UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2018

Commission file number 1-10312

SYNOVUS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)



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



1111 Bay Avenue Suite 500, Columbus, Georgia		31901
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (706) 649-2311

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Name 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 D	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 filer	x	Accelerated 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				~~August 6,~~November 5, 2018
Common Stock, $1.00 Par Value				~~117,348,421~~116,376,039

Table of Contents



			Page
Part I.	Financial Information
		Index of Defined Terms	i
	Item 1.	Financial Statements (Unaudited)
		Consolidated Balance Sheets as of ~~June~~September 30, 2018 and December 31, 2017	1
		Consolidated Statements of Income for the ~~Six~~Three and ~~Three~~Nine Months Ended ~~June~~September 30, 2018 and 2017	2
		Consolidated Statements of Comprehensive Income for the ~~Six~~Three and ~~Three~~Nine Months Ended ~~June~~September 30, 2018 and 2017	3
		Consolidated Statements of Changes in Shareholders' Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, 2018 and 2017	4
		Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2018 and 2017	5
		Notes to Unaudited Interim Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4439
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7168
	Item 4.	Controls and Procedures	7168

Part II.	Other Information
	Item 1.	Legal Proceedings	7269
	Item 1A.	Risk Factors	7269
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7569
	Item 3.	Defaults Upon Senior Securities	7569
	Item 4.	Mine Safety Disclosures	7569
	Item 5.	Other Information	7569
	Item 6.	Exhibits	7670
	Signatures		7771

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 – The third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements

BOLI – Bank-owned life insurance

BOV – Broker’s opinion of value

bp(s) – Basis point(s)

C&I – Commercial and industrial loans

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

CME – Chicago Mercantile Exchange

CMO – Collateralized Mortgage Obligation

Cabela’s Transaction – The transaction completed on September 25, 2017 whereby Synovus Bank acquired certain assets and assumed certain liabilities of World's Foremost Bank ("WFB") and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association. As a part of this transaction, Synovus Bank retained WFB’s $1.10 billion brokered time deposit portfolio and received a $75.0 million fee from Cabela’s Incorporated and Capital One. Throughout this Report, we refer to this transaction as the “Cabela’s Transaction” and the associated $75.0 million fee received from Cabela’s and Capital One as the “Cabela’s Transaction Fee”

Code – Internal Revenue Code

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

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

CRE – Commercial real estate

DIF – Deposit Insurance Fund

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

EVE – Economic value of equity

Exchange Act – Securities Exchange Act of 1934, as amended

FASB – Financial Accounting Standards Board

FCB - FCB Financial Holdings, Inc.

FDIC – Federal Deposit Insurance Corporation

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

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

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

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

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 – Government guaranteed loans

Global One – Entaire Global Companies, Inc., the parent company of Global One Financial, Inc., as acquired by Synovus on October 1, 2016. Throughout this Report, we refer to this acquisition as "Global One"

GSE – Government sponsored enterprise

HELOC – Home equity line of credit

LTV – Loan-to-collateral value ratio

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

Merger– The 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

ORE – Other real estate

OTC– Over-the-counter

OTTI – Other-than-temporary impairment

Parent Company – Synovus Financial Corp.

SBA – Small Business Administration

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' 2017 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2017

Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank

Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus

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 settled. Class B shares will be convertible into Visa Class A shares using a ~~then current~~then-current conversion ratio upon the lifting of restrictions with respect to sale of Visa Class B shares

Visa Derivative – A derivative contract with the purchaser of Visa Class B shares which provides for settlements between the purchaser and Synovus based upon a change in the ratio for conversion of Visa Class B shares into Visa Class A shares

Warrant – A warrant issued to the Treasury by Synovus to purchase up to 2,215,820 shares of Synovus common stock at a per share exercise price of $65.52 expiring on December 19, 2018, as was issued by Synovus to Treasury in 2008 in connection with the Capital Purchase Program, promulgated under the Emergency Stabilization Act of 2008

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

iii

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

SYNOVUS FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands, except share and per share data)	June 30, 2018			December 31, 2017			September 30, 2018			December 31, 2017
ASSETS
Cash and due from banks	$	404,080		$	397,848		$	436,540		$	397,848
Interest bearing funds with Federal Reserve Bank	613,082			460,928
Interest-bearing funds with Federal Reserve Bank							515,493			460,928
Interest earning deposits with banks	33,754			26,311			34,470			26,311
Federal funds sold and securities purchased under resale agreements	40,872			47,846			25,430			47,846
Total cash, cash equivalents, restricted cash, and restricted cash equivalents⁽¹⁾	1,091,788			932,933			1,011,933			932,933
Mortgage loans held for sale, at fair value	53,673			48,024			37,276			48,024
Investment securities available for sale, at fair value	3,929,962			3,987,069			3,883,574			3,987,069
Loans, net of deferred fees and costs	25,134,056			24,787,464			25,577,116			24,787,464
Allowance for loan losses	(251,725		)	(249,268		)	(251,450		)	(249,268		)
Loans, net	24,882,331			24,538,196			25,325,666			24,538,196
Cash surrender value of bank-owned life insurance	547,261			540,958			551,061			540,958
Premises and equipment, net	428,633			426,813			431,012			426,813
Goodwill	57,315			57,315			57,315			57,315
Other intangible assets	10,458			11,254			10,166			11,254
Deferred tax asset, net	182,983			165,788			185,116			165,788
Other assets	555,901			513,487			582,001			513,487
Total assets	$	31,740,305		$	31,221,837		$	32,075,120		$	31,221,837
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest bearing deposits	$	7,630,491		$	7,686,339
Interest bearing deposits, excluding brokered deposits	16,961,187			16,500,436
Brokered deposits	1,851,010			1,961,125
Non-interest-bearing deposits							$	7,628,736		$	7,686,339
Interest-bearing deposits							18,804,922			18,461,561
Total deposits	26,442,688			26,147,900			26,433,658			26,147,900
Federal funds purchased and securities sold under repurchase agreements	207,580			161,190			191,145			161,190
Other short-term borrowings							478,540			100,000
Long-term debt	1,656,647			1,706,138			1,656,909			1,606,138
Other liabilities	265,696			245,043			274,795			245,043
Total liabilities	28,572,611			28,260,271			29,035,047			28,260,271
Shareholders' Equity
Series D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2018	195,138			—
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at June 30, 2018 and December 31, 2017	125,980			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, 2017	143,078			142,678
Series D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at September 30, 2018							195,138			—
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at December 31, 2017							—			125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 143,093,317 issued at September 30, 2018 and 142,677,449 issued at December 31, 2017; 116,714,463 outstanding at September 30, 2018 and 118,897,295 outstanding at December 31, 2017							143,093			142,678
Additional paid-in capital	3,045,014			3,043,129			3,049,233			3,043,129
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		)
Treasury stock, at cost – 26,378,854 shares at September 30, 2018 and 23,780,154 shares at December 31, 2017							(974,478		)	(839,674		)
Accumulated other comprehensive loss	(125,720		)	(54,754		)	(143,720		)	(54,754		)
Retained earnings	700,688			544,207			770,807			544,207
Total shareholders’ equity	3,167,694			2,961,566			3,040,073			2,961,566
Total liabilities and shareholders' equity	$	31,740,305		$	31,221,837		$	32,075,120		$	31,221,837

See accompanying notes to unaudited interim consolidated financial statements.

⁽¹⁾See "Note 1 - ~~Significant Accounting Policies"~~Basis of Presentation" 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,						Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share data)	2018			2017			2018			2017			2018		2017			2018			2017
Interest income:
Loans, including fees	$	585,396		$	511,319		$	300,056		$	261,971		$	314,639	$	273,847		$	900,035		$	785,166
Investment securities available for sale	47,812			40,099			23,884			20,266			24,164		20,014			71,976			60,112
Trading account assets	220			49			166			21
Mortgage loans held for sale	936			972			557			505			578		506			1,514			1,478
Federal Reserve Bank balances	4,568			2,515			2,818			1,304			2,376		1,569			6,944			4,084
Other earning assets	4,036			2,957			2,353			1,443			2,185		1,716			6,442			4,723
Total interest income	642,968			557,911			329,834			285,510			343,942		297,652			986,911			855,563
Interest expense:
Deposits	58,975			35,075			32,600			18,118			39,219		20,798			98,195			55,874
Federal funds purchased and securities sold under repurchase agreements	310			84			203			45
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings													940		347			2,744			865
Long-term debt	24,822			31,728			12,454			16,250			12,164		13,935			35,492			45,227
Total interest expense	84,107			66,887			45,257			34,413			52,323		35,080			136,431			101,966
Net interest income	558,861			491,024			284,577			251,097			291,619		262,572			850,480			753,597
Provision for loan losses	24,566			18,934			11,790			10,260			14,982		39,686			39,548			58,620
Net interest income after provision for loan losses	534,295			472,090			272,787			240,837			276,637		222,886			810,932			694,977
Non-interest income:
Service charges on deposit accounts	39,938			40,370			19,999			20,252			20,582		20,678			60,521			61,048
Fiduciary and asset management fees	27,419			24,676			13,983			12,524			13,462		12,615			40,881			37,290
Card fees	21,032			19,885			10,833			10,041			10,608		9,729			31,640			29,614
Brokerage revenue	17,596			14,436			8,900			7,210			9,329		7,511			26,924			21,947
Mortgage banking income	9,887			11,548			4,839			5,784			5,290		5,603			15,177			17,151
Income from bank-owned life insurance	7,949			6,328			3,733			3,272			3,771		3,232			11,720			9,560
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		)
Cabela's Transaction Fee													—		75,000			—			75,000
Investment securities losses, net													—		(7,956		)	(1,296		)	(289		)
Other fee income	9,877			11,033			5,259			6,164			4,510		5,094			14,387			16,127
Other non-interest income	11,124			7,762			7,174			4,807			4,116		3,929			12,147			8,526
Total non-interest income	140,433			140,539			73,387			68,701			71,668		135,435			212,101			275,974
Non-interest expense:
Salaries and other personnel expense	225,583			212,404			111,863			105,213			114,341		109,675			339,924			322,079
Net occupancy and equipment expense	64,134			59,264			32,654			29,933			32,088		30,573			96,222			89,837
Third-party processing expense	29,012			26,223			15,067			13,620			14,810		13,659			43,822			39,882
FDIC insurance and other regulatory fees	13,335			13,645			6,543			6,875			6,430		7,078			19,765			20,723
Professional fees	11,789			12,907			6,284			7,551			6,298		7,141			18,087			20,048
Advertising expense	10,312			11,258			5,220			5,346			3,735		3,610			14,046			14,868
Valuation adjustment to Visa derivative	2,328			—			2,328			—
Foreclosed real estate expense, net	749			3,582			(107		)	1,448			360		7,265			1,110			10,847
Earnout liability adjustment	—			1,707			—			1,707
Earnout liability adjustments													11,652		2,059			11,652			3,766
Merger-related expense													6,684		23			6,684			110
Restructuring charges, net	(212		)	6,524			103			13			21		519			(191		)	7,043
Other operating expenses	42,204			41,619			24,102			20,041			23,878		24,044			68,410			65,577
Total non-interest expense	399,234			389,133			204,057			191,747			220,297		205,646			619,531			594,780
Income before income taxes	275,494			223,496			142,117			117,791			128,008		152,675			403,502			376,171
Income tax expense	61,146			75,635			30,936			41,788			18,949		54,668			80,095			130,303
Net income	214,348			147,861			111,181			76,003			109,059		98,007			323,407			245,868
Dividends on preferred stock	5,119			5,119			2,559			2,559
Less: Preferred stock dividends and redemption charge													9,729		2,559			14,848			7,678
Net income available to common shareholders	$	209,229		$	142,742		$	108,622		$	73,444		$	99,330	$	95,448		$	308,559		$	238,190
Net income per common share, basic	$	1.77		$	1.17		$	0.92		$	0.60		$	0.85	$	0.79		$	2.61		$	1.96
Net income per common share, diluted	1.75			1.16			0.91			0.60			0.84		0.78			2.60			1.94
Weighted average common shares outstanding, basic	118,531			122,251			118,397			122,203			117,241		120,900			118,096			121,796
Weighted average common shares outstanding, diluted	119,229			123,043			119,139			123,027			118,095		121,814			118,847			122,628

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Six Months Ended June 30,																		Three Months Ended September 30,
	2018									2017									2018									2017
(in thousands)	Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Net income	$	275,494		$	(61,146	)	$	214,348		$	223,496		$	(75,635	)	$	147,861		$	128,008		$	(18,949	)	$	109,059		$	152,675		$	(54,668	)	$	98,007
Net change related to cash flow hedges:
Reclassification adjustment for losses realized in net income	—			—			—			130			(50		)	80
Net unrealized (losses) gains on investment securities available for sale:
Reclassification adjustment for net losses (gains) realized in net income	1,296			(336		)	960			(7,667		)	2,952			(4,715		)
Reclassification adjustment for net losses realized in net income																			—			—			—			7,956			(3,063		)	4,893
Net unrealized (losses) gains arising during the period	(86,921		)	22,512			(64,409		)	20,250			(7,797		)	12,453			(24,210		)	6,270			(17,940		)	5,465			(2,106		)	3,359
Net unrealized (losses) gains	(85,625		)	22,176			(63,449		)	12,583			(4,845		)	7,738			(24,210		)	6,270			(17,940		)	13,421			(5,169		)	8,252
Post-retirement unfunded health benefit:
Reclassification adjustment for gains realized in net income	(68		)	22			(46		)	(40		)	16			(24		)	(35		)	9			(26		)	(34		)	13			(21		)
Net unrealized (realized) gains	(68		)	22			(46		)	(40		)	16			(24		)
Actuarial (losses) gains arising during the period																			(46		)	12			(34		)	61			(23		)	38
Net increase (decrease) in unrealized gains, net																			(81		)	21			(60		)	27			(10		)	17
Other comprehensive (loss) income	$	(85,693	)	$	22,198		$	(63,495	)	$	12,673		$	(4,879	)	$	7,794		$	(24,291	)	$	6,291		$	(18,000	)	$	13,448		$	(5,179	)	$	8,269
Comprehensive income							$	150,853								$	155,655								$	91,059								$	106,276

	Three Months Ended June 30,																		Nine Months Ended September 30,
	2018									2017									2018									2017
(in thousands)	Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before-tax Amount			Tax (Expense) Benefit			Net of Tax Amount			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		$	403,502		$	(80,095	)	$	323,407		$	376,171		$	(130,303	)	$	245,868
Net change related to cash flow hedges:
Reclassification adjustment for losses realized in net income	—			—			—			65			(25		)	40			—			—			—			130			(50		)	80
Net unrealized (losses) gains on investment securities available for sale:
Reclassification adjustment for net losses realized in net income	1,296			(336		)	960			1			—			1			1,296			(336		)	960			289			(111		)	178
Net unrealized (losses) gains arising during the period	(25,476		)	6,598			(18,878		)	11,150			(4,293		)	6,857			(111,131		)	28,782			(82,349		)	25,715			(9,903		)	15,812
Net unrealized (losses) gains	(24,180		)	6,262			(17,918		)	11,151			(4,293		)	6,858			(109,835		)	28,446			(81,389		)	26,004			(10,014		)	15,990
Post-retirement unfunded health benefit:
Reclassification adjustment for gains realized in net income	(34		)	9			(25		)	(20		)	8			(12		)	(103		)	31			(72		)	(74		)	29			(45		)
Net unrealized (realized) gains	(34		)	9			(25		)	(20		)	8			(12		)
Actuarial (losses) gains arising during the period																			(46		)	12			(34		)	61			(23		)	38
Net increase (decrease) in unrealized gains, net																			(149		)	43			(106		)	(13		)	6			(7		)
Other comprehensive (loss) income	$	(24,214	)	$	6,271		$	(17,943	)	$	11,196		$	(4,310	)	$	6,886		$	(109,984	)	$	28,489		$	(81,495	)	$	26,121		$	(10,058	)	$	16,063
Comprehensive income							$	93,238								$	82,889								$	241,912								$	261,931

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 D Preferred Stock		Series C Preferred Stock		Common Stock		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total			Series 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, 2016	$	—	$	125,980	$	142,026	$	3,028,405		$	(664,595	)	$	(55,659	)	$	351,767		$	2,927,924		$	—	$	125,980		$	142,026	$	3,028,405		$	(664,595	)	$	(55,659	)	$	351,767		$	2,927,924
Net income	—		—		—		—			—			—			147,861			147,861			—		—			—		—			—			—			245,868			245,868
Other comprehensive income, net of income taxes	—		—		—		—			—			7,794			—			7,794			—		—			—		—			—			16,063			—			16,063
Cash dividends declared on common stock - $0.30 per share	—		—		—		—			—			—			(36,696		)	(36,696		)
Cash dividends declared on common stock - $0.45 per share																						—		—			—		—			—			—			(54,671		)	(54,671		)
Cash dividends paid on Series C Preferred Stock	—		—		—		—			—			—			(5,119		)	(5,119		)	—		—			—		—			—			—			(7,678		)	(7,678		)
Repurchases of common stock	—		—		—		—			(45,349		)	—			—			(45,349		)	—		—			—		—			(135,914		)	—			—			(135,914		)
Restricted share unit activity	—		—		330		(7,850		)	—			—			(290		)	(7,810		)	—		—			335		(8,007		)	—			—			(290		)	(7,962		)
Stock options exercised	—		—		143		2,361			—			—			—			2,504			—		—			164		2,708			—			—			—			2,872
Share-based compensation expense	—		—		—		6,838			—			—			—			6,838			—		—			—		10,576			—			—			—			10,576
Balance at June 30, 2017	$	—	$	125,980	$	142,499	$	3,029,754		$	(709,944	)	$	(47,865	)	$	457,523		$	2,997,947
Balance at September 30, 2017																						$	—	$	125,980		$	142,525	$	3,033,682		$	(800,509	)	$	(39,596	)	$	534,996		$	2,997,078

Balance at December 31, 2017	$	—	$	125,980	$	142,678	$	3,043,129		$	(839,674	)	$	(54,754	)	$	544,207		$	2,961,566		$	—	$	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		)
Cumulative-effect adjustment from adoption of ASU 2014-09																						—		—			—		—			—			—			(685		)	(685		)
Reclassification from adoption of ASU 2018-02	—		—		—		—			—			(7,588		)	7,588			—			—		—			—		—			—			(7,588		)	7,588			—
Cumulative effect adjustment from adoption of ASU 2016-01	—		—		—		—			—			117			(117		)	—
Cumulative-effect adjustment from adoption of ASU 2016-01																						—		—			—		—			—			117			(117		)	—
Net income	—		—		—		—			—			—			214,348			214,348			—		—			—		—			—			—			323,407			323,407
Other comprehensive loss, net of income taxes	—		—		—		—			—			(63,495		)	—			(63,495		)	—		—			—		—			—			(81,495		)	—			(81,495		)
Cash dividends declared on common stock - $0.50 per share	—		—		—		—			—			—			(59,185		)	(59,185		)
Cash dividends declared on common stock - $0.75 per share																						—		—			—		—			—			—			(88,396		)	(88,396		)
Cash dividends paid on Series C Preferred Stock	—		—		—		—			—			—			(5,119		)	(5,119		)	—		—			—		—			—			—			(7,678		)	(7,678		)
Redemption of Series C Preferred Stock																						—		(125,980		)	—		—			—			—			(4,020		)	(130,000		)
Issuance of Series D Preferred Stock, net of issuance costs	195,138		—		—		—			—			—			—			195,138			195,138		—			—		—			—			—			—			195,138
Cash dividends paid on Series D Preferred Stock																						—		—			—		—			—			—			(3,150		)	(3,150		)
Repurchases of common stock	—		—		—		—			(76,810		)	—			—			(76,810		)	—		—			—		—			(134,804		)	—			—			(134,804		)
Restricted share unit activity	—		—		289		(8,220		)	—			—			(349		)	(8,280		)
Restricted share unit vesting and taxes paid related to net share settlement																						—		—			293		(8,355		)	—			—			(349		)	(8,411		)
Stock options exercised	—		—		111		1,785			—			—			—			1,896			—		—			122		1,955			—			—			—			2,077
Share-based compensation expense	—		—		—		8,320			—			—			—			8,320			—		—			—		12,504			—			—			—			12,504
Balance at June 30, 2018	$	195,138	$	125,980	$	143,078	$	3,045,014		$	(916,484	)	$	(125,720	)	$	700,688		$	3,167,694
Balance at September 30, 2018																						$	195,138	$	—		$	143,093	$	3,049,233		$	(974,478	)	$	(143,720	)	$	770,807		$	3,040,073

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Six Months Ended June 30,						Nine Months Ended September 30,
(in thousands)	2018			2017			2018			2017
Operating Activities
Net income	$	214,348		$	147,861		$	323,407		$	245,868
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	24,566			18,934			39,548			58,620
Depreciation, amortization, and accretion, net	28,661			29,334			41,716			44,786
Deferred income tax expense	5,222			70,484			9,360			114,205
Originations of mortgage loans held for sale	(286,070		)	(325,094		)	(429,531		)	(490,202		)
Proceeds from sales of mortgage loans held for sale	287,175			323,861			449,651			500,786
Gain on sales of mortgage loans held for sale, net	(6,198		)	(7,049		)	(9,886		)	(10,587		)
Increase in other assets	(52,294		)	(4,124		)	(82,608		)	(6,678		)
Increase (decrease) in other liabilities	8,292			(9,667		)
Investment securities losses (gains), net	1,296			(7,667		)
Increase in other liabilities							17,690			17,718
Investment securities losses, net							1,296			289
Share-based compensation expense	8,320			6,838			12,504			10,576
Net cash provided by operating activities	233,318			243,711			373,147			485,381

Investing Activities
Proceeds from maturities and principal collections of investment securities available for sale	294,152			313,902			457,151			483,307
Proceeds from sales of investment securities available for sale	35,066			338,381			35,066			812,293
Purchases of investment securities available for sale	(367,458		)	(748,754		)	(510,797		)	(1,195,302		)
Proceeds from sales of loans	13,954			10,747			15,454			26,386
Proceeds from sales of other real estate	4,631			5,492
Net increase in loans	(382,086		)	(612,309		)
Proceeds from sales of other real estate and other assets							8,676			11,517
Net increase in loans including purchases of loans							(842,383		)	(755,231		)
Purchases of bank-owned life insurance policies, net of settlements	1,783			(73,110		)	1,783			(150,000		)
Net increase in premises and equipment	(26,780		)	(15,386		)	(39,034		)	(34,717		)
Proceeds from sales of other assets held for sale	2,106			3,158
Net cash used in investing activities	(424,632		)	(777,879		)	(874,084		)	(801,747		)

Financing Activities
Net (decrease) increase in demand and savings deposits	(39,614		)	367,450			(152,313		)	335,438
Net increase in certificates of deposit	334,130			202,927			437,655			1,202,926
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements	46,390			(9,320		)	29,955			(18,160		)
Net change in other short-term borrowings							378,540			—
Repayments and redemption of long-term debt	(2,330,052		)	(1,128,591		)	(2,230,052		)	(1,653,613		)
Proceeds from issuance of long-term debt	2,280,000			1,075,000			2,280,000			1,375,000
Dividends paid to common shareholders	(47,510		)	(18,349		)	(77,020		)	(36,681		)
Dividends paid to preferred shareholders	(5,119		)	(5,119		)	(10,828		)	(7,678		)
Proceeds from issuance of Series D Preferred Stock	195,138			—			195,138			—
Redemption of Series C Preferred Stock							(130,000		)	—
Stock options exercised	1,896			2,504			2,077			2,872
Repurchase of common stock	(76,810		)	(45,349		)	(134,804		)	(135,914		)
Taxes paid related to net share settlement of equity awards	(8,280		)	(7,810		)	(8,411		)	(7,962		)
Net cash provided by financing activities	350,169			433,343			579,937			1,056,228
Increase/(decrease) in cash and cash equivalents including restricted cash	158,855			(100,825		)
Increase in cash and cash equivalents including restricted cash							79,000			739,862
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period⁽¹⁾	932,933			999,045			932,933			999,045
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period⁽¹⁾	$	1,091,788		$	898,220		$	1,011,933		$	1,738,907

Supplemental Cash Flow Information
Cash paid during the period for:
Income tax payments, net	$	38,619		$	8,768		$	40,340		$	11,195
Interest paid	80,884			67,007			122,182			101,632
Non-cash Activities
Premises and equipment transferred to other assets held for sale	785			—
Other assets held for sale transferred to premises and equipment	—			4,450
Premises and equipment transferred to/(from) other assets							785			(3,387		)
Loans foreclosed and transferred to other real estate	7,561			5,516			11,280			6,571
Loans transferred to other loans held for sale at fair value	5,233			10,584
ASU 2014-09 cumulative effect adjustment to opening balance of retained earnings	(685		)	—
Loans transferred to/(from) other loans held for sale at fair value							4,088			77,774
Topic 606 cumulative-effect adjustment to opening balance of retained earnings							(685		)	—
Equity investment securities available for sale transferred to other assets at fair value	3,162			—			3,162			—
Securities purchased during the period but settled after period-end							—			193,286
Dividends declared on common stock during the period but paid after period-end	29,510			18,349			29,211			17,990

See accompanying notes to unaudited interim consolidated financial statements.

⁽¹⁾See "Note 1 - ~~Significant Accounting Policies"~~Basis of Presentation" 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~~Basis of Presentation

~~Business Operations~~General

The accompanying unaudited interim consolidated financial statements of Synovus Financial Corp. include the accounts of the Parent Company and its consolidated subsidiaries. Synovus Financial Corp. is a financial services company based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the company provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance and international banking.

Synovus Bank is positioned in ~~some of the highest growth~~ markets in the Southeast, with ~~250~~249 branches and 334 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' 2017 Form 10-K.

Reclassifications

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~~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 and the recently adopted accounting standards listed below, there have been no significant changes to the accounting policies as disclosed in Synovus' 2017 Form 10-K.

Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.

Use of Estimates in the Preparation of Financial Statements

In preparing the 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 and the fair value of investment ~~securities, and the fair value of private equity investments.~~

~~Cash and Cash Equivalents~~

Cash and cash equivalents consist of cash and due from banks, interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, federal funds sold and securities purchased under resale 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, 2018 and December 31, 2017, interest bearing funds with the Federal Reserve Bank included $35.7 million and $8.6 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $2.7 million and $5.9 million at June 30, 2018 and December 31, 2017, respectively, which are pledged as collateral in connection with certain letters of credit. Federal funds sold include $30.6 million and $43.8 million at June 30, 2018 and December 31, 2017, respectively, which are pledged to collateralize certain derivative financial instruments. Federal funds sold and securities purchased under resale agreements generally mature in one day.

~~Income Taxes~~securities.

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~~

ASU 2014-09, Revenue from Contracts with Customers (Topic 606)issued by the FASB in May 2014, and all subsequent ASUs that modified Topic 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:~~Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued ASU 2016-01, ~~that~~which included targeted amendments to accounting guidance for recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting or those that are 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 beginning 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 Synovus 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 sale to other assets and a $117 thousand cumulative-effect adjustment that decreased retained earnings, with offsetting related adjustments to deferred taxes and AOCI. ASU 2016-01 also emphasizes the existing requirement to use an exit price concept to measure fair value for disclosure purposes in determining the fair value of loans. Determination of the fair value under the exit price method requires judgment because substantially all of the loans within the loan portfolio do not have observable market prices. The adoption of this guidance did not have a significant impact on Synovus' fair value disclosures.

~~Reclassifications~~ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of ASC 820. The amendments in this ASU remove, modify, and add certain required disclosures on fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019; early adoption is permitted. Synovus elected to early adopt ASU 2018-13 for eliminated and modified disclosures upon issuance of this ASU. Synovus will delay adoption of the additional disclosures until their effective date. The adoption of this guidance did not have a significant impact on Synovus' fair value disclosures.

~~Prior periods' consolidated~~ASU 2018-15,Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.In August 2018, the FASB issued ASU 2018-15, which amends ASC 350-40. The ASU aligns the requirements for capitalizing implementation costs for a hosting arrangement that is a service contract with those incurred for hosting arrangements that contain a software license as well as those incurred to develop or implement software for internal use. This guidance is effective for fiscal years beginning after December 15, 2019; early adoption is permitted. Synovus elected to early adopt ASU 2018-15, on a prospective basis, upon issuance of this ASU. As of September 30, 2018, no implementation costs have been capitalized under this ASU. Synovus expects to capitalize certain qualifying implementation, set-up, and other upfront costs related to hosting arrangements under a service contract during the fourth quarter of 2018.

