SYNOVUS FINANCIAL CORP
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM
10-Q
______________________________
For the quarterly period ended
March 31, 2025
Commission file number
1-10312
______________________________
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Registrant’s telephone number, including area code: (
706
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641-6500
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| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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.
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| Non-accelerated filer | ☐ | Smaller reporting company |
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| Emerging growth company |
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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
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No
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As of April 28, 2025,
139,013,028
shares of the registrant's common stock, $1.00 par value, were outstanding.
Table of Contents
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Part I
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Financial Information | |||||||||||||
| Index of Defined Terms | ||||||||||||||
| Item 1. | Financial Statements (Unaudited) | |||||||||||||
| Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 | ||||||||||||||
| Consolidated Statements of Income for the Three Months Ended March 31, 2025 and 2024 | ||||||||||||||
| Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2025 and 2024 | ||||||||||||||
| Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2025 and 2024 | ||||||||||||||
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 | ||||||||||||||
| Notes to Unaudited Interim Consolidated Financial Statements | ||||||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||||
| Item 3. | ||||||||||||||
| Item 4. | Controls and Procedures | |||||||||||||
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Part II
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Other Information | |||||||||||||
| Item 1. | Legal Proceedings | |||||||||||||
| Item 1A. | Risk Factors | |||||||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||||
| Item 3. | Defaults Upon Senior Securities | |||||||||||||
| Item 4. | Mine Safety Disclosures | |||||||||||||
| Item 5. | Other Information | |||||||||||||
| Item 6. | Exhibits | |||||||||||||
| Signatures | ||||||||||||||
SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
Throughout this discussion, references to "Synovus", "we", "our", "us", "the Company" and similar terms refer to the consolidated entity consisting of Synovus Financial Corp. and its subsidiaries unless the context indicates that we refer only to the Parent Company, Synovus Financial Corp. When we refer to the "Bank" or "Synovus Bank" we mean our only bank subsidiary, Synovus Bank.
ACL
– Allowance for credit losses (ALL, reserve on unfunded loan commitments, and reserve, if required, on debt securities and other receivables)
AFS
– Available for sale
ALCO
– Synovus' Asset Liability Management Committee
ALL
– Allowance for loan losses
AOCI
– Accumulated other comprehensive income (loss)
ASC
– Accounting Standards Codification
ASU
– Accounting Standards Update
ATM
– Automatic teller machine
Basel III
– The third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements
Board
– Synovus' Board of Directors
BOLI
– Bank-owned life insurance policies
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
CIB
–
Corporate and Investment Banking
CMO
– Collateralized mortgage obligation
Code
– Internal Revenue Code, as amended
CODM
– Chief operating decision maker
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
CRA
– Community Reinvestment Act
CRE
– Commercial real estate
DCF
– Discounted cash flow
ERM
– Enterprise risk management
EVE
– Economic value of equity
Exchange Act
– Securities Exchange Act of 1934, as amended
FASB
– Financial Accounting Standards Board
FDIC
– Federal Deposit Insurance Corporation
FDM
– Financial Difficulty Modification
Federal Reserve Bank
– One of the 12 banks that are the operating arms of the U.S. central bank. They implement the policies of the Federal Reserve Board, supervise bank holding companies and certain banking institutions, 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 or Federal Reserve
– The Federal Reserve Board plus 12 Federal Reserve Banks, with each one serving member banks in its own district. The Federal Reserve has broad regulatory powers over the money supply and the credit structure of the economy
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
FOMC
–
Federal Open Market Committee
FRB
– Federal Reserve Bank
FTP
– Funds transfer pricing
GA DBF
– Georgia Department of Banking and Finance
GAAP
– Generally Accepted Accounting Principles in the United States of America
HTM
– Held to maturity
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
LIHTC
– Low Income Housing Tax Credit
LTV
– Loan-to-collateral value ratio
MBS
– Mortgage-backed security
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 (loss)
ORE
– Other real estate
Parent Company
– Synovus Financial Corp.
PPNR
–
Pre-provision net revenue
Qualpay
–
Qualpay, Inc.
Report
–
This Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025
SBA
– Small Business Administration
SBIC
– Small Business Investment Company
SEC
– U.S. Securities and Exchange Commission
Securities Act
– Securities Act of 1933, as amended
Series D Preferred Stock
– Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, $25 liquidation preference
Series E Preferred Stock
– Synovus' Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, $25 liquidation preference
SOFR
– Secured Overnight Financing Rate
ii
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' 2024 Form 10-K
– Synovus' Annual Report on Form 10-K for the year ended December 31, 2024
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
TE
– Taxable equivalent
Treasury
– United States Department of Treasury
UPB
– Unpaid principal balance
U.S.
– United States
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 (B-1 and B-2) 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
iii
PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SYNOVUS FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
| (in thousands, except share and per share data) | March 31, 2025 | December 31, 2024 | |||||||||
| ASSETS | |||||||||||
| Interest-earning deposits with banks and other cash and cash equivalents | $ |
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$ |
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| Federal funds sold and securities purchased under resale agreements |
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| Total cash, cash equivalents, and restricted cash |
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| Investment securities held to maturity |
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| Investment securities available for sale |
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Loans held for sale (includes $
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| Loans, net of deferred fees and costs |
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| Allowance for loan losses |
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| Loans, net |
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| Cash surrender value of bank-owned life insurance |
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| Premises, equipment, and software, net |
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| Goodwill |
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| Other intangible assets, net |
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| Other assets |
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| Total assets | $ |
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$ |
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| LIABILITIES AND EQUITY | |||||||||||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest-bearing deposits | $ |
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$ |
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| Interest-bearing deposits |
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| Total deposits |
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| Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings |
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| Long-term debt |
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| Other liabilities |
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| Total liabilities |
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| Equity | |||||||||||
| Shareholders' equity: | |||||||||||
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Preferred stock - no par value; authorized
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Common stock - $
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| Additional paid-in capital |
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Treasury stock, at cost;
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| Accumulated other comprehensive income (loss), net |
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| Retained earnings |
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| Total Synovus Financial Corp. shareholders' equity |
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| Noncontrolling interest in subsidiary |
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| Total equity |
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| Total liabilities and equity | $ |
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$ |
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See accompanying notes to unaudited interim consolidated financial statements.
1
SYNOVUS FINANCIAL CORP.
CONSOLIDATE
D STATEMENTS OF INCOME
(unaudited)
| Three Months Ended March 31, | |||||||||||
| (in thousands, except per share data) | 2025 | 2024 | |||||||||
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Interest income:
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Loans, including fees
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$ |
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$ |
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Investment securities
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Loans held for sale
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Federal Reserve Bank balances
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Other earning assets
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Total interest income
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Interest expense:
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Deposits
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Long-term debt
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Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings
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Total interest expense
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Net interest income
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Provision for (reversal of) credit losses
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Net interest income after provision for (reversal of) credit losses
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Non-interest revenue:
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Service charges on deposit accounts
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Fiduciary and asset management fees
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Card fees
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Brokerage revenue
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Mortgage banking income
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Capital markets income
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Income from bank-owned life insurance
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Other non-interest revenue
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Total non-interest revenue
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Non-interest expense:
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Salaries and other personnel expense
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Net occupancy, equipment, and software expense
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Third-party processing and other services
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Professional fees
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FDIC insurance and other regulatory fees
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| Restructuring charges (reversals) |
(
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Other operating expense
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Total non-interest expense
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Income before income taxes
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Income tax expense
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Net income
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| Less: Net income (loss) attributable to noncontrolling interest |
(
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(
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| Net income attributable to Synovus Financial Corp. |
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Less: Preferred stock dividends
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Net income available to common shareholders
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$ |
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$ |
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Net income per common share, basic
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$ |
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$ |
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Net income per common share, diluted
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Weighted average common shares outstanding, basic
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Weighted average common shares outstanding, diluted
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See accompanying notes to unaudited interim consolidated financial statements.
2
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
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(in thousands)
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Before-tax Amount | Income Tax | Net of Tax Amount | Before-tax Amount | Income Tax | Net of Tax Amount | |||||||||||||||||||||||||||||
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Net income
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$ |
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$ |
(
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$ |
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$ |
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$ |
(
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$ |
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| Unamortized holding (losses) gains on investment securities transferred to held to maturity: | |||||||||||||||||||||||||||||||||||
| Net unamortized unrealized holding gains (losses) on available for sale investment securities transferred to held to maturity during the period |
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| Reclassification adjustment for the change in unamortized holding gains (losses) on held to maturity investment securities |
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| Net change |
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Unrealized gains (losses) on investment securities available for sale:
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Net unrealized gains (losses) arising during the period
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(
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(
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(
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Reclassification adjustment for realized (gains) losses included in net income
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Net change
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(
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(
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(
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Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
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Net unrealized gains (losses) arising during the period
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(
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(
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(
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| Reclassification adjustment for realized (gains) losses included in net income |
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(
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| Net change |
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(
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(
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(
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Total other comprehensive income (loss)
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$ |
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$ |
(
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$ |
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$ |
(
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$ |
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$ |
(
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Comprehensive income (loss)
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| Less: comprehensive income (loss) attributable to noncontrolling interest |
(
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(
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| Comprehensive income (loss) attributable to Synovus Financial Corp. | $ |
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$ |
(
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See accompanying notes to unaudited interim consolidated financial statements.
3
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
| Synovus Financial Corp. Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | Preferred Stock |
Common
Stock |
Additional
Paid-in Capital |
Treasury
Stock |
Accumulated
Other Comprehensive Income (Loss) |
Retained Earnings | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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| Net income (loss) | — | — | — | — | — |
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(
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| Other comprehensive income (loss), net of income taxes | — | — | — | — |
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— | — |
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Cash dividends declared on common stock - $
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— | — | — | — | — |
(
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— |
(
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Cash dividends declared on preferred stock
(1)
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— | — | — | — | — |
(
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— |
(
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| Repurchases of common stock including costs to repurchase | — | — | — |
(
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— | — | — |
(
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| Restricted share unit vesting and taxes paid related to net share settlement | — |
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(
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— | — |
(
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— |
(
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| Stock options exercised, net | — |
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— | — | — | — |
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| Share-based compensation expense | — | — |
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— | — | — | — |
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| Balance at March 31, 2025 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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$ |
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| Balance at December 31, 2023 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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$ |
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| Net income (loss) | — | — | — | — | — |
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(
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| Other comprehensive income (loss), net of income taxes | — | — | — | — |
(
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— | — |
(
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Cash dividends declared on common stock - $
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— | — | — | — | — |
(
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— |
(
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Cash dividends declared on preferred stock
(1)
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— | — | — | — | — |
(
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— |
(
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|||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock including costs to repurchase | — | — | — |
(
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— | — | — |
(
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|||||||||||||||||||||||||||||||||||||||
| Restricted share unit vesting and taxes paid related to net share settlement | — |
|
(
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— | — |
(
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— |
(
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| Stock options exercised, net | — |
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— | — | — | — |
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| Share-based compensation expense | — | — |
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— | — | — | — |
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| Balance at March 31, 2024 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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$ |
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$ |
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(1)
For the three months ended March 31, 2025, dividends per share were $
0.50
for Series D and $
0.52
for Series E Preferred Stock. For the three months ended March 31, 2024, dividends per share were $
0.57
for Series D and $
0.37
for Series E Preferred Stock.
See accompanying notes to unaudited interim consolidated financial statements.
4
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
|
Operating Activities
|
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Net income
|
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities:
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Provision for (reversal of) credit losses
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|||||||||
|
Depreciation, amortization, and accretion, net
|
|
|
|||||||||
|
Deferred income tax expense (benefit)
|
|
|
|||||||||
|
Originations of loans held for sale
|
(
|
(
|
|||||||||
|
Proceeds from sales and payments on loans held for sale
|
|
|
|||||||||
|
Gain on sales of loans held for sale, net
|
(
|
(
|
|||||||||
|
(Increase) decrease in other assets
|
(
|
(
|
|||||||||
|
Increase (decrease) in other liabilities
|
(
|
(
|
|||||||||
|
Share-based compensation expense
|
|
|
|||||||||
| Net gain on sales of other real estate and other assets held for sale |
(
|
|
|||||||||
|
Net cash provided by (used in) operating activities
|
|
|
|||||||||
|
Investing Activities
|
|||||||||||
| Proceeds from maturities and principal collections of investment securities held to maturity |
|
|
|||||||||
|
Proceeds from maturities and principal collections of investment securities available for sale
|
|
|
|||||||||
|
Purchases of investment securities available for sale
|
(
|
(
|
|||||||||
|
Net proceeds from sales of loans
|
|
|
|||||||||
|
Net (increase) decrease in loans
|
(
|
|
|||||||||
|
Net (purchases) redemptions of Federal Home Loan Bank stock
|
(
|
(
|
|||||||||
|
Net (purchases) redemptions of Federal Reserve Bank stock
|
(
|
(
|
|||||||||
|
Net increase in premises, equipment and software
|
(
|
(
|
|||||||||
|
Proceeds from sales of other real estate and other assets held for sale
|
|
|
|||||||||
|
Net cash provided by (used in) investing activities
|
(
|
(
|
|||||||||
|
Financing Activities
|
|||||||||||
|
Net increase (decrease) in deposits
|
(
|
(
|
|||||||||
|
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements
|
(
|
(
|
|||||||||
| Net increase (decrease) in other short-term borrowings |
|
|
|||||||||
| Proceeds from long-term debt, net |
|
|
|||||||||
|
Dividends paid to common shareholders
|
(
|
(
|
|||||||||
|
Dividends paid to preferred shareholders
|
(
|
(
|
|||||||||
|
Repurchases of common stock
|
(
|
(
|
|||||||||
|
Issuances, net of taxes paid, under equity compensation plans
|
(
|
(
|
|||||||||
|
Net cash provided by (used in) financing activities
|
(
|
|
|||||||||
|
Increase (decrease) in cash and cash equivalents including restricted cash
|
(
|
(
|
|||||||||
|
Cash, cash equivalents, and restricted cash, at beginning of period
|
|
|
|||||||||
|
Cash, cash equivalents, and restricted cash at end of period
|
$ |
|
$ |
|
|||||||
|
Supplemental Disclosures:
|
|||||||||||
| Income taxes paid | $ |
|
$ |
|
|||||||
| Interest paid |
|
|
|||||||||
| Non-cash Activities | |||||||||||
| Loans foreclosed and transferred to other real estate |
|
|
|||||||||
See accompanying notes to unaudited interim consolidated financial statements.
5
Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Basis of Presentation and Accounting Policies
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 and a registered bank holding company based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the Company provides commercial and consumer banking in addition to a full suite of specialized products and services, including wealth services, treasury management, mortgage services, premium finance, asset-based lending, structured lending, capital markets, and international banking. Synovus also provides financial planning and investment advisory services through its wholly-owned subsidiaries, Synovus Trust and Synovus Securities.
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 (loss), 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' 2024 Form 10-K.
Use of Estimates in the Preparation of Financial Statements
In preparing the consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the respective consolidated balance sheets and the reported amounts of revenue and expense for the periods presented. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the ACL, estimates of fair value, income taxes, and contingent liabilities.
6
Recent Accounting Pronouncements
The following table provides a brief description of accounting standards adopted in 2025 or recently issued and the estimated effect on the Company’s financial statements.
| Standard | Description | Required date of adoption | Effect on Company's financial statements or other significant matters | ||||||||
| Standards Adopted (or partially adopted) | |||||||||||
| ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | In December 2023, the FASB issued ASU 2023-09 to enhance the transparency and decision usefulness of income tax disclosures. The ASU addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Retrospective application in all prior periods is permitted. | Annual period beginning on January 1, 2025 | The Company adopted the new disclosures for the annual periods beginning on January 1, 2025. The Company will include the applicable and relevant required disclosures in the Income Taxes footnote in the Form 10-K. | ||||||||
| Standard | Description | Required date of adoption | Effect on Company's financial statements or other significant matters | ||||||||
| Standards Issued But Not Yet Adopted | |||||||||||
| ASU 2024-03, Income Statement (Topic 220): Disaggregation of Income Statement Expenses | In November 2024, the FASB issued ASU 2024-03 to improve the disclosures over expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The ASU addresses investors requests for more disaggregated expense information to better understand an entity's performance, better assess the entity's prospects for future cash flows, and compare an entity's performance over time and with that of other entities. This ASU requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. Retrospective application in all prior periods is permitted. | January 1, 2027 | The Company will adopt the new disclosure requirements for the annual period beginning on January 1, 2027, and interim periods starting on January 1, 2028. The Company is currently evaluating the impact of the incremental expense information that will be required to be disclosed as well as the impact to the Form 10-K. | ||||||||
7
Note 2 - Investment Securities
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities at March 31, 2025 and December 31, 2024 are summarized below.
| March 31, 2025 | |||||||||||||||||||||||
| (in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
| Investment securities held to maturity: | |||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
|
Total investment securities held to maturity
(1)
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Investment securities available for sale: | |||||||||||||||||||||||
| U.S. Treasury securities | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| U.S. Government agency securities |
|
|
(
|
|
|||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies |
|
|
(
|
|
|||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Corporate debt securities and other debt securities |
|
|
(
|
|
|||||||||||||||||||
|
Total investment securities available for sale
(2)
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||
| Investment securities held to maturity: | |||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
|
Total investment securities held to maturity
(1)
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Investment securities available for sale: | |||||||||||||||||||||||
| U.S. Treasury securities | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| U.S. Government agency securities |
|
|
(
|
|
|||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies |
|
|
(
|
|
|||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises |
|
|
(
|
|
|||||||||||||||||||
| Corporate debt securities and other debt securities |
|
|
(
|
|
|||||||||||||||||||
|
Total investment securities available for sale
(2)
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
(1)
The amounts reported exclude accrued interest receivable on investment securities HTM of $
5.6
million and $
5.7
million at March 31, 2025 and December 31, 2024, respectively, which are presented as a component of other assets on the consolidated balance sheets. The amortized cost basis of investment securities HTM includes a discount of $(
633.2
) million and $(
649.7
) million at March 31, 2025 and December 31, 2024, respectively, related to the unamortized portion of unrealized losses on investment securities HTM.
