0000018349 syn:CommercialAndIndustrialMember us-gaap:InterestRateBelowMarketReductionMember 2018-01-01 2018-06-30FCBFinancialHoldingsInc.Member syn:FinancingReceivables90to149DaysPatDueMember 2019-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 10-Q
 

☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
☐For the quarterly period ended JuneSeptember 30, 2019
Commission file number 1-10312
 

financialappendix930a89.jpg
SYNOVUS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)

 
Georgia 58-1134883
(State or other jurisdiction of incorporation or organization)
 
   (I.R.S. Employer Identification No.)
1111 Bay Avenue  
Suite 500,Columbus,Georgia  31901
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (706) 649-2311
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 Par ValueSNVNew York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series DSNV - PrDNew York Stock Exchange
Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series ESNV - PrENew 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 ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
    
Non-accelerated filer☐Smaller reporting company☐
    
  Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes��Yes ☐    No ☒
Indicate the numberAs of October 31, 2019, 146,544,786 shares outstanding of each of the issuer’s class ofregistrant's common stock, as of the latest practicable date.$1.00 par value, were outstanding.

ClassJuly 31, 2019
Common Stock, $1.00 Par Value154,320,484


Table of Contents
 
    Page
Part I.
Financial Information 
  Index of Defined Terms
i
 Item 1.Financial Statements (Unaudited) 
  Consolidated Balance Sheets as of JuneSeptember 30, 2019 and December 31, 2018
1
  Consolidated Statements of Income for the Three and SixNine Months Ended JuneSeptember 30, 2019 and 2018
2
  Consolidated Statements of Comprehensive Income for the Three and SixNine Months Ended JuneSeptember 30, 2019 and 2018
3
  Consolidated Statements of Changes in Shareholders' Equity for the Three and SixNine Months Ended JuneSeptember 30, 2019 and 2018
4
  Consolidated Statements of Cash Flows for the SixNine Months Ended JuneSeptember 30, 2019 and 2018
6
  Notes to Unaudited Interim Consolidated Financial Statements
7
 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4345
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk
6971
 Item 4.Controls and Procedures
6971
     
Part II.
Other Information 
 Item 1.Legal Proceedings
7072
 Item 1A.Risk Factors
7072
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
7072
 Item 3.Defaults Upon Senior Securities
7173
 Item 4.Mine Safety Disclosures
7173
 Item 5.Other Information
7173
 Item 6.Exhibits
7274
 Signatures
7375
     





SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
ACL – Allowance for credit losses
AICPA – American Institute of Certified Public Accountants
ALCO – Synovus' Asset Liability Management Committee
ALL – Allowance for loan losses
AOCI – Accumulated other comprehensive income
Acquisition Date – Effective January 1, 2019, Synovus completed its acquisition of FCB Financial Holdings, Inc.
ARRC – Alternative Reference Rates Committee
ASC – Accounting Standards Codification
ASC 310-30 loans – Loans accounted for in accordance with ASC 310 – 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
ASU – Accounting Standards Update
ATM – Automatic teller machine
Azalea Merger Sub – Azalea Merger Sub Corp., a wholly-owned subsidiary of Synovus which was formed for the express and limited purpose of the Merger
Basel III – The third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements
BOLI – Bank-owned life insurance
BOV – Broker’s opinion of value
bp(s) – Basis point(s)
C&I – Commercial and industrial
CECL – Current expected credit losses
CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules
CMO – Collateralized Mortgage Obligation
Cabela’s Transaction – The transaction completed on September 25, 2017 whereby Synovus Bank acquired certain assets and assumed certain liabilities of WFB and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association.  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. and its wholly-owned subsidiaries, except where the context requires otherwise
FDIC – Federal Deposit Insurance Corporation
Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the policies of the Federal Reserve Board and also conduct economic research

i

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 deductibility of FDIC insurance premiums, and limitation of the deductibility of certain performance-based compensation, among others
i

FFIEC – Federal Financial Institutions Examination Council
FFIEC Retail Credit Classification Policy – FFIEC Uniform Retail Credit Classification and Account Management Policy
FHLB – Federal Home Loan Bank
FICO – Fair Isaac Corporation
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 acquisitionacquired entity as "Global One"
GSE – Government sponsored enterprise
HELOC – Home equity line of credit
Interagency Supervisory Guidance – Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties
LIBOR – London Interbank Offered Rate
LIHTC – Low Income Housing Tax 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 January 1, 2019 merger of Azalea Merger Sub with and into FCB and immediately thereafter, the merger of FCB with and into Synovus, with Synovus continuing as the surviving entity pursuant to the terms and conditions of the Merger Agreement
MPS – Merchant processing servicer(s)
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.

PCD – Purchased Credit Deteriorated
ii

PCI – Purchased Credit Impaired
ROU – Right-of-use
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

ii

Series E Preferred Stock – Synovus' Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, $25 liquidation preference
SOFR – Secured Overnight Financing Rate
Synovus – Synovus Financial Corp.
Synovus Bank – A Georgia state-chartered bank and wholly-owned subsidiary of Synovus, through which Synovus conducts its banking operations
Synovus' 2018 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2018
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus
Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TARP 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
TDR – Troubled debt restructuring (as defined in ASC 310-40)
the Treasury – United States Department of the Treasury
UPB – Unpaid principal balance
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 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


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, 2019 December 31, 2018September 30, 2019 December 31, 2018
ASSETS      
Cash and due from banks$549,616
 $468,426
$611,496
 $468,426
Interest-bearing funds with Federal Reserve Bank531,488
 641,476
480,913
 641,476
Interest earning deposits with banks20,271
 19,841
20,086
 19,841
Federal funds sold and securities purchased under resale agreements49,946
 13,821
69,975
 13,821
Total cash, cash equivalents, restricted cash, and restricted cash equivalents1,151,321
 1,143,564
1,182,470
 1,143,564
Investment securities available for sale, at fair value7,007,012
 3,991,632
6,892,162
 3,991,632
Mortgage loans held for sale, at fair value81,855
 37,129
129,415
 37,129
Loans36,138,561
 25,946,573
36,417,826
 25,946,573
Allowance for loan losses(257,376) (250,555)(265,013) (250,555)
Loans, net35,881,185
 25,696,018
36,152,813
 25,696,018
Cash surrender value of bank-owned life insurance766,287
 554,134
771,458
 554,134
Premises and equipment, net490,644
 434,307
487,053
 434,307
Goodwill492,390
 57,315
487,865
 57,315
Other intangible assets61,473
 9,875
58,572
 9,875
Other assets1,386,036
 745,218
1,499,374
 745,218
Total assets$47,318,203
 $32,669,192
$47,661,182
 $32,669,192
LIABILITIES AND SHAREHOLDERS' EQUITY      
Liabilities      
Deposits:      
Non-interest-bearing deposits$9,205,066
 $7,650,967
$9,586,148
 $7,650,967
Interest-bearing deposits28,761,656
 19,069,355
27,846,922
 19,069,355
Total deposits37,966,722
 26,720,322
37,433,070
 26,720,322
Federal funds purchased and securities sold under repurchase agreements273,481
 237,692
197,419
 237,692
Other short-term borrowings1,330,000
 650,000
2,233,593
 650,000
Long-term debt2,306,072
 1,657,157
2,153,600
 1,657,157
Other liabilities688,112
 270,419
774,662
 270,419
Total liabilities42,564,387
 29,535,590
42,792,344
 29,535,590
Shareholders' Equity      
Series D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2019 and December 31, 2018195,140
 195,140
Common stock - $1.00 par value. Authorized 342,857,143 shares; 166,079,543 issued at June 30, 2019 and 143,300,449 issued at December 31, 2018; 156,872,026 outstanding at June 30, 2019 and 115,865,510 outstanding at December 31, 2018166,080
 143,300
Preferred stock - no par value. Authorized 100,000,000 shares;
22,000,000 shares issued and outstanding at September 30, 2019, 8,000,000 shares issued and outstanding at December 31, 2018		536,550
 195,140
Common stock - $1.00 par value. Authorized 342,857,143 shares; 166,201,048 issued at September 30, 2019 and 143,300,449 issued at December 31, 2018; 147,594,000 outstanding at September 30, 2019 and 115,865,510 outstanding at December 31, 2018166,201
 143,300
Additional paid-in capital3,801,748
 3,060,561
3,801,158
 3,060,561
Treasury stock, at cost – 9,207,517 shares at June 30, 2019 and 27,434,939 shares at December 31, 2018(344,901) (1,014,746)
Treasury stock, at cost – 18,607,048 shares at September 30, 2019 and 27,434,939 shares at December 31, 2018(680,081) (1,014,746)
Accumulated other comprehensive income (loss), net49,289
 (94,420)75,933
 (94,420)
Retained earnings886,460
 843,767
969,077
 843,767
Total shareholders’ equity4,753,816
 3,133,602
4,868,838
 3,133,602
Total liabilities and shareholders' equity$47,318,203
 $32,669,192
$47,661,182
 $32,669,192
      
See accompanying notes to unaudited interim consolidated financial statements.


SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)2019 2018 2019 20182019 2018 2019 2018
Interest income:              
Loans, including fees$457,564
 $300,056
 $905,333
 $585,396
$463,437
 $314,639
 $1,368,769
 $900,035
Investment securities available for sale52,794
 23,884
 102,732
 47,812
53,761
 24,164
 156,493
 71,976
Mortgage loans held for sale752
 557
 1,143
 936
978
 578
 2,122
 1,514
Federal Reserve Bank balances2,701
 2,818
 6,371
 4,568
2,288
 2,376
 8,659
 6,944
Other earning assets2,320
 2,519
 5,391
 4,256
2,951
 2,185
 8,342
 6,442
Total interest income516,131
 329,834
 1,020,970
 642,968
523,415
 343,942
 1,544,385
 986,911
Interest expense:              
Deposits92,700
 32,600
 180,383
 58,975
94,082
 39,219
 274,466
 98,195
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings7,294
 203
 10,757
 310
7,843
 940
 18,599
 2,744
Long-term debt18,875
 12,454
 35,392
 24,822
19,393
 12,164
 54,785
 35,492
Total interest expense118,869
 45,257
 226,532
 84,107
121,318
 52,323
 347,850
 136,431
Net interest income397,262
 284,577
 794,438
 558,861
402,097
 291,619
 1,196,535
 850,480
Provision for loan losses12,119
 11,790
 35,688
 24,566
27,562
 14,982
 63,250
 39,548
Net interest income after provision for loan losses385,143
 272,787
 758,750
 534,295
374,535
 276,637
 1,133,285
 810,932
Non-interest income:              
Service charges on deposit accounts21,994
 19,999
 42,853
 39,938
22,952
 20,582
 65,805
 60,521
Fiduciary and asset management fees14,478
 13,983
 28,057
 27,419
14,686
 13,462
 42,743
 40,881
Card fees11,161
 10,833
 22,037
 21,032
12,297
 10,608
 34,334
 31,640
Brokerage revenue10,052
 8,709
 19,431
 17,085
11,071
 9,041
 30,502
 26,125
Mortgage banking income10,351
 5,290
 23,313
 15,177
Capital markets income8,385
 1,118
 13,291
 2,086
7,396
 1,155
 21,557
 3,826
Mortgage banking income7,907
 4,839
 12,962
 9,887
Income from bank-owned life insurance5,176
 3,733
 10,466
 7,949
5,139
 3,771
 15,605
 11,720
Investment securities losses, net(1,845) (1,296) (1,771) (1,296)(3,731) —
 (5,502) (1,296)
Other non-interest income12,499
 11,469
 21,859
 16,333
8,599
 7,759
 29,588
 23,507
Total non-interest income89,807
 73,387
 169,185
 140,433
88,760
 71,668
 257,945
 212,101
Non-interest expense:              
Salaries and other personnel expense143,009
 111,863
 282,436
 225,583
142,516
 114,341
 424,952
 339,924
Net occupancy and equipment expense39,851
 32,654
 78,245
 64,134
41,017
 32,088
 119,262
 96,222
Third-party processing expense19,118
 15,067
 36,875
 29,012
18,528
 14,810
 55,403
 43,822
Professional fees9,312
 6,284
 15,660
 11,789
9,719
 6,298
 25,379
 18,087
FDIC insurance and other regulatory fees7,867
 6,543
 14,629
 13,335
7,242
 6,430
 21,872
 19,765
Advertising expense5,923
 5,220
 11,045
 10,312
5,950
 3,735
 16,996
 14,046
Amortization of intangibles2,410
 292
 5,802
 583
2,901
 292
 8,702
 875
Merger-related expense7,401
 —
 57,140
 —
353
 6,684
 57,493
 6,684
Earnout liability adjustments10,457
 11,652
 10,457
 11,652
Loss on early extinguishment of debt, net4,592
 —
 4,592
 —
Other operating expenses29,235
 26,134
 54,705
 44,486
33,035
 23,967
 87,739
 68,454
Total non-interest expense264,126
 204,057
 556,537
 399,234
276,310
 220,297
 832,847
 619,531
Income before income taxes210,824
 142,117
 371,398
 275,494
186,985
 128,008
 558,383
 403,502
Income tax expense54,640
 30,936
 95,028
 61,146
51,259
 18,949
 146,287
 80,095
Net income156,184
 111,181
 276,370
 214,348
135,726
 109,059
 412,096
 323,407
Less: Preferred stock dividends3,150
 2,559
 6,300
 5,119
Less: Preferred stock dividends and redemption charge8,291
 9,729
 14,591
 14,848
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
$127,435
 $99,330
 $397,505
 $308,559
Net income per common share, basic$0.97
 $0.92
 $1.70
 $1.77
$0.84
 $0.85
 $2.53
 $2.61
Net income per common share, diluted0.96
 0.91
 1.68
 1.75
0.83
 0.84
 2.51
 2.60
Weighted average common shares outstanding, basic157,389
 118,397
 159,148
 118,531
152,238
 117,241
 156,819
 118,096
Weighted average common shares outstanding, diluted159,077
 119,139
 160,908
 119,229
154,043
 118,095
 158,595
 118,847
              
See accompanying notes to unaudited interim consolidated financial statements.

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

Three Months Ended June 30,Three Months Ended September 30,
2019 20182019 2018
(in thousands)Before-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax AmountBefore-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax Amount
Net income$210,824
 $(54,640) $156,184
 $142,117
 $(30,936) $111,181
$186,985
 $(51,259) $135,726
 $128,008
 $(18,949) $109,059
Net unrealized gains (losses) on investment securities available for sale:                      
Reclassification adjustment for net losses realized in net income1,845
 (478) 1,367
 1,296
 (336) 960
3,731
 (966) 2,765
 —
 —
 —
Net unrealized gains (losses) arising during the period89,459
 (23,169) 66,290
 (25,476) 6,598
 (18,878)
Net unrealized holding gains (losses) arising during the period33,919
 (8,786) 25,133
 (24,210) 6,270
 (17,940)
Net unrealized gains (losses)91,304
 (23,647) 67,657
 (24,180) 6,262
 (17,918)37,650
 (9,752) 27,898
 (24,210) 6,270
 (17,940)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:           
Unrealized holding gains (losses), net arising during the period(1,182) 306
 (876) —
 —
 —
Post-retirement unfunded health benefit:                      
Reclassification adjustment for gains realized in net income(35) 9
 (26) (34) 9
 (25)—
 —
 —
 (35) 9
 (26)
Actuarial losses arising during the period(510) 132
 (378) (46) 12
 (34)
Net decrease in unrealized gains(510) 132
 (378) (81) 21
 (60)
Other comprehensive income (loss)$91,269
 $(23,638) $67,631
 $(24,214) $6,271
 $(17,943)$35,958
 $(9,314) $26,644
 $(24,291) $6,291
 $(18,000)
Comprehensive income    $223,815
     $93,238
    $162,370
     $91,059
                      
Six Months Ended June 30,Nine Months Ended September 30,
2019 20182019 2018
(in thousands)Before-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax AmountBefore-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax Amount
Net income$371,398
 $(95,028) $276,370
 $275,494
 $(61,146) $214,348
$558,383
 $(146,287) $412,096
 $403,502
 $(80,095) $323,407
Net unrealized gains (losses) on investment securities available for sale:                      
Reclassification adjustment for net losses realized in net income1,771
 (459) 1,312
 1,296
 (336) 960
5,502
 (1,425) 4,077
 1,296
 (336) 960
Net unrealized gains (losses) arising during the period192,241
 (49,788) 142,453
 (86,921) 22,512
 (64,409)
Net unrealized holding gains (losses) arising during the period226,160
 (58,574) 167,586
 (111,131) 28,782
 (82,349)
Net unrealized gains (losses)194,012
 (50,247) 143,765
 (85,625) 22,176
 (63,449)231,662
 (59,999) 171,663
 (109,835) 28,446
 (81,389)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:           
Unrealized holding gains (losses), net arising during the period(1,182) 306
 (876) —
 —
 —
Post-retirement unfunded health benefit:                      
Reclassification adjustment for gains realized in net income(70) 14
 (56) (68) 22
 (46)
Reclassification adjustment for net gains realized in net income(70) 14
 (56) (103) 31
 (72)
Actuarial losses arising during the period(510) 132
 (378) (46) 12
 (34)
Net decrease in unrealized gains(580) 146
 (434) (149) 43
 (106)
Other comprehensive income (loss)$193,942
 $(50,233) $143,709
 $(85,693) $22,198
 $(63,495)$229,900
 $(59,547) $170,353
 $(109,984) $28,489
 $(81,495)
Comprehensive income    $420,079
     $150,853
    $582,449
     $241,912
                      
See accompanying notes to unaudited interim consolidated financial statements.




SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Series C Preferred Stock Series D Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings TotalPreferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance, April 1, 2019$—
 $195,140
 $165,929
 $3,794,262
 $(319,898) $(18,342) $780,662
 $4,597,753
Balance, July 1, 2019$195,140
 $166,080
 $3,801,748
 $(344,901) $49,289
 $886,460
 $4,753,816
Net income—
 —
 —
 —
 —
 —
 156,184
 156,184
—
 —
 —
 —
 —
 135,726
 135,726
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 67,631
 —
 67,631
—
 —
 —
 —
 26,644
 —
 26,644
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 —
 (47,236) (47,236)—
 —
 —
 —
 —
 (44,476) (44,476)
Cash dividends paid on Series D Preferred Stock - $0.39 per share—
 —
 —
 —
 —
 —
 (3,150) (3,150)
Cash dividends declared on preferred stock(1)
—
 —
 —
 —
 —
 (8,291) (8,291)
Issuance of Series E Preferred Stock, net of issuance costs341,410
 —
 —
 —
 —
 —
 341,410
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (25,003) —
 —
 (25,003)—
 —
 —
 (343,690) —
 —
 (343,690)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 50
 (281) —
 —
 —
 (231)—
 9
 219
 —
 —
 (326) (98)
Stock options/warrants exercised, net—
 —
 101
 1,786
 —
 —
 —
 1,887
Stock options exercised—
 112
 2,514
 —
 —
 —
 2,626
Warrants exercised with net settlement and common stock reissued—
 —
 (8,494) 8,510
 —
 (16) —
Share-based compensation expense—
 —
 —
 5,981
 —
 —
 —
 5,981
—
 —
 5,171
 —
 —
 —
 5,171
Balance, June 30, 2019$—
 $195,140
 $166,080
 $3,801,748
 $(344,901) $49,289
 $886,460
 $4,753,816
Balance, September 30, 2019$536,550
 $166,201
 $3,801,158
 $(680,081) $75,933
 $969,077
 $4,868,838
                            
Balance, April 1, 2018$125,980
 $—
 $143,017
 $3,039,757
 $(866,407) $(107,777) $621,925
 $2,956,495
Balance, July 1, 2018$321,118
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
Net income—
 —
 —
 —
 —
 —
 111,181
 111,181
—
 —
 —
 —
 —
 109,059
 109,059
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 (17,943) —
 (17,943)—
 —
 —
 —
 (18,000) —
 (18,000)
Cash dividends declared on common stock - $0.25 per share—
 —
 —
 —
 —
 —
 (29,510) (29,510)—
 —
 —
 —
 —
 (29,211) (29,211)
Cash dividends paid on Series C Preferred Stock - $0.49 per share—
 —
 —
 —
 —
 —
 (2,559) (2,559)
Issuance of Series D Preferred Stock, net of issuance costs—
 195,138
 —
 —
 —
 —
 —
 195,138
Cash dividends declared on preferred stock(1)
—
 —
 —
 —
 —
 (5,709) (5,709)
Redemption of Series C Preferred Stock(125,980) —
 —
 —
 —
 (4,020) (130,000)
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (50,077) —
 —
 (50,077)—
 —
 —
 (57,994) —
 —
 (57,994)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 23
 274
 —
 —
 (349) (52)—
 4
 (135) —
 —
 —
 (131)
Stock options exercised—
 —
 38
 618
 —
 —
 —
 656
—
 11
 170
 —
 —
 —
 181
Share-based compensation expense—
 —
 —
 4,365
 —
 —
 —
 4,365
—
 —
 4,184
 —
 —
 —
 4,184
Balance, June 30, 2018$125,980
 $195,138
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
Balance, September 30, 2018$195,138
 $143,093
 $3,049,233
 $(974,478) $(143,720) $770,807
 $3,040,073
                            
(1) For the three months ended September 30, 2019, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively. For the three months ended September 30, 2018, dividends per share were $0.49 and $0.39 for Series C and Series D Preferred Stock, respectively.
(1) For the three months ended September 30, 2019, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively. For the three months ended September 30, 2018, dividends per share were $0.49 and $0.39 for Series C and Series D Preferred Stock, respectively.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited) (continued)
               
(in thousands, except per share data)Series C Preferred Stock Series D Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings TotalPreferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance, December 31, 2018$—
 $195,140
 $143,300
 $3,060,561
 $(1,014,746) $(94,420) $843,767
 $3,133,602
$195,140
 $143,300
 $3,060,561
 $(1,014,746) $(94,420) $843,767
 $3,133,602
Cumulative-effect adjustment from adoption of ASU 2016-02—
 —
 —
 —
 —
 —
 4,270
 4,270
—
 —
 —
 —
 —
 4,270
 4,270
Net income—
 —
 —
 —
 —
 —
 276,370
 276,370
—
 —
 —
 —
 —
 412,096
 412,096
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 143,709
 —
 143,709
—
 —
 —
 —
 170,353
 —
 170,353
FCB Acquisition:                            
Issuance of common stock, net of issuance costs—
 —
 22,043
 682,103
 —
 —
 —
 704,146
—
 22,043
 682,103
 —
 —
 —
 704,146
Common stock reissued—
 —
 —
 —
 1,014,746
 —
 (137,176) 877,570
—
 —
 —
 1,014,746
 —
 (137,176) 877,570
Fair value of exchanged equity awards and warrants attributed to purchase price—
 —
 —
 43,972
 —
 —
 —
 43,972
—
 —
 43,972
 —
 —
 —
 43,972
Cash dividends declared on common stock - $0.60 per share—
 —
 —
 —
 —
 —
 (94,471) (94,471)
Cash dividends paid on Series D Preferred Stock - $0.78 per share—
 —
 —
 —
 —
 —
 (6,300) (6,300)
Cash dividends declared on common stock - $0.90 per share—
 —
 —
 —
 —
 (138,947) (138,947)
Cash dividends declared on preferred stock(1)
—
 —
 —
 —
 —
 (14,591) (14,591)
Issuance of Series E Preferred Stock, net of issuance costs341,410
 —
 —
 —
 —
 —
 341,410
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (345,170) —
 —
 (345,170)—
 —
 —
 (688,860) —
 —
 (688,860)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 285
 (8,928) —
 —
 —
 (8,643)—
 294
 (8,709) —
 —
 (326) (8,741)
Stock options/warrants exercised, net—
 —
 452
 7,815
 269
 —
 —
 8,536
Stock options exercised—
 564
 10,598
 —
 —
 —
 11,162
Warrants exercised with net settlement and common stock reissued—
 —
 (8,763) 8,779
 —
 (16) —
Share-based compensation expense—
 —
 —
 16,225
 —
 —
 —
 16,225
—
 —
 21,396
 —
 —
 —
 21,396
Balance, June 30, 2019$—
 $195,140
 $166,080
 $3,801,748
 $(344,901) $49,289
 $886,460
 $4,753,816
Balance, September 30, 2019$536,550
 $166,201
 $3,801,158
 $(680,081) $75,933
 $969,077
 $4,868,838
                            
Balance, 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)—
 —
 —
 —
 —
 (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) —
—
 —
 —
 —
 117
 (117) —
Net income—
 —
 —
 —
 —
 —
 214,348
 214,348
—
 —
 —
 —
 —
 323,407
 323,407
Other comprehensive income (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 paid on Series C Preferred Stock - $0.98 per share—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Cash dividends declared on common stock - $0.75 per share—
 —
 —
 —
 —
 (88,396) (88,396)
Cash dividends declared on preferred stock(1)
—
 —
 —
 —
 —
 (10,828) (10,828)
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
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (76,810) —
 —
 (76,810)—
 —
 —
 (134,804) —
 —
 (134,804)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 289
 (8,220) —
 —
 (349) (8,280)—
 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, June 30, 2018$125,980
 $195,138
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
Balance, September 30, 2018$195,138
 $143,093
 $3,049,233
 $(974,478) $(143,720) $770,807
 $3,040,073
                            
(1) For the nine months ended September 30, 2019, dividends per share were $1.17 and $0.37 for Series D and Series E Preferred Stock, respectively. For the nine months ended September 30, 2018, dividends per share were $1.47 and $0.39 for Series C and Series D Preferred Stock, respectively.
(1) For the nine months ended September 30, 2019, dividends per share were $1.17 and $0.37 for Series D and Series E Preferred Stock, respectively. For the nine months ended September 30, 2018, dividends per share were $1.47 and $0.39 for Series C and Series D Preferred Stock, respectively.
See accompanying notes to unaudited interim consolidated financial statements.


SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,Nine Months Ended September 30,
(in thousands)
2019(1)
 2018
2019(1)
 2018
Operating Activities      
Net income$276,370
 $214,348
$412,096
 $323,407
Adjustments to reconcile net income to net cash provided by operating activities:      
Provision for loan losses35,688
 24,566
63,250
 39,548
Depreciation, amortization, and accretion, net11,446
 28,661
8,969
 41,716
Deferred income tax expense27,539
 5,222
42,594
 9,360
Originations of mortgage loans held for sale(325,109) (286,070)(603,086) (429,531)
Proceeds from sales of mortgage loans held for sale287,648
 287,175
527,354
 449,651
Gain on sales of mortgage loans held for sale, net(8,286) (6,198)(15,453) (9,886)
Increase in other assets(22,191) (54,639)(135,448) (64,765)
(Decrease) increase in other liabilities(45,265) 8,292
Increase in other liabilities32,345
 17,690
Investment securities losses, net1,771
 1,296
5,502
 1,296
Loss on early extinguishment of debt, net4,592
 —
Share-based compensation expense16,225
 8,320
21,396
 12,504
Net cash provided by operating activities255,836
 230,973
364,111
 390,990
   
Investing Activities      
Net cash received in business combination, net of cash paid201,100
 —
201,100
 —
Proceeds from maturities and principal collections of investment securities available for sale444,865
 294,152
780,538
 457,151
Proceeds from sales of investment securities available for sale1,292,673
 35,066
2,002,137
 35,066
Purchases of investment securities available for sale(2,263,383) (367,458)(3,160,139) (510,797)
Proceeds from sales of loans44,229
 13,954
71,530
 15,454
Proceeds from sales of other real estate and other assets8,255
 6,737
15,859
 8,676
Net increase in loans excluding loans acquired in business combination(970,160) (382,086)(1,278,772) (842,383)
Net (purchases) redemptions of Federal Home Loan Bank stock(43,775) (6,155)(75,735) (26,343)
Net (purchases) redemptions of Federal Reserve Bank stock(24,239) 8,500
(45,856) 8,500
Proceeds from settlements of bank-owned life insurance policies656
 1,783
15,208
 1,783
Net increase in premises and equipment(31,767) (26,780)(40,195) (39,034)
Net cash used in investing activities(1,341,546) (422,287)(1,514,325) (891,927)
   
Financing Activities      
Net increase in deposits337,552
 294,516
Net increase in federal funds purchased and securities sold under repurchase agreements6,650
 46,390
Net (decrease) increase in deposits(185,362) 285,342
Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements(69,412) 29,955
Net change in other short-term borrowings680,000
 —
1,582,000
 378,540
Repayments and redemption of long-term debt—
 (2,330,052)(157,226) (2,230,052)
Proceeds from issuance of long-term debt, net497,045
 2,280,000
497,045
 2,280,000
Dividends paid to common shareholders(76,203) (47,510)(123,446) (77,020)
Dividends paid to preferred shareholders(6,300) (5,119)(9,450) (10,828)
Proceeds from issuance of Series D Preferred Stock—
 195,138
Proceeds from issuance of preferred stock341,410
 195,138
Redemption of preferred stock—
 (130,000)
Stock options and warrants exercised8,536
 1,896
11,162
 2,077
Repurchase of common stock(345,170) (76,810)(688,860) (134,804)
Taxes paid related to net share settlement of equity awards(8,643) (8,280)(8,741) (8,411)
Net cash provided by financing activities1,093,467
 350,169
1,189,120
 579,937
Increase in cash and cash equivalents including restricted cash7,757
 158,855
38,906
 79,000
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period1,143,564
 932,933
1,143,564
 932,933
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,151,321
 $1,091,788
$1,182,470
 $1,011,933
      
Supplemental Disclosures:      
Income taxes paid (refunded)$62,913
 $38,619
Income taxes paid$88,480
 $40,340
Interest paid221,475
 80,884
350,388
 122,182
Non-cash Activities      
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB1,625,688
 —
1,625,688
 —
Premises and equipment transferred to other assets held for sale—
 785
—
 785
Loans foreclosed and transferred to other real estate7,586
 7,561
14,084
 11,280
Loans transferred to/(from) other loans held for sale at fair value47,927
 5,233
Subtopic 825-10 equity investment securities available for sale transferred to other assets—
 3,162
—
 3,162
Dividends declared on common stock during the period but paid after period-end47,236
 29,510
44,476
 29,211
   
Dividends declared on preferred stock during the period but paid after period-end5,141
 —

(1) Where applicable, changes for balances as of JuneSeptember 30, 2019, compared to December 31, 2018, exclude amounts acquired on the Acquisition Date.
See accompanying notes to unaudited interim consolidated financial statements.

Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Basis of Presentation
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 companyCompany provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance, asset-based lending, structured lending, and international banking. Synovus Bank is positioned in markets in the Southeast, with 297298 branches and 385386 ATMs in Alabama, Florida, Georgia, South Carolina, and Tennessee.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to the SEC Form 10-Q and Article 10 of Regulation S-X; therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with GAAP. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the periods covered by this Report have been included. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Synovus' 2018 Form 10-K.
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.
Use of Estimates in the Preparation of Financial Statements
In preparing the consolidated financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the respective consolidated balance sheets and the reported amounts of revenues and expenses for the periods presented. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses;ALL; estimates of fair value; income taxes; and contingent liabilities including legal matters, among others.
Purchased loans
Purchased loans are recorded at fair value in accordance with ASC Topic 820, Fair Value Measurement, consistent with the exit price concept on the date of acquisition. Credit risk assumptions and resulting credit discounts are included in the determination of fair value; therefore, no ALL is recorded at the acquisition date. 
Pursuant to an AICPA letter dated December 18, 2009, the AICPA summarized the SEC staff's view regarding the accounting in subsequent periods for discount accretion associated with loan receivables acquired in a business combination or asset purchase. Regarding the accounting for such loan receivables, in the absence of further standard setting, the AICPA understands the SEC staff would not object to an accounting policy based on contractual cash flows (ASC Topic 310-20, Nonrefundable Fees and Other Costs) or an accounting policy based on expected cash flows (ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality). Synovus analogizes to ASC Topic 310-30 to account for the fair value discount.
Purchased loans are evaluated upon acquisition as following the ASC 310-30 approach or ASC 310-20. Loans meeting the scope exception of ASC 310-30 (e.g. loans with revolving components) are not permitted to be analogized and will be accounted for in accordance with ASC 310-20.  For ASC 310-30 loans, expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are recognized prospectively as interest income. Decreases in expected cash flows due to credit deterioration are recognized by recording an ALL. Loan removals from pools due to pay-off or charge-off are removed at their carrying amount.  The difference between the carrying amount and the amount received to satisfy the loan is recorded in interest income. For ASC 310-20 loans, the difference between the fair value and UPB of the loan at the acquisition date is amortized or accreted to interest income over the contractual life of the loans using the effective interest method. In the event of prepayment, the remaining unamortized amount is recognized in interest income in the quarter of prepayment.
Due to the significant difference in accounting for ASC 310-30 loans, Synovus believes inclusion of these loans in certain asset quality ratios that reflect non-performing assetsNPAs in the numerator or denominator (or both) results in significant distortion to these ratios. In addition, because loan level charge-offs related to ASC 310-30 loans are not recognized in the financial statements until the cumulative amounts exceed the original loss projections on a pool basis, the net charge-off ratio is inconsistent with the

net charge-off ratio for other loan portfolios. The inclusion of ASC 310-30 loans in certain asset quality ratios could result in a lack of

comparability across quarters or years, and could impact comparability with other portfolios that were not impacted by ASC 310-30 accounting. Synovus believes that presenting certain loan and asset quality disclosures separately for ASC 310-20 and ASC 310-30 loans, and/or excluding ASC 310-30 loans, where appropriate and indicated within each table, provides better perspective into underlying trends related to the quality of its loan portfolio.
Non-interest Income - Revenue from Contracts with Customers within the scope of ASC Topic 606
Synovus' contracts with customers generally do not contain terms that require significant judgment to determine the amount of revenue to recognize. Synovus' policies for recognizing non-interest income within the scope of ASC Topic 606, including the nature and timing of such revenue streams, are included below.
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,NSF, account management and other deposit-related fees. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction-related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.
Fiduciary and Asset Management Fees: Fiduciary and asset management fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. Synovus' performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month-end through a direct charge to customers' accounts. Synovus does not earn performance-based incentives.
Card Fees: Card fees consist primarily of interchange fees from consumer credit and debit cards processed by card association networks, as well as merchant discounts, and other card-related services. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in the following month. Card fees are reported net of certain associated expense items including loyalty program expenses and network expenses.
Brokerage Revenue: Brokerage revenue consists primarily of commissions. Additionally, brokerage revenue includes advisory fees earned from the management of customer assets. 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. 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
Capital Markets Income: Investment banking income, a component of capital markets income, is comprised primarily of securities underwriting fees and remarketing fees. Synovus assists corporate clients in raising capital by offering equity or debt securities to potential investors. The transaction fees are based on a percentage of the sizetotal transaction amount. The underwriting and number of transactions executed at the client's direction andremarketing fees are generally recognized on the trade date when the securities are sold to third-party investors with payment received on the settlement date.
Insurance Revenue (included in other non-interest income on the consolidated statements of income): 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.
Other Fees (included in other non-interest income on the consolidated statements of income): Other fees within the scope of ASC Topic 606 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.
Recently Adopted Accounting Standards
ASU 2016-02, Leases (ASC 842). Synovus adopted ASC 842 prospectively as of January 1, 2019 for existing leasing arrangements. As such, financial information was not updated and the disclosures required under the new standard are not presented for dates and periods prior to January 1, 2019. Refer to the 2018 10-K for lease disclosures surrounding prior period information reported under ASC 840, Leases. For leases that commenced prior to the effective date of ASC 842, Synovus elected the package of practical expedients not to reassess (a) whether existing contracts contain leases, (b) lease classification for existing leases, and (c) initial direct cost for any existing leases as well as the short-term lease recognition exemption for all leases that qualify. Additionally, Synovus did not elect the practical expedient to combine lease and non-lease components for all of our leases.
Adoption of the new standard resulted in the recording of ROU assets and lease liabilities of $381.1 million and $391.0 million, respectively, as of January 1, 2019. These amounts were based on the present value of the remaining rental payments for existing leases and include consideration for renewal and termination options available that we were reasonably certain of exercising. The difference between the asset and liability balance is primarily the result of lease liabilities that existed prior to adoption of the new guidance. The adoption of the standard also resulted in a cumulative-effect adjustment, net of income taxes, to the beginning

balance of retained earnings of $4.3 million ($3.9 million of which consisted of deferred gains associated with sale-leaseback transactions that previously did not qualify for recognition). The ROU assets are included in other assets (other than $4.0 million of finance leases included in premises and equipment) on the consolidated balance sheet and the lease liabilities are included in other liabilities. Adoption of the standard did not materially impact our consolidated statements of income and had no impact on cash flows.
Synovus determines if an arrangement is a lease at inception in accordance with ASC 842-10-15-3 and classifies leases as either operating or financing from a lessee perspective and operating or direct financing and sales-type from a lessor perspective based on criteria that are largely similar to those applied under ASC 840, Leases, but without explicit bright lines.

ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The determination of future minimum lease payments includes consideration for extension or termination options when it is reasonably certain Synovus will exercise that option as well as rent escalation clauses (including market or index-based escalations) and abatements, capital improvement funding or other lease concessions. As most leases in Synovus' portfolio do not provide an implicit rate, Synovus utilizes a collateralized incremental borrowing rate, referenced to the Federal Home Loan Bank rates for borrowings of similar terms, based on the information available at lease commencement date in determining the present value of future payments. Additionally, for all real estate leases, Synovus applies a portfolio approach (based on lease term) in the application of the discount rate. Determination of the ROU asset also includes prepaid lease payments and amounts recognized relating to favorable or unfavorable lease terms from leases acquired through business combinations.
For operating leases, minimum rental expense is recognized on a straight-line basis based on the fixed components of leasing arrangements. Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as expense when incurred. For financing leases, rent expense is recognized as amortization expense on a straight-line basis and interest expense using the effective interest method. Additionally, leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these leases is recognized on a straight-line basis over the lease term. Net lease cost is recorded net of sublease income. For leases beginning in 2019 and later, lease components (e.g., base rent) are accounted for separately from non-lease components (e.g., common-area maintenance costs, real estate taxes and insurance costs).
ASU 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 2017- 04, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Therefore, any carrying amount which exceeds the reporting unit’s fair value (up to the amount of goodwill recorded) will be recognized as an impairment loss. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Synovus elected to early adopt the guidance, effective January 1, 2019. Synovus performed a qualitative assessment as allowed under ASC 350-20-35 during its annual impairment test as of June 30, 2019 and based on the assessment performed, management concluded goodwill was not impaired. As such, the adoption of this ASU had no impact.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2016-13, Financial Instruments--CreditInstruments-Credit Losses (CECL). In June 2016, the FASB issued new guidance (CECL) related to credit losses. The new guidanceCECL (and all subsequent ASUs)ASUs on this topic) replaces the existing incurred loss impairment guidance with an expected credit loss methodology. The new guidanceCECL will require management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments. For Synovus, the standardCECL will apply to loans, unfunded loan commitments, and debt securities available for sale. The standard is effective for fiscal years beginning after December 15, 2019sale and interim periods within those fiscal years with early adoption permitted on January 1, 2019. Synovus will adopt the guidancebe adopted on January 1, 2020. Upon adoption, for non-PCI (non-PCD under CECL) assets, Synovus will record a cumulative-effect adjustment to beginning retained earnings as of the beginning of the reporting period of adoption.earnings. In addition, the amendments provideCECL provides for a simplified accounting model for purchased financial assets with a more-than-insignificant amount of credit deterioration since their acquisition ("PCD assets")origination (PCD assets). The initial estimate of expected credit losses on PCD assets will be recognized through the ALLACL with an offset to the cost basis of the related financial asset at acquisition.adoption.  
Synovus is continuing its implementation efforts which are led by a cross-functional steering committee. The teamcommittee meets periodically to discuss the latest developments and ensure progress compared to the planned timeline. We continued ourSynovus shifted from limited to more comprehensive parallel testing during the secondthird quarter of 2019.  The results are beingcontinue to be utilized to refine our models and estimation techniques.  Documentation of new processesmethodologies and internal controls that will be implemented as part of standard adoptionCECL as well as model validation is also in process. Implementation status updates are provided quarterly to executive management and the Audit Committee of Synovus' Board of Directors.
Upon adoption of CECL, Synovus expects the Board.ACL (allowance for credit losses which will apply to debt securities as well as loans and unfunded loan commitments) may increase by 40% to 60% compared to the incurred loss method. The increase is primarily driven by two factors:
Management expects that the allowanceestablishment of reserves for loan losses will be higher underacquired loans independent of the new standard primarily for fair value discount; and
longer duration consumer loans, due to the difference between loss emergence periods currently used versus the remaining life of the asset required under CECL.

We expect the adoption impact of classifying PCI assets as PCD assets to represent approximately half of the ACL increase but, as previously noted, is not expected to impact equity. Additionally, the regulatory transition rules allow for a three-year phase-in of the day-one regulatory capital effects. Due to the combination of these factors, Synovus does not expect CECL adoption to have a material impact on regulatory capital ratios. However, managementSynovus is still in the process of refining estimates and these estimates involve significant judgment. The estimates provided above are subject to ultimately determine the impact on the financial statementssubstantial change and regulatory capital ratios. Additionally, the extent of the expected increase on the ALL will ultimately depend upon the composition of the loan portfolio, upon adoption of the standard, as well as economic conditions and forecasts at that time.the time of CECL adoption.



Note 2 - Acquisitions
Acquisition of FCB Financial Holdings, Inc.
Effective January 1, 2019 (the "Acquisition Date"), Synovus completed its acquisition of all of the outstanding stock of FCB, a bank holding company based in Weston, Florida, for total consideration of $1.63 billion. Effective January 1, 2019, FCB's wholly-owned banking subsidiary, Florida Community Bank, National Association, merged into Synovus Bank. On the Acquisition Date, the preliminary estimated fair values of FCB included approximately $12.4 billion of identifiable assets, $9.3 billion in loans, and $10.9 billion in deposits. With the addition of FCB and its 51 full service banking centers, Synovus expanded its deposit base in the Southeast. The addition of FCB elevated Synovus' growth profile through a deepened presence in high-growth Florida markets. Conversion of FCB systems occurred during the second quarter of 2019. The results of FCB's operations are included in Synovus' consolidated financial statements since the Acquisition Date.
Under the terms of the Merger Agreement, each outstanding share of FCB common stock was converted into the right to receive 1.055 Synovus common shares and cash in lieu of fractional shares. Additionally, under the terms of the Merger Agreement, certain outstanding FCB non-vested equity awards with a fair value of $7.5 million on the Acquisition Date accelerated vesting and converted automatically into the right to receive merger consideration at the merger exchange ratio of 1.055, or an equivalent amount in cash, of which $3.5 million was allocated to purchase price and the remaining to merger-related compensation expense. In the aggregate, on the Acquisition Date, FCB stockholders received 49.5 million shares of Synovus common stock valued at $1.58 billion and $601 thousand in cash. Also, under the terms of the Merger Agreement, FCB employee and non-employee director outstanding stock options and non-vested restricted share units as well as outstanding FCB warrants were converted into options, restricted share units, and warrants, respectively, to purchase and receive Synovus common stock. The converted options and restricted share units had a fair value of $41.5 million on the Acquisition Date, of which $37.3 million was allocated to purchase price and the remaining to compensation expense and the converted warrants had a fair value of $6.7 million attributed to purchase price. The estimated fair value of the converted restricted share units was based on Synovus' closing stock price on December 31, 2018 of $31.99, and the estimated fair value of the converted stock options was determined using a Hull-White model in a binomial lattice option pricing framework. The estimated fair value of the converted warrants was determined using the Black-Scholes-Merton model.
The acquisition of FCB constituted a business combination and was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at their estimated fair value on the Acquisition Date. The determination of estimated fair values requires management to make certain estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and may require adjustments. Upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition date, Synovus will record any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined. Fair value adjustments based on updated estimates could materially affect the goodwill recorded on the acquisition. Synovus may incur losses on the acquired loans that are materially different from losses Synovus originally projected.
Preliminary goodwill of $435.1$430.6 million was recorded as a result of the transaction and is not-deductible for tax purposes. FCB's $19.6 million of merger-based success fees payable to third-party advisors and investment bankers were accounted for as part of the business combination and an assumed liability. Since the success fees payable by FCB were contingent upon the consummation of the merger, the expense was recognized as an "on the line" expense with no expense recognition in either the pre- or post-acquisition financials of FCB or Synovus. The following table reflects the consideration transferred for FCB's net assets and the identifiable assets purchased and liabilities assumed at their estimated fair values as of January 1, 2019. These fair value measurement estimates are based on third-party and internal valuations and reflect immaterial measurement period adjustments to the amounts reported as of March 31, 2019 the most significant of which consists of a decrease in core deposit intangibles of $10.8 million, with offsetting increases in goodwill and net deferred tax assets (the income statement impact of such adjustments was immaterial).


(in thousands)  
Consideration transferred:  
Synovus common stock issued and reissued from treasury attributed to purchase price(1)
Synovus common stock issued and reissued from treasury attributed to purchase price(1)
$1,582,133
Synovus common stock issued and reissued from treasury attributed to purchase price(1)
$1,582,133
Cash payments to FCB stockholders attributed to purchase price(2)
 173
 173
Fair value of exchanged employee and director equity awards and FCB warrants attributed to purchase price(1)
 43,972
 43,972
Total purchase price $1,626,278
 $1,626,278
  
Statement of Net Assets Acquired at Fair Value (Preliminary): 
 
Assets 
 
Cash and cash equivalents$201,689
 $201,689
 
Investment securities available for sale2,301,001
 2,301,001
 
Loans9,289,208
 9,292,991
 
Cash surrender value of bank-owned life insurance216,848
 216,848
 
Premises and equipment44,875
 45,412
 
Core deposit intangible57,400
 57,400
 
Other assets268,804
 269,304
 
Total Assets$12,379,825
 $12,384,645
 
  
Liabilities

Deposits$10,930,724
 $10,930,724
 
Federal funds purchased and securities sold under repurchase agreements29,139
 29,139
 
Long-term debt153,236
 153,236
 
Other liabilities75,523
 75,818
 
Total Liabilities$11,188,622
 $11,188,917
 
  
Fair value of net identifiable assets acquired 1,191,203
 1,195,728
Preliminary goodwill $435,075
 $430,550
  
(1) Based on Synovus' closing stock price of $31.99 on December 31, 2018.
(1)
Based on Synovus' closing stock price of $31.99 on December 31, 2018.
(2) $173 thousand of cash payment of $601 thousand attributed to purchase price with remaining allocated to compensation expense.

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above.

Investment Securities Available for Sale: Fair values of securities were based on quoted market prices from multiple third-party pricing services as well as realized proceeds upon sale of certain corporate bonds.

Loans: The Income Approach was utilized in accordance with ASC Topic 820 to estimate the fair value of the loans as of the Acquisition Date. The Income Approach utilizes a discounted cash flow method, to present value the expected cash flows using a market-based discount rate. The acquired loans were grouped together based on the terms of the loans, variable or fixed interest rate, variable index rate, interest or principal only loans, payment plans and amortizing or non-amortizing loans.

The discounted cash flow model utilized the contractual loan data and market-based assumptions for prepayment rates, loss rates, and servicing fee, at the loan group level, to project expected loan cash flows as of the Acquisition Date. The acquired loans were grouped together based on the terms of the loans, variable or fixed interest rate, variable index rate, interest or principal only loans, payment plans and amortizing or non-amortizing loans. Total measurement period adjustments to date amounted to an increase in the fair value of loans of $5.2 million based on new information about facts and circumstances that existed prior to the Acquisition Date obtained during a subsequent sale of certain FCB acquired loans (primarily NPLs).

Core Deposit Intangible (CDI): This intangible asset represents the value of the relationships with deposit customers. The fair value of the core deposit intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative costs of funds, and the interest costs associated with the customer deposits. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. TheSince the Acquisition Date, Synovus made one measurement period adjustment to decrease inthe value of the CDI ofby $10.8 million, during the quarter was based on further reviewresulting in a CDI asset of the alternative cost of funds assumptions at the Acquisition Date.$57.4 million.

Deposits: Certificates of deposit were valued by projecting out the expected cash flows based on the contractual terms of the certificates of deposit. These cash flows were discounted based on a market rate for a certificate of deposit with a corresponding

maturity. The fair values for demand and savings deposits were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.

Long-term Debt: Fair values for FHLB borrowings were based on market values and market rates provided by the FHLB.

The following table presents consolidated financial information included in Synovus' unaudited consolidated statements of income from the Acquisition Date (January 1, 2019) through JuneSeptember 30, 2019 under the column "Actual from Acquisition Date." Synovus does not provide separate summary financial information of FCB from the Acquisition Date since it would be impracticable to do so as certain systems and processes were integrated during the six months ended June 30,second quarter of 2019. The following table also presents unaudited pro forma information as if the acquisition occurred on January 1, 2018 under the "Pro Forma" column. The unaudited pro forma results include the estimated impact of amortizing and accreting certain estimated purchase accounting adjustments such as intangible assets as well as fair value adjustments to loans and deposits. Merger-related expenses that occurred at the effective time of the mergerMerger, or subsequent to the mergerMerger are not reflected in the unaudited pro forma amounts. Cost savings are also not reflected in the unaudited pro forma amounts for the sixnine months ended JuneSeptember 30, 2018. The pro forma information does not necessarily reflect the results of operations that would have occurred had Synovus merged with FCB at the beginning of 2018.
(in thousands) 
Actual from Acquisition Date (January 1, 2019) through June 30, 2019(1)
 Pro Forma for Six Months Ended June 30, 2018
Actual from Acquisition Date (January 1, 2019) through September 30, 2019(1)
 Pro Forma for Nine Months Ended September 30, 2018
Net interest income $794,438
 $760,304
$1,196,535
 $1,162,146
Non-interest income 169,185
 155,610
257,945
 236,042
Net income available to common shareholders 270,070
 309,786
Income before income taxes(1)
558,383
 604,101
Net income available to common shareholders(1)
397,505
 463,984
       
(1) Actual results for the sixnine months ended JuneSeptember 30, 2019 include pre-tax merger-related expense of $57.1$57.5 million.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $7.4$0.4 million and $57.1$57.5 million for the three and sixnine months ended JuneSeptember 30, 2019, primarily related to employment compensation agreements, severance, professional services, and contract termination charges, including the payment of $21.8 million related to employment agreements of certain FCB executives. Merger-related expense for the three and sixnine months ended JuneSeptember 30, 2019 is presented in the table below:
(in thousands)Three Months Ended June 30, 2019 Six Months Ended June 30, 2019Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Employment compensation agreements, severance, and other employee benefit costs$1,774
 $34,762
$—
 $34,762
Professional fees1,791
 16,991
131
 17,122
All other expense(1)
3,836
 5,387
222
 5,609
Total merger-related expense$7,401
 $57,140
$353
 $57,493
      

(1) Primarily relates to fees associated with lease exit accruals, asset impairments related to the integration, and contract termination charges.
Acquisition of Global One
On October 1, 2016, Synovus completed its acquisition of all of the outstanding stock of Global One. Under the terms of the merger agreement, the purchase price included additional annual payments ("Earnout Payments") to Global One's former shareholders over a three to five yearsfive-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. During the three and nine months ended September 30, 2019 and 2018, Synovus recorded an$10.5 million and $11.7 million, increaserespectively, in increases to the earnout liability driven bydue to increased earnings projections of Global One andOne. The total fair value of the earnout liability at September 30, 2019 was $24.8 million. During the fourth quarter of 2018, Synovus issued the second annual Earnout Payment of 199 thousand shares of Synovus common stock valued at $7.4 million and $1.2 million in cash. The total fair value of the earnout liability at June 30, 2019 was $14.4 million based on the estimated fair value of the remaining Earnout Payments.

Note 3 - Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at JuneSeptember 30, 2019 and December 31, 2018 are summarized below.
 June 30, 2019September 30, 2019
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair ValueAmortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $19,689
 $—
 $—
 $19,689
$19,782
 $—
 $—
 $19,782
U.S. Government agency securities 64,070
 1,617
 —
 65,687
35,497
 1,388
 (8) 36,877
Mortgage-backed securities issued by U.S. Government agencies 88,677
 367
 (767) 88,277
69,141
 730
 (190) 69,681
Mortgage-backed securities issued by U.S. Government sponsored enterprises 4,873,285
 84,794
 (9,408) 4,948,671
4,970,420
 99,289
 (4,208) 5,065,501
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 859,235
 6,391
 (3,093) 862,533
656,311
 9,612
 (1) 665,922
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises 354,104
 14,339
 —
 368,443
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises360,065
 19,606
 —
 379,671
State and municipal securities 2,107
 —
 (7) 2,100
2,079
 10
 —
 2,089
Asset-backed securities 501,713
 4,044
 (640) 505,117
497,045
 9,442
 (156) 506,331
Corporate debt securities 144,401
 2,124
 (30) 146,495
144,441
 1,876
 (9) 146,308
Total investment securities available for sale $6,907,281
 $113,676
 $(13,945) $7,007,012
$6,754,781
 $141,953
 $(4,572) $6,892,162
               
 December 31, 2018December 31, 2018
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair ValueAmortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $123,436
 $—
 $(1,359) $122,077
$123,436
 $—
 $(1,359) $122,077
U.S. Government agency securities 38,021
 361
 —
 38,382
38,021
 361
 —
 38,382
Mortgage-backed securities issued by U.S. Government agencies 100,060
 172
 (3,027) 97,205
100,060
 172
 (3,027) 97,205
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,460,498
 1,981
 (63,829) 2,398,650
2,460,498
 1,981
 (63,829) 2,398,650
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,215,406
 2,997
 (29,885) 1,188,518
1,215,406
 2,997
 (29,885) 1,188,518
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises 131,492
 613
 (2,240) 129,865
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises131,492
 613
 (2,240) 129,865
Corporate debt securities 17,000
 150
 (215) 16,935
17,000
 150
 (215) 16,935
Total investment securities available for sale $4,085,913
 $6,274
 $(100,555) $3,991,632
$4,085,913
 $6,274
 $(100,555) $3,991,632
               

At JuneSeptember 30, 2019 and December 31, 2018, investment securities with a carrying value of $1.591.46 billion and $1.56 billion, respectively, were pledged to secure certain deposits and securities sold under repurchase agreements as required by law and contractual agreements.
Synovus has evaluated investment securities that are in an unrealized loss position as of JuneSeptember 30, 2019 and December 31, 2018 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.
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 credit component of an OTTI would be recognized in earnings and the non-credit component would be recognized in 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 JuneSeptember 30, 2019, Synovus had 2127 investment securities in a loss position for less than twelve months and 698 investment securities in a loss position for twelve months or longer. At December 31, 2018, Synovus had 9 investment securities in a loss position for less than twelve months and 123 investment securities in a loss position for twelve months or longer.
Asset-backed securities and corporate bonds and other debt securities acquired as part of the FCB acquisition were generally underwritten in accordance with Synovus' credit extension standards, without relying on a bond issuer's guarantee in making the investment decision. These investments are investment grade and will continue to be monitored as part of Synovus' ongoing impairment analysis, but are expected to perform in accordance with their terms.
Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at JuneSeptember 30, 2019 and December 31, 2018 are presented below.
June 30, 2019September 30, 2019
Less than 12 Months 12 Months or Longer TotalLess than 12 Months 12 Months or Longer Total
(in thousands)Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized LossesFair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
U.S. Government agency securities$1,046
 $(8) $—
 $—
 $1,046
 $(8)
Mortgage-backed securities issued by U.S. Government agencies$626
 $(4) $61,656
 $(763) $62,282
 $(767)3,381
 (4) 11,333
 (186) 14,714
 (190)
Mortgage-backed securities issued by U.S. Government sponsored enterprises10,523
 (15) 1,213,574
 (9,393) 1,224,097
 (9,408)869,064
 (2,271) 188,440
 (1,937) 1,057,504
 (4,208)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises44,539
 (21) 345,169
 (3,072) 389,708
 (3,093)527
 (1) —
 —
 527
 (1)
State and municipal securities1,599
 (7) —
 —
 1,599
 (7)
Asset-backed securities124,312
 (640) —
 —
 124,312
 (640)64,235
 (156) —
 —
 64,235
 (156)
Corporate debt securities9,478
 (30) —
 —
 9,478
 (30)1,991
 (9) —
 —
 1,991
 (9)
Total$191,077
 $(717) $1,620,399
 $(13,228) $1,811,476
 $(13,945)$940,244
 $(2,449) $199,773
 $(2,123) $1,140,017
 $(4,572)
                      
December 31, 2018December 31, 2018
Less than 12 Months 12 Months or Longer TotalLess than 12 Months 12 Months or Longer Total
(in thousands)Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized LossesFair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
U.S. Treasury securities$39,031
 $(118) $63,570
 $(1,241) $102,601
 $(1,359)$39,031
 $(118) $63,570
 $(1,241) $102,601
 $(1,359)
Mortgage-backed securities issued by U.S. Government agencies2,059
 (2) 79,736
 (3,025) 81,795
 (3,027)2,059
 (2) 79,736
 (3,025) 81,795
 (3,027)
Mortgage-backed securities issued by U.S. Government sponsored enterprises130,432
 (700) 2,105,358
 (63,129) 2,235,790
 (63,829)130,432
 (700) 2,105,358
 (63,129) 2,235,790
 (63,829)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 964,732
 (29,885) 964,732
 (29,885)—
 —
 964,732
 (29,885) 964,732
 (29,885)
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises58,998
 (1,298) 44,220
 (942) 103,218
 (2,240)
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises58,998
 (1,298) 44,220
 (942) 103,218
 (2,240)
Corporate debt securities—
 —
 1,785
 (215) 1,785
 (215)—
 —
 1,785
 (215) 1,785
 (215)
Total$230,520
 $(2,118) $3,259,401
 $(98,437) $3,489,921
 $(100,555)$230,520
 $(2,118) $3,259,401
 $(98,437) $3,489,921
 $(100,555)
                      


The amortized cost and fair value by contractual maturity of investment securities available for sale at JuneSeptember 30, 2019 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, 2019Distribution of Maturities at September 30, 2019
(in thousands)Within One
Year		 1 to 5
Years		 5 to 10
Years		 More Than
10 Years		 TotalWithin One
Year		 1 to 5
Years		 5 to 10
Years		 More Than
10 Years		 Total
Amortized Cost                  
U.S. Treasury securities$19,689
 $—
 $—
 $—
 $19,689
$19,782
 $—
 $—
 $—
 $19,782
U.S. Government agency securities791
 2,100
 61,179
 —
 64,070
585
 4,926
 29,986
 —
 35,497
Mortgage-backed securities issued by U.S. Government agencies—
 809
 16,111
 71,757
 88,677
—
 821
 2,037
 66,283
 69,141
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 43,477
 467,320
 4,362,488
 4,873,285
—
 5,807
 132,548
 4,832,065
 4,970,420
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 370
 858,865
 859,235
—
 —
 345
 655,966
 656,311
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 22,699
 236,738
 94,667
 354,104
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—
 22,632
 250,321
 87,112
 360,065
State and municipal securities—
 —
 1,084
 1,023
 2,107
—
 —
 1,066
 1,013
 2,079
Asset-backed securities—
 4,496
 324,224
 172,993
 501,713
—
 —
 377,474
 119,571
 497,045
Corporate debt securities—
 109,216
 33,185
 2,000
 144,401
24,280
 84,864
 33,297
 2,000
 144,441
Total amortized cost$20,480
 $182,797
 $1,140,211
 $5,563,793
 $6,907,281
$44,647
 $119,050
 $827,074
 $5,764,010
 $6,754,781
                  
Fair Value                  
U.S. Treasury securities$19,689
 $—
 $—
 $—
 $19,689
$19,782
 $—
 $—
 $—
 $19,782
U.S. Government agency securities793
 2,107
 62,787
 —
 65,687
592
 4,954
 31,331
 —
 36,877
Mortgage-backed securities issued by U.S. Government agencies—
 810
 16,022
 71,445
 88,277
—
 825
 2,077
 66,779
 69,681
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 43,479
 469,441
 4,435,751
 4,948,671
—
 5,811
 135,778
 4,923,912
 5,065,501
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 377
 862,156
 862,533
—
 —
 353
 665,569
 665,922
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 23,158
 246,337
 98,948
 368,443
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—
 23,152
 264,048
 92,471
 379,671
State and municipal securities—
 —
 1,078
 1,022
 2,100
—
 —
 1,069
 1,020
 2,089
Asset-backed securities—
 4,607
 327,521
 172,989
 505,117
—
 —
 385,587
 120,744
 506,331
Corporate debt securities—
 110,354
 34,124
 2,017
 146,495
24,421
 85,851
 34,045
 1,991
 146,308
Total fair value$20,482
 $184,515
 $1,157,687
 $5,644,328
 $7,007,012
$44,795
 $120,593
 $854,288
 $5,872,486
 $6,892,162
                  

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the three and sixnine months ended JuneSeptember 30, 2019 and 2018 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale.
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2019 2018 2019 20182019 2018 2019 2018
Proceeds from sales of investment securities available for sale$104,434
 $35,066
 $1,292,673
 $35,066
$709,464
 $—
 $2,002,137
 $35,066
Gross realized gains on sales—
 —
 9,129
 —
140
 —
 9,270
 —
Gross realized losses on sales(1,845) (1,296) (10,900) (1,296)(3,871) —
 (14,772) (1,296)
Investment securities losses, net$(1,845) $(1,296) $(1,771) $(1,296)$(3,731) $—
 $(5,502) $(1,296)
              


Note 4 - Loans and Allowance for Loan Losses
The following tables provide a summary of current, accruing past due, and non-accrual loans separately reported by originated (loans originated, renewed, refinanced, modified, or otherwise underwritten by Synovus) and acquired loans from business combinations by portfolio class as of JuneSeptember 30, 2019 and December 31, 2018. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' accounting for purchased loans.
Current, Accruing Past Due, and Non-accrual Originated LoansCurrent, Accruing Past Due, and Non-accrual Originated Loans Current, Accruing Past Due, and Non-accrual Originated Loans 
June 30, 2019 September 30, 2019 
(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$7,712,371
 $19,804
 $462
 $20,266
 $68,573
 $7,801,210
 $8,003,162
 $15,997
 $989
 $16,986
 $64,912
 $8,085,060
 
Owner-occupied5,348,232
 6,331
 284
 6,615
 11,557
 5,366,404
 5,572,063
 6,068
 1,617
 7,685
 9,222
 5,588,970
 
Total commercial and industrial13,060,603
 26,135
 746
 26,881
 80,130
 13,167,614
 13,575,225
 22,065
 2,606
 24,671
 74,134
 13,674,030
 
Investment properties5,924,501
 1,525
 881
 2,406
 799
 5,927,706
 6,055,365
 1,714
 902
 2,616
 378
 6,058,359
 
1-4 family properties639,534
 2,296
 —
 2,296
 1,618
 643,448
 634,144
 2,928
 834
 3,762
 2,218
 640,124
 
Land and development359,921
 1,874
 158
 2,032
 2,735
 364,688
 401,491
 3,311
 —
 3,311
 3,032
 407,834
 
Total commercial real estate6,923,956
 5,695
 1,039
 6,734
 5,152
 6,935,842
 7,091,000
 7,953
 1,736
 9,689
 5,628
 7,106,317
 
Consumer mortgages3,175,355
 4,494
 550
 5,044
 13,628
 3,194,027
 3,382,636
 6,069
 —
 6,069
 10,015
 3,398,720
 
Home equity lines1,569,312
 4,783
 265
 5,048
 13,494
 1,587,854
 1,596,081
 7,354
 38
 7,392
 12,590
 1,616,063
 
Credit cards253,331
 2,503
 2,449
 4,952
 —
 258,283
 262,724
 2,657
 2,493
 5,150
 —
 267,874
 
Other consumer loans2,213,665
 18,272
 802
 19,074
 4,667
 2,237,406
 2,261,276
 18,527
 780
 19,307
 4,736
 2,285,319
 
Total consumer7,211,663
 30,052
 4,066
 34,118
 31,789
 7,277,570
 7,502,717
 34,607
 3,311
 37,918
 27,341
 7,567,976
 
Total loans$27,196,222
 $61,882
 $5,851
 $67,733
 $117,071
 $27,381,026
(1) 
$28,168,942
 $64,625
 $7,653
 $72,278
 $107,103
 $28,348,323
(1) 
                        
            


Current, Accruing Past Due, and Non-accrual Acquired LoansCurrent, Accruing Past Due, and Non-accrual Acquired Loans Current, Accruing Past Due, and Non-accrual Acquired Loans 
June 30, 2019 September 30, 2019 
(in thousands)Current 
Accruing 30-89 Days Past Due(2)
 
Accruing 90 Days or Greater Past Due(2)
 
Total Accruing Past Due(2)
 
Non-accrual(2)
 ASC 310-30 Loans Discount/Premium Total Current 
Accruing 30-89 Days Past Due(2)
 
Accruing 90 Days or Greater Past Due(2)
 
Total Accruing Past Due(2)
 
Non-accrual(2)
 ASC 310-30 Loans Discount/Premium Total 
Commercial, financial and agricultural$754,672
 $317
 $—
 $317
 $—
 $1,177,713
 $(16,166) $1,916,536
 $658,014
 $648
 $—
 $648
 $5,000
 $1,120,805
 $(13,646) $1,770,821
 
Owner-occupied69,569
 —
 —
 —
 —
 1,098,670
 (4,846) 1,163,393
 91,651
 —
 —
 —
 —
 913,716
 (4,946) 1,000,421
 
Total commercial and industrial824,241
 317
 —
 317
 —
 2,276,383
 (21,012) 3,079,929
 749,665
 648
 —
 648
 5,000
 2,034,521
 (18,592) 2,771,242
 
Investment properties991,090
 —
 —
 —
 —
 2,105,867
 (19,563) 3,077,394
 917,663
 —
 —
 —
 —
 1,973,932
 (15,191) 2,876,404
 
1-4 family properties49,695
 —
 —
 —
 174
 55,192
 (1,119) 103,942
 55,674
 —
 —
 —
 —
 43,208
 (242) 98,640
 
Land and development125,101
 —
 —
 —
 —
 109,342
 (3,174) 231,269
 114,642
 —
 —
 —
 —
 92,829
 (2,799) 204,672
 
Total commercial real estate1,165,886
 —
 —
 —
 174
 2,270,401
 (23,856) 3,412,605
 1,087,979
 —
 —
 —
 —
 2,109,969
 (18,232) 3,179,716
 
Consumer mortgages132,011
 —
 —
 —
 —
 2,165,966
 (84,242) 2,213,735
 97,107
 —
 —
 —
 —
 2,045,872
 (70,969) 2,072,010
 
Home equity lines65,112
 155
 —
 155
 55
 5,088
 (7,519) 62,891
 60,565
 201
 —
 201
 —
 2,377
 (4,114) 59,029
 
Other consumer loans308
 —
 —
 —
 —
 12,902
 (1,279) 11,931
 311
 —
 —
 —
 —
 10,790
 (934) 10,167
 
Total consumer197,431
 155
 —
 155
 55
 2,183,956
 (93,040) 2,288,557
 157,983
 201
 —
 201
 —
 2,059,039
 (76,017) 2,141,206
 
Total loans$2,187,558
 $472
 $—
 $472
 $229
 $6,730,740
 $(137,908) $8,781,091
(3) 
$1,995,627
 $849
 $—
 $849
 $5,000
 $6,203,529
 $(112,841) $8,092,164
(3) 
                                




Current, Accruing Past Due, and Non-accrual Loans 
 December 31, 2018 
(in thousands)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$7,372,301
 $7,988
 $114
 $8,102
 $69,295
 $7,449,698
 
Owner-occupied5,317,023
 5,433
 81
 5,514
 8,971
 5,331,508
 
Total commercial and industrial12,689,324
 13,421
 195
 13,616
 78,266
 12,781,206
 
Investment properties5,557,224
 1,312
 34
 1,346
 2,381
 5,560,951
 
1-4 family properties674,648
 2,745
 96
 2,841
 2,381
 679,870
 
Land and development319,978
 739
 —
 739
 2,953
 323,670
 
Total commercial real estate6,551,850
 4,796
 130
 4,926
 7,715
 6,564,491
 
Consumer mortgages2,922,136
 7,150
 —
 7,150
 4,949
 2,934,235
 
Home equity lines1,496,562
 7,092
 28
 7,120
 12,114
 1,515,796
 
Credit cards252,832
 3,066
 2,347
 5,413
 —
 258,245
 
Other consumer loans1,894,352
 17,604
 1,098
 18,702
 3,689
 1,916,743
 
Total consumer6,565,882
 34,912
 3,473
 38,385
 20,752
 6,625,019
 
Total loans$25,807,056
 $53,129
 $3,798
 $56,927
 $106,733
 $25,970,716
(4) 
             
(1) 
Total before net deferred fees and costs of $23.6$22.7 million.
(2) 
For purposes of this table, non-performing and past due loans exclude acquired loans accounted for under ASC 310-30.
(3) 
Represents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs including maturities since acquisition date.Acquisition Date.
(4) 
Total before net deferred fees and costs of $24.1 million.