Recently Issued Accounting Standards Not Yet Adopted

ASU 2016-13,Financial Instruments--Credit Losses (CECL).In June 2016, the FASB issued new guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with an 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 with early adoption permitted on January 1, 2019. Synovus will adopt the guidance on January 1, 2020. Upon adoption, Synovus will 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. 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 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 2016-02, Leases (ASC 842). In February 2016, the FASB issued ASU 2016-02, its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. Under the new standard, all lessees will

recognize a right-of-use asset and a lease liability, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged from existing GAAP. Additional amendments include, but are ~~reclassified whenever necessary to conform~~not limited to, the ~~current periods' presentation.~~elimination of leveraged leases; modification to the definition of a lease; amendments on sale and leaseback transactions; and disclosure of additional qualitative and quantitative information.

In July 2018, the FASB issued ASU 2018-11, Leases (ASC 842), Targeted Improvements. The ASU 2018-11 amendments include an optional transition method to apply ASU 2016-02 on a prospective basis as of the effective date, with a cumulative- effect adjustment to retained earnings in the period of adoption, instead of applying the guidance using the modified retrospective approach as originally required under ASU 2016-02. ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to not separate lease and non-lease components under certain circumstances, and clarifies which guidance (ASC 842 or ASC 606) to apply to the combined lease and non-lease components.

Synovus will elect the optional transition method provided through ASU 2018-11 and will adopt ASU 2016-02 prospectively on January 1, 2019. Synovus will elect the package of practical expedients to not reassess (a) whether existing contracts contain leases, (b) lease classification for existing leases, and (c) initial direct cost for any existing leases. Synovus currently expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to substantially all of the $230 million of future minimum lease commitments as disclosed in Note 7 of Synovus' 2017 Form 10-K. Additionally, Synovus expects to recognize a cumulative-effect adjustment upon adoption to increase the beginning balance of retained earnings as of January 1, 2019 for any remaining deferred gains on sale-leaseback transactions that occurred prior to the date of initial application. Synovus had approximately $5.2 million of such deferred gains recorded as of September 30, 2018. Synovus does not expect this ASU to have a material impact on the timing of expense recognition in its consolidated statements of income.

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 provided 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 a three to five year 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 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. During the three months ended September 30, 2017, Synovus completed the determination of the final allocation of the purchase price with respect to the assets acquired and 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 a three to five year period, with amounts based on a percentage of "Global One Earnings," as defined in the merger agreement. The Earnout Payments consist of shares of Synovus common stock as well as a smaller cash consideration component. The first annual Earnout Payment of stock and cash valued at $6.4 million was made during November 2017. During the quarter ended September 30, 2018, Synovus recorded an $11.7 million increase to the earnout liability driven by increased earnings projections of Global One. The ~~balance~~total fair value of the earnout liability at ~~June~~September 30, 2018 was ~~$11.3~~$23.0 million based on the estimated fair value of the remaining Earnout Payments.

~~Note 3 - Share Repurchase Program~~

Note 43 - Investment Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at ~~June~~September 30, 2018 and December 31, 2017 are summarized below.


	June 30, 2018									September 30, 2018
(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	$	122,800	$	—	$	(2,167	)	$	120,633	$	123,265	$	—	$	(2,626	)	$	120,639
U.S. Government agency securities	40,753		181		—			40,934		38,020		102		(258		)	37,864
Mortgage-backed securities issued by U.S. Government agencies	111,406		107		(3,569		)	107,944		104,933		75		(4,125		)	100,883
Mortgage-backed securities issued by U.S. Government sponsored enterprises	2,614,668		59		(87,882		)	2,526,845		2,592,827		70		(103,532		)	2,489,365
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	1,159,859		139		(43,550		)	1,116,448		1,168,378		—		(50,675		)	1,117,703
State and municipal securities	115		—		—			115
Corporate debt and other debt securities	17,000		186		(143		)	17,043		17,000		155		(35		)	17,120
Total investment securities available for sale	$	4,066,601	$	672	$	(137,311	)	$	3,929,962	$	4,044,423	$	402	$	(161,251	)	$	3,883,574

	December 31, 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	$	83,608	$	—	$	(934	)	$	82,674	$	83,608	$	—	$	(934	)	$	82,674
U.S. Government agency securities	10,771		91		—			10,862		10,771		91		—			10,862
Mortgage-backed securities issued by U.S. Government agencies	121,283		519		(1,362		)	120,440		121,283		519		(1,362		)	120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises	2,666,818		5,059		(31,354		)	2,640,523		2,666,818		5,059		(31,354		)	2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	1,135,259		144		(23,404		)	1,111,999		1,135,259		144		(23,404		)	1,111,999
State and municipal securities	180		—		—			180		180		—		—			180
Corporate debt and other securities	20,320		294		(223		)	20,391		20,320		294		(223		)	20,391
Total investment securities available for sale	$	4,038,239	$	6,107	$	(57,277	)	$	3,987,069	$	4,038,239	$	6,107	$	(57,277	)	$	3,987,069

At ~~June~~September 30, 2018 and December 31, 2017, investment securities with a carrying value of $~~1.35~~1.29 billion and $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~~September 30, 2018 and December 31, 2017 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~~For investment securities that Synovus does not expect to sell, or it is not more likely than not it will be required to sell prior to recovery of its amortized cost basis, the ~~fair value~~credit component of ~~available for sale securities below their cost that are deemed to have~~an OTTI ~~are reflected~~would be recognized in earnings ~~as realized losses to~~and the ~~extent the impairment is related to credit losses. The amount of the impairment related to other factors is~~non-credit component would be recognized in ~~other comprehensive income.~~OCI. Currently, unrealized losses on debt securities are attributable to increases in interest rates on comparable securities from the date of purchase. Synovus regularly evaluates its investment securities portfolio to ensure that there are no conditions that would indicate that unrealized losses represent OTTI. These factors include the length of time the security has been in a loss position, the extent that the fair value is below amortized cost, and the credit standing of the issuer.

As of ~~June~~September 30, 2018, Synovus had 8043 investment securities in a loss position for less than twelve months and 55100 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~~September 30, 2018 and December 31, 2017 are presented below.


	June 30, 2018												September 30, 2018
	Less than 12 Months				12 Months or Longer				Total				Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities	$	72,386	$	1,378	$	29,255	$	789	$	101,641	$	2,167	$	38,352	$	739	$	62,905	$	1,887	$	101,257	$	2,626
U.S. Government agency securities													29,727		258		—		—		29,727		258
Mortgage-backed securities issued by U.S. Government agencies	23,240		632		67,765		2,937		91,005		3,569		15,655		364		73,555		3,761		89,210		4,125
Mortgage-backed securities issued by U.S. Government sponsored enterprises	1,703,526		49,197		812,767		38,685		2,516,293		87,882		830,455		24,765		1,618,843		78,767		2,449,298		103,532
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	609,505		21,190		412,961		22,360		1,022,466		43,550		214,420		3,406		903,283		47,269		1,117,703		50,675
Corporate debt and other debt securities	—		—		1,857		143		1,857		143		—		—		1,965		35		1,965		35
Total	$	2,408,657	$	72,397	$	1,324,605	$	64,914	$	3,733,262	$	137,311	$	1,128,609	$	29,532	$	2,660,551	$	131,719	$	3,789,160	$	161,251

	December 31, 2017												December 31, 2017
	Less than 12 Months				12 Months or Longer				Total				Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities	$	34,243	$	443	$	29,562	$	491	$	63,805	$	934	$	34,243	$	443	$	29,562	$	491	$	63,805	$	934
Mortgage-backed securities issued by U.S. Government agencies	36,810		357		55,740		1,005		92,550		1,362		36,810		357		55,740		1,005		92,550		1,362
Mortgage-backed securities issued by U.S. Government sponsored enterprises	1,271,012		10,263		929,223		21,091		2,200,235		31,354		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 enterprises	653,781		9,497		426,237		13,907		1,080,018		23,404		653,781		9,497		426,237		13,907		1,080,018		23,404
Corporate debt and other securities	—		—		5,097		223		5,097		223		—		—		5,097		223		5,097		223
Total	$	1,995,846	$	20,560	$	1,445,859	$	36,717	$	3,441,705	$	57,277	$	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~~September 30, 2018 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, 2018										Distribution of Maturities at September 30, 2018
(in thousands)	Within One Year		1 to 5 Years		5 to 10 Years		More Than 10 Years		Total		Within One Year		1 to 5 Years		5 to 10 Years		More Than 10 Years		Total
Amortized Cost
U.S. Treasury securities	$	18,993	$	103,807	$	—	$	—	$	122,800	$	19,382	$	103,883	$	—	$	—	$	123,265
U.S. Government agency securities	2,330		6,437		31,986		—		40,753		1,917		6,118		29,985		—		38,020
Mortgage-backed securities issued by U.S. Government agencies	—		—		27,725		83,681		111,406		—		—		25,659		79,274		104,933
Mortgage-backed securities issued by U.S. Government sponsored enterprises	1		1,471		615,334		1,997,862		2,614,668		—		43,496		556,115		1,993,216		2,592,827
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		—		17,355		1,142,504		1,159,859		—		—		28,367		1,140,011		1,168,378
State and municipal securities	115		—		—		—		115
Corporate debt and other debt securities	—		—		15,000		2,000		17,000		—		—		15,000		2,000		17,000
Total amortized cost	$	21,439	$	111,715	$	707,400	$	3,226,047	$	4,066,601	$	21,299	$	153,497	$	655,126	$	3,214,501	$	4,044,423

Fair Value
U.S. Treasury securities	$	18,993	$	101,640	$	—	$	—	$	120,633	$	19,382	$	101,257	$	—	$	—	$	120,639
U.S. Government agency securities	2,337		6,455		32,142		—		40,934		1,937		6,200		29,727		—		37,864
Mortgage-backed securities issued by U.S. Government agencies	—		—		27,266		80,678		107,944		—		—		25,154		75,729		100,883
Mortgage-backed securities issued by U.S. Government sponsored enterprises	1		1,520		596,366		1,928,958		2,526,845		—		42,630		534,881		1,911,854		2,489,365
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		—		16,855		1,099,593		1,116,448		—		—		27,198		1,090,505		1,117,703
State and municipal securities	115		—		—		—		115
Corporate debt and other debt securities	—		—		15,186		1,857		17,043		—		—		15,155		1,965		17,120
Total fair value	$	21,446	$	109,615	$	687,815	$	3,111,086	$	3,929,962	$	21,319	$	150,087	$	632,115	$	3,080,053	$	3,883,574

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 2017 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,						Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2018			2017			2018			2017			2018		2017			2018			2017
Proceeds from sales of investment securities available for sale	$	35,066		$	338,381		$	35,066		$	55,752		$	—	$	473,912		$	35,066		$	812,293
Gross realized gains on sales	—			7,942			—			239			—		—			—			7,942
Gross realized losses on sales	(1,296		)	(275		)	(1,296		)	(240		)	—		(7,956		)	(1,296		)	(8,231		)
Investment securities (losses) gains, net	$	(1,296	)	$	7,667		$	(1,296	)	$	(1	)
Investment securities losses, net													$	—	$	(7,956	)	$	(1,296	)	$	(289	)

~~Note 5 - Restructuring Charges~~

~~For the six and three months ended June 30, 2018 and 2017, total restructuring charges consist of the following components:~~

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 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 of 2017.

~~The following tables present aggregate activity within the accrual for restructuring charges for the six and three months ended June 30, 2018 and 2017:~~

(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, 2016 $ 81
$ 3,968
$ 4,049
Accrual for voluntary and involuntary termination benefits 6,453
—
6,453
Payments (2,803 ) (438 ) (3,241 )
Balance at June 30, 2017 $ 3,731
$ 3,530
$ 7,261

Balance at April 1, 2017 6,315
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 in which they were incurred. No other restructuring charges resulted in payment accruals.~~

Note 64 - 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~~September 30, 2018 and December 31, 2017.


Current, Accruing Past Due, and Non-accrual Loans	Current, Accruing Past Due, and Non-accrual Loans														Current, Accruing Past Due, and Non-accrual Loans
	June 30, 2018														September 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			$	7,185,447	$	25,850	$	1,159	$	27,009	$	69,010	$	7,281,466
Owner-occupied	4,994,038		4,180		98		4,278		6,076		5,004,392				5,206,192		8,879		1,049		9,928		5,708		5,221,828
Total commercial and industrial	12,164,915		22,605		645		23,250		87,307		12,275,472				12,391,639		34,729		2,208		36,937		74,718		12,503,294
Investment properties	5,505,409		1,838		611		2,449		1,738		5,509,596				5,661,605		1,930		—		1,930		2,155		5,665,690
1-4 family properties	715,154		2,309		—		2,309		3,247		720,710				701,406		2,651		—		2,651		3,139		707,196
Land and development	407,639		1,602		—		1,602		4,624		413,865				333,709		765		217		982		4,829		339,520
Total commercial real estate	6,628,202		5,749		611		6,360		9,609		6,644,171				6,696,720		5,346		217		5,563		10,123		6,712,406
Home equity lines	1,430,778		8,450		362		8,812		14,265		1,453,855				1,442,451		7,819		651		8,470		14,498		1,465,419
Consumer mortgages	2,741,064		4,805		244		5,049		4,822		2,750,935				2,832,971		4,960		—		4,960		5,313		2,843,244
Credit cards	235,406		1,793		1,225		3,018		—		238,424				241,334		2,170		1,645		3,815		—		245,149
Other consumer loans	1,783,466		8,990		135		9,125		1,325		1,793,916				1,809,033		18,444		135		18,579		3,773		1,831,385
Total consumer	6,190,714		24,038		1,966		26,004		20,412		6,237,130				6,325,789		33,393		2,431		35,824		23,584		6,385,197
Total loans	$	24,983,831	$	52,392	$	3,222	$	55,614	$	117,328	$	25,156,773	⁽¹	⁾	$	25,414,148	$	73,468	$	4,856	$	78,324	$	108,425	$	25,600,897	⁽¹	⁾

	December 31, 2017														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			$	7,097,127	$	11,214	$	1,016	$	12,230	$	70,130	$	7,179,487
Owner-occupied	4,830,150		6,880		479		7,359		6,654		4,844,163				4,830,150		6,880		479		7,359		6,654		4,844,163
Total commercial and industrial	11,927,277		18,094		1,495		19,589		76,784		12,023,650				11,927,277		18,094		1,495		19,589		76,784		12,023,650
Investment properties	5,663,665		2,506		90		2,596		3,804		5,670,065				5,663,665		2,506		90		2,596		3,804		5,670,065
1-4 family properties	775,023		3,545		202		3,747		2,849		781,619				775,023		3,545		202		3,747		2,849		781,619
Land and development	476,131		1,609		67		1,676		5,797		483,604				476,131		1,609		67		1,676		5,797		483,604
Total commercial real estate	6,914,819		7,660		359		8,019		12,450		6,935,288				6,914,819		7,660		359		8,019		12,450		6,935,288
Home equity lines	1,490,808		5,629		335		5,964		17,455		1,514,227				1,490,808		5,629		335		5,964		17,455		1,514,227
Consumer mortgages	2,622,061		3,971		268		4,239		7,203		2,633,503				2,622,061		3,971		268		4,239		7,203		2,633,503
Credit cards	229,015		1,930		1,731		3,661		—		232,676				229,015		1,930		1,731		3,661		—		232,676
Other consumer loans	1,461,223		10,333		226		10,559		1,669		1,473,451				1,461,223		10,333		226		10,559		1,669		1,473,451
Total consumer	5,803,107		21,863		2,560		24,423		26,327		5,853,857				5,803,107		21,863		2,560		24,423		26,327		5,853,857
Total loans	$	24,645,203	$	47,617	$	4,414	$	52,031	$	115,561	$	24,812,795	⁽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 ~~$22.7~~$23.8 million.

⁽²⁾Total before net deferred fees and costs of $25.3 million.

Loans with carrying values of $8.11 billion and $7.93 billion were pledged as collateral for borrowings and potential borrowings at September 30, 2018 and December 31, 2017, respectively, to the FHLB and Federal Reserve Bank.

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

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

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

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

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

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

In the following tables, consumer loans are generally assigned a risk grade similar to the classifications described above; however, upon reaching 90 days and 120 days past due, they are generally downgraded to Substandard and Loss, respectively, in accordance with the FFIEC 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 home equity lines and consumer mortgages secured by junior liens on 1-4 family residential properties also consider available information on the payment status of any associated senior liens with other financial institutions.


Loan Portfolio Credit Exposure by Risk Grade	Loan Portfolio Credit Exposure by Risk Grade															Loan Portfolio Credit Exposure by Risk Grade
	June 30, 2018															September 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			$	6,986,930	$	135,359	$	157,922	$	1,251	$	4	⁽³⁾	$	7,281,466
Owner-occupied	4,873,936		63,373		67,010		73		—			5,004,392				5,077,397		79,967		64,038		426		—			5,221,828
Total commercial and industrial	11,870,017		170,624		231,591		3,240		—			12,275,472				12,064,327		215,326		221,960		1,677		4			12,503,294
Investment properties	5,422,727		51,279		35,590		—		—			5,509,596				5,587,389		47,667		30,634		—		—			5,665,690
1-4 family properties	698,532		9,245		12,933		—		—			720,710				687,775		7,943		11,478		—		—			707,196
Land and development	369,071		29,612		12,053		3,129		—			413,865				298,696		24,661		12,689		3,129		345		⁽³⁾	339,520
Total commercial real estate	6,490,330		90,136		60,576		3,129		—			6,644,171				6,573,860		80,271		54,801		3,129		345			6,712,406
Home equity lines	1,435,724		—		16,599		175		1,357		⁽³⁾	1,453,855				1,446,606		—		17,513		175		1,125		⁽³⁾	1,465,419
Consumer mortgages	2,743,245		—		7,588		102		—		⁽³⁾	2,750,935				2,836,972		—		6,171		101		—			2,843,244
Credit cards	237,198		—		447		—		779		⁽⁴⁾	238,424				243,503		—		570		—		1,076		⁽⁴⁾	245,149
Other consumer loans	1,792,568		—		1,087		257		4		⁽³⁾	1,793,916				1,827,487		—		3,640		257		1		⁽³⁾	1,831,385
Total consumer	6,208,735		—		25,721		534		2,140			6,237,130				6,354,568		—		27,894		533		2,202			6,385,197
Total loans	$	24,569,082	$	260,760	$	317,888	$	6,903	$	2,140		$	25,156,773	⁽⁵	⁾	$	24,992,755	$	295,597	$	304,655	$	5,339	$	2,551		$	25,600,897	⁽⁵	⁾

	December 31, 2017															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				$	6,929,506	$	115,912	$	132,818	$	1,251	$	—		$	7,179,487
Owner-occupied	4,713,877		50,140		80,073		73		—			4,844,163				4,713,877		50,140		80,073		73		—			4,844,163
Total commercial and industrial	11,643,383		166,052		212,891		1,324		—			12,023,650				11,643,383		166,052		212,891		1,324		—			12,023,650
Investment properties	5,586,792		64,628		18,645		—		—			5,670,065				5,586,792		64,628		18,645		—		—			5,670,065
1-4 family properties	745,299		19,419		16,901		—		—			781,619				745,299		19,419		16,901		—		—			781,619
Land and development	431,759		33,766		14,950		3,129		—			483,604				431,759		33,766		14,950		3,129		—			483,604
Total commercial real estate	6,763,850		117,813		50,496		3,129		—			6,935,288				6,763,850		117,813		50,496		3,129		—			6,935,288
Home equity lines	1,491,105		—		21,079		285		1,758		⁽³⁾	1,514,227				1,491,105		—		21,079		285		1,758		⁽³⁾	1,514,227
Consumer mortgages	2,622,499		—		10,607		291		106		⁽³⁾	2,633,503				2,622,499		—		10,607		291		106		⁽³⁾	2,633,503
Credit cards	230,945		—		399		—		1,332		⁽⁴⁾	232,676				230,945		—		399		—		1,332		⁽⁴⁾	232,676
Other consumer loans	1,470,944		—		2,168		329		10		⁽³⁾	1,473,451				1,470,944		—		2,168		329		10		⁽³⁾	1,473,451
Total consumer	5,815,493		—		34,253		905		3,206			5,853,857				5,815,493		—		34,253		905		3,206			5,853,857
Total loans	$	24,222,726	$	283,865	$	297,640	$	5,358	$	3,206		$	24,812,795	₍₆	₎	$	24,222,726	$	283,865	$	297,640	$	5,358	$	3,206		$	24,812,795	₍₆	₎

⁽¹⁾ Includes ~~$209.6~~$204.1 million and $190.6 million of Substandard accruing loans at ~~June~~September 30, 2018 and December 31, 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 ~~$22.7~~$23.8 million.

⁽⁶⁾Total before net deferred fees and costs of $25.3 million.

The following table details the changes in the allowance for loan losses by loan segment for the ~~six~~three and ~~three~~nine months ended ~~June~~September 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, 2018												As Of and For The Three Months Ended September 30, 2018
(in thousands)	Commercial & Industrial			Commercial Real Estate			Consumer			Total			Commercial & Industrial			Commercial Real Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	126,803		$	74,998		$	47,467		$	249,268		$	130,335		$	75,205		$	46,185		$	251,725
Charge-offs	(23,786		)	(2,446		)	(9,894		)	(36,126		)	(13,526		)	(1,077		)	(3,993		)	(18,596		)
Recoveries	3,995			6,964			3,058			14,017			1,091			591			1,657			3,339
Provision for loan losses	23,323			(4,311		)	5,554			24,566			11,417			(1,447		)	5,012			14,982
Ending balance⁽¹⁾	$	130,335		$	75,205		$	46,185		$	251,725		$	129,317		$	73,272		$	48,861		$	251,450
Ending balance: individually evaluated for impairment	$	9,474		$	4,687		$	771		$	14,932		$	9,108		$	3,317		$	970		$	13,395
Ending balance: collectively evaluated for impairment	$	120,861		$	70,518		$	45,414		$	236,793		$	120,209		$	69,955		$	47,891		$	238,055
Loans:
Ending balance: total loans⁽¹⁾⁽²⁾	$	12,275,472		$	6,644,171		$	6,237,130		$	25,156,773		$	12,503,294		$	6,712,406		$	6,385,197		$	25,600,897
Ending balance: individually evaluated for impairment	$	107,544		$	53,805		$	27,676		$	189,025		$	102,671		$	37,988		$	28,963		$	169,622
Ending balance: collectively evaluated for impairment	$	12,167,928		$	6,590,366		$	6,209,454		$	24,967,748		$	12,400,623		$	6,674,418		$	6,356,234		$	25,431,275

	As Of and For The Six Months Ended June 30, 2017												As Of and For The Three Months Ended September 30, 2017
(in thousands)	Commercial & Industrial			Commercial Real Estate			Consumer			Total			Commercial & Industrial			Commercial Real Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	125,778		$	81,816		$	44,164		$	251,758		$	123,437		$	77,527		$	47,131		$	248,095
Charge-offs	(19,535		)	(3,207		)	(9,656		)	(32,398		)	(21,855		)	(8,129		)	(14,367		)	(44,351		)
Recoveries	3,282			3,648			2,871			9,801			1,899			2,543			1,811			6,253
Provision for loan losses	13,912			(4,730		)	9,752			18,934			23,022			6,019			10,645			39,686
Ending balance⁽¹⁾	$	123,437		$	77,527		$	47,131		$	248,095		$	126,503		$	77,960		$	45,220		$	249,683
Ending balance: individually evaluated for impairment	$	7,226		$	4,386		$	1,038		$	12,650		$	7,360		$	4,108		$	783		$	12,251
Ending balance: collectively evaluated for impairment	$	116,211		$	73,141		$	46,093		$	235,445		$	119,143		$	73,852		$	44,437		$	237,432
Loans:
Ending balance: total loans⁽¹⁾⁽³⁾	$	11,742,945		$	7,422,234		$	5,291,371		$	24,456,550		$	11,727,142		$	7,226,924		$	5,557,572		$	24,511,638
Ending balance: individually evaluated for impairment	$	122,889		$	73,638		$	31,688		$	228,215		$	109,434		$	64,909		$	30,132		$	204,475
Ending balance: collectively evaluated for impairment	$	11,620,056		$	7,348,596		$	5,259,683		$	24,228,335		$	11,617,708		$	7,162,015		$	5,527,440		$	24,307,163

⁽¹⁾⁽¹⁾As of and for the ~~six~~three months ended ~~June~~September 30, 2018 and 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 ~~$22.7~~$23.8 million.

⁽³⁾Total before net deferred fees and costs of ~~$26.0~~$24.3 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, 2018												As Of and For The Nine Months Ended September 30, 2018
(in thousands)	Commercial & Industrial			Commercial Real Estate			Consumer			Total			Commercial & Industrial			Commercial Real Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	134,745		$	73,991		$	49,028		$	257,764		$	126,803		$	74,998		$	47,467		$	249,268
Charge-offs	(15,770		)	(523		)	(5,211		)	(21,504		)	(37,312		)	(3,523		)	(13,888		)	(54,723		)
Recoveries	1,635			480			1,560			3,675			5,086			7,555			4,716			17,357
Provision for loan losses	9,725			1,257			808			11,790			34,740			(5,758		)	10,566			39,548
Ending balance⁽¹⁾	$	130,335		$	75,205		$	46,185		$	251,725		$	129,317		$	73,272		$	48,861		$	251,450
Ending balance: individually evaluated for impairment	$	9,474		$	4,687		$	771		$	14,932		$	9,108		$	3,317		$	970		$	13,395
Ending balance: collectively evaluated for impairment	$	120,861		$	70,518		$	45,414		$	236,793		$	120,209		$	69,955		$	47,891		$	238,055
Loans:
Ending balance: total loans⁽¹⁾⁽²⁾	$	12,275,472		$	6,644,171		$	6,237,130		$	25,156,773		$	12,503,294		$	6,712,406		$	6,385,197		$	25,600,897
Ending balance: individually evaluated for impairment	$	107,544		$	53,805		$	27,676		$	189,025		$	102,671		$	37,988		$	28,963		$	169,622
Ending balance: collectively evaluated for impairment	$	12,167,928		$	6,590,366		$	6,209,454		$	24,967,748		$	12,400,623		$	6,674,418		$	6,356,234		$	25,431,275

	As Of and For The Three Months Ended June 30, 2017												As Of and For The Nine Months Ended September 30, 2017
(in thousands)	Commercial & Industrial			Commercial Real Estate			Consumer			Total			Commercial & Industrial			Commercial Real Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	127,096		$	78,314		$	48,104		$	253,514		$	125,778		$	81,816		$	44,164		$	251,758
Charge-offs	(12,642		)	(1,299		)	(5,722		)	(19,663		)	(41,390		)	(11,336		)	(24,023		)	(76,749		)
Recoveries	1,458			759			1,767			3,984			5,181			6,191			4,682			16,054
Provision for loan losses	7,525			(247		)	2,982			10,260			36,934			1,289			20,397			58,620
Ending balance⁽¹⁾	$	123,437		$	77,527		$	47,131		$	248,095		$	126,503		$	77,960		$	45,220		$	249,683
Ending balance: individually evaluated for impairment	$	7,226		$	4,386		$	1,038		$	12,650		$	7,360		$	4,108		$	783		$	12,251
Ending balance: collectively evaluated for impairment	$	116,211		$	73,141		$	46,093		$	235,445		$	119,143		$	73,852		$	44,437		$	237,432
Loans:
Ending balance: total loans⁽¹⁾⁽³⁾	$	11,742,945		$	7,422,234		$	5,291,371		$	24,456,550		$	11,727,142		$	7,226,924		$	5,557,572		$	24,511,638
Ending balance: individually evaluated for impairment	$	122,889		$	73,638		$	31,688		$	228,215		$	109,434		$	64,909		$	30,132		$	204,475
Ending balance: collectively evaluated for impairment	$	11,620,056		$	7,348,596		$	5,259,683		$	24,228,335		$	11,617,708		$	7,162,015		$	5,527,440		$	24,307,163

⁽¹⁾⁽¹⁾As of and for the ~~three~~nine months ended ~~June~~September 30, 2018 and 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 ~~$22.7~~$23.8 million.

⁽³⁾Total before net deferred fees and costs of ~~$26.0~~$24.3 million.

The tables below summarize impaired loans (including accruing TDRs) as of ~~June~~September 30, 2018 and December 31, 2017.


