10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

for the fiscal year ended December 31, 2006

Commission file number     1-10312

SYNOVUS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

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

1111 Bay Avenue
Suite 500, Columbus, Georgia	31901
(Address of principal executive offices)	(Zip Code)
(Registrant’s telephone number, including area code)	(706) 649-5220

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $1.00 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES þ NO o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

YES o NO þ

     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, and (2) has been subject to such filing requirements for the past 90 days.

YES þ NO o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ     Accelerated Filer o     Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

     As of June 30, 2006, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $6,776,544,000 based on the closing sale price as reported on the New York Stock Exchange.

     As of February 20, 2007, there were 326,607,166 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Incorporated Documents	Form 10-K Reference Locations
Portions of the 2007 Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2007 (“Proxy Statement”)	Part III
Financial Appendix for the year ended December 31, 2006 to the Proxy Statement (“Financial Appendix”)	Parts I, II, III and IV

Table of Contents

		Page
Part I
Safe Harbor Statement			1
Item 1.	Business		1
Item 1A.	Risk Factors		10
Item 1B.	Unresolved Staff Comments	None
Item 2.	Properties		17
Item 3.	Legal Proceedings		18
Item 4.	Submission of Matters to a Vote of Security Holders	None
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities		18
Item 6.	Selected Financial Data		19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 8.	Financial Statements and Supplementary Data		20
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	None
Item 9A.	Controls and Procedures		20
Item 9B.	Other Information	None
Part III
Item 10.	Directors and Executive Officers of the Registrant and Corporate Governance		21
Item 11.	Executive Compensation		21
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		22
Item 13.	Certain Relationships and Related Transactions, and Director Independence		22
Item 14.	Principal Accountant Fees and Services		22
Part IV
Item 15.	Exhibits and Financial Statement Schedules		23
EX-10.19 SUMMARY OF BOARD OF DIRECTORS COMPENSATION
EX-10.26 SUMMARY OF ANNUAL BASE SALARIES OF NAMED EXECUTIVE OFFICERS
EX-21.1 SUBSIDIARIES OF SYNOVUS FINANCIAL CORP.
EX-23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32 SECTION 906 CERTIFICATIONS OF THE CEO AND CFO
EX-99.1 FINANCIAL APPENDIX TO THE PROXY STATEMENT

Part I

Safe Harbor Statement

     We have included or incorporated by reference in this Annual Report on Form 10-K, and from time to time our management may make, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of which by their nature are inherently uncertain and outside our control. These statements include statements other than historical information or statements of current condition and may relate to our future plans, objectives and results, among other things, and also include (without limitation) statements made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report. It is possible that our actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Important factors that could cause actual results to differ from those in the forward-looking statements include, among others, those discussed under “Risk Factors” in Part I, Item 1A of this Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report.

     Accordingly, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made, whether as a result of new information, future events or otherwise except as required by applicable law. You should, however, consult further disclosures we may make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments thereto.

Item 1. Business

Business and Business Segments

     We are a diverse financial services company with more than $31 billion in assets and are a registered bank holding company. We provide integrated financial services including banking, financial management, insurance, mortgage and leasing services through bank subsidiaries and our other offices in Georgia, Alabama, South Carolina, Florida and Tennessee and electronic payment processing and related services through our 81% owned subsidiary, Total System Services, Inc. We are based in Columbus, Georgia and our stock is traded on the New York Stock Exchange under the symbol “SNV.”

     We are engaged in two reportable business segments: Financial Services (which primarily involves banking activities, as well as financial management, mortgage, leasing and insurance services), and Transaction Processing Services (which consists primarily of electronic payment processing services, including consumer, commercial, retail, government services, debit and stored value card processing and related services.) See Note 18 of Notes to Consolidated

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Financial Statements on pages F-40 and F-41 of the Financial Appendix which is incorporated in this document by reference.

Financial Services

     As of December 31, 2006, we had 40 wholly owned bank subsidiaries located in five southeastern states. Our bank subsidiaries offer commercial banking services, including commercial, financial, agricultural and real estate loans, and retail banking services, including accepting customary types of demand and savings deposits; making individual, consumer, installment and mortgage loans; safe deposit services; leasing services; automated banking services; automated fund transfers; and bank credit card services, including MasterCard and Visa services.

     Our primary wholly owned nonbank subsidiaries are: (1) Synovus Securities, Inc., Columbus, Georgia, which specializes in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer and the provision of individual investment advice on equity and other securities; (2) Synovus Trust Company, N.A., Columbus, Georgia, which provides trust services; (3) Synovus Mortgage Corp., Birmingham, Alabama, which offers mortgage services; (4) Synovus Insurance Services, Columbus, Georgia, which offers insurance agency services; (5) Creative Financial Group, LTD., Atlanta, Georgia, which provides financial planning services; and (6) GLOBALT, Inc., Atlanta, Georgia, which provides asset management services.

Transaction Processing Services

     Business. TSYS provides electronic payment processing and related services to financial and nonfinancial institutions. Services include processing consumer, retail, commercial, government services, stored value and debit cards. Based in Columbus, Georgia, and traded on the New York Stock Exchange under the symbol “TSS,” TSYS provides services to financial and nonfinancial institutions throughout the United States and internationally. TSYS currently offers merchant acquiring services to financial institutions and other organizations in the United States through its wholly owned subsidiary, TSYS Acquiring Solutions, L.L.C., and in Japan through its majority owned subsidiary, GP Network Corporation. TSYS also offers optional value added products and services to support its core processing services. Value added products and services include: risk management tools and techniques, such as credit evaluation, fraud detection and prevention and behavior analysis tools; and revenue enhancement tools and customer retention programs, such as loyalty programs and bonus rewards.

     Seasonality. Due to the somewhat seasonal nature of the credit card industry, TSYS’ revenues and results of operations have generally increased in the fourth quarter of each year because of increased transaction and authorization volumes during the traditional holiday shopping season.

     Backlog of Accounts. As of December 31, 2006, TSYS had a pipeline of approximately ten million accounts associated with new clients. TSYS expects to convert its entire backlog of new accounts in 2007.

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     See “Non-Interest Income” under the “Financial Review” Section on pages F-58 through F-63, “Non-Interest Expense” under the “Financial Review” Section on pages F-63 through F-66, and Note 18 of Notes to Consolidated Financial Statements on pages F-40 and F-41 of the Financial Appendix which are incorporated in this document by reference.

Intellectual Property

     Financial Services. We own the federally registered service marks of Synovus Financial Corp., Synovus, the stylized S logo, Synovus Mortgage Corp., Synovus Securities, Inc. and Synovus Trust Company. We also own additional registered service marks and other service marks. In the opinion of our management, the loss of the right to use such marks would not materially affect our business.

     Transaction Processing Services. TSYS’ intellectual property portfolio is a component of its ability to be a leading electronic payment services provider. TSYS diligently protects and works to build its intellectual property rights through patent, servicemark and trade secret laws. TSYS also uses various licensed intellectual property to conduct its business. In addition to using intellectual property in its own operations, TSYS grants licenses to certain of its clients to use its intellectual property.

Major Customers

     A significant amount of TSYS’ revenues are derived from long-term contracts with large clients, including its major customers during 2006, Bank of America Corporation and JP Morgan Chase & Co. In October 2006, TSYS completed the deconversion of Bank of America’s consumer card portfolio as a result of its decision to shift the processing of that portfolio in house in connection with its merger with MBNA Corporation. For the year ended December 31, 2006, Bank of America and JP Morgan Chase & Co accounted for approximately 24.3% and 10.1%, respectively, of TSYS’ total revenues. Bank of America accounted for approximately 13.3% of Synovus’ total revenues for the year ended December 31, 2006. As a result, the loss of Bank of America or JP Morgan Chase & Co, or other large clients, could have a material adverse effect on TSYS’ and Synovus’ financial position, results of operations and cash flows. See “Major Customers” under the “Financial Review” Section on pages F-59 and F-60 of the Financial Appendix which is incorporated in this document by reference.

Acquisitions

     We have pursued a strategy of acquiring banks and financial services companies which are used to augment our internal growth. TSYS also acquires companies to enhance its functionality and product offerings. See Note 2 of Notes to Consolidated Financial Statements on pages F-17 through F-19 and “Acquisitions” under the “Financial Review” Section on page F-55 of the Financial Appendix which are incorporated in this document by reference.

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Supervision, Regulation and Other Factors

     Bank holding companies, financial holding companies and banks are regulated extensively under federal and state law. In addition, our non-bank subsidiaries are also subject to regulation under federal and state law. The following discussion sets forth some of the elements of the regulatory framework applicable to us. The regulatory framework is intended primarily for the protection of depositors and the Bank Insurance Fund and not for the protection of security holders and creditors. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions.

     General. We are a registered bank holding company and a financial holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 and by the Georgia Department of Banking and Finance under the bank holding company laws of the State of Georgia. Our affiliate national bank associations are subject to regulation and examination primarily by the Office of the Comptroller of the Currency, which we refer to as the OCC, and, secondarily, by the Federal Deposit Insurance Corporation and the Federal Reserve Board. Our state-chartered banks are subject to primary federal regulation and examination by the FDIC and, in addition, are regulated and examined by their respective state banking departments. Numerous other federal and state laws, as well as regulations promulgated by the Federal Reserve Board, the state banking regulators, the OCC and the FDIC govern almost all aspects of the operations of our bank subsidiaries. Various federal and state bodies regulate and supervise our nonbank subsidiaries including our brokerage, investment advisory, insurance agency and processing operations. These include, but are not limited to, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., federal and state banking regulators and various state regulators of insurance and brokerage activities.

     As a financial holding company we are eligible to engage in, or acquire companies engaged in, the broader range of activities that are permitted by the Gramm-Leach Bliley Act of 1999. These activities include those that are determined to be “financial in nature,” including insurance underwriting, securities underwriting and dealing, and making merchant banking investments in commercial and financial companies. If any of our banking subsidiaries ceases to be “well capitalized” or “well managed” under applicable regulatory standards, the Federal Reserve Board may, among other things, place limitations on our ability to conduct these broader financial activities or, if the deficiencies persist, require us to divest the banking subsidiary. In addition, if any of our banking subsidiaries receives a rating of less than satisfactory under the Community Reinvestment Act of 1977 we would be prohibited from engaging in any additional activities other than those permissible for bank holding companies that are not financial holding companies.

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     Dividends. Under the laws of the State of Georgia, we, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in our Articles of Incorporation, and unless, after payment of the dividend, we would not be able to pay our debts when they become due in the usual course of our business or our total assets would be less than the sum of our total liabilities. We are also subject to regulatory capital restrictions that limit the amount of cash dividends that we may pay. Additionally, we are subject to contractual restrictions that limit the amount of cash dividends we may pay.

     The primary sources of funds for our payment of dividends to our shareholders are dividends and fees to us from our bank and non-bank affiliates. Various federal and state statutory provisions and regulations limit the amount of dividends that our subsidiary banks may pay. Under the regulations of the Georgia Department of Banking and Finance, a Georgia bank must have approval of the Georgia Department of Banking and Finance to pay cash dividends if, at the time of such payment:

• the ratio of Tier 1 capital to adjusted total assets is less than 6%;

• the aggregate amount of dividends to be declared or anticipated to be declared during the current calendar year exceeds 50% of its net after-tax profits for the previous calendar year; or

• its total classified assets in its most recent regulatory examination exceeded 80% of its Tier 1 capital plus its allowance for loan losses, as reflected in the examination.

     In general, the approval of the Alabama Banking Department, Florida Department of Financial Services and Tennessee Department of Financial Institutions is required if the total of all dividends declared by an Alabama, Florida or Tennessee bank, as the case may be, in any year would exceed the total of its net profits for that year combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank’s retained net income for the current year plus retained net income for the preceding two years. Approval of the Federal Reserve Board is required for payment of any dividend by a state chartered bank that is a member of the Federal Reserve System and sometimes referred to as a state member bank, if the total of all dividends declared by the bank in any calendar year would exceed the total of its net profits, as defined by regulatory agencies, for that year combined with its retained net profits for the preceding two years. In addition, a state member bank may not pay a dividend in an amount greater than its net profits then on hand.

     Federal and state banking regulations applicable to us and our bank subsidiaries require minimum levels of capital which limit the amounts available for payment of dividends. See “Parent Company” under the “Financial Review” Section on pages F-86 and F-87 and Note 13 of Notes to Consolidated Financial Statements on pages F-31 and F-32 of the Financial Appendix which are incorporated in this document by reference.

     Monetary Policy and Economic Controls. The earnings of our bank subsidiaries, and therefore our earnings, are affected by the policies of regulatory authorities, including the Federal

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Reserve Board. An important function of the Federal Reserve Board is to promote orderly economic growth by influencing interest rates and the supply of money and credit. Among the methods that have been used to achieve this objective are open market operations in United States government securities, changes in the discount rate for member bank borrowings and changes in reserve requirements against bank deposits. These methods are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, interest rates on loans and securities, and rates paid for deposits.

     The effects of the various Federal Reserve Board policies on our future business and earnings cannot be predicted. We cannot predict the nature or extent of any effects that possible future governmental controls or legislation might have on our business and earnings.

     Capital Requirements. We are required to comply with the capital adequacy standards established by the Federal Reserve Board and our bank subsidiaries must comply with similar capital adequacy standards established by the OCC, FDIC and the Federal Reserve Board, as applicable. As a financial holding company, we and each of our bank subsidiaries are required to maintain capital levels required for a well capitalized institution, as defined in “Prompt Corrective Action” below. There are two basic measures of capital adequacy for bank holding companies and their bank subsidiaries that have been promulgated by the Federal Reserve Board, the FDIC and the OCC: a risk-based measure and a leverage measure. All applicable capital standards must be satisfied for a bank holding company or a bank to be considered in compliance. See “Capital Resources” and “Dividends” under the “Financial Review” Section on pages F-83 through F-85 and Note 13 of Notes to Consolidated Financial Statements on pages F-31 and F-32 of the Financial Appendix which are incorporated in this document by reference.

     Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on the taking of brokered deposits, and certain other restrictions on its business. As described below, substantial additional restrictions can be imposed upon FDIC insured depository institutions that fail to meet applicable capital requirements. See “Prompt Corrective Action” below.

     Commitments to Subsidiary Banks. Under the Federal Reserve Board’s policy, we are expected to act as a source of financial strength to our subsidiary banks and to commit resources to support our subsidiary banks in circumstances when we might not do so absent such policy. In addition, any capital loans by us to any of our subsidiary banks would also be subordinate in right of payment to depositors and to certain other indebtedness of such bank.

     In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of a banking subsidiary will be assumed by the bankruptcy trustee and entitled to a priority of payment. In addition, the Federal Deposit Insurance Act provides that any financial institution whose deposits are insured by the FDIC generally will be liable for any loss incurred by the FDIC in connection with the default of, or any assistance provided by the FDIC to, a commonly controlled financial institution. All of our bank subsidiaries are FDIC-insured depository institutions.

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       Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. Under this system the federal banking regulators are required to rate supervised institutions on the basis of five capital categories as described below. The federal banking regulators are also required to take mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions in the three undercapitalized categories, the severity of which will depend upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the Federal Deposit Insurance Corporation Improvement Act requires the banking regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.

     Under the Federal Deposit Insurance Corporation Improvement Act, the Federal Reserve Board, the FDIC, the OCC and the Office of Thrift Supervision have adopted regulations setting forth a five-tier scheme for measuring the capital adequacy of the financial institutions they supervise. Under the regulations, an institution would be placed in one of the following capital categories:

• Well Capitalized — an institution that has a Total risk-based capital ratio of at least 10%, a Tier 1 capital ratio of at least 6% and a Tier 1 leverage ratio of at least 5%;

• Adequately Capitalized — an institution that has a Total risk-based capital ratio of at least 8%, a Tier 1 capital ratio of at least 4% and a Tier 1 leverage ratio of at least 4%;

• Undercapitalized — an institution that has a Total risk-based capital ratio of under 8%, a Tier 1 capital ratio of under 4% or a Tier 1 leverage ratio of under 4%;

• Significantly Undercapitalized — an institution that has a Total risk-based capital ratio of under 6%, a Tier 1 capital ratio of under 3% or a Tier 1 leverage ratio of under 3%; and

• Critically Undercapitalized — an institution whose tangible equity is not greater than 2% of total tangible assets.

     The regulations permit the appropriate federal banking regulator to downgrade an institution to the next lower category if the regulator determines (1) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (2) that the institution has received and not corrected a less-than-satisfactory rating for any of the categories of asset quality, management, earnings or liquidity in its most recent examination. Supervisory actions by the appropriate federal banking regulator depend upon an institution’s classification within the five categories. Our management believes that we and our bank subsidiaries have the requisite capital levels to qualify as well capitalized institutions under the Federal Deposit Insurance Corporation Improvement Act regulations. See Note 13 of Notes to Consolidated Financial Statements on pages F-31 and F-32 of the Financial Appendix which is incorporated in this document by reference.

     The Federal Deposit Insurance Corporation Improvement Act generally prohibits a depository institution from making any capital distribution, including payment of a dividend, or

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paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions are subject to growth limitations and are required to submit capital restoration plans. A depository institution’s holding company must guarantee the capital plan, up to an amount equal to the lesser of 5% of the depository institution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan. Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.

     Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator.

     Depositor Preference Statute. Federal law provides that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution are afforded a priority over other general unsecured claims against such institution, including federal funds and letters of credit, in the liquidation or other resolution of the institution by any receiver.

     USA Patriot Act. The USA Patriot Act of 2001 substantially broadens anti-money laundering legislation and the extraterritorial jurisdiction of the United States, imposes new compliance and due diligence obligations, creates new crimes and penalties, compels the production of documents located both inside and outside the United States, including those of foreign institutions that have a correspondent relationship in the United States, and clarifies the safe harbor from civil liability to customers. The U.S. Treasury Department has issued a number of regulations implementing the USA Patriot Act that apply certain of its requirements to financial institutions such as our banking and broker-dealer subsidiaries. The regulations impose new obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing.

     Privacy. Under the Gramm-Leach-Bliley Act of 1999, federal banking regulators adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of this act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.

     TSYS. TSYS is subject to being examined, and is indirectly regulated, by federal and state financial institution regulatory agencies which regulate the financial institutions for which TSYS provides electronic payment processing services. Matters reviewed and examined by these federal and state financial institution regulatory agencies have included TSYS’ internal controls

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in connection with its present performance of electronic payment processing services, and the agreements pursuant to which TSYS provides such services. In addition, TSYS is registered with Visa and MasterCard as a service provider for member institutions and is subject to applicable card association rules.

     As the Federal Reserve Bank of Atlanta has approved our indirect ownership of TSYS through Columbus Bank and Trust Company, TSYS is subject to direct regulation by the Federal Reserve Board. TSYS was formed with the prior written approval of, and is subject to regulation and examination by, the Georgia Banking Department as a subsidiary of Columbus Bank and Trust Company. In addition, as TSYS and its subsidiaries operate as subsidiaries of Columbus Bank and Trust Company, they are subject to regulation by the FDIC.

