SYNOVUS FINANCIAL CORP [SNV] Filings

10-Q 1 syn-20240630.htm 10-Q syn-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

______________________________

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

For the quarterly period ended June 30, 2024

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 July 30, 2024, 143,972,321 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 June 30, 2024 and December 31, 2023

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023

Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023

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 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

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

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

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

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 June 30, 2024

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

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' 2023 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2023

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 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)	June 30, 2024		December 31, 2023
ASSETS
Interest-earning deposits with banks and other cash and cash equivalents	$	2,263,545	$	2,414,103


Federal funds sold and securities purchased under resale agreements	31,063		37,323
Total cash, cash equivalents, and restricted cash	2,294,608		2,451,426
Investment securities held to maturity	2,668,068		—
Investment securities available for sale	7,043,681		9,788,662
Loans held for sale (includes $41,823 and $47,338 measured at fair value, respectively)	139,323		52,768
Loans, net of deferred fees and costs	43,093,397		43,404,490
Allowance for loan losses	(485,101)		(479,385)
Loans, net	42,608,296		42,925,105
Cash surrender value of bank-owned life insurance	1,125,928		1,112,030
Premises, equipment, and software, net	375,455		365,851
Goodwill	480,440		480,440
Other intangible assets, net	40,114		45,928
Other assets	2,830,430		2,587,324
Total assets	$	59,606,343	$	59,809,534
LIABILITIES AND EQUITY
Liabilities
Deposits:
Non-interest-bearing deposits	$	11,655,811	$	12,507,616
Interest-bearing deposits	38,539,967		38,231,569
Total deposits	50,195,778		50,739,185
Federal funds purchased and securities sold under repurchase agreements	94,484		189,074
Other short-term borrowings	2,536		3,496
Long-term debt	2,283,767		1,932,534
Other liabilities	1,953,106		1,801,097
Total liabilities	54,529,671		54,665,386
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 342,857,142 shares; issued 171,935,817 and 171,360,188, respectively; outstanding 144,149,614 and 146,705,330, respectively	171,936		171,360
Additional paid-in capital	3,965,751		3,955,819
Treasury stock, at cost; 27,786,203 and 24,654,858 shares, respectively	(1,066,239)		(944,484)
Accumulated other comprehensive income (loss), net	(1,050,374)		(1,117,073)
Retained earnings	2,495,387		2,517,226
Total Synovus Financial Corp. shareholders' equity	5,053,606		5,119,993
Noncontrolling interest in subsidiary	23,066		24,155
Total equity	5,076,672		5,144,148
Total liabilities and equity	$	59,606,343	$	59,809,534

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2024		2023		2024		2023
Interest income:
Loans, including fees	$	701,570	$	670,230	$	1,393,285	$	1,299,787
Investment securities	78,891		60,421		150,797		121,475
Loans held for sale	1,132		5,801		1,710		11,378
Federal Reserve Bank balances	15,630		17,410		30,661		34,228
Other earning assets	4,019		5,281		7,499		9,154
Total interest income	801,242		759,143		1,583,952		1,476,022
Interest expense:
Deposits	335,754		241,780		668,420		415,715
Long-term debt	28,390		55,915		57,985		98,444
Other borrowings	2,100		5,917		3,703		25,580
Total interest expense	366,244		303,612		730,108		539,739
Net interest income	434,998		455,531		853,844		936,283
Provision for (reversal of) credit losses	26,404		38,881		80,384		71,035
Net interest income after provision for (reversal of) credit losses	408,594		416,650		773,460		865,248
Non-interest revenue:
Service charges on deposit accounts	22,907		23,477		44,720		46,451
Fiduciary and asset management fees	19,728		20,027		38,741		39,723
Card fees	19,418		17,059		38,904		32,884
Brokerage revenue	20,457		22,451		43,164		46,655
Mortgage banking income	3,944		4,609		7,362		8,467
Capital markets income	15,077		9,482		21,704		24,609
Income from bank-owned life insurance	8,097		6,878		15,444		14,140
Investment securities gains (losses), net	(256,660)		—		(256,660)		1,030
Recovery of NPA	—		—		—		13,126
Other non-interest revenue	18,181		8,293		36,658		18,317
Total non-interest revenue	(128,851)		112,276		(9,963)		245,402
Non-interest expense:
Salaries and other personnel expense	179,407		183,001		367,928		371,926
Net occupancy, equipment, and software expense	46,415		42,785		93,223		85,645
Third-party processing and other services	21,783		21,659		42,041		43,493
Professional fees	15,655		9,597		23,286		18,560
FDIC insurance and other regulatory fees	6,493		11,162		30,312		21,429
Restructuring charges (reversals)	(658)		(110)		866		(843)
Loss on other loans held for sale	—		2,360		—		19,110
Other operating expense	32,706		36,727		66,886		69,714
Total non-interest expense	301,801		307,181		624,542		629,034
Income (loss) before income taxes	(22,058)		221,745		138,955		481,616
Income tax expense (benefit)	(7,378)		47,801		29,565		105,513
Net income (loss)	(14,680)		173,944		109,390		376,103
Less: Net income (loss) attributable to noncontrolling interest	(652)		(166)		(1,089)		(166)
Net income (loss) attributable to Synovus Financial Corp.	(14,028)		174,110		110,479		376,269
Less: Preferred stock dividends	9,713		8,291		19,398		16,581
Net income (loss) available to common shareholders	$	(23,741)	$	165,819	$	91,081	$	359,688
Net income (loss) per common share, basic	$	(0.16)	$	1.13	$	0.62	$	2.46
Net income (loss) per common share, diluted	(0.16)		1.13		0.62		2.45
Weighted average common shares outstanding, basic	145,565		146,113		145,998		145,957
Weighted average common shares outstanding, diluted	145,565		146,550		146,568		146,644