Impaired Loans (including accruing TDRs)	Impaired Loans (including accruing TDRs)														Impaired Loans (including accruing TDRs)
	June 30, 2018						Six Months Ended June 30, 2018				Three Months Ended June 30, 2018				September 30, 2018						Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Recorded 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	$	—	$	20,884	$	26,878	$	—	$	21,118	$	—	$	14,458	$	—
Owner-occupied	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial and industrial	21,549		32,458		—		11,129		—		13,575		—		20,884		26,878		—		21,118		—		14,458		—
Investment properties	—		—		—		—		—		—		—		—		—		—		—		—		—		—
1-4 family properties	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Land and development	—		—		—		19		—		—		—		265		1,110		—		88		—		42		—
Total commercial real estate	—		—		—		19		—		—		—		265		1,110		—		88		—		42		—
Home equity lines	—		—		—		1,423		—		724		—		—		—		—		—		—		949		—
Consumer mortgages	62		87		—		1,330		—		1,780		—		33		60		—		42		—		901		—
Credit cards	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other consumer loans	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total consumer	62		87		—		2,753		—		2,504		—		33		60		—		42		—		1,850		—
Total impaired loans with no related allowance recorded	$	21,611	$	32,545	$	—	$	13,901	$	—	$	16,079	$	—	$	21,182	$	28,048	$	—	$	21,248	$	—	$	16,350	$	—
With allowance recorded
Commercial, financial and agricultural	$	45,171	$	45,385	$	6,813	$	62,564	$	428	$	57,930	$	155	$	35,181	$	36,127	$	6,024	$	40,136	$	143	$	55,088	$	571
Owner-occupied	40,824		40,884		2,660		38,073		730		38,432		373		46,606		47,292		3,084		44,366		435		40,171		1,165
Total commercial and industrial	85,995		86,269		9,473		100,637		1,158		96,362		528		81,787		83,419		9,108		84,502		578		95,259		1,736
Investment properties	24,218		24,218		1,659		23,604		418		24,439		220		13,846		13,846		1,566		14,103		179		20,437		597
1-4 family properties	10,458		10,458		309		11,466		442		11,217		226		8,307		8,307		191		9,697		176		10,876		619
Land and development	19,129		20,869		2,720		18,280		150		18,428		74		15,570		17,311		1,560		16,734		61		17,765		211
Total commercial real estate	53,805		55,545		4,688		53,350		1,010		54,084		520		37,723		39,464		3,317		40,534		416		49,078		1,427
Home equity lines	3,915		3,915		174		3,822		76		3,262		30		3,209		3,223		236		3,433		20		3,693		96
Consumer mortgages	18,767		18,767		350		19,283		394		19,459		199		20,201		20,201		575		19,924		225		19,496		618
Credit cards	—		—		—		—		—		4,985		—		—		—		—		—		—		—		—
Other consumer loans	4,932		4,938		248		5,188		143		—		72		5,520		5,520		159		5,284		69		5,220		212
Total consumer	27,614		27,620		772		28,293		613		27,706		301		28,930		28,944		970		28,641		314		28,409		926
Total impaired loans with allowance recorded	$	167,414	$	169,434	$	14,933	$	182,280	$	2,781	$	178,152	$	1,349	$	148,440	$	151,827	$	13,395	$	153,677	$	1,308	$	172,746	$	4,089
Total impaired loans
Commercial, financial and agricultural	$	66,720	$	77,843	$	6,813	$	73,693	$	428	$	71,505	$	155	$	56,065	$	63,005	$	6,024	$	61,254	$	143	$	69,546	$	571
Owner-occupied	40,824		40,884		2,660		38,073		730		38,432		373		46,606		47,292		3,084		44,366		435		40,171		1,165
Total commercial and industrial	107,544		118,727		9,473		111,766		1,158		109,937		528		102,671		110,297		9,108		105,620		578		109,717		1,736
Investment properties	24,218		24,218		1,659		23,604		418		24,439		220		13,846		13,846		1,566		14,103		179		20,437		597
1-4 family properties	10,458		10,458		309		11,466		442		11,217		226		8,307		8,307		191		9,697		176		10,876		619
Land and development	19,129		20,869		2,720		18,299		150		18,428		74		15,835		18,421		1,560		16,822		61		17,807		211
Total commercial real estate	53,805		55,545		4,688		53,369		1,010		54,084		520		37,988		40,574		3,317		40,622		416		49,120		1,427
Home equity lines	3,915		3,915		174		5,245		76		3,986		30		3,209		3,223		236		3,433		20		4,642		96
Consumer mortgages	18,829		18,854		350		20,613		394		21,239		199		20,234		20,261		575		19,966		225		20,397		618
Credit cards	—		—		—		—		—		4,985		—		—		—		—		—		—		—		—
Other consumer loans	4,932		4,938		248		5,188		143		—		72		5,520		5,520		159		5,284		69		5,220		212
Total consumer	27,676		27,707		772		31,046		613		30,210		301		28,963		29,004		970		28,683		314		30,259		926
Total impaired loans	$	189,025	$	201,979	$	14,933	$	196,181	$	2,781	$	194,231	$	1,349	$	169,622	$	179,875	$	13,395	$	174,925	$	1,308	$	189,096	$	4,089



Impaired Loans (including accruing TDRs)
	December 31, 2017						Year Ended December 31, 2017
(in thousands)	Recorded 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 industrial	8,220		9,576		—		28,351		—
Investment properties	—		—		—		123		—
1-4 family properties	—		—		—		323		—
Land and development	56		1,740		—		1,816		—
Total commercial real estate	56		1,740		—		2,262		—
Home equity lines	2,746		2,943		—		1,205		—
Consumer mortgages	—		—		—		496		—
Credit cards	—		—		—		—		—
Other consumer loans	—		—		—		—		—
Total consumer	2,746		2,943		—		1,701		—
Total impaired loans with no related allowance recorded	$	11,022	$	14,259	$	—	$	32,314	$	—
With allowance recorded
Commercial, financial and agricultural	$	65,715	$	65,851	$	7,406	$	50,468	$	1,610
Owner-occupied	37,399		37,441		2,109		40,498		1,382
Total commercial and industrial	103,114		103,292		9,515		90,966		2,992
Investment properties	23,364		23,364		1,100		28,749		1,144
1-4 family properties	15,056		15,056		504		16,257		925
Land and development	18,420		18,476		2,636		23,338		404
Total commercial real estate	56,840		56,896		4,240		68,344		2,473
Home equity lines	5,096		5,096		114		7,476		334
Consumer mortgages	18,668		18,668		569		19,144		896
Credit cards	—		—		—		—		—
Other consumer loans	5,546		5,546		470		4,765		266
Total consumer	29,310		29,310		1,153		31,385		1,496
Total impaired loans with allowance recorded	$	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-occupied	37,399		37,441		2,109		47,163		1,382
Total commercial and industrial	111,334		112,868		9,515		119,317		2,992
Investment properties	23,364		23,364		1,100		28,872		1,144
1-4 family properties	15,056		15,056		504		16,580		925
Land and development	18,476		20,216		2,636		25,154		404
Total commercial real estate	56,896		58,636		4,240		70,606		2,473
Home equity lines	7,842		8,039		114		8,681		334
Consumer mortgages	18,668		18,668		569		19,640		896
Credit cards	—		—		—		—		—
Other consumer loans	5,546		5,546		470		4,765		266
Total consumer	32,056		32,253		1,153		33,086		1,496
Total impaired loans	$	200,286	$	203,757	$	14,908	$	223,009	$	6,961

The average recorded investment in impaired loans was ~~$233.8~~$218.7 million and ~~$232.5~~$228.9 million respectively for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017. Interest income recognized for accruing TDRs was ~~$3.5~~$1.7 million and ~~$1.8~~$5.2 million respectively for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017. At ~~June~~September 30, 2018 and December 31, 2017, impaired loans of ~~$63.7~~$54.9 million and $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.

As of September 30, 2018 and December 31, 2017, there were no commitments to lend a material amount of additional funds to any customer whose loan was classified as a troubled debt restructuring.

The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 2017 that were reported as accruing or non-accruing TDRs.


TDRs by Concession Type
	Six Months Ended June 30, 2018											Three Months Ended September 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
Commercial, financial and agricultural	14	$	—	$	—	$	1,565	$	1,565			7	$	—	$	—	$	565	$	565
Owner-occupied	6	—		4,799		684		5,483				3	—		727		4,839		5,566
Total commercial and industrial	20	—		4,799		2,249		7,048				10	—		727		5,404		6,131
Investment properties	3	—		6,011		2,215		8,226				1	—		42		—		42
1-4 family properties	7	—		965		492		1,457				5	—		445		766		1,211
Land and development	3	—		—		1,786		1,786				1	—		—		71		71
Total commercial real estate	13	—		6,976		4,493		11,469				7	—		487		837		1,324
Home equity lines	3	—		172		148		320				1	—		—		191		191
Consumer mortgages	14	—		4,695		87		4,782				2	—		670		—		670
Credit cards	—	—		—		—		—				—	—		—		—		—
Other consumer loans	31	—		925		821		1,746				44	—		695		2,784		3,479
Total consumer	48	—		5,792		1,056		6,848				47	—		1,365		2,975		4,340
Total TDRs	81	$	—	$	17,567	$	7,798	$	25,365	⁽¹	⁾	64	$	—	$	2,579	$	9,216	$	11,795	⁽¹	⁾

	Three Months Ended June 30, 2018											Nine Months Ended September 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
Commercial, financial and agricultural	5	$	—	$	—	$	576	$	576			21	$	—	$	—	$	2,130	$	2,130
Owner-occupied	4	—		2,094		592		2,686				9	—		5,526		5,523		11,049
Total commercial and industrial	9	—		2,094		1,168		3,262				30	—		5,526		7,653		13,179
Investment properties	2	—		6,011		256		6,267				4	—		6,053		2,215		8,268
1-4 family properties	1	—		—		492		492				12	—		1,408		1,259		2,667
Land and development	3	—		—		1,786		1,786				4	—		—		1,856		1,856
Total commercial real estate	6	—		6,011		2,534		8,545				20	—		7,461		5,330		12,791
Home equity lines	3	—		172		148		320				4	—		172		339		511
Consumer mortgages	7	—		2,963		87		3,050				16	—		5,365		87		5,452
Credit cards	—	—		—		—		—				—	—		—		—		—
Other consumer loans	17	—		388		313		701				75	—		1,621		3,606		5,227
Total consumer	27	—		3,523		548		4,071				95	—		7,158		4,032		11,190
Total TDRs	42	$	—	$	11,628	$	4,250	$	15,878	⁽¹	⁾	145	$	—	$	20,145	$	17,015	$	37,160	⁽¹	⁾

⁽¹⁾~~No net~~Net charge-offs of $88 thousand were recorded during both the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 upon restructuring of these loans.


TDRs by Concession Type
	Six Months Ended June 30, 2017											Three Months Ended September 30, 2017
(in thousands, except contract data)	Number of Contracts	Principal Forgiveness		Below Market Interest Rate		Term Extensions and/or Other Concessions		Total				Number of Contracts	Principal Forgiveness		Below Market Interest Rate		Term Extensions and/or Other Concessions		Total
Commercial, financial and agricultural	28	$	—	$	5,760	$	6,279	$	12,039			22	$	—	$	2,943	$	5,866	$	8,809
Owner-occupied	1	—		—		22		22				3	—		35		1,683		1,718
Total commercial and industrial	29	—		5,760		6,301		12,061				25	—		2,978		7,549		10,527
Investment properties	—	—		—		—		—				—	—		—		—		—
1-4 family properties	16	—		2,089		513		2,602				5	—		—		964		964
Land and development	1	—		—		135		135				3	—		157		760		917
Total commercial real estate	17	—		2,089		648		2,737				8	—		157		1,724		1,881
Home equity lines	—	—		—		—		—				—	—		—		—		—
Consumer mortgages	1	—		—		9		9				7	—		248		1,181		1,429
Credit cards	—	—		—		—		—				—	—		—		—		—
Other consumer loans	8	—		—		570		570				17	—		682		388		1,070
Total consumer	9	—		—		579		579				24	—		930		1,569		2,499
Total TDRs	55	$	—	$	7,849	$	7,528	$	15,377	⁽²	⁾	57	$	—	$	4,065	$	10,842	$	14,907	⁽²	⁾

	Three Months Ended June 30, 2017											Nine Months Ended September 30, 2017
(in thousands, except contract data)	Number of Contracts	Principal Forgiveness		Below Market Interest Rate		Term Extensions and/or Other Concessions		Total				Number of Contracts	Principal Forgiveness		Below Market Interest Rate		Term Extensions and/or Other Concessions		Total
Commercial, financial and agricultural	10	$	—	$	1,895	$	740	$	2,635			50	$	—	$	8,703	$	12,145	$	20,848
Owner-occupied	1	—		—		22		22				4	—		35		1,705		1,740
Total commercial and industrial	11	—		1,895		762		2,657				54	—		8,738		13,850		22,588
Investment properties	—	—		—		—		—				—	—		—		—		—
1-4 family properties	8	—		478		196		674				21	—		2,090		1,477		3,567
Land and development	1	—		—		135		135				4	—		157		895		1,052
Total commercial real estate	9	—		478		331		809				25	—		2,247		2,372		4,619
Home equity lines	—	—		—		—		—				—	—		—		—		—
Consumer mortgages	1	—		—		9		9				8	—		248		1,190		1,438
Credit cards	—	—		—		—		—				—	—		—		—		—
Other consumer loans	5	—		—		295		295				25	—		682		958		1,640
Total consumer	6	—		—		304		304				33	—		930		2,148		3,078
Total TDRs	26	$	—	$	2,373	$	1,397	$	3,770	⁽²	⁾	112	$	—	$	11,915	$	18,370	$	30,285	⁽²	⁾

⁽²⁾No net charge-offs were recorded during the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017 upon restructuring of these loans.

For ~~both~~ the ~~six and~~ three months ended ~~June~~September 30, 2018 there were no defaults, and for the nine months ended September 30, 2018, there were eight defaults with a recorded investment of $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 ~~three defaults for both the six and three months ended June 30, 2017~~one default with a recorded investment of ~~$292 thousand.~~$206 thousand and four defaults with a recorded investment of $498 thousand for the three and nine months ended September 30, 2017, respectively.

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~~September 30, 2018, the allowance for loan losses allocated to accruing TDRs totaling ~~$125.3~~$114.7 million was ~~$6.5~~$6.9 million compared to accruing TDRs of $151.3 million with an allocated allowance for loan losses of $8.7 million at December 31, 2017. Non-accrual, non-homogeneous loans (commercial-type impaired loans greater than $1 million) that are designated as TDRs are individually measured for the amount of impairment, if any, both before and after the TDR ~~designation~~.designation.

Note 75 - Accumulated Other Comprehensive Income (Loss)

The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 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 Total
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) —
960
(25 ) 935
Net current period other comprehensive income —
(17,918 ) (25 ) (17,943 )
Balance as of June 30, 2018 $ (12,137 ) $ (114,565 ) $ 982
$ (125,720 )



Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)	Net unrealized losses on cash flow hedges			Net unrealized gains (losses) on investment securities available for sale			Post-retirement unfunded health benefit			Total
Balance as of July 1, 2018	$	(12,137	)	$	(114,565	)	$	982		$	(125,720	)
Other comprehensive loss before reclassifications	—			(17,940		)	(34		)	(17,974		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			(26		)	(26		)
Net current period other comprehensive loss	—			(17,940		)	(60		)	(18,000		)
Balance as of September 30, 2018	$	(12,137	)	$	(132,505	)	$	922		$	(143,720	)

Balance as of July 1, 2017	$	(12,137	)	$	(36,586	)	$	858		$	(47,865	)
Other comprehensive income before reclassifications	—			3,359			38			3,397
Amounts reclassified from accumulated other comprehensive income (loss)	—			4,893			(21		)	4,872
Net current period other comprehensive income	—			8,252			17			8,269
Balance as of September 30, 2017	$	(12,137	)	$	(28,334	)	$	875		$	(39,596	)


(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			Total			Net 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, 2017													$	(12,137	)	$	(43,470	)	$	853		$	(54,754	)
Other comprehensive loss before reclassifications													—			(82,349		)	(34		)	(82,383		)
Amounts reclassified from accumulated other comprehensive income (loss)													—			960			(72		)	888
Net current period other comprehensive loss													—			(81,389		)	(106		)	(81,495		)
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 September 30, 2018													$	(12,137	)	$	(132,505	)	$	922		$	(143,720	)

Balance at December 31, 2016	$	(12,217	)	$	(44,324	)	$	882		$	(55,659	)	$	(12,217	)	$	(44,324	)	$	882		$	(55,659	)
Other comprehensive income before reclassifications	—			12,453			—			12,453			—			15,812			38			15,850
Amounts reclassified from accumulated other comprehensive income (loss)	80			(4,715		)	(24		)	(4,659		)	80			178			(45		)	213
Net current period other comprehensive income	80			7,738			(24		)	7,794			80			15,990			(7		)	16,063
Balance as of June 30, 2017	$	(12,137	)	$	(36,586	)	$	858		$	(47,865	)
Balance as of September 30, 2017													$	(12,137	)	$	(28,334	)	$	875		$	(39,596	)

Balance as of April 1, 2017	$	(12,177	)	$	(43,444	)	$	870		$	(54,751	)
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 income (loss)	40			6,858			(12		)	6,886
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 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 instruments and available for sale securities as a single portfolio. As of ~~June~~September 30, 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 the 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
For the Six Months Ended June 30,
2018 2017
Net unrealized gains (losses) on cash flow hedges:
  Amortization of deferred losses $ —
$ (130 ) Interest expense
—
50
Income tax (expense) benefit
$ —
$ (80 ) Reclassifications, net of income taxes

Net unrealized gains on investment securities available for sale:
  Realized (losses) gains on sale of securities $ (1,296 ) $ 7,667
Investment securities gains, net
336
(2,952 ) Income tax (expense) benefit
$ (960 ) $ 4,715
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:
  Amortization of actuarial gains $ 68
$ 40
Salaries and other personnel expense
(22 ) (16 ) Income tax (expense) benefit
$ 46
$ 24
Reclassifications, net of income taxes

Details About
Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)

Affected Line Item
in the Statement Where
Net Income is Presented
For the Three Months Ended June 30,
2018 2017
Net unrealized gains (losses) on cash flow hedges:
  Amortization of deferred losses $ —
$ (65 ) Interest expense
—
25
Income tax (expense) benefit
$ —
$ (40 ) Reclassifications, net of income taxes

Net unrealized gains on investment securities available for sale:
  Realized losses on sale of securities $ (1,296 ) $ (1 ) Investment securities gains, net
336
—
Income tax (expense) benefit
$ (960 ) $ (1 ) Reclassifications, net of income taxes
Post-retirement unfunded health benefit:
  Amortization of actuarial gains $ 34
$ 20
Salaries and other personnel expense
(9 ) (8 ) Income tax (expense) benefit
$ 25
$ 12
Reclassifications, net of income taxes

Note 86 - 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 1~~	~~Quoted prices (unadjusted) in active markets for identical assets and liabilities for the instrument or security to be valued. Level 1 assets include U.S. Treasury securities and mutual funds.~~
~~Level 2~~	Observable 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 GSEs and agencies, obligations of states and municipalities, collateralized mortgage obligations issued by GSEs, and mortgage loans held-for-sale are generally included in this category.
~~Level 3~~	Unobservable 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 corporate securities, private equity investments, GGL/SBA loan servicing assets, and the earnout liability.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 15 - Fair Value Accounting" to the consolidated financial statements of Synovus' 2017 Form 10-K for a description of the fair value hierarchy and 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~~tables present all financial instruments measured at fair value on a recurring basis as of ~~June~~September 30, 2018 and December 31, 2017, according to the valuation hierarchy included in ASC 820-10. For debt securities, class was determined based on the nature and risks of the investments. Synovus did not have any transfers between levels during the six and three months ended June 30, 2018 and year ended December 31, 2017.


	June 30, 2018								September 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Assets and Liabilities at Fair Value
Assets
Trading securities:
U.S. Government agency securities	$	—	$	17,164	$	—	$	17,164	$	—	$	6,532	$	—	$	6,532
Mortgage-backed securities issued by U.S. Government agencies	—		577		—		577		—		921		—		921
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	—		409		—		409		—		183		—		183
State and municipal securities	—		2,495		—		2,495		—		177		—		177
Other investments	906		—		—		906		998		38		—		1,036
Total trading securities	$	906	$	20,645	$	—	$	21,551	$	998	$	7,851	$	—	$	8,849
Mortgage loans held for sale	—		53,673		—		53,673		—		37,276		—		37,276
Investment securities available for sale:
U.S. Treasury securities	120,633		—		—		120,633		$	120,639	$	—	$	—	$	120,639
U.S. Government agency securities	—		40,934		—		40,934		—		37,864		—		37,864
Mortgage-backed securities issued by U.S. Government agencies	—		107,944		—		107,944		—		100,883		—		100,883
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		2,526,845		—		2,526,845		—		2,489,365		—		2,489,365
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		1,116,448		—		1,116,448		—		1,117,703		—		1,117,703
State and municipal securities	—		115		—		115
Corporate debt and other debt securities⁽¹⁾	—		15,186		1,857		17,043
Corporate debt and other debt securities									—		15,155		1,965		17,120
Total investment securities available for sale	$	120,633	$	3,807,472	$	1,857	$	3,929,962	$	120,639	$	3,760,970	$	1,965	$	3,883,574
Private equity investments	—		—		12,678		12,678		—		—		13,112		13,112
Mutual funds	3,124		—		—		3,124		3,118		—		—		3,118
Mutual funds held in rabbi trusts	13,638		—		—		13,638		14,100		—		—		14,100
GGL/SBA loans servicing asset	—		—		4,186		4,186		—		—		3,761		3,761
Derivative assets:
Interest rate contracts	—		10,034		—		10,034		$	—	$	8,892	$	—	$	8,892
Mortgage derivatives⁽²⁾	—		1,302		—		1,302
Mortgage derivatives⁽¹⁾									—		1,122		—		1,122
Total derivative assets	$	—	$	11,336	$	—	$	11,336	$	—	$	10,014	$	—	$	10,014
Liabilities
Trading account liabilities	—		12,328		—		12,328		—		3,540		—		3,540
Earnout liability⁽³⁾	—		—		11,348		11,348
Earnout liability⁽²⁾									—		—		23,000		23,000
Derivative liabilities:
Interest rate contracts	—		19,303		—		19,303		$	—	$	20,822	$	—	20,822
Mortgage derivatives⁽²⁾	—		248		—		248
Visa derivative	—		—		5,943		5,943		—		—		1,990		1,990
Total derivative liabilities	$	—	$	19,551	$	5,943	$	25,494	$	—	$	20,822	$	1,990	$	22,812


	December 31, 2017								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Mortgage-backed securities issued by U.S. Government agencies	$	—	$	3,002	$	—	$	3,002	$	—	$	3,002	$	—	$	3,002
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	—		296		—		296		—		296		—		296
Other investments	522		—		—		522		522		—		—		522
Total trading securities	$	522	$	3,298	$	—	$	3,820	$	522	$	3,298	$	—	$	3,820
Mortgage loans held for sale	—		48,024		—		48,024		—		48,024		—		48,024

Investment securities available for sale:
U.S. Treasury securities	82,674		—		—		82,674		$	82,674	$	—	$	—	$	82,674
U.S. Government agency securities	—		10,862		—		10,862		—		10,862		—		10,862
Mortgage-backed securities issued by U.S. Government agencies	—		120,440		—		120,440		—		120,440		—		120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		2,640,523		—		2,640,523		—		2,640,523		—		2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		1,111,999		—		1,111,999		—		1,111,999		—		1,111,999
State and municipal securities	—		180		—		180		—		180		—		180
Corporate debt and other securities⁽¹⁾	3,162		15,294		1,935		20,391
Corporate debt and other securities									3,162		15,294		1,935		20,391
Total investment securities available for sale	$	85,836	$	3,899,298	$	1,935	$	3,987,069	$	85,836	$	3,899,298	$	1,935	$	3,987,069
Private equity investments	—		—		15,771		15,771		—		—		15,771		15,771
Mutual funds held in rabbi trusts	14,140		—		—		14,140		14,140		—		—		14,140
GGL/SBA loan servicing asset	—		—		4,101		4,101		—		—		4,101		4,101
Derivative assets:
Interest rate contracts	—		10,786		—		10,786		$	—	$	10,786	$	—	$	10,786
Mortgage derivatives⁽²⁾	—		936		—		936
Mortgage derivatives⁽¹⁾									—		936		—		936
Total derivative assets	$	—	$	11,722	$	—	$	11,722	$	—	$	11,722	$	—	$	11,722
Liabilities
Trading account liabilities	—		1,000		—		1,000		—		1,000		—		1,000
Earnout liability⁽³⁾	—		—		11,348		11,348
Earnout liability⁽²⁾									—		—		11,348		11,348
Derivative liabilities:
Interest rate contracts	—		12,638		—		12,638		$	—	$	12,638	$	—	$	12,638
Mortgage derivatives⁽²⁾	—		129		—		129
Mortgage derivatives⁽¹⁾									—		129		—		129
Visa derivative	—		—		4,330		4,330		—		—		4,330		4,330
Total derivative liabilities	$	—	$	12,767	$	4,330	$	17,097	$	—	$	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⁾⁽²⁾Earnout liability consists of contingent consideration obligation related to the Global One acquisition.

Fair Value Option

The following table summarizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. Mortgage loans held for sale are initially measured at fair value with subsequent changes in fair value recognized in earnings. Changes in fair value are recorded as a component of mortgage banking income in the consolidated statements of income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.


Changes in Fair Value Included in Net Income
	For the Six Months Ended June 30,				For the Three Months Ended June 30,					For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands)	2018		2017		2018		2017			2018			2017			2018			2017
Mortgage loans held for sale	$	155	$	954	$	40	$	(249	)	$	(569	)	$	(104	)	$	(414	)	$	850


Mortgage Loans Held for Sale
(in thousands)	As of June 30, 2018		As of December 31, 2017		As of September 30, 2018		As of December 31, 2017
Fair value	$	53,673	$	48,024	$	37,276	$	48,024
Unpaid principal balance	52,333		46,839		36,505		46,839
Fair value less aggregate unpaid principal balance	$	1,340	$	1,185	$	771	$	1,185

~~Changes in Level 3~~ Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

During the three 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 sheet for the six and threenine months ended June 30, 2018 and 2017 (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 JuneSeptember 30, 2018 and 2017, Synovus did not have any transfers ~~between levels~~in or out of Level 3 in the fair value hierarchy. For the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, total net losses included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at ~~June~~September 30, 2018 was ~~$6.2~~$11.8 million and ~~$2.7~~$17.9 million, respectively. For the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017, total net losses included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at ~~June~~September 30, 2017 was ~~$2.4~~$2.1 million and ~~$2.1~~$7.7 million, respectively.



