovus may, from time to time, take advantage of attractive market opportunities to refinance its existing debt, redeem its preferred stock, which is redeemable beginning on August 1, 2018, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average total assets for the six months ended June 30, 20172018 increased $1.45 billion,$838.0 million or 5.0%2.7%, to $30.54$31.37 billion as compared to $29.09$30.54 billion for the first six months of 2016.2017. Average earning assets increased $1.53 billion,$968.6 million, or 5.7%3.4%, in the first six months of 20172018 compared to the same period in 20162017 and represented 93.7%94.3% of average total assets at June 30, 2017,2018, as compared to 93.1%93.7% at June 30, 2016.2017. The increase in average earning assets resulted from a $1.44 billion$708.9 million increase in average loans, net, and a $310.1$242.8 million increase in average taxable investment securities. Average interest bearing liabilities increased $632.9 million, or 3.1%, to $20.76 billion for the first six months of 2018 compared to the same period in 2017. The increase in average interest bearing liabilities was driven by a $672.8 million increase in average time deposits and a $206.0 million increase in average interest bearing demand deposits. These increases were partially offset by a $259.1$238.2 million decrease in interestaverage long-term debt. Average non-interest bearing funds held at the Federal Reserve Bank. Average interest bearing liabilitiesdemand deposits increased $1.07 billion,$229.1 million, or 5.6%3.2%, to $20.13$7.47 billion for the first six months of 20172018 compared to the same period in 2016. The increase in interest bearing liabilities was driven by a $594.8 million increase in interest bearing demand deposits and a $545.3 million increase in money market deposit accounts. Average non-interest bearing demand deposits increased $365.6 million, or 5.3%, to $7.24 billion for the first six months of 2017 compared to the same period in 2016.2017.
Net interest income for the six months ended June 30, 20172018 was $491.0$558.9 million, an increase of $51.4$67.8 million, or 11.7%13.8%, compared to $439.6$491.0 million for the six months ended June 30, 2016.2017.
The net interest margin was 3.82% for the six months ended June 30, 2018, an increase of 36 basis points from 3.46% for the six months ended June 30, 2017, an increase of 192017. The yield on earning assets was 4.39%, up 46 basis points from 3.27% forcompared to the six months ended June 30, 2016. The yield on earning assets was 3.93%, up 20 basis points compared to the first six months of 20162017 and the effective cost of funds increased 110 basis pointpoints to 0.47%0.57%. The yield on loans was 4.31%4.79%, an increase of 1648 basis points from the six months ended June 30, 20162017 and the yield on investment securities was 2.09%2.34%, an increase of 1825 basis points from the six months ended June 30, 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve.2017.
On a sequential quarter basis, net interest income increased by $11.2$10.3 million and the net interest margin increased by 98 basis points.points to 3.86%. The increase in net interest income was driven by a $236.9 million increase in average earning assets with a $319.6an $81.3 million increase in average loans, net. This increase in loans was partially offset by a $80.6 million decrease in lower yielding funds held at the Federal Reserve. 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, 20172018 compared to the three months ended March 31, 2017 and the three months ended June 30, 2016.previous quarter. The yield on earning assets was 3.99%4.47%, up 2616 basis points from the secondfirst quarter of 2016.2018. This increase was driven by an 18 basis point increase in loan yields. The effective cost of funds was 0.48%0.61% for the second quarter 2017,of 2018, up 28 basis points from the secondfirst quarter of 2016.2018.