Competition

     Financial Services. The financial services business is highly competitive. Our banks and wholly owned nonbank subsidiaries compete actively with national and state banks, savings and loan associations and credit unions and other nonbank financial institutions, including securities brokers and dealers, investment advisory firms, personal loan companies, insurance companies, trust companies, finance companies, leasing companies, mortgage companies and certain governmental agencies, all of which actively engage in marketing various types of loans, deposit accounts and other financial services. These competitors have been successful in developing products that are in direct competition with or are alternatives to the banking services offered by traditional banking institutions. Our ability to maintain our history of strong financial performance will depend in part on our ability to expand the scope of and effectively deliver products and services, allowing us to meet the changing needs of our customers.

     As of December 31, 2006, we were the second largest bank holding company headquartered in Georgia, based on assets. Customers for financial services are generally influenced by convenience, quality of service, personal contacts, price of services and availability of products. Although our market share varies in different markets, we believe that our affiliates effectively compete with other banks and thrifts in their relevant market areas.

     Transaction Processing Services. TSYS encounters vigorous competition in providing electronic payment processing services from several different sources. Most of the national market in third party card processors is presently being provided by approximately three vendors. TSYS believes that as of December 31, 2006 it is the second largest third party card processor in the United States. In addition, TSYS competes with in house processors and software vendors which provide their products to institutions which process in house. TSYS is presently encountering, and in the future anticipates continuing to encounter, substantial competition from data processing and bankcard computer service firms and other such third party vendors located throughout the United States and from certain international processors with respect to international-based support services. Based upon available market share data that includes cards processed in house, TSYS believes that during 2006 it held a 39% share of the domestic consumer card processing market, an 86% share of the Visa and MasterCard domestic commercial card processing market and a 14% share of the domestic retail card processing market.

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     TSYS’ major competitor in the card processing industry is First Data Resources, Inc., a wholly owned subsidiary of First Data Corporation, which provides card processing services. The principal methods of competition between TSYS and First Data Resources are price, system performance and reliability, breadth of features and functionality, disaster recovery capabilities, data security, scalability and flexibility of infrastructure and servicing capability. Certain other subsidiaries of First Data Corporation also compete with TSYS with respect to the provision of merchant acquiring services.

Employees

     On December 31, 2006, we had 13,178 full time employees, 6,644 of whom are employees of TSYS.

Selected Statistical Information

     The “Financial Review” Section which is set forth on pages F-50 through F-90 and the “Summary of Quarterly Financial Data” Section which is set forth on page F-91 of the Financial Appendix, which includes the information encompassed within “Selected Statistical Information,” are incorporated in this document by reference.

Available Information

     Our website address is www.synovus.com. You may obtain free electronic copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports in the Investor Relations Section of our website under the heading “Financial Reports” and then under “SEC Filings.” These reports are available on our website as soon as reasonably practicable after we electronically file them with the SEC.

     We have adopted a Code of Business Conduct and Ethics for our directors, officers and employees and have also adopted Corporate Governance Guidelines. Our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of our board committees are available in the Corporate Governance Section of our website at www.synovus.com/governance. Copies of these documents are also available in print upon written request to the Corporate Secretary, Synovus Financial Corp., 1111 Bay Avenue, Suite 500, Columbus, Georgia 31901.

Item 1A. Risk Factors

     This section highlights specific risks that could affect our business and us. Although this section attempts to highlight key factors, please be aware that 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 financial performance. In addition to the factors discussed elsewhere or incorporated by reference in this report, among the other factors that could cause actual results to differ materially are the following:

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We face intense competition from other financial service providers.

     We operate in a highly competitive environment in the products and services we offer and the markets in which we serve. The competition among financial services providers to attract and retain customers is intense. Customer loyalty can be easily influenced by a competitor’s new products, especially offerings that could provide cost savings to the customer. Some of our competitors may be better able to provide a wider range of products and services over a greater geographic area.

     Moreover, this highly competitive industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies now can merge by creating a “financial holding company,” which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, a number of foreign banks have acquired financial services companies in the U.S., further increasing competition in the U.S. market. In addition, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and some have lower cost structures. We expect the consolidation of the banking and financial services industry to result in larger, better-capitalized companies offering a wide array of financial services and products.

The strength of the U.S. economy in general and the strength of the local economies in which we operate may be different than expected, and we may not be able to successfully manage any impact from slowing economic conditions or consumer spending.

     Our business and earnings are affected by general business and economic conditions in the U.S. and in particular, the states where we have significant operations, including Georgia, Alabama, South Carolina, Florida and Tennessee. These conditions include short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, the strength of the U.S. economy and the local economies in which we operate and consumer spending, borrowing and savings habits. For example, an economic downturn, an increase in unemployment, or other events that affect household and/or corporate incomes could decrease the demand for loan and non-loan products and services and increase the number of customers who fail to pay interest or principal on their loans. Nonpayment of loans, if it occurs, could have an adverse effect on our financial condition and results of operations. Accordingly, an economic downturn, whether national or local, can hurt our financial performance. We may not be able to successfully manage the impact from such slowing economic conditions.

We may experience increased delinquencies and credit losses.

     Like other lenders, we face the risk that our customers will not repay their loans. A customer’s failure to repay is generally preceded by missed payments. In some instances, a customer may declare bankruptcy prior to missing payments, although this is not generally the case. Customers who declare bankruptcy frequently do not repay their loans. Where we have collateral, we attempt to seize it when customers default on their loans. The value of the

11

collateral may not equal the amount of the unpaid loan, and we may be unsuccessful in recovering the remaining balance from our customers. Rising delinquencies and rising rates of bankruptcy are often precursors of future charge-offs and may require us to increase our allowance for loan losses. Higher charge-off rates and an increase in our allowance for loan losses may hurt our overall financial performance if we are unable to raise revenue to compensate for these losses and may increase our cost of funds.

The trade, monetary and fiscal policies and laws of the federal government and its agencies, including interest rate policies of the Federal Reserve Board, significantly affect our earnings.

     The Federal Reserve Board regulates the supply of money and credit in the U.S. Its policies determine in large part our cost of funds for lending and investing and the return we earn on those loans and investments, both of which affect our net interest margin. They can also materially affect the value of financial instruments we hold, such as debt securities. Its policies can affect our borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of the money supply by the Federal Reserve Board could reduce the demand for a borrower’s products and services. This could adversely affect the borrower’s earnings and ability to repay its loans, which could materially adversely affect us. In addition, higher interest rates could also increase our cost to borrow funds and increase the rate we pay on deposits. Changes in Federal Reserve Board policies and laws are beyond our control and hard to predict.

Maintaining or increasing market share depends on the timely development of and acceptance of new products and services and perceived overall value of these products and services by users.

     Our success depends, in part, on our ability to adapt our products and services to evolving industry standards. There is increasing pressure to provide products and services at lower prices. This can reduce our net interest margin and revenues from our fee-based products and services. In addition, our success depends, in part, on our ability to generate significant levels of new business in our existing markets and in identifying and penetrating new markets. Further, the widespread adoption of new technologies, including internet services, could require us to make substantial expenditures to modify or adapt our existing products and services. We may not be successful in introducing new products and services, achieving market acceptance of products and services or developing and maintaining loyal customers and/or breaking into targeted markets.

We must respond to rapid technological changes and these changes may be more difficult or expensive than anticipated.

     If competitors introduce new products and services embodying new technologies, or if new industry standards and practices emerge, our existing product and service offerings, technology and systems may become obsolete. Further, if we fail to adopt or develop new technologies or to adapt our products and services to emerging industry standards, we may lose current and future customers, which could have a material adverse effect on our business, financial condition and results of operations. The financial services industry is changing rapidly

12

and in order to remain competitive, we must continue to enhance and improve the functionality and features of our products, services and technologies. These changes may be more difficult or expensive than we anticipate.

We have pursued a strategy of acquiring banks and financial services companies and these acquisitions may be more difficult to integrate than anticipated.

     We regularly explore opportunities to acquire banks and financial services companies and expect to grow, in part, through such acquisitions. In addition, TSYS also acquires companies to enhance its functionality and product offerings. Difficulty in integrating an acquired company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits of the acquisition. The integration could result in higher than expected deposit attrition, loss of key employees, disruption of our business or the business of the acquired company, or otherwise adversely affect our ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition. These factors could contribute to us not achieving the anticipated benefits of the acquisition within the desired time frames, if at all.

Fluctuations in our expenses and other costs may hurt our financial results.

     Our expenses and other costs, such as operating and marketing expenses, directly affect our earnings results. In light of the extremely competitive environment in which we operate, and because the size and scale of many of our competitors provides them with increased operational efficiencies, it is important that we are able to successfully manage such expenses. As our business develops, changes or expands, additional expenses can arise. Other factors that can affect the amount of our expenses include legal and administrative cases and proceedings, which can be expensive to pursue or defend. In addition, changes in accounting policies can significantly affect how we calculate expenses and earnings.

We are heavily regulated by federal and state agencies, and changes in laws and regulations may affect our financial outlook.

     Synovus, our subsidiary banks, and many of our nonbank subsidiaries, including TSYS, are heavily regulated at the federal and state levels. This regulation is designed primarily to protect depositors, federal deposit insurance funds and the banking system as a whole, not shareholders. Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including interpretation and implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways, including limiting the types of financial services and products we may offer and/or increasing the ability of nonbanks to offer competing financial services and products. Also, if we do not comply with laws, regulations or policies, we could receive regulatory sanctions, including monetary penalties that may have a material impact on our financial condition and results of operations, and damage to our reputation. For more information, refer to “Supervision, Regulation and Other Factors” on page 4.

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Changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies, could materially impact our financial statements.

     Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the regulatory agencies, the Financial Accounting Standards Board, and other authoritative bodies change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.

The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition.

     We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business. Our insurance may not cover all claims that may be asserted against it, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations. In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all.

Our financial condition and outlook may be adversely affected by damage to our reputation.

     Our financial condition and outlook is highly dependent upon perceptions of our business practices and reputation. Our ability to attract and retain customers and employees could be adversely affected to the extent our reputation is damaged. Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance, regulatory compliance, mergers and acquisitions, disclosure, sharing or inadequate protection of customer information and from actions taken by government regulators and community organizations in response to that conduct. Damage to our reputation could give rise to legal risks, which, in turn, could increase the size and number of litigation claims and damages asserted or subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.

Our access to funds from our subsidiaries may become limited, thereby restricting our ability to make payments on our obligations or dividend payments.

     Synovus is a separate and distinct legal entity from our banking and nonbanking subsidiaries. We therefore depend on dividends, distributions and other payments from our banking and nonbanking subsidiaries to fund dividend payments on our common stock and to fund all payments on our other obligations, including debt obligations. Our banking subsidiaries and certain other of our subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to us. Regulatory action of that kind could

14

impede access to funds we need to make payments on our obligations or dividend payments.

Changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which we are perceived in such markets, may adversely affect financial results.

     In general, the amount, type and cost of our funding, including from other financial institutions, the capital markets and deposits, directly impacts our costs in operating our business and growing our assets and therefore, can positively or negatively affect our financial results. A number of factors could make funding more difficult, more expensive or unavailable on any terms, including, but not limited to, a reduction in our debt ratings, financial results and losses, changes within our organization, specific events that adversely impact our reputation, disruptions in the capital markets, specific events that adversely impact the financial services industry, counterparty availability, changes affecting our assets, the corporate and regulatory structure, interest rate fluctuations, general economic conditions and the legal, regulatory, accounting and tax environments governing our funding transactions. Also, we compete for funding with other banks and similar companies, many of which are substantially larger, and have more capital and other resources than we do. In addition, as some of these competitors consolidate with other financial institutions, these advantages may increase. Competition from these institutions may increase the cost of funds.

Various domestic or international military or terrorist activities or conflicts could affect our business and financial condition.

     Acts or threats of war or terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, could negatively affect business and economic conditions in the U.S. If terrorist activity, acts of war or other international hostilities cause an overall economic decline, our financial condition and results of operations could be materially adversely affected. The potential for future terrorist attacks, the national and international responses to terrorist attacks or perceived threats to national security and other actual or potential conflicts or acts of war, including conflict in the Middle East, have created many economic and political uncertainties that could seriously harm our business and results of operations in ways that cannot presently be predicted.

Security and privacy breaches may damage our reputation and business.

     Any failures in our security and privacy measures, including the security and privacy measures at TSYS, could have a material adverse effect on our financial position and results of operations. The uninterrupted operation of TSYS’ processing systems and the confidentiality of the client information that resides on those systems is critical to TSYS’ business. TSYS has security, backup and recovery systems in place, as well as a business continuity plan to ensure that its systems will not be inoperable. TSYS also has what it believes to be sufficient security around its systems to prevent unauthorized access. TSYS electronically stores personal information about consumers who are customers of its clients. If TSYS is unable to protect, or its clients’ perceive that it is unable to protect, the security and privacy of its electronic transactions, our business and reputation could be materially adversely affected. While we

15

believe TSYS uses proven applications designed for data security and integrity to process electronic transactions, there can be no assurance that its use of these applications will be sufficient to address changing market positions or the security and privacy concerns of existing and potential clients.

     In addition to the factors discussed above, the following factors concerning TSYS’ business may cause our results to differ from the results discussed in forward-looking statements:

TSYS may be unable to achieve its annual earnings goals.

     TSYS’ earnings have historically constituted approximately one-third of Synovus’ net income. As such, TSYS’ annual earnings projection is one of the assumptions upon which Synovus’ annual earnings projections are based. There is no guarantee that TSYS will be able to meet its annual earnings projections. Any shortfall in TSYS achieving its earnings goals could adversely affect the financial condition and results of operations of Synovus.

The merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients could materially impact our financial condition.

     Consolidation among financial institutions, particularly in the area of credit card operations, continues to be a major risk. Specifically, TSYS faces risk that its clients may merge with entities that are not TSYS clients or its clients may sell portfolios to entities that are not TSYS clients, thereby impacting TSYS’ existing agreements and projected revenues with these clients. Consolidation among financial institutions and the loss of any significant client by TSYS could have a material adverse effect on our financial condition and results of operations. In addition, consolidation among financial institutions has led to an increasingly concentrated client base at TSYS which increases the pressure on its profit margins.

TSYS may not be able to successfully manage its intellectual property and may be subject to infringement claims.

     In the rapidly developing legal framework, TSYS relies on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect its proprietary technology. Despite TSYS’ efforts to protect its intellectual property, third parties may infringe or misappropriate TSYS’ intellectual property or may develop software or technology competitive to TSYS. TSYS’ competitors may independently develop similar technology, duplicate its products or services or design around TSYS’ intellectual property rights. TSYS may have to litigate to enforce and protect its intellectual property rights, trade secrets and know-how or to determine their scope, validity or enforceability, which is expensive and could cause a diversion of resources and may not prove successful. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection could harm TSYS’ business and ability to compete. TSYS may also be subject to costly litigation in the event its products and technology infringe upon another party’s proprietary rights.

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Item 1B. Unresolved Staff Comments

     None.

Item 2. Properties

     Financial Services. We and our subsidiaries own, in some cases subject to mortgages or other security interests, or lease all of the real property and/or buildings on which we are located. All of such buildings are in a good state of repair and are appropriately designed for the purposes for which they are used.

     We and our Financial Services subsidiaries own 300 facilities encompassing approximately 2,469,232 square feet and lease from third parties and TSYS 110 facilities encompassing approximately 829,338 square feet. The owned and leased facilities are primarily comprised of office space from which we conduct our Financial Services business. The following table provides additional information with respect to our leased facilities:

			Average
Square Footage	Number of Locations		Square Footage
Under 3,000		36		1,431
3,000 – 9,999		50		4,965
10,000 – 18,999		10		12,425
19,000 – 30,000		9		23,858
Over 30,000		5		38,122

     See Note 12 of Notes to Consolidated Financial Statements on pages F-28 through F-31 of the Financial Appendix which is incorporated in this document by reference.

     Transaction Processing Services. As of December 31, 2006, TSYS and its subsidiaries owned 11 facilities encompassing approximately 1,442,168 square feet and leased from third parties 28 facilities encompassing approximately 593,351 square feet. These facilities are used for operational, sales and administrative purposes.

	Leased Facilities				Owned Facilities
	Number		Square Footage		Number		Square Footage
Domestic-based support services		13		326,653		9		1,345,800
International-based support services		11		53,005		2		96,368
Merchant acquiring services		4		213,693		-0-		-0-

     TSYS believes that its facilities are suitable and adequate for its current business; however, TSYS periodically reviews its space requirements and may acquire new space to meet the needs of its businesses or consolidate and dispose of or sublet facilities which are no longer required.

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Item 3. Legal Proceedings

     See Note 12 of Notes to Consolidated Financial Statements on pages F-28 through F-31 of the Financial Appendix which is incorporated in this document by reference.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities

     Shares of our common stock are traded on the NYSE under the symbol “SNV.” See “Capital Resources” and “Dividends” under the “Financial Review” Section which are set forth on pages F-83 through F-85 and “Issuer Purchases of Equity Securities” under the “Financial Review” Section which is set forth on page F-87 of the Financial Appendix which are incorporated in this document by reference.

Stock Performance Graph

     The following graph compares the yearly percentage change in cumulative shareholder return on Synovus stock with the cumulative total return of the Standard & Poor’s 500 Index, the Keefe, Bruyette & Woods 50 Bank Index and the KBW Regional Bank Index for the last five fiscal years (assuming a $100 investment on December 31, 2001 and reinvestment of all dividends). In the preceding year, Synovus selected the KBW 50 Bank Index as the index with which to compare its performance. As the KBW 50 Bank Index is no longer published, Synovus is replacing it with the KBW Regional Bank Index.

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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
SYNOVUS FINANCIAL CORP., S&P 500, KBW 50 BANK INDEX AND
KBW REGIONAL BANK INDEX

	2001		2002		2003		2004		2005		2006
Synovus	$	100	$	79	$	123	$	124	$	120	$	141
S&P 500	$	100	$	78	$	100	$	111	$	117	$	135
KBW 50	$	100	$	93	$	125	$	137	$	139	$	166
KBW Regional Bank	$	100	$	104	$	146	$	166	$	167	$	182

Item 6. Selected Financial Data

     The “Selected Financial Data” Section which is set forth on page F-49 of the Financial Appendix is incorporated in this document by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The “Financial Review” Section which is set forth on pages F-50 through F-90 and the “Summary of Quarterly Financial Data” Section which is set forth on page F-91 of the Financial Appendix which include the information encompassed by “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are incorporated in this document by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     See “Market Risk and Interest Rate Sensitivity” and “Derivative Instruments for Interest Rate Risk Management” under the “Financial Review” Section which are set forth on pages F-78

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through F-82 and Note 12 of Notes to Consolidated Financial Statements on pages F-28 through F-31 of the Financial Appendix which are incorporated in this document by reference.

Item 8. Financial Statements and Supplementary Data

     The “Summary of Quarterly Financial Data” Section which is set forth on page F-91 and the “Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income, Consolidated Statements of Cash Flows, Notes to Consolidated Financial Statements, Report of Independent Registered Public Accounting Firm (on consolidated financial statements), Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm (on management’s assessment of internal controls)” Sections which are set forth on pages F-2 through F-48 of the Financial Appendix are incorporated in this document by reference.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

     None.