At March 31, 2025, investment securities AFS and investment securities HTM with carrying values of $
3.35
billion and $
2.29
billion, respectively, were pledged to secure certain deposits and other liabilities, as required by law or contractual agreements.
8
At December 31, 2024, investment securities AFS and investment securities HTM with a carrying value of $
2.83
billion and $
2.45
billion, respectively, were pledged to secure certain deposits and other liabilities, as required by law or contractual agreements.
Gross unrealized losses on investment securities AFS 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 March 31, 2025 and December 31, 2024 are presented below.
| March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
| (in thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||
| U.S. Government agency securities | $ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Corporate debt securities and other debt securities |
|
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Total | $ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
| (in thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||
| U.S. Treasury securities | $ |
|
$ |
(
|
$ |
|
$ |
|
$ |
|
$ |
(
|
|||||||||||||||||||||||
| U.S. Government agency securities |
|
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises |
|
(
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Corporate debt securities and other debt securities |
|
|
|
(
|
|
(
|
|||||||||||||||||||||||||||||
| Total | $ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||||||||||
As of March 31, 2025, Synovus had
35
investment securities AFS in a loss position for less than 12 months and
209
investment securities AFS in a loss position for 12 months or longer. As of March 31, 2025, Synovus does not intend to sell investment securities AFS in an unrealized loss position prior to the recovery of the unrealized loss, which may not be until maturity. Additionally, Synovus is not currently aware of any circumstances which will require it to sell any of the AFS securities
9
that are in an unrealized loss position prior to the respective securities' recovery of all such unrealized losses. As such, no write-downs to the amortized cost basis of the portfolio were recorded at March 31, 2025.
At March 31, 2025,
no
ACL was established for investment securities AFS. Substantially all of the unrealized losses on the securities portfolio were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. U.S. Treasury and agency securities and agency mortgage-backed securities are issued, guaranteed or otherwise supported by the United States government, an agency of the United States government, or a government sponsored enterprise.
As of March 31, 2025, all investment securities HTM were rated investment grade or supported by U.S. government agencies and have no history of credit losses supporting the application of a zero-credit loss assumption and
no
allowance for credit losses.
The amortized cost and fair value by contractual maturity of investment securities HTM and investment securities AFS at March 31, 2025 are shown below. The expected life of MBSs 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, MBSs and CMOs, which are not due at a single maturity date, have been classified based on the final contractual maturity date.
| (in thousands) |
Within One
Year |
1 to 5
Years |
5 to 10
Years |
More Than
10 Years |
Total | ||||||||||||||||||||||||
| Investment securities HTM | |||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | |||||||||||||||||||||||||||||
| Amortized cost | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Investment securities AFS | |||||||||||||||||||||||||||||
| U.S. Treasury securities | |||||||||||||||||||||||||||||
| Amortized cost | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| U.S. Government agency securities | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
| Corporate debt securities and other debt securities | |||||||||||||||||||||||||||||
| Amortized cost |
|
|
|
|
|
||||||||||||||||||||||||
| Fair value |
|
|
|
|
|
||||||||||||||||||||||||
10
Note 3 - Loans and Allowance for Loan Losses
Aging and Non-Accrual Analysis
The following tables provide a summary of current, accruing past due, and non-accrual loans by portfolio class as of March 31, 2025 and December 31, 2024.
| March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Current | Accruing 30-89 Days Past Due | Accruing 90 Days or Greater Past Due | Total Accruing Past Due | Non-accrual with an ALL | Non-accrual without an ALL | Total | ||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
| Owner-occupied |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Investment properties |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| 1-4 family properties |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Land and development |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Home equity |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Credit cards |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
Loans, net of deferred fees and costs
(1)(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Current | Accruing 30-89 Days Past Due | Accruing 90 Days or Greater Past Due | Total Accruing Past Due | Non-accrual with an ALL | Non-accrual without an ALL | Total | ||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
| Owner-occupied |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Investment properties |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| 1-4 family properties |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Land and development |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Home equity |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Credit cards |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
Loans, net of deferred fees and costs
(1)(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
(1)
The amortized cost basis of loans, net of deferred fees and costs excludes accrued interest receivable of $
215.3
million and $
217.1
million at March 31, 2025 and December 31, 2024, respectively, which is presented as a component of
on the consolidated balance sheets.
(2)
Loans are presented net of deferred loan fees and costs totaling $
32.6
million and $
34.1
million at March 31, 2025 and December 31, 2024, respectively.
Pledged Loans
Loans with carrying values of $
24.90
billion and $
24.66
billion, respectively, were pledged as collateral for borrowings and capacity at March 31, 2025 and December 31, 2024, respectively, to the FHLB and Federal Reserve Bank.
11
Portfolio Segment Risk Factors
The risk characteristics and collateral information of each portfolio segment are as follows:
Commercial and Industrial Loans
-
The C&I loan portfolio is comprised of general middle market and commercial banking clients across a diverse set of industries, as well as certain specialized lending verticals including specialty finance, senior housing, and CIB. 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. These loans are generally secured by collateral such as business equipment, inventory, and real estate. Credit decisions on loans in the C&I portfolio are based on cash flow from the operations of the business as the primary source of repayment of the debt, with underlying real estate or other collateral being the secondary source of repayment.
Commercial Real Estate Loans
-
CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development 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. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties 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. 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 our preference is to obtain some level of recourse from project sponsors. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).
Consumer Loans
-
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network, including first and second residential mortgages, home equity, and consumer credit card loans, as well as home improvement loans, student, and personal loans from third-party lending ("other consumer loans"). Together, consumer mortgages and home equity comprise the majority of Synovus' consumer loans and are secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s).
Credit Quality Indicators
The credit quality of the loan portfolio is reviewed and updated no less frequently than annually 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 categorized 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) 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.
12
The following table summarizes each loan portfolio class by risk grade and origination year as of March 31, 2025 and December 31, 2024 as required under CECL.
| March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Amortized Cost Basis | Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Doubtful |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial, financial and agricultural |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Owner-occupied | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total owner-occupied |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Investment properties | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Doubtful |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total investment properties |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| 1-4 family properties | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total 1-4 family properties |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
13
| March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Amortized Cost Basis | Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Land and development | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total land and development |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Consumer mortgages | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total consumer mortgages |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total home equity |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total credit cards |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Other consumer loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total other consumer loans |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
14
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Amortized Cost Basis | Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Doubtful |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial, financial and agricultural |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Owner-occupied | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total owner-occupied |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Investment properties | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Doubtful |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total investment properties |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| 1-4 family properties | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total 1-4 family properties |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Land and development | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Special Mention |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total land and development |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
15
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Amortized Cost Basis | Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Consumer mortgages | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total consumer mortgages |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total home equity |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total credit cards |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Other consumer loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Substandard |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Loss |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total other consumer loans |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
| Current YTD Period: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||||||
Collateral-Dependent Loans
We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.
There were no material changes in the extent to which collateral secures our collateral-dependent loans during the three months ended March 31, 2025.
16
Rollforward of Allowance for Loan Losses
The following tables detail the changes in the ALL by loan segment for the three months ended March 31, 2025 and 2024. During the three months ended March 31, 2025 and 2024, Synovus had no significant transfers to loans held for sale.
| As Of and For the Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| (in thousands) | Commercial & Industrial | Commercial Real Estate | Consumer | Total | |||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||
| Beginning balance at December 31, 2024 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Charge-offs |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Recoveries |
|
|
|
|
|||||||||||||||||||
| Provision for (reversal of) loan losses |
|
|
|
|
|||||||||||||||||||
| Ending balance at March 31, 2025 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| As Of and For the Three Months Ended March 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Commercial & Industrial | Commercial Real Estate | Consumer | Total | |||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||
| Beginning balance at December 31, 2023 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Charge-offs |
(
|
(
|
(
|
(
|
|||||||||||||||||||
| Recoveries |
|
|
|
|
|||||||||||||||||||
| Provision for (reversal of) loan losses |
|
|
|
|
|||||||||||||||||||
| Ending balance at March 31, 2024 | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
The ALL of $
478.2
million and the reserve for unfunded commitments of $
50.7
million, which is recorded in other liabilities, comprise the total ACL of $
528.9
million at March 31, 2025. The ACL decreased $
10.4
million compared to the December 31, 2024 ACL of $
539.3
million, which consisted of the ALL of $
486.8
million and a reserve for unfunded commitments of $
52.5
million. The ACL to loans coverage ratio was
1.24
% at March 31, 2025, compared to
1.27
% at December 31, 2024. When compared to the year-end 2024 ACL, the March 31, 2025 ACL was characterized by improved credit performance, partially offset by increased economic uncertainty, including more heavily-weighted downside scenarios. The Company includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties in the quantitative estimate. The March 31, 2025 and December 31, 2024 allowance included qualitative adjustments for higher risk portfolios such as C&I (which includes Leveraged Lending), CRE Office, and CRE Multi-family.
The ACL is estimated using a
two-year
reasonable and supportable forecast period. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the Company reverts on a straight-line basis back to the historical rates over a
one-year
period. Synovus utilizes multiple economic forecast scenarios sourced from a reputable third-party provider that are probability-weighted internally. The current scenarios include a consensus baseline forecast, an upside scenario reflecting stronger growth than the baseline, a downside scenario that reflects adverse economic conditions, and an additional adverse scenario that assumes consistent slow growth that is less optimistic than the baseline. At March 31, 2025, the unemployment rate is the input that most significantly impacts our estimate. The multi-scenario forecast used in our estimate includes a weighted average unemployment rate of
4.9
% over the forecasted period at March 31, 2025, compared to
4.6
% at December 31, 2024.
Financial Difficulty Modifications
When borrowers are experiencing financial difficulty, Synovus may make certain loan modifications as part of its loss mitigation strategies to maximize expected payment. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K for additional information regarding accounting policies for FDMs.
17
The following tables present the amortized cost of FDM loans by loan portfolio class that were modified during the
three months ended March 31, 2025 and 2024.
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Interest Rate Reduction | Term Extension | Payment Delay | Interest Rate Reduction and Term Extension | Principal Forgiveness, Term Extension, and Payment Delay | Total | Percentage of Total by Financing Class | ||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
% | |||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
| Total FDMs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
% | |||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
| (in thousands) | Interest Rate Reduction | Term Extension | Payment Delay | Interest Rate Reduction and Term Extension | Total | Percentage of Total by Financing Class | |||||||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
% | |||||||||||||||||||||||
| Owner-occupied |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Investment properties |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Home equity |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total FDMs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
% | |||||||||||||||||||||||
18
The following tables present the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024.
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| (dollars in thousands) | Weighted Average Interest Rate Reduction |
Weighted Average Term Extension
(in months) |
Weighted Average Payment Delay
(in months) |
Principal Forgiveness | |||||||||||||||||||
| Commercial, financial and agricultural |
|
% |
|
|
$ |
|
|||||||||||||||||
| Consumer mortgages |
|
— |
|
|
|||||||||||||||||||
| Other consumer loans |
|
|
|
|
|||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||
| (dollars in thousands) | Weighted Average Interest Rate Reduction |
Weighted Average Term Extension
(in months) |
Weighted Average Payment Deferral
(in months) |
||||||||||||||
| Commercial, financial and agricultural |
|
% |
|
— | |||||||||||||
| Owner-occupied |
|
|
— | ||||||||||||||
| Investment properties |
|
|
— | ||||||||||||||
| Consumer mortgages |
|
— |
|
||||||||||||||
| Home equity |
|
|
— | ||||||||||||||
| Other consumer loans |
|
|
— | ||||||||||||||
During the three months ended March 31, 2025, there were
no
material FDMs that subsequently defaulted. During the three months ended March 31, 2024, commercial, financial and agricultural loans of $
71.6
million defaulted that were previously modified in the prior 12 months by receiving a term extension. Defaults are defined as the earlier of the FDM being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments. As of March 31, 2025 and December 31, 2024, there were
no
commitments to lend a material amount of additional funds to any borrower whose loan was classified as a FDM.
19
Synovus monitors the performance of FDMs to understand the effectiveness of its modification efforts.
The following tables provide a summary of current, accruing past due, and non-accrual loans on an amortized cost basis by loan portfolio class that have been modified during the 12 months prior to March 31, 2025 and March 31, 2024, respectively.
| As of March 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Current | Accruing 30-89 Days Past Due | Accruing 90 Days or Greater Past Due | Non-accrual | Total | ||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Owner-occupied |
|
|
|
|
|
||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
||||||||||||||||||||||||
| Investment properties |
|
|
|
|
|
||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
||||||||||||||||||||||||
| Total FDMs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| As of March 31, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Current | Accruing 30-89 Days Past Due | Accruing 90 Days or Greater Past Due | Non-accrual | Total | ||||||||||||||||||||||||
| Commercial, financial and agricultural | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Owner-occupied |
|
|
|
|
|
||||||||||||||||||||||||
| Total commercial and industrial |
|
|
|
|
|
||||||||||||||||||||||||
| Investment properties |
|
|
|
|
|
||||||||||||||||||||||||
| 1-4 family properties |
|
|
|
|
|
||||||||||||||||||||||||
| Land and development |
|
|
|
|
|
||||||||||||||||||||||||
| Total commercial real estate |
|
|
|
|
|
||||||||||||||||||||||||
| Consumer mortgages |
|
|
|
|
|
||||||||||||||||||||||||
| Home equity |
|
|
|
|
|
||||||||||||||||||||||||
| Other consumer loans |
|
|
|
|
|
||||||||||||||||||||||||
| Total consumer |
|
|
|
|
|
||||||||||||||||||||||||
| Total FDMs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
20
Note 4 - Shareholders' Equity and Other Comprehensive Income (Loss)
Repurchases of Common Stock
On December 13, 2024 the Board of Directors approved share repurchases of up to $
400
million of common stock and $
50
million of preferred stock in 2025. During the three months ended March 31, 2025, Synovus repurchased
2.4
million shares of common stock at an average price of $
49.41
per share via open market transactions.
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
The following table illustrates activity within the balances in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2025 and 2024.
| Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes) | |||||||||||||||||||||||
| (in thousands) | Net unamortized holding (losses) gains on AFS investment securities transferred to HTM |
Net unrealized gains (losses) on investment securities AFS
(1)
|
Net unrealized gains (losses) on cash flow hedges
(1)
|
Total | |||||||||||||||||||
| Balance at December 31, 2024 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Other comprehensive income (loss) before reclassifications |
|
|
|
|
|||||||||||||||||||
| Amounts reclassified from AOCI |
|
|
|
|
|||||||||||||||||||
| Net current period other comprehensive income (loss) |
|
|
|
|
|||||||||||||||||||
| Balance at March 31, 2025 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Balance at December 31, 2023 | $ |
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
| Other comprehensive income (loss) before reclassifications |
|
(
|
(
|
(
|
|||||||||||||||||||
| Amounts reclassified from AOCI |
|
|
|
|
|||||||||||||||||||
| Net current period other comprehensive income (loss) |
|
(
|
(
|
(
|
|||||||||||||||||||
| Balance at March 31, 2024 | $ |
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
(1)
For March 31, 2025 and 2024, the ending balance in net unrealized gains (losses) on investment securities available for sale and cash flow hedges includes unrealized losses of $
10.2
million and $
11.6
million, respectively, related to residual tax effects remaining in OCI primarily due to previously established deferred tax asset valuation allowances in 2010 and 2011 and state rate changes. In accordance with ASC 740-20-45-11(b), under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.
21
Note 5 - Fair Value Accounting
See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.
The following table presents assets and liabilities measured at estimated fair value on a recurring basis.
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | ||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| State and municipal securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Other investments |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total trading securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Investment securities available for sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| U.S. Government agency securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government agencies |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities issued by U.S. Government sponsored enterprises |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities and other debt securities |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Total investment securities available for sale | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||||||||||||||||||
| Other investments |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Mutual funds and mutual funds held in rabbi trusts |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Derivative assets |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds held in rabbi trusts |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
|
Derivative liabilities
(1)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
(1)
Excludes from Level 3 the Visa derivative of $
2.2
million and $
64
thousand at March 31, 2025 and December 31, 2024, respectively. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K for discussion of fair value accounting related to this in the Derivative Instruments section.