	Six Months Ended June 30, 2018															Three Months Ended September 30, 2018
(in thousands)	Investment Securities Available for Sale			Private Equity Investments			Visa Derivative			Earnout Liability⁽¹⁾			GGL / SBA Loans Servicing Asset⁽²⁾			Investment Securities Available for Sale			Private Equity Investments			GGL / SBA Loans Servicing Asset			Earnout Liability			Visa Derivative
Beginning balance, January 1, 2018	$	1,935		$	15,771		$	(4,330	)	$	(11,348	)	$	4,101
Beginning balance, July 1, 2018																$	1,857		$	12,678		$	4,186		$	(11,348	)	$	(5,943	)
Total (losses) gains realized/unrealized:
Included in earnings	—			(3,093		)	(2,328		)	—			(734		)	—			434			(561		)	(11,652		)	—
Unrealized losses included in other comprehensive income	(78		)	—			—			—			—
Unrealized gains (losses) included in OCI																108			—			—			—			—
Additions	—			—			—			—			819			—			—			136			—			—
Settlements	—			—			715			—			—			—			—			—			—			3,953
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	)
Ending balance, September 30, 2018																$	1,965		$	13,112		$	3,761		$	(23,000	)	$	(1,990	)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2018																$	—		$	434		$	(561	)	$	(11,652	)	$	—

	Three Months Ended June 30, 2018															Three Months Ended September 30, 2017
(in thousands)	Investment Securities Available for Sale			Private Equity Investments			Visa Derivative			Earnout Liability⁽¹⁾			GGL / SBA Loans Servicing Asset			Investment Securities Available for Sale			Private Equity Investments			GGL / SBA Loans Servicing Asset			Earnout Liability			Visa Derivative
Beginning balance, April 1, 2018	$	1,852		$	12,715		$	(3,974	)	$	(11,348	)	$	3,971
Beginning balance, July 1, 2017																$	1,927		$	15,698		$	4,297		$	(13,941	)	$	(5,053	)
Total (losses) gains realized/unrealized:
Included in earnings	—			(37		)	(2,328		)	—			(312		)	—			(27		)	(27		)	(2,059		)	—
Unrealized gains included in other comprehensive income	5			—			—			—			—
Additions	—			—			—			—			527
Unrealized gains (losses) included in OCI																(9		)	—			—			—			—
Settlements	—			—			359			—			—			—			—			—			—			360
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	)
Ending balance, September 30, 2017																$	1,918		$	15,671		$	4,270		$	(16,000	)	$	(4,693	)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2017																$	—		$	(27	)	$	(27	)	$	(2,059	)	$	—



	Nine Months Ended September 30, 2018
(in thousands)	Investment Securities Available for Sale		Private Equity Investments			GGL / SBA Loans Servicing Asset			Earnout Liability			Visa Derivative
Beginning balance, January 1, 2018	$	1,935	$	15,771		$	4,101		$	(11,348	)	$	(4,330	)
Total (losses) gains realized/unrealized:
Included in earnings	—		(2,659		)	(1,295		)	(11,652		)	(2,328		)
Unrealized gains (losses) included in OCI	30		—			—			—			—
Additions	—		—			955			—			—
Settlements	—		—			—			—			4,668
Ending balance, September 30, 2018	$	1,965	$	13,112		$	3,761		$	(23,000	)	$	(1,990	)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2018	$	—	$	(2,659	)	$	(1,295	)	$	(11,652	)	$	(2,328	)

	Nine Months Ended September 30, 2017
(in thousands)	Investment Securities Available for Sale		Private Equity Investments			GGL / SBA Loans Servicing Asset			Earnout Liability			Visa Derivative
Beginning balance, January 1, 2017	$	1,796	$	25,493		$	—		$	(14,000	)	$	(5,768	)
Total (losses) gains realized/unrealized:
Included in earnings	—		(3,193		)	(721		)	(3,766		)	—
Unrealized gains (losses) included in OCI	122		—			—			—			—
Additions	—		—			539			—			—
Sales and settlements	—		(6,629		)	—			—			1,075
Transfer from amortization method to fair value	—		—			4,452			—			—
Measurement period adjustments related to Global One	—		—			—			1,766			—
Ending balance, September 30, 2017	$	1,918	$	15,671		$	4,270		$	(16,000	)	$	(4,693	)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2017	$	—	$	(3,193	)	$	(721	)	$	(3,766	)	$	—

Quantitative Information about Level 3 Fair Value Measurements

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 income 131

—
—
—
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 income 76
—
—
—
—
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. Prior to 2017, Synovus accounted for the GGL/SBA loans servicing asset using the amortization method.

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, 2018

December 31, 2017

Valuation Technique

Significant Unobservable Input

Level 3

Fair Value

Range or Weighted Average

Level 3

Fair Value

Range or Weighted Average

September 30, 2018

December 31, 2017

Assets and liabilities

measured at fair value

on a recurring basis

Valuation Technique

Significant Unobservable Input

Level 3

Fair Value

Range or Weighted Average

Level 3

Fair Value

Range or Weighted Average

Investment Securities Available for Sale - Other Investments:

Trust preferred securities

Discounted cash flow analysis

Credit spread embedded in discount rate

$1,857

438 bps

$1,935

398 bps

Investment Securities Available for Sale - Other Investments: Trust preferred securities

Discounted cash flow analysis

Credit spread embedded in discount rate

$1,965

389 bps

$1,935

398 bps

Private equity investments

Individual analysis of each investee company

Multiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies

12,678

N/A

15,771

N/A

Individual analysis of each investee company

13,112

N/A

15,771

N/A

GGL/SBA loans servicing asset

Discounted cash flow analysis

Discount rate Prepayment speeds

4,186

13.40% 8.64%

4,101

13.16% 7.50%

Discounted cash flow analysis

Discount rate Prepayment speeds

3,761

13.40% 8.64%

4,101

13.16% 7.50%

Earnout liability

Option pricing methods and Monte Carlo simulation

Financial projections of Global One

11,348

N/A

11,348

N/A

Option pricing methods and Monte Carlo simulation

Earning projections of Global One

23,000

N/A

11,348

N/A

Visa derivative liability

Discounted cash flow analysis

Estimated 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 counterparty

5,943

1-3 years

4,330

1-4 years

Discounted cash flow analysis

1,990

1-2 years

4,330

1-4 years

Assets Measured at Fair Value on a Non-recurring Basis

Certain assets are recorded at fair value on a non-recurring ~~basis. These assets 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 ~~six~~nine months ended ~~June~~September 30, 2018 and year ended December 31, 2017.


	June 30, 2018								December 31, 2017								September 30, 2018								December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Impaired loans^*	$	—	$	—	$	12,820	$	12,820	$	—	$	—	$	3,603	$	3,603
Impaired loans⁽¹⁾																	$	—	$	—	$	17,270	$	17,270	$	—	$	—	$	3,603	$	3,603
Other loans held for sale	—		—		—		—		—		—		10,197		10,197		—		—		—		—		—		—		10,197		10,197
Other real estate	—		—		—		—		—		—		3,363		3,363		—		—		507		507		—		—		3,363		3,363
Other assets held for sale	—		—		695		695		—		—		5,334		5,334		—		—		302		302		—		—		5,334		5,334

^*⁽¹⁾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.~~sheets. The carrying value of ORE at ~~June~~September 30, 2018 and December 31, 2017 was ~~$6.3~~$8.5 million and $3.8 million, respectively.

The following table presents fair value adjustments recognized in earnings for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 2017 for assets measured at fair value on a non-recurring basis still held at period-end.


	Six Months Ended June 30,				Three Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2018		2017		2018		2017		2018		2017		2018		2017
Impaired loans^*	$	7,548	$	5,808	$	6,828	$	5,776
Impaired loans⁽¹⁾									$	1,223	$	83	$	4,594	$	1,075
Other loans held for sale	—		3,519		—		—		—		25,051		—		25,051
Other real estate	—		518		—		280		61		5,165		61		5,165
Other assets held for sale	499		238		499		—		—		1,683		499		1,683

^*(1)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~~Quantitative Information about 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.Fair Value Measurements



					~~June~~September 30, 2018	December 31, 2017
Assets measured at fair value on a non-recurring basis	Valuation Technique	Significant 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% - 68% ~~(38%~~(25%) 0% - 10% (7%)	0%-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	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	~~N/A~~0% - 7% (4%) ~~N/A~~0% - 10% (7%)	0%-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	~~27%-43%~~0%-42% (42%) 0%-10% (7%)	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~~tables present the carrying and fair values of financial instruments, as well as the level within the fair value value hierarchy, at ~~June~~September 30, 2018 and December 31, 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~~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, 2018 and December 31, 2017 are as follows:~~


	June 30, 2018										September 30, 2018
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	1,091,788	$	1,091,788	$	1,091,788	$	—	$	—	$	1,011,933	$	1,011,933	$	1,011,933	$	—	$	—
Trading account assets	21,551		21,551		906		20,645		—		8,849		8,849		998		7,851		—
Mortgage loans held for sale	53,673		53,673		—		53,673		—		37,276		37,276		—		37,276		—
Other loans held for sale	2,733		2,733		—		—		2,733		12		12		—		—		12
Investment securities available for sale	3,929,962		3,929,962		120,633		3,807,472		1,857		3,883,574		3,883,574		120,639		3,760,970		1,965
Private equity investments	12,678		12,678		—		—		12,678		13,112		13,112		—		—		13,112
Mutual funds	3,124		3,124		3,124		—		—		3,118		3,118		3,118		—		—
Mutual funds held in rabbi trusts	13,638		13,638		13,638		—		—		14,100		14,100		14,100		—		—
Loans, net	24,882,331		24,732,689		—		—		24,732,689		25,325,666		25,138,896		—		—		25,138,896
GGL/SBA loans servicing asset	4,186		4,186		—		—		4,186		3,761		3,761		—		—		3,761
Derivative assets	11,336		11,336		—		11,336		—		10,014		10,014		—		10,014		—

Financial liabilities
Trading account liabilities	12,328		12,328		—		12,328		—		3,540		3,540		—		3,540		—

Non-interest bearing deposits	7,630,491		7,630,491		—		7,630,491		—		$	7,628,736	$	7,628,736	$	—	$	7,628,736	$	—
Non-time interest bearing deposits	13,958,048		13,958,048		—		13,958,048		—
Non-time interest-bearing deposits											13,847,104		13,847,104		—		13,847,104		—
Time deposits	4,854,149		4,826,356		—		4,826,356		—		4,957,818		4,937,216		—		4,937,216		—
Total deposits	$	26,442,688	$	26,414,895	$	—	$	26,414,895	$	—	$	26,433,658	$	26,413,056	$	—	$	26,413,056	$	—
Federal funds purchased, other short-term borrowings and other short-term liabilities	207,580		207,580		207,580		—		—
Federal funds purchased and securities sold under repurchase agreements											191,145		191,145		191,145		—		—
Other short-term borrowings											475,000		475,000		—		475,000		—
Long-term debt	1,656,647		1,658,790		—		1,658,790		—		1,656,909		1,654,002		—		1,654,002		—
Earnout liabilities	11,348		11,348		—		—		11,348		23,000		23,000		—		—		23,000
Derivative liabilities	25,494		25,494		—		19,551		5,943		$	22,812	$	22,812	$	—	$	20,822	$	1,990


	December 31, 2017										December 31, 2017
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	932,933	$	932,933	$	932,933	$	—	$	—	$	932,933	$	932,933	$	932,933	$	—	$	—
Trading account assets	3,820		3,820		522		3,298		—		3,820		3,820		522		3,298		—
Mortgage loans held for sale	48,024		48,024		—		48,024		—		48,024		48,024		—		48,024		—
Other loans for sale	11,356		11,356		—		—		11,356		11,356		11,356						11,356
Investment securities available for sale	3,987,069		3,987,069		85,836		3,899,298		1,935		3,987,069		3,987,069		85,836		3,899,298		1,935
Private equity investments	15,771		15,771		—		—		15,771		15,771		15,771		—		—		15,771
Mutual funds held in rabbi trusts	14,140		14,140		14,140		—		—		14,140		14,140		14,140		—		—
Loans, net	24,538,196		24,507,141		—		—		24,507,141		24,538,196		24,507,141		—		—		24,507,141
GGL/SBA loans servicing asset	4,101		4,101		—		—		4,101		4,101		4,101		—		—		4,101
Derivative assets	11,722		11,722		—		11,722		—		11,722		11,722		—		11,722		—

Financial liabilities
Trading account liabilities	1,000		1,000		—		1,000		—		1,000		1,000		—		1,000		—

Non-interest bearing deposits	7,686,339		7,686,339		—		7,686,339		—
Non-time interest bearing deposits	13,941,814		13,941,814		—		13,941,814		—
Non-interest-bearing deposits											$	7,686,339	$	7,686,339	$	—	$	7,686,339	$	—
Non-time interest-bearing deposits											13,941,814		13,941,814		—		13,941,814		—
Time deposits	4,519,747		4,523,661		—		4,523,661		—		4,519,747		4,523,661		—		4,523,661		—
Total deposits	$	26,147,900	$	26,151,814	$	—	$	26,151,814	$	—	$	26,147,900	$	26,151,814	$	—	$	26,151,814	$	—
Federal funds purchased, other short-term borrowings and other short-term liabilities	161,190		161,190		161,190		—		—
Federal funds purchased and securities sold under repurchase agreements											161,190		161,190		161,190		—		—
Other short-term borrowings											100,000		100,000		—		100,000		—
Long-term debt	1,706,138		1,721,814		—		1,721,814		—		1,606,138		1,621,814		—		1,621,814		—
Earnout liabilities	11,348		11,348		—		—		11,348		11,348		11,348		—		—		11,348
Derivative liabilities	17,097		17,097		—		12,767		4,330		$	17,097	$	17,097	$	—	$	12,767	$	4,330

Note 97 - 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~~September 30, 2018 and December 31, 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. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 16 - Derivative Instruments" of Synovus' 2017 Form 10-K for additional information on Synovus' derivative instruments.

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.

~~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 sheet. Fair value changes are recorded as a component of non-interest income. As of June 30, 2018, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.67 billion, an increase of $201.4 million compared to December 31, 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 $5.9 million and $4.3 million at June 30, 2018 and December 31, 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 18 - Visa Shares and Related Agreements" of Synovus' 2017 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, 2018 and December 31, 2017, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $69.7 million and $49.3 million, respectively. Fair value adjustments related to these commitments resulted in a gain of $366 thousand and a loss of $(416) thousand for the six months ended June 30, 2018 and 2017, respectively, which was recorded as a component of mortgage banking income in the consolidated statements of income.

At June 30, 2018 and December 31, 2017, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $86.0 million and $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 $(119) thousand and $(1.7) million for the six months ended June 30, 2018 and 2017, respectively, which were recorded as a component of mortgage banking income in the consolidated statements of income.

Collateral Requirements

Pursuant to the Dodd-Frank Act, certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of ~~June~~September 30, 2018, collateral totaling ~~$30.6~~$31.1 million ~~of federal funds sold~~ was pledged to the derivative counterparties to comply with collateral requirements. ~~Effective January 3, 2017,~~For derivatives cleared through central clearing houses, the ~~CME amended its rulebook to legally characterize~~ variation margin ~~cash~~ payments ~~for cleared OTC derivatives~~made are legally characterized as ~~settlement rather than as collateral.~~settlements of the derivatives. As a result, these variation margin payments are netted against the fair value of the respective derivative contracts in ~~2017, Synovus began reducing~~ the ~~corresponding derivative asset~~balance sheet and ~~liability balances for CME-cleared OTC derivatives to reflect the settlement of those positions via the exchange of variation margin.~~related disclosures. At ~~June~~September 30, 2018 and December 31, 2017, Synovus had a variation margin of ~~$8.9~~$11.6 million and $1.5 million, respectively, reducing the derivative asset.

The ~~impact~~following table reflects the notional amount and fair value of derivative instruments included on the ~~Consolidated Balance Sheets at June 30, 2018 and December 31, 2017 is presented below.~~consolidated balance sheets.

Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location 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 contracts Other assets $ 10,034
$ 10,786
Other liabilities $ 19,303
$ 12,638
Mortgage derivatives Other assets 1,302
936
Other liabilities 248
129
Visa derivative —
—
Other liabilities 5,943
4,330
Total derivatives not
  designated as hedging
  instruments
$ 11,336
$ 11,722
$ 25,494
$ 17,097



	September 30, 2018						December 31, 2017
			Fair Value						Fair Value
(in thousands)	Notional Amount		Derivative Assets ⁽¹⁾		Derivative Liabilities ⁽²⁾		Notional Amount		Derivative Assets ⁽¹⁾		Derivative Liabilities ⁽²⁾
Derivatives not designated as hedging instruments:
Interest rate contracts ⁽³⁾	$	1,667,397	$	8,892	$	20,822	$	1,466,059	10,786		$	12,638
Mortgage derivatives - interest rate lock commitments	59,289		875		—		49,304		936		—
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	85,500		247		—		72,500		—		129
Visa derivative	—		—		1,990		—		—		4,330
Total derivatives not designated as hedging instruments			$	10,014	$	22,812			$	11,722	$	17,097

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

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

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

The pre-tax effect of changes in fair value ~~hedges~~from derivative instruments not designated as hedging instruments on the consolidated statements of income for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 2017 is presented below.


													Gain (Loss) Recognized in Consolidated Statements of Income
	Location of Gain (Loss) Recognized in Income		Gain (Loss) Recognized in Income										Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)		Six Months Ended June 30,								Location in Consolidated Statements of Income		2018				2017				2018				2017
Derivatives not designated as hedging instruments		2018				2017
Derivatives not designated as hedging instruments:
Interest rate contracts⁽¹⁾		Other non-interest income		$	(9	)		$	(1	)		Other non-interest income		$	1			$	(4	)		$	(8	)		$	(5	)
Mortgage derivatives⁽²⁾		Mortgage banking income		247				(2,073		)
Mortgage derivatives - interest rate lock commitments											Mortgage banking income		(427		)		(180		)		(61		)		(595		)
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans											Mortgage banking income		495				(271		)		376				(1,929		)
Visa derivative											Other non-interest expense		—				—				(2,328		)		—
Total			$	238			$	(2,074	)				$	69			$	(455	)		$	(2,021	)		$	(2,529	)

	Location of Gain (Loss) Recognized in Income		Gain (Loss) Recognized in Income
(in thousands)		Three Months Ended June 30,
Derivatives not designated as hedging instruments		2018				2017
Interest rate contracts⁽¹⁾		Other non-interest income		$	(16	)		$	—
Mortgage derivatives⁽²⁾		Mortgage banking income		(680		)		(289		)
Total			$	(696	)		$	(289	)

⁽¹⁾ Gain (loss) represents net fair value adjustments (including ~~credit related~~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.~~Note 8 - Shareholders' Equity

Issuance of Series D Preferred Stock

On June 21, 2018, Synovus completed a $200 million public offering of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, $25.00 per share liquidation preference. The offering generated net proceeds of $195.1 million. Dividends on the shares are non-cumulative and, if declared, will accrue and be payable, in arrears, quarterly at a rate per annum equal to 6.300% for each dividend period from the original issue date to, but excluding, June 21, 2023. From and including June 21, 2023, the dividend rate will change to a floating rate equal to the three-month LIBOR plus a spread of 3.352% per annum. The Series D Preferred Stock is perpetual and has no maturity date. The Series D Preferred Stock is redeemable at Synovus' option in whole or in part, from time to time, on any dividend payment date on or after June 21, 2023, or in whole, but not in part, at any time within 90 days following a regulatory capital treatment event at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series D Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series D Preferred Stock does not have any voting rights.

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 $130.0 million and paid a dividend of $2.6 million on the Series C Preferred Stock. The redemption of the Series C Preferred Stock was funded primarily with proceeds from Synovus' public offering of $200 million of Series D Preferred Stock completed in June 2018. Concurrent with the redemption, Synovus recognized a one-time, non-cash redemption charge of $4.0 million.

Repurchases of Common Stock

On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of September 30, 2018, Synovus had repurchased under this program a total of $134.8 million, or 2.6 million shares of its common stock, at an average price of $51.85 per share. As of September 30, 2018, the remaining authorization under this program was $15.2 million. During October 2018, the program was concluded with the remaining $15.2 million, or 345 thousand shares, repurchased. In total, 2.9 million shares were repurchased during 2018 at an average price of $50.96 per share.

Note 109 - 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~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and 2017.


	Six Months Ended June 30,				Three Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2018		2017		2018		2017		2018		2017		2018		2017
Basic Net Income Per Common Share:
Net income available to common shareholders	$	209,229	$	142,742	$	108,622	$	73,444	$	99,330	$	95,448	$	308,559	$	238,190
Weighted average common shares outstanding	118,531		122,251		118,397		122,203		117,241		120,900		118,096		121,796
Net income per common share, basic	$	1.77	$	1.17	$	0.92	$	0.60	$	0.85	$	0.79	$	2.61	$	1.96
Diluted Net Income Per Common Share:
Net income available to common shareholders	$	209,229	$	142,742	$	108,622	$	73,444	$	99,330	$	95,448	$	308,559	$	238,190
Weighted average common shares outstanding	118,531		122,251		118,397		122,203		117,241		120,900		118,096		121,796
Potentially dilutive shares from outstanding equity-based awards and Earnout Payments	698		792		742		824
Potentially dilutive shares from outstanding equity-based awards and earnout payments									854		914		751		832
Weighted average diluted common shares	119,229		123,043		119,139		123,027		118,095		121,814		118,847		122,628
Net income per common share, diluted	$	1.75	$	1.16	$	0.91	$	0.60	$	0.84	$	0.78	$	2.60	$	1.94

Basic net income per common share is computed by dividing net income available to common shareholders by the average common shares outstanding for the period. Diluted net income per common share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The dilutive effect of outstanding stock options 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~~September 30, 2018 and 2017, there were 2.2 million potentially dilutive shares related to the Warrant to purchase shares of common stock that were outstanding during 2018 and 2017 but were not included in the computation of diluted net income per common share because the effect would have been anti-dilutive.

Note 1110 - 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. 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~~September 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. Vesting 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 the date of 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 actual 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 ~~$8.3~~$4.2 million and ~~$4.4~~$12.5 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, and ~~$6.8~~$3.7 million and ~~$3.5~~$10.6 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 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~~nine months ended ~~June~~September 30, 2018. At ~~June~~September 30, 2018, there were ~~655~~643 thousand outstanding stock options to purchase shares of common stock with a weighted average exercise price of ~~$16.92~~$16.94 per share.

Restricted Share Units, Performance Share Units, and Market Restricted Share Units

During the ~~six~~nine months ended ~~June~~September 30, 2018, Synovus awarded ~~234~~236 thousand restricted share units that have a service-based vesting period of three years and awarded 87 thousand performance share units that vest upon service and performance conditions. Synovus also granted 58 thousand market restricted share units during the ~~six~~nine months ended ~~June~~September 30, 2018. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was ~~$47.67~~$47.69 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~~September 30, 2018, including dividend equivalents granted, there were ~~910~~909 thousand restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of ~~$40.82~~$40.86 per share.

Note 11 - Income Taxes

Synovus' provision for income taxes for the three and nine months ended September 30, 2018 and 2017 is based on the estimated annual effective tax rate, plus discrete items.

The following table presents the provision for income taxes and the effective tax rates for the periods indicated.



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2018			2017			2018			2017
Income before income tax expense	$	128,008		$	152,675		$	403,502		$	376,171
Income tax expense	18,949			54,668			80,095			130,303
Effective tax rate	14.8		%	35.8		%	19.8		%	34.6		%

The difference between Synovus' effective tax rate for the three and nine months ended September 30, 2018 and the U.S. statutory tax rate of 21%, primarily relates to third quarter 2018 discrete tax benefits of $12.7 million, which included a $3.9 million tax benefit for the refinement of provisional amounts previously reported under SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), a $5.5 million return to provision benefit associated with the preparation of the 2017 tax return and a $3.3 million benefit associated with insignificant adjustments to tax returns from several prior years. In addition, the effective income tax rate for the nine months ended September 30, 2018 included a net discrete income tax benefit of $2.8 million resulting from tax benefits associated with the exercise and vesting of employee equity awards. Other items impacting the difference between Synovus' effective tax rates for the three and nine months ended September 30, 2018 and 2017 and the U.S. statutory tax rates of 21% and 35%, respectively, primarily relate to, but are not limited to, the level of pre-tax income, bank-owned life insurance, state income taxes (net of federal income tax benefit), tax-exempt interest and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as tax benefits related to share-based compensation, jurisdiction statutory tax rate changes, valuation allowance changes and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.

Impact of Tax Reform

On December 22, 2017, Federal Tax Reform was enacted into law. The new legislation included a decrease in the U.S. statutory 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 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, Synovus expected that certain deferred tax assets and liabilities would continue to be evaluated in the context of Federal Tax Reform through the date of the filing of the 2017 federal income tax return, and that changes might result from evolving internal 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 was considered provisional. During the third quarter of 2018, Synovus completed its 2017 federal income tax return and recorded a $3.9 million tax benefit for the refinement of provisional amounts previously reported under SAB 118; thus, the accounting under SAB 118 for Federal Tax Reform is now complete.

Note 12 - Non-interest Income

The following table reflects revenue disaggregated by revenue type and line of business for the ~~six~~three and ~~three~~nine months ended ~~June~~September 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 fees 27,419
—
—
—
27,419
—
Card fees 21,032
420
—
20,612
—
—
Brokerage revenue 17,596
—
—
—
17,596
—
Insurance revenue 3,092
—
—
—
3,092
—
Other fees 1,588
—
—
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


Non-interest Income by Line of Business													Non-interest Income by Line of Business
													For the Three Months Ended September 30, 2018
(in thousands)													Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Total
Service charges on deposit accounts													$	5,660	$	475	$	13,792	$	—	$	655	$	20,582
Fiduciary and asset management fees													—		—		—		13,462		—		13,462
Card fees													208		—		10,400		—		—		10,608
Brokerage revenue													—		—		—		9,329		—		9,329
Insurance revenue													—		—		—		1,148		—		1,148
Other fees													—		—		454		—		266		720
													$	5,868	$	475	$	24,646	$	23,939	$	921	$	55,849

Other revenues⁽¹⁾													1,142		1,836		1,645		5,994		5,202		15,819
Total non-interest income													$	7,010	$	2,311	$	26,291	$	29,933	$	6,123	$	71,668

	For the Six Months Ended June 30, 2017												For the Three Months Ended September 30, 2017
(in thousands)	Total		Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Total
Service charges on deposit accounts	$	40,370	$	11,415	$	887	$	26,970	$	—	$	1,098	$	5,613	$	432	$	14,024	$	—	$	609	$	20,678
Fiduciary and asset management fees	24,676		—		—		—		24,676		—		—		—		—		12,615		—		12,615
Card fees	19,885		437		—		19,448		—		—		210		—		9,519		—		—		9,729
Brokerage revenue	14,436		—		—		—		14,436		—		—		—		—		7,511		—		7,511
Insurance revenue	2,364		—		—		—		2,364		—		—		—		—		1,059		—		1,059
Other fees	1,590		—		—		1,060		—		530		—		—		463		—		265		728
	$	103,321	$	11,852	$	887	$	47,478	$	41,476	$	1,628	$	5,823	$	432	$	24,006	$	21,185	$	874	$	52,320

Other revenues⁽¹⁾	37,218		4,641		4,376		3,183		13,413		11,605		2,642		1,460		1,574		6,558		70,881		83,115
Total non-interest income	$	140,539	$	16,493	$	5,263	$	50,661	$	54,889	$	13,233	$	8,465	$	1,892	$	25,580	$	27,743	$	71,755	$	135,435

⁽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) Total Community 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 fees 13,983
—
—
—
13,983
—
Card fees 10,833
215
—
10,618
—
—
Brokerage revenue 8,900
—
—
—
8,900
—
Insurance revenue 1,879
—
—
—
1,879
—
Other fees 756
—
—
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


Non-interest Income by Line of Business													Non-interest Income by Line of Business
													For the Nine Months Ended September 30, 2018
(in thousands)													Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Total
Service charges on deposit accounts													$	17,064	$	1,460	$	40,310	$	—	$	1,687	$	60,521
Fiduciary and asset management fees													—		—		—		40,881		—		40,881
Card fees													628		—		31,012		—		—		31,640
Brokerage revenue													—		—		—		26,924		—		26,924
Insurance revenue													—		—		—		4,240		—		4,240
Other fees													—		—		1,487		—		821		2,308
													$	17,692	$	1,460	$	72,809	$	72,045	$	2,508	$	166,514

Other revenues⁽¹⁾													6,983		5,417		4,887		17,402		10,898		45,587
Total non-interest income													$	24,675	$	6,877	$	77,696	$	89,447	$	13,406	$	212,101

	For the Three Months Ended June 30, 2017												For the Nine Months Ended September 30, 2017
(in thousands)	Total		Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Community Banking		Corporate Banking		Retail Banking		Financial Management Services		Other		Total
Service charges on deposit accounts	$	20,252	$	5,644	$	428	$	13,533	$	—	$	647	$	17,028	$	1,319	$	40,994	$	—	$	1,707	$	61,048
Fiduciary and asset management fees	12,524		—		—		—		12,524		—		—		—		—		37,290		—		37,290
Card fees	10,041		218		—		9,823		—		—		647		—		28,967		—		—		29,614
Brokerage revenue	7,210		—		—		—		7,210		—		—		—		—		21,947		—		21,947
Insurance revenue	1,060		—		—		—		1,060		—		—		—		—		3,424		—		3,424
Other fees	748		—		—		486		—		262		—		—		1,525		—		795		2,320
	$	51,835	$	5,862	$	428	$	23,842	$	20,794	$	909	$	17,675	$	1,319	$	71,486	$	62,661	$	2,502	$	155,643

Other revenues⁽¹⁾	16,866		2,993		2,758		1,618		6,816		2,681		7,283		5,836		4,756		19,971		82,485		120,331
Total non-interest income	$	68,701	$	8,855	$	3,186	$	25,460	$	27,610	$	3,590	$	24,958	$	7,155	$	76,242	$	82,632	$	84,987	$	275,974

⁽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:~~Topic 606:

Service Charges on Deposit Accounts: Revenue from service charges on deposit accounts is earned through cash management, wire transfer, and other deposit-related services, as well as overdraft, non-sufficient funds, account management and other deposit-related fees. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for ~~transaction related~~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~~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~~three and ~~three~~nine months ended ~~June~~September 30, 2018, Synovus recognized an immaterial amount of insurance trailing ~~commissions related to performance obligations satisfied in prior periods.~~commissions.