Item 9A. Controls and Procedures

     Evaluation of Disclosure Controls and Procedures. We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report as required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended. This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer and chief financial officer. Based on this evaluation, the chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

     Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm. “Management’s Report on Internal Control Over Financial Reporting,” which is set forth on page F-47 of the Financial Appendix, and “Report of Independent Registered Public Accounting Firm (on management’s assessment of internal controls),” which is set forth on page F-48 of the Financial Appendix, are incorporated in this document by reference.

     Changes in Internal Control Over Financial Reporting. No change in our internal control over financial reporting occurred during the fourth fiscal quarter covered by this Annual Report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

     None.

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Part III

Item 10. Directors and Executive Officers of the Registrant and Corporate Governance

     Information included under the following captions in our Proxy Statement is incorporated in this document by reference:

• “PROPOSALS TO BE VOTED ON – PROPOSAL 1: ELECTION OF DIRECTORS”;

• “EXECUTIVE OFFICERS”;

• “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE”; and

• “CORPORATE GOVERNANCE AND BOARD MATTERS – Committees of the Board.”

     We have a Code of Business Conduct and Ethics that applies to all directors, officers and employees, including our principal executive officer, principal financial officer and chief accounting officer. You can find our Code of Business Conduct and Ethics in the Corporate Governance section of our website at www.synovus.com/governance. We will post any amendments to the Code of Business Conduct and Ethics and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE in the Corporate Governance section of our website.

     Because our common stock is listed on the NYSE, our chief executive officer is required to make, and he has made, an annual certification to the NYSE stating that he was not aware of any violation by us of the corporate governance listing standards of the NYSE. Our chief executive officer made his annual certification to that effect to the NYSE as of May 8, 2006. In addition, we have filed, as exhibits to this Annual Report, the certifications of our chief executive officer and chief financial officer required under Section 302 of the Sarbanes-Oxley Act of 2002.

Item 11. Executive Compensation

     Information included under the following captions in our Proxy Statement is incorporated in this document by reference:

• “DIRECTOR COMPENSATION”;

• “EXECUTIVE COMPENSATION”;

• “COMPENSATION COMMITTEE REPORT”;

• “SUMMARY COMPENSATION TABLES” and the compensation tables and related information which follow the Summary Compensation Tables; and

• ‘CORPORATE GOVERNANCE AND BOARD MATTERS – Committees of the Board – Compensation Committee Interlocks and Insider Participation.”

     The information included under the heading “Compensation Committee Report” in our Proxy Statement is incorporated herein by reference; however, this information shall not be

21

deemed to be “soliciting material” or to be “filed” with the Commission or subject to regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     Information pertaining to equity compensation plans is contained in Note 15 of Notes to Consolidated Financial Statements on pages F-33 through F-37 of the Financial Appendix and is incorporated in this document by reference.

     Information included under the following captions in our Proxy Statement is incorporated in this document by reference:

• “STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS”;

• “PRINCIPAL SHAREHOLDERS”; and

• “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — TSYS Stock Ownership of Directors and Management.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

     Information included under the following captions in our Proxy Statement is incorporated in this document by reference:

• “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”;

• “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Beneficial Ownership of TSYS Stock by CB&T”;

• “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Interlocking Directorates of Synovus, CB&T and TSYS”;

• “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Transactions and Agreements Between Synovus, CB&T, TSYS and Certain of Synovus’ Subsidiaries”; and

• “CORPORATE GOVERNANCE AND BOARD MATTERS – Independence.”

Item 14. Principal Accountant Fees and Services

     Information included under the following captions in our Proxy Statement is incorporated in this document by reference:

• “AUDIT COMMITTEE REPORT – KPMG LLP Fees and Services” (excluding the information under the main caption “AUDIT COMMITTEE REPORT”); and

• “AUDIT COMMITTEE REPORT – Policy on Audit Committee Pre-Approval.”

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Part IV

Item 15. Exhibits and Financial Statement Schedules

     (a) 1. Financial Statements

The following consolidated financial statements of Synovus and our subsidiaries are incorporated by reference from pages F-2 through F-48 of the Financial Appendix.

Consolidated Balance Sheets — December 31, 2006 and 2005

Consolidated Statements of Income — Years Ended December 31, 2006, 2005 and 2004

Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income — Years Ended December 31, 2006, 2005 and 2004

Consolidated Statements of Cash Flows — Years Ended December 31, 2006, 2005 and 2004

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (on consolidated financial statements)

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm (on management’s assessment of internal controls)

2.	Financial Statement Schedules
	Financial Statement Schedules — None applicable because the required information has been incorporated in the consolidated financial statements and notes thereto of Synovus and our subsidiaries which are incorporated in this document by reference.

3.

Exhibits

The following exhibits are filed herewith or are incorporated to other documents previously filed with the Securities and Exchange Commission. Exhibits 10.1 through 10.26 pertain to executive compensation plans and arrangements. With the exception of those portions of the Financial Appendix and Proxy Statement that are expressly incorporated by reference in this Form 10-K, such documents are not to be deemed filed as part of this Form 10-K.

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Exhibit
Number	Description
3.1	Articles of Incorporation of Synovus, as amended, incorporated by reference to Exhibit 3.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the SEC on May 10, 2006.
3.2	Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 3.2 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the SEC on May 10, 2006.

10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

10.1	Incentive Bonus Plan of Synovus, incorporated by reference to Exhibit 10.5 of Synovus’ Registration Statement on Form S-1 filed with the SEC on December 18, 1990 (File No. 33-38244).
10.2	Director Stock Purchase Plan of Synovus, incorporated by reference to Exhibit 10.3 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the SEC on March 22, 2000.
10.3	Synovus Financial Corp. 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.4 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.4	Synovus Financial Corp. Deferred Stock Option Plan, incorporated by reference to Exhibit 10.5 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.5	Synovus Financial Corp. Directors’ Deferred Compensation Plan, incorporated by reference to Exhibit 10.7 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.6	Wage Continuation Agreement of Synovus, incorporated by reference to Exhibit 10.8 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the SEC on March 29, 1993.

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10.7	Agreement in Connection with Personal Use of Company Aircraft, incorporated by reference to Exhibit 10.7 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as filed with the SEC on March 7, 2006.
10.8	Life Insurance Trusts, incorporated by reference to Exhibit 10.12 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the SEC on March 29, 1993.
10.9	1993 Split Dollar Insurance Agreement of Synovus, incorporated by reference to Exhibit 10.14 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as filed with the SEC on March 28, 1994.
10.10	1995 Split Dollar Insurance Agreement of Synovus, incorporated by reference to Exhibit 10.15 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the SEC on March 24, 1995.
10.11	Synovus Financial Corp. 1994 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.16 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the SEC on March 24, 1995.
10.12	Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.17 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.13	Amendment Number One to Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated July 8, 2005, as filed with the SEC on July 12, 2005.
10.14	Synovus Financial Corp. Executive Cash Bonus Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on 8-K dated April 27, 2006, as filed with the SEC on April 27, 2006.
10.15	Change of Control Agreements for executive officers, incorporated by reference to Exhibit 10.2 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 20, 2005.
10.16	Employment Agreement of James H. Blanchard, incorporated by reference to Exhibit 10 of Synovus’ Quarterly Report on Form

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10-Q for the quarter ended September 30, 1999, as filed with the SEC on November 15, 1999.

10.17	Synovus Financial Corp. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.22 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the SEC on March 22, 2000.
10.18	Form of Stock Option Agreement for the: (i) Synovus Financial Corp. 1994 Long-Term Incentive Plan; (ii) Synovus Financial Corp. 2000 Long-Term Incentive Plan; and (iii) Synovus Financial Corp. 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, as filed with the SEC on November 9, 2004.
10.19	Summary of Board of Directors Compensation.
10.20	Form of Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 25, 2005.
10.21	Form of Performance-Based Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.2 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 25, 2005.
10.22	Form of Non-Employee Director Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated February 1, 2005, as filed with the SEC on February 3, 2005.
10.23	Form of Stock Option Agreement for the Synovus Financial Corp. 2002 Long-Term Incentive Plan for grants made subsequent to January 18, 2006, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated January 18, 2006, as filed with the SEC on January 18, 2006.
10.24	Form of Restricted Stock Award Agreement for the Synovus Financial Corp. 2002 Long-Term Incentive Plan for grants made subsequent to January 18, 2006, incorporated by reference to Exhibit 10.2 of Synovus’ Current Report on Form 8-K dated January 18, 2006, as filed with the SEC on January 18, 2006.

26

10.25	Consulting Agreement of James H. Blanchard, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated October 18, 2006, as filed with the SEC on October 18, 2006.
10.26	Summary of Annual Base Salaries of Synovus’ Named Executive Officers.
21.1	Subsidiaries of Synovus Financial Corp.
23.1	Consent of Independent Registered Public Accounting Firm.
24.1	Powers of Attorney contained on the signature pages of this 2006 Annual Report on Form 10-K and incorporated herein by reference.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Financial Appendix to the Proxy Statement for the Annual Meeting of Shareholders of Synovus to be held on April 25, 2007.
99.2	Annual Report on Form 11-K for the Synovus Financial Corp. Employee Stock Purchase Plan for the year ended December 31, 2006 (to be filed as an amendment hereto within 120 days of the end of the period covered by this report).
99.3	Annual Report on Form 11-K for the Synovus Financial Corp. Director Stock Purchase Plan for the year ended December 31, 2006 (to be filed as an amendment hereto within 120 days of the end of the period covered by this report).

     We agree to furnish the SEC, upon request, a copy of each instrument with respect to issues of long-term debt. The principal amount of any individual instrument, which has not been previously filed, does not exceed ten percent of the total assets of Synovus and our subsidiaries on a consolidated basis.

27

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Synovus Financial Corp. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SYNOVUS FINANCIAL CORP. (Registrant)
March 1, 2007	By:	/s/Richard E. Anthony
		Richard E. Anthony,
		Principal Executive Officer and Chairman of the Board

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard E. Anthony and Frederick L. Green, III and each of them, his or her true and lawful attorney(s)-in-fact and agent(s), with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this report and to file the same, with all exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons in the capacities and on the dates indicated.

/s/Richard E. Anthony Richard E. Anthony, Principal Executive Officer and Chairman of the Board	Date: March 1, 2007
/s/Frederick L. Green, III Frederick L. Green, III, President and Director	Date: March 1, 2007

/s/Thomas J. Prescott Thomas J. Prescott, Executive Vice President and Principal Financial Officer	Date: March 1, 2007
/s/Liliana McDaniel Liliana McDaniel, Chief Accounting Officer	Date: March 1, 2007
/s/Daniel P. Amos Daniel P. Amos, Director	Date: March 1, 2007
/s/James H. Blanchard James H. Blanchard, Director	Date: March 1, 2007
/s/Richard Y. Bradley Richard Y. Bradley, Director	Date: March 1, 2007
/s/Frank W. Brumley Frank W. Brumley, Director	Date: March 1, 2007
/s/Elizabeth W. Camp Elizabeth W. Camp, Director	Date: March 1, 2007
/s/Gardiner W. Garrard, Jr. Gardiner W. Garrard, Jr., Director	Date: March 1, 2007
/s/T. Michael Goodrich T. Michael Goodrich, Director	Date: March 1, 2007

/s/V. Nathaniel Hansford V. Nathaniel Hansford, Director	Date: March 1, 2007
/s/Alfred W. Jones III Alfred W. Jones III, Director	Date: March 1, 2007
Mason H. Lampton, Director	Date:                      ___, 2007
Elizabeth C. Ogie, Director	Date:                      ___, 2007
/s/H. Lynn Page H. Lynn Page, Director	Date: March 1, 2007
/s/J. Neal Purcell J. Neal Purcell, Director	Date: March 1, 2007
/s/Melvin T. Stith Melvin T. Stith, Director	Date: March 1, 2007
/s/William B. Turner, Jr. William B. Turner, Jr., Director	Date: March 1, 2007
/s/James D. Yancey James D. Yancey, Director	Date: March 1, 2007

EX-10.19

Exhibit 10.19

SYNOVUS FINANCIAL CORP.
Board of Directors Compensation
Approved January 25, 2007

     Upon the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors of Synovus Financial Corp. approved modifications to the compensation to be paid to directors effective February 1, 2007, as set forth below:

Cash Compensation
Annual Board Retainer	$	40,000
Annual Committee Member Retainers:
Audit Committee	$	15,000
Compensation Committee	$	10,000
Corporate Governance and Nominating Committee	$	7,500
Executive Committee	$	10,000
Annual Committee Chair Retainers*:
Audit Committee	$	15,000
Compensation Committee	$	10,000
Corporate Governance and Nominating Committee	$	7,500
Annual Lead Director Retainer	$	5,000

* Note: The committee chair will receive both an annual committee member retainer and an annual committee chair retainer.

Equity Compensation
Annual restricted stock award (in the form of a grant from the Synovus 2002 Long-Term Incentive Plan, 3 year cliff vesting)	500 shares
No equity awards to employee directors
Director Stock Purchase Plan
Annual maximum company cash contribution per director participant to company-sponsored open market stock purchase plan, with company’s contribution equal to 50% of director participant’s cash contribution, subject to annual maximum contribution limit by director of $20,000	$	10,000

EX-10.26

Exhibit 10.26

SYNOVUS FINANCIAL CORP.
Annual Base Salaries for Named Executive Officers
Approved January 25, 2007

     Upon the recommendation of the Compensation Committee, on January 25, 2007 the Board of Directors of Synovus Financial Corp. approved the following base salaries for its named executive officers, effective January 1, 2007.

Name	Position	Base Salary
Richard E. Anthony	Chairman of the Board and Chief Executive Officer	$	869,000
Frederick L. Green, III	President and Chief Operating Officer	$	500,000
G. Sanders Griffith, III	Senior Executive Vice President, General Counsel and Secretary	$	429,000
Elizabeth R. James	Vice Chairman and Chief People Officer	$	391,000
Thomas J. Prescott	Executive Vice President and Chief Financial Officer	$	387,000

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF SYNOVUS FINANCIAL CORP.

Ownership				Place of
Percentage			Name	Incorporation
	100	%	Columbus Bank and Trust Company	Georgia
			100% Synovus Trust Company, National Association	National
			100% Synovus Insurance Services of Georgia, Inc.	Georgia
			100% CB&T Housing Fund Investor, L.L.C.	Georgia
			100% CB&T State Tax Credit Fund, L.L.C.	Georgia
			100% CB&T Special Limited Partner, L.L.C.	Georgia
			100% CB&T 11th Street Loft Company, L.L.C.	Georgia
			100% Synovus Equity Investments, Inc.	Georgia
			100% Synovus Callier Partners, LLC	Georgia
			100% Synovus Special Limited Partner LLC	Georgia
			100% Synovus Union Hill, L.L.C.	Georgia
			100% Synovus Pointe Apartments, L.L.C.	Georgia
			99.99% Tall Pines Apartments, Ltd.	Alabama
			100% Synovus Aspenwood Square, LLC	Georgia
			81% Total System Services, Inc.	Georgia
			100% Columbus Depot Equipment Company	Georgia
			100% TSYS Canada, Inc.	Georgia
			100% TSYS Total Debt Management, Inc.	Georgia
			100% Columbus Productions, Inc.	Georgia
			100% Enhancement Services Corporation	Georgia
			100% Golden Retriever Systems, L.L.C.	Arizona
			100% TSYS Japan Co., Ltd.	Japan
			100% TSYS Technology Center, Inc.	Idaho
			100% ProCard, Inc.	Delaware
			100% TSYS Prepaid, Inc.	Delaware
			100% TSYS Staffing Services, Inc.	Georgia
			100% TSYS Servicos de Transacoes Eletronicas Ltda	Brazil
			100% Total System Services Holding Europe LP	England
			100% Total System Services Sales Europe Limited	England
			100% Total System Services Processing Europe Limited	England
			100% TSYS Europe (Netherlands) B.V.	Netherlands
			100% TSYS Europe (Spain) S.L.	Spain
			100% TSYS Card Tech Holding Limited	England
			100% TSYS Card Tech Research Limited	England
			100% TSYS Card Tech Limited	England
			100% TSYS Card Tech Services Limited	Cyprus
			100% TSYS Card Tech Services (Malaysia) Limited	Malaysia
			55% TSYS Managed Services EMEA Limited	England
			100% The Merchants Group (Netherlands) BV	Netherlands
			100% Merchants Netherlands BV	Netherlands
			100% TSYS Acquiring Solutions, L.L.C.	Delaware
			100% TSYS POS Systems and Services, L.L.C.	California
			100% Merlin Solutions L.L.C.	Maryland
			51.46% GP Network Corporation	Japan
			49% Total System Services de Mexico, S.A. de C.V.	Mexico

Ownership				Place of
Percentage			Name	Incorporation
			100% TSYS Servicios Corporativos	Mexico
			44.56% China Unionpay Data Services Company Limited	China
	100	%	Commercial Bank	Georgia
	100	%	Commercial Bank & Trust Company of Troup County	Georgia
	100	%	Security Bank and Trust Company of Albany	Georgia
	100	%	Sumter Bank and Trust Company	Georgia
	100	%	The Coastal Bank of Georgia	Georgia
	100	%	First State Bank and Trust Company of Valdosta	Georgia
	100	%	The Cohutta Banking Company	Georgia
	100	%	Bank of Coweta	Georgia
	100	%	Citizens Bank and Trust of West Georgia	Georgia
			100% Synovus Insurance Services of West Georgia, Inc.	Georgia
	100	%	First Community Bank of Tifton	Georgia
	100	%	CB&T Bank of Middle Georgia	Georgia
	100	%	Sea Island Bank	Georgia
	100	%	Citizens First Bank	Georgia
	100	%	The Citizens Bank	Georgia
	100	%	AFB&T	Georgia
			100% Athena Service Corporation	Georgia
	100	%	Citizens & Merchants State Bank	Georgia
	100	%	Bank of North Georgia	Georgia
	100	%	Georgia Bank & Trust	Georgia
	100	%	First Nation Bank	Georgia
	60	%	Total Technology Ventures, LLC	Georgia
	100	%	Creative Financial Group, LTD	Georgia
	100	%	Synovus Securities, Inc.	Georgia
	100	%	GLOBALT, Inc.	Georgia
	100	%	Synovus Investment Advisors, Inc.	Georgia
	100	%	First Commercial Bank of Huntsville	Alabama
			100% DAL LLC	Alabama
			100% KDC LLC	Alabama
	100	%	The Bank of Tuscaloosa	Alabama
	100	%	Sterling Bank	Alabama
			50% Sterling Place, L.L.C.	Alabama
	100	%	First Commercial Bank	Alabama
			100% First Commercial Mortgage Corporation	Alabama
			100% First Commercial Credit Corporation	Alabama
			100% Synovus Mortgage Corp.	Alabama
			100% FCB Heritage 1901 Redevelopment LLC	Alabama
			100% First Holdings, Inc.	Alabama
			100% FCBDE Holdings, Inc.	Delaware
			100% FCBIM Corp.	Georgia
			100% FAL Mortgage Investment Corporation	Alabama
	100	%	The National Bank of Jasper (AL)	National
			100% Synovus Insurance Services of Alabama, Inc.	Alabama
			100% FNBJ Holdings, Inc.	Alabama
			100% FNBJDE Holdings, Inc.	Delaware
			100% FNBJIM Corp.	Georgia
	100	%	CB&T Bank of East Alabama	Alabama
	100	%	Community Bank & Trust of Southeast Alabama	Alabama

Ownership				Place of
Percentage			Name	Incorporation
	100	%	The Tallahassee State Bank	Florida
			100% Synovus Insurance Services of Florida, Inc.	Florida
	100	%	Bank of Pensacola	Florida
			100% BOP Investment Company, Inc.	Delaware
			100% BOP Mortgage Investment Corporation	Florida
			100% BOP Properties, Inc.	Florida
	100	%	Vanguard Bank & Trust Company	Florida
			100% VBT Investment Company, Inc.	Delaware
			100% VBT Mortgage Investment Corporation	Florida
	100	%	First Coast Community Bank	Florida
	100	%	Synovus Bank of Tampa Bay	Florida
			100% W.L. Properties, Inc.	Florida
			100% U.O.S. Properties, Inc.	Florida
	100	%	Synovus Bank of Jacksonville	Florida
	100	%	The National Bank of Walton County(GA)	National
	100	%	Peachtree National Bank (GA)	National
	100	%	The National Bank of South Carolina (SC)	National
			100% Synovus Insurance Services of South Carolina, Inc.	South Carolina
			100% NBSC Holdings, Inc.	Delaware
			100% NBSCIM Corp.	Georgia
			100% Synovus Lofts of Greenville, LLC	Georgia
	100	%	The Bank of Nashville	Tennessee
			100% Machinery Leasing Company of North America, Inc.	Tennessee
	100	%	Trust One Bank	Tennessee
	100	%	Cohutta Banking Company of Tennessee	Tennessee
	100	%	First Florida Bank	Florida

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements (No. 2-93472, No. 2-94639, No. 33-90630, No. 33-60473, No. 33-60475, No. 333-30937, No. 333-88087, No. 333-38232, No. 333-40368, No. 333-55748, No. 333-74816, No. 333-89278, No. 333-97477, No. 333-103628, No. 333-103613, No. 333-112454, No. 333-116259, No. 333-132739, No. 333-132973, No. 333-50351, No. 2-92497, No. 33-17376, No. 333-25401, No. 333-41775, and No. 333-104142) on Form S-8 and (No. 333-37403 and No. 333-104625) on Form S-3 of Synovus Financial Corp. of our reports dated March 1, 2007, with respect to the consolidated balance sheets of Synovus Financial Corp. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 and the effectiveness of internal control over financial reporting as of December 31, 2006, which reports are incorporated by reference in the December 31, 2006 annual report on Form 10-K of Synovus Financial Corp.