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.
22
The following table summarizes the difference between the fair value and the UPB of mortgage loans held for sale and the changes in fair value of these loans. An immaterial portion of these changes in fair value was attributable to instrument-specific credit risk.
| Mortgage Loans Held for Sale | |||||||||||
| (in thousands) | As of March 31, 2025 | As of December 31, 2024 | |||||||||
| Fair value | $ |
|
$ |
|
|||||||
| Unpaid principal balance |
|
|
|||||||||
| Fair value less aggregate unpaid principal balance | $ |
|
$ |
|
|||||||
| Changes in Fair Value Included in Net Income | Three Months Ended March 31, | Location in Consolidated Statements of Income | |||||||||||||||
| (in thousands) | 2025 | 2024 | |||||||||||||||
| Mortgage loans held for sale | $ |
|
$ |
(
|
Mortgage banking income | ||||||||||||
Activity for Level 3 Assets
See "Part II - Item 8. Financial Statements and Supplementary Data - Note 12 - Fair Value Accounting" of Synovus' 2024 Form 10-K for a description of the valuation techniques and significant inputs for Level 3 assets and liabilities that are measured at fair value on a recurring and non-recurring basis. During the three months ended March 31, 2025 and 2024, Synovus did not have any transfers in or out of Level 3 in the fair value hierarchy.
The following tables provide rollforwards of Level 3 assets measured at fair value on a recurring basis.
| Three Months Ended March 31, 2025 | ||||||||
| (in thousands) | Other Investments | |||||||
| Beginning balance at December 31, 2024 | $ |
|
||||||
| Total gains (losses) realized/unrealized: | ||||||||
| Included in earnings |
(
|
|||||||
| Additions |
|
|||||||
| Ending balance at March 31, 2025 | $ |
|
||||||
| Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets still held at March 31, 2025 | $ |
(
|
||||||
| Three Months Ended March 31, 2024 | ||||||||
| (in thousands) | Other Investments | |||||||
| Beginning balance at December 31, 2023 | $ |
|
||||||
| Total gains (losses) realized/unrealized: | ||||||||
| Included in earnings |
(
|
|||||||
| Additions |
|
|||||||
| Ending balance at March 31, 2024 | $ |
|
||||||
| Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets still held at March 31, 2024 | $ |
(
|
||||||
23
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.
| March 31, 2025 | Fair Value Adjustments for the | Location in Consolidated Statements of Income | |||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Three Months Ended March 31, 2025 | |||||||||||||||||||||||||
|
Loans
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
Provision for (reversal of) credit losses | ||||||||||||||||||||
| March 31, 2024 | Fair Value Adjustments for the | Location in Consolidated Statements of Income | |||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||
|
Loans
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
Provision for (reversal of) credit losses | ||||||||||||||||||||
(1)
Collateral-dependent loans that were written down to fair value of collateral.
Fair Value of Financial Instruments
The following tables present the carrying and estimated fair values of financial instruments at March 31, 2025 and December 31, 2024. The fair values represent management’s best estimates based on a range of 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' 2024 Form 10-K for a description of how fair value measurements are determined.
| March 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||
| Total cash, cash equivalents, and restricted cash | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Trading securities |
|
|
|
|
|
||||||||||||||||||||||||
| Investment securities held to maturity |
|
|
|
|
|
||||||||||||||||||||||||
| Investment securities available for sale |
|
|
|
|
|
||||||||||||||||||||||||
| Loans held for sale |
|
|
|
|
|
||||||||||||||||||||||||
| Other investments |
|
|
|
|
|
||||||||||||||||||||||||
| Mutual funds and mutual funds held in rabbi trusts |
|
|
|
|
|
||||||||||||||||||||||||
|
Loans, net
(1)
|
|
|
|
|
|
||||||||||||||||||||||||
| FRB and FHLB stock |
|
|
|
|
|
||||||||||||||||||||||||
| Derivative assets |
|
|
|
|
|
||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||
| Non-interest-bearing deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Non-time interest-bearing deposits |
|
|
|
|
|
||||||||||||||||||||||||
| Time deposits |
|
|
|
|
|
||||||||||||||||||||||||
|
Total deposits
(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Long-term debt |
|
|
|
|
|
||||||||||||||||||||||||
| Mutual funds held in rabbi trusts |
|
|
|
|
|
||||||||||||||||||||||||
|
Derivative liabilities
(3)
|
|
|
|
|
|
||||||||||||||||||||||||
(1)
Synovus estimates the fair value of loans based on present value of the future cash flows using the interest rate that would be charged for a similar loan to a borrower with similar risk, adjusted for a discount based on the estimated time period to complete a sale transaction with a market participant.
(2)
The fair value of deposits with no stated maturity, such as non-interest-bearing demand, interest-bearing demand, money market, and savings accounts reflects the carrying amount which is payable on demand, as of the respective date, and may not align with other valuation methods or processes. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
(3)
Excludes from Level 3 the Visa derivative of $
2.2
million at March 31, 2025. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K for discussion of fair value accounting related to this in the Derivative Instruments section.
24
| December 31, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||
| Total cash, cash equivalents, and restricted cash | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Trading securities |
|
|
|
|
|
||||||||||||||||||||||||
| Investment securities held to maturity |
|
|
|
|
|
||||||||||||||||||||||||
| Investment securities available for sale |
|
|
|
|
|
||||||||||||||||||||||||
| Loans held for sale |
|
|
|
|
|
||||||||||||||||||||||||
| Other investments |
|
|
|
|
|
||||||||||||||||||||||||
| Mutual funds and mutual funds held in rabbi trusts |
|
|
|
|
|
||||||||||||||||||||||||
|
Loans, net
(1)
|
|
|
|
|
|
||||||||||||||||||||||||
| FRB and FHLB stock |
|
|
|
|
|
||||||||||||||||||||||||
| Derivative assets |
|
|
|
|
|
||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||
| Non-interest-bearing deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Non-time interest-bearing deposits |
|
|
|
|
|
||||||||||||||||||||||||
| Time deposits |
|
|
|
|
|
||||||||||||||||||||||||
|
Total deposits
(2)
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||
| Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings |
|
|
|
|
|
||||||||||||||||||||||||
| Long-term debt |
|
|
|
|
|
||||||||||||||||||||||||
| Mutual funds held in rabbi trusts |
|
|
|
|
|
||||||||||||||||||||||||
|
Derivative liabilities
(3)
|
|
|
|
|
|
||||||||||||||||||||||||
(1)
Synovus estimates the fair value of loans based on present value of the future cash flows using the interest rate that would be charged for a similar loan to a borrower with similar risk, adjusted for a discount based on the estimated time period to complete a sale transaction with a market participant.
(2)
The fair value of deposits with no stated maturity, such as non-interest-bearing demand, interest-bearing demand, money market, and savings accounts reflects the carrying amount which is payable on demand, as of the respective date, and may not align with other valuation methods or processes. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
(3)
Excludes from Level 3 the Visa derivative of $
64
thousand at December 31, 2024. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K for discussion of fair value accounting related to this in the Derivative Instruments section.
25
Note 6 - 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 client transactions. The primary types of derivative instruments utilized by Synovus consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan clients, commitments to sell fixed-rate mortgage loans, and foreign currency exchange contracts. Interest rate lock commitments represent derivative instruments since it is intended that such loans will be sold. Synovus also provides foreign currency exchange services, primarily forward contracts, with counterparties to allow commercial clients to mitigate exchange rate risk. Synovus covers its risk by entering into an offsetting foreign currency exchange forward contract. Synovus enters into risk participation agreements with financial institution counterparties where we are either a participant or a lead bank so that the risk of default on the interest rate swaps is shared. Synovus either pays or receives a fee depending on the participation type. Synovus is party to master netting arrangements with its dealer counterparties; however, Synovus does not offset assets and liabilities under these arrangements for financial statement presentation purposes. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2024 Form 10-K for additional information regarding accounting policies for derivatives.
Hedging Derivatives
Cash flow hedging 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 commercial loans. The contracts effectively modify Synovus' exposure to interest rate risk by utilizing receive fixed/pay index-based variable rate interest rate swaps.
For cash flow hedges, gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss), net of the tax impact, and subsequently reclassified into earnings when the hedged transaction affects earnings with the impacts recorded in the same income statement line item used to present the earnings effect of the hedged item. When a cash flow hedge relationship is discontinued but the hedged cash flows, or forecasted transactions, are still expected to occur, gains or losses that were accumulated in OCI are amortized into earnings over the same periods in which the hedged transactions are still expected to affect earnings. If, however, it is probable the forecasted transactions will no longer occur, the remaining accumulated amounts in OCI for the impacted cash flow hedges are immediately recognized in earnings.
Synovus recorded
no
unrealized gains (losses) during the three months ended March 31, 2025 and 2024 related to terminated cash flow hedges. Synovus recognized pre-tax losses of $
4.5
million and $
5.6
million during the three months ended March 31, 2025 and 2024, respectively, related to the amortization of terminated cash flow hedges. Amounts related to the amortization of terminated cash flow hedges are being recognized into earnings in conjunction with the effective terms of the original swaps through the third quarter of 2026.
As of March 31, 2025, Synovus expects to reclassify into earnings approximately $
38
million in pre-tax loss due to the receipt or payment of interest payments on all cash flow hedges within the next 12 months. Included in this amount is approximately $
14
million in pre-tax loss related to the amortization of terminated cash flow hedges. As of March 31, 2025, the maximum length of time over which Synovus is hedging its exposure to the variability in future cash flows is through the fourth quarter of 2029.
Fair value hedging relationships mitigate exposure to the change in fair value of an asset or liability. Synovus has entered into receive-fixed, pay-variable interest rate swap contracts to hedge the change in the fair value due to fluctuations in market interest rates for outstanding fixed-rate long-term debt and fixed-rate term interest-bearing deposits. The changes in fair value of the fair value hedges are recorded through earnings with an offset against changes in the fair value of the hedged item within interest expense in the consolidated statements of income. All components of each derivative instrument’s gain/(loss) are included in the assessment of hedge effectiveness.
Derivatives not designated as hedges include those that are entered into as either economic hedges to facilitate client needs or as part of Synovus' overall risk management strategy. Economic hedges are those that do not qualify to be treated as a fair value hedge or cash flow hedge for accounting purposes but are necessary to economically manage the risk exposure associated with the assets and liabilities of Synovus. 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
26
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 client 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, client risk rating, collateral value, and client 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 client specific risk.
Collateral Requirements
Certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of March 31, 2025 and December 31, 2024, Synovus had recorded the right to reclaim cash collateral of $
48.9
million and $
34.6
million, respectively. As of March 31, 2025 and December 31, 2024, Synovus had recorded the obligation to return cash collateral of $
4.6
million.
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 consolidated balance sheets and related disclosures.
The following table reflects the estimated fair value of derivative instruments included in other assets and other liabilities on the consolidated balance sheets along with their respective notional amounts on a gross basis.
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| Estimated Fair Value | Estimated Fair Value | ||||||||||||||||||||||||||||||||||
| (in thousands) | Notional Amount | Derivative Assets | Derivative Liabilities | Notional Amount | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||
| Derivatives in cash flow hedging relationships: | |||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Total cash flow hedges | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
| Derivatives in fair value hedging relationships: | |||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Total fair value hedges | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
|
Derivatives not designated
as hedging instruments: |
|||||||||||||||||||||||||||||||||||
| Interest rate contracts | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Mortgage derivatives - interest rate lock commitments |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Risk participation agreements |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Foreign exchange contracts |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Visa derivative |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||||||
27
The following table presents the effect of hedging derivative instruments in the consolidated statements of income and the total amounts for the respective line item affected for the
three months ended March 31, 2025 and 2024
.
| Three Months Ended March 31, 2025 | |||||||||||||||||
| Interest Income | Interest Expense | ||||||||||||||||
| (in thousands) | Loans, including fees | Deposits | Long-term debt | ||||||||||||||
| Total interest income/expense amounts presented in the consolidated statements of income | $ |
|
$ |
|
$ |
|
|||||||||||
|
Gain/(loss) on cash flow hedging relationships:
(1)
|
|||||||||||||||||
| Interest rate contracts: | |||||||||||||||||
| Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans | $ |
(
|
$ |
|
$ |
|
|||||||||||
| Pre-tax income (loss) recognized on cash flow hedges | $ |
(
|
$ |
|
$ |
|
|||||||||||
| Gain/(loss) on fair value hedging relationships: | |||||||||||||||||
| Amounts related to interest settlements on derivatives | $ |
|
$ |
(
|
$ |
(
|
|||||||||||
| Recognized on derivatives |
|
|
|
||||||||||||||
| Recognized on hedged items |
|
(
|
(
|
||||||||||||||
| Pre-tax income (loss) recognized on fair value hedges | $ |
|
$ |
(
|
$ |
(
|
|||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||
| Interest Income | Interest Expense | ||||||||||||||||
| (in thousands) | Loans, including fees | Deposits | Long-term debt | ||||||||||||||
| Total interest income/expense amounts presented in the consolidated statements of income | $ |
|
$ |
|
$ |
|
|||||||||||
|
Gain/(loss) on cash flow hedging relationships:
(1)
|
|||||||||||||||||
| Interest rate contracts: | |||||||||||||||||
| Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans | $ |
(
|
$ |
|
$ |
|
|||||||||||
| Pre-tax income (loss) recognized on cash flow hedges | $ |
(
|
$ |
|
$ |
|
|||||||||||
| Gain/(loss) on fair value hedging relationships: | |||||||||||||||||
| Amounts related to interest settlements on derivatives | $ |
|
$ |
(
|
$ |
(
|
|||||||||||
| Recognized on derivatives |
|
(
|
(
|
||||||||||||||
| Recognized on hedged items |
|
|
|
||||||||||||||
| Pre-tax income (loss) recognized on fair value hedges | $ |
|
$ |
(
|
$ |
(
|
|||||||||||
(1)
See Note 4 - Shareholders' Equity and Other Comprehensive Income (Loss) in this Report for gain (loss) recognized on cash flow hedging relationships in AOCI.
The following table presents the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of the hedged assets/(liabilities) in fair value hedging relationships.
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Hedged Items Currently Designated | Hedged Items No Longer Designated | Hedged Items Currently Designated | Hedged Items No Longer Designated | ||||||||||||||||||||||||||
| (in thousands) | Carrying Amount of Assets/(Liabilities) | Hedge Accounting Basis Adjustment | Carrying Amount of Assets/(Liabilities) | Hedge Accounting Basis Adjustment | |||||||||||||||||||||||||
| Interest-bearing deposits | $ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||
| Long-term debt |
(
|
(
|
|
(
|
|
|
|||||||||||||||||||||||
28
The pre-tax effect of changes in fair value from derivative instruments not designated as hedging instruments in the consolidated statements of income for the three months ended March 31, 2025 and 2024 is presented below.
| Gain (Loss) Recognized in Consolidated Statements of Income | ||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||
| (in thousands) |
Location in Consolidated Statements of Income
|
2025 | 2024 | |||||||||||||||||
|
Derivatives not designated
as hedging instruments: |
||||||||||||||||||||
|
Interest rate contracts
(1)
|
Capital markets income | $ |
|
$ |
(
|
|||||||||||||||
| Mortgage derivatives - interest rate lock commitments | Mortgage banking income |
|
|
|||||||||||||||||
| Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans | Mortgage banking income |
(
|
|
|||||||||||||||||
| Risk participation agreements | Capital markets income |
(
|
(
|
|||||||||||||||||
| Foreign exchange contracts | Capital markets income |
(
|
|
|||||||||||||||||
| Visa derivative | Other non-interest expense |
(
|
|
|||||||||||||||||
|
Total derivatives not designated as hedging instruments
|
$ |
(
|
$ |
|
||||||||||||||||
(1)
Gain (loss) represents net fair value adjustments (including credit related adjustments) for client swaps.
Note 7 - Net Income Per Common Share
The following table displays a reconciliation of the information used in calculating basic and diluted net income per common share for the three months ended March 31, 2025 and 2024. Diluted net income per common share incorporates the potential impact of contingently issuable shares, including awards which require future service as a condition of delivery of the underlying common stock.
| Three Months Ended March 31, | |||||||||||
| (in thousands, except per share data) | 2025 | 2024 | |||||||||
| Basic Net Income Per Common Share: | |||||||||||
| Net income available to common shareholders | $ |
|
$ |
|
|||||||
| Weighted average common shares outstanding |
|
|
|||||||||
| Net income per common share, basic | $ |
|
$ |
|
|||||||
| Diluted Net Income Per Common Share: | |||||||||||
| Net income available to common shareholders | $ |
|
$ |
|
|||||||
| Weighted average common shares outstanding |
|
|
|||||||||
| Effect of dilutive outstanding equity-based awards |
|
|
|||||||||
| Weighted average diluted common shares |
|
|
|||||||||
| Net income per common share, diluted | $ |
|
$ |
|
|||||||
Note 8 - 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 clients. 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 client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration
29
dates or other termination clauses and may require payment of a fee. Synovus also has commitments to fund certain tax credits, CRA partnerships, and other 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 ACL associated with unfunded commitments and letters of credit is recorded within other liabilities on the consolidated balance sheets. At March 31, 2025 and December 31, 2024, the ACL for unfunded commitments was $
50.7
million and $
52.5
million, respectively. Additionally, an immaterial amount of unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance sheets.
