SYNOVUS FINANCIAL CORP [SNV-PD] Filings

10-Q 1 syn-20240930.htm 10-Q syn-20240930

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, 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 October 31, 2024, 141,665,266 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, 2024 and December 31, 2023

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2024 and 2023

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

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

Consolidated Statements of Cash Flows for the Nine Months Ended September 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

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

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

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 September 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

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' 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 (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)	September 30, 2024		December 31, 2023
ASSETS
Interest-earning deposits with banks and other cash and cash equivalents	$	1,807,641	$	2,414,103


Federal funds sold and securities purchased under resale agreements	45,971		37,323
Total cash, cash equivalents, and restricted cash	1,853,612		2,451,426
Investment securities held to maturity	2,622,457		—
Investment securities available for sale	7,554,168		9,788,662
Loans held for sale (includes $36,943 and $47,338 measured at fair value, respectively)	121,470		52,768
Loans, net of deferred fees and costs	43,120,674		43,404,490
Allowance for loan losses	(484,985)		(479,385)
Loans, net	42,635,689		42,925,105
Cash surrender value of bank-owned life insurance	1,133,652		1,112,030
Premises, equipment, and software, net	380,267		365,851
Goodwill	480,440		480,440
Other intangible assets, net	37,207		45,928
Other assets	2,770,666		2,587,324
Total assets	$	59,589,628	$	59,809,534
LIABILITIES AND EQUITY
Liabilities
Deposits:
Non-interest-bearing deposits	$	11,561,626	$	12,507,616
Interest-bearing deposits	38,632,114		38,231,569
Total deposits	50,193,740		50,739,185
Federal funds purchased and securities sold under repurchase agreements	94,055		189,074
Other short-term borrowings	—		3,496
Long-term debt	2,021,050		1,932,534
Other liabilities	1,902,612		1,801,097
Total liabilities	54,211,457		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 172,077,277 and 171,360,188, respectively; outstanding 141,997,383 and 146,705,330, respectively	172,077		171,360
Additional paid-in capital	3,976,706		3,955,819
Treasury stock, at cost; 30,079,894 and 24,654,858 shares, respectively	(1,167,130)		(944,484)
Accumulated other comprehensive income (loss), net	(773,786)		(1,117,073)
Retained earnings	2,610,964		2,517,226
Total Synovus Financial Corp. shareholders' equity	5,355,976		5,119,993
Noncontrolling interest in subsidiary	22,195		24,155
Total equity	5,378,171		5,144,148
Total liabilities and equity	$	59,589,628	$	59,809,534

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)	2024		2023		2024		2023
Interest income:
Loans, including fees	$	700,657	$	686,094	$	2,093,942	$	1,985,881
Investment securities	87,643		61,642		238,440		183,118
Loans held for sale	1,045		17,914		2,755		29,292
Federal Reserve Bank balances	17,416		15,483		48,077		49,711
Other earning assets	3,746		4,906		11,245		14,059
Total interest income	810,507		786,039		2,394,459		2,262,061
Interest expense:
Deposits	345,314		292,060		1,013,734		707,774
Long-term debt	24,055		50,524		82,041		148,968
Other borrowings	398		296		4,101		25,877
Total interest expense	369,767		342,880		1,099,876		882,619
Net interest income	440,740		443,159		1,294,583		1,379,442
Provision for (reversal of) credit losses	23,434		72,572		103,818		143,607
Net interest income after provision for (reversal of) credit losses	417,306		370,587		1,190,765		1,235,835
Non-interest revenue:
Service charges on deposit accounts	23,683		21,385		68,403		67,836
Fiduciary and asset management fees	19,714		20,205		58,455		59,928
Card fees	18,439		18,602		57,343		51,485
Brokerage revenue	20,810		21,387		63,974		68,043
Mortgage banking income	4,033		3,671		11,395		12,138
Capital markets income	10,284		7,980		31,988		32,589
Income from bank-owned life insurance	8,442		6,965		23,886		21,106
Investment securities gains (losses), net	—		—		(256,660)		1,030
Recovery of NPA	—		—		—		13,126
Other non-interest revenue	18,575		6,944		55,233		25,260
Total non-interest revenue	123,980		107,139		114,017		352,541
Non-interest expense:
Salaries and other personnel expense	184,814		179,741		552,742		551,667
Net occupancy, equipment, and software expense	46,977		45,790		140,200		131,435
Third-party processing and other services	21,552		21,439		63,593		64,932
Professional fees	10,854		10,147		34,140		28,707
FDIC insurance and other regulatory fees	7,382		11,837		37,694		33,266
Restructuring charges (reversals)	1,219		17,319		2,084		16,476
Loss on other loans held for sale	—		30,954		—		50,064
Other operating expense	40,892		36,305		107,779		106,019
Total non-interest expense	313,690		353,532		938,232		982,566
Income before income taxes	227,596		124,194		366,550		605,810
Income tax expense	46,912		27,729		76,476		133,242
Net income	180,684		96,465		290,074		472,568
Less: Net income (loss) attributable to noncontrolling interest	(871)		(630)		(1,960)		(796)
Net income attributable to Synovus Financial Corp.	181,555		97,095		292,034		473,364
Less: Preferred stock dividends	11,927		9,672		31,325		26,254
Net income available to common shareholders	$	169,628	$	87,423	$	260,709	$	447,110
Net income per common share, basic	$	1.19	$	0.60	$	1.80	$	3.06
Net income per common share, diluted	1.18		0.60		1.79		3.05
Weighted average common shares outstanding, basic	143,144		146,170		145,039		146,028
Weighted average common shares outstanding, diluted	143,979		146,740		145,718		146,683