Our report dated March 1, 2007 on the consolidated financial statements referred to above refers to the adoption of the fair value method of accounting for share-based compensation as required by Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment, the recognition and disclosure provisions of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, and the application of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, in 2006.

Our report dated March 1, 2007 on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006, contains an explanatory paragraph that states that Synovus acquired TSYS Card Tech, Ltd., TSYS Managed Services EMEA, Ltd., and Banking Corporation of Florida during 2006. Management excluded from its assessment of the effectiveness of Synovus Financial Corp.’s internal control over financial reporting as of December 31, 2006, the internal control over financial reporting of TSYS Card Tech, Ltd., TSYS Managed Services EMEA, Ltd., and Banking Corporation of Florida. Our audit of internal control over financial reporting of Synovus Financial Corp. also excluded an evaluation of the internal control over financial reporting of TSYS Card Tech, Ltd., TSYS Managed Services EMEA, Ltd., and Banking Corporation of Florida.

Atlanta, Georgia
March 1, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

     I, Richard E. Anthony, certify that:

1.	I have reviewed this annual report on Form 10-K of Synovus Financial Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2007	/s/Richard E. Anthony
	Richard E. Anthony
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

     I, Thomas J. Prescott, certify that:

1.	I have reviewed this annual report on Form 10-K of Synovus Financial Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2007	/s/Thomas J. Prescott
	Thomas J. Prescott
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC REPORT

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, Richard E. Anthony, the Chief Executive Officer of Synovus Financial Corp. (the “Company”), and Thomas J. Prescott, the Chief Financial Officer of the Company, hereby certify that, to the best of his knowledge:

(1) The Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (the “Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 1, 2007	/s/Richard E. Anthony
	Richard E. Anthony
	Chief Executive Officer
March 1, 2007	/s/Thomas J. Prescott
	Thomas J. Prescott
	Chief Financial Officer

This certification “accompanies” the Form 10-K to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K, irrespective of any general incorporation language contained in such filing.)

EX-99.1

Financial Appendix  

Consolidated Balance Sheets as of December 31, 2006 and 2005	F-2
Consolidated Statements of Income for the Years ended December 31, 2006, 2005, and 2004	F-3
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income for the Years ended December 31, 2006, 2005, and 2004	F-4
Consolidated Statements of Cash Flows for the Years ended December 31, 2006, 2005, and 2004	F-5
Notes to Consolidated Financial Statements	F-6
Report of Independent Registered Public Accounting Firm	F-46
Management’s Report on Internal Control Over Financial Reporting	F-47
Report of Independent Registered Public Accounting Firm	F-48
Selected Financial Data	F-49
Financial Review	F-50
Summary of Quarterly Financial Data, Unaudited	F-91

F-1

Consolidated Balance Sheets 

(In thousands, except share data)
				December 31,
				2006			2005
ASSETS
Cash and due from banks, including $41,337 and $49,659 in 2006 and 2005, respectively, on deposit to meet Federal Reserve requirements				$	889,975			880,886
Interest earning deposits with banks					19,389			2,980
Federal funds sold and securities purchased under resale agreements					101,091			68,922
Trading account assets (note 3)					15,266			27,322
Mortgage loans held for sale					175,042			143,144
Investment securities available for sale (note 4)					3,352,357			2,958,320
Loans, net of unearned income (note 5)					24,654,552			21,392,347
Allowance for loan losses (note 5)					(314,459	)		(289,612	)
			Loans, net		24,340,093			21,102,735
Premises and equipment, net					752,738			669,425
Contract acquisition costs and computer software, net (note 6)					383,899			431,849
Goodwill, net (notes 2 and 18)					669,515			458,382
Other intangible assets, net (notes 2 and 7)					63,586			44,867
Other assets (notes 7 and 17)					1,091,822			831,840
			Total assets	$	31,854,773			27,620,672
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Deposits:
		Non-interest bearing retail and commercial deposits		$	3,538,598			3,700,750
		Interest bearing retail and commercial deposits (note 8)			17,741,354			14,798,845
			Total retail and commercial deposits		21,279,952			18,499,595
		Brokered time deposits (note 8)			3,014,495			2,284,770
			Total deposits		24,294,447			20,784,365
	Federal funds purchased and securities sold under repurchase agreements (note 9)				1,572,809			1,158,669
	Long-term debt (note 9)				1,350,139			1,933,638
	Other liabilities (note 17)				692,019			597,698
			Total liabilities		27,909,414			24,474,370
Minority interest in consolidated subsidiaries					236,709			196,973
Shareholders’ equity (notes 2, 13, and 15):
	Common stock — $1.00 par value. Authorized 600,000,000 shares; issued 331,213,913 in 2006 and 318,301,275 in 2005; outstanding 325,552,375 in 2006 and 312,639,737 in 2005				331,214			318,301
	Additional paid-in capital				1,033,055			686,447
	Treasury stock, at cost — 5,661,538 shares				(113,944	)		(113,944	)
	Unearned compensation				—			(3,126	)
	Accumulated other comprehensive loss (note 1)				(2,129	)		(29,536	)
	Retained earnings (note 1)				2,460,454			2,091,187
			Total shareholders’ equity		3,708,650			2,949,329
Commitments and contingencies (note 12)
			Total liabilities and shareholders’ equity	$	31,854,773			27,620,672

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statements of income 

(In thousands, except per share data)
					Years Ended December 31,
					2006			2005		2004
Interest income:
		Loans, including fees			$	1,859,914			1,375,227		1,051,117
		Investment securities available for sale:
			U.S. Treasury and U.S. Government agency securities			69,834			53,037		45,184
			Mortgage-backed securities			52,469			40,287		38,731
			State and municipal securities			9,208			10,072		10,786
			Other investments			6,915			5,402		4,644
		Trading account assets				2,691			642		—
		Mortgage loans held for sale				8,638			7,304		6,581
		Federal funds sold and securities purchased under resale agreements				6,422			4,082		1,945
		Interest earning deposits with banks				375			172		32
				Total interest income		2,016,466			1,496,225		1,159,020
Interest expense:
		Deposits (note 8)				739,949			407,305		216,284
		Federal funds purchased and securities sold under repurchase agreements				71,439			31,569		19,286
		Long-term debt				71,204			88,504		62,771
				Total interest expense		882,592			527,378		298,341
				Net interest income		1,133,874			968,847		860,679
Provision for losses on loans (note 5)						75,148			82,532		75,319
				Net interest income after provision for losses on loans		1,058,726			886,315		785,360
Non-interest income:
		Electronic payment processing services				985,868			867,914		755,267
		Merchant acquiring services				260,275			237,418		26,169
		Other transaction processing services				186,394			183,412		170,905
		Service charges on deposit accounts				112,417			109,960		121,450
		Fiduciary and asset management fees				47,800			44,886		43,001
		Brokerage and investment banking income				26,729			24,487		21,748
		Mortgage banking income				29,255			28,682		26,300
		Bankcard fees				44,303			38,813		30,174
		Securities (losses) gains, net (note 4)				(2,118	)		463		75
		Other fee income				38,743			34,148		29,227
		Other operating income				52,201			36,016		67,157
	Non-interest income before reimbursable items					1,781,867			1,606,199		1,291,473
		Reimbursable items				351,719			312,280		229,538
			Total non-interest income			2,133,586			1,918,479		1,521,011
Non-interest expense:
		Salaries and other personnel expense (notes 14 and 15)				974,515			836,371		731,579
		Net occupancy and equipment expense (note 12)				414,169			368,210		321,689
		Other operating expenses (note 20)				430,274			426,530		305,560
	Non-interest expense before reimbursable items					1,818,958			1,631,111		1,358,828
		Reimbursable items				351,719			312,280		229,538
			Total non-interest expense			2,170,677			1,943,391		1,588,366
Minority interest in subsidiaries’ net income						48,102			37,381		28,724
				Income before income taxes		973,533			824,022		689,281
Income tax expense (note 17)						356,616			307,576		252,248
				Net income	$	616,917			516,446		437,033
Net income per share (notes 11 and 15):
		Basic			$	1.92			1.66		1.42
		Diluted				1.90			1.64		1.41
Weighted average shares outstanding (note 11):
		Basic				321,241			311,495		307,262
		Diluted				324,232			314,815		310,330

See accompanying notes to consolidated financial statements.

F-3

Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income 

(In thousands, except per share data)
															Accumulated
						Additional									Other
		Shares		Common		Paid-In			Treasury			Unearned			Comprehensive			Retained
Years ended December 31, 2006, 2005, and 2004		Issued		Stock		Capital			Stock			Compensation			Income (Loss)			Earnings			Total
Balance at December 31, 2003			307,748	$	307,748		442,931			(113,940	)		(266	)		29,509			1,579,057			2,245,039
Net income			—		—		—			—			—			—			437,033			437,033
Other comprehensive loss, net of tax (note 10):
	Net unrealized loss on cash flow hedges		—		—		—			—			—			(5,753	)		—			(5,753	)
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			(20,577	)		—			(20,577	)
	Gain on foreign currency translation		—		—		—			—			—			5,724			—			5,724
	Other comprehensive loss		—		—		—			—			—			(20,606	)		—			(20,606	)
Comprehensive income			—		—		—			—			—			—			—			416,427
Issuance of common stock for acquisitions (note 2)			5,478		5,478		151,700			—			—			—			—			157,178
Cash dividends declared - $.69 per share			—		—		—			—			—			—			(213,686	)		(213,686	)
Amortization of unearned compensation (note 15)			—		—		—			—			160			—			—			160
Stock options exercised (note 15)			2,405		2,405		21,060			—			—			—			—			23,465
Stock option tax benefit			—		—		12,705			—			—			—			—			12,705
Ownership change at majority-owned subsidiary			—		—		5			—			—			—			—			5
Treasury stock purchase			—		—		—			(4	)		—			—			—			(4	)
Issuance of common stock under commitment to charitable foundation			5		5		(5	)		—			—			—			—			—
Balance at December 31, 2004			315,636		315,636		628,396			(113,944	)		(106	)		8,903			1,802,404			2,641,289
Net income			—		—		—			—			—			—			516,446			516,446
Other comprehensive loss, net of tax (note 10):
	Net unrealized loss on cash flow hedges		—		—		—			—			—			(2,240	)		—			(2,240	)
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			(28,354	)		—			(28,354	)
	Loss on foreign currency translation		—		—		—			—			—			(7,845	)		—			(7,845	)
	Other comprehensive loss		—		—		—			—			—			(38,439	)		—			(38,439	)
Comprehensive income			—		—		—			—			—			—			—			478,007
Cash dividends declared - $.73 per share			—		—		—			—			—			—			(227,663	)		(227,663	)
Issuance of restricted stock (note 15)			146		146		3,807			—			(3,953	)		—			—			—
Amortization of unearned compensation (note 15)			—		—		—			—			933			—			—			933
Stock options exercised (note 15)			2,506		2,506		40,619			—			—			—			—			43,125
Stock option tax benefit			—		—		9,505			—			—			—			—			9,505
Ownership change at majority-owned subsidiary			—		—		3,907			—			—			—			—			3,907
Issuance of common stock for acquisitions (note 2)			8		8		218			—			—			—			—			226
Issuance of common stock under commitment to charitable foundation			5		5		(5	)		—			—			—			—			—
Balance at December 31, 2005			318,301		318,301		686,447			(113,944	)		(3,126	)		(29,536	)		2,091,187			2,949,329
SAB No. 108 adjustment to opening shareholders’ equity (note 1)			—		—		—			—			—			826			3,434			4,260
Postretirement unfunded health benefit obligation from adoption of SFAS No. 158, net of tax (note 1)			—		—		—			—			—			(3,212	)		—			(3,212	)
Net Income			—		—		—			—			—			—			616,917			616,917
Other comprehensive income, net of tax (note 10):
	Net unrealized gain on cash flow hedges		—		—		—			—			—			3,650			—			3,650
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			13,268			—			13,268
	Gain on foreign currency translation		—		—		—			—			—			12,875			—			12,875
	Other comprehensive income		—		—		—			—			—			29,793			—			29,793
Comprehensive income			—		—		—			—			—			—			—			646,710
Cash dividends declared - $.78 per share			—		—		—			—			—			—			(251,084	)		(251,084	)
Reclassification of unearned compensation to additional paid-in capital upon adoption of SFAS No. 123(R)			—		—		(3,126	)		—			3,126			—			—			—
Issuance of restricted stock (note 15)			610		610		(610	)		—			—			—			—			—
Share-based compensation expense (note 15)			—		—		23,373			—			—			—			—			23,373
Stock options exercised (note 15)			3,459		3,459		62,051			—			—			—			—			65,510
Stock option tax benefit			—		—		11,390			—			—			—			—			11,390
Ownership change at majority-owned subsidiary			—		—		6,031			—			—			—			—			6,031
Issuance of common stock for acquisitions (note 2)			8,844		8,844		247,499			—			—			—			—			256,343
Balance at December 31, 2006			331,214	$	331,214		1,033,055			(113,944	)		—			(2,129	)		2,460,454			3,708,650

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statements of Cash Flows 

(In thousands)
				Years Ended December 31,
				2006			2005			2004
Operating Activities
	Net income			$	616,917			516,446			437,033
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for losses on loans			75,148			82,532			75,319
		Depreciation, amortization, and accretion, net			231,288			193,152			161,062
		Equity in income of equity investments			(14,726	)		(6,135	)		(23,736	)
		Deferred income tax (benefit) expense			(44,970	)		(53,575	)		22,401
		Increase in interest receivable			(84,457	)		(40,853	)		(16,495	)
		Increase in interest payable			74,422			23,363			3,007
		Minority interest in subsidiaries’ net income			48,102			37,381			28,724
		Decrease (increase) in trading account assets			12,056			(27,322	)		—
		Originations of mortgage loans held for sale			(1,550,099	)		(1,414,357	)		(1,398,334	)
		Proceeds from sales of mortgage loans held for sale			1,518,554			1,391,378			1,410,725
		Increase in prepaid and other assets			(150,668	)		(80,982	)		(36,700	)
		Increase in accrued salaries and benefits			6,781			37,953			36,000
		Increase (decrease) in other liabilities			(3,741	)		(26,422	)		166,375
		Decrease in billings in excess of costs and profits on uncompleted contracts			—			—			(17,573	)
		Net (gains) losses on sales of available for sale investment securities			(2,118	)		463			75
		Gain on sale of loans			(1,975	)		—			—
		Gain on sale of other assets			(5,436	)		—			—
		Gain on sale of banking locations			—			—			(15,849	)
		Share-based compensation			27,163			1,999			55
		Impairment of developed software			—			3,619			10,059
		Other, net			27,455			(18,924	)		(45,870	)
			Net cash provided by operating activities		779,696			619,716			796,278
Investing Activities
	Net cash paid for acquisitions				(53,664	)		(56,995	)		(37,172	)
	Net (increase) decrease in interest earning deposits with banks				(16,409	)		1,173			70
	Net (increase) decrease in federal funds sold and securities purchased under resale agreements				(27,387	)		66,549			34,456
	Proceeds from maturities and principal collections of investment securities available for sale				676,492			660,085			1,351,436
	Proceeds from sales of investment securities available for sale				130,457			50,048			33,332
	Purchases of investment securities available for sale				(1,051,733	)		(1,019,585	)		(1,491,355	)
	Net cash received on sale of banking locations				—			—			25,069
	Proceeds from sale of commercial loans				32,813			—			—
	Net increase in loans				(2,498,467	)		(1,990,774	)		(2,598,559	)
	Purchases of premises and equipment				(140,143	)		(106,674	)		(111,396	)
	Proceeds from disposals of premises and equipment				1,201			1,708			3,061
	Proceeds from sale of other assets				5,632			—			—
	Additions to other intangible assets				(6,446	)		—			—
	Contract acquisition costs				(42,452	)		(19,468	)		(29,150	)
	Additions to licensed computer software from vendors				(11,858	)		(12,875	)		(57,302	)
	Additions to internally developed computer software				(13,973	)		(22,602	)		(5,224	)
			Net cash used in investing activities		(3,015,937	)		(2,449,410	)		(2,882,734	)
Financing Activities
	Net increase in demand and savings deposits				948,033			1,354,258			1,388,914
	Net increase in certificates of deposit				1,738,743			852,639			803,208
	Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements				361,401			(49,411	)		(192,229	)
	Principal repayments on long-term debt				(760,937	)		(617,177	)		(399,690	)
	Proceeds from issuance of long-term debt				127,203			672,666			655,727
	Treasury stock purchased				—			—			(4	)
	Excess tax benefit from share-based payment arrangements				10,460			—			—
	Dividends paid to shareholders				(244,654	)		(224,303	)		(209,883	)
	Proceeds from issuance of common stock				65,510			43,125			23,465
			Net cash provided by financing activities		2,245,759			2,031,797			2,069,508
Effect of exchange rate changes on cash and cash equivalent balances held in foreign currencies					(429	)		(4,252	)		3,953
Increase (decrease) in cash and cash equivalents					9,089			197,851			(12,995	)
Cash and due from banks at beginning of year					880,886			683,035			696,030
Cash and due from banks at end of year				$	889,975			880,886			683,035

See accompanying notes to consolidated financial statements.