Loans with carrying values of $12.16$11.77 billion and $8.40 billion were pledged as collateral for borrowings and capacity at JuneSeptember 30, 2019 and December 31, 2018, 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 Retail Credit Classification Policy. Additionally, in accordance with Interagency Supervisory Guidance, the risk grade classifications of consumer loans (consumer mortgages and home equity lines)HELOCs) secured by junior liens on 1-4 family residential properties also consider available information on the payment status of any associated senior liens with other financial institutions.




Originated Loan Portfolio Credit Exposure by Risk GradeOriginated Loan Portfolio Credit Exposure by Risk Grade Originated Loan Portfolio Credit Exposure by Risk Grade 
June 30, 2019 September 30, 2019 
(in thousands)Pass Special Mention 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total Pass Special Mention 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total 
Commercial, financial and agricultural$7,534,124
 $117,878
 $144,660
 $4,548
 $—
 $7,801,210
 $7,816,114
 $104,214
 $156,919
 $7,813
 $—
 $8,085,060
 
Owner-occupied5,268,926
 17,844
 79,561
 73
 —
 5,366,404
 5,493,248
 19,647
 76,002
 73
 —
 5,588,970
 
Total commercial and industrial12,803,050
 135,722
 224,221
 4,621
 —
 13,167,614
 13,309,362
 123,861
 232,921
 7,886
 —
 13,674,030
 
Investment properties5,860,735
 22,206
 44,765
 —
 —
 5,927,706
 6,007,116
 20,549
 30,694
 —
 —
 6,058,359
 
1-4 family properties631,648
 3,610
 8,190
 —
 —
 643,448
 628,631
 3,558
 7,935
 —
 —
 640,124
 
Land and development342,427
 9,880
 12,381
 —
 —
 364,688
 386,163
 9,878
 11,793
 —
 —
 407,834
 
Total commercial real estate6,834,810
 35,696
 65,336
 —
 —
 6,935,842
 7,021,910
 33,985
 50,422
 —
 —
 7,106,317
 
Consumer mortgages3,179,300
 —
 13,708
 943
 76

3,194,027
 3,388,412
 —
 9,859
 373
 76

3,398,720
 
Home equity lines1,572,002
 —
 14,362
 21
 1,469

1,587,854
 1,600,061
 —
 14,683
 21
 1,298

1,616,063
 
Credit cards255,836
 —
 934
 —
 1,513
(4) 
258,283
 265,382
 —
 822
 —
 1,670
(4) 
267,874
 
Other consumer loans2,232,459
 —
 4,947
 —
 —

2,237,406
 2,280,305
 —
 5,014
 —
 —

2,285,319
 
Total consumer7,239,597
 —
 33,951
 964
 3,058
 7,277,570
 7,534,160
 —
 30,378
 394
 3,044
 7,567,976
 
Total loans$26,877,457
 $171,418
 $323,508
 $5,585
 $3,058
 $27,381,026
(5) 
$27,865,432
 $157,846
 $313,721
 $8,280
 $3,044
 $28,348,323
(5) 
                        
                        
Acquired Loan Portfolio Credit Exposure by Risk GradeAcquired Loan Portfolio Credit Exposure by Risk Grade Acquired Loan Portfolio Credit Exposure by Risk Grade 
June 30, 2019 September 30, 2019 
(in thousands)Pass Special Mention 
Substandard(1)
 Doubtful Loss Total Pass Special Mention 
Substandard(1)
 Doubtful Loss Total 
Commercial, financial and agricultural$1,881,798
 $19,981
 $14,757
 $—
 $—
 $1,916,536
 $1,701,326
 $48,615
 $20,880
 $—
 $—
 $1,770,821
 
Owner-occupied1,153,900
 5,686
 3,807
 —
 —
 1,163,393
 971,075
 24,039
 5,307
 —
 —
 1,000,421
 
Total commercial and industrial3,035,698
 25,667
 18,564
 —
 —
 3,079,929
 2,672,401
 72,654
 26,187
 —
 —
 2,771,242
 
Investment properties3,035,213
 6,439
 35,742
 —
 —
 3,077,394
 2,842,820
 27,488
 6,096
 —
 —
 2,876,404
 
1-4 family properties101,480
 —
 2,462
 —
 —
 103,942
 98,316
 —
 324
 —
 —
 98,640
 
Land and development231,141
 128
 —
 —
 —
 231,269
 197,957
 6,588
 127
 —
 —
 204,672
 
Total commercial real estate3,367,834
 6,567
 38,204
 —
 —
 3,412,605
 3,139,093
 34,076
 6,547
 —
 —
 3,179,716
 
Consumer mortgages2,213,735
 —
 —
 —
 —
 2,213,735
 2,064,108
 —
 7,902
 —
 —
 2,072,010
 
Home equity lines62,746
 —
 145
 —
 —
 62,891
 58,983
 —
 46
 —
 —
 59,029
 
Other consumer loans11,931
 —
 —
 —
 —
 11,931
 10,167
 —
 —
 —
 —
 10,167
 
Total consumer2,288,412
 —
 145
 —
 —
 2,288,557
 2,133,258
 —
 7,948
 —
 —
 2,141,206
 
Total loans$8,691,944
 $32,234
 $56,913
 $—
 $—
 $8,781,091
(6) 
$7,944,752
 $106,730
 $40,682
 $—
 $—
 $8,092,164
(6) 
                        
                        

Loan Portfolio Credit Exposure by Risk Grade 
 December 31, 2018 
(in thousands)Pass Special Mention 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total 
Commercial, financial and agricultural$7,190,517
 $118,188
 $140,218
 $775
 $—
 $7,449,698
 
Owner-occupied5,212,473
 55,038
 63,572
 425
 —
 5,331,508
 
Total commercial and industrial12,402,990
 173,226
 203,790
 1,200
 —
 12,781,206
 
Investment properties5,497,344
 40,516
 23,091
 —
 —
 5,560,951
 
1-4 family properties663,692
 6,424
 9,754
 —
 —
 679,870
 
Land and development297,855
 12,786
 13,029
 —
 —
 323,670
 
Total commercial real estate6,458,891
 59,726
 45,874
 —
 —

6,564,491
 
Consumer mortgages2,926,712
 —
 7,425
 98
 —

2,934,235
 
Home equity lines1,501,316
 —
 13,130
 174
 1,176

1,515,796
 
Credit cards255,904
 —
 858
 —
 1,483
(4) 
258,245
 
Other consumer loans1,912,902
 —
 3,841
 —
 —

1,916,743
 
Total consumer6,596,834
 —
 25,254
 272
 2,659
 6,625,019
 
Total loans$25,458,715
 $232,952
 $274,918
 $1,472
 $2,659
 $25,970,716
(7) 
             
(1) 
Includes $265.0$249.8 million and $172.3 million of Substandard accruing loans at JuneSeptember 30, 2019 and December 31, 2018, respectively.
(2) 
The loans within this risk grade are on non-accrual status and generally have an allowance for loan lossesALL 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 lossesALL 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 lossesALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.
(5) 
Total before net deferred fees and costs of $23.6$22.7 million.
(6)  
Represents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs including maturities since acquisition date.Acquisition Date.
(7) 
Total before net deferred fees and costs of $24.1 million.

Acquired loans
As discussed in "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions", on January 1, 2019, Synovus acquired loans from FCB with fair values of $9.29 billion net of total discount of $168.0$164.2 million.
At the Acquisition Date, the contractual required payments receivable on the purchased loans accounted for under ASC 310-20 totaled $2.45 billion, with a corresponding fair value of $2.15 billion. The estimated cash flows not expected to be collected at the Acquisition Date were $39.5 million.
Information about the acquired FCB loan portfolio accounted for under ASC 310-30 as of the Acquisition Date is in the following table.
(in thousands)ASC 310-30 Loans
Contractually required principal and interest at acquisition$8,377,942
Non-accretable difference (expected losses and foregone interest)(163,147)
    Cash flows expected to be collected at acquisition8,214,795
Accretable yield(1,066,689)
    Basis in ASC 310-30 loans at acquisition$7,148,106
  








The following table is a summary of changes in the accretable differenceyield for all loans accounted for under ASC 310-30 for the sixnine months ended JuneSeptember 30, 2019.
(in thousands)Six Months Ended June 30, 2019Nine Months Ended September 30, 2019
Beginning balance$—
$—
Additions1,066,689
1,066,689
Transfers from non-accretable difference to accretable yield(1)
13,516
13,516
Accretion(182,944)(273,231)
Changes in expected cash flows not affecting non-accretable differences(2)
24,929
24,929
Ending balance$922,190
$831,903
  
(1) Represents improvement in the credit component of expected cash flows.
(2) Includes changes in cash flows expected to be collected due to the impact of changes in actual or expected timing of liquidation events, modifications, changes in interest rates and changes in prepayment assumptions.

The following tables detail the changes in the allowance for loan lossesALL by loan segment for the three and sixnine months ended JuneSeptember 30, 2019 and 2018.
Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Three Months Ended June 30, 2019
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$135,639
 $69,009
 $52,388
 $257,036
Charge-offs(11,095) (861) (4,909) (16,865)
Recoveries1,821
 1,954
 1,311
 5,086
Provision for (reversal of) loan losses11,639
 (6,639) 7,119
 12,119
Ending balance(1)
$138,004
 $63,463
 $55,909
 $257,376
Ending balance: individually evaluated for impairment$16,126
 $1,229
 $811
 $18,166
Ending balance: collectively evaluated for impairment$121,878
 $62,234
 $55,098
 $239,210
Loans:       
Ending balance: total loans(2)
$16,247,543
 $10,348,447
 $9,566,127
 $36,162,117
Ending balance: individually evaluated for impairment    $135,548
 $28,231
 $31,713
 $195,492
Ending balance: collectively evaluated for impairment(3)
$13,857,183
 $8,070,437
 $7,433,959
 $29,361,579
Ending balance: acquired loans accounted for under ASC 310-30(4)    
$2,254,812
 $2,249,779
 $2,100,455
 $6,605,046
        
 As Of and For The Three Months Ended June 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$134,745
 $73,991
 $49,028
 $257,764
Charge-offs(15,770) (523) (5,211) (21,504)
Recoveries1,635
 480
 1,560
 3,675
Provision for loan losses9,725
 1,257
 808
 11,790
Ending balance$130,335
 $75,205
 $46,185
 $251,725
Ending balance: individually evaluated for impairment$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$120,861
 $70,518
 $45,414
 $236,793
Loans:       
Ending balance: total loans(5)(6)
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment$107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
        
(1) As of and for the three months ended June 30, 2019, there was no allowance for loan losses for acquired loans accounted for under ASC 310-30.
(2)
Total before net deferred fees and costs of $23.6 million.
(3)
These loans are presented net of the remaining fair value discount of $12.2 million at June 30, 2019.
(4)
These loans are presented net of the remaining fair value discount of $125.7 million at June 30, 2019.
(5)
Total before net deferred fees and costs of $22.7 million.
(6)
As of and for the three months ended June 30, 2018, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.


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, 2019As Of and For the Three Months Ended September 30, 2019
(in thousands)Commercial & Industrial Commercial Real Estate Consumer TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$133,123
 $68,796
 $48,636
 $250,555
$138,004
 $63,463
 $55,909
 $257,376
Charge-offs(24,133) (2,093) (11,337) (37,563)(15,425) (3,275) (6,026) (24,726)
Recoveries3,810
 2,298
 2,588
 8,696
2,276
 1,490
 1,035
 4,801
Provision for (reversal of) loan losses25,204
 (5,538) 16,022
 35,688
17,156
 280
 10,126
 27,562
Ending balance(1)
$138,004
 $63,463
 $55,909
 $257,376
$142,011
 $61,958
 $61,044
 $265,013
Ending balance: individually evaluated for impairment$16,126
 $1,229
 $811
 $18,166
$14,139
 $1,184
 $881
 $16,204
Ending balance: collectively evaluated for impairment$121,878
 $62,234
 $55,098
 $239,210
$127,872
 $60,774
 $60,163
 $248,809
Loans:              
Ending balance: total loans(2)
$16,247,543
 $10,348,447
 $9,566,127
 $36,162,117
$16,445,272
 $10,286,033
 $9,709,182
 $36,440,487
Ending balance: individually evaluated for impairment $135,548
 $28,231
 $31,713
 $195,492
$139,160
 $28,797
 $31,459
 $199,416
Ending balance: collectively evaluated for impairment(3)
$13,857,183
 $8,070,437
 $7,433,959
 $29,361,579
$14,292,323
 $8,163,218
 $7,687,835
 $30,143,376
Ending balance: acquired loans accounted for under ASC 310-30(4)
$2,254,812
 $2,249,779
 $2,100,455
 $6,605,046
$2,013,789
 $2,094,018
 $1,989,888
 $6,097,695
              
As Of and For The Six Months Ended June 30, 2018As Of and For the Three Months Ended September 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer TotalCommercial & 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)
Recoveries3,995
 6,964
 3,058
 14,017
1,091
 591
 1,657
 3,339
Provision for (reversal of) loan losses23,323
 (4,311) 5,554
 24,566
Provision for loan losses11,417
 (1,447) 5,012
 14,982
Ending balance$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(5)(6)
$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
              
(1) 
As of and for the sixthree months ended JuneSeptember 30, 2019, there was no allowance for loan losses0 ALL for acquired loans accounted for under ASC 310-30.
(2) 
Total before net deferred fees and costs of $23.6$22.7 million.
(3) 
These loans are presented net of the remaining fair value discount of $12.2$7.0 million at JuneSeptember 30, 2019.
(4) 
These loans are presented net of the remaining fair value discount of $125.7$105.8 million at JuneSeptember 30, 2019.
(5) 
Total before net deferred fees and costs of $22.7$23.8 million.
(6) 
As of and for the sixthree months ended JuneSeptember 30, 2018, , there were no purchased credit-impaired0 PCI loans and no allowance0 ALL for loan losses for purchased credit-impairedPCI loans.


Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For the Nine Months Ended September 30, 2019
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$133,123
 $68,796
 $48,636
 $250,555
Charge-offs(39,558) (5,369) (17,363) (62,290)
Recoveries6,087
 3,788
 3,623
 13,498
Provision for (reversal of) loan losses42,359
 (5,257) 26,148
 63,250
Ending balance(1)
$142,011
 $61,958
 $61,044
 $265,013
Ending balance: individually evaluated for impairment$14,139
 $1,184
 $881
 $16,204
Ending balance: collectively evaluated for impairment$127,872
 $60,774
 $60,163
 $248,809
Loans:       
Ending balance: total loans(2)
$16,445,272
 $10,286,033
 $9,709,182
 $36,440,487
Ending balance: individually evaluated for impairment    $139,160
 $28,797
 $31,459
 $199,416
Ending balance: collectively evaluated for impairment(3)
$14,292,323
 $8,163,218
 $7,687,835
 $30,143,376
Ending balance: acquired loans accounted for under ASC 310-30(4)    
$2,013,789
 $2,094,018
 $1,989,888
 $6,097,695
        
 As Of and For the Nine Months Ended September 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$126,803
 $74,998
 $47,467
 $249,268
Charge-offs(37,312) (3,523) (13,888) (54,723)
Recoveries5,086
 7,555
 4,716
 17,357
Provision for (reversal of) loan losses34,740
 (5,758) 10,566
 39,548
Ending balance$129,317
 $73,272
 $48,861
 $251,450
Ending balance: individually evaluated for impairment$9,108
 $3,317
 $970
 $13,395
Ending balance: collectively evaluated for impairment$120,209
 $69,955
 $47,891
 $238,055
Loans:       
Ending balance: total loans(5)(6)
$12,503,294
 $6,712,406
 $6,385,197
 $25,600,897
Ending balance: individually evaluated for impairment$102,671
 $37,988
 $28,963
 $169,622
Ending balance: collectively evaluated for impairment$12,400,623
 $6,674,418
 $6,356,234
 $25,431,275
        
(1)
As of and for the nine months ended September 30, 2019, there was 0 ALL for acquired loans accounted for under ASC 310-30.
(2)
Total before net deferred fees and costs of $22.7 million.
(3)
These loans are presented net of the remaining fair value discount of $7.0 million at September 30, 2019.
(4)
These loans are presented net of the remaining fair value discount of $105.8 million at September 30, 2019.
(5)
Total before net deferred fees and costs of $23.8 million.
(6)
As of and for the nine months ended September 30, 2018, there were 0 PCI loans and 0 ALL for PCI loans.

Below is a detailed summary of impaired loans (including TDRs) by class as of JuneSeptember 30, 2019 and December 31, 2018 and for the three and sixnine months ended JuneSeptember 30, 2019 and 2018.At JuneSeptember 30, 2019 and December 31, 2018, impaired loans of $69.1$69.4 million and $51.3 million, respectively, were on non-accrual status.

Impaired Loans (including accruing TDRs)
June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
 Recorded Investment   Recorded Investment  Recorded Investment   Recorded Investment 
(in thousands)Unpaid Principal BalanceWithout an ALLWith an ALLRelated Allowance Unpaid Principal BalanceWithout an ALLWith an ALLRelated AllowanceUnpaid Principal BalanceWithout an ALLWith an ALLRelated Allowance Unpaid Principal BalanceWithout an ALLWith an ALLRelated Allowance
Commercial, financial and agricultural$94,581
$24,420
$59,760
$13,248
 $65,150
$22,298
$34,222
$7,133
$104,229
$33,534
$55,413
$11,267
 $65,150
$22,298
$34,222
$7,133
Owner-occupied53,576
116
51,252
2,878
 49,588
—
48,902
3,074
50,493
—
50,213
2,872
 49,588
—
48,902
3,074
Total commercial and industrial148,157
24,536
111,012
16,126
 114,738
22,298
83,124
10,207
154,722
33,534
105,626
14,139
 114,738
22,298
83,124
10,207
Investment properties12,493
—
12,494
585
 13,916
—
13,916
1,523
12,307
—
12,307
555
 13,916
—
13,916
1,523
1-4 family properties5,369
—
5,369
181
 5,586
—
5,586
131
5,064
—
5,005
117
 5,586
—
5,586
131
Land and development11,636
1,055
9,313
463
 16,283
265
13,431
944
12,752
1,055
10,430
512
 16,283
265
13,431
944
Total commercial real estate29,498
1,055
27,176
1,229
 35,785
265
32,933
2,598
30,123
1,055
27,742
1,184
 35,785
265
32,933
2,598
Consumer mortgages19,988
883
18,814
268
 19,506
—
19,506
343
18,881
874
17,707
372
 19,506
—
19,506
343
Home equity lines5,666
—
5,604
335
 3,264
—
3,235
224
6,360
—
6,282
278
 3,264
—
3,235
224
Other consumer loans6,412
—
6,412
208
 5,565
—
5,565
177
6,596
—
6,596
231
 5,565
—
5,565
177
Total consumer32,066
883
30,830
811
 28,335
—
28,306
744
31,837
874
30,585
881
 28,335
—
28,306
744
Total loans$209,721
$26,474
$169,018
$18,166
 $178,858
$22,563
$144,363
$13,549
$216,682
$35,463
$163,953
$16,204
 $178,858
$22,563
$144,363
$13,549
      

Three Months Ended June 30, 2019 Three Months Ended June 30, 2018Three Months Ended September 30, 2019 Three Months Ended September 30, 2018
(in thousands)Average Recorded Investment
Interest Income Recognized(1)
 Average Recorded Investment
Interest Income Recognized(1)
Average Recorded Investment 
Interest Income Recognized(1)
 Average Recorded Investment 
Interest Income Recognized(1)
Commercial, financial and agricultural$86,393
$384
 $71,505
$452
$85,487
 $620
 $61,254
 $379
Owner-occupied51,549
614
 38,432
444
50,929
 504
 44,366
 574
Total commercial and industrial137,942
998
 109,937
896
136,416
 1,124
 105,620
 953
Investment properties12,929
157
 24,439
220
12,518
 156
 14,103
 179
1-4 family properties5,096
134
 11,217
226
5,277
 125
 9,697
 176
Land and development11,061
34
 18,428
74
11,375
 32
 16,822
 62
Total commercial real estate29,086
325
 54,084
520
29,170
 313
 40,622
 417
Consumer mortgages19,565
217
 3,986
200
19,278
 206
 19,966
 226
Home equity lines4,849
37
 21,239
56
5,705
 47
 3,433
 34
Other consumer loans5,940
81
 4,985
71
6,221
 99
 5,284
 69
Total consumer30,354
335
 30,210
327
31,204
 352
 28,683
 329
Total loans$197,382
$1,658
 $194,231
$1,743
$196,790
 $1,789
 $174,925
 $1,699
          
(1) 
Of the interest income recognized during the three months ended JuneSeptember 30, 2019 and 2018, cash-basis interest income was $290$310 thousand and $394$391 thousand, respectively.


Six Months Ended June 30, 2019 Six Months Ended June 30, 2018Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018
(in thousands)Average Recorded Investment
Interest Income Recognized(1)
 Average Recorded Investment
Interest Income Recognized(1)
Average Recorded Investment 
Interest Income Recognized(1)
 Average Recorded Investment 
Interest Income Recognized(1)
Commercial, financial and agricultural$81,373
$938
 $73,693
$851
$82,745
 $1,558
 $69,546
 $1,230
Owner-occupied50,794
1,140
 38,073
814
50,839
 1,644
 40,171
 1,388
Total commercial and industrial132,167
2,078
 111,766
1,665
133,584
 3,202
 109,717
 2,618
Investment properties12,984
298
 23,604
418
12,829
 453
 20,437
 597
1-4 family properties5,302
265
 11,466
442
5,294
 391
 10,876
 619
Land and development11,062
69
 18,299
150
11,166
 101
 17,807
 212
Total commercial real estate29,348
632
 53,369
1,010
29,289
 945
 49,120
 1,428
Consumer mortgages19,801
429
 5,245
395
19,627
 635
 20,397
 621
Home equity lines4,076
73
 20,613
102
4,619
 119
 4,642
 136
Other consumer loans5,701
159
 5,188
143
5,874
 259
 5,220
 212
Total consumer29,578
661
 31,046
640
30,120
 1,013
 30,259
 969
Total loans$191,093
$3,371
 $196,181
$3,315
$192,993
 $5,160
 $189,096
 $5,015
          
(1) 
Of the interest income recognized during the sixnine months ended JuneSeptember 30, 2019 and 2018, cash-basis interest income was $690 thousand$1.0 million and $535$926 thousand, respectively.
Information about Synovus' TDRs is presented in the following tables. Modifications of loans that are accounted for within a pool under ASC Topic 310-30 are excluded as TDRs. Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those loans would otherwise be considered a TDR. As a result, all such acquired loans that would otherwise meet the criteria for classification as a TDR are excluded from the tables below. The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the three and sixnine months ended JuneSeptember 30, 2019 and 2018 that were reported as accruing or non-accruing TDRs.

TDRs by Concession Type    
Three Months Ended June 30, 2019 Three Months Ended September 30, 2019 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural21
 $1,343
 $1,589
 $2,932
 27
 $2,577
 $1,917
 $4,494
 
Owner-occupied4
 1,082
 —
 1,082
 7
 2,822
 861
 3,683
 
Total commercial and industrial25
 2,425
 1,589
 4,014
 34
 5,399
 2,778
 8,177
 
Investment properties1
 180
 —
 180
 4
 385
 —
 385
 
1-4 family properties4
 514
 —
 514
 4
 766
 —
 766
 
Land and development2
 169
 —
 169
 1
 473
 —
 473
 
Total commercial real estate7
 863
 —
 863
 9
 1,624
 —
 1,624
 
Consumer mortgages1
 109
 —
 109
 10
 1,008
 118
 1,126
 
Home equity lines24
 2,321
 —
 2,321
 25
 364
 1,635
 1,999
 
Other consumer loans34
 586
 1,332
 1,918
 27
 473
 1,222
 1,695
 
Total consumer59
 3,016
 1,332
 4,348
 62
 1,845
 2,975
 4,820
 
Total TDRs91
 $6,304
 $2,921
 $9,225
(2) 
105
 $8,868
 $5,753
 $14,621
(2) 
    
Three Months Ended June 30, 2018 Three Months Ended September 30, 2018 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural5
 $—
 $576
 $576
 7
 $—
 $565
 $565
 
Owner-occupied4
 2,094
 592
 2,686
 3
 727
 4,839
 5,566
 
Total commercial and industrial9
 2,094
 1,168
 3,262
 10
 727
 5,404
 6,131
 
Investment properties2
 6,011
 256
 6,267
 1
 42
 —
 42
 
1-4 family properties1
 —
 492
 492
 5
 445
 766
 1,211
 
Land and development3
 —
 1,786
 1,786
 1
 —
 71
 71
 
Total commercial real estate6
 6,011
 2,534
 8,545
 7
 487
 837
 1,324
 
Consumer mortgages7
 2,963
 87
 3,050
 2
 670
 —
 670
 
Home equity lines3
 172
 148
 320
 1
 —
 191
 191
 
Other consumer loans17
 388
 313
 701
 44
 695
 2,784
 3,479
 
Total consumer27
 3,523
 548
 4,071
 47
 1,365
 2,975
 4,340
 
Total TDRs42
 $11,628
 $4,250
 $15,878
(3) 
64
 $2,579
 $9,216
 $11,795
(3) 
    
(1) Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the three months ended June 30, 2019 and 2018.
(1)
Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the three months ended September 30, 2019 and 2018.
(2)    NoNaN net charge-offs were recorded during the three months ended JuneSeptember 30, 2019 upon restructuring of these loans.
(3)    No netNet charge-offs of $88 thousand were recorded during the three months ended JuneSeptember 30, 2018 upon restructuring of these loans.


TDRs by Concession TypeSix Months Ended June 30, 2019 Nine Months Ended September 30, 2019 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural34
 $3,126
 $2,488
 $5,614
 61
 $5,703
 $4,404
 $10,107
 
Owner-occupied6
 2,031
 —
 2,031
 13
 4,854
 861
 5,715
 
Total commercial and industrial40
 5,157
 2,488
 7,645
 74
 10,557
 5,265
 15,822
 
Investment properties2
 663
 —
 663
 6
 1,048
 —
 1,048
 
1-4 family properties10
 1,307
 —
 1,307
 14
 2,072
 —
 2,072
 
Land and development2
 169
 —
 169
 3
 641
 —
 641
 
Total commercial real estate14
 2,139
 —
 2,139
 23
 3,761
 —
 3,761
 
Consumer mortgages5
 237
 1,214
 1,451
 15
 1,245
 1,332
 2,577
 
Home equity lines25
 2,321
 105
 2,426
 50
 2,686
 1,740
 4,426
 
Other consumer loans52
 694
 2,377
 3,071
 79
 1,167
 3,599
 4,766
 
Total consumer82
 3,252
 3,696
 6,948
 144
 5,098
 6,671
 11,769
 
Total TDRs136
 $10,548
 $6,184
 $16,732
(2 
) 
241
 $19,416
 $11,936
 $31,352
(2 
) 
    
Six Months Ended June 30, 2018 Nine Months Ended September 30, 2018 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural14
 $—
 $1,565
 $1,565
 21
 $—
 $2,130
 $2,130
 
Owner-occupied6
 4,799
 684
 5,483
 9
 5,526
 5,523
 11,049
 
Total commercial and industrial20
 4,799
 2,249
 7,048
 30
 5,526
 7,653
 13,179
 
Investment properties3
 6,011
 2,215
 8,226
 4
 6,053
 2,215
 8,268
 
1-4 family properties7
 965
 492
 1,457
 12
 1,408
 1,259
 2,667
 
Land and development3
 —
 1,786
 1,786
 4
 —
 1,856
 1,856
 
Total commercial real estate13
 6,976
 4,493
 11,469
 20
 7,461
 5,330
 12,791
 
Consumer mortgages14
 4,695
 87
 4,782
 16
 5,365
 87
 5,452
 
Home equity lines3
 172
 148
 320
 4
 172
 339
 511
 
Other consumer loans31
 925
 821
 1,746
 75
 1,621
 3,606
 5,227
 
Total consumer48
 5,792
 1,056
 6,848
 95
 7,158
 4,032
 11,190
 
Total TDRs81
 $17,567
 $7,798
 $25,365
(3) 
145
 $20,145
 $17,015
 $37,160
(3) 
                

(1) Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the six months ended June 30, 2019 and 2018.
(2) No net charge-offs were recorded during the six months ended June 30, 2019 upon restructuring of these loans.
(3) No net charge-offs were recorded during the six months ended June 30, 2018 upon restructuring of these loans.
(1)
Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the nine months ended September 30, 2019 and 2018.
(2)
NaN net charge-offs were recorded during the nine months ended September 30, 2019 upon restructuring of these loans.
(3)
Net charge-offs of $88 thousand were recorded during the nine months ended September 30, 2018 upon restructuring of these loans.
For both the three and sixnine months ended JuneSeptember 30, 2019 there was one defaultwere 3 defaults with a recorded investment of $5$321 thousand and 4 defaults with a recorded investment of $326 thousand, respectively, on accruing TDRs restructured during the previous twelve months (defaults are defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments) compared to eight. There were 0 defaults for the three months ended September 30, 2018 and 8 defaults with a recorded investment of $10.5 million for both the three and sixnine months ended JuneSeptember 30, 2018.
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 lossesALL resulting from such TDR designation is not significant. At JuneSeptember 30, 2019, the allowance for loan lossesALL allocated to accruing TDRs totaling $126.4$130.0 million was $5.7$5.8 million compared to accruing TDRs of $115.6 million with an allocated allowance for loan lossesALL of $6.1 million at December 31, 2018.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. As of September 30, 2019 As of June 30, 2019 and December 31, 2018, there were no0 commitments to lend a material amount of additional funds to any customer whose loan was classified as a TDR.