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

Average Balances, Interest, and Yields2018 2017
(dollars in thousands) (yields and rates annualized)Second Quarter 
First
Quarter
 Fourth Quarter Third Quarter Second Quarter
Interest Earning Assets:         
Taxable investment securities (1)
$4,077,564
 4,097,162
 3,937,278
 3,786,436
 3,844,688
Yield2.34% 2.34
 2.29
 2.11
 2.11
Tax-exempt investment securities(1)(3)
$115
 140
 180
 259
 340
Yield (taxable equivalent) (3)
6.87% 6.57
 7.97
 7.86
 6.87
Trading account assets(4)
$23,772
 8,167
 7,360
 7,823
 3,667
Yield2.79% 2.66
 2.78
 2.09
 2.28
Commercial loans(2)(3)
$18,857,271
 18,963,515
 18,935,774
 19,059,936
 19,137,733
Yield4.85% 4.64
 4.49
 4.41
 4.27
Consumer loans(2)
$6,092,899
 5,899,015
 5,704,629
 5,440,765
 5,215,258
Yield4.76% 4.71
 4.54
 4.55
 4.49
Allowance for loan losses$(257,966) (251,635) (252,319) (249,248) (251,219)
Loans, net (2)
$24,692,204
 24,610,895
 24,388,084
 24,251,453
 24,101,772
Yield4.88% 4.70
 4.55
 4.49
 4.36
Mortgage loans held for sale$50,366
 38,360
 45,353
 52,177
 52,224
Yield4.42% 3.95
 3.96
 3.88
 3.87
Other earning assets (5)
$724,537
 516,575
 922,296
 543,556
 561,503
Yield1.77% 1.48
 1.31
 1.23
 1.00
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$165,845
 177,381
 159,455
 175,263
 177,323
Yield4.63% 3.39
 4.03
 3.50
 2.99
Total interest earning assets$29,734,403
 29,448,680
 29,460,006
 28,816,967
 28,741,517
Yield4.47% 4.31
 4.15
 4.11
 3.99
Interest Bearing Liabilities:         
Interest bearing demand deposits$5,001,826
 5,032,000
 4,976,239
 4,868,372
 4,837,053
Rate0.35% 0.31
 0.28
 0.27
 0.23
Money Market accounts, excluding brokered deposits$7,791,107
 7,561,554
 7,514,992
 7,528,036
 7,427,562
Rate0.55% 0.43
 0.36
 0.34
 0.32
Savings deposits$829,800
 811,587
 804,853
 803,184
 805,019
Rate0.03% 0.03
 0.03
 0.03
 0.04
Time deposits under $100,000$1,161,890
 1,143,780
 1,166,413
 1,183,582
 1,202,746
Rate0.82% 0.71
 0.70
 0.68
 0.67
Time deposits over $100,000$2,021,084
 1,895,545
 2,004,031
 2,067,347
 2,040,924
Rate1.22% 1.02
 0.99
 0.97
 0.94
Non-maturing brokered deposits$262,976
 424,118
 546,413
 547,466
 564,043
Rate1.94% 1.14
 0.81
 0.73
 0.54
Brokered time deposits$1,659,941
 1,527,793
 1,651,920
 983,423
 815,515
Rate1.85% 1.75
 1.63
 1.16
 0.94
Total interest bearing deposits$18,728,624
 18,396,377
 18,664,861
 17,981,410
 17,692,862
Rate0.70% 0.58
 0.54
 0.46
 0.41
Federal funds purchased and securities sold under repurchase agreements$210,679
 202,226
 184,369
 191,585
 183,400
Rate0.38% 0.21
 0.15
 0.08
 0.10
Long-term debt$1,852,094
 2,127,994
 1,713,982
 1,985,175
 2,270,452
Rate2.66% 2.32
 2.67
 2.81
 2.83
Total interest bearing liabilities$20,791,397
 20,726,597
 20,563,212
 20,158,170
 20,146,714
Rate0.68% 0.65
 0.62
 0.63
 0.65% 0.87% 0.76
 0.72
 0.69
 0.68
Non-interest bearing demand deposits$7,298,845
 7,174,146
 7,280,033
 $7,042,908
 6,930,336
 $7,539,451
 7,391,695
 7,621,147
 7,305,508
 7,298,845
Effective cost of funds0.48% 0.46
 0.44
 0.44
 0.46% 0.61% 0.53
 0.50
 0.48
 0.48
Net interest margin3.51% 3.42
 3.29
 3.27
 3.27% 3.86% 3.78
 3.65
 3.63
 3.51
Taxable equivalent adjustment (3)
$298
 309
 322
 $330
 329
 $120
 116
 234
 283
 298
                   
(1) Excludes net unrealized gains (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(3) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21% beginning in 2018, and 35%, for prior years, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(4) Included as a component of Other Assets on the balance sheet.
(5) Includes interest bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.