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)


	Three Months Ended June 30,
	2024						2023
(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount
Net income (loss)	$	(22,058)	$	7,378	$	(14,680)	$	221,745	$	(47,801)	$	173,944
Unamortized holding (losses) gains on investment securities transferred to held to maturity:
Net unamortized unrealized holding (losses) gains on available for sale investment securities transferred to held to maturity	(708,549)		171,115		(537,434)		—		—		—
Reclassification adjustment for the change in unamortized holding (losses) gains on held to maturity investment securities	20,638		(4,984)		15,654		—		—		—
Net change	(687,911)		166,131		(521,780)		—		—		—
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period	673,802		(162,723)		511,079		(109,525)		26,659		(82,866)
Reclassification adjustment for realized (gains) losses included in net income	256,660		(61,983)		194,677		—		—		—
Net change	930,462		(224,706)		705,756		(109,525)		26,659		(82,866)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period	(18,274)		4,413		(13,861)		(73,123)		17,798		(55,325)
Reclassification adjustment for realized (gains) losses included in net income	36,527		(8,822)		27,705		42,748		(10,405)		32,343
Net change	18,253		(4,409)		13,844		(30,375)		7,393		(22,982)
Total other comprehensive income (loss)	$	260,804	$	(62,984)	$	197,820	$	(139,900)	$	34,052	$	(105,848)
Comprehensive income (loss)					183,140						68,096
Less: comprehensive income (loss) attributable to noncontrolling interest					(652)						(166)
Comprehensive income (loss) attributable to Synovus Financial Corp.					$	183,792					$	68,262

	Six Months Ended June 30,
	2024						2023
(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount
Net income (loss)	$	138,955	$	(29,565)	$	109,390	$	481,616	$	(105,513)	$	376,103
Unamortized holding (losses) gains on investment securities transferred to held to maturity:
Net unamortized unrealized holding (losses) gains on available for sale investment securities transferred to held to maturity	(708,549)		171,115		(537,434)		—		—		—
Reclassification adjustment for the change in unamortized holding (losses) gains on held to maturity investment securities	20,638		(4,984)		15,654		—		—		—
Net change	(687,911)		166,131		(521,780)		—		—		—
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period	518,166		(125,137)		393,029		43,556		(10,601)		32,955
Reclassification adjustment for realized (gains) losses included in net income	256,660		(61,983)		194,677		(1,030)		251		(779)
Net change	774,826		(187,120)		587,706		42,526		(10,350)		32,176
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period	(75,330)		18,192		(57,138)		(63,123)		15,364		(47,759)
Reclassification adjustment for realized (gains) losses included in net income	76,350		(18,439)		57,911		82,640		(20,115)		62,525
Net change	1,020		(247)		773		19,517		(4,751)		14,766
Total other comprehensive income (loss)	$	87,935	$	(21,236)	$	66,699	$	62,043	$	(15,101)	$	46,942
Comprehensive income (loss)					176,089						423,045
Less: comprehensive income (loss) attributable to noncontrolling interest					(1,089)						(166)
Comprehensive income (loss) attributable to Synovus Financial Corp.					$	177,178					$	423,211

See accompanying notes to unaudited interim consolidated financial statements.

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 March 31, 2024	$	537,145	$	171,873	$	3,957,576	$	(974,499)	$	(1,248,194)	$	2,574,017	23,718	$	5,041,636

Net income (loss)	—		—		—		—		—		(14,028)		(652)	(14,680)
Other comprehensive income (loss), net of income taxes	—		—		—		—		197,820		—		—	197,820
Cash dividends declared on common stock - $0.38 per share	—		—		—		—		—		(54,781)		—	(54,781)
Cash dividends declared on preferred stock(1)	—		—		—		—		—		(9,713)		—	(9,713)
Repurchases of common stock including costs to repurchase	—		—		—		(91,740)		—		—			(91,740)
Restricted share unit vesting and taxes paid related to net share settlement	—		28		(124)		—		—		(108)		—	(204)
Stock options exercised, net	—		35		758		—		—		—		—	793
Share-based compensation expense	—		—		7,541		—		—		—		—	7,541

Balance at June 30, 2024	$	537,145	$	171,936	$	3,965,751

SYNOVUS FINANCIAL CORP [SNV] Filings
SYNOVUS FINANCIAL CORP [SNV-PD] Filings
SYNOVUS FINANCIAL CORP [SNV-PE] Filings
10-Q	[2024-08-02]
10-Q	[2024-05-02]
10-K	[2024-02-23]
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