Note 5 - Goodwill and Other Intangible Assets
Changes to the carrying amount of goodwill by reporting unit for the sixnine months ended JuneSeptember 30, 2019 are provided in the following table. There were no changes to the carrying amount of goodwill during the year ended December 31, 2018.
(in thousands) Synovus Bank Reporting Unit Trust Services Reporting Unit TotalSynovus Bank Reporting Unit Trust Services Reporting Unit Total
Balance as of December 31, 2018 $32,884
 $24,431
 $57,315
$32,884
 $24,431
 $57,315
Goodwill acquired during the year (preliminary allocation) and adjustments 435,075
 —
 435,075
430,550
 —
 430,550
Balance as of June 30, 2019 $467,959
 $24,431
 $492,390
Balance as of September 30, 2019$463,434
 $24,431
 $487,865
           

Effective January 1, 2019, Synovus acquired FCB. In connection with the acquisition, Synovus recorded $435.1$430.6 million of goodwill based on Acquisition Date preliminary fair value estimates of the assets acquired and liabilities assumed in the business combination, including measurement period adjustments recorded during the three months ended June 30, 2019, the most significant of which consisted of a decrease in core deposit intangible assets of $10.8 million, with offsetting increases in goodwill and net deferred tax assets.adjustments. Additionally, Synovus recorded a $57.4 million core deposit intangible asset on the Acquisition Date, including the aforementioneda measurement period adjustment recorded during the three months ended June 30, 2019.adjustment. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for additional information on the FCB acquisition.
As of June 30, 2019, Synovus completed its annual goodwill impairment evaluation applying ASC 350-20-35-3A, Goodwill Subsequent Measurement - Qualitative Assessment Approach based on the preliminary allocation of goodwill to the reporting units shown above and concluded that goodwill was not impaired. No events or circumstances have occurred since that date to warrant a subsequent interim evaluation.
The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of JuneSeptember 30, 2019 and December 31, 2018, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. Core deposit intangible assets were $52.2$49.6 million at JuneSeptember 30, 2019. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Amortization expense recognized on intangible assets for the three and sixnine months ended JuneSeptember 30, 2019, was $2.4$2.9 million and $5.8$8.7 million, respectively. Amortization expense recognized on intangible assets for the three and sixnine months ended JuneSeptember 30, 2018 was $292 thousand and $583$875 thousand, respectively.
(in thousands) June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
Other intangible assets, gross carrying amount $70,328
 $12,928
$70,328
 $12,928
Other intangible assets, accumulated amortization (8,855) (3,053)(11,756) (3,053)
Other intangible assets, net carrying amount $61,473
 $9,875
$58,572
 $9,875
       

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

Stock issued for acquisition of FCB
On January 1, 2019, as part of the FCB acquisition, Synovus issued 22.0 million shares of common stock and reissued 27.4 million shares of treasury stock and incurred $417 thousand in costs related to the issuance. FCB stockholders received 1.055 shares of Synovus common stock for each outstanding share of FCB common stock. Also, under the terms of the Merger Agreement, outstanding stock options, non-vested restricted share units, and warrants were converted into options, restricted share units, and warrants, respectively, to purchase and receive Synovus common stock. The total value of the acquisition consideration transferred by Synovus was $1.63 billion. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the FCB acquisition.
Repurchases of Common Stock
On June 17, 2019, Synovus announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019. As of JuneSeptember 30, 2019, Synovus had repurchased under this program a total of $345.0$688.5 million, or 9.218.8 million shares of its common stock, at an average price of $37.43$36.55 per share.
Issuance of Series E Preferred Stock
On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. The offering generated net proceeds of $341.4 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 5.875% for each dividend period from the original issue date to, but excluding, July 1, 2024. From and including July 1, 2024, the dividend rate will change and reset every five years on July 1 at a rate equal to the five-year

U.S. Treasury Rate plus 4.127% per annum. The Series E Preferred Stock is redeemable at Synovus' option in whole or in part, from time to time, on July 1, 2024 or any subsequent reset date, or in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in each case at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series E Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series E Preferred Stock does not have any voting rights.
Series D Preferred Stock
Synovus' outstanding $200 million Series D Preferred Stock, $25.00 per share liquidation preference, is reflected net of issuance costs at $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 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.

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

The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component

for the three and sixnine months ended JuneSeptember 30, 2019 and 2018.
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)
Net unrealized losses on cash flow hedges(1)
 
Net unrealized gains (losses) on investment securities available for sale(1)
 Post-retirement unfunded health benefit Total 
Net unrealized gains (losses) on investment securities available for sale(1)
 
Net unrealized gains (losses) on cash flow hedges(1)
 Post-retirement unfunded health benefit Total
Balance, April 1, 2019$(12,137) $(7,071) $866
 $(18,342)
Balance, July 1, 2019 $60,586
 $(12,137) $840
 $49,289
Other comprehensive income (loss) before reclassifications—
 66,290
 —
 66,290
 25,133
 (876) (378) 23,879
Amounts reclassified from AOCI—
 1,367
 (26) 1,341
 2,765
 —
 —
 2,765
Net current period other comprehensive income (loss)—
 67,657
 (26) 67,631
 27,898
 (876) (378) 26,644
Balance, June 30, 2019$(12,137) $60,586
 $840
 $49,289
Balance, September 30, 2019 $88,484
 $(13,013) $462
 $75,933
               
Balance, April 1, 2018$(12,137) $(96,647) $1,007
 $(107,777)
Balance, July 1, 2018 $(114,565) $(12,137) $982
 $(125,720)
Other comprehensive income (loss) before reclassifications—
 (18,878) —
 (18,878) (17,940) —
 (34) (17,974)
Amounts reclassified from AOCI—
 960
 (25) 935
 —
 —
 (26) (26)
Net current period other comprehensive income (loss)—
 (17,918) (25) (17,943) (17,940) —
 (60) (18,000)
Balance, June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
Balance, September 30, 2018 $(132,505) $(12,137) $922
 $(143,720)
               
Balance, January 1, 2019$(12,137) $(83,179) $896
 $(94,420) $(83,179) $(12,137) $896
 $(94,420)
Other comprehensive income (loss) before reclassifications—
 142,453
 —
 142,453
 167,586
 (876) (378) 166,332
Amounts reclassified from AOCI—
 1,312
 (56) 1,256
 4,077
 —
 (56) 4,021
Net current period other comprehensive income (loss)—
 143,765
 (56) 143,709
 171,663
 (876) (434) 170,353
Balance, June 30, 2019$(12,137) $60,586
 $840
 $49,289
Balance, September 30, 2019 $88,484
 $(13,013) $462
 $75,933
               
Balance, December 31, 2017$(12,137) $(43,470) $853
 $(54,754) $(43,470) $(12,137) $853
 $(54,754)
Reclassification from adoption of ASU 2018-02—
 (7,763) 175
 (7,588) (7,763) —
 175
 (7,588)
Cumulative-effect adjustment from adoption of ASU 2016-01—
 117
 —
 117
 117
 —
 —
 117
Other comprehensive income (loss) before reclassifications—
 (64,409) —
 (64,409) (82,349) —
 (34) (82,383)
Amounts reclassified from AOCI—
 960
 (46) 914
 960
 —
 (72) 888
Net current period other comprehensive income (loss)—
 (63,449) (46) (63,495) (81,389) —
 (106) (81,495)
Balance, June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
Balance, September 30, 2018 $(132,505) $(12,137) $922
 $(143,720)
               

(1)In accordance with ASC 740-20-45-11(b), in 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 which treats derivative instruments and available for sale securities as a single portfolio. For all periods presented, the ending balance in net unrealized gains (losses) on cash flow hedges and investment securities available for sale includes unrealized losses of $12.1 million and $13.3 million, respectively, related to 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.


In accordance with ASC 740-20-45-11(b), in 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 which treats derivative instruments and available for sale securities as a single portfolio. For all periods presented, the ending balance in net unrealized gains (losses) on cash flow hedges and investment securities available for sale includes unrealized losses of $12.1 million and $13.3 million, respectively, related to 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.

Note 7 - Fair Value Accounting
See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2018 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 tables present all financial instruments measured at fair value on a recurring basis as of JuneSeptember 30, 2019 and December 31, 2018.
June 30, 2019September 30, 2019
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair ValueLevel 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets              
Trading securities:              
U.S. Government agency securities$—
 $31
 $—
 $31
$—
 $30
 $—
 $30
Mortgage-backed securities issued by U.S. Government agencies—
 3,504
 —
 3,504
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises
—
 999
 —
 999
—
 1,686
 —
 1,686
Other mortgage-backed securities—
 1,464
 —
 1,464


 1,799
 


 1,799
State and municipal securities—
 382
 —
 382
—
 485
 —
 485
Corporate debt securities—
 77
 —
 77
Total trading securities$—
 $6,457
 $—
 $6,457
$—
 $4,000
 $—
 $4,000
Investment securities available for sale:              
U.S. Treasury securities$19,689
 $—
 $—
 $19,689
$19,782
 $—
 $—
 $19,782
U.S. Government agency securities—
 65,687
 —
 65,687
—
 36,877
 —
 36,877
Mortgage-backed securities issued by U.S. Government agencies—
 88,277
 —
 88,277
—
 69,681
 —
 69,681
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 4,948,671
 —
 4,948,671
—
 5,065,501
 —
 5,065,501
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 862,533
 —
 862,533
—
 665,922
 —
 665,922
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 368,443
 —
 368,443
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—
 379,671
 —
 379,671
State and municipal securities—
 2,100
 —
 2,100
—
 2,089
 —
 2,089
Asset-backed securities—
 505,117
 —
 505,117
—
 506,331
 —
 506,331
Corporate debt securities —
 144,478
 2,017
 146,495
—
 144,317
 1,991
 146,308
Total investment securities available for sale$19,689
 $6,985,306
 $2,017
 $7,007,012
$19,782
 $6,870,389
 $1,991
 $6,892,162
Mortgage loans held for sale—
 81,855
 —
 81,855
—
 129,415
 —
 129,415
Private equity investments—
 —
 13,341
 13,341
—
 —
 11,289
 11,289
Mutual funds16,390
 —
 —
 16,390
Mutual funds held in rabbi trusts14,816
 —
 —
 14,816
Mutual funds and mutual funds held in rabbi trusts31,429
 —
 —
 31,429
GGL/SBA loans servicing asset—
 —
 3,326
 3,326
—
 —
 3,350
 3,350
Derivative assets:       
Interest rate contracts$—
 $134,504
 $—
 $134,504
Mortgage derivatives(1)
—
 1,892
 —
 1,892
Total derivative assets$—
 $136,396
 $—
 $136,396
Derivative assets—
 181,805
 —
 181,805
Liabilities              
Earnout liability(2)
—
 —
 14,353
 14,353
Derivative liabilities:       
Interest rate contracts$—
 $32,193
 $—
 $32,193
Mortgage derivatives(1)
—
 1,049
 —
 1,049
Visa derivative—
 —
 1,049
 1,049
Total derivative liabilities$—
 $33,242
 $1,049
 $34,291
Trading account liabilities—
 1,593
 —
 1,593
Earnout liability(1)
—
 —
 24,810
 24,810
Derivative liabilities—
 41,350
 3,335
 44,685
              


December 31, 2018December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair ValueLevel 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets              
Trading securities:              
U.S. Government agency securities$—
 $44
 $—
 $44
$—
 $44
 $—
 $44
State and municipal securities—
 1,064
 —
 1,064
—
 1,064
 —
 1,064
Other investments1,128
 894
 —
 2,022
1,128
 894
 —
 2,022
Total trading securities$1,128
 $2,002
 $—
 $3,130
$1,128
 $2,002
 $—
 $3,130
Investment securities available for sale:              
U.S. Treasury securities$122,077
 $—
 $—
 $122,077
$122,077
 $—
 $—
 $122,077
U.S. Government agency securities—
 38,382
 —
 38,382
—
 38,382
 —
 38,382
Mortgage-backed securities issued by U.S. Government agencies—
 97,205
 —
 97,205
—
 97,205
 —
 97,205
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,398,650
 —
 2,398,650
—
 2,398,650
 —
 2,398,650
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 1,188,518
 —
 1,188,518
—
 1,188,518
 —
 1,188,518
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 129,865
 —
 129,865
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—
 129,865
 —
 129,865
Corporate debt securities —
 15,150
 1,785
 16,935
—
 15,150
 1,785
 16,935
Total investment securities available for sale$122,077
 $3,867,770
 $1,785
 $3,991,632
$122,077
 $3,867,770
 $1,785
 $3,991,632
Mortgage loans held for sale—
 37,129
 —
 37,129
—
 37,129
 —
 37,129
Private equity investments—
 —
 11,028
 11,028
—
 —
 11,028
 11,028
Mutual funds3,168
 —
 —
 3,168
Mutual funds held in rabbi trusts12,844
 —
 —
 12,844
Mutual funds and mutual funds held in rabbi trusts16,012
 —
 —
 16,012
GGL/SBA loans servicing asset—
 —
 3,729
 3,729
—
 —
 3,729
 3,729
Derivative assets:       
Interest rate contracts$—
 $18,388
 $—
 $18,388
Mortgage derivatives(1)
—
 944
 —
 944
Total derivative assets$—
 $19,332
 $—
 $19,332
Derivative assets—
 19,332
 —
 19,332
Liabilities              
Earnout liability(2)
—
 —
 14,353
 14,353
Derivative liabilities:       
Interest rate contracts$—
 $15,716
 $—
 $15,716
Mortgage derivatives(1)
—
 819
 —
 819
Visa derivative—
 —
 1,673
 1,673
Total derivative liabilities$—
 $16,535
 $1,673
 $18,208
Earnout liability(1)
—
 —
 14,353
 14,353
Derivative liabilities—
 16,535
 1,673
 18,208
              

(1)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.
(2) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.

Earnout liability consists of contingent consideration obligation related to the Global One acquisition.
Fair Value Option
Synovus has elected the fair value option for mortgage loans held for sale primarily to ease the operational burden required to maintain hedge accounting for these loans. Synovus is still able to achieve effective economic hedges on mortgage loans held for sale without the time and expense needed to manage a hedge accounting program.
The following table summarizes the difference between the fair value and the unpaid principal balanceUPB of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.
Mortgage Loans Held for Sale  
(in thousands)As of June 30, 2019 As of December 31, 2018As of September 30, 2019 As of December 31, 2018
Fair value$81,855
 $37,129
$129,415
 $37,129
Unpaid principal balance79,873
 35,848
126,541
 35,848
Fair value less aggregate unpaid principal balance$1,982
 $1,281
$2,874
 $1,281
      

Changes in Fair Value Included in Net Income              
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2019 2018 2019 20182019 2018 2019 2018
Mortgage loans held for sale$345
 $40
 $701
 $155
$892
 $(569) $1,593
 $(414)
              


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

During the three and sixnine months ended JuneSeptember 30, 2019 and 2018, Synovus did not have any transfers in or out of Level 3 in the fair value hierarchy. For the three and sixnine months ended JuneSeptember 30, 2019, total net gains/(losses) included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at JuneSeptember 30, 2019 werewas a $1.5$12.2 million gainloss and a $2.3$9.9 million gain,loss, respectively. For the three and sixnine months ended JuneSeptember 30, 2018, total net gains/(losses) included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at JuneSeptember 30, 2018 were a $2.4was an $11.2 million loss and a $5.4$16.6 million loss, respectively.
Three Months Ended June 30, 2019Three Months Ended September 30, 2019
(in thousands)Investment Securities Available for Sale Private Equity Investments 
GGL / SBA
Loans Servicing Asset
 Earnout
Liability		 Visa DerivativeInvestment Securities Available for Sale Private Equity Investments 
GGL / SBA
Loans Servicing Asset
 Earnout
Liability		 Visa Derivative
Beginning balance, April 1, 2019$1,981
 $11,886
 $3,447
 $(14,353) $(1,366)
Beginning balance, July 1, 2019$2,017
 $13,341
 $3,326
 $(14,353) $(1,049)
Total gains (losses) realized/unrealized:                  
Included in earnings—
 1,455
 (305) —
 —
—
 1,194
 (298) (10,457) (2,500)
Unrealized gains (losses) included in OCI36
 —
 —
 —
 —
(26) —
 —
 —
 —
Additions—
 —
 184
 —
 —
—
 —
 322
 —
 —
Settlements—
 —
 —
 —
 317
—
 (3,246) —
 —
 214
Ending balance, June 30, 2019$2,017
 $13,341
 $3,326
 $(14,353) $(1,049)
Total net gains for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at June 30, 2019 $—
 $1,455
 $—
 $—
 $—
Ending balance, September 30, 2019$1,991
 $11,289
 $3,350
 $(24,810) $(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2019 $—
 $777
 $—
 $(10,457) $(2,500)
  
Three Months Ended June 30, 2018Three Months Ended September 30, 2018
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa DerivativeInvestment 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
 $3,971
 $(11,348) $(3,974)
Total (losses) gains realized/unrealized:         
Included in earnings—
 (37) (312) —
 (2,328)
Unrealized gains (losses) included in OCI5
 —
 —
 —
 —
Additions—
 —
 527
 —
 —
Settlements—
 —
 —
 —
 359
Ending balance, June 30, 2018$1,857
 $12,678
 $4,186
 $(11,348) $(5,943)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(37) $—
 $—
 $(2,328)
         
Six Months Ended June 30, 2019
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa Derivative
Beginning balance, January 1, 2019$1,785
 $11,028
 $3,729
 $(14,353) $(1,673)
Beginning balance, July 1, 2018$1,857
 $12,678
 $4,186
 $(11,348) $(5,943)
Total gains (losses) realized/unrealized:                  
Included in earnings—
 2,313
 (793) —
 —
—
 434
 (561) (11,652) —
Unrealized gains (losses) included in OCI232
 —
 —
 —
 —
108
 —
 —
 —
 —
Additions—
 —
 390
 —
 —
—
 —
 136
 —
 —
Settlements—
 —
 —
 —
 624
—
 —
 —
 —
 3,953
Ending balance, June 30, 2019$2,017
 $13,341
 $3,326
 $(14,353) $(1,049)
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, 2019 $—
 $2,313
 $—
 $—
 $—
Ending balance, September 30, 2018$1,965
 $13,112
 $3,761
 $(23,000) $(1,990)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2018$—
 $434
 $—
 $(11,652) $—
                  


Nine Months Ended September 30, 2019
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa Derivative
Beginning balance, January 1, 2019$1,785
 $11,028
 $3,729
 $(14,353) $(1,673)
Total gains (losses) realized/unrealized:         
Included in earnings—
 3,507
 (1,091) (10,457) (2,500)
Unrealized gains (losses) included in OCI206
 —
 —
 —
 —
Additions—
 —
 712
 —
 —
Settlements—
 (3,246) —
 —
 838
Ending balance, September 30, 2019$1,991
 $11,289
 $3,350
 $(24,810) $(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2019 $—
 $3,090
 $—
 $(10,457) $(2,500)
         
Six Months Ended June 30, 2018Nine Months Ended September 30, 2018
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa DerivativeInvestment 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)$1,935
 $15,771
 $4,101
 $(11,348) $(4,330)
Total (losses) gains realized/unrealized:                  
Included in earnings—
 (3,093) (734) —
 (2,328)—
 (2,659) (1,295) (11,652) (2,328)
Unrealized gains (losses) included in OCI(78) —
 —
 —
 —
30
 —
 —
 —
 —
Additions—
 —
 819
 —
 —
—
 —
 955
 —
 —
Sales and settlements—
 —
 —
 —
 715
—
 —
 —
 —
 4,668
Ending balance, June 30, 2018$1,857
 $12,678
 $4,186
 $(11,348) $(5,943)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(3,093) $—
 $—
 $(2,328)
Ending balance, September 30, 2018$1,965
 $13,112
 $3,761
 $(23,000) $(1,990)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2018$—
 $(2,659) $—
 $(11,652) $(2,328)
                  


Assets Measured at Fair Value on a Non-recurring Basis

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


September 30, 2019 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans(1)
$—
 $—
 $10,477
 $10,477
 $—
 $—
 $21,742
 $21,742
Other loans held for sale—
 —
 —
 —
 —
 —
 1,494
 1,494
Other real estate—
 —
 1,523
 1,523
 —
 —
 3,827
 3,827
Other assets held for sale—
 —
 350
 350
 —
 —
 1,104
 1,104
                


June 30, 2019 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans(1)
$—
 $—
 $1,540
 $1,540
 $—
 $—
 $21,742
 $21,742
Other loans held for sale—
 —
 —
 —
 —
 —
 1,494
 1,494
Other real estate—
 —
 2,332
 2,332
 —
 —
 3,827
 3,827
Other assets held for sale—
 —
 350
 350
 —
 —
 1,104
 1,104
                
(1) Collateral-dependent impaired loans that were written down to fair value during the period.
    Other real estate (ORE)
(1)
Collateral-dependent impaired loans that were written down to fair value during the period.
ORE properties are included in other assets on the consolidated balance sheets. The carrying value of ORE at JuneSeptember 30, 2019 and December 31, 2018 was $14.8$13.7 million and $6.2 million, respectively.
The following table presents fair value adjustments recognized in earnings for the three and sixnine months ended JuneSeptember 30, 2019 and 2018 for assets measured at fair value on a non-recurring basis still held at period-end.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Impaired loans(1)
$—
 $6,828
 $2,625
 $7,548
Other real estate612
 —
 624
 —
Other assets held for sale—
 499
 91
 499
        

(1) Collateral-dependent impaired loans that were written down to fair value during the period.
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2019 2018 2019 2018
Impaired loans(1)
$4,170
 $1,223
 $4,718
 $4,594
Other real estate74
 61
 569
 61
Other assets held for sale—
 —
 91
 499
        

(1)
Collateral-dependent impaired loans that were written down to fair value during the period.
Fair Value of Financial Instruments
The following tables present the carrying and fair values of financial instruments at JuneSeptember 30, 2019 and December 31, 2018. The fair values represent management’s estimates based on various methodologies and assumptions. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2018 Form 10-K for a description of how fair value measurements are determined.
 September 30, 2019
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,182,470
 $1,182,470
 $1,182,470
 $—
 $—
Trading securities4,000
 4,000
 —
 4,000
 —
Investment securities available for sale6,892,162
 6,892,162
 19,782
 6,870,389
 1,991
Mortgage loans held for sale129,415
 129,415
 —
 129,415
 —
Private equity investments11,289
 11,289
 —
 —
 11,289
Mutual funds and mutual funds held in rabbi trusts31,429
 31,429
 31,429
 —
 —
Loans, net36,152,813
 36,154,866
 —
 —
 36,154,866
GGL/SBA loans servicing asset3,350
 3,350
 —
 —
 3,350
Derivative assets181,805
 181,805
 —
 181,805
 —
          
Financial liabilities
 
 
 
  
Non-interest-bearing deposits$9,586,148
 $9,586,148
 $—
 $9,586,148
 $—
Non-time interest-bearing deposits18,313,513
 18,313,513
 —
 18,313,513
 —
Time deposits9,533,409
 9,578,012
 —
 9,578,012
 —
     Total deposits$37,433,070
 $37,477,673
 $—
 $37,477,673
 $—
Federal funds purchased and securities sold under repurchase agreements197,419
 197,419
 197,419
 —
 —
Other short-term borrowings2,233,593
 2,233,593
 —
 2,233,593
 —
Long-term debt2,153,600
 2,176,073
 —
 2,176,073
 —
Earnout liability24,810
 24,810
 —
 —
 24,810
Derivative liabilities44,685
 44,685
 —
 41,350
 3,335
          
 June 30, 2019
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,151,321
 $1,151,321
 $1,151,321
 $—
 $—
Trading securities6,457
 6,457
 —
 6,457
 —
Investment securities available for sale7,007,012
 7,007,012
 19,689
 6,985,306
 2,017
Mortgage loans held for sale81,855
 81,855
 —
 81,855
 —
Other loans held for sale4,861
 4,861
 —
 —
 4,861
Private equity investments13,341
 13,341
 —
 —
 13,341
Mutual funds16,390
 16,390
 16,390
 —
 —
Mutual funds held in rabbi trusts14,816
 14,816
 14,816
 —
 —
Loans, net35,881,185
 35,674,964
 —
 —
 35,674,964
GGL/SBA loans servicing asset3,326
 3,326
 —
 —
 3,326
Derivative assets136,396
 136,396
 —
 136,396
 —
          
Financial liabilities
 
 
 
  
Non-interest-bearing deposits$9,205,066
 $9,205,066
 $—
 $9,205,066
 $—
Non-time interest-bearing deposits18,264,053
 18,264,053
 —
 18,264,053
 —
Time deposits10,497,603
 10,542,659
 —
 10,542,659
 —
     Total deposits$37,966,722
 $38,011,778
 $—
 $38,011,778
 $—
Federal funds purchased and securities sold under repurchase agreements273,481
 273,481
 273,481
 —
 —
Other short-term borrowings1,330,000
 1,330,000
 —
 1,330,000
 —
Long-term debt2,306,072
 2,334,573
 —
 2,334,573
 —
Earnout liability14,353
 14,353
 —
 —
 14,353
Derivative liabilities34,291
 34,291
 —
 33,242
 1,049


December 31, 2018December 31, 2018
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets                  
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,143,564
 $1,143,564
 $1,143,564
 $—
 $—
$1,143,564
 $1,143,564
 $1,143,564
 $—
 $—
Trading securities3,130
 3,130
 1,128
 2,002
 —
3,130
 3,130
 1,128
 2,002
 —
Investment securities available for sale3,991,632
 3,991,632
 122,077
 3,867,770
 1,785
3,991,632
 3,991,632
 122,077
 3,867,770
 1,785
Mortgage loans held for sale37,129
 37,129
 —
 37,129
 —
37,129
 37,129
 —
 37,129
 —
Other loans for sale1,506
 1,506
 —
 —
 1,506
1,506
 1,506
 —
 —
 1,506
Private equity investments11,028
 11,028
 —
 —
 11,028
11,028
 11,028
 —
 —
 11,028
Mutual funds3,168
 3,168
 3,168
 —
 —
Mutual funds held in rabbi trusts12,844
 12,844
 12,844
 —
 —
Mutual funds and mutual funds held in rabbi trusts16,012
 16,012
 16,012
 —
 —
Loans, net25,696,018
 25,438,890
 —
 —
 25,438,890
25,696,018
 25,438,890
 —
 —
 25,438,890
GGL/SBA loans servicing asset3,729
 3,729
 —
 —
 3,729
3,729
 3,729
 —
 —
 3,729
Derivative assets19,332
 19,332
 —
 19,332
 —
19,332
 19,332
 —
 19,332
 —
                  
Financial liabilities                  
Non-interest-bearing deposits$7,650,967
 $7,650,967
 $—
 $7,650,967
 $—
$7,650,967
 $7,650,967
 $—
 $7,650,967
 $—
Non-time interest-bearing deposits14,065,959
 14,065,959
 —
 14,065,959
 —
14,065,959
 14,065,959
 —
 14,065,959
 —
Time deposits5,003,396
 4,989,570
 —
 4,989,570
 —
5,003,396
 4,989,570
 —
 4,989,570
 —
Total deposits$26,720,322
 $26,706,496
 $—
 $26,706,496
 $—
$26,720,322
 $26,706,496
 $—
 $26,706,496
 $—
Federal funds purchased and securities sold under repurchase agreements237,692
 237,692
 237,692
 —
 —
237,692
 237,692
 237,692
 —
 —
Other short-term borrowings650,000
 650,000
 —
 650,000
 —
650,000
 650,000
 —
 650,000
 —
Long-term debt1,657,157
 1,649,642
 —
 1,649,642
 —
1,657,157
 1,649,642
 —
 1,649,642
 —
Earnout liability14,353
 14,353
 —
 —
 14,353
14,353
 14,353
 —
 —
 14,353
Derivative liabilities18,208
 18,208
 —
 16,535
 1,673
18,208
 18,208
 —
 16,535
 1,673
                  

Note 8 - Derivative Instruments and Hedging Activities
Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk, exposures related to liquidity and credit risk, and to facilitate customer transactions. The primary types of derivative instruments utilized by Synovus consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan customers, and commitments to sell fixed-rate mortgage loans.loans, and foreign currency exchange forwards. 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. As of June 30, 2019 and December 31, 2018, 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.
Hedging Derivatives
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. Synovus has entered into interest rate swap contracts to manage overall cash flow changes related to interest rate risk exposure on index-based variable rate loans. The contracts effectively modify Synovus' exposure to interest rate risk by utilizing receive fixed/pay index-based variable rate interest rate swaps. At September 30, 2019, Synovus' cash flow hedges are all forward-starting with effective start dates during the second quarter of 2020.
For cash flow hedges, the effective and ineffective portions of the gain or loss related to the derivative instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated. As of September 30, 2019, the maximum length of time over which Synovus is hedging its exposure to the variability in future cash flows is through the second quarter of 2023. Synovus does not expect to reclassify amounts from accumulated other comprehensive income (loss) into interest income on cash flow hedges over the next twelve months.
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.
Counterparty Credit Risk and Collateral
Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating

information, evaluating other market indicators, and periodically reviewing detailed financials. Dealer collateral requirements are determined via risk-based policies and procedures and in accordance with existing agreements. Synovus seeks to minimize dealer credit risk by dealing with highly rated counterparties and by obtaining collateral for exposures above certain predetermined limits. Management closely monitors credit conditions within the customer swap portfolio, which management deems to be of higher risk than dealer counterparties. Collateral is secured at origination and credit-related fair value adjustments are recorded against the asset value of the derivative as deemed necessary based upon an analysis, which includes consideration of the current asset value of the swap, customer 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.