F-5

Notes to Consolidated Financial Statements 

Note 1 Summary of Significant Accounting Policies

Business Operations

      The consolidated financial statements of Synovus include the accounts of Synovus Financial Corp. (Parent Company) and its consolidated subsidiaries. Synovus provides integrated financial services including banking, financial management, insurance, mortgage, and leasing services through 40 wholly-owned affiliate banks and other Synovus offices in Georgia, Alabama, South Carolina, Florida, and Tennessee. TSYS, an 81% owned subsidiary, provides electronic payment processing and related services to financial and non-financial institutions located throughout the United States and internationally. TSYS offers merchant acquiring services to financial institutions and other organizations in the United States through its wholly owned subsidiary, TSYS Acquiring Services, L.L.C. (TSYS Acquiring), and in Japan through its majority owned subsidiary, GP Network Corporation (GP Net).

Basis of Presentation

      In preparing the consolidated financial statements in accordance with U.S. generally accepted accounting principles, 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 balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates.

      Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses; the valuation of other real estate; the valuation of long-lived assets, goodwill, and other intangible assets; the determination of transaction processing provisions; and the disclosures for contingent assets and liabilities. In connection with the determination of the allowance for loan losses and the valuation of other real estate, management obtains independent appraisals for significant properties and properties collateralizing impaired loans.

      The accounting and reporting policies of Synovus conform to U.S. generally accepted accounting principles and to general practices within the banking, electronic payment, and merchant acquiring industries. All significant intercompany accounts and transactions have been eliminated in consolidation. The following is a description of the more significant of those policies.

Cash Flow Information

      Cash and due from banks includes cash and all amounts due from banks with original maturities less than 90 days. For the years ended December 31, 2006, 2005, and 2004, income taxes of $391.4 million, $323.0 million, and $190.9 million, and interest of $806.4 million, $505.7 million, and $298.1 million, respectively, were paid.

      Loans receivable of approximately $33 million, $20 million, and $11 million were transferred to other real estate during 2006, 2005, and 2004, respectively.

Federal Funds Sold, Federal Funds Purchased, Securities Purchased Under Resale Agreements, and Securities Sold Under Repurchase Agreements

      Federal funds sold, federal funds purchased, securities purchased under resale agreements, and securities sold under repurchase agreements generally mature in one day.

Trading Account Assets

      Trading account assets, which include both debt and equity securities, are reported at fair value. Fair value adjustments and fees from trading account activities are included as a component of other fee income. Gains and losses realized from the sale of trading account assets are determined by specific identification and are included as a component of other fee income. Interest income on trading assets is reported as a component of interest income.

Mortgage Loans Held for Sale

      Mortgage loans held for sale are carried at the lower of aggregate cost or fair value. Fair value is based on forward sales commitments, which qualify for hedge accounting, and are carried at cost when used to hedge the loans. Otherwise, fair values are based upon quoted prices from secondary market investors. No valuation allowances were required at December 31, 2006 or 2005.

      The cost of mortgage loans held for sale is the mortgage note amount less discounts and unearned fees.

Investment Securities Available for Sale

      Available for sale securities are recorded at fair value. Fair value is determined at a specific point in time, based on quoted market prices. Unrealized gains and losses on securities available for sale, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity, within accumulated other comprehensive income (loss), until realized.

      A decline in the fair market value of any available for sale security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.

F-6

Notes to Consolidated Financial Statements 

      Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield using the effective interest method and prepayment assumptions. Dividend and interest income are recognized when earned. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the amortized cost of securities sold.

      Gains and losses on sales of investment securities are recognized on the settlement date, based on the amortized cost of the specific security. The financial statement impact of settlement date accounting versus trade date accounting is inconsequential.

Loans and Interest Income

      Loans are reported at principal amounts outstanding less unearned income, net deferred fees and expenses, and the allowance for loan losses.

      Interest income on consumer loans, made on a discount basis, is recognized in a manner which approximates the level yield method. Interest income on substantially all other loans is recognized on a level yield basis.

      Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full collection of interest or principal, or when they become contractually in default for 90 days or more as to either interest or principal, unless they are both well-secured and in the process of collection. When a loan is placed on nonaccrual status, previously accrued and uncollected interest is charged to interest income on loans, unless management believes that the accrued interest is recoverable through the liquidation of collateral. Interest payments received on nonaccrual loans are applied as a reduction of principal. Loans are returned to accruing status when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. Interest is accrued on impaired loans as long as such loans do not meet the criteria for nonaccrual classification.

Allowance for Loan Losses

      The allowance for loan losses is established through the provision for losses on loans charged to operations. Loans are charged against the allowance for loan losses when management believes that the collection of principal is unlikely. Subsequent recoveries are added to the allowance. Management’s evaluation of the adequacy of the allowance for loan losses is based on a formal analysis which assesses the risk within the loan portfolio. This analysis includes consideration of historical performance, current economic conditions, level of nonperforming loans, loan concentrations, and review of impaired loans.

      Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the subsidiary banks’ allowances for loan losses. Such agencies may require the subsidiary banks to recognize adjustments to the allowance for loan losses based on their judgments about information available to them at the time of their examination.

      Management, considering current information and events regarding a borrowers’ ability to repay its obligations, considers a loan to be impaired when the ultimate collectibility of all amounts due, according to the contractual terms of the loan agreement, is in doubt. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral-dependent, the fair value of the collateral less estimated selling costs is used to determine the amount of impairment. Impairment losses are included in the allowance for loan losses through a charge to the provision for losses on loans.

      The accounting for impaired loans described above applies to all loans, except for large pools of smaller-balance, homogeneous loans that are collectively evaluated for impairment, and loans that are measured at fair value or at the lower of cost or fair value. The allowance for loan losses for loans not considered impaired and for large pools of smaller-balance, homogeneous loans is established through consideration of such factors as changes in the nature and volume of the portfolio, overall portfolio quality, individual loan risk ratings, loan concentrations, and historical charge-off trends.

Premises and Equipment

      Premises and equipment, including leasehold improvements and purchased internal-use software, are reported at cost, less accumulated depreciation and amortization which are computed using the straight-line method over the estimated useful lives of the related assets. The Company reviews long-lived assets, such as premises and equipment, for impairment whenever events and circumstances indicate that the carrying amount of an asset may not be recoverable.

F-7

Notes to Consolidated Financial Statements 

Contract Acquisition Costs

      TSYS capitalizes contract acquisition costs related to signing or renewing long-term contracts. TSYS capitalizes internal conversion costs in accordance with Financial Accounting Standards Board (FASB) Technical Bulletin No. 90-1, “Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.” The capitalization of costs related to cash payments for rights to provide processing services is capitalized in accordance with the FASB’s Emerging Issues Task Force (EITF) Issue No. 01-9 “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products),” and the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 104 (SAB No. 104), “Revenue Recognition.” These costs are amortized using the straight line method over the contract term beginning when the client’s cardholder accounts are converted and producing revenues. All costs incurred prior to a signed agreement are expensed as incurred.

      The amortization of contract acquisition costs associated with cash payments is recorded as a reduction of revenues in the consolidated statements of income. The amortization of contract acquisition costs associated with conversion activity is recorded as other operating expenses in the consolidated statements of income.

      TSYS evaluates the carrying value of contract acquisition costs associated with each customer for impairment on the basis of whether these costs are fully recoverable from expected undiscounted net operating cash flows of the related contract. These costs may become impaired with the loss of a contract, the financial decline of a client, termination of conversion efforts after a contract is signed, diminished prospects for current clients, or if TSYS’ actual results differ from its estimates of future cash flows. The amount of impairment is written off in the period that such a determination is made. The determination of expected undiscounted net operating cash flows requires management to make estimates.

Computer Software

Licensed Computer Software

      TSYS licenses software that is used in providing electronic payment processing, merchant acquiring and other services to clients. Licensed software is obtained through perpetual licenses and site licenses, and through agreements based on processing capacity (called “MIPS agreements”). Perpetual and site licenses are amortized using the straight-line method over their estimated useful lives which range from three to five years. Software licensed under MIPS agreements is amortized using a units-of-production basis over the estimated useful life of the software, generally not to exceed ten years. At each balance sheet date, TSYS evaluates impairment losses on long-lived assets used in operations in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

Software Development Costs

      In accordance with SFAS No. 86, “Computer Software to be Sold, Leased or Otherwise Marketed,” software development costs are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when TSYS has completed a detail program design and has determined that a product can be produced to meet its design specifications, including functions, features, and technical performance requirements. Capitalization of costs ceases when the product is generally available to clients. At each balance sheet date, TSYS evaluates the unamortized capitalized costs of software development as compared to the net realizable value of the software product which is determined by expected undiscounted net operating cash flows. The amount by which the unamortized software development costs exceed the net realizable value is charged off to operations in the period that such determination is made. Software development costs are amortized using the greater of (1) the straight-line method over its estimated useful life, which ranges from three to ten years, or (2) the ratio of current revenues to total anticipated revenue over its useful life.

      TSYS also develops software that is used internally. These software development costs are capitalized based upon the provisions of AICPA Statement of Position (SOP) No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” Internal-use software development costs are capitalized once (1) the preliminary project stage is completed, (2) management authorizes and commits to funding a computer software project, and (3) it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred prior to meeting these qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Internal-use software development costs are amortized using an estimated useful life of three to five years.

      Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product.

F-8

Notes to Consolidated Financial Statements 

Acquisition Technology Intangibles

      Acquisition technology intangibles represent software technology assets resulting from acquisitions. These assets are amortized using the straight-line method over periods not exceeding their estimated useful lives, which range from five to nine years. SFAS No. 142, “Goodwill and Other Intangible Assets” requires that intangible assets with estimated useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144.

Transaction Processing Provisions

      TSYS has recorded estimates to accrue for contract contingencies (performance penalties) and processing errors. A significant number of TSYS’ contracts with large clients contain service level agreements which can result in TSYS incurring performance penalties if contractually required service levels are not met. When providing for these accruals, TSYS takes into consideration such factors as the prior history of performance penalties and processing errors incurred, actual contractual penalties inherent in its contracts, progress towards milestones, and known processing errors not covered by insurance.

      These accruals are included in other current liabilities in the consolidated balance sheets. Increases and decreases in transaction processing provisions are charged to other operating expenses in the consolidated statements of income, and payments or credits for performance penalties and processing errors are charged against the accrual.

Goodwill and Other Intangible Assets

      Goodwill, which represents the excess of cost over the fair value of net assets acquired of purchased companies, is tested for impairment at least annually. Synovus established its annual impairment test date as June 30. To test for goodwill impairment, Synovus identifies its reporting units and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. Synovus then compares the carrying value of each unit to its fair value to determine whether impairment exists. No impairment losses have been recorded as a result of Synovus’ annual goodwill impairment analyses during the years ended December 31, 2006, 2005, and 2004.

      Identifiable intangible assets relate primarily to core deposit premiums, resulting from the valuation of core deposit intangibles acquired in business combinations or in the purchase of branch offices, customer relationships, and customer contract premiums resulting from the acquisition of investment advisory and transaction processing businesses. These identifiable intangible assets are amortized using accelerated methods over periods not exceeding the estimated average remaining life of the existing customer deposits, customer relationships, or contracts acquired. Amortization periods range from 3 to 15 years. Amortization periods for intangible assets are monitored to determine if events and circumstances require such periods to be reduced.

      Goodwill and identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. With the exception of goodwill, recoverability of the intangible assets is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered impaired, the amount of impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets based on the discounted expected future cash flows to be generated by the assets. Assets to be disposed of are reported at the lower of their carrying value or fair value less costs to sell.

Other Assets

      Other assets include interest receivable on loans, investment securities, and other interest-bearing balances. The accounting for other significant balances included in other assets is described below.

Investments in Company-Owned Life Insurance Programs

      Investments in company-owned life insurance programs are recorded at the net realizable value of the underlying insurance contracts. The change in contract value during the period is recorded as an adjustment of premiums paid in determining the expense or income to be recognized under the contract during the period. Income or expense from company-owned life insurance programs is included as a component of other operating income.

TSYS’ Equity Investments

      TSYS has a 49% investment in Total System Services de México, S.A. de C.V. (TSYS de México), an electronic payment processing support operation located in Mexico, which is accounted for using the equity method of accounting. TSYS also has a 44.56% investment in China UnionPay Data Co., Ltd. (CUP Data), a payment processing company which is headquartered in Shanghai, China, and which is also accounted for using the equity method of accounting. Prior to March 1, 2005, TSYS owned 50% of TSYS Acquiring, which was accounted for using the equity method of accounting. On March 1, 2005, TSYS acquired the remaining 50% equity stake in TSYS Acquiring formerly held by Visa U.S.A. and began

F-9

Notes to Consolidated Financial Statements 

consolidating this wholly-owned subsidiary. TSYS Acquiring is a merchant acquiring services operation headquartered in Tempe, Arizona.

Other Real Estate

      Other real estate, consisting of properties obtained through foreclosure or in satisfaction of loans, is reported at the lower of cost or fair value, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources, adjusted for estimated selling costs. At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the allowance for loan losses. Gains or losses on sale and any subsequent adjustments to the value are recorded as a component of other operating expenses.

Accounts Receivable

      Accounts receivable balances are stated net of allowances for doubtful accounts and billing adjustments of $11.0 million and $12.6 million at December 31, 2006 and December 31, 2005.

      TSYS records an allowance for doubtful accounts when it is probable that the accounts receivable balance will not be collected. When estimating the allowance for doubtful accounts, TSYS takes into consideration such factors as its day-to-day knowledge of the financial position of specific clients, the industry and size of its clients, the overall composition of its accounts receivable aging, prior history with specific customers of accounts receivable write-offs and prior experience of allowances in proportion to the overall receivable balance. This analysis includes an ongoing and continuous communication with its largest clients and those clients with past due balances. A financial decline of any one of TSYS’ large clients could have a material adverse effect on collectibility of receivables and thus the adequacy of the allowance for doubtful accounts.

      Increases in the allowance for doubtful accounts are recorded as charges to bad debt expense and are reflected in other operating expenses in the consolidated statements of income. Write-offs of uncollectible accounts are charged against the allowance for doubtful accounts.

      TSYS records an allowance for billing adjustments for actual and potential billing discrepancies. When estimating the allowance for billing adjustments, TSYS considers its overall history of billing adjustments, as well as its history with specific clients and known disputes. Increases in the allowance for billing adjustments are recorded as a reduction of revenues in the consolidated statements of income and actual adjustments to invoices are charged against the allowance for billing adjustments.

Derivative Instruments

      Synovus’ risk management policies emphasize the management of interest rate risk within acceptable guidelines. Synovus’ objective in maintaining these policies is to achieve consistent growth in net interest income while limiting volatility arising from changes in interest rates. Risks to be managed include both fair value and cash flow risks. Utilization of derivative financial instruments provides a valuable tool to assist in the management of these risks.

      In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138 “Accounting for Certain Derivative Instruments and Hedging Activities, an Amendment of SFAS No. 133,” all derivative instruments are recorded on the consolidated balance sheet at their respective fair values.

      The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and if so, on the reason for holding it. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair values, cash flows, or foreign currencies. If the hedged exposure is a fair value exposure, the gain or loss on the derivative instrument is recognized in earnings in the period of change, together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a component of accumulated other comprehensive income (outside earnings), and subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness, as well as the ineffective portion of the gain or loss on the derivative instrument, are reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss on the derivative instrument is recognized in earnings in the period of change.

      With the exception of commitments to fund and sell fixed-rate mortgage loans and derivatives utilized to meet the financing, interest rate and equity risk management needs of its customers, all derivatives utilized by Synovus to manage its interest rate sensitivity are designed as either a hedge of a recognized fixed-rate asset or liability (a fair value hedge), or a hedge of a forecasted transaction or of the variability of future cash flows of a floating rate asset or liability (cash flow hedge). Synovus does not speculate using derivative instruments.

F-10

Notes to Consolidated Financial Statements 

      Synovus utilizes interest rate swap agreements to hedge the fair value risk of fixed-rate balance sheet liabilities, primarily deposit liabilities. Fair value risk is measured as the volatility in the value of these liabilities as interest rates change. Interest rate swaps entered into to manage this risk are designed to have the same notional value, as well as similar interest rates and interest calculation methods. These agreements entitle Synovus to receive fixed-rate interest payments and pay floating-rate interest payments based on the notional amount of the swap agreements. Swap agreements structured in this manner allow Synovus to effectively hedge the fair value risks of these fixed-rate liabilities. Ineffectiveness from fair value hedges is recognized in the consolidated statements of income as other operating income.

      Synovus is potentially exposed to cash flow risk due to its holding of loans whose interest payments are based on floating rate indices. Synovus monitors changes in these exposures and their impact on its risk management activities and uses interest rate swap agreements to hedge the cash flow risk. These agreements entitle Synovus to receive fixed-rate interest payments and pay floating-rate interest payments. The maturity date of the agreement with the longest remaining term to maturity is June 16, 2011. These agreements allow Synovus to offset the variability of floating rate loan interest received with the variable interest payments paid on the interest rate swaps. The ineffectiveness from cash flow hedges is recognized in the consolidated statements of income as other operating income.

      In 2005, Synovus entered into certain forward starting swap contracts to hedge the cash flow risk of certain forecasted interest payments on a forecasted debt issuance. Upon the determination to issue debt, Synovus was potentially exposed to cash flow risk due to changes in market interest rates prior to the placement of the debt. The forward starting swaps allowed Synovus to hedge this exposure. Upon placement of the debt, these swaps were cash settled concurrent with the pricing of the debt. The effective portion of the cash flow hedge previously included in accumulated other comprehensive income is being amortized over the life of the debt issue as an adjustment to interest expense.

      By using derivatives to hedge fair value and cash flow risks, Synovus exposes itself to potential credit risk from the counterparty to the hedging instrument. This credit risk is normally a small percentage of the notional amount and fluctuates as interest rates change. Synovus analyzes and approves credit risk for all potential derivative counterparties prior to execution of any derivative transaction. Synovus minimizes credit risk by dealing with highly rated counterparties, and by obtaining collateralization for exposures above certain predetermined limits.

      Synovus also holds derivative instruments which consist of commitments to fund fixed-rate mortgage loans to customers (interest rate lock commitments) and forward commitments to sell mortgage-backed securities and individual fixed-rate mortgage loans. Synovus’ objective in obtaining the forward commitments is to mitigate the interest rate risk associated with the commitments to fund the fixed-rate mortgage loans and the mortgage loans that are held for sale. Both the interest rate lock commitments and the forward commitments are reported at fair value, with adjustments being recorded in current period earnings. Certain forward sales commitments are accounted for as hedges of mortgage loans held for sale.

      Synovus also enters into derivative financial instruments to meet the financing, interest rate and equity risk management needs of its customers. Upon entering into these instruments to meet customer needs, Synovus enters into offsetting positions to minimize interest rate and equity price risk to Synovus. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings. These instruments, and their offsetting positions, are recorded in other assets and other liabilities on the consolidated balance sheets.