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 13 - 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) may 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 ~~sheet.~~sheets. Additionally, unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance ~~sheet.~~sheets. These amounts are not material to Synovus' consolidated balance ~~sheet.~~sheets.

Unfunded letters of credit and lending commitments at ~~June~~September 30, 2018 and December 31, 2017 are presented below.


(in thousands)	June 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Letters of credit*	$	179,860	$	153,372	$	167,969	$	153,372
Commitments to fund commercial and industrial loans	5,361,671		5,090,827		5,688,192		5,090,827
Commitments to fund commercial real estate, construction, and land development loans	1,652,834		1,567,583		1,763,006		1,567,583
Commitments under home equity lines of credit	1,179,074		1,137,714		1,211,861		1,137,714
Unused credit card lines	743,376		779,254		766,521		779,254
Other loan commitments	365,861		351,358		394,428		351,358
Total unfunded lending commitments and letters of credit	$	9,482,676	$	9,080,108	$	9,991,977	$	9,080,108

* Represent the contractual amount net of risk participations of approximately $70 million and $77 million at ~~June~~September 30, 2018 and December 31, 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~~seeks to mitigate 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~~For the ~~six~~three and nine months ended ~~June~~September 30, 2018, the sponsored entities processed and settled $17.69 billion and $52.04 billion of transactions, respectively. For the three and nine months ended September 30, 2017, the sponsored entities processed and settled ~~$34.35~~$15.84 billion and ~~$30.42~~$46.26 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,~~transactions, respectively. Synovus began covering and may continue to ~~accrue~~cover chargebacks related to a ~~receivable for chargebacks associated with one~~ merchant processing ~~relationship.~~servicer during the third quarter of 2018 where the merchant processing servicer’s cash reserve account was unavailable to support the chargebacks. Synovus expects to recover these amounts from the servicer under the terms of the contract; however, any inability by Synovus to fully recover these amounts would result in losses to Synovus in future periods.

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.~~reserve. An event is considered to be probable if the future event is likely to occur. While the final outcome of any legal proceeding is inherently uncertain, based on the information currently available, advice of counsel and available insurance coverage, management believes that the amounts accrued with respect to legal matters as of ~~June~~September 30, 2018 are adequate. The actual costs of resolving legal claims may be higher or lower than the amounts accrued.

In addition, where Synovus determines that there is a reasonable possibility of a loss in respect of legal matters, Synovus considers whether it is able to estimate the total reasonably possible loss or range of loss. An event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely.” An event is “remote” if “the chance of the future event or events occurring is more than slight but less than reasonably possible." In many situations, Synovus may be unable to estimate reasonably possible losses due to the preliminary nature of the legal matters, as well as a variety of other factors and uncertainties. For those legal matters where Synovus is able to estimate a range of reasonably possible losses,

management currently estimates the aggregate range from our outstanding litigation is from zero to $5 million in excess of the amounts accrued, if any, related to those matters. This estimated aggregate range is based upon information currently available to Synovus, and the actual losses could prove to be lower or higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations 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 - ~~Subsequent Events~~Pending Acquisition and Pending Branch Sales

Pending Acquisition of FCB Financial Holdings, Inc.

On July 23, 2018, Synovus entered into the Merger Agreement by and among Synovus, FCB and Azalea Merger Sub Corp. pursuant to which Synovus will acquire FCB in a reverse triangular merger. FCB is headquartered in Weston, Florida with reported assets of $12.19 billion as of June 30, 2018. At the effective time of the 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 common stock, par value $1.00 per share. The Merger Agreement has been unanimously approved by both companies’ Board of Directors. The transaction is subject to customary closing conditions, including approval of Synovus and FCB shareholders and approval of state and federal regulators, and is expected to close by the first quarter of 2019.

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

~~Redemption of Series C Preferred Stock~~

Pending Branch Sales

On August 1,28, 2018, Synovus ~~redeemed~~Bank entered into a purchase and assumption agreement with Jefferson Financial Federal Credit Union pursuant to which Jefferson Financial Federal Credit Union will acquire certain assets, including selected loans, and assume substantially all ~~5,200,000 outstanding shares~~ of ~~Series C Preferred Stock~~the deposits associated with two branches in Mobile, Alabama, and one branch in Daphne, Alabama. The agreement provides for the transfer of approximately $138 million in loans, approximately $107 million in deposits, and other assets associated with the three branches in exchange for a ~~cash price~~deposit premium of ~~$25.00 per share, without interest, for an aggregate redemption price~~$14.5 million. The transaction is subject to regulatory approval and satisfaction of ~~$130 million~~customary closing conditions and ~~paid a dividend~~is expected to be completed in the first quarter of $2.6 million on the Series C Preferred Stock. The redemption 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 recognized in a manner similar to the treatment of dividends paid on preferred stock during the three months ending September 30, 2018.

2019.

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 impact 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;~~exposures, and the risk that we may be unable to obtain full payment in respect of any trade or other receivables;



(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 the ability of our operational framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could among other things, result in a breach of operating or security systems as a result of cyber attacks or 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;



(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 sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;



(16)		the risk that we may be exposed to potential losses in the event of fraud and/or theft, or in the event that a ~~third party~~third-party vendor or obligor fails to pay amounts due to us under that ~~relationship;~~relationship or under any arrangement that we enter into with them;



(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 counterparties, we may not be able to complete such transactions on favorable terms, if at all, or successfully integrate acquired bank or nonbank operations into our existing operations or realize anticipated benefits from such transactions;



(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;



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



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



(21)		restrictions or limitations on access to funds from historical and alternative sources of liquidity could adversely affect our overall liquidity, which could restrict our ability to make payments on our obligations and our ability to support asset growth and sustain our operations and the operations of Synovus Bank;



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



(23)		risks related to regulatory approval to take certain actions, including any dividends on our common stock or Series D Preferred Stock, any repurchases of common stock or any issuance or redemption of any other regulatory capital instruments, as well as any applications in respect of expansionary initiatives;



(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;



(25)		the ~~risk that we may be required to take additional charges with respect to our deferred tax assets as a result of Federal Tax Reform in the event our estimates prove inaccurate;~~



~~(26)~~		~~the~~ costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;



~~(27)~~(26)		risks related to the fluctuation in our stock price;



~~(28)~~(27)		the effects of any damages to our reputation resulting from developments related to any of the items identified above;



~~(29)~~(28)		the risk that the required shareholder approvals of the Merger with FCB may not be obtained;



~~(30)~~(29)		the risk that Synovus or FCB may be unable to obtain all of the regulatory approvals required to complete the Merger;



~~(31)~~(30)		the risk that the other conditions to closing the Merger with FCB may not be satisfied;



~~(32)~~(31)		the risk that the length of time necessary to consummate the Merger with FCB may be longer than anticipated for various reasons;



~~(33)~~(32)		the risk that the businesses of Synovus and FCB will not be integrated successfully or that the integration may take longer than expected;



~~(34)~~(33)		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)~~(34)		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)~~(35)		the risk that costs associated with the integration of the businesses of Synovus and FCB will be higher than anticipated;



~~(37)~~(36)		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)~~(37)		the risk that events could lead to the termination of the Merger Agreement (or otherwise result in payment of termination fee);



~~(39)~~(38)		the risk of business disruption following the Merger; and



~~(40)~~(39)		other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in "Part I - Item 1A. 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' 2017 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 ~~250~~249 branches ~~and 334 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~~three and ~~three~~nine months ended ~~June~~September 30, 2018 and financial condition as of ~~June~~September 30, 2018 and December 31, 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’ 2017 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	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	Credit Quality, Capital Resources and Liquidity - Discusses credit quality, market risk, capital resources, and liquidity, as well as performance trends. It also includes a discussion of liquidity policies, how Synovus obtains funding, and related performance.

Ÿ ~~Additional Disclosures - Discusses additional important matters including critical accounting policies and non-GAAP~~

~~financial measures used within this Report.~~


Ÿ	Additional Disclosures - Discusses additional important matters including critical accounting policies and non-GAAP financial measures used within this Report.

A reading of each section is important to understand fully our financial performance.

DISCUSSION OF RESULTS OF OPERATIONS

Consolidated Financial Highlights


	Six Months Ended June 30,								Three Months Ended June 30,								Three Months Ended September 30,								Nine Months Ended September 30,
(dollars in thousands, except per share data)	2018			2017			Change		2018			2017			Change		2018			2017			Change		2018			2017			Change
Net interest income	$	558,861		$	491,024		13.8	%	$	284,577		$	251,097		13.3	%	$	291,619		$	262,572		11.1	%	$	850,480		$	753,597		12.9	%
Provision for loan losses	24,566			18,934			29.7		11,790			10,260			14.9		14,982			39,686			(62.2	)	39,548			58,620			(32.5	)
Non-interest income	140,433			140,539			(0.1)		73,387			68,701			6.8		71,668			135,435			(47.1	)	212,101			275,974			(23.1	)
Adjusted non-interest income⁽¹⁾	144,822			136,038			6.5		74,720			70,054			6.7		71,234			68,418			4.1		216,056			204,456			5.7
Total revenues ⁽²⁾	700,590			623,896			12.3		359,260			319,799			12.3		363,287			398,007			(8.7	)	1,062,581			1,029,571			3.2
Adjusted total revenues ⁽¹⁾																	362,989			331,273			9.6		1,066,908			958,943			11.3
Non-interest expense	399,234			389,133			2.6		204,057			191,747			6.4		220,297			205,646			7.1		619,531			594,780			4.2
Adjusted non-interest expense⁽¹⁾	400,561			382,048			4.8		202,734			191,442			5.9		201,648			194,102			3.9		602,209			576,150			4.5
Income before income taxes	275,494			223,496			23.3		142,117			117,791			20.7		128,008			152,675			(16.2	)	403,502			376,171			7.3
Net income	214,348			147,861			45.0		111,181			76,003			46.3		109,059			98,007			11.3		323,407			245,868			31.5
Net income available to common shareholders	209,229			142,742			46.6		108,622			73,444			47.9		99,330			95,448			4.1		308,559			238,190			29.5
Net income per common share, basic	1.77			1.17			51.2		0.92			0.60			52.7		0.85			0.79			7.3		2.61			1.96			33.6
Net income per common share, diluted	1.75			1.16			51.3		0.91			0.60			52.7		0.84			0.78			7.3		2.60			1.94			33.7
Adjusted net income per common share, diluted⁽¹⁾	1.78			1.17			52.1		0.92			0.61			52.6		0.95			0.65			46.4		2.73			1.82			49.9
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
Net interest margin⁽²⁾																	3.89		%	3.63		%	26	bps	3.84		%	3.52		%	32	bps
Net charge-off ratio⁽²⁾																	0.24			0.62			(38	)	0.20			0.33			(13	)
Return on average assets⁽²⁾																	1.36			1.27			9		1.37			1.07			30
Adjusted return on average assets⁽¹⁾⁽²⁾																	1.47			1.05			42		1.42			1.01			41
Efficiency ratio	56.97			62.31			(534	)	56.78			59.90			(312	)	60.62			50.62			nm		58.21			57.70			51
Adjusted efficiency ratio⁽¹⁾	56.90			60.87			(397	)	56.41			59.56			(315	)	55.55			58.59			(304	)	56.44			60.08			(364	)

⁽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 investment securities gains (losses), net.~~

⁽³⁾Annualized


	June 30, 2018			March 31, 2018			Sequential Quarter Change			June 30, 2017			Year-Over-Year Change			September 30, 2018			June 30, 2018			Sequential Quarter Change			September 30, 2017			Year-Over-Year Change
(dollars in thousands, except per share data)
Loans, net of deferred fees and costs	$	25,134,056		$	24,883,037		$	251,019		$	24,430,512		$	703,544		$	25,577,116		$	25,134,056		$	443,060		$	24,487,360		$	1,089,756
Total average loans	24,946,307			24,852,399			93,908			24,350,004			596,303			25,322,582			24,946,307			376,275			24,499,923			822,659
Total deposits	26,442,688			26,253,507			189,181			25,218,816			1,223,872			26,433,658			26,442,688			(9,030		)	26,186,228			247,430
Total average deposits	26,268,074			25,788,073			480,001			24,991,708			1,276,366			26,387,312			26,268,074			119,238			25,286,919			1,100,393
Average core deposits ⁽¹⁾	24,345,157			23,836,163			508,994			23,612,149			733,008			24,614,335			24,345,157			269,178			23,756,030			858,305

Non-performing assets ratio	0.50		%	0.53		%	(3		) bps	0.73		%	(23		) bps	0.46		%	0.50		%	(4		) bps	0.57		%	(11		) bps
Non-performing loans ratio	0.47			0.48			(1		)	0.65			(18		)	0.42			0.47			(5		)	0.40			2
Past due loans over 90 days	0.01			0.02			(1		)	0.02			(1		)	0.02			0.01			1			0.02			—

Common equity Tier 1 capital (transitional)	$	2,838,616		$	2,801,073		$	37,543		$	2,734,983		$	103,633		$	2,846,416		$	2,838,616		$	7,800		$	2,749,304		$	97,112
Tier 1 capital	3,156,805			2,924,109			232,696			2,829,340			327,465			3,038,768			3,156,805			(118,037		)	2,849,580			189,188
Total risk-based capital	3,668,904			3,442,921			225,983			3,340,155			328,749			3,550,686			3,668,904			(118,218		)	3,362,125			188,561
Common equity Tier 1 capital ratio (transitional)	10.12		%	10.09		%	3		bps	10.02		%	10		bps	9.90		%	10.12		%	(22		) bps	10.06		%	(16		) bps
Tier 1 capital ratio	11.25			10.53			72			10.37			88			10.57			11.25			(68		)	10.43			14
Total risk-based capital ratio	13.08			12.40			68			12.24			84			12.36			13.08			(72		)	12.30			6
Total shareholders’ equity to total assets ratio	9.98			9.39			59			9.77			21			9.48			9.98			(50		)	9.47			1
Tangible common equity ratio⁽¹⁾	8.77			8.79			(2		)	9.15			(38		)	8.68			8.77			(9		)	8.88			(20		)
Return on average common equity⁽²⁾	15.39			14.62			77			10.34			505			13.95			15.39			(144		)	13.24			71
Adjusted return on average common equity⁽¹⁾⁽²⁾	15.59			14.86			73			10.49			510			15.69			15.59			10			10.92			477
Adjusted return on average tangible common equity⁽¹⁾⁽²⁾	15.97			15.23			74			10.75			522			16.08			15.97			11			11.19			489

⁽¹⁾See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

⁽²⁾Quarter annualized

Executive Summary

~~Results~~Net income available to common shareholders for the ~~Six~~third quarter of 2018 was $99.3 million, or $0.84 per diluted common share, an increase of 4.1% and ~~Three Months Ended June 30,~~7.3%, respectively, compared to the third quarter of 2017. Adjusted net income per common share, diluted⁽¹⁾ was $0.95 for the third quarter of 2018,

up 46.4% compared to $0.65 for the third quarter of 2017. Third quarter 2018 adjustments to net income available to common shareholders included merger-related expense of $6.7 million associated with Synovus' pending acquisition of FCB, an $11.7 million increase in the earnout liability related to the Global One acquisition, a $4.0 million one-time, non-cash charge associated with the Series C Preferred Stock redemption, partially offset by $9.9 million in discrete (non-core) tax benefits. The third quarter of 2018 results were positively impacted by strong loan growth, continued expansion of the net interest margin, fee income growth, and a lower effective tax rate. Third quarter of 2017 results included the $75.0 million Cabela's Transaction Fee, partially offset by certain balance sheet restructuring actions totaling $44.5 million. Net income available to common shareholders for the first ~~six~~nine months of 2018 was ~~$209.2~~$308.6 million, or ~~$1.75~~$2.60 per diluted common share, an increase of ~~46.6%~~29.5% and ~~51.3%~~33.7%, respectively, compared to the first ~~six~~nine 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~~third quarter of 2018 was 1.36%, up 9 basis points from the third quarter of 2017 and was 1.37% for the nine months ended ~~June~~September 30, 2018, ~~was 1.38%,~~ up 4030 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, 2017 and the effective cost of funds increased 10 basis points to 0.57%. The yield on loans was 4.79%, an increase of 48 basis points from the six months ended June 30, 2017 and the yield on investment securities was 2.34%, an increase of 25 basis points from the six months ended June 30, 2017. On a sequential quarter basis, net interest income increased $7.0 million, driven by ~~$10.3~~a $380.6 million ~~and~~increase in average loans, net, as well as net margin expansion of 3 basis points to 3.89%. Compared to the same quarter in 2017, net interest income increased $29.0 million, driven by a $821.3 million increase in average loans, net, as well as net margin expansion of 26 basis points. The net interest margin ~~increased~~increase compared to the prior quarter and the third quarter of 2017 was primarily driven by ~~8 basis points to 3.86%.~~federal funds rate increases. The yield on earning assets was ~~4.47%~~4.58%, ~~up 16~~an increase of 11 basis points from the ~~first~~second quarter of ~~2018.~~2018, and an increase of 47 basis points from the third quarter of 2017. This increase was driven by an ~~18 basis point~~ increase in loan yields. The effective cost of funds was ~~0.61%~~0.69% for the ~~second~~third quarter of 2018, up 8 basis points from the ~~first~~second quarter of ~~2018. The recent~~2018, and up 21 basis points from the third quarter of 2017. Net interest income for the first nine months of 2018 was $850.5 million, an increase of $96.9 million, or 12.9%, compared to $753.6 million for the same period in 2017. Net interest margin increased 32 basis points to 3.84% over the comparable nine-month periods, primarily driven by federal funds rate increases ~~favorably impacted net interest income~~ and ~~net interest margin for 2018.~~our asset-sensitive balance sheet. Since September 30, 2017, there have been four 25 basis points federal funds rate increases. The yield on earning assets was 4.45%, an increase of 46 basis points compared to the nine months ended September 30, 2017, while the effective cost of funds increased 14 basis points to 0.61%. The yield on loans increased 49 basis points to 4.86%, and the yield on investment securities increased 25 basis points to 2.35% over the nine months ended September 30, 2017.

Non-interest income for the ~~first six months~~third quarter of 2018 was ~~$140.4~~$71.7 million, down $63.8 million, or 47.1%, compared to the third quarter of 2017. On a year-to-date basis, non-interest income was $212.1 million compared to ~~$140.5~~$276.0 million for the first ~~six~~nine months ~~of 2017. Non-interest income for the second quarter of 2018 was $73.4 million, up $4.7 million, or 6.8%, compared to the second quarter~~ of 2017. Adjusted non-interest income⁽¹⁾, which excludes investment securities ~~gains (losses) and decrease~~losses, net, increase (decrease) in fair value of private equity investments, and the Cabela's Transaction Fee, was up ~~$8.8~~$2.8 million, or ~~6.5%~~4.1%, for the ~~first six months of 2018 compared to 2017 and up $4.7 million, or 6.7%, for the second~~third quarter of 2018 compared to the ~~second~~third quarter of ~~2017. Synovus experienced growth in multiple categories during~~2017 and up $11.6 million, or 5.7%, for the first ~~half~~nine months of 2018 compared to the same 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.2017.

Non-interest expense for the ~~first six months~~third quarter of 2018 increased ~~$10.1~~$14.7 million, or ~~2.6%~~7.1%, compared to the ~~first six months~~third quarter of 2017, and non-interest expense for the ~~second quarter~~first nine months of 2018 increased ~~$12.3~~$24.8 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 20184.2% compared to the first ~~half~~nine months of 2017. ~~Strong operating leverage~~The efficiency ratio for the first ~~half~~nine months of 2018 ~~resulted in an efficiency ratio of 56.97%~~was 58.21%, ~~improved from 62.31%~~compared to 57.70% for the first ~~half~~nine months of 2017. The adjusted efficiency ratio⁽¹⁾ for the first ~~six~~nine months of 2018 was ~~56.90%~~56.44%, down ~~397~~364 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.

~~Credit quality metrics~~Synovus continued to be favorable during the second 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 loan ratio was 0.47% at June 30, 2018, as compared to 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%,benefit from a ~~year ago. The~~relatively stable credit environment with the non-performing assets ratio ~~was 0.50% at June 30, 2018, down 3~~improving further to 0.46%, a four basis ~~points~~point improvement from the ~~prior~~previous quarter, and ~~down 23~~an 11 basis ~~points~~point improvement from a year ago. Net charge-offs for the ~~six months ended June 30,~~third quarter of 2018 were ~~$22.1 million, or 0.18% as a percentage~~24 basis points, annualized, down from 29 basis points in the prior quarter. Year-to-date, net charge-offs are 20 basis points, well within Synovus' guidance of average loans annualized, compared to $22.6 million, or 0.19%, as a percentage of average loans annualized for the six months ended June 30, 2017. Loans past due over 90 days were 0.01% of total loans at June 30, 2018 as compared to 0.02% at June 30, 2017. For the six months ended June 30, 2018, the provision for loan losses was $24.6 million, an increase of $5.6 million, or 29.7%, compared to the six months ended June 30, 2017. 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 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 and $248.1 million, or 1.02% of total loans, at June 30, 2017.

15-25 basis points.

At ~~June~~September 30, 2018, total loans were ~~$25.13~~$25.58 billion, an increase of ~~$346.6~~$789.7 million, or ~~2.8%~~4.3% annualized, and ~~$703.5 million~~$1.09 billion or ~~2.9%~~4.5%, compared to December 31, 2017 and ~~June~~September 30, 2017, respectively. Year-over-year loan growth was driven by a ~~$532.5~~$776.2 million or ~~4.5%~~6.6% increase in C&I loans and a ~~$945.8~~$827.6 million or ~~17.9%~~14.9% increase in consumer loans, with our lending partnerships growing ~~$744.4~~$569.6 million and mortgage loans growing ~~$280.3~~$285.6 million. This growth was partially offset by a ~~$778.1~~$514.5 million or ~~10.5%~~7.1% decline in CRE loans.

During the ~~second~~third quarter of 2018, total average deposits increased ~~$480.0~~$119.2 million, or ~~7.5%~~1.8% annualized, ~~compared to the first quarter of 2018, and increased $1.28 billion, or 5.1%,~~ compared to the second quarter of ~~2017. Average brokered deposits declined $29.0 million~~2018, and increased $1.10 billion, or 4.4%, compared to the ~~prior quarter.~~third quarter of 2017. Average core deposits⁽¹⁾, during the ~~second~~third quarter of 2018, increased ~~$509.0~~$269.2 million, or ~~8.6%~~4.4% annualized, compared to the prior quarter, and increased ~~$733.0~~$858.3 million, or ~~3.1%~~3.6%, compared to the ~~second~~third quarter of 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 quarter, due to the reclassification. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

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~~$195.1 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~~$130.0 million.

Concurrent with the redemption of the Series C Preferred Stock, Synovus recognized a one-time, non-cash redemption charge of $4.0 million.

On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of ~~June~~September 30, 2018, Synovus had repurchased under this program a total of ~~$76.8~~$134.8 million, or ~~1.5~~2.6 million shares of its common stock, at an average price of ~~$52.72~~$51.85 per share. As of September 30, 2018, the remaining authorization under this program was $15.2 million. During October 2018, the program was concluded with the remaining $15.2 million, or 345 thousand shares, repurchased. In total, 2.9 million shares were repurchased during 2018 at an average price of $50.96 per share. Additionally, during the first quarter of 2018, Synovus increased the quarterly common stock dividend by 67% to $0.25 per share effective with the quarterly dividend declared during the first quarter of 2018. ~~Total shareholders’ equity was $3.17 billion at June~~

More detail on Synovus' financial results for the three and nine months ended September 30, 2018 can be found in subsequent sections of "Item 2. – Management's Discussion and ~~$3.0 billion at December 31, 2017. Return on average common equity annualized for the second quarter~~Analysis of ~~2018 was 15.39%, an increase~~Financial Condition and Results of ~~505 basis points from the same period in 2017. Adjusted return on average common equity annualized for the second quarter~~Operations" 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 15.97%, an increase of 522 basis points from the same period in 2017. ~~See Non-GAAP Financial Measures" in~~ this ~~Report for applicable reconciliation to the most comparable GAAP measures.~~Report.

2018 Expectations

For the full year 2018 as compared to the full year 2017, management expectations are noted below:

~~Average~~Period-end loan growth of 4% to 6%5%

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%~~21% to ~~24%~~22%

Net charge-off ratio of 15 to 25 bps

Common share repurchases of up to $150 million (completed as of October 2018)

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

Changes in Financial Condition

During the ~~six~~nine months ended ~~June~~September 30, 2018, total assets increased ~~$518.5~~$853.3 million from $31.22 billion at December 31, 2017 to ~~$31.74~~$32.08 billion. The principal ~~components~~component of this increase ~~were~~was an increase in loans, net of deferred fees and costs, of ~~$346.6 million~~$789.7 million. Short-term borrowings and ~~an increase in interest bearing funds with~~deposits provided the ~~Federal Reserve of $152.2 million. An increase of $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 assets. The net loan to deposit ratio was 96.8% at September 30, 2018 compared to 94.8% at December 31, 2017.

Loans

The following table compares the composition of the loan portfolio at ~~June~~September 30, 2018, December 31, 2017, and ~~June~~September 30, 2017.


(dollars in thousands)	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		September 30, 2018			December 31, 2017			September 30, 2018 vs. December 31, 2017 % Change⁽¹⁾		September 30, 2017			September 30, 2018 vs. September 30, 2017 % Change
Commercial, financial and agricultural	$	7,271,080		$	7,179,487		2.6	%	$	6,993,817		4.0	%	$	7,281,466		$	7,179,487		1.9	%	$	6,961,709		4.6	%
Owner-occupied	5,004,392			4,844,163			6.7		4,749,128			5.4		5,221,828			4,844,163			10.4		4,765,433			9.6
Total commercial and industrial	12,275,472			12,023,650			4.2		11,742,945			4.5		12,503,294			12,023,650			5.3		11,727,142			6.6
Investment properties	5,509,596			5,670,065			(5.7	)	6,035,664			(8.7	)%	5,665,690			5,670,065			(0.1	)	5,925,096			(4.4	)%
1-4 family properties	720,710			781,619			(15.7	)	836,826			(13.9	)	707,196			781,619			(12.7	)	794,616			(11.0	)
Land and development	413,865			483,604			(29.1	)	549,744			(24.7	)	339,520			483,604			(39.8	)	507,212			(33.1	)
Total commercial real estate	6,644,171			6,935,288			(8.5	)	7,422,234			(10.5	)	6,712,406			6,935,288			(4.3	)	7,226,924			(7.1	)
Home equity lines	1,453,855			1,514,227			(8.0	)	1,563,167			(7.0	)	1,465,419			1,514,227			(4.3	)	1,528,889			(4.2	)
Consumer mortgages	2,750,935			2,633,503			9.0		2,470,665			11.3		2,843,244			2,633,503			10.6		2,557,680			11.2
Credit cards	238,424			232,676			5.0		225,900			5.5		245,149			232,676			7.2		225,725			8.6
Other consumer loans	1,793,916			1,473,451			43.9		1,031,639			73.9		1,831,385			1,473,451			32.5		1,245,278			47.1
Total consumer	6,237,130			5,853,857			13.2		5,291,371			17.9		6,385,197			5,853,857			12.1		5,557,572			14.9
Total loans	25,156,773			24,812,795			2.8		24,456,550			2.9		25,600,897			24,812,795			4.2		24,511,638			4.4
Deferred fees and costs, net	(22,717		)	(25,331		)	(20.8	)	(26,038		)	(12.8	)	(23,781		)	(25,331		)	(8.2	)	(24,278		)	(2.0	)
Total loans, net of deferred fees and costs	$	25,134,056		$	24,787,464		2.8	%	$	24,430,512		2.9	%	$	25,577,116		$	24,787,464		4.3	%	$	24,487,360		4.5	%

⁽¹⁾Percentage changes are annualized

Commercial Loans

Total commercial loans (which are comprised of C&I and CRE loans) at ~~June~~September 30, 2018 were ~~$18.92~~$19.22 billion or ~~75.3%~~75.1% of the total loan portfolio, compared to $18.96 billion, or 76.5%, at December 31, 2017 and ~~$19.17~~$18.95 billion, or ~~78.4%~~77.4%, at ~~June~~September 30, 2017.

At ~~June~~September 30, 2018 and December 31, 2017, Synovus had 30 29and 25, respectively, commercial loan relationships with total commitments of $50 million or more (including amounts funded).The average funded balance of these relationships was approximately$34 million and $35 million ~~for both June~~at September 30, 2018 and December 31, ~~2017.~~2017, respectively.