Collateral Requirements
Pursuant to the Dodd-Frank Act, certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of JuneSeptember 30, 2019, collateral totaling $77.4$105.5 million was pledged to the derivative counterparties to comply with collateral requirements. For derivatives cleared through central clearing houses, the variation margin payments made are legally characterized as settlements of the derivatives. As a result, these variation margin payments are netted against the fair value of the respective derivative contracts in the balance sheet and related disclosures. At JuneSeptember 30, 2019 and December 31, 2018, Synovus had a variation margin of $103.0$141.1 million and $3.1 million respectively, each reducing the derivative liability.
The following table reflects the notional amount and fair value of derivative instruments included on the consolidated balance sheets.
June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
  Fair Value   Fair Value  Fair Value   Fair Value
(in thousands)Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
 Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
 Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
Derivatives in cash flow hedging relationships:           
Interest rate contracts(3)
$1,000,000
 $915
 $2,097
 —
 $—
 $—
Total derivatives designated as hedging instruments   $915
 $2,097
   $—
 $—
           
Derivatives not designated
as hedging instruments:		                      
Interest rate contracts(3)
$5,799,682
 $134,504
 $32,193
 $1,840,288
 18,388
 $15,716
$6,402,871
 $178,976
 $38,702
 $1,840,288
 $18,388
 $15,716
Mortgage derivatives - interest rate lock commitments119,590
 1,892
 —
 52,420
 944
 —
125,023
 1,914
 —
 52,420
 944
 —
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans127,519
 —
 1,049
 65,500
 —
 819
161,500
 —
 407
 65,500
 —
 819
Other contracts(4)
139,167
 —
 144
 69,902
 —
 —
Visa derivative—
 —
 1,049
 —
 —
 1,673
—
 —
 3,335
 —
 —
 1,673
Total derivatives not designated as hedging instruments   $136,396
 $34,291
   $19,332
 $18,208
  $180,890
 $42,588
   $19,332
 $18,208
                      

(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.
(2)
Derivative liabilities are recorded in other liabilities on the consolidated balance sheets.
(3)
Includes interest rate contracts for customer swaps and offsetting positions, net of variation margin payments.
(4)
Includes risk participation agreements sold.
Synovus has entered into risk participation agreements with counterparties to transfer or assume credit exposures related to interest rate derivatives. The notional amounts of risk participation agreements sold were $102.2$139.2 million and $69.9 million at JuneSeptember 30, 2019 and December 31, 2018, respectively. The notional amount of risk participation agreements purchased was $3.1 million at September 30, 2019. Assuming all underlying third-party customers referenced in the swap contracts defaulted at JuneSeptember 30, 2019 and December 31, 2018, the exposure from these agreements would not be material based on the fair value of the underlying swaps.
Synovus also provides foreign currency exchange services, primarily forward contracts, with counterparties to allow commercial customers to mitigate exchange rate risk. Synovus covers its risk by entering into an offsetting foreign currency exchange forward contract. The notional amounts of foreign currency exchange forwards were $37.4 million and $28.8 million at

September 30, 2019 and December 31, 2018, respectively. The fair value of foreign currency exchange forwards was negligible at September 30, 2019 and December 31, 2018 due to the very short duration of these contracts.
The pre-tax effect of changes in fair value from derivative instruments not designated as hedging instruments on the consolidated statements of income for the three and sixnine months ended JuneSeptember 30, 2019 and 2018 is presented below.
 Gain (Loss) Recognized in Consolidated Statements of Income Gain (Loss) Recognized in Consolidated Statements of Income
 Three Months Ended June 30, Six Months Ended June 30, Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) Location in Consolidated Statements of Income 2019 2018 2019 2018 Location in Consolidated Statements of Income 2019 2018 2019 2018
Derivatives not designated as hedging instruments:                    
Interest rate contracts(1)
 Capital markets income $221
 $(16) $91
 $(9) Capital markets income $549
 $1
 $640
 $(8)
Other contracts(2)
 Capital markets income (144) —
 (144) —
Mortgage derivatives - interest rate lock commitments Mortgage banking income 255
 (369) 948
 366
 Mortgage banking income 22
 (427) 970
 (61)
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans Mortgage banking income (243) (311) (229) (119) Mortgage banking income 642
 495
 413
 376
Visa derivative Other non-interest expense (2,500) —
 (2,500) (2,328)
Total derivatives not designated as hedging instruments $233
 $(696) $810
 $238
 $(1,431) $69
 $(621) $(2,021)
                
(1)
Gain (loss) represents net fair value adjustments (including credit-related adjustments and interest settlements on variation margin payments) for customer swaps and offsetting positions.
(2)
Includes risk participation agreements sold.

Note 9 - Net Income Per Common Share
The following table displays a reconciliation of the information used in calculating basic and diluted earnings per common share for the three and sixnine months ended JuneSeptember 30, 2019 and 2018.

Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)2019 2018 2019 20182019 2018 2019 2018
Basic Net Income Per Common Share:              
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
$127,435
 $99,330
 $397,505
 $308,559
Weighted average common shares outstanding157,389
 118,397
 159,148
 118,531
152,238
 117,241
 156,819
 118,096
Net income per common share, basic$0.97
 $0.92
 $1.70
 $1.77
$0.84
 $0.85
 $2.53
 $2.61
Diluted Net Income Per Common Share:              
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
$127,435
 $99,330
 $397,505
 $308,559
Weighted average common shares outstanding157,389
 118,397
 159,148
 118,531
152,238
 117,241
 156,819
 118,096
Effect of dilutive outstanding equity-based awards, warrants, and earnout payments1,688
 742
 1,760
 698
1,805
 854
 1,776
 751
Weighted average diluted common shares159,077
 119,139
 160,908
 119,229
154,043
 118,095
 158,595
 118,847
Net income per common share, diluted$0.96
 $0.91
 $1.68
 $1.75
$0.83
 $0.84
 $2.51
 $2.60
              

Basic net income per common share is computed by dividing net income available to common shareholders by the average common shares outstanding for the period. Diluted net income per common share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The dilutive effect of outstanding stock options, restricted share units, and warrants is reflected in diluted net income per common share, unless the impact is anti-dilutive, by application of the treasury stock method.
As of JuneSeptember 30, 2019, there were 40 thousand potentially dilutive shares related to stock options to purchase shares of common stock that were outstanding during 2019, and as of JuneSeptember 30, 2018, there were 2.2 million potentially dilutive shares related to the TARP Warrant to purchase shares of common stock that were outstanding during 2018 but were not included in the computation of diluted net income per common share because the effect would have been anti-dilutive.

Note 10 - Share-based Compensation
As a result of the FCB acquisitionMerger on January 1, 2019, Synovus assumed 3.2 million outstanding FCB stock option awards and 136 thousand outstanding FCB restricted stock unit awards. Pursuant to the Merger Agreement, each stock option and restricted share unit outstanding on the Acquisition Date was assumed and converted into a stock option or restricted stock unit award relating to shares of Synovus common stock, with the same terms and conditions as were applicable under such award prior to the acquisition. The converted options and restricted share units had a fair value of $41.5 million on the Acquisition Date, of which $4.2 million was allocated to compensation expense and the remaining to purchase price. The estimated fair value of the converted restricted share units was based on Synovus' closing stock price on December 31, 2018, and the estimated fair value of the converted stock options was determined using a Hull-White model in a binomial lattice option pricing framework. Additionally, under the terms of the Merger Agreement, certain outstanding FCB non-vested equity awards with a fair value of $7.5 million on the Acquisition Date, accelerated vesting and converted automatically into the right to receive merger consideration at the merger exchange ratio of 1.055, or an equivalent amount in cash, of which $3.9 million was allocated to merger-related compensation expense consisting of $3.5 million settled in equity and $400 thousand settled in cash with the remaining $3.5 million allocated to purchase price.
The following tables summarize the status of Synovus' stock options, restricted share units, market restricted share units, and performance share units as of JuneSeptember 30, 2019, and activity for the sixnine months ended JuneSeptember 30, 2019.
 Stock Options Stock Options
(in thousands, except per share amounts) Quantity Weighted-Average Exercise Price Per Share Quantity Weighted-Average Exercise Price Per Share
Outstanding at January 1, 2019 640
 $16.93
 640
 $16.93
Assumed 3,230
 23.22
 3,230
 23.22
Exercised (461) 19.23
 (585) 20.10
Outstanding at June 30, 2019 3,409
 $22.58
Outstanding at September 30, 2019 3,285
 $22.55
        

 
Restricted Share
 Units
 Market Restricted Share Units 
Performance Share
 Units
 
Restricted Share
 Units
 Market Restricted Share Units 
Performance Share
 Units
(in thousands, except per share amounts) Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 2019 526
 $41.18
 144
 $41.91
 248
 $38.29
 526
 $41.18
 144
 $41.91
 248
 $38.29
Granted 537
 36.26
 151
 36.96
 140
 37.34
 541
 36.26
 151
 36.96
 140
 37.34
Assumed 136
 31.99
 —
 —
 —
 —
 136
 31.99
 —
 —
 —
 —
Quantity change by TSR factor —
 —
 (18) 38.06
 —
 —
 —
 —
 (19) 37.76
 —
 —
Dividend equivalents granted 10
 36.26
 2
 36.96
 10
 37.34
 17
 36.26
 4
 36.96
 13
 37.34
Vested (292) 36.78
 (55) 38.06
 (93) 26.35
 (298) 36.78
 (58) 37.76
 (93) 26.35
Forfeited (82) 36.14
 (19) 40.94
 (31) 40.65
 (100) 36.43
 (19) 40.94
 (31) 40.34
Non-vested at June 30, 2019 835
 $38.49
 205
 $39.68
 274
 $41.56
Non-vested at September 30, 2019 822
 $38.49
 203
 $39.80
 277
 $41.56
                        

Total share-based compensation expense recognized for the three and sixnine months ended JuneSeptember 30, 2019 and 2018 is presented in the following table by its classification within total non-interest expense.
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2019 2018 2019 20182019 2018 2019 2018
Salaries and other personnel expense$5,405
 $3,976
 $11,713
 $7,749
$4,992
 $3,976
 $16,705
 $11,725
Merger-related expense413
 —
 4,219
 —
—
 —
 4,219
 —
Other operating expenses163
 389
 293
 571
179
 208
 472
 779
Total share-based compensation expense included in non-interest expense$5,981
 $4,365
 $16,225
 $8,320
$5,171
 $4,184
 $21,396
 $12,504
              



Note 11 - Leases

Synovus’ leasing activities are primarily comprised of real estate leases used for retail branch locations and office space for core administrative and operating activities of Synovus’ banking and financial services business, and to a significantly lesser extent, certain equipment. The majority of these leases provide for fixed lease payments, including periodic escalators which are fixed at lease inception, however, a number of leases provide for variable lease payments where periodic increases in payment amounts are indexed to a consumer price index. Many leases include one1 or more options to renew which generally range from one to five years. Optional extension periods which are reasonably certain to be exercised in the future were included in the measurement of ROU assets and lease liabilities. Synovus’ leasing arrangements do not contain any material residual value guarantees, material restrictive covenants, or material end of lease purchase options.
The following table presents the lease balances within the consolidated balance sheet as of JuneSeptember 30, 2019. The difference between the asset and liability balance is primarily the result of lease liabilities that existed prior to the January 1, 2019 adoption of the new accounting guidance for leases.
Leases    
(in thousands)Classification June 30, 2019Classification September 30, 2019
Assets    
OperatingOther Assets $373,675
Other Assets $379,456
Finance
Premises and Equipment, net(1)
 3,233
Premises and Equipment, net(1)
 3,011
Total leased assets $376,908
 $382,467
Liabilities    
OperatingOther Liabilities 381,345
Other Liabilities $387,898
FinanceOther Liabilities 3,050
Other Liabilities 2,767
Total lease liabilities $384,395
 $390,665
    
(1) Finance lease assets are recorded net of accumulated amortization of $448 thousand as of June 30, 2019.
(1)
Finance lease assets are recorded net of accumulated amortization of $671 thousand as of September 30, 2019.

For the three and sixnine months ended JuneSeptember 30, 2019, the components of lease expense were as follows:
Lease Cost        
(in thousands)Classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating lease cost, net(1)
Net occupancy and equipment expense $8,137
 $16,309
Net occupancy and equipment expense $8,199
 $24,508
Finance lease cost        
Amortization of leased assetsNet occupancy and equipment expense 224
 448
Net occupancy and equipment expense 223
 671
Interest on lease liabilitiesNet occupancy and equipment expense 19
 39
Net occupancy and equipment expense 18
 57
Sublease income(2)
Net occupancy and equipment expense (157) (323)Net occupancy and equipment expense (157) (479)
Net lease cost $8,223
 $16,473
 $8,283
 $24,757
        
(1)Excludes variable and short-term lease costs, which are not material.
(2) Sublease income excludes rental income from owned properties of $639 thousand and $1.2 million, respectively, for the three and six months ended June 30, 2019, which is also included in net occupancy and equipment expenses.
(1)
Excludes variable and short-term lease costs, which are not material.
(2)
Sublease income excludes rental income from owned properties of $631 thousand and $1.9 million, respectively, for the three and nine months ended September 30, 2019, which is also included in net occupancy and equipment expenses.

The following table presents the weighted average remaining lease term and weighted average discount rates related to Synovus' leases as of JuneSeptember 30, 2019:
Lease Term and Discount Rate    
Weighted-average remaining lease term (years) Weighted-average discount rate (percentage)Weighted-average remaining lease term (years) Weighted-average discount rate (percentage)
Operating leases21.5 3.55%21.2 3.54%
Finance leases4.2 2.44
4.03 2.42
    






Supplemental cash flow information related to the Company's leasing activities for the sixnine months ended JuneSeptember 30, 2019 are as follows:
Other Information  
(in thousands)Six Months Ended June 30, 2019Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities(1)

Operating cash flows from operating leases$(14,893)$(22,318)
Operating cash flows from finance leases(39)(57)
Financing cash flows from finance leases(357)(639)
  

(1) Excludes sublease income which is not material.

The following table presents the maturity of the Company’sSynovus' lease liabilities as of JuneSeptember 30, 2019:
Maturity of Lease Liabilities          
(in thousands)Operating Leases Finance Leases TotalOperating Leases Finance Leases Total
2019$14,732
 $494
 $15,226
$7,541
 $193
 $7,734
202029,437
 871
 30,308
30,164
 871
 31,035
202128,104
 839
 28,943
28,975
 839
 29,814
202227,369
 465
 27,834
28,235
 465
 28,700
202325,711
 180
 25,891
26,426
 180
 26,606
After 2023434,340
 343
 434,683
443,238
 343
 443,581
Total lease payments$559,693
 $3,192
 $562,885
$564,579
 $2,891
 $567,470
Less: Imputed interest178,348
 142
 178,490
176,681
 124
 176,805
Present value of lease liabilities$381,345
 $3,050
 $384,395
$387,898
 $2,767
 $390,665
          


As of JuneSeptember 30, 2019, minimum lease payments related to operating leases that had not yet commenced were $20.8$11.2 million.
Note 12 - Commitments and Contingencies
In the normal course of business, Synovus enters into commitments to extend credit such as loan commitments and letters of credit to meet the financing needs of its customers. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Synovus also has commitments to fund certain low incomelow-income housing investments.
The contractual amount of these financial instruments represents Synovus' maximum credit risk should the counterparty draw upon the commitment, and should the counterparty subsequently fail to perform according to the terms of the contract. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Additionally, certain commitments (primarily consumer) can generally be canceled by providing notice to the borrower.
The allowance for credit lossesACL associated with unfunded commitments and letters of credit is a component of the unfunded commitments reserve recorded within other liabilities on the consolidated balance sheets. Additionally, unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance sheets. These amounts are not material to Synovus' consolidated balance sheets.
Synovus invests in certain low income housing tax creditLIHTC partnerships which are engaged in the development and operation of affordable multi-family housing utilizing the LIHTC pursuant to Section 42 of the Code. Synovus typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships and as such, is not considered the primary beneficiary of the partnership. Synovus typically provides financing during the construction and development of the properties and is at risk for the amount of its equity investment plus the outstanding amount of any construction loans in excess of the fair value of the collateral for the loan but has no obligation to fund the operations or working capital of the

partnerships and is not exposed to losses beyond Synovus’ investment. Synovus receives tax credits related to these investments which are subject to recapture by taxing authorities based on compliance features required to be met at the project level.

(in thousands)June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
Letters of credit*$216,304
 $157,675
$203,224
 $157,675
Commitments to fund commercial and industrial loans6,065,365
 5,527,017
6,702,472
 5,527,017
Commitments to fund commercial real estate, construction, and land development loans3,020,509
 2,034,223
2,734,852
 2,034,223
Commitments under home equity lines of credit1,419,312
 1,258,657
1,464,720
 1,258,657
Unused credit card lines857,536
 775,003
899,379
 775,003
Other loan commitments473,824
 400,983
487,698
 400,983
Total unfunded lending commitments and letters of credit$12,052,850
 $10,153,558
$12,492,345
 $10,153,558
Investments in low income housing tax credit partnerships:      
Carrying amount included in other assets$79,541
 $83,736
$108,025
 $83,736
Amount of future funding commitments included in carrying amount28,382
 47,123
49,179
 47,123
Short-term construction loans and letter of credit commitments259
 1,585
259
 1,585
Funded portion of short-term loans and letters of credit2,822
 5,595
2,822
 5,595
      
* Represent the contractual amount net of risk participations of approximately $34$33 million and $46 million at JuneSeptember 30, 2019 and December 31, 2018, respectively.
Merchant Services
In accordance with credit and debit card association rules, Synovus sponsors various MPS businesses that process credit and debit card transactions on behalf of merchants. In connection with these services, a liability may arise in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder's favor. If the merchant defaults on its obligations, the cardholder, through its issuing bank, generally has until six months after the date of the transaction to present a chargeback to the MPS, which is primarily liable for any losses on covered transactions. However, if the MPS fails to meet its obligations, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus seeks to mitigate this risk through its contractual arrangements with the MPS and the merchants by withholding future settlements, retaining cash reserve accounts and/or obtaining other security. For the three and sixnine months ended JuneSeptember 30, 2019, the sponsored entities processed and settled $18.88$19.13 billion and $36.59$55.72 billion of transactions, respectively. For the three and sixnine months ended JuneSeptember 30, 2018, the sponsored entities processed and settled $17.63$17.69 billion and $34.35$52.04 billion of transactions, respectively.
Synovus began covering and has continued to cover chargebacks related to a particular MPS during 2019 and 2018 where the MPS’s cash reserve account was unavailable to support the chargebacks. As of JuneSeptember 30, 2019, the remaining amount due to Synovus had advanced approximately $22.6 million tofrom the MPS is $21.7 million, which is included in other assets and classified in NPAs, compared to cover these chargebacks.$22.9 million at December 31, 2018. While Synovus has contractual protections to mitigate against loss, repayment of suchthe amounts owed to Synovus will depend in large part upon the continued financial viability and/or valuation of the MPS and the availability of any cash reserve accounts.
Legal Proceedings
Synovus and its subsidiaries are subject to various legal proceedings 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, tax matters, 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 individuals related to loans and allegations of violations of state and federal laws and regulations relating to banking practices, including putative class action matters and also claims asserted by shareholders or purported shareholders against Synovus, members of Synovus' Board of Directors, and members of Synovus' management team. 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 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 JuneSeptember 30, 2019 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 zero0 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 13 - Subsequent Event

Issuance of Series E Preferred Stock
On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. The offering generated net proceeds of $341.5 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 5.875% for each dividend period from the original issue date to, but excluding, July 1, 2024. From and including July 1, 2024, the dividend rate will change and reset every five years on July 1 at a rate equal to the five-year U.S. Treasury Rate plus 4.127% per annum. The Series E Preferred Stock is redeemable at Synovus' option in whole or in part, from time to time, on July 1, 2024 or any subsequent reset date, or in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in each case at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series E Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series E Preferred Stock does not have any voting rights.


ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Report, the words “Synovus,” “the Company,” “we,” “us,” and “our” refer to Synovus Financial Corp. together with Synovus Bank and Synovus' other wholly-owned subsidiaries, except where the context requires otherwise.
FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this Report which are not statements of historical fact, including those under “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Report, constitute forward-looking statements within the meaning of, and subject to the protections of, Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements include statements with respect to Synovus' beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, many of which are beyond Synovus' control and which may cause Synovus' actual results, performance or achievements or the financial services industry or economy generally, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus' use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “predicts,” “could,” “should,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus' future business and financial performance and/or the performance of the financial services industry and economy in general. Forward-looking statements are based on the current beliefs and expectations of Synovus' management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of these factors are beyond Synovus' ability to control or predict. These factors include, but are not limited to:
(1) the risk that competition in the financial services industry may adversely affect our future earnings and growth;
(2) the risk that any future economic downturn could have a material adverse effect on our capital, financial condition, credit quality, results of operations and future growth;
(3)changes in 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;
(4)the risk that we may not realize the expected benefits from our efficiency and growth initiatives, which could negatively impact our future profitability;
(3)that we may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expected, and that we may encounter significant difficulties in integrating and managing FCB and its businesses;
(4)(5) the risk that our current and future information technology system enhancements and operational initiatives may not be successfully implemented, which could negatively impact our operations;
(5)(6) the risk that our enterprise risk management framework, our compliance program, or our corporate governance and supervisory oversight functions may not identify or address risks adequately, which may result in unexpected losses;
(6)(7) the risk that our asset quality may deteriorate, our allowance for loan losses may prove to be inadequate or may be negatively affected by credit risk exposures, and the risk that we may be unable to obtain full payment in respect of any trade or other receivables;

(7)the risk that any future economic downturn could have a material adverse effect on our capital, financial condition, results of operations and future growth;
(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 business relationships with, and reliance upon, third parties that have strategic partnerships with us or that provide key components of our business infrastructure, including the costs of services and products provided to us by third parties, and risks related to disruptions in service or financial difficulties with a third-party vendor or business relationship;
(11) risks related to the ability of our operational framework to identify and manage risks associated with our business such as credit risk, compliance risk, reputational risk, and operational risk, including third-party vendors and other service providers;

(12) our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "hacking" and identity theft, a failure of which could disrupt our 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 risk related to our implementation of new lines of business or new products and services;
(14) changes in 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;
(15)the impact of recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation and taxation of banks and financial institutions, or the interpretation or application thereof and the uncertainty of future implementation and enforcement of these regulations;
(16)(15) the risk that we may be exposed to potential losses in the event of fraud and/or theft, or in the event that a third-party vendor, obligor, or business partner fails to pay amounts due to us under that relationship or under any arrangement that we enter into with them;
(16)that we may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expected, and that we may encounter significant difficulties in integrating and managing FCB and its businesses;
(17) the risk that we may not be able to identify suitable bank and non-bank acquisition opportunities as part of our growth strategy and even if we are able to identify attractive acquisition opportunities, we may not be able to complete such transactions on favorable terms 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) changes in the cost and availability of funding due to changes in the deposit market and credit market;
(20) 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;
(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) 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;
(23) our ability to receive dividends from our subsidiaries could affect our liquidity, including our ability to pay dividends or take other capital actions;
(24) risks related to regulatory approval to take certain actions, including any dividends on our common stock or preferred stock, any repurchases of common stock or any issuance or redemption of any other regulatory capital instruments, as well as any applications in respect of expansionary initiatives;

(25) risks related to the continued use, availability and reliability of LIBOR and other "benchmark" rates;
(26) 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;
(27)the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;
(28)(27) risks related to the fluctuation in our stock price;price and general volatility in the stock market;
(29)(28) the effects of any damages to our reputation resulting from developments related to any of the items identified above; and
(30)(29) 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 III - 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' 2018 Form 10-K and our other periodic filings, including quarterly reports on Form 10-Q and current reports on Form 8-K, that we file from time to time with the SEC. All written or oral forward-looking statements that are made by or are attributable to Synovus are expressly qualified by this cautionary notice. You should

not place undue reliance on any forward-looking statements since those statements speak only as of the date on which the statements are made. Synovus undertakes no obligation to update any forward-looking information and statements, whether oral or written, to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.
INTRODUCTION AND CORPORATE PROFILE
Synovus Financial Corp. is a financial services company and a registered bank holding company headquartered in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the Company provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance, asset-based lending, structured lending, 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 297298 branches in Alabama, Florida, Georgia, South Carolina, and Tennessee.
The following financial review summarizes the significant trends, changes in our business, transactions, and other matters affecting Synovus’ results of operations for the three and sixnine months ended JuneSeptember 30, 2019 and financial condition as of JuneSeptember 30, 2019 and December 31, 2018. 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’ 2018 Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations consists of:
Discussion of Results of Operations - Reviews Synovus' financial performance, as well as selected balance sheet items, items from the statements of income, significant transactions, and certain key ratios that illustrate Synovus' performance.

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

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

DISCUSSION OF RESULTS OF OPERATIONS
Table 1 - Consolidated Financial Highlights                      
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands, except per share data)2019 2018 Change 2019 2018 Change2019 2018 Change 2019 2018 Change
Net interest income$397,262
 $284,577
 39.6 % $794,438
 $558,861
 42.2 %$402,097
 $291,619
 37.9 % $1,196,535
 $850,480
 40.7 %
Provision for loan losses12,119
 11,790
 2.8
 35,688
 24,566
 45.3
27,562
 14,982
 84.0
 63,250
 39,548
 59.9
Non-interest income89,807
 73,387
 22.4
 169,185
 140,433
 20.5
88,760
 71,668
 23.8
 257,945
 212,101
 21.6
Adjusted non-interest income(1)
90,197
 74,720
 20.7
 168,643
 144,822
 16.4
91,297
 71,234
 28.2
 259,940
 216,056
 20.3
Total FTE revenues487,880
 358,084
 36.2
 965,064
 699,530
 38.0
491,676
 363,423
 35.3
 1,456,736
 1,062,953
 37.0
Adjusted total revenues(1)
488,270
 359,417
 35.9
 964,522
 703,919
 37.0
494,213
 362,989
 36.2
 1,458,731
 1,066,908
 36.7
Non-interest expense264,126
 204,057
 29.4
 556,537
 399,234
 39.4
276,310
 220,297
 25.4
 832,847
 619,531
 34.4
Adjusted non-interest expense(1)
256,707
 203,026
 26.4
 499,360
 401,144
 24.5
258,474
 201,940
 28.0
 757,834
 603,084
 25.7
Income before income taxes210,824
 142,117
 48.3
 371,398
 275,494
 34.8
186,985
 128,008
 46.1
 558,383
 403,502
 38.4
Net income156,184
 111,181
 40.5
 276,370
 214,348
 28.9
135,726
 109,059
 24.5
 412,096
 323,407
 27.4
Net income available to common shareholders153,034
 108,622
 40.9
 270,070
 209,229
 29.1
127,435
 99,330
 28.3
 397,505
 308,559
 28.8
Net income per common share, basic0.97
 0.92
 6.0
 1.70
 1.77
 (3.9)0.84
 0.85
 (1.2) 2.53
 2.61
 (3.0)
Net income per common share, diluted0.96
 0.91
 5.5
 1.68
 1.75
 (4.4)0.83
 0.84
 (1.6) 2.51
 2.60
 (3.5)
Adjusted net income per common share, diluted(1)
1.00
 0.92
 8.4
 1.98
 1.78
 11.6
0.97
 0.94
 2.9
 2.96
 2.72
 8.6
Net interest margin(2)
3.69% 3.86% (17) bps 3.74% 3.82% (8) bps3.69% 3.89% (20) bps 3.72% 3.84% (12) bps
Net charge-off ratio(2)
0.13
 0.29
 (16) 0.16
 0.18
 (2)0.22
 0.24
 (2) 0.18
 0.20
 (2)
Return on average assets(2)
1.34
 1.42
 (8) 1.21
 1.38
 (17)1.14
 1.36
 (22) 1.18
 1.37
 (19)
Adjusted return on average assets(1)(2)
1.39
 1.43
 (4) 1.42
 1.39
 3
1.33
 1.47
 (14) 1.39
 1.42
 (3)
Efficiency ratio-FTE54.14
 56.99
 (285) 57.67
 57.07
 60
56.20
 60.62
 (442) 57.17
 58.28
 (111)
Adjusted tangible efficiency ratio(1)
52.08
 56.41
 (433) 51.17
 56.90
 (573)51.71
 55.55
 (384) 51.36
 56.44
 (508)
                      
(1) See “Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Annualized
June 30, 2019 March 31, 2019 Sequential Quarter Change June 30, 2018 Year-Over-Year ChangeSeptember 30, 2019 June 30, 2019 Sequential Quarter Change September 30, 2018 Year-Over-Year Change
(dollars in thousands)
Loans, net of deferred fees and costs$36,138,561
 $35,634,501
 $504,060
 $25,134,056
 $11,004,505
$36,417,826
 $36,138,561
 $279,265
 $25,577,116
 $10,840,710
Total average loans35,777,127
 35,320,014
 457,113
 24,946,307
 10,830,820
36,201,322
 35,777,127
 424,195
 25,322,582
 10,878,740
Total deposits37,966,722
 38,075,190
 (108,468) 26,442,688
 11,524,034
37,433,070
 37,966,722
 (533,652) 26,433,658
 10,999,412
Core deposits(1)
34,963,178
 35,366,186
 (403,008) 24,591,678
 10,371,500
34,237,575
 34,963,178
 (725,603) 24,749,886
 9,487,689
Core transaction deposits(1)
23,268,923
 23,168,085
 100,838
 19,091,115
 4,177,808
23,794,467
 23,268,923
 525,544
 19,232,685
 4,561,782
Total average deposits37,899,662
 37,826,952
 72,710
 26,268,074
 11,631,588
37,714,145
 37,899,662
 (185,517) 26,387,312
 11,326,833
Non-performing assets ratio(3)
0.39% 0.44% (5)bps 0.50% (11)bps0.42% 0.39% 3  bps 0.46% (4) bps
Non-performing loans ratio(3)
0.34
 0.40
 (6) 0.47
 (13)0.32
 0.34
 (2) 0.42
 (10)
Past due loans over 90 days0.02
 0.01
 1
 0.01
 1
0.04
 0.02
 2
 0.02
 2
CET1 capital (transitional)$3,899,532
 $3,790,395
 $109,137
 $2,838,616
 $1,060,916
$3,660,078
 $3,899,532
 $(239,454) $2,846,416
 $813,662
Tier 1 capital4,094,672
 3,985,535
 109,137
 3,156,805
 937,867
4,196,628
 4,094,672
 101,956
 3,038,768
 1,157,860
Total risk-based capital4,913,043
 4,803,641
 109,402
 3,668,904
 1,244,139
5,023,138
 4,913,043
 110,095
 3,550,686
 1,472,452
CET1 capital ratio (transitional)9.61% 9.52% 9 bps 10.12% (51)bps8.96% 9.61% (65) bps 9.90% (94) bps
Tier 1 capital ratio10.09
 10.01
 8
 11.25
 (116)10.27
 10.09
 18
 10.57
 (30)
Total risk-based capital ratio12.11
 12.06
 5
 13.08
 (97)12.29
 12.11
 18
 12.36
 (7)
Total shareholders’ equity to total assets ratio10.05
 9.86
 19
 9.98
 7
10.22
 10.05
 17
 9.48
 74
Tangible common equity ratio(1)
8.56
 8.34
 22
 8.77
 (21)8.04
 8.56
 (52) 8.68
 (64)
Return on average common equity(2)
13.90
 10.98
 292
 15.39
 (149)11.36
 13.90
 (254) 13.95
 (259)
Adjusted return on average common equity(1)(2)
14.43
 15.03
 (60) 15.56
 (113)13.35
 14.43
 (108) 15.66
 (231)
Adjusted return on average tangible common equity(1)(2)
16.70
 17.52
 (82) 15.97
 73
15.46
 16.70
 (124) 16.08
 (62)
                  
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Quarter annualized
(3)For purposes of this table, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.
(1)
See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2)
Quarter annualized
(3)
For purposes of this table, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.