Non-Interest Income

Electronic Payment Processing Services

      TSYS’ electronic payment processing services revenues are derived from long-term processing contracts with financial and non-financial institutions and are generally recognized as the services are performed. Electronic payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, cards embossed and mailed, and other processing services for cardholder accounts on file. Most of these contracts have prescribed annual revenue minimums. Processing contracts generally range from three to ten years in length and provide for penalties for early termination.

      TSYS recognizes revenues in accordance with SAB No. 104. SAB No. 104 sets forth guidance as to when revenue is realized or realizable and earned when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectibility is reasonably assured.

      TSYS evaluates its contractual arrangements that provide services to clients through a bundled sales arrangement in accordance with the FASB’s EITF Issue No. 00-21

F-11

Notes to Consolidated Financial Statements 

(EITF 00-21), “Revenue Arrangements with Multiple Deliverables.” EITF 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting.

      A deliverable in multiple element arrangements indicates any performance obligation on the part of the seller and includes any combination of obligations to perform different services, grant licenses or other rights. Revenue is allocated to the separate units of accounting in a multiple element arrangement based on relative fair values, provided the delivered element has standalone value to the customer, the fair value of any undelivered items can be readily determined, and delivery of any undelivered items is probable and substantially within TSYS’ control. Evidence of fair value must be objective and reliable. An item has value to the customer on a standalone basis if it is sold separately by any vendor or the customer could resell the deliverable on a standalone basis.

      TSYS recognizes software license revenue in accordance with SOP 97-2, “Software Revenue Recognition,” and SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition With Respect to Certain Transactions.” For software licenses for which any services rendered are not considered essential to the functionality of the software, revenue is recognized upon delivery of the software, provided (1) there is evidence of an arrangement, (2) collection of the fee is considered probable, (3) the fee is fixed or determinable, and (4) vendor specific objective evidence (VSOE) exists to allocate revenue to the undelivered elements of the arrangement.

      When services are considered essential to the functionality of the software licensed and VSOE exists for the undelivered elements of the arrangement, revenues are recognized over the period that such services will be performed using the percentage-of-completion method in accordance with SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts.” Progress during the period in which services are performed is measured by the percentage of costs incurred to date to estimated total costs for each arrangement as this is the best measure of progress. Provisions for estimated losses on incomplete contracts are made in the period in which such losses are determined. For license arrangements in which the fee is not considered fixed or determinable, the license revenue is recognized as payments become due.

      Maintenance fees associated with license software are billed annually in advance, and the associated revenue is recognized ratably over the term of the maintenance agreement. VSOE for maintenance is measured by the renewal rate offered to the client, taking into consideration the normal pricing and discounting practices for the underlying software license. Maintenance includes license updates, product support and unspecified software product upgrades.

Merchant Acquiring Services

      TSYS’ merchant acquiring services revenues are derived from long-term processing contracts with large financial institutions and other merchant acquirers which generally range from three to eight years and provide for penalties for early termination. Merchant acquiring services revenues are generated primarily from processing all payment forms including credit, debit, electronic benefits transfer and electronic check truncation for merchants of all sizes across a wide array of retail market segments. The products and services offered include authorization and capture of electronic transactions, clearing and settlement of electronic transactions, information reporting services related to electronic transactions, merchant billing services, and point-of-sale terminal sales and services. TSYS recognizes merchant acquiring services revenue as those services are performed, primarily on a per unit basis. Revenues on point-of-sale terminal equipment are recognized upon the transfer of ownership and shipment of product.

Other Transaction Processing Services

      TSYS’ other transaction processing services revenues are derived from recovery collections work, bankruptcy process management, legal account management, skip tracing, commercial printing activities, targeted loyalty programs, and customer relationship management services, such as call center activities for card activation, balance transfer requests, customer service and collection. The contract terms for these services are generally shorter in nature as compared with TSYS’ long-term processing contracts. Revenue is recognized on these other transaction processing services as the services are performed either on a per unit or a fixed price basis.

Service Charges on Deposit Accounts

      Service charges on deposit accounts consist of non-sufficient funds fees, account analysis fees, and other service charges on deposits which consist primarily of monthly account fees. Non-sufficient funds fees are recognized at the time when the account overdraft occurs. Account analysis fees consist of fees charged to certain commercial demand deposit accounts based upon account activity (and reduced by a credit which is based upon cash levels in the account). These fees, as well as monthly account fees, are recorded under the accrual method of accounting.

F-12

Notes to Consolidated Financial Statements 

Fiduciary and Asset Management Fees

      Fiduciary and asset management fees are generally determined based upon market values of assets under management as of a specified date during the period. These fees are recorded under the accrual method of accounting.

Brokerage and Investment Banking Revenue

      Brokerage revenue consists primarily of commission income, which represents the spread between buy and sell transactions processed, and net fees charged to customers on a transaction basis for buy and sell transactions processed. Commission income is recorded on a settlement-date basis, which does not differ materially from trade-date basis. Brokerage revenue also includes portfolio management fees which represent monthly fees charged on a contractual basis to customers for the management of their investment portfolios and are recorded under the accrual method of accounting.

      Investment banking revenue represents fees for services arising from securities offerings or placements in which Synovus acts as the agent. It also includes fees earned from providing advisory services. Revenue is recognized at the time the underwriting is completed and the revenue is reasonably determinable.

Mortgage Banking Income

      Mortgage banking income consists primarily of gains and losses from the sale of mortgage loans. Mortgage loans are sold servicing released, without recourse or continuing involvement and satisfy SFAS No. 140 criteria for sale accounting. Gains (losses) on the sale of mortgage loans are determined and recognized at the time the sale proceeds are received and represent the difference between net sales proceeds and the carrying value of the loans at the time of sale adjusted for recourse obligations, if any, retained by Synovus.

Bankcard Fees

      Bankcard fees consist primarily of interchange and merchant fees earned, net of fees paid, on debit card and credit card transactions. Net fees are recognized into income as they are collected.

Reimbursable Items

      Reimbursable items consist of out-of-pocket expenses which are reimbursed by TSYS’ customers. Postage is the primary component of these expenses. TSYS accounts for reimbursable items in accordance with the FASB’s EITF No. 01-14 “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred.”

Foreign Currency Translation

      TSYS maintains several different foreign operations whose functional currency is their local currency. The foreign currency-based financial statements of these subsidiaries and branches are translated into U.S. dollars at current exchange rates, except for revenues, costs and expenses, and net income which are translated at the average exchange rates for each reporting period. Net gains or losses resulting from the currency translation of assets and liabilities of TSYS’ foreign operations, net of tax, are accumulated as a component of accumulated other comprehensive income (loss).

      Gains and losses on transactions denominated in currencies other than the functional currencies are included in determining net income for the period in which exchange rates change. TSYS does not currently utilize foreign exchange contracts or other derivative instruments to reduce its exposure to foreign currency rate changes.

Income Taxes

      Synovus files a consolidated federal tax return with its wholly-owned and majority owned subsidiaries. Synovus accounts for income taxes in accordance with the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Reserves against the carrying value of a deferred tax asset are established when necessary to reflect the decreased likelihood of realization of a deferred asset in the future. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      Income tax provisions require the use of management judgments, which are subject to challenge by various taxing authorities. Contingency reserves are periodically established where the amount of the contingency can be reasonably determined and is likely to occur. Reductions in contingency reserves are recognized when tax disputes are settled or examination periods lapse.

      Significant estimates, used in accounting for income taxes relate to the determination of taxable income, the determination of temporary differences between book and tax bases, as well as estimates on the realizability of tax credits.

F-13

Notes to Consolidated Financial Statements 

Share-Based Compensation

      Synovus adopted SFAS No. 123R, “Share-Based Payment”, effective January 1, 2006 and elected to use the modified prospective transition method. SFAS No. 123R is effective for all unvested awards at January 1, 2006 and for all awards granted or modified, repurchased, or cancelled after that date. This statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions) and recognize compensation expense over the future service period.

      Prior to adoption of SFAS No. 123R, Synovus accounted for its fixed share-based compensation in accordance with the provisions set forth in Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. In accordance with APB Opinion No. 25, compensation expense was recorded on the grant date only to the extent that the current market price of the underlying stock exceeded the exercise price on the grant date.

Postretirement Benefits

      Synovus sponsors a defined benefit health care plan for substantially all of its employees and early retirees. The expected costs of retiree health care and other postretirement benefits are being expensed over the period that employees provide service.

Fair Value of Financial Instruments

      Fair value estimates are made at a specific point in time, based on relevant market information and other information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale, at one time, the entire holdings of a particular financial instrument. Because no market exists for a portion of the financial instruments, fair value estimates are also based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

      Fair value estimates are based on existing balance sheet financial instruments, without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes, premises and equipment, capitalized contract acquisition costs, computer software, investments in joint ventures, goodwill and other intangible assets. In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Recently Issued Accounting Standards

      In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” SFAS No. 155 eliminates the exemption from applying SFAS No. 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments. SFAS No. 155 also permits election of fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a re-measurement event, on an instrument-by-instrument basis. The provisions of this statement are effective for all financial instruments acquired or issued after the beginning of the entity’s first fiscal year that begins after September 15, 2006. Synovus does not expect the impact of SFAS No. 155 on its financial position, results of operations or cash flows to be material.

      In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets.” SFAS No. 156 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations and requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The provisions of this statement are effective as of the beginning of the first fiscal year that begins after September 15, 2006. Synovus does not expect the impact of SFAS No. 156 on its financial position, results of operations or cash flows to be material.

      In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.”

F-14

Notes to Consolidated Financial Statements 

FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

      FIN 48 provides a two-step process in the evaluation of a tax position. The first step is recognition. A company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including a resolution of any related appeals or litigation processes, based upon the technical merits of the position. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

      FIN 48 is effective for fiscal years beginning after December 15, 2006. Synovus expects the impact of adopting FIN 48 will not be material to its financial position, results of operations or cash flows.

      In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but applies under other accounting pronouncements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. The provisions of this statement are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Synovus does not expect the impact of SFAS No. 157 on its financial position, results of operations or cash flows to be material.

      In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity. This statement provides different effective dates for the recognition and related disclosure provisions and for the required change to a fiscal year-end measurement date. An employer with publicly traded equity securities shall apply the requirement to recognize the funded status of a benefit plan and the disclosure requirements at the end of the first fiscal year ended after December 15, 2006, and shall apply the requirement to measure plan assets and benefit obligations as of the date of the employers’ fiscal year-end statement of financial position for fiscal years ending after December 15, 2008. In December, 2006, Synovus adopted the recognition provisions of SFAS No. 158, and recognized an accrued liability and an adjustment to shareholders’ equity of $3.2 million, net of tax, in connection with its unfunded postretirement health benefit obligation.

      In September 2006, the EITF reached a consensus on EITF Issue No. 06-4 (EITF 06-4), “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” EITF 06-4 requires an employer to recognize a liability for future benefits based on the substantive agreement with the employee. EITF 06-4 requires a company to use the guidance prescribed in FASB Statement No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” and Accounting Principles Board Opinion No. 12, “Omnibus Opinion,” when entering into an endorsement split-dollar life insurance agreement and recognizing the liability. EITF 06-4 is effective for fiscal periods beginning after December 15, 2007. Synovus is currently evaluating the impact of adopting EITF 06-4 on its financial position, results of operations and cash flows, but has yet to complete its assessment.

      In September 2006, the EITF reached a consensus on EITF Issue No. 06-5 (EITF 06-5), “Accounting for Purchases of Life Insurance — Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4.” EITF 06-5 requires that a determination of the amount that could be realized under an insurance contract should (1) consider any additional amounts beyond cash surrender value included in the contractual terms of the policy and (2) be based on an assumed surrender at the individual policy or certificate level, unless all policies or certificates are required to be surrendered as a group. EITF 06-5 is effective for fiscal periods beginning after December 15, 2006. Synovus is currently evaluating the impact of adopting EITF 06-5 on its financial position, results of operations and cash flows, but has yet to complete its assessment.

      In September 2006, the SEC issued SAB No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements.” In December 2006, Synovus adopted the provisions of SAB No. 108, which clarifies the way that a company should evaluate an identified unadjusted error for materiality. SAB No. 108 requires that the effect of misstatements that were not corrected at the end of the prior year be considered in quantifying misstatements in the current year financial statements. Two techniques were identified as being used by companies in practice to accumulate and quantify misstatements — the “rollover” approach and the “iron curtain” approach. The rollover approach, which is the approach that

F-15

Notes to Consolidated Financial Statements 

Synovus previously used, quantifies a misstatement based on the amount of the error originating in the current year income statement. Thus, this approach ignores the effects of correcting the portion of the current year balance sheet misstatement that originated in prior years. The iron curtain approach quantifies a misstatement based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatement’s year(s) of origination. The primary weakness of the iron curtain approach is that it does not consider the correction of prior year misstatements in the current year to be errors.

      Using the rollover approach resulted in an accumulation of misstatements to Synovus’ balance sheets that were deemed immaterial to Synovus’ financial statements because the amounts that originated in each year were quantitatively and qualitatively immaterial. Synovus has elected, as allowed under SAB No. 108, to reflect the effect of initially applying this guidance by adjusting the carrying amount of the impacted accounts as of the beginning of 2006 and recording an offsetting adjustment to the opening balance of retained earnings in 2006. Accordingly, Synovus recorded a cumulative adjustment to increase retained earnings by $3.4 million upon the adoption of SAB No. 108.

      The following table presents a description of the individual adjustments included in the cumulative adjustment to retained earnings:

				Nature of Error	Years
(In millions)	Adjustment			Being Corrected	Impacted
Brokered time deposits	$	(10.3	)	Adjusted to reflect incorrect use of hedges		2003 - 2005
Deferred income tax liability		3.8		Adjusted to reflect tax effect of incorrect use of hedges		2003 - 2005
Accumulated other comprehensive loss		(0.8	)	Adjusted to reflect incorrect use of hedges		2004 - 2005
Deferred income tax liability		10.7		Adjusted to reflect impact of calculation errors		1993 - 2005
Total increase in retained earnings	$	3.4

      In the first quarter of 2003, Synovus entered into interest rate swaps to hedge the fair value of certain brokered time deposits. Effectiveness was measured using the short-cut method. Upon further review of these arrangements at September 30, 2005, Synovus determined that these hedges did not qualify for the shortcut method of hedge accounting as the broker placement fee for the related certificates of deposit was factored into the pricing of the swaps. The hedging relationships were redesignated on September 30, 2005, using the cumulative dollar offset method to measure effectiveness. The prior years’ adjustments were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus’ results of operations in any of the years impacted. Brokered time deposits were increased by the amount of the cumulative fair value basis adjustment and the associated deferred tax liability was removed, resulting in a net decrease in shareholders’ equity of $6.5 million, to correct the incorrect use of hedge accounting.

      In the fourth quarter of 2004, Synovus entered into certain forward starting interest rate swaps to hedge the future interest payments on debt forecasted to be issued in 2005. Synovus accounted for these arrangements as cash flow hedges. Upon further review of these arrangements, during the second quarter of 2005, it was determined that the swaps did not qualify for hedge accounting treatment. The hedging relationships were redesignated during the second quarter of 2005. The prior years’ adjustments were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus’ results of operations in any of the years impacted. Accumulated other comprehensive losses were decreased and retained earnings were increased by $0.8 million, respectively, to correct the incorrect use of hedge accounting.

      From 1993 through 2005, Synovus had errors in its calculation of deferred taxes for temporary differences related to certain business combinations and premises and equipment. The prior years’ errors were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus results of operations in any of the years impacted. The deferred income tax liability was reduced by $10.7 million to correct the calculation errors.

      In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to make an irrevocable election, at specified election dates, to measure eligible financial instruments and certain other items at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The provisions of this statement are effective as of the beginning of the first fiscal year that begins after November 15, 2007. Synovus is currently evaluating the impact of adopting SFAS No. 159, but has yet to complete its assessment.

Reclassifications

      Certain prior years’ amounts have been reclassified to conform to the presentation adopted in 2006.

F-16

Notes to Consolidated Financial Statements 

Note 2 Business Combinations

      Effective on March 25, 2006, Synovus acquired all of the issued and outstanding common shares of Riverside Bancshares, Inc., the parent company of Riverside Bank (Riverside), headquartered in Marietta, Georgia. Concurrent with the acquisition, Riverside was merged into a subsidiary of Synovus, Bank of North Georgia. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of Riverside Bancshares have been included in Synovus’ consolidated financial statements beginning March 25, 2006.

      The aggregate purchase price was $171.1 million, consisting of 5,883,427 shares of Synovus common stock valued at $159.8 million, stock options valued at $11.4 million, and $182 thousand in direct acquisition costs. Synovus is in the process of completing the purchase price allocation relating to the acquisition.

      The preliminary purchase price allocation is presented below.

Riverside Bancshares, Inc.
(In thousands)
Cash and due from banks			$	13,041
Investment securities				116,604
Loans, net				469,983
Premises and equipment				11,973
Goodwill				122,096
Core deposits premium				6,861
Other intangible assets				3,310
Other assets				22,389
	Total assets acquired			766,257
Deposits*				491,739
Federal funds purchased				2,069
Securities sold under repurchase agreements				50,670
Long-term debt				37,683
Other liabilities				13,020
	Total liabilities assumed			595,181
		Net assets acquired	$	171,076
* Includes time deposits in the amount of $176.7 million.

      Effective on April 1, 2006, Synovus acquired all of the issued and outstanding common shares of Banking Corporation of Florida, the parent company of First Florida Bank (First Florida), headquartered in Naples, Florida. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of First Florida have been included in Synovus’ consolidated financial statements beginning April 1, 2006.

      The aggregate purchase price was $84.8 million, consisting of 2,938,791 shares of Synovus common stock valued at $80.1 million, stock options valued at $4.7 million and $24 thousand in direct acquisition costs. Synovus is in the process of completing the purchase price allocation relating to the acquisition.

      The preliminary purchase price allocation is presented below.

Banking Corporation of Florida
(In thousands)
Cash and due from banks			$	2,595
Federal funds sold				4,782
Investment securities				5,655
Loans, net				341,825
Premises and equipment				2,317
Goodwill				54,590
Core deposits premium				1,172
Other intangible assets				937
Other assets				3,655
	Total assets acquired			417,528
Deposits*				321,283
Long-term debt				10,269
Other liabilities				1,147
	Total liabilities assumed			332,699
		Net assets acquired	$	84,829
* Includes time deposits in the amount of $231.9 million.

      On July 11, 2006, TSYS completed the acquisition of Card Tech, Ltd., a privately owned London-based payments firm, and related companies. TSYS rebranded the group of companies as TSYS Card Tech. TSYS accounted for the acquisition using the purchase method of accounting, and accordingly, TSYS Card Tech’s results of operations have been included in Synovus’ consolidated financial statements beginning July 11, 2006. TSYS paid aggregate cash consideration of approximately $59.3 million, including direct acquisition costs. TSYS is in the process of allocating the purchase price to the respective assets and liabilities acquired, and has preliminarily allocated approximately $27.4 million to goodwill, approximately $24.6 million to other identifiable intangible assets and the remaining amounts to other identifiable assets and liabilities acquired.