Synovus also invests in tax credit partnerships, CRA partnerships, including SBIC programs, and other investments. The SBIC is a program initiated by the SBA in 1958 to assist in the funding of small business loans.
| (in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
|
Letters of credit
(1)
|
$ |
|
$ |
|
|||||||
| Commitments to fund commercial and industrial loans |
|
|
|||||||||
| Commitments to fund commercial real estate, construction, and land development loans |
|
|
|||||||||
| Commitments under home equity lines of credit |
|
|
|||||||||
| Unused credit card lines |
|
|
|||||||||
| Other loan commitments |
|
|
|||||||||
| Total letters of credit and unfunded lending commitments | $ |
|
$ |
|
|||||||
|
Tax credits, CRA partnerships, and other investments:
|
|||||||||||
|
Carrying amount included in other assets
(2)
|
$ |
|
$ |
|
|||||||
|
Permanent and short-term construction loans and letter of credit unfunded commitments
(3)
|
|
|
|||||||||
|
Funded portion of permanent and short-term loans and letters of credit
(4)
|
|
|
|||||||||
(1)
Represents the contractual amount net of risk participations purchased of approximately $
16.8
million for both March 31, 2025 and December 31, 2024.
(2)
Future funding commitment carrying amounts offset in other liabilities of $
385.7
million and $
358.5
million at March 31, 2025 and December 31, 2024, respectively.
(3)
Represents the contractual amount net of risk participations of $
13.9
million and $
16.0
million at March 31, 2025 and December 31, 2024, respectively.
(4)
Represents the contractual amount net of risk participations of $
17.1
million and $
16.2
million at March 31, 2025 and December 31, 2024, respectively.
Merchant Services
In accordance with credit and debit card association rules, Synovus provides merchant processing services for clients with a contractual arrangement under which certain sales and processing support are provided through an outside merchant services provider with Synovus owning the merchant contract relationship. In addition, Synovus sponsors various third-party 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 a sponsored 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 months ended March 31, 2025 and 2024, Synovus and the sponsored entities processed and settled $
28.57
billion and $
27.89
billion of transactions, respectively.
Legal Proceedings
Synovus and its subsidiaries are subject to various legal proceedings, claims, and disputes that arise in the ordinary course of its business. Additionally, in the ordinary course of business, Synovus and its subsidiaries are subject to regulatory and governmental 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, but are not limited to, mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans, 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
30
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.
At least quarterly, Synovus carefully examines and considers each legal matter using then available information, 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. In the absence of a determination that a loss contingency is both probable and reasonably estimable, no accrual is made. Once established, accruals are adjusted to reflect developments related to these matters. 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 March 31, 2025 are adequate.
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. Under GAAP, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely,” and an event is “remote” if the “chance of the future event or events occurring is slight." In many situations, Synovus may be unable to estimate reasonably possible losses due to the difficulty of predicting outcome of legal matters and the preliminary nature of the legal matters, as well as a variety of other factors and uncertainties. Those matters for which a meaningful estimate is not possible are not included within this estimated range and, therefore, this range does not represent our maximum loss exposure. For those legal matters where Synovus is able to estimate a range of reasonably possible losses, management currently estimates the aggregate range from our outstanding litigation is from
zero
to $
10
million in excess of the amounts accrued, if any, related to those matters. This estimated aggregate range is based upon information currently available to Synovus, and the actual losses could prove to be lower or higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations, or cash flows. However, in light of the significant uncertainties involved and the large or indeterminate damages sought in some of these matters, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations or financial condition for any particular period.
Any estimate or determination relating to the future resolution of litigation, regulatory or governmental examinations, information gathering requests, inquiries, investigations, or similar matters is inherently uncertain and involves significant judgment. This is particularly true in the early stages of a legal matter, when legal issues and facts have not been well articulated, reviewed, analyzed, and vetted through discovery, preparation for trial or hearings, substantive and productive mediation or settlement discussions, or other actions. It is also particularly true with respect to class action and similar claims involving multiple defendants, matters with complex procedural requirements or substantive issues or novel legal theories, and examinations, investigations, and other actions conducted or brought by regulatory and governmental agencies, in which the normal adjudicative process is not applicable. Accordingly, we usually are unable to determine whether a favorable or unfavorable outcome is remote, reasonably likely, or probable, or to estimate the amount or range of a probable or reasonably likely loss, until relatively late in the course of a legal matter, sometimes not until a number of years have elapsed. Accordingly, our judgments and estimates relating to claims will change from time to time in light of developments, and actual outcomes will differ from our estimates. These differences may be material.
Note 9 - Segment Reporting
Synovus' business segments are based on the products and services provided or the clients served and reflect the manner in which financial information is evaluated by the chief operating decision maker (CODM). Synovus' CODM is the Chief Executive Officer. The CODM primarily utilizes revenue and non-interest expense directly attributable to a respective segment as well as actual versus expected credit losses when assessing performance and allocating resources.
Synovus has
four
major reportable business segments: Wholesale Banking, Community Banking, Consumer Banking, and Financial Management Services. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions.
31
The Wholesale Banking business segment serves primarily larger corporate and governmental clients by providing commercial lending, deposit, and capital markets services through specialty teams including middle market, CRE, senior housing, premium finance, structured lending, asset-based lending, public finance, restaurant services, community investment capital, and capital markets.
The Community Banking business segment primarily serves small and medium-sized commercial clients as well as individual private wealth clients using a relationship-based approach. The commercial component of this segment focuses on locally owned and operated businesses.
Private wealth services are delivered to the individuals operating the businesses as well as other individuals in the communities in which Community Banking operates. A comprehensive set of banking products are offered to the client set, including a full suite of lending, payments, and depository products as well as financial planning services.
The Consumer Banking business segment serves individual and small business clients through its branch and ATM network, in addition to digital and telephone channels. This segment provides individuals and small businesses with an array of comprehensive banking products and services, including depository accounts, credit and debit cards, payment solutions, goal-based planning, home equity and other consumer loans, and small business lending solutions.
The Financial Management Services business segment serves its clients by providing mortgage, trust services, professional portfolio management for fixed-income securities, securities underwriting and distribution, the execution of securities transactions as a broker/dealer, asset management, financial planning, and family office services, as well as the provision of individual investment advice on equity and other securities.
Functional activities such as treasury, technology, operations, marketing, finance, enterprise risk, legal, human resources, corporate communications, executive management, among others, are included in Treasury and Corporate Other. In addition, certain assets, liabilities, revenue, and expense not allocated or attributable to a particular business segment, such as Synovus' third-party consumer loans, loans held for sale, commercial card, and CIB, as well as certain reconciling items in order to translate segment results that are based on management accounting practices into consolidated results are also included in Treasury and Corporate Other.
Synovus uses a centralized FTP methodology to attribute appropriate net interest income to its business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury and Corporate Other function, where it can be centrally monitored and managed. Treasury and Corporate Other charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The process for determining FTP is based on a number of factors and assumptions, including prevailing market interest rates, the expected lives of various assets and liabilities, and the Company's broader funding profile.
Provision for (reversal of) credit losses is allocated to segments based on historical annualized expected loss rates attributable to the credit risk of loans managed by the segments during the period. By comparison, the consolidated provision for (reversal of) credit losses is determined based on the ACL model using methodologies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of Synovus' 2024 Form 10-K, with the difference between the consolidated provision for (reversal of) credit losses and the business segments' provision for (reversal of) credit losses reflected in Treasury Corporate and Other.
The following tables present certain financial information for each reportable business segment for the three months ended March 31, 2025 and 2024 and as of March 31, 2025 and December 31, 2024. The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable business segment may be periodically revised. Loan and deposit transfers occur from time to time between reportable business segments primarily to maintain the migration of clients and relationship managers between segments; however, prior period loan and deposit balances and any related net interest income and FTP are not adjusted for transfers.
32
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| (in thousands) |
Wholesale Banking
(1)
|
Community Banking
(1)
|
Consumer Banking
(1)
|
Financial Management Services
(1)
|
Treasury and Corporate Other | Synovus Consolidated | |||||||||||||||||||||||||||||
| Net interest income (expense) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Provision for (reversal of) credit losses |
|
|
|
|
(
|
|
|||||||||||||||||||||||||||||
| Net interest income (expense) after provision for credit losses |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Service charges on deposit accounts |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Fiduciary and asset management fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Card fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Brokerage revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Mortgage banking income |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Capital markets income |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other noninterest revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total non-interest revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Salaries and other personnel expense |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Other operating expense
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total non-interest expense |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Income (loss) before income taxes | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
| (in thousands) |
Wholesale Banking
(1)
|
Community Banking
(1)
|
Consumer Banking
(1)
|
Financial Management Services
(1)
|
Treasury and Corporate Other | Synovus Consolidated | |||||||||||||||||||||||||||||
| Net interest income (expense) | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||
| Provision for (reversal of) credit losses |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Net interest income (expense) after provision for credit losses |
|
|
|
|
(
|
|
|||||||||||||||||||||||||||||
| Service charges on deposit accounts |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Fiduciary and asset management fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Card fees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Brokerage revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Mortgage banking income |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Capital markets income |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Other noninterest revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total non-interest revenue |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Salaries and other personnel expense |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Other operating expense
(1)
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Total non-interest expense |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Income (loss) before income taxes | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||||
(1)
Other operating expense for each reportable segment primarily includes, net occupancy, equipment, and software expense, third-party processing and other services, professional fees, and FDIC insurance and other regulatory fees.
33
| March 31, 2025 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Wholesale Banking | Community Banking | Consumer Banking | Financial Management Services | Treasury and Corporate Other | Synovus Consolidated | |||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Full-time equivalent employees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Wholesale Banking | Community Banking | Consumer Banking | Financial Management Services | Treasury and Corporate Other | Synovus Consolidated | |||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Deposits | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
| Full-time equivalent employees |
|
|
|
|
|
|
|||||||||||||||||||||||||||||
34
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) |
an economic downturn and contraction, including a recession, and the resulting effects on our capital, financial condition, credit quality, results of operations, and future growth, including that the strength of the current economic environment could be further weakened by recent trade policies and their impacts on us and our customers, persistent or rising inflation, interest rate fluctuations, changes in fiscal and monetary policy, and geopolitical uncertainty;
|
|||||||||||||
| (2) |
the impact of recent or proposed changes in fiscal, monetary and economic policy, laws, and regulations, or the interpretation or application thereof, and the uncertainty of future implementation and enforcement of these policies and regulations, including persistent inflationary pressures, potential interest rate fluctuations, supply chain issues, and potential changes to government policies related to immigration, trade, and government spending;
|
|||||||||||||
| (3) |
our ability to realize the expected benefits from our strategic initiatives or other operational and execution goals in the time period expected, which could negatively affect our future profitability;
|
|||||||||||||
| (4) | competition in the financial services industry, including competition from nontraditional banking institutions such as Fintechs and non-bank lenders; | |||||||||||||
| (5) |
our ability to attract and retain employees and the impact of senior leadership transitions that are key to our strategic initiatives;
|
|||||||||||||
| (6) | prolonged periods of inflation and its effects on our business, profitability, and our stock price, as well as the impact on our clients (including the velocity and levels of deposit withdrawals and loan repayment); | |||||||||||||
| (7) | our strategic implementation of new lines of business, new products and services, and new technologies and the expansion of our existing business opportunities with a renewed focus on innovation; | |||||||||||||
| (8) |
the impact of adverse developments in the banking industry, on client confidence, liquidity, and regulatory responses to these developments (including increases in the cost of our deposit insurance assessments and increased regulatory scrutiny), our ability to effectively manage our liquidity risk and any growth plans, and the availability of capital and funding;
|
|||||||||||||
| (9) | changes in the interest rate environment, including changes to the federal funds rate, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income; | |||||||||||||
| (10) | 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; | |||||||||||||
| (11) | changes in the cost and availability of funding due to changes in the deposit market and credit market; | |||||||||||||
| (12) |
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;
|
|||||||||||||
35
| (13) | we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services industry; | |||||||||||||
| (14) | our current and future information technology system enhancements and operational initiatives, including those related to or involving artificial intelligence, may not be successfully implemented, which could negatively impact our operations; | |||||||||||||
| (15) |
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 disruptions in service or financial difficulties with a third-party vendor or business relationship;
|
|||||||||||||
| (16) | 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; | |||||||||||||
| (17) | our asset quality may deteriorate or our allowance for credit losses may prove to be inadequate or may be negatively affected by credit risk exposures; | |||||||||||||
| (18) | the ability of our operational framework to identify and manage risks associated with our business, such as credit risk, compliance risk, reputational risk, cybersecurity risk, and operational risk, including by virtue of our relationships with third-party business partners, as well as our relationships with third-party vendors and other service providers; | |||||||||||||
| (19) | if economic conditions worsen or regulatory capital rules are modified, we may be required to undertake initiatives to improve or conserve our capital position; | |||||||||||||
| (20) |
our ability to identify and address cybersecurity 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;
|
|||||||||||||
| (21) | 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; | |||||||||||||
| (22) |
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 the anticipated benefits from such acquisitions;
|
|||||||||||||
| (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) | our corporate responsibility strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, employee, client, and third-party relationships; | |||||||||||||
| (25) | we could realize losses if we sell assets and the proceeds we receive are lower than the carrying value of such assets; | |||||||||||||
| (26) | our ability to obtain regulatory approval to take certain actions, including any dividends on our common or preferred stock, any repurchases of our common or preferred stock, or any other issuance or redemption of any other regulatory capital instruments, as well as any applications in respect to strategic initiatives; | |||||||||||||
| (27) | our concentrated operations in the Southeastern U.S. make us vulnerable to local economic conditions, local weather catastrophes, public health issues, and other external events; | |||||||||||||
| (28) | the costs and effects of litigation, investigations, or similar matters, or adverse facts and developments related thereto; | |||||||||||||
| (29) | the fluctuation in our stock price and general volatility in the stock market; | |||||||||||||
| (30) | the effects of any damages to our reputation resulting from developments related to any of the items identified above; and | |||||||||||||
| (31) | 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 II - 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' 2024 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 statement 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 based in Columbus,
36
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 consumer banking in addition to a full suite of specialized products and services, including wealth services, treasury management, mortgage services, premium finance, asset-based lending, structured lending, capital markets, and international banking. Synovus also provides financial planning and investment advisory services through its wholly-owned subsidiaries, Synovus Trust and Synovus Securities.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 244 branches and 356 ATMs in Alabama, Florida, Georgia, South Carolina, and Tennessee as of March 31, 2025.
The following financial review summarizes the significant trends, changes in our business, transactions, and other matters affecting Synovus’ results of operations for the three months ended March 31, 2025 compared to the same period in 2024 and financial condition as of March 31, 2025 compared to December 31, 2024. 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' 2024 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.
A reading of each section is important to fully understand our financial performance.
37
DISCUSSION OF RESULTS OF OPERATIONS
| Table 1 - Consolidated Financial Highlights | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| (dollars in thousands, except per share data) | 2025 | 2024 | Change | ||||||||||||||
|
Net interest income
|
$ | 454,384 | $ | 418,846 | 8 | % | |||||||||||
|
Provision for (reversal of) credit losses
|
10,921 | 53,980 | (80) | ||||||||||||||
|
Non-interest revenue
|
116,466 | 118,888 | (2) | ||||||||||||||
|
Total revenue
|
570,850 | 537,734 | 6 | ||||||||||||||
|
Non-interest expense
|
308,034 | 322,741 | (5) | ||||||||||||||
|
Income before income taxes
|
251,895 | 161,013 | 56 | ||||||||||||||
| Net income attributable to Synovus Financial Corp. | 195,014 | 124,507 | 57 | ||||||||||||||
|
Net income available to common shareholders
|
183,691 | 114,822 | 60 | ||||||||||||||
|
Net income per common share, basic
|
1.31 | 0.78 | 68 | ||||||||||||||
|
Net income per common share, diluted
|
1.30 | 0.78 | 67 | ||||||||||||||
|
Net interest margin
(1)
|
3.35 | 3.04 | 31 | bps | |||||||||||||
|
Net charge-off ratio
(1)
|
0.20 | 0.41 | (21) | ||||||||||||||
|
Return on average assets
(1)
|
1.32 | 0.85 | 47 | ||||||||||||||
|
Return on average common equity
(1)
|
15.48 | 10.17 | nm | ||||||||||||||
|
Efficiency ratio (TE)
|
53.81 | 59.87 | nm | ||||||||||||||
(1)
Annualized
| March 31, 2025 | December 31, 2024 | Sequential Quarter Change | March 31, 2024 | Year-Over-Year Change | ||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ | 42,648,738 | $ | 42,609,028 | $ | 39,710 | $ | 43,309,877 | $ | (661,139) | ||||||||||||||||||||||
| Total average loans, quarter | 42,506,387 | 42,536,754 | (30,367) | 43,377,902 | (871,515) | |||||||||||||||||||||||||||
| Total deposits | 50,843,061 | 51,095,359 | (252,298) | 50,580,242 | 262,819 | |||||||||||||||||||||||||||
|
Core deposits (excludes brokered deposits)
|
45,996,353 | 46,220,129 | (223,776) | 44,861,313 | 1,135,040 | |||||||||||||||||||||||||||
|
Total average deposits, quarter
|
50,598,279 | 51,101,483 | (503,204) | 50,185,777 | 412,502 | |||||||||||||||||||||||||||
| Non-performing assets ratio | 0.67 | % | 0.73 | % | (6) | bps | 0.86 | % | (19) | bps | ||||||||||||||||||||||
| Non-performing loans ratio | 0.67 | 0.73 | (6) | 0.81 | (14) | |||||||||||||||||||||||||||
| Past due loans over 90 days (as a % of loans) | 0.10 | 0.11 | (1) | 0.01 | 9 | |||||||||||||||||||||||||||
| ACL to loans coverage ratio | 1.24 | 1.27 | (3) | 1.26 | (2) | |||||||||||||||||||||||||||
| CET1 capital ratio | 10.77 | 10.84 | (7) | 10.38 | 39 | |||||||||||||||||||||||||||
|
Total Synovus Financial Corp. shareholders’ equity to total assets ratio
|
8.93 | 8.71 | 22 | 8.39 | 54 | |||||||||||||||||||||||||||
(1)
Annualized
38
First Quarter 2025 Overview
Net income available to common shareholders for the first quarter of 2025 was $183.7 million, or $1.30 per diluted common share, compared to $114.8 million, or $0.78 per diluted common share, for the first quarter of 2024. The year-over-year change was impacted by higher net interest income from lower funding costs, a decrease in provision for credit losses driven by improved credit performance, including a $23.0 million decrease in net charge-offs, and lower non-interest expense.