Executive Summary
Net income available to common shareholders for the secondthird quarter of 2019 was $153.0$127.4 million, or $0.96$0.83 per diluted common share, an increase of 40.9%28.3% and 5.5%a decrease of 1.6%, respectively, compared to the secondthird quarter of 2018. Adjusted net income per common share, diluted(1) was $1.00$0.97 for the secondthird quarter of 2019, up 8.4%2.9% compared to $0.92$0.94 for the secondthird quarter of 2018. Net income available to common shareholders for the first sixnine months of 2019 was $270.1$397.5 million, or $1.68$2.51 per diluted common share, an increase of 29.1%28.8% and a decrease of 4.4%3.5%, respectively, compared to the first sixnine months of 2018. Adjusted net income per common share, diluted(1) was $1.98$2.96 for the first sixnine months of 2019, up 11.6%8.6% compared to $1.78$2.72 for the first sixnine months of 2018. Results for 2019 include the impact of the Merger with FCB, which closed on January 1, 2019. Synovus incurred $7.4 million$353 thousand and $57.1$57.5 million in merger-related expense associated with the FCB acquisition for the secondthird quarter and year-to-date 2019, respectively. On the Acquisition Date, the preliminary estimated fair values of FCB included approximately $12.4 billion of identifiable assets, $9.3 billion in loans, and $10.9 billion in deposits. Return on average assets for the first sixnine months of 2019 was 1.21%1.18%, down 1719 basis points from the first sixnine months of 2018, and the adjusted return on average assets(1) was 1.42%1.39% for the first sixnine months of 2019, updown 3 basis points from the first sixnine months of 2018.
Net interest income was $397.3$402.1 million for the three months ended JuneSeptember 30, 2019, and $794.4 million$1.20 billion for the sixnine months ended JuneSeptember 30, 2019, up 39.6%37.9% and 42.2%40.7%, respectively, over the comparable periods of 2018. Both quarter-over-quarter and year-over-year increases were driven primarily by the FCB acquisition. Net interest margin was down 1720 basis points and 812 basis points over the comparable three and six-monthnine-month periods to 3.69% and 3.74%3.72%, respectively, impacted primarily by the FCB acquisition, the continued deposit shift to time deposits, and the issuance of subordinated debt. Year-to-date JuneSeptember 30, 2019, the yield on earning assets was 4.80%4.79%, an increase of 4134 basis points compared to the sixnine months ended JuneSeptember 30, 2018, while the total cost of funds increased 5149 basis points to 1.11%1.13%.
Non-interest income for the secondthird quarter of 2019 was $89.8$88.8 million, up $16.4$17.1 million, or 22.4%23.8%, compared to the secondthird quarter of 2018. On a year-to-date basis, non-interest income was $169.2$257.9 million compared to $140.4$212.1 million for the first sixnine months of 2018, up $28.8$45.8 million, or 20.5%21.6%. These increases were primarily driven by the FCB acquisition, withled by strong growth in mostcapital markets income as well as expansion in all other revenue categories. Additionally, mortgage banking income was up significantly compared to the same periods in 2018 due to the interest rate environment as well as the addition of mortgage originators.
Non-interest expense for the secondthird quarter of 2019 was $264.1$276.3 million, up $60.1$56.0 million, or 29.4%25.4%, compared to the secondthird quarter of 2018. On a year-to-date basis, non-interest expense was up $157.3$213.3 million, or 39.4%34.4%, versus the same period a year ago. Comparisons to prior year are impacted by the FCB acquisition and merger-related expense. The efficiency ratio-FTE for the first sixnine months of 2019 was 57.67%57.17%, compared to 57.07%58.28% for the first sixnine months of 2018. The adjusted tangible efficiency ratio(1) for the first sixnine months of 2019 was 51.17%51.36%, down 573508 basis points compared to the same period a year ago.
Synovus continued to benefit from a stableSynovus' credit environmentquality metrics remained solid with the non-performing assetsNPA ratio at 3942 basis points, non-performing loansNPL ratio at 3432 basis points, and total past due loans at 2224 basis points. Net charge-offs for the secondthird quarter of 2019 were 1322 basis points, annualized, downup from 1913 basis points in the firstsecond quarter of 2019. Year-to-date, net charge-offs are 16 basis points, well within Synovus' guidance of 15-2018 basis points. For the secondthird quarter of 2019, the provision for loan losses was $12.1$27.6 million, a declinean increase of $11.5$15.4 million, or 48.6%127.4%, compared to the firstsecond quarter of 2019, primarily due to lowerhigher net charge-offs and reduction of impaired reserves.gross funded loan production. The allowance for loan lossesALL at JuneSeptember 30, 2019 was $257.4$265.0 million, or 0.71%0.73% of total loans, compared to $250.6 million, or 0.97% of total loans, at December 31, 2018, reflecting a lower ratio at JuneSeptember 30, 2019 due to the impact of acquisition date accounting for acquired loans.
Sequential quarter loan growth of $504.1$279.3 million, or 5.7%3.1% annualized, was broad-based across all categories.included C&I loan growth of $197.7 million, consumer loan growth of $143.1 million, and a decline in CRE loans of $62.4 million. At JuneSeptember 30, 2019, total loans were $36.14$36.42 billion, an increase of $10.19$10.47 billion, or 39.2%40.4%, compared to December 31, 2018, including acquired loan balances from FCB of $9.29 billion. On a year-to-date basis, organic loan growth was $902.8 million,$1.18 billion, or 5.2%4.5% annualized, with growth of $463.5$602.8 million in consumer loans, $238.7 million in CRE loans, and $200.0$390.2 million in C&I loans, and $176.3 million in CRE loans.
Total deposits of $37.97$37.43 billion at JuneSeptember 30, 2019 declined slightly by $108.5$533.7 million, or 1.1%5.6% annualized, compared to the firstsecond quarter of 2019, from decreases in public funds and other time deposits of $278.7$556.0 million and $225.1$695.2 million, respectively. The decline in these deposits was offset partially by growth in brokered deposits of $294.5 million, which largely replaced maturing time deposits at a shorter duration, and growth in coreCore transaction depositsdeposit(1), which increased $100.8 growth, however, was very strong, up $525.5 million duringcompared to the quarter.second quarter of 2019. Compared to December 31, 2018, total period-end deposits increased $11.25$10.71 billion, or 42.1%40.1%, includingdriven by the acquisition of FCB which contributed $10.93 billion in total deposits, on the Acquisition Date. Excluding the acquired from FCB and $315.7balances, total deposits decreased $218.0 million of organic growth.compared to December 31, 2018.
On June 17, 2019, the Company announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019, of which $345.0$688.5 million was repurchased during the first sixnine months of 2019. As of October 24, 2019, the authorization under this program was complete with total repurchases of $725 million, or 19.9 million shares of common stock. On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. Proceeds from the preferred stock offering will bewere primarily used for general corporate purposes, including share repurchasesto repurchase common stock under the newshare repurchase authorization. At JuneSeptember 30, 2019, Synovus' regulatory capital levels continue to be well above regulatory capital requirements.


More detail on Synovus' financial results for the three and sixnine months ended JuneSeptember 30, 2019 may be found in subsequent sections of "Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report.

2019 Outlook
For the full year 2019, compared to 2018(2), previously stated guidance has been updated foris included below. From a balance sheet perspective, Synovus expects loan growth to fall slightly below our previously guided range and expects deposit growth and effective income tax rate, consideringto fall below the interest rate environment, other macroeconomic factors, and internal initiatives.low-end of our range. Additionally, Synovus expects revenueadjusted tangible non-interest expense growth to be at the lower endtop or slightly outside of our 2 to 4% guidance for the guidance range provided, due to the interest rate environment.year.
Loan growth of 5.5% to 7.5%
Deposit growth of 3.0% to 5.0%
Revenue growth of 5.5% to 7.5%
Adjusted tangible non-interest expense growth of 2% to 4%
Effective income tax rate of 24% to 25%
Previous Outlook (as provided in April 2019 and updated in July 2019)October 2019 Update
  * Loan growth of 5.5% to 7.5%Current outlook slightly below range
  * Deposit growth of 3.0% to 5.0%Current outlook below range
  * Revenue growth of 5.5% to 7.5%No change
  * Adjusted tangible non-interest expense growth of 2% to 4%Current outlook at top of range or slightly above
  * Effective income tax rate of 24% to 25%No change
  * Net charge-off ratio of 15 to 20 basis pointsNo change
(1) See "Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures"Measures” in this Report for applicable reconciliation to the most comparable GAAP measure.
(2) 2018 results are on a pro forma combined basis for Synovus and FCB.
Changes in Financial Condition
During the sixnine months ended JuneSeptember 30, 2019, total assets increased $14.65$14.99 billion from $32.67 billion at December 31, 2018 to $47.32$47.66 billion, due primarily to the acquisition of FCB on January 1, 2019. On the Acquisition Date, the preliminary estimated fair valuesvalue of FCB acquired balances included $12.4 billion of identifiable assets, $9.3 billion in loans, and $10.9 billion in deposits. Additionally, based on preliminary purchase price allocations, Synovus recorded goodwill increased by $435.1of $430.6 million. Excluding the acquired balances of FCB, loans increased $902.8 million and$1.18 billion, investment securities available for sale increased $714.4$599.5 million, whilemortgage loans held for sale increased $91.2 million, and cash and cash equivalents declined $193.9$162.8 million. Excluding theThe growth in assets and decline in deposits of $218.0 million, excluding acquired balances of FCB, was funded by increases of $680.0 million$1.58 billion in other short-term borrowings $495.7and $343.2 million in long-term debt, and $315.7 million in deposits provided the funding source for the growth in assets.debt. The loan to deposit ratio was 95.2%97.3% at JuneSeptember 30, 2019, compared to 97.1% at December 31, 2018, and 95.1%96.8% at JuneSeptember 30, 2018.

Loans
The following table compares the composition of the loan portfolio at JuneSeptember 30, 2019, December 31, 2018, and JuneSeptember 30, 2018.
Table 2 - Loans by Portfolio ClassTable 2 - Loans by Portfolio Class          Table 2 - Loans by Portfolio Class          
June 30, 2019 December 31, 2018 June 30, 2019 vs. December 31, 2018 % Change June 30, 2018 June 30, 2019 vs. June 30, 2018 % ChangeSeptember 30, 2019 December 31, 2018 September 30, 2019 vs. December 31, 2018 % Change September 30, 2018 September 30, 2019 vs. September 30, 2018 % Change
(dollars in thousands)Total Loans Total Originated Loans 
Total Acquired(1) Loans
 Total Loans Total Loans Total Loans Total Originated Loans 
Total Acquired(1) Loans
 Total Loans Total Loans 
Commercial, financial and agricultural$9,717,746
 $7,801,210
 $1,916,536
 $7,449,698
 30.4 % $7,271,080
 33.6%$9,855,881
 $8,085,060
 $1,770,821
 $7,449,698
 32.3 % $7,281,466
 35.4 %
Owner-occupied6,529,797
 5,366,404
 1,163,393
 5,331,508
 22.5
 5,004,392
 30.5
6,589,391
 5,588,970
 1,000,421
 5,331,508
 23.6
 5,221,828
 26.2
Total commercial and industrial16,247,543
 13,167,614
 3,079,929
 12,781,206
 27.1
 12,275,472
 32.4
16,445,272
 13,674,030
 2,771,242
 12,781,206
 28.7
 12,503,294
 31.5
Investment properties9,005,100
 5,927,706
 3,077,394
 5,560,951
 61.9
 5,509,596
 63.4
8,934,763
 6,058,359
 2,876,404
 5,560,951
 60.7
 5,665,690
 57.7
1-4 family properties747,390
 643,448
 103,942
 679,870
 9.9
 720,710
 3.7
738,764
 640,124
 98,640
 679,870
 8.7
 707,196
 4.5
Land and development595,957
 364,688
 231,269
 323,670
 84.1
 413,865
 44.0
612,506
 407,834
 204,672
 323,670
 89.2
 339,520
 80.4
Total commercial real estate10,348,447
 6,935,842
 3,412,605
 6,564,491
 57.6
 6,644,171
 55.8
10,286,033
 7,106,317
 3,179,716
 6,564,491
 56.7
 6,712,406
 53.2
Consumer mortgages5,407,762
 3,194,027
 2,213,735
 2,934,235
 84.3
 2,750,935
 96.6
5,470,730
 3,398,720
 2,072,010
 2,934,235
 86.4
 2,843,244
 92.4
Home equity lines1,650,745
 1,587,854
 62,891
 1,515,796
 8.9
 1,453,855
 13.5
1,675,092
 1,616,063
 59,029
 1,515,796
 10.5
 1,465,419
 14.3
Credit cards258,283
 258,283
 —
 258,245
 —
 238,424
 8.3
267,874
 267,874
 —
 258,245
 3.7
 245,149
 9.3
Other consumer loans2,249,337
 2,237,406
 11,931
 1,916,743
 17.4
 1,793,916
 25.4
2,295,486
 2,285,319
 10,167
 1,916,743
 19.8
 1,831,385
 25.3
Total consumer9,566,127
 7,277,570
 2,288,557
 6,625,019
 44.4
 6,237,130
 53.4
9,709,182
 7,567,976
 2,141,206
 6,625,019
 46.6
 6,385,197
 52.1
Deferred fees and costs, net(23,556) (23,556) —
 (24,143) (2.4) (22,717) 3.7
(22,661) (22,661) —
 (24,143) (6.1) (23,781) (4.7)
Total loans$36,138,561
 $27,357,470
 $8,781,091
 $25,946,573
 39.3 % $25,134,056
 43.8%$36,417,826
 $28,325,662
 $8,092,164
 $25,946,573
 40.4 % $25,577,116
 42.4 %
                          
(1) Represents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs including maturities since acquisition date.
At JuneSeptember 30, 2019, total loans were $36.14$36.42 billion, an increase of $10.19$10.47 billion, or39.3% 40.4%, and $11.00$10.84 billion, or 43.8%42.4%, compared to December 31, 2018 and JuneSeptember 30, 2018, respectively, including acquired loan balances from FCB of $9.29 billion.

Excluding acquired FCB balances, period-end loans increased $902.8 million,$1.18 billion, or 5.2%4.5% annualized, compared to December 31, 2018, with growth of $463.5$602.8 million, or 10.3%8.9% annualized, in consumer loans, $238.7$390.2 million, or 4.8%3.2% annualized, in C&I loans, and $176.3 million, or 2.3% annualized, in CRE loans, and $200.0 million, or 2.5% annualized, in C&I loans.The mix within the loan portfolio has shifted slightly as a result of the consolidation with FCB, but it remains in-line with the targets indicated in our strategic plan.Synovus' targeted portfolio mix. C&I loans remain the largest component of our balance sheet representing 44.9%45.1% of total loans, while CRE and consumer loans represent 28.6%28.2%, and 26.5%26.7%, respectively.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at JuneSeptember 30, 2019 were $26.60$26.73 billion, or 73.5%73.3% of the total loan portfolio, compared to $19.35 billion, or 74.5%, at December 31, 2018 and $18.92$19.22 billion, or 75.2%75.1%, at JuneSeptember 30, 2018.
At JuneSeptember 30, 2019, Synovus hadsix commercial loan relationships with total commitments of $100 million or more (including amounts funded), with no single relationship exceeding $125$150 million in commitments.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' total loan portfolio.portfolio and is primarily comprised of general middle market and commercial banking clients across a diverse set of industries. The following table shows the composition of the C&I loan portfolio aggregated by NAICS code. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. As of September 30, 2019, 92.6% As of June 30, 2019, approximately 92% of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral. C&I loans of $16.25$16.45 billion, representing 44.9%45.1% of the total loan portfolio, grew $3.47$3.66 billion, or 27.1%28.7%, from December 31, 2018 including acquired loan balances from FCB of $3.27 billion.Excluding acquired FCB

balances, growth was $200.0$390.2 million, or 2.5%3.2% annualized, compared to December 31, 2018 and wasdriven by continued strong contributions across a number of markets, lending specialties,from our middle market banking, senior housing, healthcare, and industries.premium finance teams.
Table 3 - Commercial and Industrial Loans by Industry
June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
Amount 
%(1)
 Amount 
%(1)
Health care and social assistance$2,995,374
 18.4% $3,044,132
 23.8%$3,031,739
 18.4% $3,060,089
 23.9%
Retail trade1,227,234
 7.6
 903,965
 7.1
1,241,737
 7.6
 910,852
 7.1
Manufacturing1,216,021
 7.5
 1,077,460
 8.4
1,206,514
 7.3
 1,082,799
 8.5
Finance and insurance1,192,218
 7.3
 906,955
 7.1
1,172,077
 7.1
 910,688
 7.1
Wholesale trade1,098,361
 6.8
 693,920
 5.4
1,136,719
 6.9
 700,843
 5.5
Other services948,847
 5.8
 793,948
 6.2
992,970
 6.0
 799,442
 6.3
Arts, entertainment and recreation916,433
 5.6
 234,310
 1.8
Real estate and rental and leasing961,149
 5.8
 606,475
 4.7
Accommodation and food services888,969
 5.5
 663,106
 5.2
893,926
 5.4
 669,750
 5.2
Real estate and rental and leasing888,531
 5.5
 675,824
 5.3
Professional, scientific, and technical services872,600
 5.4
 844,929
 6.6
886,082
 5.4
 857,947
 6.7
Transportation and warehousing834,626
 5.1
 477,386
 3.7
878,561
 5.3
 479,584
 3.8
Arts, entertainment and recreation825,696
 5.0
 237,712
 1.9
Construction726,359
 4.5
 615,903
 4.8
728,846
 4.4
 631,169
 4.9
Other industries555,118
 3.4
 235,143
 2.0
577,631
 3.6
 234,052
 1.9
Real estate other517,983
 3.2
 452,360
 3.5
501,157
 3.1
 432,114
 3.4
Educational services359,202
 2.2
 284,840
 2.2
387,012
 2.4
 284,858
 2.2
Agriculture, forestry, fishing, and hunting356,959
 2.2
 344,136
 2.7
381,702
 2.3
 345,580
 2.7
Information329,746
 2.0
 251,208
 2.0
321,569
 2.0
 252,552
 2.0
Administration, support, waste management, and remediation322,962
 2.0
 281,681
 2.2
320,185
 2.0
 284,700
 2.2
Total commercial and industrial loans$16,247,543
 100.0% $12,781,206
 100.0%$16,445,272
 100.0% $12,781,206
 100.0%
              
(1) Loan balance in each category expressed as a percentage of total C&I loans.
(1)
Loan balance in each category expressed as a percentage of total C&I loans.
At JuneSeptember 30, 2019, $9.72$9.86 billion of C&I loans, or 26.9%27.0% of the total loan portfolio, represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, cash surrender value of life insurance, and other business assets.

At JuneSeptember 30, 2019, $6.53$6.59 billion of C&I loans, or 18.0%18.1% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. The financing of owner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on cash flow from operations of the business to repay the debt. The secondary source of repayment on these loans is the underlying real estate. These loans are predominately secured by owner-occupied and other real estate, and to a lesser extent, other types of collateral.
Commercial Real Estate Loans
CRE loans consist primarily of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Total CRE loans were $10.35$10.29 billion, representing 28.6%28.2% of the total loan portfolio, and increased $3.78$3.72 billion, or 57.6%56.7%, from December 31, 2018, driven by the FCB acquisition, which included $3.55 billion of CRE loans on the Acquisition Date. Excludingthe acquisition, CRE loans grew $238.7$176.3 million, or 4.8%2.3% annualized, as compared to December 31, 2018, led primarily by growth in investment properties.
Investment Properties Loans
Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. Total investment properties loans as of JuneSeptember 30, 2019 were $9.01$8.93 billion, or 87.0%86.9% of the total CRE loan portfolio and24.9% 24.5% of the total loan portfolio, compared to $5.56 billion, or 84.7% of the total CRE loan portfolio and 21.4% of the total loan portfolio, at December 31, 2018. The increase in investment properties was primarily driven by FCB which included $3.15 billion of acquired investment properties loans. Excluding the Merger,acquisition, investment properties loans grew $291.7$221.4 million, or 6.8%3.4% annualized, compared to December 31, 2018, driven by increases in most sub-categories including multi-family office buildings, and hotels.

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. At JuneSeptember 30, 2019, 1-4 family properties loans totaled $747.4$738.8 million, or 7.2% of the total CRE loan portfolio and 2.1%2.0% of the total loan portfolio, compared to $679.9 million, or 10.4% of the total CRE loan portfolio and 2.6% of the total loan portfolio, at December 31, 2018.2018. Outside of $112.0 million loans acquired from FCB, 1-4 family properties loans declined by $44.5$53.1 million, or 11.3%9.0% annualized, compared to December 31, 2018.
Land and Development Loans
Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s). Total land and development loans were $596.0$612.5 million at JuneSeptember 30, 2019, or 1.6%1.7% of the total loan portfolio, an increase of $272.3$288.8 million, or 84.1%89.2% from December 31, 2018, which was driven by $280.9 million of loans acquired from FCB. Outside of the acquisition, land and development loans declinedincreased slightly by $8.6$8.0 million, or 2.9%1.8% annualized, compared to December 31, 2018.
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,HELOCs, credit card loans, home improvement loans, student loans, and other consumer loans.loans which primarily include third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and home equity linesHELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus.
Consumer loans at JuneSeptember 30, 2019 totaled $9.57$9.71 billion, representing 26.5%26.7% of the total loan portfolio, compared to $6.63 billion, or 25.5% of the total loan portfolio, at December 31, 2018. Consumer loans increased $2.94$3.08 billion, or 44.4%46.6%, from December 31, 2018, primarily driven by $2.48 billion of loans acquired from FCB. Excluding the acquisition, consumer loans grew $463.5$602.8 million, or 10.3%8.9% annualized, compared to December 31, 2018.
Consumer mortgages grew $2.47$2.54 billion, or 84.3%86.4%, from December 31, 2018.2018. Excluding the $2.40 billion in consumer mortgages acquired in the FCB acquisition, year-to-date growth of $76.9$138.1 million, or 2.9%3.5% annualized, was driven bythe result of solid production in the private wealth, physician and affordable mortgage products as well as production addeddriven by mortgage loan originators hired in 2018disciplined talent acquisition and 2019. the interest rate environment. HELOCs increased $134.9$159.3 million, or 8.9%10.5%, from December 31, 2018, driven primarily by the FCB acquisition.acquisition and organic growth. Excluding FCB acquired loans, HELOCs increased $69.1$91.4 million, or 8.8%7.7% annualized, compared to December 31, 2018.Credit card loans totaled $258.3$267.9 million at JuneSeptember 30, 2019, including $72.1$70.4 million of commercial credit card loans, and increased slightly compared to $258.2 million at December 31, 2018. Other consumer loans increased $332.6$378.7 million, or 17.4%19.8%, from December 31,

2018, primarily due to our two consumer-based lending partnerships.partnerships. As of JuneSeptember 30, 2019, these partnerships had combined balances of $1.91$1.95 billion, or 5.3%5.4% of the total loan portfolio.
Consumer loans are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores. Synovus makes consumer lending decisions based upon a number of key credit risk determinants including FICO scores as well as loan-to-value and debt-to-income ratios. Risk levels 1-6 (descending) are assigned to consumer loans based upon a risk score matrix. At least annually, the consumer loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores so that management can evaluate ongoing consistency or negative migration in the quality of the portfolio, which impacts the allowance for loan losses.ALL. Revolving lines of credit are 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 JuneSeptember 30, 2019, weighted-average FICO scores within the residential real estate portfolio based on committed balances were 784786 for HELOCs and 785777 for Consumer Mortgages.

Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the relative composition of deposits as of the dates indicated.
Table 4 - Composition of Period-end Deposits          
(dollars in thousands)June 30, 2019 
%(1)
 March 31, 2019 
%(1)
 December 31, 2018 
%(1)
 June 30, 2018 
%(1)
Non-interest-bearing demand deposits, excluding public funds$8,577,612
 22.6% $8,440,520
 22.2% $6,926,513
 25.9% $6,820,002
 25.8%
Interest-bearing demand deposits, excluding public funds4,847,242
 12.8
 4,911,215
 12.8
 3,690,689
 13.9
 4,060,293
 15.4
Money market accounts, excluding brokered deposits and public funds8,952,875
 23.6
 8,912,528
 23.4
 7,681,836
 28.7
 7,388,202
 27.9
Savings deposits, excluding public funds891,194
 2.3
 903,822
 2.4
 812,495
 3.0
 822,618
 3.1
Public funds4,351,304
 11.5
 4,630,022
 12.2
 2,374,892
 8.9
 2,224,631
 8.4
Time deposits, excluding brokered deposits and public funds7,342,951
 19.3
 7,568,079
 19.9
 3,685,867
 13.8
 3,275,932
 12.4
Brokered deposits3,003,544
 7.9
 2,709,004
 7.1
 1,548,030
 5.8
 1,851,010
 7.0
Total deposits$37,966,722
 100.0% $38,075,190
 100.0% $26,720,322
 100.0% $26,442,688
 100.0%
Core deposits(2)    
$34,963,178
 92.1% $35,366,186
 92.9% $25,172,292
 94.2% $24,591,678
 93.0%
Core transaction deposits(3)    
$23,268,923
 61.3% $23,168,085
 60.8% $19,111,533
 71.5% $19,091,115
 72.2%
                
Time deposits greater than $100,000, including brokered deposits and public funds$8,290,297
 21.8% $8,318,082
 21.8% $3,749,928
 14.0% $3,667,029
 13.9%
                
Brokered time deposits$2,095,240
 5.5% $1,902,962
 5.0% $1,199,670
 4.5% $1,507,996
 5.7%
                
Table 4 - Composition of Period-end Deposits          
(dollars in thousands)September 30, 2019 
%(1)
 June 30, 2019 
%(1)
 December 31, 2018 
%(1)
 September 30, 2018 
%(1)
Non-interest-bearing demand deposits(2)
$8,970,218
 24.0% $8,577,612
 22.6% $6,926,513
 25.9% $6,936,714
 26.2%
Interest-bearing demand deposits(2)
4,714,817
 12.6
 4,847,242
 12.8
 3,690,689
 13.9
 3,943,225
 14.9
Money market accounts(2)
9,212,140
 24.6
 8,952,875
 23.6
 7,681,836
 28.7
 7,536,234
 28.5
Savings deposits(2)
897,292
 2.4
 891,194
 2.3
 812,495
 3.0
 816,512
 3.1
Public funds3,795,320
 10.1
 4,351,304
 11.5
 2,374,892
 8.9
 2,024,697
 7.7
Time deposits(2)
6,647,788
 17.8
 7,342,951
 19.3
 3,685,867
 13.8
 3,492,504
 13.2
Brokered deposits3,195,495
 8.5
 3,003,544
 7.9
 1,548,030
 5.8
 1,683,772
 6.4
Total deposits$37,433,070
 100.0% $37,966,722
 100.0% $26,720,322
 100.0% $26,433,658
 100.0%
Core deposits(3)    
$34,237,575
 91.5% $34,963,178
 92.1% $25,172,292
 94.2% $24,749,886
 93.6%
Core transaction deposits(4)    
$23,794,467
 63.6% $23,268,923
 61.3% $19,111,533
 71.5% $19,232,685
 72.7%
                
Time deposits greater than $100,000, including brokered and public funds$7,574,038
 20.2% $8,290,297
 21.8% $3,749,928
 14.0% $3,729,856
 14.1%
Brokered time deposits$2,098,643
 5.6% $2,095,240
 5.5% $1,199,670
 4.5% $1,347,954
 5.1%
                
(1) Deposits balance in each category expressed as percentage of total deposits.
(2) CoreExcluding any public funds or brokered deposits exclude brokered deposits. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation.
(3) Core transaction deposits exclude brokered deposits.
(4) Core transaction deposits consist of non-interest-bearing demand deposits, interest-bearing demand deposits, money market accounts, and savings deposits excluding public funds. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation.funds and brokered deposits.
Total period-end deposits decreased $108.5$533.7 million, or 1.1% annualized,1.4%, compared to the firstsecond quarter of 2019. The quarterly decline resulted from decreases inCore transaction deposit growth, however, was very strong, up $525.5 million compared to the second quarter of 2019. Within the core transaction deposit category, non-interest-bearing deposits increased $392.6 million and money market accounts increased $259.3 million. Synovus continues to remix the deposit base by allowing higher cost time deposits and public funds to run off, while taking advantage of other short-term funding vehicles including brokered deposits and FHLB advances which carry variable rates and reduce Synovus' overall asset sensitivity headed into a period of declining rates. As a result of this approach, public funds and other time deposits of $278.7both declined by $556.0 million and $225.1$695.2 million, respectively. The decline in these deposits was offset partially by growth in brokered depositsrespectively, compared to the second quarter of $294.5 million, which largely replaced maturing time deposits at a shorter duration, and growth in core transaction deposits, which increased $100.8 million during the quarter.2019. Compared to December 31, 2018, total period-end deposits increased $11.25$10.71 billion, or 42.1%40.1%, driven by the acquisition of FCB which contributed $10.93 billion in total deposits, including $9.67 billion in core deposits, on the Acquisition Date. Excluding the acquired balances, total deposits grew $315.7decreased $218.0 million compared to December 31, 2018.

On an average basis, the decline in total deposits was $185.5 million, or 1.9% annualized, compared to the second quarter of 2019.

Non-interest Income
Non-interest income for the secondthird quarter of 2019 was $89.8$88.8 million, up $16.4$17.1 million, or 22.4%23.8%, compared to the secondthird quarter of 2018 including the impact of the acquisition of FCB. On a year-to-date basis, non-interest income was $169.2$257.9 million compared to $140.4$212.1 million for the first sixnine months of 2018. The $28.8$45.8 million, or 20.5%21.6%, increase is impacted by the FCB acquisition. Adjusted non-interest income, which excludes net investment securities losses and net changes in fair value of private equity investments, was up $15.5$20.1 million, or 20.7%28.2%, for the secondthird quarter of 2019 compared to the secondthird quarter of 2018, and year-to-date, adjusted non-interest income was up $23.8$43.9 million, or 16.4%20.3%, compared to the first sixnine months of 2018, withled by strong growth in mostcapital markets income and mortgage banking income as well as expansion in all other revenue categories. See "Part II"Table 14 - Item 7. Management's Discussion and AnalysisReconciliation of Financial Condition and Results of Operations - Non-GAAP Financial Measures" ofMeasures” in this Report for applicable reconciliation to GAAP measures.

The following table shows the principal components of non-interest income.
Table 5 - Non-interest income                      
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2019 2018 % Change 2019 2018 % Change2019 2018 % Change 2019 2018 % Change
Service charges on deposit accounts$21,994
 $19,999
 10.0 % $42,853
 $39,938
 7.3%$22,952
 $20,582
 11.5% $65,805
 $60,521
 8.7 %
Fiduciary and asset management fees14,478
 13,983
 3.5
 28,057
 27,419
 2.3
14,686
 13,462
 9.1
 42,743
 40,881
 4.6
Card fees11,161
 10,833
 3.0
 22,037
 21,032
 4.8
12,297
 10,608
 15.9
 34,334
 31,640
 8.5
Brokerage revenue10,052
 8,709
 15.4
 19,431
 17,085
 13.7
11,071
 9,041
 22.5
 30,502
 26,125
 16.8
Mortgage banking income10,351
 5,290
 95.7
 23,313
 15,177
 53.6
Capital markets income8,385
 1,118
 650.0
 13,291
 2,086
 537.2
7,396
 1,155
 540.3
 21,557
 3,826
 463.4
Mortgage banking income7,907
 4,839
 63.4
 12,962
 9,887
 31.1
Income from bank-owned life insurance5,176
 3,733
 38.7
 10,466
 7,949
 31.7
5,139
 3,771
 36.3
 15,605
 11,720
 33.1
Investment securities losses, net(1,845) (1,296) nm
 (1,771) (1,296) nm
(3,731) —
 nm
 (5,502) (1,296) nm
Increase (decrease) in fair value of private equity investments, net1,455
 (37) nm
 2,313
 (3,093) nm
Gain on sale and increase (decrease) in fair value of private equity investments1,194
 434
 nm
 3,507
 (2,659) nm
Other non-interest income11,044
 11,506
 (4.0) 19,546
 19,426
 0.6
7,405
 7,325
 1.1
 26,081
 26,166
 (0.3)
Total non-interest income$89,807
 $73,387
 22.4 % $169,185
 $140,433
 20.5%$88,760
 $71,668
 23.8% $257,945
 $212,101
 21.6 %
                      
Three and SixNine Months Ended JuneSeptember 30, 2019 compared to JuneSeptember 30, 2018
Service charges on deposit accounts for the three and sixnine months ended JuneSeptember 30, 2019 were up $2.0$2.4 million, or 10.0%11.5%, and $2.9$5.3 million, or 7.3%8.7%, respectively, including the impact of FCB. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were up $940 thousand,$1.1 million, or 10.8%11.8%, and $659 thousand,$1.7 million, or 3.7%6.5%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively, primarily due to the FCB acquisition. Account analysis fees were up $823$896 thousand, or 12.7%13.9%, and $1.8$2.7 million, or 14.5%14.3%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively.respectively, due primarily to the FCB acquisition. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposits, saving accounts, and small business accounts, for the three and sixnine months ended JuneSeptember 30, 2019, were up $233$390 thousand and $441$831 thousand, respectively.
Fiduciary and asset management fees are derived from providing estate administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased $495 thousand,$1.2 million, or 3.5%9.1%, and $638 thousand,$1.9 million, or 2.3%4.6%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively. The increases were driven by growth in total assets under management which increased by 10.0%8.0% year-over-year to $15.82$16.21 billion (including growth in brokerage assets under management).
Card fees for the three and sixnine months ended JuneSeptember 30, 2019,, increased $328 thousand,$1.7 million, or 3.0%15.9%, and $1.0$2.7 million, or 4.8%8.5%, respectively, including growth in transaction volume and the impact of FCB. Card fees consist primarily of credit card interchange fees, debit card interchange fees, and merchant discounts. Card fees are reported net of certain associated expense items including customer loyalty program expenses and network expenses.
Brokerage revenue was $10.1$11.1 million and $19.4$30.5 million for the three and sixnine months ended JuneSeptember 30, 2019, respectively, up $1.3$2.0 million, or 15.4%22.5%, and up $2.3$4.4 million, or 13.7%16.8%, compared to the three and sixnine months ended JuneSeptember 30, 2018.2018, respectively. Brokerage revenue consists primarily of brokerage commissions as well as advisory fees earned from the management of customer assets. Brokerage assets under management were $3.29$3.41 billion at JuneSeptember 30, 2019, an increase of 19.3%14.8% from $2.76$2.97 billion at JuneSeptember 30, 2018.
Mortgage banking income increased $5.1 million and $8.1 million for the three and nine months ended September 30, 2019, respectively. Mortgage banking income was driven by higher overall production, including an increase in refinance volume during the third quarter of 2019, driven by disciplined talent acquisition and the interest rate environment. Total secondary market mortgage loan production was $278.0 million and $603.1 million for the three and nine months ended September 30, 2019, respectively, up $134.5 million, or 93.8%, and up $173.6 million, or 40.4%, compared to the three and nine months ended September 30, 2018, respectively.
Capital markets income primarily includes fee income from customer derivative andtransactions. Additionally, capital markets income includes fee income from capital raising investment banking transactions and foreign exchange as well as other miscellaneous income from capital market transactions. Capital markets income increased $7.3$6.2 million and $11.2$17.7 million for the three and sixnine months ended JuneSeptember 30, 2019, respectively, driven by contributions from newly acquired Florida markets.