      On November 1, 2005, TSYS purchased an initial 34.04% equity interest in China UnionPay Data Co., Ltd. (CUP Data) for approximately $37.0 million. On August 1, 2006, TSYS paid aggregate consideration of approximately $15.6 million to increase its ownership interest to 44.56% of CUP Data.

      TSYS accounts for its investment in CUP Data under the equity method of accounting. The difference between the cost of the investment and the amount of underlying equity in net assets of CUP Data is recognized as goodwill. TSYS allocated

F-17

Notes to Consolidated Financial Statements 

$39.8 million to goodwill and $12.8 million to net assets acquired. The goodwill associated with CUP Data is not reported as goodwill in the consolidated balance sheet, but it is reported as a component of the equity investment.

      On November 16, 2006, TSYS announced an agreement with Merchants, a customer-contact company, and wholly-owned subsidiary of Dimension Data, to deliver a comprehensive range of managed services to financial institutions across Europe, the Middle East and Africa. The new venture, TSYS Managed Services EMEA, Ltd. (TSYS Managed Services), includes existing Merchants centers in Milton Keynes, England and Barneveld, The Netherlands. TSYS Managed Services is expected to add future centers in other countries throughout Europe and in South Africa. TSYS accounted for its majority interest in the new venture as a business combination, and accordingly, the results of operations of TSYS Managed Services have been included in the consolidated financial results beginning November 16, 2006. TSYS paid aggregate consideration of approximately $2.5 million, including direct acquisition costs, and has preliminarily allocated $323 thousand to goodwill related to TSYS Managed Services.

      On March 1, 2005, TSYS completed the acquisition of Vital Processing Services, L.L.C. by purchasing the 50% equity stake formerly held by Visa U.S.A. for $95.8 million, including $794 thousand of direct acquisition costs. In April, 2006, Vital was rebranded as TSYS Acquiring Solutions, L.L.C. (TSYS Acquiring). TSYS recorded the acquisition of the 50% interest as a purchase business combination, requiring that TSYS allocate the purchase price to the assets acquired and liabilities assumed based on their relative fair values. TSYS finalized the purchase price allocation during the first quarter of 2006 and has allocated $30.2 million to goodwill, $12.0 million to intangible assets and the remaining amount to the assets and liabilities acquired. TSYS Acquiring’s results of operations have been included in the consolidated financial results beginning March 1, 2005.

      The final purchase price allocation is presented below.

TSYS Acquiring Solutions, L.L.C.
(In thousands)
Cash and cash equivalents			$	19,399
Contract acquisition costs and computer software, net				31,656
Intangible assets				12,000
Goodwill				30,211
Other assets				34,407
	Total assets acquired			127,673
Total liabilities assumed				31,830
Minority interest				49
		Net assets acquired	$	95,794

      Effective October 1, 2005, TSYS acquired the remaining 49% interest in Merlin Solutions, L.L.C., a subsidiary of TSYS Acquiring, for approximately $2.0 million. TSYS has recorded the acquisition of the incremental 49% interest as a business combination requiring TSYS to allocate the purchase price to the assets acquired and liabilities assumed based on their relative fair values. TSYS allocated $1.9 million to goodwill related to this acquisition.

      On January 30, 2004, Synovus acquired all the issued and outstanding common shares of Peoples Florida Banking Corporation (Peoples Bank), the parent company of Peoples Bank, headquartered in Palm Harbor, Florida. The aggregate purchase price was $78.4 million, consisting of 1,636,827 shares of Synovus common stock valued at $43.7 million, $32.1 million in cash, stock options valued at $2.6 million and $37 thousand in direct acquisition costs. On July 25, 2005, Peoples Bank was merged into Synovus Bank of Tampa Bay.

      On June 1, 2004, Synovus acquired all the issued and outstanding common shares of Trust One Bank (Trust One) in Memphis, Tennessee. The aggregate purchase price was $111.0 million, consisting of 3,841,302 shares of Synovus common stock valued at $107.7 million, approximately $3 thousand in cash, stock options valued at $3.2 million and $126 thousand in direct acquisition costs.

      On August 2, 2004, TSYS completed the acquisition of Clarity Payment Solutions, Inc. (Clarity). The aggregate purchase price was $53.0 million in cash and $515 thousand in direct acquisition costs. Clarity was renamed TSYS Prepaid, Inc. (TSYS Prepaid).

      On May 31, 2002, Synovus acquired all the issued and outstanding common shares of GLOBALT, Inc. (GLOBALT). GLOBALT is a provider of investment advisory services based in Atlanta, Georgia, offering a full line of distinct large cap

F-18

Notes to Consolidated Financial Statements 

and mid cap growth equity strategies and products. GLOBALT’s assets under management at June 1, 2002 were approximately $1.3 billion. GLOBALT now operates as a wholly-owned subsidiary of Synovus and as a part of the Synovus Financial Management Services unit. The aggregate purchase price was $20.0 million, consisting of 702,433 shares of Synovus common stock valued at $19.0 million, $0.9 million for forgiveness of debt, and $100 thousand in direct acquisition costs. The terms of the merger agreement provide for contingent consideration based on a percentage of a multiple of earnings before interest, income taxes, depreciation, and other adjustments, as defined in the agreement (EBITDA) for each of the years ended December 31, 2004, 2005, and 2006. The contingent consideration was payable by February 15th of the year subsequent to the calendar year for which the EBITDA calculation is made. The fair value of the contingent consideration is recorded as an addition to goodwill. On February 15, 2007, Synovus recorded additional consideration of $1.8 million, which was based on 14% of a multiple of GLOBALT’s EBITDA for the year ended December 31, 2006. On February 15, 2006, Synovus recorded additional purchase consideration of $585 thousand, which was based on 7% of a multiple of GLOBALT’s EBITDA for the year ended December 31, 2005. On February 15, 2005, Synovus recorded additional consideration of $226 thousand, which was based on 4% of a multiple of GLOBALT’s EBITDA for the year ended December 31, 2004.

      Pre-acquisition results of operations for each of the above business combinations were not material to the consolidated financial results of Synovus. Accordingly, pro forma disclosures have not been provided.

Note 3 Trading Account Assets

      The following table summarizes trading account assets at December 31, 2006 and 2005.

		2006		2005
(In thousands)
U.S. Treasury and U.S. Government agency securities		$	830		117
Mortgage-backed securities			13,715		25,403
State and municipal securities			54		1,401
Other investments			667		401
	Total	$	15,266		27,322

Note 4 Investment Securities Available for Sale

      The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at December 31, 2006 and 2005 are summarized as follows:

		December 31, 2006
				Gross		Gross			Estimated
		Amortized		Unrealized		Unrealized			Fair
		Cost		Gains		Losses			Value
(In thousands)
U.S. Treasury and U.S. Government agency securities		$	1,783,313		4,784		(17,527	)		1,770,570
Mortgage-backed securities			1,291,895		4,054		(20,591	)		1,275,358
State and municipal securities			192,593		4,059		(467	)		196,185
Equity securities			95,332		1,021		—			96,353
Other investments			13,976		—		(85	)		13,891
	Total	$	3,377,109		13,918		(38,670	)		3,352,357

		December 31, 2005
				Gross		Gross			Estimated
		Amortized		Unrealized		Unrealized			Fair
		Cost		Gains		Losses			Value
U.S. Treasury and U.S. Government agency securities		$	1,651,240		806		(27,434	)		1,624,612
Mortgage-backed securities			1,032,485		1,379		(27,136	)		1,006,728
State and municipal securities			206,744		6,151		(524	)		212,371
Equity securities			112,350		493		(37	)		112,806
Other investments			1,827		—		(24	)		1,803
	Total	$	3,004,646		8,829		(55,155	)		2,958,320

F-19

Notes to Consolidated Financial Statements 

      Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2006 and 2005 were as follows:

		December 31, 2006
		Less than 12 Months					12 Months or Longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
		Value		Losses			Value		Losses			Value		Losses
(In thousands)
U.S. Treasury and U.S. Government agency securities		$	208,942		(419	)		1,118,599		(17,108	)		1,327,541		(17,527	)
Mortgage-backed securities			205,418		(618	)		717,797		(19,973	)		923,215		(20,591	)
State and municipal securities			11,637		(61	)		20,281		(406	)		31,918		(467	)
Equity securities			—		—			—		—			—		—
Other investments			926		(74	)		1,001		(11	)		1,927		(85	)
	Total	$	426,923		(1,172	)		1,857,678		(37,498	)		2,284,601		(38,670	)

		December 31, 2005
		Less than 12 Months					12 Months or Longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
		Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and U.S. Government agency securities		$	576,406		(8,198	)		875,243		(19,236	)		1,451,649		(27,434	)
Mortgage-backed securities			386,242		(6,557	)		509,521		(20,579	)		895,763		(27,136	)
State and municipal securities			24,506		(253	)		5,157		(271	)		29,663		(524	)
Equity securities			249		(37	)		—		—			249		(37	)
Other investments			1,264		(24	)		—		—			1,264		(24	)
	Total	$	988,667		(15,069	)		1,389,921		(40,086	)		2,378,588		(55,155	)

      U.S. Treasury and U.S. Government agency securities. The unrealized losses in this category consist primarily of unrealized losses in direct obligations of U.S. Government agencies and were caused by interest rate increases. Because Synovus has the ability and intent to hold these investments until a recovery of fair value, which may be at maturity, Synovus does not consider these investments to be other-than-temporarily impaired at December 31, 2006 or December 31, 2005.

      Mortgage-backed securities. The unrealized losses on Synovus’ investment in U.S. Government agency mortgage-backed securities were caused by interest rate increases. These securities are rated AAA by both Moody’s and Standard and Poor’s. Because the decline in market value is attributable to changes in interest rates and not credit quality and because Synovus has the ability and intent to hold these investments until a recovery of fair value, which may be at maturity, Synovus does not consider these investments to be other-than-temporarily impaired at December 31, 2006 or December 31, 2005.

F-20

Notes to Consolidated Financial Statements 

      The amortized cost and estimated fair value by contractual maturity of investment securities available for sale at December 31, 2006 are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized		Estimated
		Cost		Fair Value
(In thousands)
U.S. Treasury and U.S. Government agency securities:
	Within 1 year	$	352,938		349,750
	1 to 5 years		1,065,869		1,056,858
	5 to 10 years		284,820		284,815
	More than 10 years		79,686		79,147
		$	1,783,313		1,770,570
State and municipal securities:
	Within 1 year	$	21,351		21,402
	1 to 5 years		69,695		70,814
	5 to 10 years		75,910		78,004
	More than 10 years		25,637		25,965
		$	192,593		196,185
Other investments:
	Within 1 year	$	266		264
	1 to 5 years		1,097		1,087
	5 to 10 years		2,796		2,796
	More than 10 years		9,817		9,744
		$	13,976		13,891
Equity securities		$	95,332		96,353
Mortgage-backed securities		$	1,291,895		1,275,358
Total investment securities:
	Within 1 year	$	374,555		371,416
	1 to 5 years		1,136,661		1,128,759
	5 to 10 years		363,526		365,615
	More than 10 years		115,140		114,856
Equity securities			95,332		96,353
Mortgage-backed securities			1,291,895		1,275,358
		$	3,377,109		3,352,357

      A summary of sales transactions in the investment securities available for sale portfolio for 2006, 2005, and 2004 is as follows:

			Gross		Gross
			Realized		Realized
	Proceeds		Gains		Losses
(In thousands)
2006	$	130,457		—		(2,118	)
2005	$	50,048		744		(281	)
2004	$	33,332		620		(545	)

      At December 31, 2006 and 2005, investment securities with a carrying value of $2.90 billion and $2.44 billion, respectively, were pledged to secure certain deposits, securities sold under agreements to repurchase, and Federal Home Loan Bank advances, as required by law and contractual agreements.

Note 5     Loans

      Loans outstanding, by classification, are summarized as follows:

			December 31,
			2006			2005
(In thousands)
Commercial:
	Commercial, financial, and agricultural		$	5,875,854			5,268,042
	Real estate-construction			8,246,380			6,374,859
	Real estate-mortgage			6,920,107			6,448,325
		Total commercial		21,042,341			18,091,226
Retail:
	Real estate-mortgage			2,881,880			2,559,339
	Consumer loans-credit card			276,269			268,348
	Consumer loans-other			500,757			521,521
		Total retail		3,658,906			3,349,208
		Total loans		24,701,247			21,440,434
	Unearned income			(46,695	)		(48,087	)
		Total loans, net of unearned income	$	24,654,552			21,392,347

F-21

Notes to Consolidated Financial Statements 

      Activity in the allowance for loan losses is summarized as follows:

	Years Ended December 31,
	2006			2005			2004
(In thousands)
Balance at beginning of year	$	289,612			265,745			226,059
Allowance for loan losses of acquired subsidiaries		9,915			—			5,615
Provision for losses on loans		75,148			82,532			75,319
Recoveries of loans previously charged off		12,590			8,561			9,720
Loans charged off		(72,806	)		(67,226	)		(50,968	)
Balance at end of year	$	314,459			289,612			265,745

      At December 31, 2006, the recorded investment in loans that were considered to be impaired was $42.2 million. Included in this amount is $1.7 million of impaired loans for which the related allowance for loan losses is $145 thousand, and $40.5 million of impaired loans for which there is no related allowance for loan losses determined in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan.” Synovus’ criteria for an impaired loan was changed in 2006 to conform with the definition in SFAS No. 114. The change had no material impact to the allowance for loan losses or provision expense. At December 31, 2006, all impaired loans were on nonaccrual status.

      At December 31, 2005, the recorded investment in loans that were considered to be impaired was $95.3 million. Included in this amount was $58.9 million of impaired loans for which the related allowance for loan losses was $22.9 million, and $36.4 million of impaired loans for which there was no related allowance for loan losses determined in accordance with SFAS No. 114. At December 31, 2005, impaired loans in the amount of $52.6 million were on nonaccrual status.

      The allowance for loan losses on impaired loans was determined using either the fair value of the loans’ collateral, less estimated selling costs, or discounted cash flows. The average recorded investment in impaired loans was approximately $67.1 million, $90.9 million, and $107.0 million for the years ended December 31, 2006, 2005, and 2004, respectively. There was no interest income recognized for the investment in impaired loans for the year ended December 31, 2006, and the related amount of interest income recognized during the period that such loans were impaired was approximately $3.6 million and $2.9 million for the years ended December 31, 2005 and 2004, respectively.

      Loans on nonaccrual status amount to $96.2 million, $80.0 million, and $80.2 million, at December 31, 2006, 2005, and 2004, respectively. If nonaccrual loans had been on a full accruing basis, interest income on these loans would have been increased by approximately $3.9 million, $2.5 million, and $2.7 million for the years ended December 31, 2006, 2005, and 2004, respectively.

      A substantial portion of the loans are secured by real estate in markets in which subsidiary banks are located throughout Georgia, Alabama, Tennessee, South Carolina, and Florida. Accordingly, the ultimate collectibility of a substantial portion of the loan portfolio, and the recovery of a substantial portion of the carrying amount of real estate owned, are susceptible to changes in market conditions in these areas.

      In the ordinary course of business, Synovus’ subsidiary banks have made loans to certain executive officers and directors (including their associates) of the Parent Company and its significant subsidiaries, as defined. Significant subsidiaries consist of Columbus Bank and Trust Company, Bank of North Georgia, and The National Bank of South Carolina. Management believes that such loans are made substantially on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with unaffiliated customers. The following is a summary of such loans outstanding and the activity in these loans for the year ended December 31, 2006.

(In thousands)
Balance at December 31, 2005	$	292,711
Adjustment for executive officer and director changes		(396	)
Adjusted balance at December 31, 2005		292,315
New loans		234,196
Repayments		(228,102	)
Balance at December 31, 2006	$	298,409

Note 6 Contract Acquisition Costs and Computer Software

      Capitalized contract acquisition costs, consisting of conversion costs and payments for processing rights at TSYS, net of accumulated amortization, were $167.4 million and $163.9 million at December 31, 2006 and 2005, respectively. Amortization expense related to contract acquisition costs was $44.5 million, $37.8 million, and $25.2 million, for the years ended December 31, 2006, 2005, and 2004, respectively.

F-22

Notes to Consolidated Financial Statements 

Aggregate estimated amortization expense of contract acquisition costs for the next five years is as follows:

	Contract
	Acquisition
	Costs
(In thousands)
2007	$	34,011
2008		29,082
2009		28,007
2010		25,098
2011		23,606

      The weighted average estimated useful lives of contract acquisition costs is as follows:

	Weighted
	Average
	Amortization
	Period (Yrs)
Payments for processing rights		9.8
Conversion costs		7.4
Combined		9.1

      The following table summarizes TSYS’ computer software at December 31, 2006 and 2005:

	2006			2005
(In thousands)
Licensed computer software	$	336,263			395,992
Software development costs		172,555			158,384
Acquisition technology intangibles		45,344			30,700
		554,162			585,076
Less accumulated amortization		(337,712	)		(317,088	)
Computer software, net	$	216,450			267,988

      Amortization expense related to licensed and capitalized software development costs and acquisition technology intangibles at TSYS was $92.7 million, $69.4 million, and $51.8 million for the years ended December 31, 2006, 2005, and 2004, respectively. Aggregate estimated amortization expense of computer software over the next five years is as follows:

	Computer
	Software
(In thousands)
2007	$	63,932
2008		57,050
2009		45,192
2010		25,976
2011		11,021

      The weighted average estimated useful lives of TSYS’ computer software is as follows:

	Weighted
	Average
	Amortization
	Period (Yrs)
Licensed computer software		6.7
Software development costs		6.7
Acquisition technology intangibles		7.7
Combined		6.8

      TSYS was developing its Integrated Payments Platform supporting the on-line and off-line debit and stored value markets, which would have given clients access to all national and regional networks, EBT programs, ATM driving and switching services for online debit processing. Through 2004, TSYS invested a total of $6.3 million. In March 2005, TSYS evaluated its debit solution and decided to modify its approach in the debit processing market. With the acquisition of TSYS Acquiring and debit alternatives now available, TSYS determined that it would no longer market this third-party software product as its on-line debit solution. TSYS will continue to support this product for existing clients and will enhance and develop a new solution. As a result, TSYS recognized an impairment charge in net occupancy and equipment expense of approximately $3.1 million related to its on-line debit solution. In September 2005, TSYS also recognized an impairment loss on developed software of $482 thousand.

      During 2004, TSYS changed its approach for entry into the Asia-Pacific market. As a result, TSYS recognized a $10.1 million charge to net occupancy and equipment expense for the write-off of the double-byte software development project.

F-23

Notes to Consolidated Financial Statements 

Note 7 Other Intangible Assets and Other Assets

      Other intangible assets as of December 31, 2006 and 2005 are presented in the following table:

		2006							2005
		Gross							Gross
		Carrying		Accumulated					Carrying		Accumulated
		Amount		Amortization			Net		Amount		Amortization			Net
(In thousands)
Other intangible assets:
	Purchased trust revenues	$	4,210		(1,567	)		2,643	$	4,210		(1,286	)		2,924
	Acquired customer contracts		10,731		(5,702	)		5,029		7,731		(3,818	)		3,913
	Employment contracts/non-competition agreements		1,091		(941	)		150		1,091		(631	)		460
	Core deposit premiums		46,331		(19,232	)		27,099		39,674		(16,124	)		23,550
	Intangibles associated with the acquisition of minority interest in TSYS		7,848		(1,271	)		6,577		2,846		(759	)		2,087
	Customer relationships		25,116		(4,841	)		20,275		13,800		(2,100	)		11,700
	Other		2,676		(863	)		1,813		700		(467	)		233
	Total carrying value	$	98,003		(34,417	)		63,586	$	70,052		(25,185	)		44,867

      Aggregate other intangible assets amortization expense for the years ended December 31, 2006, 2005, and 2004 was $10.5 million, $8.8 million, and $8.7 million, respectively. Aggregate estimated amortization expense over the next five years is: $10.6 million in 2007, $9.4 million in 2008, $8.8 million in 2009, $7.8 million in 2010, and $7.5 million in 2011.