Net interest income for the three months ended March 31, 2025 was $454.4 million, up $35.5 million, or 8%, compared to the same period in 2024. Net interest margin was up 31 bps over the comparable period in 2024 to 3.35%, impacted by positive deposit remixing, deposit pricing diligence, and the impact of the investment securities repositioning in the second quarter of 2024. Net interest margin was up 7 bps on a linked quarter basis, largely attributable to effective deposit repricing and further supported by hedge maturities, lower cash balances and a stable Fed Funds environment. These benefits were partially offset by the full quarter impact of our $500 million of 6.168% Fixed Rate/Floating Rate Senior Notes which mature on November 1, 2030 issued in the fourth quarter of 2024.
Non-interest revenue for the first quarter of 2025 was $116.5 million, down $2.4 million, or 2%, compared to the first quarter of 2024, mostly due to lower commercial sponsorship income and brokerage revenue, partially offset by higher card fees and increased service charges on deposit accounts.
Non-interest expense for the first quarter of 2025 was $308.0 million, down $14.7 million, or 5%, compared to the same period in 2024, primarily due to a $12.2 million decrease in the accrual related to the FDIC special assessment.
At March 31, 2025, loans, net of deferred fees and costs, of $42.65 billion, increased $39.7 million from December 31, 2024. CRE loans increased primarily due to increased loan production and lower payoff/paydown activity. C&I loans decreased slightly, as production in high growth business lines was offset by payoffs/paydowns and continued strategic decline from non-relationship loans. Relatively flat consumer loan balances included fundings outpacing payment activity for third-party loans, offset by a decline in mortgage loans.
Credit metrics at March 31, 2025 included both NPAs and NPLs at 67 bps and total past due loans at 22 bps as a percentage of total loans. Net charge-offs were $21.4 million, or 20 bps annualized, for the three months ended March 31, 2025. The ACL to loans coverage ratio at March 31, 2025 of 1.24% was 3 bps lower than December 31, 2024 due to improved credit performance, partially offset by increased economic uncertainty. The ACL to NPL coverage ratio was 185% at March 31, 2025 compared to 174% at December 31, 2024.
Total period-end deposits at March 31, 2025 decreased $252.3 million compared to December 31, 2024 primarily due to a decrease in time deposits from maturities and remixing into lower cost deposits, and a seasonal decline in middle market commercial deposits partially offset by growth in public funds and higher non-interest-bearing demand deposits. Total average deposit costs of 2.26% in the first quarter of 2025 decreased 20 bps and 41 bps from the prior quarter and prior year comparable periods, respectively, primarily due to deposit remixing and pricing diligence.
At March 31, 2025, Synovus' CET1 ratio of 10.77% declined 7 bps compared to December 31, 2024, as our organic earnings supported capital accretion that was offset by share repurchases. During the three months ended March 31, 2025, Synovus repurchased 2.4 million shares of common stock at an average price of $49.41 per share via open market transactions.
More detail on Synovus' financial results for the three months ended March 31, 2025 may be found in subsequent sections of "Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report. See also "Part 1 – Item 1A. – Risk Factors" of Synovus' 2024 Form 10-K.
39
2025 Updated Fundamental Guidance
Given recent federal government and monetary policy changes and proposals, our outlook assumes more moderate growth conditions based on recent trends and client feedback given what remains a highly uncertain economic environment:
•
end of period loan growth of 3% to 5%
•
end of period core deposit
(1)
growth of 3% to 5%
•
adjusted revenue growth
(2)(3)(4)
of 3% to 6%
•
adjusted non-interest expense
(2)(3)
growth of 2% to 4%
•
annualized second quarter 2025 net charge-off ratio stable from first quarter 2025
•
CET1 ratio relatively stable
•
effective income tax rate of approximately 22%
(1)
Excludes brokered deposits.
(2)
Non-GAAP financial measure; see "Table 13 - Reconciliation of Non-GAAP Financial Measures” of this Report for applicable reconciliation to the most comparable GAAP measure.
(3)
Guidance based on 2024 adjusted revenue of $2.25 billion and adjusted non-interest expense of $1.23 billion.
(4)
Base case assumes the FOMC easing to 3.50% in 2025 and stable long-term rate expectations.
Loans
The following table compares the composition of the loan portfolio at March 31, 2025, December 31, 2024, and March 31, 2024.
| Table 2 - Loans by Portfolio Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2025 vs. December 31, 2024 Change | March 31, 2025 vs. March 31, 2024 Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial, financial and agricultural | $ | 14,611,712 | 34.3 | % | $ | 14,498,992 | 34.0 | % | $ | 112,720 | 1 | % | $ | 14,616,902 | 33.8 | % | $ | (5,190) | — | % | |||||||||||||||||||||||||||||||||||||||
| Owner-occupied | 7,701,627 | 18.0 | 7,832,137 | 18.4 | (130,510) | (2) | 8,114,394 | 18.7 | (412,767) | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
|
Total commercial and industrial
(1)
|
22,313,339 | 52.3 | 22,331,129 | 52.4 | (17,790) | — | 22,731,296 | 52.5 | (417,957) | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investment properties | 11,265,901 | 26.4 | 11,181,204 | 26.2 | 84,697 | 1 | 11,310,881 | 26.1 | (44,980) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| 1-4 family properties | 513,438 | 1.2 | 545,918 | 1.3 | (32,480) | (6) | 580,138 | 1.4 | (66,700) | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Land and development | 292,219 | 0.7 | 287,497 | 0.7 | 4,722 | 2 | 303,000 | 0.7 | (10,781) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial real estate | 12,071,558 | 28.3 | 12,014,619 | 28.2 | 56,939 | — | 12,194,019 | 28.2 | (122,461) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer mortgages | 5,269,505 | 12.4 | 5,288,776 | 12.4 | (19,271) | — | 5,384,602 | 12.4 | (115,097) | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Home equity | 1,839,185 | 4.3 | 1,831,287 | 4.3 | 7,898 | — | 1,804,348 | 4.2 | 34,837 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Credit cards | 178,522 | 0.4 | 185,871 | 0.4 | (7,349) | (4) | 180,663 | 0.4 | (2,141) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other consumer loans | 976,629 | 2.3 | 957,346 | 2.3 | 19,283 | 2 | 1,014,949 | 2.3 | (38,320) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | 8,263,841 | 19.4 | 8,263,280 | 19.4 | 561 | — | 8,384,562 | 19.3 | (120,721) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Loans, net of deferred fees and costs | $ | 42,648,738 | 100.0 | % | $ | 42,609,028 | 100.0 | % | $ | 39,710 | — | % | $ | 43,309,877 | 100.0 | % | $ | (661,139) | (2) | % | |||||||||||||||||||||||||||||||||||||||
(1)
Includes senior housing loans of $2.81 billion, $2.94 billion, and $3.18 billion at March 31, 2025, December 31, 2024, and March 31, 2024, respectively, which are primarily classified as owner-occupied in accordance with our underwriting process.
At March 31, 2025, loans, net of deferred fees and costs of $42.65 billion increased $39.7 million from December 31, 2024. C&I loans remain the largest component of our loan portfolio, representing 52.3% of total loans, while CRE and consumer loans represent 28.3% and 19.4%, respectively. Our portfolio composition is guided by our strategic growth plan, in conjunction with a comprehensive concentration management policy which sets limits for C&I, CRE, and consumer loan levels as well as sub-categories therein.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at March 31, 2025 were $34.38 billion, or 80.6% of the total loan portfolio, compared to $34.35 billion, or 80.6%, at December 31, 2024.
Synovus actively manages and evaluates credit risk associated with its commercial loans through robust underwriting policies and routine loan monitoring in order to identify and mitigate any weakness as early as possible. Synovus’ management, along with its Chief Credit Officer and Credit Risk Committee, continually monitors and evaluates commercial concentrations by property class, industry, and relative to regulatory capital to remain in line with Board-established limits and adapt to
40
changing industry conditions. As part of its risk management efforts, Synovus monitors its commercial loan portfolio on an ongoing basis to assess credit risks, identify emerging risks, and adjust its lending limits taking into account, among other things, (1) the size, complexity, and level of risk of loans and individual borrowers, (2) changes in the level of credit risk at both the borrower and portfolio level, (3) concentrations of credit risk pertaining to both specific industries and geographies in its loan portfolio, (4) loan structure, collateral location and quality, and project progress, and (5) economic forecasts and industry outlook.
Synovus has established recommended credit exposure limits for large commercial lending relationships based on Synovus' internal risk ratings for an individual borrower at the time the lending commitment is approved, with the final exposure limit being determined by the appropriate credit approval committee. Commercial credits are subject to review according to credit risk management monitoring practices as outlined in Synovus' loan policy, as well as a sampling process performed by Synovus Credit Review to ensure uniform application of policies and procedures and to validate risk rating accuracy. Synovus prepares targeted stress tests on a routine basis for its commercial loans. This testing is completed in addition to sensitivity testing completed at the initial extension of credit.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' loan portfolio and is primarily comprised of general middle market and commercial banking clients across a diverse set of industries as well as certain specialized lending verticals. The following table shows the composition of the C&I loan portfolio aggregated by NAICS code. As of March 31, 2025 and December 31, 2024, 95.0% and 95.1%, respectively, of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral. C&I loans at March 31, 2025 decreased $17.8 million from December 31, 2024, as production primarily from our high growth business lines, led by specialty finance, CIB, and middle market, was offset by payoffs/paydowns and continued strategic decline from non-relationship loans.
| Table 3 - Commercial and Industrial Loans by Industry | |||||||||||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| (dollars in thousands) | NAICS Code | Amount |
%
(1)
|
Amount |
%
(1)
|
||||||||||||||||||||||||
| Finance and insurance | 52 | $ | 4,728,673 | 21.2 | % | $ | 4,544,785 | 20.4 | % | ||||||||||||||||||||
| Health care and social assistance | 62 | 4,246,308 | 19.0 | 4,408,753 | 19.7 | ||||||||||||||||||||||||
| Accommodation and food services | 72 | 1,581,541 | 7.1 | 1,587,321 | 7.1 | ||||||||||||||||||||||||
| Manufacturing | 31-33 | 1,248,623 | 5.6 | 1,206,412 | 5.4 | ||||||||||||||||||||||||
| Lessors of real estate | 5311 | 1,230,338 | 5.5 | 1,291,763 | 5.8 | ||||||||||||||||||||||||
| Wholesale trade | 42 | 1,158,356 | 5.2 | 1,157,334 | 5.2 | ||||||||||||||||||||||||
| Retail trade | 44-45 | 1,058,311 | 4.7 | 1,048,531 | 4.7 | ||||||||||||||||||||||||
| Construction | 23 | 954,353 | 4.3 | 981,602 | 4.4 | ||||||||||||||||||||||||
|
Other industries
(2)
|
950,899 | 4.2 | 955,222 | 4.3 | |||||||||||||||||||||||||
| Other services | 81 | 929,915 | 4.2 | 898,924 | 4.0 | ||||||||||||||||||||||||
| Transportation and warehousing | 48-49 | 885,236 | 4.0 | 851,521 | 3.8 | ||||||||||||||||||||||||
| Professional, scientific, and technical services | 54 | 876,887 | 3.9 | 874,414 | 3.9 | ||||||||||||||||||||||||
| Real estate and rental and leasing other | 53 | 776,667 | 3.5 | 839,288 | 3.8 | ||||||||||||||||||||||||
| Arts, entertainment, and recreation | 71 | 542,107 | 2.4 | 544,921 | 2.4 | ||||||||||||||||||||||||
| Educational services | 61 | 465,610 | 2.1 | 474,471 | 2.1 | ||||||||||||||||||||||||
| Public administration | 92 | 457,898 | 2.1 | 441,107 | 2.0 | ||||||||||||||||||||||||
| Agriculture, forestry, fishing, and hunting | 11 | 221,617 | 1.0 | 224,760 | 1.0 | ||||||||||||||||||||||||
| Total commercial and industrial loans | $ | 22,313,339 | 100.0 | % | $ | 22,331,129 | 100.0 | % | |||||||||||||||||||||
(2)
Comprised of NAICS industries that are less than 1% of total C&I loans.
At March 31, 2025, $14.61 billion of C&I loans, or 34.3% 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 March 31, 2025, $7.70 billion of C&I loans, or 18.0% 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
41
though there is improved real estate as collateral such as senior housing facilities. 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 predominantly 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 of $12.07 billion increased $56.9 million from December 31, 2024, primarily due to increased loan production and lower payoff/paydown activity.
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 March 31, 2025 were $11.27 billion, or 93.3% of the CRE loan portfolio, and increased $84.7 million from December 31, 2024.
The following table shows the principal categories of the investment properties loan portfolio at March 31, 2025 and December 31, 2024.
| Table 4 - Investment Properties Loan Portfolio | |||||||||||||||||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Amount |
%
(1)
|
Weighted Average LTV %
(2)
|
Amount |
%
(1)
|
Weighted Average LTV %
(2)
|
|||||||||||||||||||||||||||||
| Multi-Family | $ | 4,182,886 | 37.1 | % | 51.5 | % | $ | 4,185,545 | 37.4 | % | 52.2 | % | |||||||||||||||||||||||
| Hotels | 1,831,937 | 16.3 | 53.5 | 1,769,384 | 15.8 | 54.7 | |||||||||||||||||||||||||||||
| Office Buildings | 1,724,113 | 15.3 | 55.5 | 1,743,329 | 15.6 | 54.2 | |||||||||||||||||||||||||||||
| Shopping Centers | 1,268,683 | 11.3 | 53.0 | 1,273,439 | 11.4 | 53.0 | |||||||||||||||||||||||||||||
| Warehouses | 848,530 | 7.5 | 51.6 | 846,025 | 7.6 | 51.7 | |||||||||||||||||||||||||||||
| Other investment property | 1,409,752 | 12.5 | 51.5 | 1,363,482 | 12.2 | 51.8 | |||||||||||||||||||||||||||||
| Total investment properties loans | $ | 11,265,901 | 100.0 | % | $ | 11,181,204 | 100.0 | % | |||||||||||||||||||||||||||
(1)
Loan balance in each category expressed as a percentage of total investment properties loans.
(2)
LTV calculated by dividing the respective March 31, 2025 and December 31, 2024 commitment amount and senior lien by most recent appraisal (typically at origination).
1-4 Family Properties Loans
1-4 family properties loans include construction loans to home builders and commercial mortgage loans related to 1-4 family rental properties 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 March 31, 2025, 1-4 family properties loans totaled $513.4 million, or 4.3% of the CRE loan portfolio, and decreased $32.5 million from December 31, 2024.
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). Land and development loans of $292.2 million at March 31, 2025 increased $4.7 million from December 31, 2024.
Consumer Loans
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network, including first and second residential mortgages, home equity and consumer credit card loans, as well as both secured and unsecured loans from third-party lending. As of March 31, 2025, weighted-average FICO scores within the residential real estate portfolio based on committed balances were 783 for consumer mortgages and 787 for home equity.
Consumer loans at March 31, 2025 of $8.26 billion increased $561 thousand compared to December 31, 2024. Mortgage loans decreased $19.3 million from December 31, 2024 largely due to payments surpassing production that was impacted by continued elevated mortgage interest rates that have begun to moderate. Other consumer loans increased $19.3 million from December 31, 2024, as fundings outpaced payment activity for third-party loans.