Net Interest Income and Rate/Volume Analysis
The following tables set forth the major components of net interest income and the related annualized yields and rates for the six months ended June 30, 20172018 and 2016,2017, 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 2016Six Months Ended June 30, 2018 Compared to 2017
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 2018 2017 2018 2017 2018 2017 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
$4,087,309
 $3,843,131
 $47,812
 $40,069
 2.34% 2.09% $2,531
 $5,212
 $7,743
Tax-exempt investment securities(2)
1,528
 3,791
 45
 118
 5.95
 6.23
 (70) (3) (73)128
 1,528
 4
 45
 6.71
 5.95
 (41) —
 (41)
Total investment securities3,844,659
 3,536,871
 40,114
 33,697
 2.09
 1.91
 2,851
 3,566
 6,417
4,087,437
 3,844,659
 47,816
 40,114
 2.34
 2.09
 2,490
 5,212
 7,702
Trading account assets5,047
 4,510
 49
 34
 1.93
 1.49
 4
 11
 15
16,012
 5,047
 220
 49
 2.75
 1.93
 105
 66
 171
Taxable loans, net(1)
24,122,851
 22,686,162
 510,222
 461,792
 4.27
 4.09
 29,139
 19,291
 48,430
24,854,408
 24,122,851
 584,543
 510,222
 4.74
 4.27
 15,490
 58,831
 74,321
Tax-exempt loans, net(1)(2)
72,553
 73,223
 1,688
 1,692
 4.69
 4.65
 (15) 11
 (4)52,184
 72,553
 1,120
 1,688
 4.33
 4.69
 (474) (94) (568)
Allowance for loan losses(252,565) (254,599)              (254,818) (252,565)              
Loans, net23,942,839
 22,504,786
 511,910
 463,484
 4.31
 4.15
 29,124
 19,302
 48,426
24,651,774
 23,942,839
 585,663
 511,910
 4.79
 4.31
 15,016
 58,737
 73,753
Mortgage loans held for sale49,405
 67,908
 972
 1,238
 3.93
 3.65
 (335) 69
 (266)44,396
 49,405
 936
 972
 4.22
 3.93
 (98) 62
 (36)
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
Other earning assets(3)
621,131
 607,656
 5,147
 2,684
 1.65
 0.88
 59
 2,404
 2,463
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
171,581
 174,101
 3,422
 2,788
 3.99
 3.20
 (40) 674
 634
Total interest earning assets$28,623,707
 27,089,977
 $558,517
 502,350
 3.93% 3.73
 $33,061
 23,106
 $56,167
29,592,331
 28,623,707
 643,204
 558,517
 4.39
 3.93
 17,532
 67,155
 84,687
Cash and due from banks396,305
 405,564
              387,472
 396,305
              
Premises and equipment, net414,810
 441,197
              427,291
 414,810
              
Other real estate21,723
 41,586
              3,709
 21,723
              
Other assets(3)(4)
1,080,397
 1,111,448
              964,141
 1,080,397
              
Total assets$30,536,942
 29,089,772
              $31,374,944
 $30,536,942
              
                                  
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
$5,016,830
 $4,810,836
 $8,151
 $5,001
 0.33% 0.21% $215
 $2,935
 $3,150
Money market accounts8,017,785
 7,472,471
 12,857
 11,852
 0.32
 0.32
 865
 140
 1,005
8,020,066
 8,017,785
 21,192
 12,857
 0.53
 0.32
 3
 8,332
 8,335
Savings deposits857,050
 734,199
 329
 232
 0.08
 0.06
 37
 60
 97
820,744
 857,050
 118
 329
 0.03
 0.08
 (14) (197) (211)
Time deposits4,032,971
 4,115,172
 16,887
 16,457
 0.84
 0.80
 (326) 756
 430
4,705,778
 4,032,971
 29,514
 16,887
 1.26
 0.84
 2,803
 9,824
 12,627
Federal funds purchased and securities sold under repurchase agreements180,145
 199,599
 84
 96
 0.09
 0.09
 (9) (3) (12)206,476
 180,145
 310
 84
 0.30
 0.09
 12
 214
 226
Long-term debt2,227,501
 2,320,508
 31,728
 29,763
 2.83
 2.57
 (1,185) 3,150
 1,965
1,989,282
 2,227,501
 24,822
 31,728
 2.48
 2.83
 (3,343) (3,563) (6,906)
Total interest-bearing liabilities$20,126,288
 19,057,973
 $66,886
 62,073
 0.67
 0.65
 $(87) 4,900
 $4,813
20,759,176
 20,126,288
 84,107
 66,886
 0.81
 0.67
 (324) 17,545
 17,221
Non-interest bearing deposits7,236,840
 6,871,279
              7,465,982
 7,236,840
              
Other liabilities214,381
 203,923
              201,790
 214,381
              
Shareholders' equity2,959,433
 2,956,597
              2,947,996
 2,959,433
              
Total liabilities and equity$30,536,942
 29,089,772
              $31,374,944
 $30,536,942
              