Commercial and Industrial Loans

The C&I loan portfolio represents the largest category of Synovus' total loan portfolio. The following table shows the composition of the C&I portfolio aggregated by NAICS 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 markets 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~~September 30, 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 ~~$12.28~~$12.50 billion, representing ~~48.8%~~48.9% of the total loan portfolio, grew ~~$251.8~~$479.6 million, or ~~4.2%~~5.3% annualized, from December 31, 2017 and~~$532.5~~ $776.2 million, or ~~4.5%~~6.6%, from ~~June~~September 30, 2017. The growth in C&I loans was broad-based, driven by ~~small business,~~senior housing, premium finance, and ~~senior housing.~~small business.


Commercial and Industrial Loans by Industry	June 30, 2018				December 31, 2017				September 30, 2018				December 31, 2017
(dollars in thousands)	Amount		%⁽¹⁾		Amount		%⁽¹⁾		Amount		%⁽¹⁾		Amount		%⁽¹⁾
Health care and social assistance	$	2,863,586	23.3	%	$	2,764,907	23.0	%	$	3,022,719	24.2	%	$	2,764,907	23.0	%
Manufacturing	1,015,076		8.3		930,751		7.7		983,941		7.9		930,751		7.7
Real estate and rental and leasing									854,598		6.8		851,303		7.1
Retail trade	840,398		6.8		857,348		7.1		852,775		6.8		857,348		7.1
Real estate and rental and leasing	828,961		6.8		851,303		7.1
Finance and insurance	782,753		6.4		780,279		6.5		778,414		6.2		780,279		6.5
Other services	778,208		6.3		761,916		6.3		769,741		6.2		761,916		6.3
Professional, scientific, and technical services	727,213		5.9		771,809		6.4		764,037		6.1		771,809		6.4
Wholesale trade	687,157		5.6		675,741		5.6		689,388		5.5		675,741		5.6
Accommodation and food services									618,603		4.9		562,877		4.7
Real estate other	597,073		4.9		586,707		4.9		582,872		4.7		586,707		4.9
Accommodation and food services	586,609		4.8		562,877		4.7
Construction	536,779		4.4		500,091		4.2		535,408		4.3		500,091		4.2
Transportation and warehousing	494,487		4.0		427,608		3.6		472,537		3.8		427,608		3.6
Other industries	452,432		3.7		438,312		3.6		469,805		3.8		438,312		3.6
Agriculture, forestry, fishing, and hunting	322,286		2.6		349,181		2.9		326,819		2.6		349,181		2.9
Administration, support, waste management, and remediation	263,902		2.1		273,189		2.3		278,362		2.2		273,189		2.3
Educational services	259,170		2.1		259,367		2.2		265,934		2.1		259,367		2.2
Information	239,382		2.0		232,264		1.9		237,341		1.9		232,264		1.9
Total commercial and industrial loans	$	12,275,472	100.0	%	$	12,023,650	100.0	%	$	12,503,294	100.0	%	$	12,023,650	100.0	%

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

At ~~June~~September 30, 2018, ~~$7.27~~$7.28 billion of C&I loans, or ~~28.9%~~28.5% 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~~September 30, 2018, ~~$5.00~~$5.22 billion of C&I loans, or ~~19.9%~~20.4% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. The financing of owner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on cash flow from operations of the business to repay the debt. The secondary source of repayment on these loans is the underlying real estate. These loans are predominately secured by owner-occupied and other real estate, and to a lesser extent, other types of collateral.

Commercial Real Estate Loans

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 ~~$6.64~~$6.71 billion, representing ~~26.4%~~26.2% of the total loan portfolio, decreased ~~$291.1~~$222.9 million, or ~~8.5%~~4.3% annualized, from December 31, 2017 and decreased ~~$778.1~~$514.5 million, or ~~10.5%~~7.1%, from ~~June~~September 30, 2017. The ~~$291.1~~$222.9 million decline was driven by a ~~$160.5 million decrease in the Investment Properties portfolio and a $69.7~~$144.1 million decrease in the non-strategic Land and Development ~~portfolio.~~portfolio and a $74.4 million decrease in 1-4 family properties. The decline in CRE ishas largely been the result of the continued higher velocity of pay-off activity across the ~~portfolio.~~portfolio which began to moderate in the third quarter, resulting in sequential quarter growth of $68.2 million or 4.1% annualized.

Investment Properties Loans

Investment properties loans consist of construction and mortgage loans for ~~income producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses, and other commercial development~~income-producing properties. Total investment properties loans as of ~~June~~September 30, 2018 were ~~$5.51~~$5.67 billion, or ~~82.9%~~84.4% of the total CRE portfolio and ~~21.9%~~22.1% of the total loan portfolio, compared to $5.67 billion, or 81.8% of the total CRE portfolio and 22.9% of the total loan portfolio at December 31, ~~2017, a decrease of $160.5 million, or 5.7% annualized primarily due to a decline in office buildings and multi-family properties.~~2017. Synovus' investment properties portfolio is well diversified by property type, geography (primarily within Synovus' primary market areas of Georgia, Alabama, South Carolina, Florida, and 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~~September 30, 2018, 1-4 family properties loans totaled ~~$720.7~~$707.2 million, or ~~10.8%~~10.5% of the total CRE portfolio and ~~2.9%~~2.8% of the total loan portfolio, compared to $781.6 million, or 11.3% of the total CRE portfolio and 3.2% of the total loan portfolio at December 31, 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 LTV of the collateral and the capacity of the guarantor(s). Total land and development loans were ~~$413.9~~$339.5 million at ~~June~~September 30, 2018, or ~~1.6%~~1.3% of the total loan portfolio, a decline of ~~$69.7~~$144.1 million, or ~~29.1%~~39.8% annualized, from December 31, 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~~September 30, 2018 totaled ~~$6.24~~$6.39 billion, representing ~~24.8%~~24.9% of the total loan portfolio compared to $5.85 billion, or 23.6% of the total loan portfolio at December 31, 2017, and ~~$5.29~~$5.56 billion, or ~~21.7%~~22.7% of the total loan portfolio at ~~June~~September 30, 2017. Consumer loans increased ~~$383.3~~$531.3 million, or ~~13.2%~~12.1% annualized, from December 31, 2017 and ~~$945.8~~$827.6 million, or ~~17.9%~~14.9%, from ~~June~~September 30, 2017. Consumer mortgages grew ~~$117.4~~$209.7 million or ~~9.0%~~10.6% annualized, from December 31, 2017, and ~~$280.3~~$285.6 million, or ~~11.3%~~11.2%, from ~~June~~September 30, 2017 given solid production in the private wealth management and physician categories as well as the continued addition of mortgage loan originators.HELOCs decreased ~~$60.4~~$48.8 million or ~~8.0%~~4.3%, annualized, from December 31, 2017. Credit card loans totaled ~~$238.4~~$245.1 million at ~~June~~September 30, 2018, including ~~$67.8~~$70.5 million of commercial credit card loans.

Other consumer loans increased ~~$320.5~~$357.9 million, or ~~43.9%~~32.5% annualized, from December 31, 2017, and ~~$762.3~~$586.1 million, or ~~73.9%~~47.1%, from ~~June~~September 30, 2017 primarily due to two consumer-based lending partnerships. One lending partnership, which began in 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~~September 30, 2018, these partnerships had combined balances of ~~$1.4~~$1.48 billion, or ~~5.7%~~5.8% 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 ~~December 31, 2017.~~June 30, 2018. Revolving lines of credit were 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.

As of the most recent FICO score refresh on ~~March 31,~~June 30, 2018,weighted-average FICO scores within the residential real estate portfolio were 774 for both HELOCs and ~~785 for~~ consumer ~~mortgages.~~mortgages. HELOC utilization rates (total amount outstanding as a percentage of total available lines) were ~~53.7%~~53.1% and 55.6% at ~~June~~September 30, 2018 and December 31, 2017, respectively. Additionally, we maintained loan-to-value ratios based upon prudent guidelines to ensure consistency with Synovus' overall risk philosophy.At ~~June~~September 30, 2018, 35% of home equity line balances were secured by a first lien, and 65% were secured by a second lien. Apart from credit card loans and unsecured loans, Synovus does not originate loans with LTV ratios greater than 100% at origination except for infrequent situations provided that certain underwriting requirements are met. Additionally, at origination, loan maturities are determined based on the borrower's ability to repay (cash flow or earning power 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 sub-prime, alt-A, no documentation or stated income residential real estate loan products. Synovus estimates that, as of ~~June~~September 30, 2018, it had ~~$83.7~~$79.4 million of

higher-risk consumer loans ~~(1.3%~~(1.2% of the consumer portfolio and 0.3% of the total loan portfolio) compared to ~~$100.7~~$87.0 million as of ~~June~~September 30, 2017. Included in these amounts as of ~~June~~September 30, 2018 and 2017 are approximately $9$9 million and ~~$12~~$11 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, 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 deposits 5,001,825
19.0
5,032,000
19.5
4,976,239
18.9
4,837,053
19.4
Money market accounts, excluding brokered deposits 7,791,107
29.7
7,561,554
29.3
7,514,992
28.6
7,427,562
29.7
Savings deposits 829,800
3.2
811,588
3.1
804,853
3.0
805,019
3.2
Time deposits, excluding brokered deposits 3,182,974
12.1
3,039,325
11.8
3,170,445
12.1
3,243,670
13.0
Brokered deposits 1,922,917
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 %



Composition of Average Deposits
Composition of Average Deposits
(dollars in thousands)	September 30, 2018		%⁽¹⁾		June 30, 2018		%⁽¹⁾		December 31, 2017		%⁽¹⁾		September 30, 2017		%⁽¹⁾
Non-interest bearing demand deposits	$	7,672,006	29.1	%	$	7,539,451	28.7	%	$	7,621,147	29.0	%	$	7,305,508	28.9	%
Interest-bearing demand deposits	4,701,204		17.8		5,001,825		19.0		4,976,239		18.9		4,868,372		19.2
Money market accounts, excluding brokered deposits	7,936,621		30.1		7,791,107		29.7		7,514,992		28.6		7,528,036		29.8
Savings deposits	824,935		3.1		829,800		3.2		804,853		3.0		803,185		3.2
Time deposits, excluding brokered deposits	3,479,569		13.2		3,182,974		12.1		3,170,445		12.1		3,250,929		12.8
Brokered deposits	1,772,977		6.7		1,922,917		7.3		2,198,333		8.4		1,530,889		6.1
Total average deposits	$	26,387,312	100.0	%	$	26,268,074	100.0	%	$	26,286,009	100.0	%	$	25,286,919	100.0	%
Average core deposits ⁽²⁾	$	24,614,335	93.3	%	$	24,345,157	92.7	%	$	24,087,676	91.6	%	$	23,756,030	93.9	%

Time deposits greater than $100,000	$	3,688,282	14.0	%	$	3,681,025	14.0	%	$	3,655,952	13.9	%	$	3,050,770	12.1	%

Brokered time deposits	$	1,414,700	5.4	%	$	1,659,941	6.3	%	$	1,651,920	6.3	%	$	983,423	3.9	%

⁽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~~third quarter of 2018, total average deposits increased ~~$480.0~~$119.2 million, or ~~7.5%~~1.8% annualized, ~~compared to the first quarter of 2018, and increased $1.28 billion, or 5.1%,~~ compared to the second quarter of ~~2017. Average brokered deposits declined $29.0 million~~2018, and increased $1.10 billion, or 4.4%, compared to the ~~prior quarter.~~third quarter of 2017. Average core deposits, during the ~~second~~third quarter of 2018, increased ~~$509.0~~$269.2 million, or ~~8.6%~~4.4% annualized, compared to the prior quarter, and increased ~~$733.0~~$858.3 million, or ~~3.1%~~3.6%, compared to the ~~second~~third quarter of 2017. Average brokered deposits decreased $149.9 million compared to the prior quarter as Synovus reduced its overall level of brokered deposits due to the growth in core deposits during the third quarter. 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~~third quarter 2018 average balance in these accounts ~~totaled~~was $316.7 million, compared to an average balance of $310.0 million ~~and resulted~~ in ~~an increase~~the second quarter of ~~$198.0 million in average core deposits for the quarter, due to the reclassification.~~2018. 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~~increased during the ~~three months ended June 30,~~third quarter of 2018 and ~~three months ended March 31, 2018~~were 29.1%, 28.7%, and ~~29.2%~~28.9% for the three months ended ~~June~~September 30, ~~2017.~~

~~Average time deposits of $100,000 and greater for the three months ended~~2018, June 30, 2018, ~~March 31, 2018,~~ and June 30, 2017 were $3.68 billion, $3.42 billion, and $2.86 billion, respectively, and included average brokered time deposits of $1.66 billion, $1.53 billion, and $815.5 million, respectively. These larger deposits represented 14.0%, 13.3%, and 11.4% of total average deposits for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively, and included brokered time deposits which represented 6.3%, 5.9%, and 3.3% of total average deposits for the three months ended June 30, 2018, March 31, 2018, and JuneSeptember 30, 2017, respectively.

During the second quarter of 2018, total average brokered deposits represented 7.3% of total average deposits compared to 7.6% and 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 months~~third quarter of 2018 was ~~$140.4~~$71.7 million, down $63.8 million, or 47.1%, compared to the third quarter of 2017. On a year-to-date basis, non-interest income was $212.1 million compared to ~~$140.5~~$276.0 million for the first ~~six~~nine months of 2017. ~~Non-interest income for the second~~The third quarter of ~~2018 was $73.4~~2017 included the $75.0 million ~~up $4.7~~Cabela's Transaction Fee, partially offset by $8.0 million ~~or 6.8%, compared to the second quarter of 2017.~~in investment securities losses. Adjusted non-interest income, which excludes investment securities ~~gains (losses) and decrease~~losses, net, increase (decrease) in fair value of private equity investments, and the Cabela's Transaction Fee, was up ~~$8.8~~$2.8 million, or ~~6.5%~~4.1%, for the ~~first six months of 2018 compared to 2017 and up $4.7 million, or 6.7%, for the second~~third quarter of 2018 compared to the ~~second~~third quarter of 2017 and up $11.6 million, or 5.7%, for the first nine months of 2018 compared to 2017. Synovus experienced growth in multiple categories during the first ~~half~~nine months of 2018 compared to the same time period in 2017 including an increase of ~~$6.6~~$9.4 million or ~~16.0%~~15.0%, 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.

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


Non-interest income	Six Months Ended June 30,								Three Months Ended June 30,								Three Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	2018			2017			% Change		2018			2017			% Change		2018		2017			% Change		2018			2017			% Change
Service charges on deposit accounts	$	39,938		$	40,370		(1.1	)%	$	19,999		$	20,252		(1.2	)%	$	20,582	$	20,678		(0.5	)%	$	60,521		$	61,048		(0.9	)%
Fiduciary and asset management fees	27,419			24,676			11.1		13,983			12,524			11.6		13,462		12,615			6.7		40,881			37,290			9.6
Card fees	21,032			19,885			5.8		10,833			10,041			7.9		10,608		9,729			9.0		31,640			29,614			6.8
Brokerage revenue	17,596			14,436			21.9		8,900			7,210			23.4		9,329		7,511			24.2		26,924			21,947			22.7
Mortgage banking income	9,887			11,548			(14.4	)	4,839			5,784			(16.3	)	5,290		5,603			(5.6	)	15,177			17,151			(11.5	)
Income from bank-owned life insurance	7,949			6,328			25.6		3,733			3,272			14.1		3,771		3,232			16.7		11,720			9,560			22.6
Investment securities (losses) gains, net	(1,296		)	7,667			nm		(1,296		)	(1		)	nm
Decrease in fair value of private equity investments, net	(3,093		)	(3,166		)	nm		(37		)	(1,352		)	nm
Cabela's Transaction Fee																	—		75,000			nm		—			75,000			nm
Investment securities losses, net																	—		(7,956		)	nm		(1,296		)	(289		)	nm
Other fee income	9,877			11,033			(10.5	)	5,259			6,164			(14.7	)	4,510		5,094			(11.5	)	14,387			16,127			(10.8	)
Other non-interest income	11,124			7,762			43.3		7,174			4,807			49.2		4,116		3,929			4.8		12,147			8,526			42.5
Total non-interest income	$	140,433		$	140,539		(0.1	)%	$	73,387		$	68,701		6.8	%	$	71,668	$	135,435		(47.1	)%	$	212,101		$	275,974		(23.1	)%

~~Principal Components of Non-interest Income~~Three and Nine Month Periods Ending September 30, 2018 compared to September 30, 2017:

Service charges on deposit accounts for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 were down ~~$432~~$96 thousand ~~or 1.1%,~~ and ~~down $253~~$527 thousand, ~~or 1.2%, respectively, compared to the six and three months ended June 30, 2017.~~respectively. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees ~~for the six and three months ended June 30, 2018~~ were down ~~$267 thousand, or 1.5%,~~slightly, and ~~$241 thousand, or 2.7%, respectively, compared to the six and three months ended June 30, 2017. Account~~offset by slight increases in account analysis fees for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, ~~2018 were up $171 thousand, or 1.4%, and $284 thousand, or 4.6%, respectively, compared to the six and three months ended June 30, 2017.~~2018. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposit and saving accounts, for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 were ~~down $336 thousand, or 3.3%, and $297 thousand, or 5.8%,~~essentially flat compared to the same periods in 2017.

Fiduciary and asset management fees are derived from providing estate administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased ~~$2.7~~$847 thousand, or 6.7%, and $3.6 million, or ~~11.1%, and $1.5 million, or 11.6%~~9.6%, for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, ~~respectively, compared to the six and three months ended June 30, 2017.~~respectively. The increase was driven by growth in assets under management. Total assets under management (including brokerage assets under management) increased by ~~16%~~15.5% year-over-year to approximately ~~$14.4~~$15.0 billion, due to overall market conditions, increased productivity, as well as the addition of new talent.

Card fees ~~totaled $21.0 million and $10.8 million~~ for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, ~~respectively, compared to $19.9~~increased $879 thousand or 9.0% and $2.0 million ~~and $10.0 million for the same periods in 2017.~~or 6.8%, respectively. 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. The increase in 2018 from 2017 was driven by growth in transaction volume for both credit and debit card transactions as well as growth in revenue from sponsored merchant processing service providers.

Brokerage revenue was ~~$17.6~~$9.3 million and ~~$8.9~~$26.9 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, up ~~$3.2~~$1.8 million, or ~~21.9%~~24.2%, and up ~~$1.7~~$5.0 million, or ~~23.4%~~22.7%, ~~compared to~~for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, ~~2017,~~2018, respectively. Brokerage revenue consists primarily of brokerage commissions, as well as advisory fees earned from the management of customer assets. The increase in 2018 from 2017 was largely driven by growth in brokerage assets under management due primarily to 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 decreased ~~$1.7~~$313 thousand, or 5.6%, and $2.0 million, or ~~14.4%~~11.5%, for the three and ~~$945 thousand, or 16.3%, compared to the six and three~~nine months ended ~~June~~September 30, ~~2017,~~2018, respectively, reflecting softer production volume in a rising interest rate environment.

Income from bank-owned life insurance increased ~~$1.6~~$539 thousand, or 16.7%, and $2.2 million, or ~~25.6%~~22.6%, for the three and ~~$461 thousand, or 14.1%, compared to the six and three~~nine months ended ~~June~~September 30, ~~2017,~~2018, 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.

On September 25, 2017, Synovus Bank completed the Cabela's Transaction and received the Cabela's Transaction Fee.

Investment securities losses, ~~of $1.3 million~~net, for the ~~six and three~~nine months ended ~~June~~September 30, 2018 included a loss of $1.3 million from a strategic sale to improve portfolio performance. Investment securities ~~gains,~~losses, net, ~~of $7.7~~were $8.0 million and $289 thousand, for the ~~six~~three and nine months ended ~~June~~September 30, 2017, respectively. During the third quarter of 2017, as part of its balance sheet restructuring actions, Synovus repositioned the available for sale securities portfolio and recorded a net loss of $8.0 million. The first quarter of 2017 included a $3.4 million gain on the sale of an equity position and a $4.3 million gain from the repositioning of the investment securities ~~portfolio during the first quarter of 2017.~~portfolio.

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 lower by $1.2~~decreased $584 thousand, or 11.5%, and $1.7 million, or ~~10.5%~~10.8%, for the three and ~~$905 thousand, or 14.7%, compared to the six and three~~nine months ended ~~June~~September 30, ~~2017,~~2018, respectively, due primarily to higher customer swap dealer fees and a large syndication arranger ~~fees~~fee in 2017.

The main components of other non-interest income are income from insurance commissions, gains from sales of GGL/SBA loans, changes in fair value of private equity investments, and other miscellaneous items. Other non-interest income was up ~~$3.4~~$187 thousand, or 4.8%, and $3.6 million, or ~~43.3%~~42.5%, for the three and ~~$2.4 million, or 49.2%, compared to the six and three~~nine months ended ~~June~~September 30, ~~2017,~~2018, 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~~third quarter of 2018 increased ~~$10.1~~$14.7 million, or ~~2.6%~~7.1%, compared to the ~~first six months~~third quarter of 2017, and non-interest expense for the ~~second quarter~~first nine months of 2018 increased ~~$12.3~~$24.8 million, or ~~6.4%,~~4.2% compared to the ~~second quarter~~first nine months of 2017. The ~~second~~third quarter of 2018 included ~~a $2.3~~an $11.7 million expense ~~for a valuation adjustment~~ to record an increase in the ~~Visa derivative offset in part by a $1.4 million benefit from a recovery~~fair value of ~~litigation settlement expense. The first quarter of 2018 included a $2.6 million reduction in litigation contingency accruals~~the earnout liability associated with the Global One acquisition and ~~the first quarter of 2017 included $6.5~~$6.7 million in ~~restructuring~~FCB merger-related 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%,The efficiency ratio for the first ~~half~~nine months of 2018 was 58.21%, compared to ~~the first half of 2017. Strong operating leverage~~57.70% for the first ~~half of 2018 resulted in an efficiency ratio of 56.97%, improved from 62.31% for the first half~~nine months of 2017. The adjusted efficiency ratio for the first ~~six~~nine months of 2018 was ~~56.90%~~56.44%, down ~~397~~364 basis points from the same period a year ago. Synovus remains disciplined in managing its expense base, while continuing to make appropriate investments that drive sustainable growth, enhanced customer experience, and back-office efficiency. 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,							Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2018			2017		% Change		2018			2017		% Change		2018		2017		% Change		2018			2017		% Change
Salaries and other personnel expense	$	225,583		$	212,404	6.2	%	$	111,863		$	105,213	6.3	%	$	114,341	$	109,675	4.3	%	$	339,924		$	322,079	5.5	%
Net occupancy and equipment expense	64,134			59,264		8.2		32,654			29,933		9.1		32,088		30,573		5.0		96,222			89,837		7.1
Third-party processing expense	29,012			26,223		10.6		15,067			13,620		10.6		14,810		13,659		8.4		43,822			39,882		9.9
FDIC insurance and other regulatory fees	13,335			13,645		(2.3	)	6,543			6,875		(4.8	)	6,430		7,078		(9.2	)	19,765			20,723		(4.6	)
Professional fees	11,789			12,907		(8.7	)	6,284			7,551		(16.8	)	6,298		7,141		(11.8	)	18,087			20,048		(9.8	)
Advertising expense	10,312			11,258		(8.4	)	5,220			5,346		(2.4	)	3,735		3,610		3.5		14,046			14,868		(5.5	)
Valuation adjustment to Visa derivative	2,328			—		nm		2,328			—		nm
Foreclosed real estate expense, net	749			3,582		(79.1	)	(107		)	1,448		(107.4	)	360		7,265		(95.0	)	1,110			10,847		(89.8	)
Earnout liability adjustment	—			1,707		nm		—			1,707		nm
Earnout liability adjustments															11,652		2,059		nm		11,652			3,766		nm
Merger-related expense															6,684		23		nm		6,684			110		nm
Restructuring charges, net	(212		)	6,524		nm		103			13		nm		21		519		nm		(191		)	7,043		nm
Other operating expenses	42,204			41,619		1.4		24,102			20,041		20.3		23,878		24,044		(0.7	)	68,410			65,577		4.3
Total non-interest expense	$	399,234		$	389,133	2.6	%	$	204,057		$	191,747	6.4	%	$	220,297	$	205,646	7.1	%	$	619,531		$	594,780	4.2	%

Three and Nine Month Periods Ending September 30, 2018 compared to September 30, 2017:

Salaries and other personnel expenses increased ~~$13.2~~$4.7 million, or ~~6.2%~~4.3%, and ~~$6.7~~$17.8 million, or ~~6.3%~~5.5%, for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, ~~compared to the same periods in 2017,~~ primarily due to talent additions, ~~and~~ higher incentive compensation expense, and annual merit increases, offset somewhat by decreases in employee health insurance expense and temporary help expense.

Net occupancy and equipment expense increased ~~$4.9~~$1.5 million, or ~~8.2%~~5.0%, and ~~$2.7~~$6.4 million, or ~~9.1%~~7.1%, during the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, ~~compared to the same periods in 2017~~ driven primarily by costs associated with ~~growth~~additional investments in technology ~~investments.~~as well as higher rent expense.

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 ~~$2.8~~$1.2 million, or ~~10.6%~~8.4%, and ~~$1.4~~$3.9 million, or ~~10.6%~~9.9%, during the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, ~~compared to the same periods in 2017. The increase is~~ primarily due to an increase of ~~$2.5 million~~$983 thousand and ~~$1.1~~$3.5 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, ~~compared to the same periods in 2017,~~ from servicing ~~fees~~expense associated with loan growth from Synovus' two consumer-based lending partnerships.

~~During~~FDIC insurance and other regulatory fees declined $648 thousand, or 9.2%, and $957 thousand, or 4.6%, for the three and nine months ended September 30, 2018, respectively, driven by lower assessment rates, somewhat offset by growth in average balances.

Professional fees declined $843 thousand, or 11.8%, and $2.0 million, or 9.8%, for the three and nine months ended September 30, 2018, respectively, due primarily to lower consulting fees.

Advertising expense increased slightly for the three months ended ~~June~~September 30, 2018 ~~Synovus recorded a $2.3 million valuation adjustment to~~and was lower by $821 thousand, or 5.5%, for the ~~Visa derivative following Visa's announcement on June 26, 2018 that it would deposit $600 million into its litigation escrow account.~~

~~For the six~~nine months ended ~~June~~September 30, 2018. Advertising spend during 2018 has continued with Synovus' brand awareness activities related to our transition to a single-brand during 2018.

Foreclosed real estate expense during the third quarter of 2017 included balance sheet restructuring actions with $7.1 million recorded for discounts to fair value for ORE accelerated dispositions.

Earnout liability fair value adjustments associated with the Global One acquisition increased due to higher earnings estimates over the contractual earnout period.

Merger-related expense of $6.7 million recorded during the three months ended September 30, 2018 ~~Synovus recorded net lease termination accrual reversals~~was associated with the pending acquisition of ~~$377 thousand related to branches closed~~FCB. See "Note 14 - Pending Acquisition and Pending Branch Sales" in ~~prior years offset somewhat by other property related~~this Report for more information on the pending acquisition of FCB.

Restructuring charges of ~~$165 thousand. During~~$7.0 million were recorded during the ~~six~~nine months ended ~~June~~September 30, 2017 ~~Synovus recorded~~consisting primarily of 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.

Other operating expenses were down slightly for the ~~six and~~ three months ended ~~June~~September 30, 2018 ~~included a benefit of $4.0~~and up $2.8 million, ~~and $1.4 million, respectively, from recoveries and reductions in litigation contingency accruals. Other operating expenses~~or 4.3%, for the ~~six and three~~nine months ended ~~June~~September 30, ~~2017 included~~2018 driven by a ~~$2.4~~valuation adjustment to the Visa derivative of $2.3 million ~~gain from the settlement~~in second quarter 2018 and additional fixed asset impairment charges of ~~a contingent receivable.~~$1.0 million, somewhat offset by additional contingency recoveries of $1.2 million.

Income Tax Expense

Income tax expense was ~~$61.1~~$18.9 million and ~~$30.9~~$80.1 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018, respectively, representing an effective tax rate of ~~22.2%~~14.8% and ~~21.8%~~19.8% for the respective periods. Income tax expense was ~~$75.6~~$54.7 million and ~~$41.8~~$130.3 million for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2017, respectively, representing an effective tax rate of ~~33.8%~~35.8% and ~~35.5%~~34.6% for the respective periods. The lower effective tax ~~rate is lower~~rates for the ~~six~~three and ~~three~~nine months ended ~~June~~September 30, 2018 were primarily due to ~~Federal Tax Reform that reduced~~a reduction in the federal statutory rate from 35% to 21% resulting from Tax Reform, certain provision to return adjustments and the finalization of the provisional amounts recorded for ~~tax years beginning after~~the year ended December 31, ~~2017.~~2017 related to Tax Reform.