42
Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the composition of period-end deposits as of the dates indicated. See Table 11 - Quarter-to-Date Net Interest Income and Rate/Volume Analysis in this Report for information on average deposits including average rates.
| Table 5 - Composition of Period-end Deposits | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | March 31, 2025 |
%
(1)
|
December 31, 2024 |
%
(1)
|
March 31, 2024 |
%
(1)
|
|||||||||||||||||||||||||||||
|
Non-interest-bearing demand deposits
(2)
|
$ | 11,095,769 | 21.8 | % | $ | 10,974,559 | 21.5 | % | $ | 11,515,372 | 22.8 | % | |||||||||||||||||||||||
|
Interest-bearing demand deposits
(2)
|
7,272,044 | 14.3 | 7,199,671 | 14.1 | 6,478,834 | 12.8 | |||||||||||||||||||||||||||||
|
Money market accounts
(2)
|
11,424,650 | 22.5 | 11,407,415 | 22.4 | 10,712,716 | 21.2 | |||||||||||||||||||||||||||||
|
Savings deposits
(2)
|
1,000,372 | 2.0 | 971,103 | 1.9 | 1,045,084 | 2.0 | |||||||||||||||||||||||||||||
| Public funds | 8,124,981 | 16.0 | 7,987,474 | 15.6 | 7,270,407 | 14.4 | |||||||||||||||||||||||||||||
|
Time deposits
(2)
|
7,078,537 | 13.9 | 7,679,907 | 15.0 | 7,838,900 | 15.5 | |||||||||||||||||||||||||||||
| Brokered deposits | 4,846,708 | 9.5 | 4,875,230 | 9.5 | 5,718,929 | 11.3 | |||||||||||||||||||||||||||||
| Total deposits | $ | 50,843,061 | 100.0 | % | $ | 51,095,359 | 100.0 | % | $ | 50,580,242 | 100.0 | % | |||||||||||||||||||||||
|
Core deposits
(3)
|
$ | 45,996,353 | 90.5 | % | $ | 46,220,129 | 90.5 | % | $ | 44,861,313 | 88.7 | % | |||||||||||||||||||||||
(1)
Deposits balance in each category expressed as percentage of total deposits.
(2)
Excluding any public funds or brokered deposits.
(3)
Core deposits exclude brokered deposits. Will
Total period-end deposits at March 31, 2025 decreased $252.3 million compared to December 31, 2024 primarily due to a $223.8 million decline in core deposits. The decline in core deposits was primarily due to a decrease in time deposits from maturities and remixing into lower cost deposits, which included interest-bearing demand deposits, savings accounts, and money market accounts, and a seasonal decline in middle market commercial deposits partially offset by growth in public funds and higher non-interest-bearing demand deposits.
Total average deposit costs of 2.26% in the first quarter of 2025 decreased 20 bps and 41 bps, from the prior quarter and prior year comparable periods, respectively, primarily due to remixing into lower cost deposits and deposit pricing diligence.
As of March 31, 2025 and December 31, 2024, $26.20 billion and $26.40 billion, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank's regulatory reporting requirements, but most of our deposits are either insured, collateralized, or could be insured by switching to our insured cash sweep program, which has existing capacity.
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Non-interest Revenue
The following table shows the principal components of non-interest revenue.
| Table 6 - Non-interest Revenue | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Service charges on deposit accounts | $ | 23,114 | $ | 21,813 | $ | 1,301 | 6 | % | |||||||||||||||
| Fiduciary and asset management fees | 19,917 | 19,013 | 904 | 5 | |||||||||||||||||||
| Card fees | 21,227 | 19,486 | 1,741 | 9 | |||||||||||||||||||
| Brokerage revenue | 20,359 | 22,707 | (2,348) | (10) | |||||||||||||||||||
| Mortgage banking income | 3,338 | 3,418 | (80) | (2) | |||||||||||||||||||
| Capital markets income | 6,941 | 6,627 | 314 | 5 | |||||||||||||||||||
| Income from bank-owned life insurance | 8,084 | 7,347 | 737 | 10 | |||||||||||||||||||
| Other non-interest revenue | 13,486 | 18,477 | (4,991) | (27) | |||||||||||||||||||
| Total non-interest revenue | $ | 116,466 | $ | 118,888 | $ | (2,422) | (2) | % | |||||||||||||||
|
Core banking fees
(1)
|
$ | 50,478 | $ | 47,443 | $ | 3,035 | 6 | % | |||||||||||||||
|
Wealth revenue
(2)
|
$ | 40,864 | $ | 41,938 | $ | (1,074) | (3) | % | |||||||||||||||
(1)
Core banking fees consist of service charges on deposit accounts, card fees, and several other non-interest revenue components including line of credit non-usage fees, letter of credit fees, ATM fee income, and miscellaneous other service charges.
(2)
Wealth revenue consists of fiduciary and asset management, brokerage, and insurance revenue, which is within other non-interest revenue.
Three Months Ended March 31, 2025 compared
to March 31, 2024
Non-interest revenue for the first quarter of 2025 was $116.5 million, down $2.4 million, or 2%, compared to the first quarter of 2024, mostly due to lower commercial sponsorship income (primarily within other non-interest revenue) and brokerage revenue, partially offset by higher card fees and increased service charges on deposit accounts.
Service charges on deposit accounts, consisting of account analysis fees, NSF fees, and all other service charges increased over the prior year comparable period. The largest category of service charges, account analysis fees, increased $1.2 million, or 10%, compared to the first quarter of 2024. All other service charges on deposit accounts, including NSF/overdraft fees and monthly fees on consumer demand deposits and small business accounts, marginally increased in comparison to first quarter 2024.
Fiduciary and asset management fees are derived from providing estate administration, personal trust, corporate trust, corporate bond, investment management, financial planning, and family office services. Fiduciary and asset management fees were up for the three months ended March 31, 2025, compared to the same period in 2024, primarily driven by higher trust fees, including increased investment advisor fees.
Card fees consist primarily of credit card interchange fees, debit card interchange fees, and merchant revenue. Card fees are reported net of certain associated expense items, including client loyalty program expenses and network expenses. Merchant revenue relates to the fees that are charged to merchant clients based on a percentage of their credit or debit card transaction volume amounts. Card fees for the first quarter of 2025 were up compared to the first quarter of 2024, primarily due to higher merchant fees/revenue largely related to our Qualpay investment.
Brokerage revenue consists primarily of brokerage commissions as well as advisory fees earned from the management of client assets. Brokerage revenue for the three months ended March 31, 2025 decreased 10% over the prior year comparable period, with the decline mainly attributable to repurchase volume associated with a single municipal client and decreased rate-driven annuities revenue, partially offset by higher market-driven advisory fees.
Mortgage banking income, consisting of net gains on loan origination/sales activities, decreased slightly in the first quarter of 2025 compared to the same period in 2024 due to lower sales volume and production revenue, mostly offset by positive fair market value adjustments attributed to a more favorable interest rate environment and a stabilizing pipeline.
Capital markets income primarily includes fee income from client derivative transactions, debt capital market transactions, foreign exchange, gains (losses) from sales of SBA loans, as well as other miscellaneous income from capital market transactions. The increase in the first quarter of 2025 compared to the first quarter of 2024 was primarily due to $1.1 million higher debt capital market transaction fees and a $304 thousand increase in gains on sales of SBA loans, partially offset by a $777 thousand decrease in fees on client derivative transactions and $519 thousand lower loan syndication arranger fees.
44
Income from BOLI includes increases in the cash surrender value of policies and proceeds from insurance benefits. The increase in 2025 was driven by an increase in cash surrender value appreciation income.
The main components of other non-interest revenue are fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for ATM use, other service charges and loan servicing fees, earnings on equity method investments, insurance revenue, commercial sponsorship income, including transaction and servicing fees associated with a third-party lending relationship, and other miscellaneous items. The three months ended March 31, 2025 decrease compared to the prior year was largely due to a $3.1 million decrease in the fair value of non-qualified deferred compensation plan assets (offset in non-interest expense) and $2.5 million lower commercial sponsorship income.
Non-interest Expense
The following table summarizes the components of non-interest expense.
| Table 7 - Non-interest Expense | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Salaries and other personnel expense | $ | 185,510 | $ | 188,521 | $ | (3,011) | (2) | % | |||||||||||||||
| Net occupancy, equipment, and software expense | 48,652 | 46,808 | 1,844 | 4 | |||||||||||||||||||
| Third-party processing and other services | 21,874 | 20,258 | 1,616 | 8 | |||||||||||||||||||
| Professional fees | 9,779 | 7,631 | 2,148 | 28 | |||||||||||||||||||
| FDIC insurance and other regulatory fees | 8,544 | 23,819 | (15,275) | (64) | |||||||||||||||||||
| Amortization of intangibles | 2,627 | 2,907 | (280) | (10) | |||||||||||||||||||
| Restructuring charges (reversals) | (1,292) | 1,524 | (2,816) | nm | |||||||||||||||||||
| Valuation adjustment to Visa derivative | 2,200 | — | 2,200 | nm | |||||||||||||||||||
| Other operating expense | 30,140 | 31,273 | (1,133) | (4) | |||||||||||||||||||
| Total non-interest expense | $ | 308,034 | $ | 322,741 | $ | (14,707) | (5) | % | |||||||||||||||
Three Months Ended March 31, 2025 compared to March 31, 2024
Non-interest expense for the first quarter of 2025 was $308.0 million, down $14.7 million, or 5%, compared to the same period in 2024, primarily due to a $12.2 million decrease in the accrual related to the FDIC special assessment.
Salaries and other personnel expense decreased for the three months ended March 31, 2025 primarily due to lower bonus and incentives and a $3.1 million favorable change in the fair value of non-qualified deferred compensation plan assets (offset in non-interest revenue), partially offset by higher salaries impacted by merit increases and increased employment tax expense.
Net occupancy, equipment, and software expense increased compared to the three months ended March 31, 2024 primarily due to ongoing investments in technology in addition to increased property expense.
Third-party processing and other services expense includes all third-party core operating system and processing charges as well as third-party loan servicing charges. Third-party processing expense for the three months ended March 31, 2025 increased compared to the same period in 2024 largely due to enhancements associated with technology and operations infrastructure investments and new business initiatives.
Professional fees were up for the three months ended March 31, 2025 due to $3.2 million higher consulting fees compared to 2024, partially offset by $1.0 million lower legal fees primarily associated with the process of resolving certain loan relationships.
FDIC insurance and other regulatory fees decreased for the three months ended March 31, 2025 largely due to a $12.2 million decline in the accrual related to the FDIC special assessment in addition to a lower base assessment rate.
During the three months ended March 31, 2025, restructuring charges (reversals) primarily consisted of a net reversal of $938 thousand for asset impairment/lease termination and common area maintenance charges related to corporate offices/branches and $530 thousand in gains on sales of properties, partially offset by $176 thousand of net severance expense, while the restructuring charges for the three months ended March 31, 2024 primarily included $1.3 million in asset impairment/lease termination and common area maintenance charges related to corporate offices.
During the three months ended March 31, 2025, Synovus recorded a valuation adjustment of $2.2 million to the Visa derivative associated with an indemnification agreement following Visa's announcement to fund to its litigation escrow account.
45
Other operating expense includes advertising, 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 expense. Other operating expense was down from the comparable period in 2024 largely due to efforts to reduce client fraud and other operational losses as well as other prudent expense management efforts, partially offset by business development-related expenses, including advertising and travel.
Income Tax Expense
Income tax expense was $57.0 million for the three months ended March 31, 2025, compared to $36.9 million of tax expense for the three months ended March 31, 2024, representing effective tax rates of 22.6% and 22.9%, respectively. The increase in tax expense was primarily due to the increase in pre-tax income and the discrete item discussed in the paragraph below.
During the first quarter of 2025, Synovus recorded discrete expense of $5.6 million related to a state tax matter disclosed as an uncertain tax position in the 2024 Form 10-K. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 16 - Income Taxes" of Synovus' 2024 Form 10-K for additional information. We believe this matter will be settled by the end of the second quarter of 2025 and expect no further material tax consequences.
CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
Synovus diligently monitors the quality of its loan portfolio by industry, property type, and geography through a thorough portfolio review process and our analytical risk management tools. Such credit surveillance efforts are part of a broader credit risk management framework which includes Board oversight, as well as management-level committee oversight at varying levels across the portfolio. Governance includes limits across a host of factors, ranging from borrower-specific metrics and concentrations to enterprise-level portfolio concentrations. These measures are further complemented by an enterprise risk appetite framework, which helps ensure an expansive view across a myriad of credit risks within the portfolio.
At March 31, 2025, credit metrics included both NPAs and NPLs at 67 bps, and total past due loans at 22 bps as a percentage of total loans. Net charge-offs were $21.4 million, or 20 bps annualized, for the three months ended March 31, 2025.
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The table below includes selected credit quality metrics.
| Table 8 - Credit Quality Metrics | |||||||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||||||||
|
Non-performing loans
|
$ | 286,629 | $ | 309,164 | $ | 350,450 | |||||||||||
|
ORE
|
563 | 385 | 21,210 | ||||||||||||||
|
Non-performing assets
|
$ | 287,192 | $ | 309,549 | $ | 371,660 | |||||||||||
|
Total loans
|
$ | 42,648,738 | $ | 42,609,028 | $ | 43,309,877 | |||||||||||
|
Non-performing loans as a % of total loans
|
0.67 | % | 0.73 | % | 0.81 | % | |||||||||||
|
Non-performing assets as a % of total loans and ORE
|
0.67 | 0.73 | 0.86 | ||||||||||||||
|
Loans 90 days past due and still accruing
|
$ | 40,886 | $ | 48,592 | $ | 3,748 | |||||||||||
|
As a % of total loans
|
0.10 | % | 0.11 | % | 0.01 | % | |||||||||||
|
Total past due loans and still accruing
|
$ | 93,493 | $ | 108,878 | $ | 54,814 | |||||||||||
|
As a % of total loans
|
0.22 | % | 0.26 | % | 0.13 | % | |||||||||||
| FDMs | $ | 112,556 | $ | 104,160 | $ | 178,714 | |||||||||||
| Net charge-offs, quarter | 21,366 | 28,101 | 44,356 | ||||||||||||||
| Net charge-offs/average loans, quarter (annualized) | 0.20 | % | 0.26 | % | 0.41 | % | |||||||||||
| Provision for (reversal of) loan losses, quarter | $ | 12,728 | $ | 29,961 | $ | 57,632 | |||||||||||
| Provision for (reversal of) unfunded commitments, quarter | (1,807) | 2,906 | (3,652) | ||||||||||||||
| Provision for (reversal of) credit losses, quarter | $ | 10,921 | $ | 32,867 | $ | 53,980 | |||||||||||
| Allowance for loan losses | $ | 478,207 | $ | 486,845 | $ | 492,661 | |||||||||||
| Reserve for unfunded commitments | 50,655 | 52,462 | 53,579 | ||||||||||||||
| Allowance for credit losses | $ | 528,862 | $ | 539,307 | $ | 546,240 | |||||||||||
|
ACL to loans coverage ratio
|
1.24 | % | 1.27 | % | 1.26 | % | |||||||||||
|
ALL to loans coverage ratio
|
1.12 | 1.14 | 1.14 | ||||||||||||||
| ACL/NPLs | 184.51 | 174.44 | 155.87 | ||||||||||||||
| ALL/NPLs | 166.84 | 157.47 | 140.58 | ||||||||||||||
Criticized and Classified Loans
Our loan ratings are aligned to federal banking regulators' definitions of pass and criticized categories, which include special mention, substandard, doubtful, and loss. Substandard accruing and non-accruing loans, doubtful, and loss loans are often collectively referred to as classified. Special mention, substandard, doubtful, and loss loans are often collectively referred to as criticized and classified loans.
The following table presents a summary of criticized and classified loans. Criticized and classified loans at March 31, 2025 decreased $73.5 million compared to December 31, 2024, primarily due to the upward migration and paydowns of several commercial credits.
| Table 9 - Criticized and Classified Loans | |||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
| Special mention | $ | 708,607 | $ | 755,118 | |||||||
| Substandard | 856,338 | 873,121 | |||||||||
| Doubtful | 41,786 | 52,326 | |||||||||
| Loss | 2,817 | 2,523 | |||||||||
| Criticized and Classified loans | $ | 1,609,548 | $ | 1,683,088 | |||||||
|
As a % of total loans
|
3.8 | % | 4.0 | % | |||||||
47
Provision for (Reversal of) Credit Losses and Allowance for Credit Losses
The provision for credit losses was $10.9 million for the three months ended March 31, 2025, compared to a provision of $54.0 million for the three months ended March 31, 2024. The decrease was driven by improved performance, including a decrease in net charge-offs and lower defaults. This was partially offset by a more adverse economic outlook. Net charge-offs for the three months ended March 31, 2025 were $21.4 million compared to $44.4 million for the three months ended March 31, 2024.