Interest rate spread:        3.26
 3.08
              3.58% 3.26%      
Net interest income - FTE/margin(4)(5)
    491,631
 440,277
 3.46% 3.27
 $33,148
 18,206
 $51,354
    $559,097
 $491,631
 3.82% 3.46% $17,856
 $49,610
 $67,466
Taxable equivalent adjustment    607
 634
              236
 607
          
Net interest income, actual    $491,024
 439,643
              $558,861
 $491,024
          
                                  
(1) Average loans are shown net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 2018 - $15.5 million, 2017 - $15.7 million, 2016 - $15.6 million.
(2) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of(21% in 2018 and 35% in 2017), in adjusting interest on tax-exempt loans and investment securities
to a taxable-
equivalenttaxable-equivalent basis.
(3) Includes interest bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(4) Includes average net unrealized gains (losses) on investment securities available for sale of $(41.2)$(115.1) million and $28.7$(41.2) million for the six months ended June 30, 20172018 and
2016,2017, respectively.
(4)(5) The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

Market Risk Analysis
Interest rate risk is the primary market risk to which Synovus is potentially exposed. Synovus measures its sensitivity to changes in market interest rates through the use of a simulation model. Synovus uses this simulation model to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. These simulations include all of Synovus’ earning assets and liabilities. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts, are included in the periods modeled. Anticipated deposit mix changes in each interest rate scenario are also included in the periods modeled. Assumptions utilized in the model are updated on an ongoing basis and are reviewed and approved by ALCO and the Risk Committee of the Board of Directors.
Synovus has modeled its baseline net interest income forecast assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 1.00%1.75% to 1.25%2.00% and the current prime rate of 4.25%5.00%. Synovus has modeled the impact of a gradual increase in short-term rates of 100 and 200 basis points and a gradual decline of 25100 basis points to determine the sensitivity of net interest income for the next twelve months. Synovus continues to maintain a modestly asset sensitive position which would be expected to benefit net interest income in a rising interest rate environment and reduce net interest income in a declining interest rate environment. The following table represents the estimated sensitivity of net interest income to these changes in short-term interest rates at June 30, 2017,2018, with comparable information for December 31, 2016.2017.
   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) June 30, 2018 December 31, 2017
 +200 3.0% 3.6%
 +100 1.4% 1.9%
 Flat —% —%
 -100 -3.7% -4.7%
      
Several factors could serve to diminish or eliminate this asset sensitivity in a rising rate environment. These factors 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 June 30, 2018
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% 3.0% 1.4%
+100 2.8% 1.9% 1.4% 0.7%
  
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. This EVE modeling allows Synovus to capture longer-term repricing risk and options risk embedded in the balance sheet. These simulations value only the current balance sheet and do not incorporate growth assumptions used in the net interest income simulation. The economic value of equity is the net fair value of assets, liabilities, and off-balance sheet financial instruments derived from the present value of future cash flows discounted at current market interest rates. From this baseline valuation, Synovus evaluates changes in the value of each of these items in various interest rate scenarios to determine the net impact on the economic value of equity. Key assumptions utilized in the model, namely loan prepayments, investment security prepayments, deposit repricing betas, and non-maturity deposit duration have a significant impact on the results of the EVE simulations. As illustrated in the table below, the EVE model indicates that, compared with a valuation assuming stable rates, EVE is projected to increase by 1.4%1.6% and decrease by 0.9%1.5%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 25100 basis point decline in rates, EVE is projected to decrease by 2.7%14.7%. These metrics reflect a moderation inrelatively stable long term asset sensitivityinterest rate risk position as compared to December 31, 2016. This moderation is primarily due to an increase in the duration of the investment portfolio, a slight increase in loan duration, and a decrease in wholesale funding duration.2017.

 Estimated Change in EVE Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2017 December 31, 2016 June 30, 2018 December 31, 2017
+200 -0.9% 2.8% 1.5% -0.2%
+100 1.4% 3.2% 1.6% 1.6%
-25 -2.7% -3.3%
-100 -14.7% -16.9%
  
ADDITIONAL DISCLOSURES
Recently Issued Accounting Standards
Several accounting standards will be effective in fiscal year 20182019 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
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-CreditInstruments--Credit Losses (CECL). In June 2016, the FASB issued the new accounting guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with a singlean 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 towill record a cumulative effect adjustment to retained earnings as of the beginning of the reporting period of adoption.  