During the third quarter of 2018, Synovus recognized a discrete tax benefit of $12.7 million, which included a $3.9 million tax benefit for the refinement of provisional amounts previously reported under SAB 118, a $5.5 million return to provision benefit associated with the preparation of the 2017 tax return and a $3.3 million benefit associated with insignificant adjustments to tax returns from several prior years. In addition, the effective income tax rate for the nine months ended September 30, 2018 included a net discrete income tax benefit of $2.8 million resulting from tax benefits associated with the exercise and vesting of employee equity awards.

The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, bank-owned life insurance, tax-exempt interest and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as tax benefits related to share-based compensation, jurisdiction statutory tax rate changes, valuation allowance changes and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.

The effective income tax rate for the six months ended June 30, 2018 included a net discrete income tax benefit of $2.8 million predominantly resulting from tax benefits associated with the exercise and vesting of 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~~nine months of 2018.

Two major hurricanes over the last six weeks have caused devastation to areas within the Synovus footprint, with Hurricane Florence impacting much of the Carolinas and Hurricane Michael impacting the eastern Florida panhandle and much of Southwest Georgia. Following each storm, Synovus deployed its bankers to check on customers in the affected areas, to assess any impact, and to develop a plan. With Hurricane Florence, there was no material impact to Synovus’ loan portfolio, and very few customers have requested payment relief at this time. With Hurricane Michael, we are still in the process of compiling and analyzing information. We do know that Synovus’ total exposure in the FEMA-designated areas of impact in Florida and Georgia is approximately $500 million, which is only about 2% of total loans. Thus far, we believe that the losses experienced by our customers are fully-covered by insurance, leading us to believe that Synovus will not experience a material impact to its loan portfolio from Hurricane Michael.

The table below includes selected credit quality metrics.


Credit Quality Metrics
(dollars in thousands)	June 30, 2018			December 31, 2017		June 30, 2017		September 30, 2018			December 31, 2017			September 30, 2017
Non-performing loans	$	117,328		$	115,561	$	159,317	$	108,425		$	115,561		$	97,838
Impaired loans held for sale⁽¹⁾	2,733			11,278		127		12			11,278			30,197
Other real estate	6,288			3,758		19,476		8,542			3,758			10,551
Non-performing assets	$	126,349		$	130,597	$	178,920	$	116,979		$	130,597		$	138,586
Non-performing loans as a % of total loans	0.47		%	0.47		0.65		0.42		%	0.47		%	0.40		%
Non-performing assets as a % of total loans, other loans held for sale, and ORE	0.50			0.53		0.73		0.46			0.53			0.57
Loans 90 days past due and still accruing	$	3,222		4,414		4,550		$	4,856		$	4,414		$	5,685
As a % of total loans	0.01		%	0.02		0.02		0.02		%	0.02		%	0.02		%
Total past due loans and still accruing	$	55,614		52,031		66,788		$	78,324		$	52,031		$	84,853
As a % of total loans	0.22		%	0.21		0.27		0.31		%	0.21		%	0.35		%
Net charge-offs, quarter	$	17,829		8,979		15,679		$	15,257		$	8,979		$	38,098
Net charge-offs/average loans, quarter	0.29		%	0.15		0.26		0.24		%	0.15		%	0.62		%
Net charge-offs, year-to-date	$	22,109		69,675		22,597		$	37,366		69,675			60,695
Net charge-offs/average loans, year-to-date	0.18		%	0.29		0.19		0.20		%	0.29		%	0.33		%
Provision for loan losses, quarter	$	11,790		8,564		10,260		$	14,982		$	8,564		$	39,686
Provision for loan losses, year-to-date	24,566			67,185		18,934		39,548			67,185			58,620
Allowance for loan losses	251,725			249,268		248,095		251,450			249,268			249,683
Allowance for loan losses as a % of total loans	1.00		%	1.01		1.02		0.98		%	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~~$117.0 million at ~~June~~September 30, 2018, a ~~$4.2~~$13.6 million, or ~~3.3%~~10.4%, decrease from $130.6 million at December 31, 2017 and a ~~$52.6~~$21.6 million, or ~~29.4%~~15.6%, decrease from ~~$178.9~~$138.6 million at ~~June~~September 30, 2017. The year-over-year ~~decline~~decrease in non-performing assets was driven by the continued resolution of problem ~~assets, including accelerated dispositions in conjunction with the balance sheet restructuring actions in the third quarter of 2017.~~ assets. Total non-performing assets as a percentage of total loans, other loans held for sale, and other real estate were ~~0.50%~~0.46% at ~~June~~September 30, 2018 compared to 0.53% at December 31, 2017 and ~~0.73%~~0.57% at ~~June~~September 30, 2017.

Troubled Debt Restructurings

Accruing TDRs were ~~$125.3~~$114.7 million at ~~June~~September 30, 2018, compared to $151.3 million at December 31, 2017 and ~~$167.4~~$166.9 million at ~~June~~September 30, ~~2017~~.2017. Accruing TDRs ~~declined $26.0~~decreased $36.5 million, or ~~17.2%~~24.1%, from December 31, 2017 and ~~$42.1~~$52.1 million, or, ~~25.1%,~~31.3% from a year ago primarily due to a continued decline in TDR inflows, ~~fewer~~more loans qualifying for removal of TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.

At ~~June~~September 30, 2018, the allowance for loan losses allocated to these accruing TDRs was ~~$6.5~~$6.9 million compared to $8.7 millionat December 31, 2017 and $8.5 million at ~~June~~September 30, 2017. Accruing TDRs are considered performing because they are performing in accordance with the restructured terms.At ~~June~~both September 30, 2018 and December 31, 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 levels. There were eight defaults for the ~~six~~nine months ended ~~June~~September 30, 2018 and ~~three~~four defaults for the ~~six~~nine months ended ~~June~~September 30, 2017.

Accruing TDRs by Risk Grade June 30, 2018 December 31, 2017 June 30, 2017
(dollars in thousands) Amount % Amount % Amount %
Pass $ 57,013
45.5 % $ 57,136
37.8 % $ 69,943
41.8 %
Special Mention 19,799
15.8
15,879
10.5
20,550
12.3
Substandard accruing 48,498
38.7
78,256
51.7
76,902
45.9
Total accruing TDRs $ 125,310
100.0 % $ 151,271
100.0 % $ 167,395
100.0 %

Accruing TDRs Aging by Portfolio Class
June 30, 2018
(in thousands) Current 30-89 Days Past Due 90+ Days Past Due Total
Commercial, financial and agricultural $ 11,302
$ 817
$ —
$ 12,119

Owner-occupied 36,388
62
—
36,450

Total commercial and industrial 47,690
879
—
48,569

Investment properties 24,218
—
—
24,218

1-4 family properties 10,347
111
—
10,458

Land and development 15,281
589
—
15,870

Total commercial real estate 49,846
700
—
50,546

Home equity lines 1,312
1,108
333
2,753

Consumer mortgages 18,572
195
—
18,767

Credit cards —
—
—
—

Other consumer loans 4,630
45
—
4,675

Total consumer 24,514
1,348
333
26,195

Total accruing TDRs $ 122,050

$ 2,927
$ 333

$ 125,310

December 31, 2017
(in thousands) Current 30-89 Days Past Due 90+ Days Past Due Total
Commercial, financial and agricultural $ 33,789
$ 1,161
$ 44
$ 34,994

Owner-occupied 35,554
—
—
35,554

Total commercial and industrial 69,343
1,161
44
70,548

Investment properties 21,398
—
—
21,398

1-4 family properties 14,865
191
—
15,056

Land and development 14,835
381
—
15,216

Total commercial real estate 51,098
572
—
51,670

Home equity lines 5,096
—
—
5,096

Consumer mortgages 18,588
80
—
18,668

Credit cards —
—
—
—

Other consumer loans 5,097
192
—
5,289

Total consumer 28,781
272
—
29,053

Total accruing TDRs $ 149,222
$ 2,005
$ 44
$ 151,271



Accruing TDRs by Risk Grade	September 30, 2018				December 31, 2017				September 30, 2017
(dollars in thousands)	Amount		%		Amount		%		Amount		%
Pass	$	44,226	38.5	%	$	57,136	37.8	%	$	65,018	39.0	%
Special Mention	20,091		17.5		15,879		10.5		17,759		10.6
Substandard accruing	50,423		44.0		78,256		51.7		84,141		50.4
Total accruing TDRs	$	114,740	100.0	%	$	151,271	100.0	%	$	166,918	100.0	%

Non-accruing TDRs were ~~$30.4~~$28.9 million at ~~June~~September 30, 2018 compared to ~~$11.7~~$11.8 million at December 31, 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 $153.5 million at June 30, 2018 compared to $103.3 million and $149.2 million at December 31, 2017 and June 30, 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~~nine months ended ~~June~~September 30, 2018 were ~~$22.1~~$37.4 million, or ~~0.18%~~0.20% as a percentage of average loans annualized, compared to ~~$22.6~~$60.7 million, or ~~0.19%~~0.33%, as a percentage of average loans annualized for the ~~six~~nine months ended ~~June~~September 30, 2017. The decrease from 2017 is primarily due to $34.2 million in net charge-offs recorded for loans transferred to held for sale in conjunction with balance sheet restructuring actions in the third quarter of 2017.

Provision for Loan Losses and Allowance for Loan Losses

For the ~~six~~nine months ended ~~June~~September 30, 2018, the provision for loan losses was ~~$24.6~~$39.5 million, ~~an increase~~a decrease of ~~$5.6~~$19.1 million, or ~~29.7%~~32.5%, compared to the ~~six~~nine months ended ~~June~~September 30, 2017. The ~~increase~~decrease in provision expense for the ~~six months ended June 30, 2018 compared to the six months ended June 30, 2017~~comparable nine-month periods is primarily due to ~~loan growth as well as a slightly increased level~~$27.7 million in provision expense incurred in connection with the aforementioned transfers to held for sale completed during the third quarter of ~~charge-offs above reserves.~~2017.

The allowance for loan losses at ~~June~~September 30, 2018 was ~~$251.7~~$251.5 million, or ~~1.00%~~0.98% of total loans, compared to $249.3 million, or 1.01% of total loans, at December 31, 2017 and ~~$248.1~~$249.7 million, or 1.02% of total loans, at ~~June~~September 30, 2017. The allowance to non-performing loans ratio at September 30, 2018 remained strong at 231.91% compared to 215.70% at December 31, 2017 and 255.20% at September 30, 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~~September 30, 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, 2018			December 31, 2017			September 30, 2018			December 31, 2017
Common equity Tier 1 capital (transitional)
Synovus Financial Corp.	$	2,838,616		$	2,763,168		$	2,846,416		$	2,763,168
Synovus Bank	3,285,713			3,155,163			3,345,622			3,155,163
Tier 1 capital
Synovus Financial Corp.	3,156,805			2,872,001			3,038,768			2,872,001
Synovus Bank	3,285,713			3,155,163			3,345,622			3,155,163
Total risk-based capital
Synovus Financial Corp.	3,668,904			3,383,081			3,550,686			3,383,081
Synovus Bank	3,537,812			3,406,243			3,597,540			3,406,243
Common equity Tier 1 capital ratio (transitional)
Synovus Financial Corp.	10.12		%	9.99		%	9.90		%	9.99		%
Synovus Bank	11.72			11.43			11.64			11.43
Tier 1 capital ratio
Synovus Financial Corp.	11.25			10.38			10.57			10.38
Synovus Bank	11.72			11.43			11.64			11.43
Total risk-based capital to risk-weighted assets ratio
Synovus Financial Corp.	13.08			12.23			12.36			12.23
Synovus Bank	12.61			12.33			12.52			12.33
Leverage ratio
Synovus Financial Corp.	10.03			9.19			9.58			9.19
Synovus Bank	10.45			10.12			10.56			10.12
Tangible common equity to tangible assets ratio ⁽¹⁾
Synovus Financial Corp.	8.77			8.79			8.68			8.88

⁽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~~ratios (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)~~in effect in 2018 is 1.9%). 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.

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.

On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of June 30, 2018, 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 6, 2018, the remaining authorization under this program was $73.2 million and $44.6 million, respectively.

As of June 30, 2018, total disallowed deferred tax assets were $63.6 million or 0.23% of risk-weighted assets, compared to $70.4 million, or 0.25% of risk-weighted assets, at December 31, 2017. Disallowed deferred tax assets for CET1 were $50.9 million at June 30, 2018 compared to $56.3 million at December 31, 2017. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Income Taxes" in Synovus' 2017 Form 10-K for more information on Synovus' net deferred tax asset.

At ~~June~~September 30, 2018, Synovus' CET1 ratio was ~~10.12%~~9.90% under the Basel III transitional provisions, and the estimated fully phased-in CET1 ratio was ~~10.06%~~9.86%, both of which are well in excess of regulatory 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 analyses and earnings projections, that

Synovus' capital position is adequate to meet current and future regulatory minimum capital ~~requirements.~~requirements inclusive of the capital conservation buffer.

In April 2018, the federal banking regulators proposed transitional arrangements to permit banking organizations to phase-in the day-one impact of the adoption of ASU 2016-13, referred to as the current expected credit loss model, on regulatory capital over a period of three years. For additional information on ASU 2016-13, see "Note 1 - Basis of Presentation" in this Report.

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 $195.1 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.

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 2018, Synovus increased the quarterly common stock dividend by 67% to $0.25 per share effective with the quarterly dividend declared during the first quarter of 2018.

Synovus' ability to pay dividends on its capital stock, consisting of the common stock and the 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.~~authorities. During the ~~six~~nine months ended ~~June~~September 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling ~~$110.0~~$180.0 million. Additionally, during the nine months ended September 30, 2018, non-banking subsidiaries returned $8.0 million in capital to Synovus. 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 including cash dividends of $283.2 million.

Synovus declared dividends of ~~$0.50~~$0.75 and ~~$0.30~~$0.45 per common share for the ~~six~~nine months ended ~~June~~September 30, 2018 and ~~six~~nine months ended ~~June~~September 30, 2017, respectively. In addition to dividends paid on its common stock, Synovus paid dividends of$7.7 million on its Series C Preferred Stock and $3.1 million on its Series D Preferred Stock, totaling $10.8 million, during the nine months ended September 30, 2018. Synovus paid dividends of ~~$5.1~~$7.7 million on its Series C Preferred Stock during ~~both~~ the ~~six~~nine months ended ~~June~~September 30, ~~2018 and~~ 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 local 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.~~percent (the balance of these deposits at September 30, 2018 was $742.2 million). Synovus Bank has the capacity to access funding through its membership in the FHLB system. At ~~June~~September 30, 2018, based on currently pledged collateral, Synovus Bank had access to incremental funding of ~~$1.26 billion,~~$831.5 million, subject to FHLB credit policies, through utilization of FHLB advances.

In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. During the six months ended June 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling $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 including cash dividends of $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 without the approval of the GA DBF.

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 were to increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I – Item 1A. Risk Factors - 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' 2017 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~~nine months ended ~~June~~September 30, 2018 increased ~~$838.0~~$908.5 million or ~~2.7%~~3.0%, to ~~$31.37~~$31.49 billion as compared to ~~$30.54~~$30.58 billion for the first ~~six~~nine months of 2017. Average earning assets increased ~~$968.6 million,~~$1.01 billion, or ~~3.4%~~3.5%, in the first ~~six~~nine months of 2018 compared to the same period in 2017 and represented 94.3% of average total assets at ~~June~~September 30, 2018, as compared to ~~93.7%~~93.8% at ~~June~~September 30, 2017. The increase in average earning assets resulted from a ~~$708.9~~$746.8 million increase in average loans, net, and a ~~$242.8~~$254.5 million increase in average taxable investment securities. Average ~~interest bearing~~interest-bearing liabilities increased ~~$632.9~~$618.8 million, or 3.1%, to $20.76 billion for the first ~~six~~nine months of 2018 compared to the same period in 2017. The increase in average ~~interest bearing~~interest-bearing liabilities was driven by a ~~$672.8~~$668.5 million increase in average time deposits, ~~and a $206.0~~an $85.3 million increase in average ~~interest bearing~~other short-term borrowings, an $80.2 million increase in average interest-bearing demand ~~deposits.~~deposits, and a $75.4 million increase in average money market deposit accounts. These increases were partially offset by a ~~$238.2~~$303.5 million decrease in average long-term debt. Average non-interest bearing demand deposits increased ~~$229.1~~$275.4 million, or ~~3.2%~~3.8%, to ~~$7.47~~$7.54 billion for the first ~~six~~nine months of 2018 compared to the same period in 2017.

Net interest income for the ~~six~~nine months ended ~~June~~September 30, 2018 was ~~$558.9~~$850.5 million, an increase of ~~$67.8~~$96.9 million, or ~~13.8%~~12.9%, compared to ~~$491.0~~$753.6 million for the ~~six~~nine months ended ~~June~~September 30, 2017.

~~The net~~Net interest margin ~~was 3.82% for the six months ended June 30, 2018, an increase of 36~~increased 32 basis points ~~from 3.46% for~~to 3.84% over the ~~six months ended June~~comparable nine-month periods, primarily driven by federal funds rate increases and our asset-sensitive balance sheet. Since September 30, ~~2017.~~2017, there have been four 25 basis points federal funds rate increases. The yield on earning assets was ~~4.39%~~4.45%, upan increase of 46 basis points compared to the ~~six~~nine months ended ~~June~~September 30, 2017, ~~and~~while the effective cost of funds increased 1014 basis points to ~~0.57%~~0.61%. The yield on loans ~~was 4.79%, an increase of 48~~increased 49 basis points ~~from the six months ended June 30, 2017~~to 4.86%, and the yield on investment securities ~~was 2.34%, an increase of~~increased 25 basis points ~~from~~to 2.35% over the ~~six~~nine months ended ~~June~~September 30, 2017.

On a sequential quarter basis, net interest income increased ~~by $10.3~~$7.0 million, ~~and the net interest margin increased by 8 basis points to 3.86%. The increase in net interest income was~~ driven by ~~an $81.3~~a $380.6 million increase in average loans, ~~net.~~net, as well as net margin expansion of 3 basis points to 3.89%. The ~~increase in net interest income for the quarter was also driven by margin expansion. Additionally, the rate increases in March and June favorably impacted net interest income and the~~ net interest margin ~~for~~increase was primarily driven by the ~~three months ended~~ June ~~30, 2018 compared to the previous quarter.~~federal funds rate increase. The yield on earning assets was ~~4.47%~~4.58%, ~~up 16~~an increase of 11 basis points from the ~~first~~second quarter of 2018.

This increase was driven by an 1811 basis point increase in loan yields. The effective cost of funds was ~~0.61%~~0.69% for the ~~second~~third quarter of 2018, up 8 basis points from the ~~first~~second quarter of 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 Yields	2018					2017
Average Balances and Yields/Rates												2018							2017
(dollars in thousands) (yields and rates annualized)	Second Quarter			First Quarter		Fourth Quarter		Third Quarter		Second Quarter		Third Quarter			Second Quarter		First Quarter		Fourth Quarter		Third Quarter
Interest Earning Assets:
Taxable investment securities⁽¹⁾	$	4,077,564		4,097,162		3,937,278		3,786,436		3,844,688		$	4,061,239		4,077,564		4,097,162		3,937,278		3,786,436
Yield	2.34		%	2.34		2.29		2.11		2.11		2.38		%	2.34		2.34		2.29		2.11
Tax-exempt investment securities⁽¹⁾⁽³⁾	$	115		140		180		259		340		$	89		115		140		180		259
Yield (taxable equivalent) ⁽³⁾	6.87		%	6.57		7.97		7.86		6.87		5.91		%	6.87		6.57		7.97		7.86
Trading account assets⁽⁴⁾	$	23,772		8,167		7,360		7,823		3,667		$	16,646		23,772		8,167		7,360		7,823
Yield	2.79		%	2.66		2.78		2.09		2.28		2.52		%	2.79		2.66		2.78		2.09
Commercial loans⁽²⁾⁽³⁾	$	18,857,271		18,963,515		18,935,774		19,059,936		19,137,733		$	19,025,830		18,857,271		18,963,515		18,935,774		19,059,936
Yield	4.85		%	4.64		4.49		4.41		4.27		4.98		%	4.85		4.64		4.49		4.41
Consumer loans⁽²⁾	$	6,092,899		5,899,015		5,704,629		5,440,765		5,215,258		$	6,298,643		6,092,899		5,899,015		5,704,629		5,440,765
Yield	4.76		%	4.71		4.54		4.55		4.49		4.80		%	4.76		4.71		4.54		4.55
Allowance for loan losses	$	(257,966	)	(251,635	)	(252,319	)	(249,248	)	(251,219	)	$	(251,684	)	(257,966	)	(251,635	)	(252,319	)	(249,248	)
Loans, net ⁽²⁾	$	24,692,204		24,610,895		24,388,084		24,251,453		24,101,772		$	25,072,789		24,692,204		24,610,895		24,388,084		24,251,453
Yield	4.88		%	4.70		4.55		4.49		4.36		4.99		%	4.88		4.70		4.55		4.49
Mortgage loans held for sale	$	50,366		38,360		45,353		52,177		52,224		$	49,030		50,366		38,360		45,353		52,177
Yield	4.42		%	3.95		3.96		3.88		3.87		4.71		%	4.42		3.95		3.96		3.88
Other earning assets ⁽⁵⁾	$	724,537		516,575		922,296		543,556		561,503		$	544,704		724,537		516,575		922,296		543,556
Yield	1.77		%	1.48		1.31		1.23		1.00		1.90		%	1.77		1.48		1.31		1.23
Federal Home Loan Bank and Federal Reserve Bank Stock⁽⁴⁾	$	165,845		177,381		159,455		175,263		177,323		$	163,568		165,845		177,381		159,455		175,263
Yield	4.63		%	3.39		4.03		3.50		2.99		4.41		%	4.63		3.39		4.03		3.50
Total interest earning assets	$	29,734,403		29,448,680		29,460,006		28,816,967		28,741,517		$	29,908,065		29,734,403		29,448,680		29,460,006		28,816,967
Yield	4.47		%	4.31		4.15		4.11		3.99		4.58		%	4.47		4.31		4.15		4.11
Interest Bearing Liabilities:
Interest bearing demand deposits	$	5,001,826		5,032,000		4,976,239		4,868,372		4,837,053
Interest-Bearing Liabilities:
Interest-bearing demand deposits												$	4,701,204		5,001,826		5,032,000		4,976,239		4,868,372
Rate	0.35		%	0.31		0.28		0.27		0.23		0.38		%	0.35		0.31		0.28		0.27
Money Market accounts, excluding brokered deposits	$	7,791,107		7,561,554		7,514,992		7,528,036		7,427,562		$	7,936,621		7,791,107		7,561,554		7,514,992		7,528,036
Rate	0.55		%	0.43		0.36		0.34		0.32		0.72		%	0.55		0.43		0.36		0.34
Savings deposits	$	829,800		811,587		804,853		803,184		805,019		$	824,935		829,800		811,587		804,853		803,184
Rate	0.03		%	0.03		0.03		0.03		0.04		0.03		%	0.03		0.03		0.03		0.03
Time deposits under $100,000	$	1,161,890		1,143,780		1,166,413		1,183,582		1,202,746		$	1,205,987		1,161,890		1,143,780		1,166,413		1,183,582
Rate	0.82		%	0.71		0.70		0.68		0.67		0.99		%	0.82		0.71		0.70		0.68
Time deposits over $100,000	$	2,021,084		1,895,545		2,004,031		2,067,347		2,040,924		$	2,273,582		2,021,084		1,895,545		2,004,031		2,067,347
Rate	1.22		%	1.02		0.99		0.97		0.94		1.46		%	1.22		1.02		0.99		0.97
Non-maturing brokered deposits	$	262,976		424,118		546,413		547,466		564,043		$	358,277		262,976		424,118		546,413		547,466
Rate	1.94		%	1.14		0.81		0.73		0.54		2.10		%	1.94		1.14		0.81		0.73
Brokered time deposits	$	1,659,941		1,527,793		1,651,920		983,423		815,515		$	1,414,700		1,659,941		1,527,793		1,651,920		983,423
Rate	1.85		%	1.75		1.63		1.16		0.94		1.94		%	1.85		1.75		1.63		1.16
Total interest bearing deposits	$	18,728,624		18,396,377		18,664,861		17,981,410		17,692,862
Total interest-bearing deposits												$	18,715,306		18,728,624		18,396,377		18,664,861		17,981,410
Rate	0.70		%	0.58		0.54		0.46		0.41		0.83		%	0.70		0.58		0.54		0.46
Federal funds purchased and securities sold under repurchase agreements	$	210,679		202,226		184,369		191,585		183,400		$	230,504		207,655		202,226		184,369		191,585
Rate	0.38		%	0.21		0.15		0.08		0.10		0.25		%	0.35		0.21		0.15		0.08
Other short-term borrowings												$	146,794		3,024		394,056		3,261		102,717
Rate												2.12		%	2.84		1.52		1.42		1.16
Long-term debt	$	1,852,094		2,127,994		1,713,982		1,985,175		2,270,452		$	1,656,743		1,852,094		1,733,938		1,710,721		1,882,458
Rate	2.66		%	2.32		2.67		2.81		2.83		2.87		%	2.66		2.51		2.67		2.90
Total interest bearing liabilities	$	20,791,397		20,726,597		20,563,212		20,158,170		20,146,714
Total interest-bearing liabilities												$	20,749,347		20,791,397		20,726,597		20,563,212		20,158,170
Rate	0.87		%	0.76		0.72		0.69		0.68		0.99		%	0.87		0.76		0.72		0.69
Non-interest bearing demand deposits	$	7,539,451		7,391,695		7,621,147		7,305,508		7,298,845		$	7,672,006		7,539,451		7,391,695		7,621,147		7,305,508
Effective cost of funds	0.61		%	0.53		0.50		0.48		0.48		0.69		%	0.61		0.53		0.50		0.48
Net interest margin	3.86		%	3.78		3.65		3.63		3.51		3.89		%	3.86		3.78		3.65		3.63
Taxable equivalent adjustment⁽³⁾	$	120		116		234		283		298		$	136		120		116		234		283


⁽¹⁾ ~~Excludes net unrealized gains (losses).~~	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.~~


⁽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 consolidated balance sheets.