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)


	Three Months Ended September 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	$	227,596	$	(46,912)	$	180,684	$	124,194	$	(27,729)	$	96,465
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	—		—		—		—		—		—
Reclassification adjustment for the change in unamortized holding (losses) gains on held to maturity investment securities	19,834		(4,790)		15,044		—		—		—
Net change	19,834		(4,790)		15,044		—		—		—
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period	255,064		(61,598)		193,466		(384,866)		93,676		(291,190)
Reclassification adjustment for realized (gains) losses included in net income	—		—		—		—		—		—
Net change	255,064		(61,598)		193,466		(384,866)		93,676		(291,190)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period	52,985		(12,796)		40,189		(39,096)		9,516		(29,580)
Reclassification adjustment for realized (gains) losses included in net income	36,768		(8,879)		27,889		48,296		(11,755)		36,541
Net change	89,753		(21,675)		68,078		9,200		(2,239)		6,961
Total other comprehensive income (loss)	$	364,651	$	(88,063)	$	276,588	$	(375,666)	$	91,437	$	(284,229)
Comprehensive income (loss)					457,272						(187,764)
Less: comprehensive income (loss) attributable to noncontrolling interest					(871)						(630)
Comprehensive income (loss) attributable to Synovus Financial Corp.					$	458,143					$	(187,134)

	Nine Months Ended September 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	$	366,550	$	(76,476)	$	290,074	$	605,810	$	(133,242)	$	472,568
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	40,472		(9,774)		30,698		—		—		—
Net change	(668,077)		161,341		(506,736)		—		—		—
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period	773,230		(186,735)		586,495		(341,310)		83,075		(258,235)
Reclassification adjustment for realized (gains) losses included in net income	256,660		(61,983)		194,677		(1,030)		251		(779)
Net change	1,029,890		(248,718)		781,172		(342,340)		83,326		(259,014)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period	(22,345)		5,396		(16,949)		(102,218)		24,880		(77,338)
Reclassification adjustment for realized (gains) losses included in net income	113,118		(27,318)		85,800		130,935		(31,870)		99,065
Net change	90,773		(21,922)		68,851		28,717		(6,990)		21,727
Total other comprehensive income (loss)	$	452,586	$	(109,299)	$	343,287	$	(313,623)	$	76,336	$	(237,287)
Comprehensive income					633,361						235,281
Less: comprehensive income (loss) attributable to noncontrolling interest					(1,960)						(796)
Comprehensive income attributable to Synovus Financial Corp.					$	635,321					$	236,077

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 June 30, 2024	$	537,145	$	171,936	$	3,965,751	$	(1,066,239)	$	(1,050,374)	$	2,495,387	23,066	$	5,076,672

Net income (loss)	—		—		—		—		—		181,555		(871)	180,684
Other comprehensive income (loss), net of income taxes	—		—		—		—		276,588		—		—	276,588
Cash dividends declared on common stock - $0.38 per share	—		—		—		—		—		(53,932)		—	(53,932)
Cash dividends declared on preferred stock(1)	—		—		—		—		—		(11,927)		—	(11,927)
Repurchases of common stock including costs to repurchase	—		—		—		(100,891)		—		—		—	(100,891)
Restricted share unit vesting and taxes paid related to net share settlement

SYNOVUS FINANCIAL CORP [SNV-PD] Filings
SYNOVUS FINANCIAL CORP [SNV] Filings
SYNOVUS FINANCIAL CORP [SNV-PE] Filings
10-Q	[2024-11-04]
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-PD] Filings

SYNOVUS FINANCIAL CORP [SNV] Filings

SYNOVUS FINANCIAL CORP [SNV-PE] Filings