Synovus has begun its implementation efforts which are led by a cross-functional steering committee. The early focus of the committee has been on assessing the data, calculations, and disclosures required by the standard as the committee develops a project plan to address these 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 expected increase on the allowance for loan losses will depend upon the composition of the loan portfolio upon adoption of the standard, as well as economic conditions and forecasts at that time.

ASU 2014-09, Revenue from Contracts with Customers. 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 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is intended to increase comparability across industries. 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 scope of the new standard include mortgage income, securities gains (losses), BOLI, gains on sales of GGL/SBA loans, and certain other smaller components within non-interest income. Management has also substantially completed its evaluation of service charges on deposit accounts (which

represent approximately 30% of non-interest income) and has determined that changes in 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 changes in the timing 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 use the modified retrospective method of adoption.

ASU 2016-02, Leases. In February 2016, the FASB issued ASU 2016-02, its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. Under the new standard, all lessees will recognize a right-of-use asset and a lease liability, for all leases, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged.unchanged, though the new standard does include certain targeted improvements to align, where necessary, lessor accounting with the lessee accounting model and the revenue recognition guidance in ASC Topic 606 (those related to evaluating when profit can be recognized). For Synovus, the impact of this ASU will predominatelyprimarily 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 requiredSynovus will adopt this ASU retrospectively, 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.of adoption, through a cumulative-effect adjustment to retained earnings. The standard also requires additional disclosures regarding leasing arrangements.
Synovus is currently evaluating the potential financial statement impact from the implementation of this standard by reviewing its existing lease contracts and other contracts that may include embedded leases. Synovus currently expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to substantially all of the $282$230 million of future minimum lease commitments as disclosed in Note 87 of Synovus' 20162017 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' 20162017 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. DuringIn connection with the six months ended June 30, 2017,adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed its presentation of cash and cash equivalents, effective January 1, 2018, to include cash and due from banks as well as interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements, which are inclusive of any restricted cash and restricted cash equivalents. Prior to 2018, cash and cash equivalents only included cash and due from banks. Prior periods have been revised to maintain comparability. Excluding the aforementioned presentation change, there have been no significant changes to Synovus’ criticalthe accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 20162017 Form 10-K.






Non-GAAP Financial Measures
The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; adjusted net income per common share, diluted; adjusted return on average core deposits;assets; adjusted return on average core transaction deposits;common equity; adjusted return on average tangible common equity; average core deposits; 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; efficiency ratio; total deposits;net income per common share, diluted; return on average assets; return on average common equity; total average deposits; the ratio of total shareholders' equity to total assets; and the CET1 ratio;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 non-interest income is a measure used by management to evaluate non-interest income exclusive of net investment securities gains/losses and changes in fair value of private equity investments, net. 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. Average core depositsAdjusted net income per common share, diluted, adjusted return on average assets, and adjusted return on average core transaction depositscommon equity are measuresmeasurements used by management to evaluate organic growthoperating results exclusive of depositsitems that management believes are not indicative of ongoing operations and the quality of deposits as a funding source.impact period-to-period comparisons. The adjusted return on average tangible common equity is a measure used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. Average core deposits is a measure used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The tangible common equity 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 EndedSix Months Ended Three Months Ended
(in thousands, except per share data)June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 December 31, 2016June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Adjusted non-interest income                
Total non-interest income$140,539
 131,033
 68,701
 67,886
 273,194
$140,433
 $140,539
 $73,387
 $68,701
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
Add/subtract: Investment securities losses (gains), net1,296
 (7,667) 1,296
 1
Add: Decrease in fair value of private equity investments, net3,093
 3,166
 37
 1,352
Adjusted non-interest income$136,038
 131,244
 70,054
 67,773
 268,209
$144,822
 $136,038
 $74,720
 $70,054
                
Adjusted non-interest expense                
Total non-interest expense$389,133
 376,844
 191,747
 188,611
  $399,234
 $389,133
 $204,057
 $191,747
Subtract: Restructuring charges, net(6,524) (6,981) (13) (5,841)  
Subtract: Fair value adjustment to Visa derivative—
 (720) —
 (360)  
Subtract: Litigation settlement expenses—
 (2,700) —
 —
  