⁽⁵⁾Includes ~~interest bearing~~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~~nine months ended ~~June~~September 30, 2018 and 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,														2018 Compared to 2017									Nine Months Ended September 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)	2018			2017			2018		2017		2018		2017		Volume			Rate						2018			2017			2018		2017		2018		2017		Volume			Rate
Assets
Interest earning assets:
Taxable investment securities	$	4,087,309		$	3,843,131		$	47,812	$	40,069	2.34	%	2.09	%	$	2,531		$	5,212		$	7,743		$	4,078,523		$	3,824,025		$	71,974	$	60,079	2.35	%	2.09	%	$	3,978		$	7,917		$	11,895
Tax-exempt investment securities⁽²⁾	128			1,528			4		45		6.71		5.95		(41		)	—			(41		)	114			1,101			6		51		6.51		6.13		(46		)	1			(45		)
Total investment securities	4,087,437			3,844,659			47,816		40,114		2.34		2.09		2,490			5,212			7,702			4,078,637			3,825,126			71,980		60,130		2.35		2.10		3,932			7,918			11,850
Trading account assets	16,012			5,047			220		49		2.75		1.93		105			66			171			16,226			5,983			325		90		2.67		1.99		153			82			235
Taxable loans, net⁽¹⁾	24,854,408			24,122,851			584,543		510,222		4.74		4.27		15,490			58,831			74,321			24,993,328			24,227,567			898,671		783,546		4.81		4.32		24,743			90,382			115,125
Tax-exempt loans, net⁽¹⁾⁽²⁾	52,184			72,553			1,120		1,688		4.33		4.69		(474		)	(94		)	(568		)	54,088			70,721			1,767		2,492		4.37		4.71		(586		)	(139		)	(725		)
Allowance for loan losses	(254,818		)	(252,565		)																		(253,762		)	(251,448		)
Loans, net	24,651,774			23,942,839			585,663		511,910		4.79		4.31		15,016			58,737			73,753			24,793,654			24,046,840			900,438		786,038		4.86		4.37		24,157			90,243			114,400
Mortgage loans held for sale	44,396			49,405			936		972		4.22		3.93		(98		)	62			(36		)	45,958			50,339			1,514		1,478		4.39		3.91		(128		)	164			36
Other earning assets⁽³⁾	621,131			607,656			5,147		2,684		1.65		0.88		59			2,404			2,463			595,376			586,055			7,799		4,396		1.73		0.99		68			3,335			3,403
Federal Home Loan Bank and Federal Reserve Bank stock	171,581			174,101			3,422		2,788		3.99		3.20		(40		)	674			634			168,881			174,493			5,227		4,321		4.13		3.30		(138		)	1,044			906
Total interest earning assets	29,592,331			28,623,707			643,204		558,517		4.39		3.93		17,532			67,155			84,687			29,698,732			28,688,836			987,283		856,453		4.45		3.99		28,044			102,786			130,830
Cash and due from banks	387,472			396,305																				390,288			391,829
Premises and equipment, net	427,291			414,810																				428,456			416,835
Other real estate	3,709			21,723																				5,005			20,246
Other assets⁽⁴⁾	964,141			1,080,397																				970,634			1,066,863
Total assets	$	31,374,944		$	30,536,942																			$	31,493,115		$	30,584,609

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity																							Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	5,016,830		$	4,810,836		$	8,151	$	5,001	0.33	%	0.21	%	$	215		$	2,935		$	3,150		$	4,910,465		$	4,830,226		$	12,650	$	8,366	0.34	%	0.23	%	$	138		$	4,146		$	4,284
Money market accounts	8,020,066			8,017,785			21,192		12,857		0.53		0.32		3			8,332			8,335			8,112,684			8,037,235			37,587		20,268		0.62		0.34		192			17,127			17,319
Savings deposits	820,744			857,050			118		329		0.03		0.08		(14		)	(197		)	(211		)	822,156			838,898			177		394		0.03		0.06		(7		)	(210		)	(217		)
Time deposits	4,705,778			4,032,971			29,514		16,887		1.26		0.84		2,803			9,824			12,627			4,769,299			4,100,836			47,781		26,846		1.34		0.88		4,399			16,536			20,935
Federal funds purchased and securities sold under repurchase agreements	206,476			180,145			310		84		0.30		0.09		12			214			226			213,565			184,000			434		125		0.27		0.09		20			289			309
Other short-term borrowings																								180,385			95,055			2,310		740		1.69		1.03		657			913			1,570
Long-term debt	1,989,282			2,227,501			24,822		31,728		2.48		2.83		(3,343		)	(3,563		)	(6,906		)	1,747,309			2,050,783			35,492		45,227		2.68		2.94		(6,673		)	(3,062		)	(9,735		)
Total interest-bearing liabilities	20,759,176			20,126,288			84,107		66,886		0.81		0.67		(324		)	17,545			17,221			20,755,863			20,137,033			136,431		101,966		0.87		0.68		(1,274		)	35,739			34,465
Non-interest bearing deposits	7,465,982			7,236,840																				7,535,411			7,259,981
Other liabilities	201,790			214,381																				215,327			219,388
Shareholders' equity	2,947,996			2,959,433																				2,986,514			2,968,207
Total liabilities and equity	$	31,374,944		$	30,536,942																			$	31,493,115		$	30,584,609
Interest rate spread:											3.58	%	3.26	%																				3.58	%	3.31	%
Net interest income - FTE/margin⁽⁵⁾							$	559,097	$	491,631	3.82	%	3.46	%	$	17,856		$	49,610		$	67,466								$	850,852	$	754,487	3.84	%	3.52	%	$	29,318		$	67,047		$	96,365
Taxable equivalent adjustment							236		607																					372		890
Net interest income, actual							$	558,861	$	491,024																				$	850,480	$	753,597

⁽¹⁾Average loans are shown net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 2018 - ~~$15.5~~$23.5 million, 2017 - ~~$15.7~~$23.4 million.

⁽²⁾ Reflects taxable-equivalent adjustments, using the statutory federal income tax rate (21% in 2018 and 35% in ~~2017),~~2017, in adjusting interest on tax-exempt loans and investment securities

to a taxable-equivalent basis.

⁽³⁾ Includes ~~interest bearing~~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 ~~$(115.1)~~$(123.8) million and ~~$(41.2)~~$(34.7) million for the ~~six~~nine months ended ~~June~~September 30, 2018 and

2017, respectively.

⁽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 ~~1.75%~~2.00% to ~~2.00%~~2.25% and the current prime rate of ~~5.00%~~5.25%. Synovus has modeled the impact of a gradual increase in short-term rates of 100 and 200 basis points and a gradual decline of 100 basis points to determine the sensitivity of net interest income for the next twelve months. Synovus continues to maintain a modestly ~~asset sensitive~~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~~September 30, 2018, with comparable information for December 31, 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, 2018 December 31, 2017
+200 3.0% 3.6%
+100 1.4% 1.9%
Flat —% —%
-100 -3.7% -4.7%



	Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)

Change in Short-term Interest Rates (in basis points)	September 30, 2018	December 31, 2017
+200	3.5%	3.6%
+100	1.9%	1.9%
Flat	—%	—%
-100	(2.2)%	(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~~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~~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, 2018		As of September 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	3.0%	1.4%	3.5%	1.9%
+100	1.4%	0.7%	1.9%	1.1%

The net interest income simulation model is the primary tool utilized to evaluate potential interest rate risks over a shorter term time horizon. Synovus also evaluates potential longer term interest rate risk through modeling and evaluation of EVE. Simulation modeling is utilized to measure the economic value of equity and its sensitivity to immediate changes in interest rates. 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 ~~1.6%~~1.4% and by ~~1.5%~~1.0%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 100 basis point decline in rates, EVE is projected to decrease by ~~14.7%~~13.3%. These metrics reflect a relatively stable long term interest rate risk position as compared to December 31, 2017.


	Estimated Change in EVE		Estimated Change in EVE
Immediate Change in Interest Rates (in basis points)	June 30, 2018	December 31, 2017	September 30, 2018	December 31, 2017
+200	1.5%	-0.2%	1.0%	(0.2)%
+100	1.6%	1.6%	1.4%	1.6%
-100	-14.7%	-16.9%	(13.3)%	(16.9)%

~~ADDITIONAL DISCLOSURES~~

~~Recently Issued Accounting Standards~~

Several accounting standards will be effective in fiscal year 2019 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 2017-04,~~ ~~Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment~~

~~ASU 2016-13,~~ ~~Financial Instruments-Credit Losses (CECL)~~

~~ASU 2016-02,~~ ~~Leases~~

~~The ASUs with the most significant impact on Synovus are ASU 2016-13,~~ ~~Financial Instruments-Credit Losses (CECL), effective in 2020 and ASU 2016-02,~~ ~~Leases, effective in 2019.~~

~~ASU 2016-13,~~ ~~Financial Instruments--Credit Losses (CECL).~~In June 2016, the FASB issued the new guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with an 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 will record a cumulative effect adjustment to retained earnings as of the beginning of the reporting period 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, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged, though the new standard does include certain targeted improvements to align, where necessary, lessor accounting with the lessee accounting model and the revenue recognition guidance in ASC Topic 606 (those related to evaluating when profit can be recognized). For Synovus, the impact of this ASU will primarily relate to its accounting and reporting of leases as a lessee. The new ASU will be effective for Synovus beginning January 1, 2019. Synovus will adopt this ASU retrospectively, at the beginning of the period 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 $230 million of future minimum lease commitments as disclosed in Note 7 of Synovus' 2017 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' 2017 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. 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~~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 and the recently adopted accounting standards disclosed in "Note 1 - Basis of Presentation" in this Report, there have been no significant changes to the accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 2017 Form 10-K.

Non-GAAP Financial Measures

The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted total revenues; adjusted efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; average core deposits; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income; total non-interest expense; total revenues; efficiency ratio; 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, respectively.

Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted total revenues and adjusted non-interest income ~~is a measure~~are measures used by management to evaluate non-interest income exclusive of net investment securities ~~gains/losses and~~gains (losses), changes in fair value of private equity investments, ~~net.~~net, and the Cabela's Transaction Fee. Adjusted non-interest expense and the adjusted efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income per common share, diluted, adjusted return on average assets, and adjusted return on average common equity are measurements used by management to evaluate operating results exclusive of items that management believes are not indicative of ongoing operations and 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 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	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Adjusted non-interest income
Total non-interest income	$	71,668		$	135,435		$	212,101		$	275,974
Subtract: Cabela's Transaction Fee	—			(75,000		)	—			(75,000		)
Add: Investment securities losses, net	—			7,956			1,296			289
Subtract/add: (Increase) decrease in fair value of private equity investments, net	(434		)	27			2,659			3,193
Adjusted non-interest income	$	71,234		$	68,418		$	216,056		$	204,456

Adjusted non-interest expense
Total non-interest expense	$	220,297		$	205,646		$	619,531		$	594,780
Subtract: Discounts to fair value for ORE accelerated dispositions	—			(7,082		)	—			(7,082		)
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties	—			(1,168		)	—			(1,168		)
Subtract: Earnout liability adjustments	(11,652		)	(2,059		)	(11,652		)	(2,059		)
Subtract: Merger-related expense	(6,684		)	(23		)	(6,684		)	(110		)
Subtract/add: Litigation settlement/contingency expense	—			(401		)	4,026			(401		)
Subtract/add: Restructuring charges, net	(21		)	(519		)	191			(7,043		)
Subtract: Amortization of intangibles	(292		)	(292		)	(875		)	(767		)
Subtract: Valuation adjustment to Visa derivative	—			—			(2,328		)	—
Adjusted non-interest expense	$	201,648		$	194,102		$	602,209		$	576,150

Reconciliation of Non-GAAP Financial Measures

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 non-interest income
Total non-interest income $ 140,433
$ 140,539
$ 73,387
$ 68,701
Add/subtract: Investment securities losses (gains), net 1,296
(7,667 ) 1,296
1
Add: Decrease in fair value of private equity investments, net 3,093
3,166
37
1,352
Adjusted non-interest income $ 144,822
$ 136,038
$ 74,720
$ 70,054

Adjusted non-interest expense
Total non-interest expense $ 399,234
$ 389,133
$ 204,057
$ 191,747
Subtract: Merger-related expense —
(86 ) —
—
Add: Litigation settlement/contingency expense 4,026
—
1,400
—
Add/subtract: Restructuring charges, net 212
(6,524 ) (103 ) (13 )
Subtract: Amortization of intangibles (583 ) (475 ) (292 ) (292 )
Subtract: Valuation adjustment to Visa derivative (2,328 ) —
(2,328 ) —
Adjusted non-interest expense $ 400,561
$ 382,048
$ 202,734
$ 191,442



Reconciliation of Non-GAAP Financial Measures, continued	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Adjusted total revenues and adjusted efficiency ratio
Adjusted non-interest expense	$	201,648		$	194,102		$	602,209		$	576,150

Net interest income	291,619			262,572			850,480			753,597
Add: Tax equivalent adjustment	136			283			372			890
Add: Total non-interest income	71,668			135,435			212,101			275,974
Add: Investment securities losses, net	—			7,956			1,296			289
Total FTE revenues	$	363,423		$	406,246		$	1,064,249		$	1,030,750
Subtract: Cabela's Transaction Fee	—			(75,000		)	—			(75,000		)
Subtract/add: (Increase) decrease in fair value of private equity investments, net	(434		)	27			2,659			3,193
Adjusted total revenues	$	362,989		$	331,273		$	1,066,908		$	958,943
Efficiency ratio	60.62		%	50.62		%	58.21		%	57.70		%
Adjusted efficiency ratio	55.55			58.59			56.44			60.08

Adjusted net income per common share, diluted
Net income available to common shareholders	$	99,330		$	95,448		$	308,559		$	238,190
Subtract: Cabela's Transaction Fee	—			(75,000		)	—			(75,000		)
Add: Provision expense on loans transferred to held-for-sale	—			27,710			—			27,710
Add: Discounts to fair value for ORE accelerated dispositions	—			7,082			—			7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties	—			1,168			—			1,168
Subtract: Income tax benefit, net related to SAB 118, State Tax Reform, and adjusted portion of other discrete items	(9,865		)	—			(9,148		)	—
Add: Preferred stock redemption charge	4,020			—			4,020			—
Add: Earnout liability adjustments	11,652			2,059			11,652			2,059
Add: Merger-related expense	6,684			23			6,684			110
Add/subtract: Litigation settlement/contingency expense	—			401			(4,026		)	401
Add/subtract: Restructuring charges, net	21			519			(191		)	7,043
Add: Amortization of intangibles	292			292			875			767
Add: Valuation adjustment to Visa derivative	—			—			2,328			—
Add: Investment securities losses, net	—			7,956			1,296			289
Subtract/add: (Increase) decrease in fair value of private equity investments, net	(434		)	27			2,659			3,193
Add/subtract: Tax effect of adjustments	27			11,034			(691		)	10,078
Adjusted net income available to common shareholders	$	111,727		$	78,719		$	324,017		$	223,090
Weighted average common shares outstanding, diluted	118,095			121,814			118,847			122,628
Adjusted net income per common share, diluted	$	0.95		$	0.65		$	2.73		$	1.82

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 income 558,861
491,024
284,577
251,097
Add: Tax equivalent adjustment 236
607
120
298
Add: Total non-interest income 140,433
140,539
73,387
68,701
Add/subtract: Investment securities losses (gains), net 1,296
(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, net 3,093
3,166
37
1,352
Adjusted total revenues $ 703,919
$ 627,669
$ 359,417
$ 321,449
Efficiency ratio 56.97 % 62.31 % 56.78 % 59.90 %
Adjusted efficiency ratio 56.90
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 Reform 717
—
(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 intangibles 583
475
292
292
Add: Valuation adjustment to Visa derivative 2,328
—
2,328
—
Add/subtract: Investment securities losses (gains), net 1,296
(7,667 ) 1,296
1
Add: Decrease in fair value of private equity investments, net 3,093
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, diluted 119,229
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 Reform 717
—
(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 intangibles 583
475
292
292
Add: Valuation adjustment to Visa derivative 2,328
—
2,328
—
Add/subtract: Investment securities losses (gains), net 1,296
(7,667 ) 1,296
1
Add: Decrease in fair value of private equity investments, net 3,093
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 assets 1.38 % 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, continued
	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Adjusted return on average assets (annualized)
Net income	$	109,059		$	98,007		$	323,407		$	245,868
Subtract: Cabela's Transaction Fee	—			(75,000		)	—			(75,000		)
Add: Provision expense on loans transferred to held-for-sale	—			27,710			—			27,710
Add: Discounts to fair value for ORE accelerated dispositions	—			7,082			—			7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties	—			1,168			—			1,168
Subtract: Income tax benefit, net related to SAB 118, State Tax Reform, and adjusted portion of other discrete items	(9,865		)	—			(9,148		)	—
Add: Earnout liability adjustments	11,652			2,059			11,652			2,059
Add: Merger-related expense	6,684			23			6,684			110
Add/subtract: Litigation settlement/contingency expense	—			401			(4,026		)	401
Add/subtract: Restructuring charges, net	21			519			(191		)	7,043
Add: Amortization of intangibles	292			292			875			767
Add: Valuation adjustment to Visa derivative	—			—			2,328			—
Add: Investment securities losses, net	—			7,956			1,296			289
Subtract/add: (Increase) decrease in fair value of private equity investments, net	(434		)	27			2,659			3,193
Add/subtract: Tax effect of adjustments	27			11,034			(691		)	10,078
Adjusted net income	$	117,436		$	81,278		$	334,845		$	230,768
Net income annualized	$	432,680		$	388,832		$	432,394		$	328,725
Adjusted net income annualized	$	465,915		$	322,462		$	447,687		$	308,536
Total average assets	$	31,725,604		$	30,678,388		$	31,493,115		$	30,584,607
Return on average assets	1.36		%	1.27		%	1.37		%	1.07		%
Adjusted return on average assets (annualized)	1.47			1.05			1.42			1.01


Reconciliation of Non-GAAP Financial Measures, continued	Three Months Ended									Three Months Ended
(dollars in thousands)	June 30, 2018			March 31, 2018			June 30, 2017			September 30, 2018			June 30, 2018			September 30, 2017
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)
Average 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		$	99,330		$	108,622		$	95,448
Subtract/add: Income Tax expense related to effects of State Tax Reform	(608		)	1,325			—
Subtract: Litigation settlement/contingency expense	(1,400		)	(2,626		)	—
Subtract: Cabela's Transaction Fee										—			—			(75,000		)
Add: Provision expense on loans transferred to held-for-sale										—			—			27,710
Add: Discounts to fair value for ORE accelerated dispositions										—			—			7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties										—			—			1,168
Subtract: Income tax benefit, net related to SAB 118, State Tax Reform, and adjusted portion of other discrete items										(9,865		)	(608		)	—
Add: Preferred stock redemption charge										4,020			—			—
Add: Earnout liability adjustments										11,652			—			2,059
Add: Merger-related expense										6,684			—			23
Add/subtract: Litigation settlement/contingency expense										—			(1,400		)	401
Add/subtract: Restructuring charges, net	103			(315		)	13			21			103			519
Add: Amortization of intangibles	292			292			292			292			292			292
Add: Valuation adjustment to Visa derivative	2,328			—			—			—			2,328			—
Add: Investment securities losses, net	1,296			—			1			—			1,296			7,956
Add: Decrease in fair value of private equity investments, net	37			3,056			1,352
Subtract: Tax effect of adjustments	(624		)	(96		)	(613		)
Subtract/add: (Increase) decrease in fair value of private equity investments, net										(434		)	37			27
Add/subtract: Tax effect of adjustments										27			(624		)	11,034
Adjusted net income available to common shareholders	$	110,046		$	102,243		$	74,489		$	111,727		$	110,046		$	78,719
Net income annualized	$	441,393		$	414,652		$	298,775		$	443,265		$	441,393		$	312,309

Total average shareholders' equity less preferred stock	$	2,831,368		$	2,790,648		$	2,849,069		$	2,824,707		$	2,831,368		$	2,859,491
Subtract: Goodwill	(57,315		)	(57,315		)	(57,018		)	(57,315		)	(57,315		)	(57,167		)
Subtract: Other intangible assets, net	(10,555		)	(10,915		)	(11,966		)	(10,265		)	(10,555		)	(11,648		)
Total average tangible shareholders' equity less preferred stock	$	2,763,498		$	2,722,418		$	2,780,085		$	2,757,127		$	2,763,498		$	2,790,676
Return on average common equity (annualized)	15.39		%	14.62		%	10.34		%	13.95		%	15.39		%	13.24		%
Adjusted return on average common equity (annualized)	15.59			14.86			10.49			15.69			15.59			10.92
Adjusted return on average tangible common equity (annualized)	15.97			15.23			10.75			16.08			15.97			11.19


Reconciliation of Non-GAAP Financial Measures, continued													Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)	June 30, 2018			March 31, 2018			December 31, 2018			June 30, 2017			September 30, 2018			June 30, 2018			December 31, 2017			September 30, 2017
Average core deposits
Average total deposits	$	26,268,074		$	25,788,073		$	26,286,009		$	24,991,708		$	26,387,312		$	26,268,074		$	26,286,009		$	25,286,919
Subtract: Average brokered deposits	(1,922,917		)	(1,951,910		)	(2,198,333		)	(1,379,559		)	(1,772,977		)	(1,922,917		)	(2,198,333		)	(1,530,889		)
Average core deposits	$	24,345,157		$	23,836,163		$	24,087,676		$	23,612,149		$	24,614,335		$	24,345,157		$	24,087,676		$	23,756,030

Tangible common equity ratio
Total assets	$	31,740,305		$	31,501,028		$	31,221,837		$	30,687,966		$	32,075,120		$	31,740,305		$	31,221,837		$	31,642,123
Subtract: Goodwill	(57,315		)	(57,315		)	(57,315		)	(57,092		)	(57,315		)	(57,315		)	(57,315		)	(57,315		)
Subtract: Other intangible assets, net	(10,458		)	(10,750		)	(11,254		)	(11,843		)	(10,166		)	(10,458		)	(11,254		)	(11,548		)
Tangible assets	$	31,672,532		$	31,432,963		$	31,153,268		$	30,619,031		$	32,007,639		$	31,672,532		$	31,153,268		$	31,573,260
Total shareholders' equity	$	3,167,694		$	2,956,495		$	2,961,566		$	2,997,947		$	3,040,073		$	3,167,694		$	2,961,566		$	2,997,078
Subtract: Goodwill	(57,315		)	(57,315		)	(57,315		)	(57,092		)	(57,315		)	(57,315		)	(57,315		)	(57,315		)
Subtract: Other intangible assets, net	(10,458		)	(10,750		)	(11,254		)	(11,843		)	(10,166		)	(10,458		)	(11,254		)	(11,548		)
Subtract: Preferred Stock, no par value	(321,118		)	(125,980		)	(125,980		)	(125,980		)	(195,138		)	(321,118		)	(125,980		)	(125,980		)
Tangible common equity	$	2,778,803		$	2,762,450		$	2,767,017		$	2,803,032		$	2,777,454		$	2,778,803		$	2,767,017		$	2,802,235
Total shareholders' equity to total assets ratio	9.98		%	9.39		%	9.49		%	9.77		%	9.48		%	9.98		%	9.49		%	9.47		%
Tangible common equity ratio	8.77			8.79			8.88			9.15			8.68			8.77			8.88			8.88

Common equity Tier 1 (CET1) ratio (fully phased-in)
Common equity Tier 1 (CET1)	$	2,838,616											$	2,846,416
Subtract: Adjustment related to capital components	(3,599		)										(2,784		)
CET1 (fully phased-in)	$	2,835,017											$	2,843,632
Total risk-weighted assets	$	28,056,193											$	28,738,381
Total risk-weighted assets (fully phased-in)	$	28,182,637											$	28,844,942
Common equity Tier 1 (CET1) ratio	10.12		%										9.90		%
Common equity Tier 1 (CET1) ratio (fully phased-in)	10.06												9.86


	Current expectation- increase (decrease) vs. 2017					Current expectation - increase (decrease) vs. 2017
(dollars in thousands)	2017			$	%	2017			$	%
2018 Expectation for adjusted non-interest income growth
Total non-interest income, as reported	$	345,327		$285 million-$290 million	(16%)-(18%)	$	345,327		$285 million-$290 million	(16%)-(18%)
Subtract: Cabela's Transaction Fee	(75,000		)			(75,000		)
Add: Investment securities losses, net	289					289
Add: decrease in fair value of private equity investments, net	3,093
Add: Decrease in fair value of private equity investments, net						3,093
Adjusted non-interest income	$	273,709		$285 million-$290 million	4%-6%	$	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~~September 30, 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~~September 30, 2018 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 - Commitments and Contingencies" of this Report, which Note is incorporated herein by this reference.

ITEM 1A. – RISK FACTORS

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in "Part I - Item IA - Risk Factors” of ~~Synovus’~~Synovus' 2017 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.

As a result of Synovus entering into the Merger Agreement with FCB, certain risk factors as ~~provided below,~~disclosed in "Part II - Item 1A - Risk Factors" of Synovus' Form 10-Q for the quarterly period ended June 30, 2018 have been identified in addition to those previously reported in ~~Synovus’~~Synovus' 2017 Form 10-K. These risks and the other risks associated with the proposed Merger ~~will be~~are 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~~filed with the SEC in connection with the Merger. We urge you to read the registration statement on Form S-4 ~~once~~as it ~~becomes available because it will contain~~contains 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 not discovered during the course 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 extent 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 resulting in 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.

Synovus' Board of Directors authorized a $150 million share repurchase program that will expire at the end of 2018. This program was announced on January 23, 2018. The table below sets forth information regarding repurchases of our common stock during the ~~second~~third quarter of 2018.

													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		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
July 2018							450	$	52.88	450	$	49,405
August 2018							372	50.13		372	30,743
September 2018							320	48.48		320	15,248
Total	922	$	54.30	922			1,142	$	50.75	1,142

⁽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~~third quarter of 2018 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

ITEM 3. – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. – MINE SAFETY DISCLOSURES

None.

ITEM 5. – OTHER INFORMATION

None.

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.

12.1			Ratio of Earnings to Fixed ~~Charges.~~Charges

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

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

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

101			Interactive Data File

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 8,~~November 6, 2018	By:	/s/ Kevin S. Blair
Date		Kevin S. Blair
		Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

7771



(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



Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Statement Where Net Income is Presented
	For the Six Months Ended June 30,
	2018			2017
Net unrealized gains (losses) on cash flow hedges:
Amortization of deferred losses	$	—		$	(130	)	Interest expense
	—			50			Income tax (expense) benefit
	$	—		$	(80	)	Reclassifications, net of income taxes

Net unrealized gains on investment securities available for sale:
Realized (losses) gains on sale of securities	$	(1,296	)	$	7,667		Investment securities gains, net
	336			(2,952		)	Income tax (expense) benefit
	$	(960	)	$	4,715		Reclassifications, net of income taxes
Post-retirement unfunded health benefit:
Amortization of actuarial gains	$	68		$	40		Salaries and other personnel expense
	(22		)	(16		)	Income tax (expense) benefit
	$	46		$	24		Reclassifications, net of income taxes



	Fair Value of Derivative Assets					Fair Value of Derivative Liabilities
(in thousands)	Location 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 contracts	Other assets	$	10,034	$	10,786	Other liabilities	$	19,303	$	12,638
Mortgage derivatives	Other assets	1,302		936		Other liabilities	248		129
Visa derivative		—		—		Other liabilities	5,943		4,330
Total derivatives not designated as hedging instruments		$	11,336	$	11,722		$	25,494	$	17,097



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 fees	27,419		—		—		—		27,419		—
Card fees	21,032		420		—		20,612		—		—
Brokerage revenue	17,596		—		—		—		17,596		—
Insurance revenue	3,092		—		—		—		3,092		—
Other fees	1,588		—		—		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



Non-interest Income by Line of Business	For the Three Months Ended June 30, 2018
(in thousands)	Total		Community 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 fees	13,983		—		—		—		13,983		—
Card fees	10,833		215		—		10,618		—		—
Brokerage revenue	8,900		—		—		—		8,900		—
Insurance revenue	1,879		—		—		—		1,879		—
Other fees	756		—		—		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



Accruing TDRs Aging by Portfolio Class
	June 30, 2018
(in thousands)	Current		30-89 Days Past Due		90+ Days Past Due		Total
Commercial, financial and agricultural	$	11,302	$	817	$	—	$	12,119
Owner-occupied	36,388		62		—		36,450
Total commercial and industrial	47,690		879		—		48,569
Investment properties	24,218		—		—		24,218
1-4 family properties	10,347		111		—		10,458
Land and development	15,281		589		—		15,870
Total commercial real estate	49,846		700		—		50,546
Home equity lines	1,312		1,108		333		2,753
Consumer mortgages	18,572		195		—		18,767
Credit cards	—		—		—		—
Other consumer loans	4,630		45		—		4,675
Total consumer	24,514		1,348		333		26,195
Total accruing TDRs	$	122,050	$	2,927	$	333	$	125,310

	December 31, 2017
(in thousands)	Current		30-89 Days Past Due		90+ Days Past Due		Total
Commercial, financial and agricultural	$	33,789	$	1,161	$	44	$	34,994
Owner-occupied	35,554		—		—		35,554
Total commercial and industrial	69,343		1,161		44		70,548
Investment properties	21,398		—		—		21,398
1-4 family properties	14,865		191		—		15,056
Land and development	14,835		381		—		15,216
Total commercial real estate	51,098		572		—		51,670
Home equity lines	5,096		—		—		5,096
Consumer mortgages	18,588		80		—		18,668
Credit cards	—		—		—		—
Other consumer loans	5,097		192		—		5,289
Total consumer	28,781		272		—		29,053
Total accruing TDRs	$	149,222	$	2,005	$	44	$	151,271



Reconciliation of Non-GAAP Financial Measures	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 non-interest income
Total non-interest income	$	140,433		$	140,539		$	73,387		$	68,701
Add/subtract: Investment securities losses (gains), net	1,296			(7,667		)	1,296			1
Add: Decrease in fair value of private equity investments, net	3,093			3,166			37			1,352
Adjusted non-interest income	$	144,822		$	136,038		$	74,720		$	70,054

Adjusted non-interest expense
Total non-interest expense	$	399,234		$	389,133		$	204,057		$	191,747
Subtract: Merger-related expense	—			(86		)	—			—
Add: Litigation settlement/contingency expense	4,026			—			1,400			—
Add/subtract: Restructuring charges, net	212			(6,524		)	(103		)	(13		)
Subtract: Amortization of intangibles	(583		)	(475		)	(292		)	(292		)
Subtract: Valuation adjustment to Visa derivative	(2,328		)	—			(2,328		)	—
Adjusted non-interest expense	$	400,561		$	382,048		$	202,734		$	191,442