Mortgage banking income increased $3.1 million for both the three and six months ended June 30, 2019. Mortgage banking income was driven by higher overall production due to an increase in mortgage loan originators and the addition of FCB.
Income from bank-owned life insurance,BOLI, which includes increases in the cash surrender value of policies and proceeds from insurance benefits, increased $1.4 million, or 38.7%36.3%, and $2.5$3.9 million, or 31.7%33.1%, for the three and sixnine months ended JuneSeptember 30, 2019, primarily driven by the impact of acquired FCB policies. The first sixnine months of 2019 included income on proceeds from insurance benefits of $233$234 thousand compared to $561 thousand in 2018.
Investment securities losses, net, of $1.8$3.7 million and $5.5 million for both the three and sixnine months ended JuneSeptember 30, 2019, respectively, included net losses due to strategic repositioning of the portfolio to better align with long-term liquidity objectives.improve portfolio performance. Investment securities losses of $1.3 million, for both the three and sixnine months ended JuneSeptember 30, 2018, included a loss of $1.3 million from a strategic sale to improve portfolio performance.
Increase/Gain on sale and increase/(decrease) in the fair value of private equity investments was up $1.5 million and $5.4 million, respectively, for the three and six months ended June 30, 2019 due to favorable fair value adjustments to private equityincluded $417 thousand of realized gains from sales of investments of $1.5 million and $2.3 million during the three and sixnine months ended JuneSeptember 30, 2019 respectively, compared to unfavorable fair value adjustments of $37and $777 thousand and $3.1 million forof unrealized increases in fair value during the same period a year ago.three and nine months ended September 30, 2019, respectively.
The main components of other non-interest income are fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for ATM use, other service charges, income from insurance commissions, gains from sales of GGL/SBA loans, and other miscellaneous items. Gains from sales of GGL/SBA loans were down $1.5 million and $2.1 million, respectively, for the three and six months ended June 30, 2019, offset by valuation gains on mutual funds held in rabbi trusts of $1.8 million and $1.7 million, respectively, for the three and six months ended June 30, 2019.
Non-interest Expense
Non-interest expense for the secondthird quarter of 2019 was $264.1$276.3 million, up $60.1$56.0 million, or 29.4%25.4%, compared to the secondthird quarter of 2018. On a year-to-date basis, non-interest expense was up $157.3$213.3 million, or 39.4%34.4%, versus the same period a year ago. Comparisons to prior year are impacted by the FCB acquisition and merger-related expense. Adjusted non-interest expense, which excludes merger-related expense, earnout liability adjustments, loss on early extinguishment of debt, valuation adjustment to Visa derivative, and certain other items, for the secondthird quarter of 2019 was up $53.7$56.5 million, or 26.4%28.0%, versus the same period a year ago. On a year-to-date basis, adjusted non-interest expense increased $98.2$154.7 million, or 24.5%25.7%. The efficiency ratio-FTE for the first sixnine months of 2019 was 57.67%57.17%, compared to 57.07%58.28% for the first sixnine months of 2018. The adjusted tangible efficiency ratio for the first sixnine months of 2019 was 51.17%51.36%, down 573508 basis points compared to the same period a year ago. See "Part II"Table 14 - Item 7. Management's Discussion and AnalysisReconciliation of Financial Condition and Results of Operations - Non-GAAP Financial Measures" ofMeasures” in this Report for applicable reconciliation to GAAP measures.
The following table summarizes the components of non-interest expense.
Table 6 - Non-interest Expense                      
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands)2019 2018 % Change 2019 2018 % Change2019 2018 % Change 2019 2018 % Change
Salaries and other personnel expense$143,009
 $111,863
 27.8% $282,436
 $225,583
 25.2%$142,516
 $114,341
 24.6 % $424,952
 $339,924
 25.0 %
Net occupancy and equipment expense39,851
 32,654
 22.0
 78,245
 64,134
 22.0
41,017
 32,088
 27.8
 119,262
 96,222
 23.9
Third-party processing expense19,118
 15,067
 26.9
 36,875
 29,012
 27.1
18,528
 14,810
 25.1
 55,403
 43,822
 26.4
Professional fees9,312
 6,284
 48.2
 15,660
 11,789
 32.8
9,719
 6,298
 54.3
 25,379
 18,087
 40.3
FDIC insurance and other regulatory fees7,867
 6,543
 20.2
 14,629
 13,335
 9.7
7,242
 6,430
 12.6
 21,872
 19,765
 10.7
Advertising expense5,923
 5,220
 13.5
 11,045
 10,312
 7.1
5,950
 3,735
 59.3
 16,996
 14,046
 21.0
Amortization of intangibles2,410
 292
 nm
 5,802
 583
 nm
2,901
 292
 nm
 8,702
 875
 nm
Merger-related expense7,401
 —
 nm
 57,140
 —
 nm
353
 6,684
 nm
 57,493
 6,684
 nm
Earnout liability adjustments10,457
 11,652
 (10.3) 10,457
 11,652
 (10.3)
Loss on early extinguishment of debt, net4,592
 —
 nm
 4,592
 —
 nm
Valuation adjustment to Visa derivative2,500
 —
 nm
 2,500
 2,328
 7.4
Other operating expenses29,235
 26,134
 11.9
 54,705
 44,486
 23.0
30,535
 23,967
 27.4
 85,239
 66,126
 28.9
Total non-interest expense$264,126
 $204,057
 29.4% $556,537
 $399,234
 39.4%$276,310
 $220,297
 25.4 % $832,847
 $619,531
 34.4 %
                      
Three and SixNine Months Ended JuneSeptember 30, 2019 compared to JuneSeptember 30, 2018
Salaries and other personnel expense increased $31.1$28.2 million, or 27.8%24.6%, and $56.9$85.0 million, or 25.2%25.0%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively, including the impact of FCB, talent additions, higher production-based commission and incentive compensation expense, and annual merit increases, and higher employee insurance.

increases.
Net occupancy and equipment expense increased $7.2$8.9 million, or 22.0%27.8%, and $14.1$23.0 million, or 22.0%23.9%, during the three and sixnine months ended JuneSeptember 30, 2019, respectively, primarily due to additional branches from the acquisition of FCB.

Third-party processing expense includes all third-party core operating system and processing charges as well as third-party loan servicing charges. Third-party processing expense increased $4.1$3.7 million, or 26.9%25.1%, and $7.9$11.6 million, or 27.1%26.4%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively. The increase is primarily associated with loan growth from Synovus' consumer-based lending partnerships and the acquisition of FCB.
Professional fees increased $3.0$3.4 million, or 48.2%54.3%, and $3.9$7.3 million, or 32.8%40.3%, for the three and sixnine months ended JuneSeptember 30, 2019, respectively, primarily from increases in both consulting fees due to planned strategic and technology initiatives.legal fees.
FDIC insurance and other regulatory fees were up $1.3$812 thousand and $2.1 million for both the three and sixnine months ended JuneSeptember 30, 2019, respectively, primarily due to the acquisition of FCB, somewhat offset by the FDIC's elimination of the assessment surcharge for all large banks in the fourth quarter of 2018.
Advertising expense was up $2.2 million and $2.9 million for the three and nine months ended September 30, 2019, respectively, largely driven by additional advertising in Florida markets as well as direct mail campaigns.
Amortization of intangibles was up $2.1$2.6 million and $5.2$7.8 million for the three and sixnine months ended JuneSeptember 30, 2019, respectively, due to amortization of the core deposit intangible asset created from the FCB acquisition, which will be amortized using an accelerated method over an estimated life of 10 years.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $7.4 million$353 thousand and $57.1$57.5 million for the three and sixnine months ended JuneSeptember 30, 2019, primarily related to employment compensation agreements, severance, and professional services. See "Note"Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the acquisition of FCB.
Earnout liability fair value adjustments associated with the 2016 Global One acquisition increased due to higher than projected earnings through September 30, 2019 and higher earnings estimates over the remaining contractual earnout period.
During the three and nine months ended September 30, 2019, Synovus repositioned certain assets and liabilities to improve portfolio performance and lower funding costs and incurred a $4.6 million net loss on early extinguishment of debt from the termination of an assumed $150 million long-term FHLB obligation from the FCB acquisition.
During the three and nine months ended September 30, 2019 and the nine months ended September 30, 2018, Synovus recorded $2.5 million and $2.3 million, respectively, in valuation adjustments to the Visa derivative following Visa's announcements to fund its litigation escrow account.
Other operating expenses includes travel, insurance, network and communication, other taxes, subscriptions and dues, other loan and ORE expense, postage and freight, training, business development, supplies, donations, and other miscellaneous expenses. Other operating expenses were up $3.1$6.6 million and $10.2$19.1 million, respectively, for the three and sixnine months ended JuneSeptember 30, 2019, includingprimarily due to the impactacquisition of FCB. OtherAdditionally, other operating expenses for the three and sixnine months ended JuneSeptember 30, 2018 included a benefit of $1.4 million and $4.0 million respectively, from recoveries and reductions in litigation contingency accruals and a $2.3 million valuation adjustment expense related to the Visa Derivative.accruals.
Income Tax Expense
Income tax expense was $54.6$51.3 million and $95.0$146.3 million for the three and sixnine months ended JuneSeptember 30, 2019, respectively, representing an effective tax rate of 25.9%27.4% and 25.6%26.2% for the respective periods. Income tax expense was $30.9$18.9 million and $61.1$80.1 million for the three and sixnine months ended JuneSeptember 30, 2018, respectively, representing an effective tax rate of 21.8%14.8% and 22.2%19.8% for the respective periods. The increase in the effective tax rate for the three and sixnine months ended JuneSeptember 30, 2019, as compared to the three and sixnine months ended JuneSeptember 30, 2018, was largely due to the FCB acquisition, including non-deductible merger-related expenses and an increase in state tax expense resulting from a shift of earnings into higher tax jurisdictions,jurisdictions. Other increases in tax expense resulted from the write-down of net deferred tax assets to reflect the enactment of a reduced Florida statutory income tax rate, the recording of an additional valuation allowance for state credits expected to expire unused and a decrease in the benefit recognized as a result of employee share-based award vesting. Additionally, the 2018 effective tax rate included discrete tax benefits for the refinement of provisional amounts reported under SAB 118, along with return to provision benefits from tax filings for 2017 and prior periods.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, bank-owned life insurance,BOLI, 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, income tax credits earned, and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.

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 lossesALL that management believes is sufficient to absorb probable losses inherent in its loan portfolio. Synovus continued to benefit from a relatively stable credit environment during the first sixnine months of 2019.
The table below includes selected credit quality metrics.
Table 7 - Credit Quality Metrics  
(dollars in thousands)June 30, 2019 December 31, 2018 June 30, 2018September 30, 2019 December 31, 2018 September 30, 2018
Non-performing loans(1)
$124,083
 $106,733
 $117,328
$115,915
 $106,733
 $108,425
Impaired loans held for sale(2)
631
 1,506
 2,733
Other real estate14,848
 6,220
 6,288
ORE and other assets35,400
 7,726
 8,554
Non-performing assets(1)
$139,562
 $114,459
 $126,349
$151,315
 $114,459
 $116,979
Total loans$36,138,561
 $25,946,573
 $25,134,056
$36,417,826
 $25,946,573
 $25,577,116
Non-performing loans as a % of total loans0.34% 0.41% 0.47%0.32% 0.41% 0.42%
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.39
 0.44
 0.50
Loans 90 days past due and still accruing$5,851
 $3,798
 $3,222
Non-performing assets as a % of total loans, ORE, and specific other assets0.42
 0.44
 0.46
Loans 90 days past due and still accruing(2)
$15,660
 $3,798
 $4,856
As a % of total loans0.02% 0.01% 0.01%0.04% 0.01% 0.02%
Total past due loans and still accruing(3)
$80,792
 $56,927
 $55,614
Total past due loans and still accruing(2)
$88,219
 $56,927
 $78,323
As a % of total loans0.22% 0.22% 0.22%0.24% 0.22% 0.31%
Net charge-offs, quarter$11,779
 $13,044
 $17,829
$19,925
 $13,044
 $15,257
Net charge-offs/average loans, quarter0.13% 0.20% 0.29%
Net charge-offs annualized/average loans, quarter0.22% 0.20% 0.24%
Net charge-offs, year-to-date$28,867
 $50,410
 $22,109
$48,792
 $50,410
 $37,366
Net charge-offs/average loans, year-to-date0.16% 0.20% 0.18%
Net charge-offs annualized/average loans, year-to-date0.18% 0.20% 0.20%
Provision for loan losses, quarter$12,119
 $12,148
 $11,790
$27,562
 $12,148
 $14,982
Provision for loan losses, year-to-date35,688
 51,697
 24,566
63,250
 51,697
 39,548
Allowance for loan losses257,376
 250,555
 251,725
265,013
 250,555
 251,450
Allowance for loan losses as a % of total loans0.71% 0.97% 1.00%0.73% 0.97% 0.98%
          
(1) For purposes of this table, JuneSeptember 30, 2019 non-performing loansNPLs exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.
(2) 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.
(3) For purposes of this table, JuneSeptember 30, 2019 total past due loans and still accruing include acquired loans accounted for under ASC 310-30 that are contractually 30-89 days past due.
Non-performing Assets
Total non-performing assetsNPAs as a percentage of total loans, impaired loans held for sale,ORE, and OREspecific other assets improved 52 basis points and 114 basis points, respectively, to 0.39%0.42% at JuneSeptember 30, 2019 compared to 0.44% at December 31, 2018 and 0.50%0.46% at JuneSeptember 30, 2018. Total NPAs were $139.6$151.3 million at JuneSeptember 30, 2019, a $25.1$36.9 million, or 21.9%32.2%, increase from $114.5 million at December 31, 2018 and a $13.2$34.3 million, or 10.5%29.4%, increase from $126.3$117.0 million at JuneSeptember 30, 2018, primarily due to NPAsincluding an increase of $21.7 million from the FCB acquisition. NPAs declined $15.7classification of an other asset related to an amount due from a MPS as non-performing at September 30, 2019 (See "Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - Commitments and Contingencies" in this Report for more information). During the nine months ended September 30, 2019, $19.0 million or 10.1%, fromof the March 31, 2019 balance of $155.3$23.5 million primarily due to the sale of FCB acquired NPLs during the second quarter of 2019were sold at a net price that exceeded the preliminary fair value recorded at the Acquisition Date.Date, resulting in an increase in the fair value of the acquired loans of $5.2 million during the measurement period.
Net Charge-offs
Net charge-offs for the sixnine months ended JuneSeptember 30, 2019 were $28.9$48.8 million, or 0.16%,0.18% annualized, as a percentage of average loans, annualized, compared to $22.1$37.4 million, or 0.18%,0.20% annualized, as a percentage of average loans, annualized, for the sixnine months ended JuneSeptember 30, 2018. The increase in net charge-offs from 2018 is primarily attributabledue to a few commercial loan charge-offs in the $1-4 million range as well as a higher level of recoveries in the previous year. Year-to-date net charge-offs of 1618 basis points is well(annualized) remain within Synovus' previous guidance of 15-20 basis points. Net charge-offs for the secondthird quarter of 2019 were 1322 basis points annualized, down from 2924 basis points annualized in the secondthird quarter of 2018, primarily due to lower gross charge-offs in the current quarter.2018.

Provision for Loan Losses and Allowance for Loan Losses
For the sixnine months ended JuneSeptember 30, 2019, the provision for loan losses was $35.7$63.3 million, an increase of $11.1$23.7 million, or 45.3%59.9%, compared to the sixnine months ended JuneSeptember 30, 2018. The year-to-dateyear-over-year increase in provision expense was driven by gross organic loan growth including renewal of maturing FCB loans (i.e., provisioning for acquired loans subsequent to the acquisition date) as well as an increased level of net charge-offs due toincluding lower recoveries. The provision for loan losses covered 124%130% of net charge-offs for the sixnine months ended JuneSeptember 30, 2019 compared to 111%106% for the sixnine months ended JuneSeptember 30, 2018. For the secondthird quarter of 2019, provision expense was $12.1$27.6 million, a declinean increase of $11.5$15.4 million or 48.6%, compared to the firstsecond quarter of 2019, primarily due to lowerhigher net charge-offs and reduction of impaired reserves.gross funded loan production.
The ALL at JuneSeptember 30, 2019 was $257.4$265.0 million, or 0.71%0.73% of total loans, compared to $250.6 million, or 0.97% of total loans, at December 31, 2018 and $251.7$251.5 million, or 1.00%0.98% of total loans, at JuneSeptember 30, 2018, reflecting a lower ratio at JuneSeptember 30, 2019 due to the impact of acquisition date accounting for acquired loans.The allowance to non-performing loansNPLs (excluding acquired NPLs with no reserve) at JuneSeptember 30, 2019 remained strong at 207%238%, compared to 235% at December 31, 2018 and 215%232% at JuneSeptember 30, 2018.
Table 8 - Accruing TDRs by Risk Grade                      
June 30, 2019 December 31, 2018 June 30, 2018September 30, 2019 December 31, 2018 September 30, 2018
(dollars in thousands)Amount % Amount % Amount %Amount % Amount % Amount %
Pass$60,586
 47.9% $50,668
 43.9% $57,013
 45.5%$65,171
 50.1% $50,668
 43.9% $44,226
 38.5%
Special Mention12,841
 10.2
 14,480
 12.5
 19,799
 15.8
14,053
 10.8
 14,480
 12.5
 20,091
 17.5
Substandard accruing52,942
 41.9
 50,440
 43.6
 48,498
 38.7
50,795
 39.1
 50,440
 43.6
 50,423
 44.0
Total accruing TDRs$126,369
 100.0% $115,588
 100.0% $125,310
 100.0%$130,019
 100.0% $115,588
 100.0% $114,740
 100.0%
                      
Troubled Debt Restructurings
Accruing TDRs were $126.4$130.0 million at JuneSeptember 30, 2019, compared to $115.6 million at December 31, 2018 and $125.3$114.7 million at JuneSeptember 30, 2018. Accruing TDRs increased $10.8$14.4 million from December 31, 2018 and$1.1 $15.3 million fromJune September 30, 2018. Non-accruing TDRs were $12.8$13.6 million at JuneSeptember 30, 2019, compared to $26.2 million at December 31, 2018 and $30.4$28.9 million at JuneSeptember 30, 2018, a decrease of $13.4$12.6 million and $17.6$15.3 million, respectively. The primary driver of the increase in accruing TDRs and decline in non-accruing TDRs compared to December 31, 2018 and JuneSeptember 30, 2018 is a result of a large TDR relationship being upgraded in the second quarter of 2019 from non-accruing to accruing status based on the extent of its payment performance and the expectation of the collectability of all contractual amounts.
Accruing TDRs are considered performing because they are performing in accordance with the restructured terms.At JuneSeptember 30, 2019, December 31, 2018, and JuneSeptember 30, 2018, approximately97% 98%, 98%, and 97%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 remainedcontinued to remain at low levels.


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. At JuneSeptember 30, 2019, Synovus and Synovus Bank's capital levels remained strong and exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Table 9 - Capital Ratios      
(dollars in thousands)June 30, 2019 December 31, 2018September 30, 2019 December 31, 2018
CET1 capital (transitional)      
Synovus Financial Corp.$3,899,532
 $2,897,997
$3,660,078
 $2,897,997
Synovus Bank4,513,247
 3,382,497
4,577,972
 3,382,497
Tier 1 risk-based capital      
Synovus Financial Corp.4,094,672
 3,090,416
4,196,628
 3,090,416
Synovus Bank4,513,247
 3,382,497
4,577,972
 3,382,497
Total risk-based capital      
Synovus Financial Corp.4,913,043
 3,601,376
5,023,138
 3,601,376
Synovus Bank4,771,618
 3,633,457
4,844,482
 3,633,457
CET1 capital ratio (transitional)      
Synovus Financial Corp.9.61% 9.95%8.96% 9.95%
Synovus Bank11.13
 11.62
11.21
 11.62
Tier 1 risk-based capital ratio      
Synovus Financial Corp.10.09
 10.61
10.27
 10.61
Synovus Bank11.13
 11.62
11.21
 11.62
Total risk-based capital to risk-weighted assets ratio      
Synovus Financial Corp.12.11
 12.37
12.29
 12.37
Synovus Bank11.77
 12.49
11.87
 12.49
Leverage ratio      
Synovus Financial Corp.8.89
 9.60
9.02
 9.60
Synovus Bank9.80
 10.51
9.85
 10.51
Tangible common equity ratio(1)
      
Synovus Financial Corp.8.56
 8.34
8.04
 8.81
      
(1)See ""Table 14 - Reconciliation of Non-GAAP Financial Measures"Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
At JuneSeptember 30, 2019, Synovus' CET1 ratio was 9.61%8.96% under the Basel III transitional provisions, and the estimated fully phased-in CET1 ratio was 9.60% (See "Non-GAAP Financial Measures" in this Report)8.94%(1), consistent with the lower end of Synovus' target operating range, and both of which are well in excess of regulatory requirements including the capital conservation buffer which has now reached the fully-phased in amount of 2.5% effective January 1, 2019.. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 11 - Regulatory Capital" to the consolidated financial statements of Synovus' 2018 Form 10-K for additional information on regulatory capital requirements. 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 inclusive of the capital conservation buffer.
Effective January 1, 2019, Synovus completed its acquisition of all of the outstanding stock of FCB for total consideration of $1.63 billion. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the FCB acquisition.
On June 17, 2019, the CompanySynovus announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019. As of JuneSeptember 30, 2019, Synovus had repurchased under this program a total of $345.0$688.5 million, or 9.218.8 million shares of its common stock, at an average price of $37.43$36.55 per share.share, and reduced common shares outstanding by 10.7% from January 1, 2019. As of July 31,October 24, 2019, the remaining authorization under this program was $286.8 million. The timing and amountcomplete with total repurchases of future repurchases under the share repurchase program will depend upon a variety$725 million, or 19.9 million shares of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by us and applicable law and regulations.
Additionally, Synovus increased the quarterly common stock dividend by 20% to $0.30 per share effective with the first quarter 2019 dividend paid in April 2019.

On February 7, 2019, Synovus completed a public offering of $300.0 million aggregate principal amount of 5.900% Fixed-to-Fixed Rate Subordinated Notes due in 2029.stock.
On July 1, 2019, Synovus completed a $350 million public offering of Tier 1 qualifying Series E Preferred Stock. The preferred stock offering generated net proceeds of $341.5 million.$341.4 million which were largely used to repurchase common stock under the share repurchase authorization.
In December 2018, the federal banking regulators adopted as final the 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,CECL, on regulatory capital over a period of three

years. Synovus expects to elect the phase-in option upon adoption of CECL. For additional information on ASU 2016-13,CECL, see "Note"Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report.
Dividends
Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely monitor current and projected capital levels, liquidity (including dividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. Synovus increased the quarterly common stock dividend by 20% to $0.30 per share effective with the first quarter 2019 dividend paid in April 2019.
Synovus' ability to pay dividends on its common stock and preferred stock is primarily dependent upon dividends and distributions that it receives from its bank and non-banking subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities.
Synovus declared common stock dividends of $0.60 and $0.50$138.9 million, or $0.90 per common share, for the sixnine months ended JuneSeptember 30, 2019, and 2018, respectively.compared to $88.4 million, or $0.75 per common share, for the nine months ended September 30, 2018. In addition to dividends paid on its common stock, Synovus paiddeclared dividends of $6.3 million on its Series D Preferred Stockpreferred stock of $14.6 million and $10.8 million during the sixnine months ended JuneSeptember 30, 2019 and paid dividends of $5.1 million on its Series C Preferred Stock during the six months ended June 30, 2018.2018, respectively.
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, core 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 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 (the balance of these deposits at June 30, 2019 was $530.2 million). In addition, Synovus Bank has the capacity to access funding through its membership in the FHLB system. At JuneSeptember 30, 2019, based on currently pledged collateral, Synovus Bank had access to incremental funding of $2.06$1.08 billion, subject to FHLB credit policies, through utilization of FHLB advances.
In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. 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 February 7, 2019, Synovus completed a public offering of $300.0 million aggregate principal amount of 5.900% Fixed-to-Fixed Rate Subordinated Notes due in 2029.  Subject to any redemption prior to February 7, 2029, the notes will bear interest at the rate of 5.900% per annum for the first five years and, thereafter, at a fixed rate which will be 3.379% above the 5-Year Mid-Swap Rate as of the reset date. Interest on the notes will be payable semi-annually in arrears. The notes will mature on February 7, 2029. Proceeds from these notes were primarily used to repurchase common stock under the currentshare repurchase authorization.
On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. The offering generated net proceeds of $341.5$341.4 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 5.875% for each dividend period from the original issue date to, but excluding, July 1, 2024. From and including July 1, 2024, the dividend rate will change and reset every five years on July 1 at a rate equal to the five-year

U.S. Treasury Rate plus 4.127% per annum. The Series E Preferred Stock is redeemable at Synovus' option in whole or in part, from time to time, on July 1, 2024 or any subsequent reset date, or in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in each case, at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series E Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series E Preferred Stock does not have any voting rights. Proceeds from the preferred stock offering will bewere primarily used for general corporate purposes, including share repurchasesto repurchase common stock under the newshare repurchase authorization.
On September 19, 2019, Synovus terminated an assumed $150 million long-term FHLB obligation from the FCB acquisition primarily through utilization of short-term FHLB advances and incurred a $4.6 million net loss on early extinguishment of debt.
Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank were to increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I – Item 1A. Risk Factors - 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.results" of Synovus' 2018 Form 10-K. Furthermore, Synovus may, from time to time, take advantage of attractive market opportunities to refinance its existing debt, redeem its preferred stock, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average total assets for the sixnine months ended JuneSeptember 30, 2019 increased $14.86$15.07 billion, or 47.4%47.9%, to $46.24$46.57 billion as compared to $31.37$31.49 billion for the first sixnine months of 2018. Average earning assets increased $13.32$13.46 billion, or 45.0%45.3%, in the first sixnine months of 2019 compared to the same period in 2018 and represented 92.8%92.7% of average total assets at JuneSeptember 30, 2019, as compared to 94.3% at JuneSeptember 30, 2018. The increase in average earning assets resulted from a $10.64$10.72 billion increase in average loans, net, and a $2.66$2.70 billion increase in average investment securities primarily attributable to the FCB acquisition.
Average interest-bearing liabilities increased $11.05$11.17 billion, or 53.2%53.8%, to $31.81$31.93 billion for the first sixnine months of 2019 compared to the same period in 2018. The increase in average interest-bearing liabilities was primarily related to the $10.93 billion in deposits acquired from FCB, on the Acquisition Date, of which $9.42 billion were interest-bearing. The year-over-year increase in average interest-bearing liabilities included a $5.72 billion increase in average time deposits, a $2.97 billion increase in average money market deposit accounts, a $1.35 billion increase in average interest-bearing demand deposits, a $608.1 million increase inAdditionally, average other short-term borrowings and a $256.4increased $794.3 million increase inand average long-term debt increased $382.1 million, primarily due to the $300.0 million aggregate principal amount of fixed-to-fixed rate subordinated notes issued in February 2019.
The year-over-year increase in average interest-bearing deposits of $9.96 billion included a $5.58 billion increase in average time deposits, a $2.92 billion increase in average money market deposit accounts, and a $1.38 billion increase in average interest-bearing demand deposits. Average non-interest-bearing demand deposits increased $1.71 billion, or 23.0%22.7%, to $9.18$9.24 billion for the first sixnine months of 2019 compared to the same period in 2018, due primarily to the FCB acquisition.
Net interest income for the six months ended June 30, 2019 was $794.4 million, an increase of $235.6 million, or 42.2%, compared to $558.9$402.1 million for the sixthree months ended JuneSeptember 30, 2018,2019, and $1.20 billion for the nine months ended September 30, 2019, up 37.9% and 40.7%, respectively, over the comparable periods of 2018. Both quarter-over-quarter and year-over-year increases were driven primarily by the FCB acquisition. Net interest margin was down 820 basis points and 12 basis points over the comparable six-monththree and nine-month periods to 3.74% 3.69% and 3.72%, and wasrespectively, impacted primarily by the FCB acquisition, the continued deposit shift to time deposits, and the issuance of subordinated debt. TheYear-to-date September 30, 2019, the yield on earning assets was 4.80%4.79%, an increase of 4134 basis points compared to the sixnine months ended JuneSeptember 30, 2018, while the total cost of funds increased 5149 basis points to 1.11%1.13%. The yield on loans increased 3830 basis points to 5.17%5.16%, and the yield on investment securities increased 7173 basis points to 3.05%3.08% over the sixnine months ended JuneSeptember 30, 2018.
On a sequential quarter basis, net interest income was essentially flat.up $4.8 million, or 1.2%. The net interest margin for the third quarter was 3.69%, down 9 basis points fromwhich was flat compared to the firstsecond quarter of 2019, and included a 1 basis point decrease in earning asset yields and an 8 basis point increase in the total cost of funds.2019. Net interest income and margin for the secondthird quarter of 2019 were favorably impacted by $21.0$28.9 million, or 2127 basis points, of purchase accounting adjustments primarily comprised of $9.8$16.1 million of loan accretion (excess over contractual interest), $1.7 million of investment securities accretion, and $11.0 million of deposit premium amortization compared to a favorable impact of $18.8$21.0 million, or 1921 basis points, including $7.4$9.8 million of loan accretion (excess over contractual interest) and $11.0 million of deposit premium amortization, in the firstsecond quarter of 2019. The sequential quarter decrease in the net interest margin was driven by the full quarter effect of sub-debt issuance and continued upward repricing of

time deposits. The net interest margin, excluding the impact of purchase accounting adjustments, was 3.48%down 6 basis points sequentially to 3.42% for the secondthird quarter of 2019, down 11driven by an 8 basis point decrease in the yield on earning assets and a 2 basis point decrease in the effective cost of funds due to the two 25 basis points sequentially.federal funds rate declines in July and September.