Subtract: Loss on early extinguishment of debt, net—
 (4,735) —
 —
  
Subtract: Merger-related expense—
 (86) —
 —
Add: Litigation settlement/contingency expense4,026
 —
 1,400
 —
Add/subtract: Restructuring charges, net212
 (6,524) (103) (13)
Subtract: Amortization of intangibles(475) (121) (292) —
  (583) (475) (292) (292)
Subtract: Merger-related expense(86) —
 —
 —
  
Subtract: Valuation adjustment to Visa derivative(2,328) —
 (2,328) —
Adjusted non-interest expense$382,048
 361,587
 191,442
 182,410
  $400,561
 $382,048
 $202,734
 $191,442
                

Reconciliation of Non-GAAP Financial Measures, continued

Six Months EndedThree Months Ended
(in thousands, except per share data)June 30, 2017 June 30, 2016June 30, 2017 June 30, 2016
Adjusted efficiency ratio      
Adjusted non-interest expense$382,048
 361,587
191,442
 182,410
Net interest income491,024
 439,643
251,097
 221,449
Add: Tax equivalent adjustment607
 634
298
 329
Add: Total non-interest income140,539
 131,033
68,701
 67,886
Subtract/add: Investment securities gains (losses), net(7,667) (67)1
 —
Total FTE revenues624,503
 571,243
320,097
 289,664
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
Efficiency ratio62.31% 65.97%59.90
 65.11
      Adjusted efficiency ratio60.87
 63.27
59.56
 63.00
       



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

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




Reconciliation of Non-GAAP Financial Measures, continuedThree Months Ended
(dollars in thousands)June 30, 2018 March 31, 2018 June 30, 2017
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)     
Net income available to common shareholders$108,622
 $100,607
 $73,444
Subtract/add: Income Tax expense related to effects of State Tax Reform(608) 1,325
 —
Subtract: Litigation settlement/contingency expense(1,400) (2,626) —
Add/subtract: Restructuring charges, net103
 (315) 13
Add: Amortization of intangibles292
 292
 292
Add: Valuation adjustment to Visa derivative2,328
 —
 —
Add: Investment securities losses, net1,296
 —
 1
Add: Decrease in fair value of private equity investments, net37
 3,056
 1,352
Subtract: Tax effect of adjustments(624) (96) (613)
Adjusted net income available to common shareholders$110,046
 $102,243
 $74,489
Net income annualized$441,393
 $414,652
 $298,775
      
Total average shareholders' equity less preferred stock$2,831,368
 $2,790,648
 $2,849,069
Subtract: Goodwill(57,315) (57,315) (57,018)
Subtract: Other intangible assets, net(10,555) (10,915) (11,966)
Total average tangible shareholders' equity less preferred stock$2,763,498
 $2,722,418
 $2,780,085
Return on average common equity (annualized)15.39%
14.62%
10.34%
Adjusted return on average common equity (annualized)15.59
 14.86
 10.49
Adjusted return on average tangible common equity (annualized)15.97
 15.23
 10.75
      


Reconciliation of Non-GAAP Financial Measures, continued

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

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

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

        


 Current expectation- increase (decrease) vs. 2017
(dollars in thousands)2017 $ %
2018 Expectation for adjusted non-interest income growth     
Total non-interest income, as reported$345,327
 $285 million-$290 million (16%)-(18%)
Subtract: Cabela's Transaction Fee(75,000)    
Add: Investment securities losses, net289
    
Add: decrease in fair value of private equity investments, net3,093
    
Adjusted non-interest income$273,709
 $285 million-$290 million 4%-6%
      


ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
ITEM 4. – CONTROLS AND PROCEDURES
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2017,2018, Synovus' disclosure controls and procedures were effective.     
There have been no material changes in Synovus' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 20172018 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 ProceedingsCommitments and Contingencies" of this Report, which Note is incorporated herein by this reference.
ITEM 1A. – RISK FACTORS
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in "Part I - Item IA - Risk Factors” of Synovus’ 20162017 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.
ThereAs a result of Synovus entering into the Merger Agreement with FCB, certain risk factors, as provided below, have been identified in addition to those previously reported in Synovus’ 2017 10-K. These risks and the other risks associated with the proposed Merger will be more fully discussed in the joint proxy statement/prospectus that will be included in the registration statement on Form S-4 that Synovus will file with the SEC in connection with the Merger. We urge you to read the registration statement on Form S-4 once it becomes available because it will contain important information about the Merger, including relevant risk factors.