The ALL of $478.2 million and the reserve for unfunded commitments of $50.7 million, which is recorded in other liabilities, comprise the total ACL of $528.9 million at March 31, 2025. The ACL decreased $10.4 million compared to the December 31, 2024 ACL of $539.3 million, which consisted of an ALL of $486.8 million and a reserve for unfunded commitments of $52.5 million. The ACL to loans coverage ratio of 1.24% at March 31, 2025 decreased 3 bps compared to December 31, 2024 due to improved credit performance, partially offset by increased economic uncertainty. The ACL to NPL coverage ratio was 185% at March 31, 2025 compared to 174% at December 31, 2024.
Capital Resources
Synovus and Synovus Bank are required to comply with capital adequacy standards established by our primary federal regulator, the Federal Reserve. Synovus and Synovus Bank measure capital adequacy using the standardized approach under Basel III. Beyond adhering to regulatory capital standards, Synovus also maintains a rigorous capital management and adequacy framework, which includes oversight by both the ALCO and the Board. This effort involves monitoring and managing our capital position in alignment with our Board’s risk appetite framework and with a Board-approved annual capital plan, with a focus on applicable regulatory capital ratios. Our ALCO serves to provide management level oversight within this framework, which may include establishing target operating ranges for certain capital measures, such as CET1, as a means to provide further clarity over the management of our capital position.
At March 31, 2025, 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 10 - Capital Ratios | |||||||||||
| (dollars in thousands) | March 31, 2025 |
December 31, 2024
(1)
|
|||||||||
| CET1 capital | |||||||||||
| Synovus Financial Corp. | $ | 5,182,336 | $ | 5,199,950 | |||||||
| Synovus Bank | 5,840,478 | 5,657,947 | |||||||||
| Tier 1 risk-based capital | |||||||||||
| Synovus Financial Corp. | 5,719,481 | 5,737,095 | |||||||||
| Synovus Bank | 5,840,478 | 5,657,947 | |||||||||
| Total risk-based capital | |||||||||||
| Synovus Financial Corp. | 6,576,435 | 6,622,462 | |||||||||
| Synovus Bank | 6,566,053 | 6,373,618 | |||||||||
| CET1 capital ratio | |||||||||||
| Synovus Financial Corp. | 10.77 | % | 10.84 | % | |||||||
| Synovus Bank | 12.16 | 11.81 | |||||||||
| Tier 1 risk-based capital ratio | |||||||||||
| Synovus Financial Corp. | 11.89 | 11.96 | |||||||||
| Synovus Bank | 12.16 | 11.81 | |||||||||
| Total risk-based capital to risk-weighted assets ratio | |||||||||||
| Synovus Financial Corp. | 13.67 | 13.81 | |||||||||
| Synovus Bank | 13.67 | 13.31 | |||||||||
| Leverage ratio | |||||||||||
| Synovus Financial Corp. | 9.56 | 9.55 | |||||||||
| Synovus Bank | 9.78 | 9.44 | |||||||||
48
At March 31, 2025, Synovus' CET1 ratio of 10.77% declined 7 bps compared to December 31, 2024, as our organic earnings supported capital accretion that was offset by share repurchases. We will continue to maintain a disciplined approach to capital management, targeting a relatively stable CET1 ratio, acknowledging the uncertain economic environment, and ensuring sufficient capital for expected client growth. Our focus remains on prioritizing the deployment of our balance sheet and capital position for core client growth; however, we expect to continue to complement that with share repurchases to effectively manage within our capital management framework. For additional information on regulatory capital requirements, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 10 - Regulatory Capital" to the consolidated financial statements of Synovus' 2024 Form 10-K. Management reviews the Company's capital position on an ongoing basis and believes, based on internal capital analyses and earnings projections, that Synovus is well positioned to meet relevant regulatory capital standards.
On December 13, 2024, the Board of Directors approved a capital plan that included an anticipated quarterly common stock dividend of $0.39 per share, beginning with quarterly dividend payable in April 2025, and authorized share repurchases of up to $400 million of common stock and $50 million of preferred stock in 2025. During the three months ended March 31, 2025, Synovus repurchased 2.4 million shares of common stock at an average price of $49.41 per share via open market transactions.
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' 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 $54.7 million, or $0.39 per common share, for the three months ended March 31, 2025, compared to $55.6 million, or $0.38 per common share, for the three months ended March 31, 2024. In addition, Synovus declared dividends on its preferred stock of $11.3 million for the three months ended March 31, 2025 compared to $9.7 million for the three months ended March 31, 2024.
Liquidity
Liquidity represents the extent to which Synovus has readily available sources of funding 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 as well as market risk.
In accordance with Synovus policies and regulatory guidance, ALCO evaluates contractual and anticipated cash flows under normal and stressed conditions to properly manage the Company’s liquidity profile. Synovus places an emphasis on maintaining numerous sources of current and contingent liquidity to meet its obligations to depositors, borrowers, and creditors on a timely basis. Liquidity is generated through various sources, including, but not limited to, maturities and repayments of loans by clients, maturities and sales of investment securities, and growth in core and wholesale deposits.
Synovus Bank also generates liquidity through the issuance of brokered certificates of deposit and money market accounts. Synovus Bank accesses funds from a broad geographic base to diversify its sources of funding and liquidity. Synovus Bank also has the capacity to access funding through its membership in the FHLB system and the Federal Reserve. Management continuously monitors and maintains appropriate levels of liquidity so as to provide adequate funding sources to manage client deposit withdrawals, loan requests, and other funding demands.
Total deposits at March 31, 2025 decreased $252.3 million compared to December 31, 2024, primarily due to a $223.8 million decrease in core deposits along with a $28.5 million decline in brokered deposits. The decline in core deposits was primarily due to a decrease in time deposits from maturities and remixing into lower cost deposits, which included interest-bearing demand deposits, savings accounts, and money market accounts, and a seasonal decline in middle market commercial deposits partially offset by growth in public funds and higher non-interest-bearing demand deposits. Synovus continues to proactively manage its liquidity position, which has included the level of brokered deposits, and robust contingent liquidity is maintained across a diverse set of sources which include immediately available funds as well as funds we expect to be available within short notice. Liquidity sources include primary sources such as FHLB borrowing capacity, FRB cash reserves, unencumbered securities, and third-party consumer loans, which includes strategic runoff, while secondary sources consist of the Federal Reserve discount window, Fed Funds lines, and other sources. At March 31, 2025, contingent sources of liquidity
49
totaled approximately $26.3 billion, and based on currently pledged collateral, Synovus Bank had access to FHLB funding of $7.4 billion, subject to FHLB credit policies.
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, payment of general corporate expense, 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, both the GA DBF and Federal Reserve Bank may require approval to pay dividends, based on certain regulatory statutes and limitations.
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 a 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 - Market and Other General Risk -
Negative developments affecting the banking industry, and resulting media coverage, have eroded client confidence in the banking system, and Credit and Liquidity Risk - Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity, and financial results
,
"
of
Synovus' 2024 Form 10-K. Furthermore, Synovus may, from time to time, take advantage of attractive market opportunities to refinance, retire, or repurchase its existing debt, redeem or issue its preferred stock, repurchase shares, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average earning assets decreased $378.7 million in the first three months of 2025 compared to the same period in 2024. The decrease in average earning assets primarily resulted from a $871.5 million decrease in average total loans, net of unearned income and a decline of $388.7 million in average investment securities (amortized cost basis), partially offset by a $871.9 million increase in interest-earning deposits with other banks. The decrease in average total loans, net of unearned income, was largely due to increased paydowns, a continued focus on strategically reducing non-relationship loans, and a decline in third-party consumer loans from continued run-off. The increase in interest-earning deposits with other banks was primarily due to core deposit growth outpacing loan growth, along with active management of our liquidity position. Average investment securities (amortized cost basis) declined primarily due to the transfer of investment securities from AFS to HTM on April 1, 2024, which included unrealized losses at the date of transfer.
Average interest-bearing liabilities increased $976.5 million for the first three months of 2025 compared to the same period in 2024. The increase in average interest-bearing liabilities largely resulted from increases of $1.07 billion and $1.02 billion in average money market accounts and average interest-bearing demand deposits, respectively, partially offset by decreases of $831.5 million and $125.1 million in average brokered deposits and average time deposits, respectively. The increases in average money market accounts and average
interest-bearing demand deposits and decreases in average brokered deposits and average time deposits were correlated, as positive deposit remixing resulted in a shift towards lower cost deposits. Average non-interest-bearing demand deposits decreased $665.6 million for the first three months of 2025 compared to the same period in 2024 primarily due to the continued pressures from the rate environment and client deployment of excess funds, which largely occurred in the first half of 2024.
Net interest income for the three months ended March 31, 2025 was $454.4 million, up $35.5 million, or 8%, compared to the same period in 2024. Net interest margin was up 31 bps over the comparable
period to 3.35%, impacted by positive deposit remixing, deposit pricing diligence, and the impact of the investment securities repositioning in the second quarter of 2024.
On a sequential quarter basis, net interest income was relatively flat, and net interest margin for the first quarter of 2025 was up 7 bps compared to the fourth quarter of 2024. The linked quarter increase in the net interest margin was largely attributable to effective deposit repricing and further supported by hedge maturities, lower interest-earning deposits with other banks balances and a stable Fed Funds environment. These benefits were partially offset by the full quarter impact of our $500 million of 6.168% Fixed Rate/Floating Rate Senior Notes which mature on November 1, 2030 issued in the fourth quarter of 2024.
50
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 three months ended March 31, 2025 and 2024, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
| Table 11 - Quarter-to-Date Net Interest Income and Rate/Volume Analysis | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | 2025 Compared to 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 |
Change due to
(1)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
Average Balance | Interest |
Yield/
Rate |
Average Balance | Interest |
Yield/
Rate |
Volume |
Yield/ Rate | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
|
Assets
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Interest earning assets:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Commercial loans
(2) (3)
|
$ | 34,262,226 | $ | 543,485 | 6.43 | % | $ | 34,943,797 | $ | 583,459 | 6.72 | % | $ | (11,277) | $ | (28,697) | $ | (39,974) | |||||||||||||||||||||||||||||||||||
|
Consumer loans
(2)
|
8,244,161 | 106,344 | 5.19 | 8,434,105 | 109,566 | 5.21 | (2,440) | (782) | (3,222) | ||||||||||||||||||||||||||||||||||||||||||||
|
Less: Allowance for loan losses
|
(480,023) | — | — | (481,146) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
|
Loans, net
|
42,026,364 | 649,829 | 6.26 | 42,896,756 | 693,025 | 6.49 | (13,717) | (29,479) | (43,196) | ||||||||||||||||||||||||||||||||||||||||||||
|
Total investment securities
(4)
|
10,759,512 | 93,352 | 3.47 | 11,148,242 | 71,906 | 2.58 | (2,473) | 23,919 | 21,446 | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits with other banks | 2,054,292 | 22,172 | 4.32 | 1,182,412 | 15,907 | 5.33 | 11,459 | (5,194) | 6,265 | ||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 20,162 | 131 | 2.60 | 35,678 | 266 | 2.95 | (113) | (22) | (135) | ||||||||||||||||||||||||||||||||||||||||||||
|
Mortgage loans held for sale
|
24,267 | 373 | 6.15 | 29,773 | 495 | 6.65 | (90) | (32) | (122) | ||||||||||||||||||||||||||||||||||||||||||||
| Other loans held for sale | 69,049 | 384 | 2.23 | 18,465 | 83 | 1.77 | 221 | 80 | 301 | ||||||||||||||||||||||||||||||||||||||||||||
|
Other earning assets
(5)
|
178,344 | 2,101 | 4.71 | 199,392 | 2,338 | 4.69 | (243) | 6 | (237) | ||||||||||||||||||||||||||||||||||||||||||||
|
Total interest earning assets
|
$ | 55,131,990 | $ | 768,342 | 5.65 | % | $ | 55,510,718 | $ | 784,020 | 5.68 | % | $ | (4,956) | $ | (10,722) | $ | (15,678) | |||||||||||||||||||||||||||||||||||
|
Cash and due from banks
|
499,201 | 532,624 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Premises and equipment
|
384,258 | 370,376 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Other real estate
|
261 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Cash surrender value of bank-owned life insurance
|
1,142,943 | 1,114,703 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Other assets
(6)
|
2,717,893 | 1,493,749 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total assets
|
$ | 59,876,546 | $ | 59,022,231 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
Liabilities and Shareholders' Equity
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Interest-bearing liabilities:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Interest-bearing demand deposits
|
$ | 11,613,495 | $ | 62,811 | 2.19 | % | $ | 10,590,340 | $ | 65,415 | 2.48 | % | $ | 6,257 | $ | (8,861) | $ | (2,604) | |||||||||||||||||||||||||||||||||||
|
Money market accounts
|
13,900,933 | 92,897 | 2.71 | 12,826,385 | 103,129 | 3.23 | 8,558 | (18,790) | (10,232) | ||||||||||||||||||||||||||||||||||||||||||||
|
Savings deposits
|
994,127 | 320 | 0.13 | 1,057,087 | 287 | 0.11 | (17) | 50 | 33 | ||||||||||||||||||||||||||||||||||||||||||||
|
Time deposits
|
7,777,767 | 71,055 | 3.71 | 7,902,850 | 86,493 | 4.40 | (1,357) | (14,081) | (15,438) | ||||||||||||||||||||||||||||||||||||||||||||
| Brokered deposits | 4,905,909 | 55,242 | 4.57 | 5,737,445 | 77,342 | 5.42 | (11,113) | (10,987) | (22,100) | ||||||||||||||||||||||||||||||||||||||||||||
|
Federal funds purchased and securities sold under repurchase agreements
|
75,252 | 208 | 1.11 | 113,558 | 648 | 2.26 | (214) | (226) | (440) | ||||||||||||||||||||||||||||||||||||||||||||
|
Other short-term borrowings
|
— | — | — | 71,775 | 955 | 5.26 | (931) | (24) | (955) | ||||||||||||||||||||||||||||||||||||||||||||
|
Long-term debt
|
1,773,203 | 29,848 | 6.74 | 1,764,740 | 29,595 | 6.69 | 140 | 113 | 253 | ||||||||||||||||||||||||||||||||||||||||||||
|
Total interest-bearing liabilities
|
41,040,686 | $ | 312,381 | 3.09 | % | 40,064,180 | $ | 363,864 | 3.65 | % | $ | 1,323 | $ | (52,806) | $ | (51,483) | |||||||||||||||||||||||||||||||||||||
|
Non-interest-bearing demand deposits
|
11,406,048 | 12,071,670 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Other liabilities
|
2,058,727 | 1,782,659 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total equity
|
5,371,085 | 5,103,722 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total liabilities and shareholders' equity
|
$ | 59,876,546 | $ | 59,022,231 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
Net interest income and net interest margin, taxable equivalent
(7)
|
$ | 455,961 | 3.35 | % | $ | 420,156 | 3.04 | % | $ | (6,279) | $ | 42,084 | $ | 35,805 | |||||||||||||||||||||||||||||||||||||||
|
Less: taxable-equivalent adjustment
|
1,577 | 1,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net interest income
|
$ | 454,384 | $ | 418,846 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)
Changes in rate/volume will equal the increase/(decrease) in interest income/expense.
(2)
Average loans are shown net of unearned income. NPLs are included. Interest income includes fees as follows: First quarter - 2025 - $13.2 million, First quarter - 2024 - $10.6 million.
(3)
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.
(4)
Securities are included on an amortized cost basis with yield and net interest margin calculated accordingly.
(5)
Includes trading account assets and FHLB and Federal Reserve Bank stock.
(6)
Includes average net unrealized gains (losses) on investment securities available for sale of $(473.3) million and $(1.36) billion for the three months ended March 31, 2025 and 2024, respectively.
(7)
The net interest margin is calculated by dividing annualized net interest income - TE by average total interest earnings assets.
51
Market Risk Analysis
Interest rate risk is the primary market risk to which Synovus is potentially exposed. Synovus measures the sensitivity of net interest income to changes in market interest rates through the use of simulation modeling, which incorporates all of Synovus’ earning assets and liabilities. These simulations are used to determine a baseline net interest income projection and the sensitivity of the income profile based on changes in interest rates. These simulations incorporate assumptions and factors, including, but not limited to, changes in market rates, in the size or composition of the balance sheet, and in repricing characteristics as well as client behaviors for both loans and deposits. This includes estimates for deposit repricing characteristics which, for purposes of the sensitivity estimates provided below, relies upon a constant, through-the-cycle total deposit cost beta of approximately 40%-50% as of the most recently reported period. The deposit beta assumptions are based on historical observations and future expectations. This process is reviewed and updated on an ongoing basis in a manner consistent with Synovus’ ALCO governance framework.
The Risk Committee of the Board has chartered the ALCO and approved related policies to aid in the management and governance of various risks, including interest rate risk. The ALCO has an established limit framework for interest rate risk, which is monitored on an ongoing basis and is in alignment with the tolerances and limits as established by the Board. Additionally, Synovus’ ERM framework establishes a Board-approved risk appetite statement, which includes certain quantitative measurements for interest rate risk and helps to ensure management operates within the Board’s established appetite.
