SYNOVUS FINANCIAL CORP [SNV] Filings

10-Q 1 syn-20230930.htm 10-Q syn-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

______________________________

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

For the quarterly period ended September 30, 2023

Commission file number 1-10312

______________________________

SYNOVUS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

______________________________


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

1111 Bay Avenue, Suite 500

Columbus,

Georgia

31901

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (706) 641-6500

______________________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 Par Value	SNV	New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D	SNV - PrD	New York Stock Exchange
Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E	SNV - PrE	New York Stock Exchange

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.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2023, 146,241,890 shares of the registrant's common stock, $1.00 par value, were outstanding.

Table of Contents

Page

Part I.

Financial Information

Index of Defined Terms

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2023 and 2022

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022

Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

Notes to Unaudited Interim Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II.

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)

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

BOLI – Bank-owned life insurance

bp(s) – Basis point(s)

C&I – Commercial and industrial

CARES Act – The Coronavirus Aid, Relief, and Economic Security Act

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

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

COVID-19 – Coronavirus disease 2019

CRA – Community Reinvestment Act

CRE – Commercial real estate

DCF – Discounted cash flow

ESG – Environmental, social, and governance

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

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

FTP – Funds transfer pricing

GA DBF – Georgia Department of Banking and Finance

GAAP – Generally Accepted Accounting Principles in the United States of America

HTC– Historic tax credit

Interagency Supervisory Guidance – Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties

ITC– Investment tax credits

LIBOR – London Interbank Offered Rate

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.

PPP – Paycheck Protection Program established as part of the CARES Act and launched on April 3, 2020 by the SBA and Treasury

Qualpay – Qualpay, Inc.

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

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' 2022 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2022

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

Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank

TDR – Troubled debt restructuring (as defined in ASC 310-40)

TE – Taxable equivalent

UPB – Unpaid principal balance

Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively

Visa Class A shares – Class A shares of common stock issued by Visa are publicly traded shares which are not subject to restrictions on sale

Visa Class B shares – Class B shares of common stock issued by Visa which are subject to restrictions with respect to sale until all of the Covered Litigation has been settled. Class B shares will be convertible into Visa Class A shares using a then-current conversion ratio upon the lifting of restrictions with respect to sale of Visa Class B shares

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

iii

PART I. FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

SYNOVUS FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands, except share and per share data)	September 30, 2023		December 31, 2022
ASSETS
Cash and due from banks	$	604,631	$	624,097
Interest-bearing funds with Federal Reserve Bank	1,431,356		1,280,684
Interest earning deposits with banks	65,468		34,632
Federal funds sold and securities purchased under resale agreements	36,176		38,367
Total cash, cash equivalents, and restricted cash	2,137,631		1,977,780
Investment securities available for sale, at fair value	9,237,191		9,678,103
Loans held for sale (includes $48,994 and $51,136 measured at fair value, respectively)	66,558		391,502
Loans, net of deferred fees and costs	43,679,910		43,716,353
Allowance for loan losses	(477,532)		(443,424)
Loans, net	43,202,378		43,272,929
Cash surrender value of bank-owned life insurance	1,107,092		1,089,280
Premises, equipment, and software, net	364,054		370,632
Goodwill	479,851		452,390
Other intangible assets, net	49,096		27,124
Other assets	2,699,079		2,471,638
Total assets	$	59,342,930	$	59,731,378
LIABILITIES AND EQUITY
Liabilities
Deposits:
Non-interest-bearing deposits	$	12,976,574	$	15,639,899
Interest-bearing deposits	37,227,316		33,231,660
Total deposits	50,203,890		48,871,559
Federal funds purchased and securities sold under repurchase agreements	98,270		146,588
Other short-term borrowings	2,362		603,384
Long-term debt	2,704,701		4,109,597
Other liabilities	1,772,139		1,524,449
Total liabilities	54,781,362		55,255,577
Equity
Shareholders' equity:
Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000	537,145		537,145
Common stock - $1.00 par value; authorized 342,857,143 shares; issued 170,859,506 and 170,141,492, respectively; outstanding 146,204,648 and 145,486,634, respectively	170,860		170,141
Additional paid-in capital	3,940,507		3,920,346
Treasury stock, at cost; 24,654,858 shares	(944,484)		(944,484)
Accumulated other comprehensive income (loss), net	(1,679,404)		(1,442,117)
Retained earnings	2,512,334		2,234,770
Total Synovus Financial Corp. shareholders' equity	4,536,958		4,475,801
Noncontrolling interest in subsidiary	24,610		—
Total equity	4,561,568		4,475,801
Total liabilities and equity	$	59,342,930	$	59,731,378