Quarterly yields earned on average interest-earning assets and rates paid on average interest-bearing liabilities for the five most recent quarters are presented below.
Table 10 - Average Balances and Yields/Rates2019 20182019 2018
(dollars in thousands) (yields and rates annualized)Second Quarter First Quarter Fourth Quarter Third Quarter Second QuarterThird Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
Interest Earning Assets:                  
Investment securities(1)(2)
$6,955,386
 6,536,199
 4,073,685
 4,061,328
 4,077,679
$6,831,036
 6,955,386
 6,536,199
 4,073,685
 4,061,328
Yield3.03% 3.06
 2.45
 2.39
 2.36
3.14% 3.03
 3.06
 2.45
 2.39
Trading account assets(3)
$4,853
 2,049
 7,493
 16,646
 23,772
$5,519
 4,853
 2,049
 7,493
 16,646
Yield1.83% 1.30
 1.90
 2.52
 2.79
4.01% 1.83
 1.30
 1.90
 2.52
Commercial loans(2)(4)
$26,353,973
 26,140,672
 19,150,252
 19,025,830
 18,857,271
$26,568,194
 26,353,973
 26,140,672
 19,150,252
 19,025,830
Yield5.13% 5.16
 5.13
 4.98
 4.85
5.09% 5.13
 5.16
 5.13
 4.98
Consumer loans(4)
$9,423,427
 9,180,679
 6,476,026
 6,298,643
 6,092,899
$9,633,603
 9,423,427
 9,180,679
 6,476,026
 6,298,643
Yield5.17% 5.10
 4.85
 4.80
 4.76
5.08% 5.17
 5.10
 4.85
 4.80
Allowance for loan losses$(259,284) (252,815) (251,098) (251,684) (257,966)$(258,024) (259,284) (252,815) (251,098) (251,684)
Loans, net(4)
$35,518,116
 35,068,536
 25,375,180
 25,072,789
 24,692,204
$35,943,773
 35,518,116
 35,068,536
 25,375,180
 25,072,789
Yield5.17% 5.17
 5.11
 4.99
 4.88
5.13% 5.17
 5.17
 5.11
 4.99
Mortgage loans held for sale$70,497
 34,913
 36,477
 49,030
 50,366
$99,556
 70,497
 34,913
 36,477
 49,030
Yield4.27% 4.48
 4.79
 4.71
 4.42
3.93% 4.27
 4.48
 4.79
 4.71
Other earning assets(5)
$511,488
 679,477
 641,832
 544,704
 724,537
$513,160
 511,488
 679,477
 641,832
 544,704
Yield2.37% 2.45
 2.20
 1.90
 1.77
2.08% 2.37
 2.45
 2.20
 1.90
Federal Home Loan Bank and Federal Reserve Bank Stock(3)
$234,949
 211,408
 162,369
 163,568
 165,845
$254,994
 234,949
 211,408
 162,369
 163,568
Yield3.29% 4.82
 4.31
 4.41
 4.63
3.85% 3.29
 4.82
 4.31
 4.41
Total interest earning assets$43,295,289

42,532,582

30,297,036

29,908,065

29,734,403
$43,648,038

43,295,289

42,532,582

30,297,036

29,908,065
Yield4.79% 4.80
 4.69
 4.58
 4.47
4.78% 4.79
 4.80
 4.69
 4.58
Interest-Bearing Liabilities:                  
Interest-bearing demand deposits$6,335,953
 6,393,304
 4,692,804
 4,701,204
 5,001,826
$6,138,810
 6,335,953
 6,393,304
 4,692,804
 4,701,204
Rate0.71% 0.68
 0.41
 0.38
 0.35
0.69% 0.71
 0.68
 0.41
 0.38
Money market accounts, excluding brokered deposits$10,024,836
 10,244,556
 8,050,732
 7,936,621
 7,791,107
$10,138,783
 10,024,836
 10,244,556
 8,050,732
 7,936,621
Rate1.23% 1.18
 0.89
 0.72
 0.55
1.26% 1.23
 1.18
 0.89
 0.72
Savings deposits$904,183
 901,059
 815,588
 824,935
 829,800
$900,366
 904,183
 901,059
 815,588
 824,935
Rate0.05% 0.06
 0.04
 0.03
 0.03
0.05% 0.05
 0.06
 0.04
 0.03
Time deposits under $100,000$2,245,878
 2,238,568
 1,242,811
 1,205,987
 1,161,890
$2,100,492
 2,245,878
 2,238,568
 1,242,811
 1,205,987
Rate1.39% 1.24
 1.16
 0.99
 0.82
1.39% 1.39
 1.24
 1.16
 0.99
Time deposits over $100,000$6,331,665
 6,211,067
 2,478,649
 2,273,582
 2,021,084
$5,957,691
 6,331,665
 6,211,067
 2,478,649
 2,273,582
Rate1.70% 1.60
 1.67
 1.46
 1.22
1.69% 1.70
 1.60
 1.67
 1.46
Non-maturing brokered deposits$766,718
 937,629
 349,480
 358,277
 262,976
$993,078
 766,718
 937,629
 349,480
 358,277
Rate2.46% 2.60
 2.46
 2.10
 1.94
2.47% 2.46
 2.60
 2.46
 2.10
Brokered time deposits$1,985,589
 1,845,819
 1,275,276
 1,414,700
 1,659,941
$2,119,149
 1,985,589
 1,845,819
 1,275,276
 1,414,700
Rate2.28% 2.13
 2.03
 1.94
 1.85
2.27% 2.28
 2.13
 2.03
 1.94
Total interest-bearing deposits$28,594,822
 28,772,002
 18,905,340
 18,715,306
 18,728,624
$28,348,369
 28,594,822
 28,772,002
 18,905,340
 18,715,306
Rate1.30% 1.24
 0.96
 0.83
 0.70
1.32% 1.30
 1.24
 0.96
 0.83
Federal funds purchased and securities sold under repurchase agreements$300,168
 233,076
 194,370
 230,504
 207,655
$221,045
 300,168
 233,076
 194,370
 230,504
Rate0.20% 0.22
 0.18
 0.25
 0.35
0.22% 0.20
 0.22
 0.18
 0.25
Other short-term borrowings$1,090,581
 517,456
 112,228
 146,794
 3,024
$1,307,370
 1,090,581
 517,456
 112,228
 146,794
Rate2.59% 2.58
 2.51
 2.12
 2.84
2.31% 2.59
 2.58
 2.51
 2.12
Long-term debt$2,114,819
 1,983,910
 1,657,022
 1,656,743
 1,852,094
$2,286,221
 2,114,819
 1,983,910
 1,657,022
 1,656,743
Rate3.53% 3.33
 3.06
 2.87
 2.66
3.32% 3.53
 3.33
 3.06
 2.87
Total interest-bearing liabilities$32,100,390
 31,506,444

20,868,960

20,749,347

20,791,397
$32,163,005
 32,100,390

31,506,444

20,868,960

20,749,347
Rate1.48% 1.38
 1.12
 0.99
 0.87
1.47% 1.48
 1.38
 1.12
 0.99
Non-interest-bearing demand deposits$9,304,839
 9,054,949
 8,014,761
 7,672,006
 7,539,451
$9,365,776
 9,304,839
 9,054,949
 8,014,761
 7,672,006
Cost of funds1.15% 1.07
 0.81
 0.73
 0.64
1.16% 1.15
 1.07
 0.81
 0.73
Effective cost of funds(6)
1.10% 1.02
 0.77
 0.69
 0.61
1.09% 1.10
 1.02
 0.77
 0.69
Net interest margin3.69% 3.78
 3.92
 3.89
 3.86
3.69% 3.69
 3.78
 3.92
 3.89
Taxable equivalent adjustment(2)
$811
 630
 181
 136
 120
$819
 811
 630
 181
 136
                  
(1)
Excludes net unrealized gains (losses).
(2) 
Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(3) 
Included as a component of other assets on the consolidated balance sheets.
(4) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(4)
Average loans are shown net of deferred fees and costs. NPLs are included.
(5) 
Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(6) Includes the impact of non-interest-bearing capital funding sources.
(6)
Includes the impact of non-interest-bearing capital funding sources.

Net Interest Income and Rate/Volume Analysis
The following table sets forth the major components of net interest income and the related annualized yields and rates for the sixnine months ended JuneSeptember 30, 2019 and 2018, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Table 11 - Net Interest Income and Rate/Volume Analysis
Six Months Ended June 30, 2019 Compared to 2018Nine Months Ended September 30, 2019 Compared to 2018
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)2019 2018 2019 2018 2019 2018 Volume Rate 2019 2018 2019 2018 2019 2018 Volume Rate 
Assets                                  
Interest earning assets:                                  
Investment securities$6,746,950
 $4,087,437
 $102,789
 $47,816
 3.05% 2.34% $31,103
 $23,870
 $54,973
$6,775,287
 $4,078,637
 $156,554
 $71,980
 3.08% 2.35% $47,650
 $36,924
 $84,574
Trading account assets3,459
 16,012
 29
 220
 1.67
 2.75
 (171) (20) (191)4,153
 16,226
 84
 325
 2.70
 2.67
 (241) —
 (241)
Taxable loans, net(1)
35,207,787
 24,854,408
 900,151
 584,543
 5.16
 4.74
 243,358
 72,250
 315,608
35,421,829
 24,993,328
 1,360,533
 898,671
 5.14
 4.81
 375,178
 86,684
 461,862
Tax-exempt loans, net(1)(2)
342,848
 52,184
 6,587
 1,120
 3.87
 4.33
 6,241
 (774) 5,467
348,246
 54,088
 10,453
 1,767
 4.01
 4.37
 9,615
 (929) 8,686
Allowance for loan losses(256,067) (254,818)              (256,727) (253,762)              
Loans, net35,294,568
 24,651,774
 906,738
 585,663
 5.17
 4.79
 249,599

71,476
 321,075
35,513,348
 24,793,654
 1,370,986
 900,438
 5.16
 4.86
 384,793

85,755
 470,548
Mortgage loans held for sale52,803
 44,396
 1,143
 936
 4.33
 4.22
 176
 31
 207
68,558
 45,958
 2,122
 1,514
 4.13
 4.39
 742
 (134) 608
Other earning assets(3)
595,018
 621,131
 7,233
 5,147
 2.42
 1.65
 (212) 2,298
 2,086
567,433
 595,376
 9,964
 7,799
 2.32
 1.73
 (360) 2,525
 2,165
Federal Home Loan Bank and Federal Reserve Bank stock223,244
 171,581
 4,479
 3,422
 4.01
 3.99
 1,022
 35
 1,057
233,943
 168,881
 6,931
 5,227
 3.95
 4.13
 2,010
 (306) 1,704
Total interest earning assets42,916,042

29,592,331
 1,022,411

643,204
 4.80
 4.39
 281,517

97,690

379,207
43,162,722

29,698,732
 1,546,641

987,283
 4.79
 4.45
 434,594

124,764

559,358
Cash and due from banks517,958
 387,472
              516,789
 390,288
              
Premises and equipment, net483,420
 427,291
              486,141
 428,456
              
Other real estate14,056
 3,709
              14,803
 5,005
              
Cash surrender value of bank-owned life insurance763,741
 543,233
              765,204
 545,046
              
Other assets(4)
1,544,423
 420,908
              1,621,335
 425,588
              
Total assets$46,239,640

$31,374,944
              $46,566,994

$31,493,115
              
                                  
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity                Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                                  
Interest-bearing demand deposits$6,364,470
 $5,016,830
 $21,974
 $8,151
 0.70% 0.33% $2,205
 $11,618
 $13,823
$6,288,424
 $4,910,465
 $32,611
 $12,650
 0.69% 0.34% $3,504
 $16,457
 $19,961
Money market accounts10,985,791
 8,020,066
 71,264
 21,192
 1.31
 0.53
 7,794
 42,278
 50,072
11,035,016
 8,112,684
 109,711
 37,587
 1.33
 0.62
 13,551
 58,573
 72,124
Savings deposits902,630
 820,744
 258
 118
 0.06
 0.03
 12
 128
 140
901,867
 822,156
 371
 177
 0.05
 0.03
 18
 176
 194
Time deposits10,430,033
 4,705,778
 86,887
 29,514
 1.68
 1.26
 35,767
 21,606
 57,373
10,344,873
 4,769,299
 131,773
 47,781
 1.70
 1.34
 55,881
 28,111
 83,992
Federal funds purchased and securities sold under repurchase agreements266,807
 204,956
 281
 288
 0.21
 0.28
 86
 (93) (7)251,385
 213,565
 404
 434
 0.21
 0.27
 76
 (106) (30)
Other short-term borrowings805,602
 197,460
 10,476
 1,516
 2.59
 1.53
 4,614
 4,346
 8,960
974,696
 180,385
 18,195
 2,310
 2.46
 1.69
 10,040
 5,845
 15,885
Long-term debt2,049,726
 1,793,342
 35,392
 23,328
 3.43
 2.60
 3,306
 8,758
 12,064
2,129,424
 1,747,309
 54,785
 35,492
 3.39
 2.68
 7,660
 11,633
 19,293
Total interest-bearing liabilities31,805,059

20,759,176
 226,532
 84,107
 1.43
 0.81
 53,784

88,641

142,425
31,925,685

20,755,863
 347,850
 136,431
 1.44
 0.87
 90,730

120,689

211,419
Non-interest-bearing deposits9,180,584
 7,465,982
              9,242,993
 7,535,411
              
Other liabilities689,462
 201,790
              691,357
 215,327
              
Shareholders' equity4,564,535
 2,947,996
              4,706,959
 2,986,514
              
Total liabilities and equity$46,239,640

$31,374,944
              $46,566,994

$31,493,115
              
Interest rate spread:        3.37% 3.58%              3.35% 3.58%      
Net interest income - FTE/margin(5)
    $795,879
 $559,097
 3.74% 3.82% $227,733

$9,049

$236,782
    $1,198,791
 $850,852
 3.72% 3.84% $343,864

$4,075

$347,939
Taxable equivalent adjustment    1,441
 236
              2,256
 372
          
Net interest income, actual    $794,438
 $558,861
              $1,196,535
 $850,480
          
                                  
(1) Average loans are shown net of unearned income. Non-performing loansNPLs are included. Interest income includes fees as follows: 2019 - $17.1$26.4 million, 2018 - $15.5$23.5 million.
(2) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans to a taxable-equivalent basis.
(3) Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(4) Includes average net unrealized gains (losses) on investment securities available for sale of $(36.5) million and $(115.1) million for the six months ended June 30, 2019 and 2018, respectively.
(5) The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.
(2)
Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans to a taxable-equivalent basis.
(3)
Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(4)
Includes average net unrealized gains (losses) on investment securities available for sale of $14.7 million and $(123.8) million for the nine months ended September 30, 2019 and 2018, 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 2.25%1.75% to 2.50%2.00% and the current prime rate of 5.50%5.00%. Synovus has modeled the impact of a gradual increase in the targeted federal funds range and the prime rate of 100 and 200 basis points and a gradual decline of 100 and 200 basis points to determine the sensitivity of net interest income for the next twelve months. For the 200 basis point decline scenario, Synovus assumes the targeted federal funds rate is 0% and the prime rate is 3.00%. Synovus' current rate risk position is considered modestly asset-sensitive and would be expected to benefit net interest income in a rising interest rate environment and reduce net interest income in a declining interest rate environment. The following table represents the estimated sensitivity of net interest income at JuneSeptember 30, 2019, with comparable information for December 31, 2018.
 
Table 12 - Twelve Month Net Interest Income Sensitivity(1)
   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, 2019 December 31, 2018
 +200 4.7% 3.4%
 +100 3.0% 2.0%
 Flat —% —%
 -100 (1.5)% (2.0)%
 -200 (4.8)% N/A
      
 
Table 12 - Twelve Month Net Interest Income Sensitivity(1)
   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, 2019 December 31, 2018
 +200 4.2% 3.4%
 +100 2.8% 2.0%
 Flat —% —%
 -100 (2.7)% (2.0)%
 -200 (5.4)% N/A
      
(1) December 31, 2018 does not include assets and liabilities of FCB which were acquired on January 1, 2019.
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 equityEVE 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 equityEVE 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.EVE. 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 2.6% and decrease by 0.5% and by 4.3%1.0%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 100 basis point and 200 basis point decline in rates, EVE is projected to decrease by 7.0%9.3% and 19.2%20.0%, respectively. These changes in long-term interest rate sensitivity are primarily due to the impact of the acquisition of FCB.
Table 13 - Economic Value of Sensitivity(1)
    
  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2019 December 31, 2018
+200 (4.3)% 0.7%
+100 (0.5)% 1.3%
-100 (7.0)% (13.9)%
-200 (19.2)% N/A
     
Table 13 - Economic Value of Sensitivity(1)
    
  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) September 30, 2019 December 31, 2018
+200 (1.0)% 0.7%
+100 2.6% 1.3%
-100 (9.3)% (13.9)%
-200 (20.0)% N/A
     
(1) December 31, 2018 does not include assets and liabilities of FCB which were acquired on January 1, 2019.





LIBOR
In July 2017, the Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021, confirming the continuation of LIBOR will not be guaranteed beyond that date.  The ARRC has proposed the SOFR as its preferred rate as an alternative to LIBOR and has proposed a paced market transition plan to SOFR from LIBOR.  Organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR.  As noted within our 10-K Risk Factors, Synovus holds instruments that may be impacted by the discontinuance of LIBOR including floating rate obligations, loans, deposits, derivatives and hedges, and other financial instruments but is not able to currently predict the associated financial impacts of the transition to an alternative reference rate.  Synovus has established a cross-functional LIBOR transition working group that is in the process of i) assessing the Company's current exposure to LIBOR indexed instruments and the data, systems and processes that may also be impacted; ii) establishing an implementation plan; and iii) developing a formal governance structure for the transition. 
Critical Accounting Policies
The accounting and financial reporting policies of Synovus are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Synovus has identified certain of its accounting policies as “critical accounting policies,” consisting of those related to the allowance for loan losses, fair value measurements and income taxes. In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee, including the development, selection, implementation and disclosure of the critical accounting policies. The application of these policies has a significant impact on Synovus’ unaudited interim consolidated financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2018 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. Excluding the recently adopted accounting standards and purchased loans accounting policy disclosed in "Note"Part I - Item 1. Financial Statements and Supplementary Data - 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' 2018 Form 10-K.







Non-GAAP Financial Measures
The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; core deposits; core transaction deposits; tangible common equity ratio; and 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-FTE; net income per common share, diluted; return on average assets; return on average common equity; total 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 are measures used by management to evaluate non-interest income exclusive of net investment securities losses and gains (losses)on sale and changes in fair value of private equity investments, net. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income per common share, diluted, adjusted return on average assets, and adjusted return on average common equity are measurements used by management to evaluate operating results exclusive of items that management believes are not indicative of ongoing operations and impact period-to-period comparisons. The adjustedAdjusted 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. Core deposits and core transaction deposits are measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The tangible common equity ratio and 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.
Table 14 - Reconciliation of Non-GAAP Financial Measures       Table 14 - Reconciliation of Non-GAAP Financial Measures      
Three Months Ended Six Months EndedThree Months Ended Nine Months Ended
(in thousands)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Adjusted non-interest income              
Total non-interest income$89,807
 $73,387
 $169,185
 $140,433
$88,760
 $71,668
 $257,945
 $212,101
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
3,731
 —
 5,502
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract/add: Gain on sale and (increase) decrease in fair value of private equity investments, net(1,194) (434) (3,507) 2,659
Adjusted non-interest income$90,197
 $74,720
 $168,643
 $144,822
$91,297
 $71,234
 $259,940
 $216,056
              
Adjusted non-interest expense              
Total non-interest expense$264,126
 $204,057
 $556,537
 $399,234
$276,310
 $220,297
 $832,847
 $619,531
Subtract: Earnout liability adjustments(10,457) (11,652) (10,457) (11,652)
Subtract: Merger-related expense(7,401) —
 (57,140) —
(353) (6,684) (57,493) (6,684)
Add: Litigation settlement/contingency expense—
 1,400
 —
 4,026
—
 —
 —
 4,026
Subtract/add: Restructuring charges, net(18) (103) (37) 212
Subtract: Fair value adjustment to Visa derivative—
 (2,328) —
 (2,328)
Add/subtract: Restructuring charges, net66
 (21) 29
 191
Subtract: Valuation adjustment to Visa derivative(2,500) —
 (2,500) (2,328)
Subtract: Loss on early extinguishment of debt, net(4,592) —
 (4,592) —
Adjusted non-interest expense$256,707
 $203,026
 $499,360
 $401,144
$258,474
 $201,940
 $757,834
 $603,084
              

Table 14 - Reconciliation of Non-GAAP Financial Measures, continuedTable 14 - Reconciliation of Non-GAAP Financial Measures, continued    Table 14 - Reconciliation of Non-GAAP Financial Measures, continued    

Three Months Ended Six Months EndedThree Months Ended Nine Months Ended
(in thousands, except per share data)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Adjusted total revenues and adjusted tangible efficiency ratio              
Adjusted non-interest expense$256,707
 $203,026
 $499,360
 $401,144
$258,474
 $201,940
 $757,834
 $603,084
Subtract: Amortization of intangibles(2,410) (292) (5,802) (583)(2,901) (292) (8,702) (875)
Adjusted tangible non-interest expense$254,297
 $202,734
 $493,558
 $400,561
$255,573
 $201,648
 $749,132
 $602,209
              
Net interest income$397,262
 $284,577
 $794,438
 $558,861
$402,097
 $291,619
 $1,196,535
 $850,480
Add: Tax equivalent adjustment811
 120
 1,441
 236
819
 136
 2,256
 372
Add: Total non-interest income89,807
 73,387
 169,185
 140,433
88,760
 71,668
 257,945
 212,101
Total FTE revenues$487,880
 $358,084
 $965,064
 $699,530
$491,676
 $363,423
 $1,456,736
 $1,062,953
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
3,731
 —
 5,502
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract/add: Gain on sale and (increase) decrease in fair value of private equity investments, net(1,194) (434) (3,507) 2,659
Adjusted total revenues$488,270
 $359,417
 $964,522
 $703,919
$494,213
 $362,989
 $1,458,731
 $1,066,908
Efficiency ratio-FTE54.14% 56.99% 57.67% 57.07%56.20% 60.62% 57.17% 58.28%
Adjusted tangible efficiency ratio52.08
 56.41
 51.17
 56.90
51.71
 55.55
 51.36
 56.44
              
Adjusted net income per common share, diluted              
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
$127,435
 $99,330
 $397,505
 $308,559
Subtract/add: Income tax expense, net related to State Tax Reform—
 (608) —
 717
Add/subtract: Income tax expense (benefit), net related to State Tax Reform, SAB 118, and adjusted portion of other discrete items4,402
 (9,865) 4,402
 (9,148)
Add: Earnout liability adjustments10,457
 11,652
 10,457
 11,652
Add: Preferred stock redemption charge—
 4,020
 —
 4,020
Add: Merger-related expense7,401
 —
 57,140
 —
353
 6,684
 57,493
 6,684
Subtract: Litigation settlement/contingency expense—
 (1,400) —
 (4,026)—
 —
 —
 (4,026)
Add/subtract: Restructuring charges, net18
 103
 37
 (212)
Add: Fair value adjustment to Visa derivative—
 2,328
 —
 2,328
Subtract/add: Restructuring charges, net(66) 21
 (29) (191)
Add: Valuation adjustment to Visa derivative2,500
 —
 2,500
 2,328
Add: Loss on early extinguishment of debt, net4,592
 —
 4,592
 —
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
3,731
 —
 5,502
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract: Tax effect of adjustments(1,951) (554) (7,659) (582)
Subtract/add: Gain on sale and (increase) decrease in fair value of private equity investments, net(1,194) (434) (3,507) 2,659
Subtract/add: Tax effect of adjustments(2,478) 96
 (10,137) (486)
Adjusted net income available to common shareholders$158,892
 $109,824
 $319,046
 $211,843
$149,732
 $111,504
 $468,778
 $323,347
Weighted average common shares outstanding, diluted159,077
 119,139
 160,908
 119,229
154,043
 118,095
 158,595
 118,847
Adjusted net income per common share, diluted$1.00
 $0.92
 $1.98
 $1.78
$0.97
 $0.94
 $2.96
 $2.72
              



Table 14 - Reconciliation of Non-GAAP Financial Measures, continuedTable 14 - Reconciliation of Non-GAAP Financial Measures, continued    Table 14 - Reconciliation of Non-GAAP Financial Measures, continued    
Three Months Ended Six Months EndedThree Months Ended Nine Months Ended
(dollars in thousands)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Adjusted return on average assets (annualized)              
Net income$156,184
 $111,181
 $276,370
 $214,348
$135,726
 $109,059
 $412,096
 $323,407
Subtract/add: Income tax expense, net related to State Tax Reform—
 (608) —
 717
Add/subtract: Income tax expense (benefit), net related to State Tax Reform, SAB 118, and adjusted portion of other discrete items4,402
 (9,865) 4,402
 (9,148)
Add: Earnout liability adjustments10,457
 11,652
 10,457
 11,652
Add: Merger-related expense7,401
 —
 57,140
 —
353
 6,684
 57,493
 6,684
Subtract: Litigation settlement/contingency expense—
 (1,400) —
 (4,026)—
 —
 —
 (4,026)
Add/subtract: Restructuring charges, net18
 103
 37
 (212)
Add: Fair value adjustment to Visa derivative—
 2,328
 —
 2,328
Subtract/add: Restructuring charges, net(66) 21
 (29) (191)
Add: Valuation adjustment to Visa derivative2,500
 —
 2,500
 2,328
Add: Loss on early extinguishment of debt, net4,592
 —
 4,592
 —
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
3,731
 —
 5,502
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract: Tax effect of adjustments(1,951) (554) (7,659) (582)
Subtract/add: Gain on sale and (increase) decrease in fair value of private equity investments, net(1,194) (434) (3,507) 2,659
Subtract/add: Tax effect of adjustments(2,478) 96
 (10,137) (486)
Adjusted net income$162,042
 $112,383
 $325,346
 $216,962
$158,023
 $117,213
 $483,369
 $334,175
Net income annualized626,452
 445,946
 557,321
 432,249
538,478
 432,680
 550,971
 432,394
Adjusted net income annualized649,949
 450,767
 656,084
 437,520
626,939
 465,030
 646,263
 446,791
Total average assets46,679,769
 31,502,758
 46,239,640
 31,374,944
47,211,026
 31,725,604
 46,566,994
 31,493,115
Return on average assets1.34% 1.42% 1.21% 1.38%
Return on average assets (annualized)1.14% 1.36% 1.18% 1.37%
Adjusted return on average assets (annualized)1.39
 1.43
 1.42
 1.39
1.33
 1.47
 1.39
 1.42
              


Table 14 - Reconciliation of Non-GAAP Financial Measures, continued          
Three Months EndedThree Months Ended
(dollars in thousands)June 30, 2019 March 31, 2019 June 30, 2018September 30, 2019 June 30, 2019 September 30, 2018
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)          
Net income available to common shareholders$153,034
 $117,036
 $108,622
$127,435
 $153,034
 $99,330
Subtract: Income tax expense, net related to State Tax Reform—
 —
 (608)
Add/subtract: Income tax expense (benefit), net related to State Tax Reform, SAB 118, and adjusted portion of other discrete items4,402
 —
 (9,865)
Add: Earnout liability adjustments10,457
 —
 11,652
Add: Preferred stock redemption charge—
 —
 4,020
Add: Merger-related expense7,401
 49,738
 —
353
 7,401
 6,684
Subtract: Litigation settlement/contingency expense—
 —
 (1,400)
Add: Restructuring charges, net18
 19
 103
Add: Fair value adjustment to Visa derivative—
 —
 2,328
Add/subtract: Investment securities losses (gains), net1,845
 (75) 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) (858) 37
Subtract: Tax effect of adjustments(1,951) (5,705) (554)
Subtract/add: Restructuring charges, net(66) 18
 21
Add: Valuation adjustment to Visa derivative2,500
 —
 —
Add: Loss on early extinguishment of debt, net4,592
 —
 —
Add: Investment securities losses, net3,731
 1,845
 —
Subtract: Gain on sale and increase in fair value of private equity investments(1,194) (1,455) (434)
Subtract/add: Tax effect of adjustments(2,478) (1,951) 96
Net income available to common shareholders$158,892
 $160,155
 $109,824
$149,732
 $158,892
 $111,504
          
Adjusted net income available to common shareholders' annualized$637,314
 $649,518
 $440,502
$594,045
 $637,314
 $442,379
Add: Amortization of intangibles7,250
 10,317
 896
8,632
 7,250
 886
Adjusted net income available to common shareholders excluding amortization of intangibles annualized$644,564

$659,835

$441,398
$602,677

$644,564

$443,265
     
Net income available to common shareholders annualized$505,585
 $613,818
 $394,081
Add: Amortization of intangibles$8,632
 $7,250
 $886
Net income available to common shareholders excluding amortization of intangibles$514,217
 $621,068
 $394,967
          
Total average shareholders' equity less preferred stock$4,416,705
 $4,321,561
 $2,831,368
$4,450,301
 $4,416,705
 $2,824,707
Subtract: Goodwill(487,601) (480,215) (57,315)(492,320) (487,601) (57,315)
Subtract: Other intangible assets, net(69,853) (75,191) (10,555)(60,278) (69,853) (10,265)
Total average tangible shareholders' equity less preferred stock$3,859,251
 $3,766,155
 $2,763,498
$3,897,703
 $3,859,251
 $2,757,127
Return on average common equity (annualized)13.90% 10.98% 15.39%11.36% 13.90% 13.95%
Adjusted return on average common equity (annualized)14.43
 15.03
 15.56
13.35
 14.43
 15.66
Return on average tangible common equity (annualized)13.19
 16.09
 14.33
Adjusted return on average tangible common equity (annualized)16.70
 17.52
 15.97
15.46
 16.70
 16.08
          

Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(in thousands)June 30, 2019 March 31, 2019 December 31, 2018 June 30, 2018September 30, 2019 June 30, 2019 December 31, 2018 September 30, 2018
Period-end core deposits and core transaction deposits              
Total deposits$37,966,722
 $38,075,190
 $26,720,322
 $26,442,688
$37,433,070
 $37,966,722
 $26,720,322
 $26,433,658
Subtract: Brokered deposits(3,003,544) (2,709,004) (1,548,030) (1,851,010)(3,195,495) (3,003,544) (1,548,030) (1,683,772)
Core deposits34,963,178
 35,366,186
 25,172,292
 24,591,678
34,237,575
 34,963,178
 25,172,292
 24,749,886
Subtract: Time deposits, excluding brokered deposits(7,342,951) (7,568,079) (3,685,867) (3,275,932)
Subtract: Time deposits, excluding brokered and public funds(6,647,788) (7,342,951) (3,685,867) (3,492,504)
Subtract: Public funds(4,351,304) (4,630,022) (2,374,892) (2,224,631)(3,795,320) (4,351,304) (2,374,892) (2,024,697)
Core transaction deposits$23,268,923
 $23,168,085
 $19,111,533
 $19,091,115
$23,794,467
 $23,268,923
 $19,111,533
 $19,232,685
              


Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)June 30, 2019
March 31, 2019
June 30, 2018
Tangible common equity ratio     
Total assets$47,318,203
 $46,630,025
 $31,740,305
Subtract: Goodwill(492,390) (485,000) (57,315)
Subtract: Other intangible assets, net(61,473) (74,683) (10,458)
Tangible assets$46,764,340
 $46,070,342
 $31,672,532
Total shareholders' equity$4,753,816
 $4,597,753
 $3,167,694
Subtract: Goodwill(492,390) (485,000) (57,315)
Subtract: Other intangible assets, net(61,473) (74,683) (10,458)
Subtract: Preferred Stock, no par value(195,140) (195,140) (321,118)
Tangible common equity$4,004,813
 $3,842,930
 $2,778,803
Total shareholders' equity to total assets ratio10.05% 9.86% 9.98%
Tangible common equity ratio8.56
 8.34
 8.77
      
CET1 ratio (fully phased-in)     
CET1$3,899,532
    
Total risk-weighted assets40,562,547
    
Total risk-weighted assets (fully phased-in)40,630,953
    
CET1 ratio9.61%   

     CET1 ratio (fully phased-in)9.60
   

      



Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)September 30, 2019
June 30,
2019
 December 31, 2018
September 30, 2018
Tangible common equity ratio       
Total assets$47,661,182
 $47,318,203
 $32,669,192
 $32,075,120
Subtract: Goodwill(487,865) (492,390) (57,315) (57,315)
Subtract: Other intangible assets, net(58,572) (61,473) (9,875) (10,166)
Tangible assets$47,114,745
 $46,764,340
 $32,602,002
 $32,007,639
Total shareholders' equity$4,868,838
 $4,753,816
 $3,133,602
 $3,040,073
Subtract: Goodwill(487,865) (492,390) (57,315) (57,315)
Subtract: Other intangible assets, net(58,572) (61,473) (9,875) (10,166)
Subtract: Preferred Stock, no par value(536,550) (195,140) (195,140) (195,138)
Tangible common equity$3,785,851
 $4,004,813
 $2,871,272
 $2,777,454
Total shareholders' equity to total assets ratio10.22% 10.05% 9.59% 9.48%
Tangible common equity ratio8.04
 8.56
 8.81
 8.68
        
CET1 ratio (fully phased-in)       
CET1$3,660,078
      
Total risk-weighted assets40,856,279
      
Total risk-weighted assets (fully phased-in)40,924,685
      
CET1 ratio8.96%     

     CET1 ratio (fully phased-in)8.94
     

        

ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
ITEM 4. – CONTROLS AND PROCEDURES
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of JuneSeptember 30, 2019, Synovus' disclosure controls and procedures were effective.     

There have been no material changes in Synovus' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended JuneSeptember 30, 2019 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 of Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations and financial condition for any particular period. For additional information, see "Note"Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - 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' 2018 Form 10-K which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.
There are no material changes during the period covered by this Report to the risk factors previously disclosed in the Synovus' 2018 Form 10-K.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
On June 17, 2019, the Company announced that the Board increased its prior $400 million share repurchase authorization to $725 million for the year 2019.
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 2019 —
 $—
 —
 $80,002
May 2019 137
 36.52
 137
 75,002
June 2019 595
 33.58
 595
 380,014
July 2019 2,616
 $35.64
 2,616
 $286,755
August 2019 4,315
 35.43
 4,315
 133,869
September 2019 2,690
 36.20
 2,690
 36,517
Total 732
 $37.71
 732
 
 9,621
 $35.70
 9,621
 
                
(1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

The foregoing repurchases during the secondthird quarter of 2019 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. The timing and amount of future repurchases under the share repurchase program will depend upon a variety of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by us and applicable law and regulations.

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, 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
 
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 July 1, 2019, as filed with the SEC on July 1, 2019.
   
3.7
 
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.
  
31.1
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101
 Interactive Data File
   
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

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 2,November 5, 2019By: /s/ Andrew J. Gregory, Jr.
Date  Andrew J. Gregory, Jr.
   Executive Vice President and Chief Financial Officer
   (Duly Authorized Officer and Principal Financial Officer)


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