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

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

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


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

We may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating FCB.
Our ability to realize the anticipated benefits of the Merger will depend, to a large extent, on our ability to successfully integrate the acquired businesses. The integration and combination of the acquired businesses is a complex, costly and time-consuming process. As a result, we will be required to devote significant management attention and resources to integrating their business practices and operations with ours. The integration process may disrupt our business and the business of FCB and, if implemented ineffectively, could limit the full realization of the anticipated benefits of the acquisition. The failure to meet the challenges involved in integrating the acquired businesses and to realize the anticipated benefits of the Merger could cause an interruption of, or a loss of momentum in, our business activities or those of FCB and could adversely impact our business, financial condition and results of operations. In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, loss of customers and diversion of our management’s and employees’ attention. The challenges of combining the operations of the companies include, among others:
difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition;
difficulties in the integration of operations and systems;
difficulties in the assimilation of employees;
difficulties in managing the expanded operations of a larger and more complex company;
challenges in keeping existing customers and obtaining new customers;
challenges in attracting and retaining key personnel, including personnel that are considered key to the future success of FCB’s businesses; and
challenges in keeping key business relationships in place.
Many of these factors will be outside of our control and any one of them could result in increased costs and liabilities, decreases in the amount of expected income and diversion of management’s time and energy, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, even if the operations of FCB are integrated successfully with our business, the full benefits of the transaction may not be realized, including the synergies, cost savings, growth opportunities or earnings accretion that are expected. These benefits may not be achieved within the anticipated time frame, or at all, and additional unanticipated costs may be incurred in the integration of the businesses. Furthermore, FCB may have unknown or contingent liabilities that we would assume in the acquisition and that were no material changesnot discovered during the period covered by this Reportcourse of our due diligence. These liabilities could include exposure to unexpected asset quality problems, compliance and regulatory violations, key employee and client retention problems and other problems that could result in significant costs to us.
All of these factors could cause dilution to our earnings per share, decrease or delay the expected accretive effect of the transaction, negatively impact the price of our common stock, or have a material adverse effect on our business, financial condition and results of operations.

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

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

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

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

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

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

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

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

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

We currently anticipate that the Merger will be accretive to shareholders of the combined company on an earnings per share basis in 2020. This expectation is based on preliminary estimates, which may materially change. We could also encounter additional transaction and integration-related costs or other factors previously disclosedresulting in Synovus’ 2016 10-K.the failure to realize all of the benefits anticipated in the Merger. All of these factors could cause dilution of our adjusted earnings per share or decrease or delay the expected accretive effect of the Merger and cause a decrease in the market value of our common stock.

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

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

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

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

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

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

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

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$150 million share repurchase program that will expire at the end of 2017.2018. This program was announced on January 17, 2017.23, 2018. The table below sets forth information regarding repurchases of our common stock during the second quarter of 2017.2018.
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
(in thousands, except per share data) Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number
of Shares Repurchased as
Part of
Publicly Announced
Plans or Programs
 
Maximum Approximate
Dollar Value
of Shares
that May Yet Be
Purchased Under the
Plans or Programs
April 2018 22
 $52.98
 22
 $122,112
May 2018 479
 53.63
 479
 96,408
June 2018 421
 55.14
 421
 73,220
Total 922
 $54.30
 922
 
         
(1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

The foregoing repurchases during the second quarter of 20172018 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
  
2.1
Agreement and Plan of Merger by and among Synovus Financial Corp., FCB Financial Holdings, Inc. and Azalea Merger Sub Corp., dated as of July 23, 2018, incorporated by reference to Exhibit 2.1 to Synovus' Current Report on Form 8-K dated July 23, 2018, as filed with the SEC on July 25, 2018.
3.1
 
Amended and Restated Articles of Incorporation of Synovus, as amended, incorporated by reference to Exhibit 3.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 9, 2010.
  
3.2
 
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus with respect to the Series C Preferred Stock, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated July 25, 2013, as filed with the SEC on July 25, 2013.
   
3.3
 
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated April 29, 2014, as filed with the SEC on April 29, 2014.
   
3.4
 
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated May 19, 2014, as filed with the SEC on May 19, 2014.
   
3.5
 
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 of Synovus' Current Report on Form 8-K dated June 20, 2018, as filed with the SEC on June 21, 2018.
3.6
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 2002.2002.
   
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 2002.2002.
   
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, 20178, 2018By: /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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