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Interest income:
Loans, including fees	$	686,094	$	478,448	$	1,985,881	$	1,230,847
Investment securities available for sale	61,642		53,550		183,118		151,111
Loans held for sale	17,914		12,017		29,292		26,798
Federal Reserve Bank balances	15,483		5,584		49,711		7,965
Other earning assets	4,906		1,700		14,059		4,412
Total interest income	786,039		551,299		2,262,061		1,421,133
Interest expense:
Deposits	292,060		46,917		707,774		79,077
Long-term debt	50,524		22,156		148,968		41,069
Other borrowings	296		4,307		25,877		5,432
Total interest expense	342,880		73,380		882,619		125,578
Net interest income	443,159		477,919		1,379,442		1,295,555
Provision for (reversal of) credit losses	72,572		25,581		143,607		49,669
Net interest income after provision for (reversal of) credit losses	370,587		452,338		1,235,835		1,245,886
Non-interest revenue:
Service charges on deposit accounts	21,385		23,398		67,836		69,428
Fiduciary and asset management fees	20,205		19,201		59,928		59,577
Card fees	18,602		15,101		51,485		45,946
Brokerage revenue	20,237		17,140		63,703		47,038
Mortgage banking income	3,671		5,065		12,138		14,922
Capital markets income	6,377		6,839		27,077		19,704
Income from bank-owned life insurance	6,965		6,792		21,106		22,514
Investment securities gains (losses), net	—		—		1,030		—
Recovery of NPA	—		—		13,126		—
Other non-interest revenue	9,697		10,762		35,112		27,768
Total non-interest revenue	107,139		104,298		352,541		306,897
Non-interest expense:
Salaries and other personnel expense	179,741		173,334		551,667		499,081
Net occupancy, equipment, and software expense	45,790		43,462		131,435		129,538
Third-party processing and other services	21,439		22,539		64,932		65,486
Professional fees	10,147		6,755		28,707		26,094
FDIC insurance and other regulatory fees	11,837		7,707		33,266		20,851
Restructuring charges (reversals)	17,319		956		16,476		(7,318)
Loss on other loans held for sale	30,954		—		50,064		—
Other operating expense	36,305		39,257		106,019		114,779
Total non-interest expense	353,532		294,010		982,566		848,511
Income before income taxes	124,194		262,626		605,810		704,272
Income tax expense	27,729		59,582		133,242		152,140
Net income	96,465		203,044		472,568		552,132
Less: Net income (loss) attributable to noncontrolling interest	(630)		—		(796)		—
Net income attributable to Synovus Financial Corp.	97,095		203,044		473,364		552,132
Less: Preferred stock dividends	9,672		8,291		26,254		24,872
Net income available to common shareholders	$	87,423	$	194,753	$	447,110	$	527,260
Net income per common share, basic	$	0.60	$	1.34	$	3.06	$	3.63
Net income per common share, diluted	0.60		1.33		3.05		3.60
Weighted average common shares outstanding, basic	146,170		145,386		146,028		145,329
Weighted average common shares outstanding, diluted	146,740		146,418		146,683		146,465

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)


	Three Months Ended September 30,
	2023						2022
(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount
Net income	$	124,194	$	(27,729)	$	96,465	$	262,626	$	(59,582)	$	203,044
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period	(384,866)		93,676		(291,190)		(565,121)		134,668		(430,453)
Reclassification adjustment for realized (gains) losses included in net income	—		—		—		—		—		—
Net change	(384,866)		93,676		(291,190)		(565,121)		134,668		(430,453)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period	(39,096)		9,516		(29,580)		(111,549)		26,582		(84,967)
Reclassification adjustment for realized (gains) losses included in net income	48,296		(11,755)		36,541		10,253		(2,442)		7,811
Net change	9,200		(2,239)		6,961		(101,296)		24,140		(77,156)
Total other comprehensive income (loss)	$	(375,666)	$	91,437	$	(284,229)	$	(666,417)	$	158,808	$	(507,609)
Comprehensive income (loss)					(187,764)						(304,565)
Less: comprehensive income (loss) attributable to noncontrolling interest					(630)						—
Comprehensive income (loss) attributable to Synovus Financial Corp.					$	(187,134)					$	(304,565)

	Nine Months Ended September 30,
	2023						2022
(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount

SYNOVUS FINANCIAL CORP [SNV] Filings
SYNOVUS FINANCIAL CORP [SNV-PD] Filings
SYNOVUS FINANCIAL CORP [SNV-PE] Filings
10-Q	[2023-11-03]
10-Q	[2023-08-04]
10-Q	[2023-05-04]
10-K	[2023-02-24]
10-Q	[2022-11-02]
10-Q	[2022-08-02]
10-Q	[2022-05-03]
10-K	[2022-02-25]
10-Q	[2021-11-03]
10-Q	[2021-08-04]
10-Q	[2021-05-06]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-06]
10-Q	[2020-05-11]
10-K	[2020-03-02]
10-Q	[2019-11-05]
10-Q	[2019-08-02]
10-Q	[2019-05-03]
10-K	[2019-02-28]
10-Q	[2018-11-06]
10-Q	[2018-08-08]
10-Q	[2018-05-07]
10-K	[2018-02-28]
10-Q	[2017-11-07]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-27]
10-Q	[2016-11-04]
10-Q	[2016-08-03]
10-Q	[2016-05-05]
10-K	[2016-02-29]
10-Q	[2015-11-05]
10-Q	[2015-08-05]
10-Q	[2015-05-06]
10-K	[2015-03-02]
10-Q	[2014-11-05]
10-Q	[2014-08-06]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-06]
10-Q	[2013-08-07]
10-Q	[2013-05-09]
10-K	[2013-03-01]
10-Q	[2012-11-09]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-02-29]

SYNOVUS FINANCIAL CORP [SNV] Filings

SYNOVUS FINANCIAL CORP [SNV-PD] Filings

SYNOVUS FINANCIAL CORP [SNV-PE] Filings