Synovus has modeled its baseline net interest income forecast assuming an interest rate projection that is flat to March 31, 2025 interest rate curves, with the federal funds rate at the Federal Reserve’s targeted range of 4.25% to 4.50% as of March 31, 2025 and the prime rate of 7.50% as of March 31, 2025. Synovus has modeled the impact of an immediate change in market interest rates across the yield curve of 100 and 200 bps to determine the sensitivity of net interest income for the next 12 months. As illustrated in the table below, the net interest income sensitivity derived from this simulation suggests that net interest income is projected to increase by 3.7% and 1.8% if interest rates increased by 200 and 100 bps, respectively. Net interest income is projected to decrease by 1.8% and 3.5% if interest rates decreased by 100 and 200 bps, respectively.
The following table represents the estimated sensitivity of net interest income at March 31, 2025, with comparable information for December 31, 2024.
| Table 12 - Twelve Month Net Interest Income Sensitivity | ||||||||||||||
| Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next 12 months) | ||||||||||||||
| Change in Interest Rates (in bps) | March 31, 2025 | December 31, 2024 | ||||||||||||
| +200 | 3.7% | 4.0% | ||||||||||||
| +100 | 1.8 | 2.0 | ||||||||||||
| -100 | (1.8) | (2.0) | ||||||||||||
| -200 | (3.5) | (3.8) | ||||||||||||
While all of the above estimates are reflective of the general interest rate sensitivity of Synovus, local market conditions, the realized growth and remixing of the balance sheet, as well as the broader macroeconomic environment could all have a significant impact on both the sensitivity and realized level of net interest income. Additionally, should there be differences between realized deposit betas for a given level of rates as compared to the Company's estimates for through-the-cycle betas, this may also have a significant impact on our reported sensitivity and the realized level of net interest income.
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 the sensitivity of the Company's EVE. The EVE measurement process estimates the net fair value of assets, liabilities, and off-balance sheet financial instruments under various interest rate scenarios. Management uses EVE sensitivity analyses as an additional means of measuring interest rate risk and incorporates this form of analysis within its governance and limits framework.
Synovus is also subject to market risk in certain of its fee income business lines. Financial management services revenue, which include trust, brokerage, and asset management fees, can be affected by risk in the securities markets, primarily the equity securities market. A significant portion of the fees in this unit are determined based upon a percentage of asset values. Weaker securities markets and lower equity values have an adverse impact on the fees generated by these operations. Trading account assets, maintained to facilitate brokerage client activity, are also subject to market risk; however, trading activities are limited and subject to risk policy limits. Additionally, Synovus utilizes various tools to measure and manage price risk in its trading portfolio.
52
Mortgage banking income is also subject to market risk. Mortgage loan originations are sensitive to levels of mortgage interest rates and therefore, mortgage banking income can be negatively impacted during a period of rising interest rates as we have been experiencing through the cycle. The extension of commitments to clients to fund mortgage loans also subjects Synovus to market risk. This risk is primarily created by the time periods between making the commitment, closing, and delivering the loan. Synovus seeks to minimize its exposure by utilizing various risk management tools, including forward sales commitments and other economic hedges.
Derivative Instruments for Interest Rate Risk Management
Synovus utilizes derivative instruments to manage its exposure to various types of structural interest rate risks by executing end-user derivative transactions designated as hedges. Hedging relationships may be designated as either a cash flow hedge, which mitigates risk exposure to the variability of future cash flows or other forecasted transactions, or a fair value hedge, which mitigates risk exposure to adverse changes in the fair market value of a fixed rate asset or liability due to changes in market interest rates.
As of March 31, 2025 and December 31, 2024, Synovus had $4.60 billion and $4.35 billion, respectively, in notional amounts outstanding of both effective and forward-starting interest rate swaps designated as cash flow hedging instruments to hedge its exposure to contractually specified interest rate risk associated with floating rate loans.
As of March 31, 2025 and December 31, 2024, Synovus had $2.25 billion and $2.10 billion, respectively, in notional amounts outstanding of receive-fixed, pay-variable interest rate swaps designated as fair value hedging instruments to hedge its exposure to the change in the fair value due to fluctuations in market interest rates for outstanding fixed-rate long-term debt and fixed-rate interest-bearing deposits.
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 credit losses 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 on a periodic basis, 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' 2024 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. 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' 2024 Form 10-K.
Non-GAAP Financial Measures
The measures entitled adjusted non-interest revenue, adjusted non-interest expense, adjusted revenue TE, adjusted tangible efficiency ratio, adjusted PPNR, adjusted net income available to common shareholders, adjusted net income per common share, diluted, adjusted return on average assets, adjusted return on average common equity, return on average tangible common equity, adjusted return on average tangible common equity, and tangible common equity ratio, 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 revenue, total non-interest expense, total revenue, efficiency ratio-TE, PPNR, net income (loss) available to common shareholders, net income (loss) per common share, diluted, return on average assets, return on average common equity, and the ratio of total Synovus Financial Corp. shareholders' equity to total assets, respectively.
Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted non-interest revenue and adjusted revenue TE are measures used by management to evaluate non-interest revenue and total revenue exclusive of net investment securities gains (losses), fair value adjustments on non-qualified deferred compensation, and other items not indicative of ongoing operations that could impact period-to-period comparisons. 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
53
controllable operating costs. Adjusted net income available to common shareholders, adjusted net income per common share, diluted, adjusted return on average assets, adjusted return on average common equity, and adjusted PPNR are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Return on average tangible common equity and adjusted return on average tangible common equity are measures used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio is used by stakeholders to assess our capital position. The computations of these measures are set forth in the tables below.
Management does not provide a reconciliation for forward-looking non-GAAP financial measures where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the occurrence and the financial impact of various items that have not yet occurred, are out of Synovus’ control, or cannot be reasonably predicted. For the same reasons, Synovus’ management is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
| Table 13 - Reconciliation of Non-GAAP Financial Measures | |||||||||||
| Three Months Ended | |||||||||||
| (in thousands) | March 31, 2025 | March 31, 2024 | |||||||||
| Adjusted non-interest revenue | |||||||||||
| Total non-interest revenue | $ | 116,466 | $ | 118,888 | |||||||
| Fair value adjustment on non-qualified deferred compensation | 816 | (2,299) | |||||||||
| Adjusted non-interest revenue | $ | 117,282 | $ | 116,589 | |||||||
| Adjusted non-interest expense | |||||||||||
| Total non-interest expense | $ | 308,034 | $ | 322,741 | |||||||
| Restructuring (charges) reversals | 1,292 | (1,524) | |||||||||
| Valuation adjustment to Visa derivative | (2,200) | — | |||||||||
| Fair value adjustment on non-qualified deferred compensation | 816 | (2,299) | |||||||||
| Adjusted non-interest expense | $ | 307,942 | $ | 318,918 | |||||||
54
| Table 13 - Reconciliation of Non-GAAP Financial Measures, continued | |||||||||||
| Three Months Ended | |||||||||||
| (in thousands, except per share data) | March 31, 2025 | March 31, 2024 | |||||||||
| Adjusted revenue (TE) and adjusted tangible efficiency ratio | |||||||||||
| Adjusted non-interest expense | $ | 307,942 | $ | 318,918 | |||||||
| Amortization of intangibles | (2,627) | (2,907) | |||||||||
| Adjusted tangible non-interest expense | $ | 305,315 | $ | 316,011 | |||||||
| Net interest income | $ | 454,384 | $ | 418,846 | |||||||
| Taxable equivalent adjustment | 1,577 | 1,310 | |||||||||
| Net interest income (TE) | $ | 455,961 | $ | 420,156 | |||||||
| Net interest income | $ | 454,384 | $ | 418,846 | |||||||
| Total non-interest revenue | 116,466 | 118,888 | |||||||||
| Total revenue | $ | 570,850 | $ | 537,734 | |||||||
| Taxable equivalent adjustment | 1,577 | 1,310 | |||||||||
| Total (TE) revenue | $ | 572,427 | $ | 539,044 | |||||||
| Fair value adjustment on non-qualified deferred compensation | 816 | (2,299) | |||||||||
| Adjusted revenue (TE) | $ | 573,243 | $ | 536,745 | |||||||
| Efficiency ratio (TE) | 53.81 | % | 59.87 | % | |||||||
| Adjusted tangible efficiency ratio | 53.26 | 58.88 | |||||||||
| Adjusted pre-provision net revenue | |||||||||||
| Net interest income | $ | 454,384 | $ | 418,846 | |||||||
| Total non-interest revenue | 116,466 | 118,888 | |||||||||
| Total non-interest expense | (308,034) | (322,741) | |||||||||
| Pre-provision net revenue (PPNR) | $ | 262,816 | $ | 214,993 | |||||||
| Adjusted revenue (TE) | $ | 573,243 | $ | 536,745 | |||||||
| Adjusted non-interest expense | (307,942) | (318,918) | |||||||||
| Adjusted PPNR | $ | 265,301 | $ | 217,827 | |||||||
| Adjusted net income available to common shareholders and adjusted diluted earnings per share | |||||||||||
| Net income available to common shareholders | $ | 183,691 | $ | 114,822 | |||||||
| Restructuring charges (reversals) | (1,292) | 1,524 | |||||||||
| Valuation adjustment to Visa derivative | 2,200 | — | |||||||||
|
Tax effect of adjustments
(1)
|
(219) | (373) | |||||||||
| Adjusted net income available to common shareholders | $ | 184,380 | $ | 115,973 | |||||||
| Weighted average common shares outstanding, diluted | 141,775 | 147,122 | |||||||||
| Net income per common share, diluted | $ | 1.30 | $ | 0.78 | |||||||
| Adjusted net income per common share, diluted | 1.30 | 0.79 | |||||||||
|
(1)
An assumed marginal tax rate of 24.2% for 2025 and 24.5% for 2024 was applied.
|
|||||||||||
55
| Table 13 - Reconciliation of Non-GAAP Financial Measures, continued | |||||||||||
| Three Months Ended | |||||||||||
| (dollars in thousands) | March 31, 2025 | March 31, 2024 | |||||||||
| Adjusted return on average assets (annualized) | |||||||||||
| Net income | $ | 194,872 | $ | 124,070 | |||||||
| Restructuring charges (reversals) | (1,292) | 1,524 | |||||||||
| Valuation adjustment to Visa derivative | 2,200 | — | |||||||||
|
Tax effect of adjustments
(1)
|
(219) | (373) | |||||||||
| Adjusted net income | $ | 195,561 | $ | 125,221 | |||||||
| Net income annualized | $ | 790,314 | $ | 499,007 | |||||||
| Adjusted net income annualized | $ | 793,109 | $ | 503,636 | |||||||
| Total average assets | $ | 59,876,546 | $ | 59,022,231 | |||||||
| Return on average assets (annualized) | 1.32 | % | 0.85 | % | |||||||
| Adjusted return on average assets (annualized) | 1.32 | 0.85 | |||||||||
|
(1)
An assumed marginal tax rate of 24.2% for 2025 and 24.5% for 2024 was applied.
|
|||||||||||
| Three Months Ended | |||||||||||
| (dollars in thousands) | March 31, 2025 | March 31, 2024 | |||||||||
| Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity (annualized) | |||||||||||
| Net income available to common shareholders | $ | 183,691 | $ | 114,822 | |||||||
| Restructuring charges (reversals) | (1,292) | 1,524 | |||||||||
| Valuation adjustment to Visa derivative | 2,200 | — | |||||||||
|
Tax effect of adjustments
(1)
|
(219) | (373) | |||||||||
| Adjusted net income available to common shareholders | $ | 184,380 | $ | 115,973 | |||||||
| Adjusted net income available to common shareholders annualized | $ | 747,763 | $ | 466,441 | |||||||
| Amortization of intangibles, annualized net of tax | 8,082 | 8,831 | |||||||||
| Adjusted net income available to common shareholders excluding amortization of intangibles annualized | $ | 755,845 | $ | 475,272 | |||||||
| Net income (loss) available to common shareholders annualized | $ | 744,969 | $ | 461,812 | |||||||
| Amortization of intangibles, annualized net of tax | 8,082 | 8,831 | |||||||||
| Net income (loss) available to common shareholders excluding amortization of intangibles annualized | $ | 753,051 | $ | 470,643 | |||||||
| Total average Synovus Financial Corp. shareholders' equity less preferred stock | $ | 4,812,279 | $ | 4,542,616 | |||||||
| Average goodwill | (480,440) | (480,440) | |||||||||
| Average other intangible assets, net | (32,966) | (44,497) | |||||||||
| Total average Synovus Financial Corp. tangible shareholders' equity less preferred stock | $ | 4,298,873 | $ | 4,017,679 | |||||||
| Return on average common equity (annualized) | 15.48 | % | 10.17 | % | |||||||
| Adjusted return on average common equity (annualized) | 15.54 | 10.27 | |||||||||
| Return on average tangible common equity (annualized) | 17.52 | 11.71 | |||||||||
| Adjusted return on average tangible common equity (annualized) | 17.58 | 11.83 | |||||||||
|
(1)
An assumed marginal tax rate of 24.2% for 2025 and 24.5% for 2024 was applied.
|
|||||||||||
56
| Table 13 - Reconciliation of Non-GAAP Financial Measures, continued | |||||||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||||||||
| Tangible common equity ratio | |||||||||||||||||
| Total assets | $ | 60,339,121 | $ | 60,233,644 | $ | 59,835,120 | |||||||||||
| Goodwill | (480,440) | (480,440) | (480,440) | ||||||||||||||
| Other intangible assets, net | (31,691) | (34,318) | (43,021) | ||||||||||||||
| Tangible assets | $ | 59,826,990 | $ | 59,718,886 | $ | 59,311,659 | |||||||||||
| Total Synovus Financial Corp. shareholders' equity | $ | 5,390,751 | $ | 5,244,557 | $ | 5,017,918 | |||||||||||
| Goodwill | (480,440) | (480,440) | (480,440) | ||||||||||||||
| Other intangible assets, net | (31,691) | (34,318) | (43,021) | ||||||||||||||
| Preferred stock, no par value | (537,145) | (537,145) | (537,145) | ||||||||||||||
| Tangible common equity | $ | 4,341,475 | $ | 4,192,654 | $ | 3,957,312 | |||||||||||
| Total Synovus Financial Corp. shareholders' equity to total assets ratio | 8.93 | % | 8.71 | % | 8.39 | % | |||||||||||
| Tangible common equity ratio | 7.26 | 7.02 | 6.67 | ||||||||||||||
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 section of this Report 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 March 31, 2025, 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 March 31, 2025 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.
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PART II. – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
See "Part I - Item 1. Financial Statements and Supplementary Data - Note 8 - Commitments and Contingencies" of this Report.
ITEM 1A. – RISK FACTORS
In addition to the other information set forth in this Report, in evaluating an investment in the Company's securities, investors should consider carefully, among other things, the risk factors previously disclosed in "Part I - Item IA - Risk Factors” of Synovus' 2024 Form 10-K which could materially affect the Company's 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 our 2024 Form 10-K.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
On December 13, 2024 the Board of Directors approved share repurchases of up to $400 million of common stock and $50 million of preferred stock in 2025. The table below sets forth information regarding repurchases of our common stock during the first quarter of 2025.
| Table 14 - 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 |
||||||||||||||||||||||
| January 1 to January 31, 2025 | 371 | $ | 55.28 | 371 | $ | 379,481 | ||||||||||||||||||||
| February 1 to February 28, 2025 | 422 | 54.35 | 422 | 356,539 | ||||||||||||||||||||||
| March 1 to March 31, 2025 | 1,633 | 46.79 | 1,633 | 280,150 | ||||||||||||||||||||||
| Total | 2,426 | $ | 49.41 | 2,426 | ||||||||||||||||||||||
(1)
The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions, other transaction expenses, and the 1 percent excise tax charged on public company share repurchases.
The foregoing common stock repurchases during the first quarter of 2025 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. – MINE SAFETY DISCLOSURES
None.
ITEM 5. – OTHER INFORMATION
(a) None.
(b) None.
(c) Pursuant to Item 408(a) of Regulation S-K, none of the Company's directors or executive officers
adopted
,
terminated
or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025.
58
ITEM 6. – EXHIBITS
|
Exhibit
Number |
Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32 | ||||||||
| 101 | Interactive Data File | |||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | |||||||
59
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. | |||||||||||
| May 2, 2025 | By: | /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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TABLE OF CONTENTS
Part I. Financial InformationprintItem 1. - Financial StatementsprintNote 1 - Basis Of Presentation and Accounting PoliciesprintNote 2 - Investment SecuritiesprintNote 3 - Loans and Allowance For Loan LossesprintNote 4 - Shareholders' Equity and Other Comprehensive Income (loss)printNote 5 - Fair Value AccountingprintNote 6 - Derivative Instruments and Hedging ActivitiesprintNote 7 - Net Income Per Common ShareprintNote 8 - Commitments and ContingenciesprintNote 9 - Segment ReportingprintItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsprintItem 3. Quantitative and Qualitative Disclosures About Market RiskprintItem 4. Controls and ProceduresprintPart II. Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Securities and Use Of ProceedsprintItem 3. Defaults Upon Senior SecuritiesprintItem 4. Mine Safety DisclosuresprintItem 5. Other InformationprintItem 6. Exhibitsprint