Other Assets

      Significant balances included in other assets are accounts receivable, company-owned life insurance policies, other real estate (ORE) and equity method investments.

      At December 31, 2006 and 2005, TSYS had accounts receivable of $246.6 million and $184.5 million, respectively, net of allowance for doubtful accounts and billing adjustments of $11.0 million and $12.6 million at 2006 and 2005, respectively.

      At December 31, 2006 and 2005, Synovus maintained certain company-owned life insurance policies with a carrying value of approximately $204.0 million and $187.2 million, respectively.

      Investments in joint ventures consist of TSYS’ 49% investment in TSYS de México, TSYS’ 44.56% investment in CUP Data and prior to March 1, 2005, TSYS’ 50% investment in Vital. These investments are accounted for using the equity method. Other assets include $62.1 million and $42.7 million in recorded balances related to these investments at December 31, 2006 and 2005, respectively.

Note 8 Interest Bearing Deposits

      A summary of interest bearing deposits at December 31, 2006 and 2005 is as follows:

		2006		2005
(In thousands)
Interest bearing demand deposits		$	3,228,350		3,133,607
Money market accounts			6,905,834		5,748,378
Savings accounts			499,962		524,652
Time deposits under $100,000			3,020,976		2,440,484
Time deposits of $100,000 or more			4,086,232		2,951,724
			17,741,354		14,798,845
Brokered time deposits*			3,014,495		2,284,770
	Total interest bearing deposits	$	20,755,849		17,083,615
* Brokered time deposits are in amounts of $100,000 or more.

      Interest bearing deposits include the unamortized balance of purchase accounting adjustments and the fair value basis adjustment for those time deposits which are hedged with interest rate swaps. Interest expense for the years ended December 31, 2006, 2005, and 2004 on time deposits of $100,000 or more was $299.5 million, $171.5 million, and $94.3 million, respectively.

F-24

Notes to Consolidated Financial Statements 

      The following table presents scheduled cash maturities of time deposits at December 31, 2006:

(In thousands)
Maturing within one year		$	8,518,807
	between 1 — 2 years		762,369
2 — 3 years			259,625
3 — 4 years			255,829
4 — 5 years			140,944
	Thereafter		159,409
		$	10,096,983

Note 9 Long-Term Debt and Short-Term Borrowings

      Long-term debt at December 31, 2006 and 2005 consists of the following:

		2006		2005
(In thousands)
Parent Company:
4.875% subordinated notes, due February 15, 2013, with semi-annual interest payments and principal to be paid at maturity		$	300,000		300,000
5.125% subordinated notes, due June 15, 2017, with semi-annual interest payments and principal to be paid at maturity			450,000		450,000
LIBOR + 3.60% debentures, matured in December 2006			—		10,252
LIBOR + 3.45% debentures, due September 30, 2037 with quarterly interest payments and principal to be paid at maturity (rate of 8.81% at December 31, 2006)			10,180		—
LIBOR + 1.80% debentures, due April 19, 2035 with quarterly interest payments and principal to be paid at maturity (rate of 7.16% at December 31, 2006)			10,218		—
Hedge-related basis adjustment			887		(883	)
	Total long-term debt — Parent Company		771,285		759,369
Subsidiaries:
Federal Home Loan Bank advances with interest and principal payments due at various maturity dates through 2018 and interest rates ranging from 2.00% to 6.68% at December 31, 2006 (weighted average interest rate of 4.51% at December 31, 2006)			566,930		1,163,570
Other notes payable, capital leases and software obligations payable with interest and principal payments due at various maturity dates through 2028 (weighted average interest rate of 6.09% at December 31, 2006)			11,924		10,699
	Total long-term debt  — subsidiaries		578,854		1,174,269
	Total long-term debt	$	1,350,139		1,933,638

      The provisions of the loan and security agreements associated with some of the promissory notes place certain restrictions, within specified limits, on payments of cash dividends, issuance of additional debt, creation of liens upon property, disposition of common stock or assets, and investments in subsidiaries. As of December 31, 2006, Synovus and its subsidiaries were in compliance with the covenants of the loan and security agreements.

      The Federal Home Loan Bank advances are secured by certain loans receivable of approximately $2.4 billion, as well as investment securities of approximately $73.6 million at December 31, 2006.

      Synovus has an unsecured line of credit with an unaffiliated bank for $25 million with an interest rate of 50 basis points above the short-term index, as defined. The line of credit requires an annual commitment fee of .125% on the average daily available balance and draws can be made on demand (subject to compliance with certain restrictive covenants). There were no advances outstanding at December 31, 2006 and 2005.

F-25

Notes to Consolidated Financial Statements 

      Required annual principal payments on long-term debt for the five years subsequent to December 31, 2006 are shown on the following table:

	Parent
	Company		Subsidiaries		Total
(In thousands)
2007	$	—		254,640		254,640
2008		—		53,381		53,381
2009		—		135,037		135,037
2010		—		16,653		16,653
2011		—		33,315		33,315

      The following table sets forth certain information regarding federal funds purchased and securities sold under repurchase agreements, the principal components of short-term borrowings.

	2006			2005			2004
(In thousands)
Balance at December 31	$	1,572,809			1,158,669			1,208,080
Weighted average interest rate at December 31		5.00	%		3.69	%		1.95	%
Maximum month end balance during the year	$	1,974,272			1,918,797			1,749,923
Average amount outstanding during the year	$	1,534,312			1,103,005			1,479,815
Weighted average interest rate during the year		4.66	%		2.86	%		1.30	%

Note 10     Other Comprehensive Income (Loss)

      The components of other comprehensive income (loss) for the years ended December 31, 2006, 2005, and 2004 are as follows:

	2006							2005								2004
	Before-		Tax			Net of		Before-			Tax		Net of			Before-			Tax			Net of
	Tax		(Expense)			Tax		Tax			(Expense)		Tax			Tax			(Expense)			Tax
	Amount		or Benefit			Amount		Amount			or Benefit		Amount			Amount			or Benefit			Amount
(In thousands)
Net unrealized gains (losses) on cash flow hedges	$	5,909		(2,259	)		3,650		(3,670	)		1,430		(2,240	)		(9,718	)		3,965			(5,753	)
Net unrealized gains (losses) on investment securities available for sale:
Unrealized gains (losses) arising during the year		19,456		(7,482	)		11,974		(45,639	)		17,568		(28,071	)		(32,988	)		12,457			(20,531	)
Reclassification adjustment for (gains) losses realized in net income		2,118		(824	)		1,294		(463	)		180		(283	)		(75	)		29			(46	)
Net unrealized gains (losses)		21,574		(8,306	)		13,268		(46,102	)		17,748		(28,354	)		(33,063	)		12,486			(20,577	)
Foreign currency translation gains (losses)		16,688		(3,813	)		12,875		(12,161	)		4,316		(7,845	)		8,893			(3,169	)		5,724
Other comprehensive income (loss)	$	44,171		(14,378	)		29,793		(61,933	)		23,494		(38,439	)		(33,888	)		13,282			(20,606	)

F-26

Notes to Consolidated Financial Statements 

Cash settlements on cash flow hedges were $2.5 million, $7 thousand, and $5.8 million for the years ended December 31, 2006, 2005, and 2004, respectively, all of which were included in earnings. During 2006, 2005, and 2004, Synovus recorded cash (payments) receipts on terminated hedges of $159 thousand, ($6.2) million, and $313 thousand, respectively, which were deferred and are being amortized into earnings over the shorter of the remaining contract life or the maturity of the designated instrument as an adjustment to interest income (expense). There was one terminated cash flow hedge during 2006. There were two terminated cash flow hedges during 2005 and one terminated cash flow hedge during 2004. The corresponding net amortization on these settlements was approximately ($389) thousand, ($165) thousand, and $456 thousand in 2006, 2005, and 2004, respectively. The change in unrealized gains (losses) on cash flow hedges was approximately $5.6 million in 2006, ($3.8) million in 2005, and ($9.3) million in 2004.

      In July 2006, TSYS restructured its European branch operation into a new statutory structure. As a result, TSYS’ UK branch structure was terminated with some of the former UK branch assets and workforce being contributed into the new European statutory structure. Accordingly, TSYS adopted the permanent investment exception under Accounting Principles Board Opinion No. 23 (APB 23), “Accounting for Income Taxes  — Special Areas,” with respect to future earnings of certain foreign subsidiaries. Its decision to permanently reinvest foreign earnings offshore means that TSYS will no longer allocate taxes to foreign currency translation adjustments associated with these foreign subsidiaries accumulated in other comprehensive income.

Note 11 Earnings Per Share

      The following table displays a reconciliation of the information used in calculating basic and diluted earnings per share (EPS) for the years ended December 31, 2006, 2005, and 2004.

	2006						2005							2004
			Weighted		Net					Weighted		Net					Weighted		Net
	Net		Average		Income		Net			Average		Income		Net			Average		Income
(In thousands,	Income		Shares		Per Share		Income			Shares		Per Share		Income			Shares		Per Share
except per share data)
Basic EPS	$	616,917		321,241	$	1.92	$	516,446			311,495	$	1.66	$	437,033			307,262	$	1.42
Effect of dilutive share awards		—		2,991				(158	)*		3,320				(247	)*		3,068
Diluted EPS	$	616,917		324,232	$	1.90	$	516,288			314,815	$	1.64	$	436,786			310,330	$	1.41

*  Represents dilution from outstanding TSYS stock options which enable their holders to obtain TSYS common stock.

      The following represents potentially dilutive shares including options to purchase shares of Synovus common stock and non-vested shares that were outstanding during the periods noted below, but were not included in the computation of diluted earnings per share because the options’ exercise price and fair value of non-vested shares was greater than the average market price of the common shares during the period.

			Weighted Average
	Number		Exercise Price
Quarter Ended	of Shares		Per Share
December 31, 2006		11,863	$	30.61
September 30, 2006		4,651,345	$	29.21
June 30, 2006		5,727,935	$	28.79
March 31, 2006		5,710,605	$	28.89
December 31, 2005		4,725,260	$	29.21
September 30, 2005		4,703,210	$	29.22
June 30, 2005		2,933,225	$	29.05
March 31, 2005		2,637,150	$	28.98
December 31, 2004		2,637,150	$	28.98
September 30, 2004		7,002,758	$	27.34
June 30, 2004		7,046,977	$	27.33
March 31, 2004		6,905,462	$	27.37

F-27

Notes to Consolidated Financial Statements 

Note 12 Derivative Instruments, Commitments and Contingencies

Derivative Instruments

      As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk. These derivative instruments consist of interest rate swaps, commitments to sell fixed-rate mortgage loans, and interest rate lock commitments made to prospective mortgage loan customers. Mortgage rate lock commitments represent derivative instruments since it is intended that such loans will be sold.

      Synovus originates first lien residential mortgage loans for sale into the secondary market and generally does not hold the originated loans for investment purposes. Mortgage loans are either converted to securities or are sold to a third party servicing aggregator.

      At December 31, 2006, Synovus had commitments to fund fixed-rate mortgage loans to customers in the amount of $89.8 million. The fair value of these commitments at December 31, 2006 was an unrealized loss of $446 thousand, which was recorded as a component of mortgage banking income in the consolidated statements of income.

      At December 31, 2006, outstanding commitments to sell fixed-rate mortgage loans amounted to approximately $175.4 million. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding commitments to originate residential mortgage loans for resale.

      The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. The fair value of outstanding commitments to sell mortgage loans at December 31, 2006 was an unrealized gain of $267 thousand, which was recorded as a component of mortgage banking income in the consolidated statements of income.

      Synovus utilizes interest rate swaps to manage interest rate risks, primarily arising from its core community banking activities. These interest rate swap transactions generally involve the exchange of fixed and floating rate interest rate payment obligations without the exchange of underlying principal amounts. Entering into interest rate derivatives 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 often are used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller.

      The receive fixed interest rate swap contracts at December 31, 2006 are being utilized to hedge $700 million in floating rate loans and $2.08 billion in fixed-rate liabilities. The fair value (net unrealized gains or losses) of these contracts has been recorded on the consolidated balance sheets.

      A summary of interest rate contracts and their terms at December 31, 2006 and 2005 is shown below. In accordance with the provisions of SFAS No. 133, the fair value (net unrealized gains and losses) of these contracts has been recorded on the consolidated balance sheets.

				Weighted						Weighted							Net
				Average			Weighted			Average							Unrealized
		Notional		Receive			Average Pay			Maturity		Unrealized		Unrealized			Gains
		Amount		Rate			Rate*			In Months		Gains		Losses			(Losses)
December 31, 2006
Receive fixed swaps:
Fair value hedges		$	2,082,500		4.91	%		5.11	%		31	$	32,686		(14,787	)		17,899
Cash flow hedges			700,000		7.91	%		8.25	%		38		4,265		(2,253	)		2,012
Total		$	2,782,500		5.66	%		5.90	%		32	$	36,951		(17,040	)		19,911
December 31, 2005
Receive fixed swaps:
Fair value hedges		$	807,500		4.38	%		4.28	%		70	$	1,270		(14,804	)		(13,534	)
Cash flow hedges			350,000		6.10	%		7.25	%		18		117		(3,667	)		(3,550	)
	Total	$	1,157,500		4.90	%		5.18	%		54	$	1,387		(18,471	)		(17,084	)

*  Variable pay rate based upon contract rates in effect at December 31, 2006 and 2005.

F-28

Notes to Consolidated Financial Statements 

      Synovus designates hedges of floating rate loans as cash flow hedges. These swaps hedge against the variability of cash flows from specified pools of floating rate prime based loans. Synovus calculates effectiveness of the hedging relationship quarterly using the cumulative dollar offset method. As of December 31, 2006, cumulative ineffectiveness for Synovus’ portfolio of cash flow hedges represented a gain of approximately $80 thousand. Ineffectiveness from cash flow hedges is recognized in the consolidated statements of income as other operating income.

      Synovus expects to reclassify from accumulated other comprehensive income approximately $900 thousand as net-of-tax expense during the next twelve months, as the related payments for interest rate swaps and amortization of deferred gains(losses) are recorded.

      During 2006 and 2005, Synovus terminated certain cash flow hedges which resulted in a net pre-tax gain (loss) of $159 thousand and ($6.2) million, respectively. These gains (losses) have been included as a component of accumulated other comprehensive income (loss) and are being amortized over the shorter of the remaining contract life or the maturity of the designated instrument as an adjustment to interest income (expense). The remaining unamortized deferred gain (loss) balances at December 31, 2006 and 2005 were ($4.0) million and ($5.8) million, respectively.

      Synovus designates hedges of fixed rate liabilities as fair value hedges. These swaps hedge against the change in fair market value of various fixed rate liabilities due to changes in the benchmark interest rate LIBOR. Synovus uses the short cut method of hedge accounting for fair value hedging relationships designated as hedging the change in fair value of fixed rate subordinated debt issued by Synovus. These transactions total approximately $300 million in notional principal. For all other fair value hedging relationships, Synovus measures hedge ineffectiveness quarterly using the cumulative dollar offset method. As of December 31, 2006, cumulative ineffectiveness for Synovus’ portfolio of fair value hedges represented a gain of approximately $210 thousand. Ineffectiveness from fair value hedges is recognized in the consolidated statements of income as other operating income.

      Synovus also enters into derivative financial instruments to meet the financing and interest rate risk management needs of its customers. Upon entering into these instruments to meet customer needs, Synovus enters into offsetting positions in order to minimize the risk to Synovus. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings. As of December 31, 2006 and 2005, the notional amount of customer related derivative financial instruments was $2.05 billion and $837.9 million, respectively.

      Synovus also enters into derivative financial instruments to meet the equity risk management needs of its customers. Upon entering into these instruments to meet customer needs, Synovus enters into offsetting positions in order to minimize the risk to Synovus. These derivative financial instruments are recorded at fair value with any resulting gain or loss recorded in current period earnings. The notional amount of customer related equity derivative financial instruments was $19.8 million at December 31, 2006 and 2005.

Loan Commitments and Letters of Credit

      Synovus is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and commercial letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated financial statements.

      The carrying amount of loan commitments and letters of credit closely approximates the fair value of such financial instruments. Carrying amounts include unamortized fee income and, in some instances, allowances for any estimated credit losses from these financial instruments. These amounts are not material to Synovus’ consolidated balance sheets.

      As of December 31, 2006, Synovus had standby and commercial letters of credit in the amount of $2.50 billion. The standby letters of credit are conditional commitments issued by Synovus to guarantee the performance of a customer to a third party. The approximate terms of these commitments range from one to five years. Collateral is required to support letters of credit in accordance with management’s evaluation of the creditworthiness of each customer.

      The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, and standby and commercial letters of credit, is represented by the contract amount of those instruments. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

      Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, total commit-

F-29

Notes to Consolidated Financial Statements 

ment amounts do not necessarily represent future cash requirements.

      Loan commitments and letters of credit at December 31, 2006 include the following:

(In thousands)
Standby and commercial letters of credit		$	2,497,161
Commitments to fund commercial real estate, construction, and land development loans			2,323,353
Unused credit card lines			1,351,400
Commitments under home equity lines of credit			1,073,600
Other loan commitments			3,780,281
	Total	$	11,025,795

Lease Commitments

      Synovus and its subsidiaries have entered into long-term operating leases for various facilities and computer equipment. Management expects that as these leases expire they will be renewed or replaced by similar leases based on need.

      At December 31, 2006, minimum rental commitments under all such non-cancelable leases for the next five years and thereafter are as follows:

(In thousands)
2007		$	118,009
2008			70,211
2009			50,161
2010			27,868
2011			20,833
Thereafter			97,031
	Total	$	384,113

      Rental expense on computer equipment, including cancelable leases, was $121.9 million, $107.9 million, and $97.1 million for the years ended December 31, 2006, 2005, and 2004, respectively. Rental expense on facilities was $31.2 million, $27.9 million, and $21.4 million for the years ended December 31, 2006, 2005, and 2004, respectively.

Contractual Commitments

      In the normal course of its business, TSYS maintains long-term processing contracts with its clients. These processing contracts contain commitments, including but not limited to, minimum standards and time frames against which its performance is measured. In the event that TSYS does not meet its contractual commitments with its clients, TSYS may incur penalties and/or certain clients may have the right to terminate their contracts with TSYS. TSYS does not believe that it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its financial position, results of operations or cash flows.

Legal Proceedings

      Synovus and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of its business. In the ordinary course of business, Synovus and its subsidiaries are also subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus establishes reserves for litigation and regulatory matters when those matters present loss contingencies that Synovus determines to be both probable and reasonably estimable. In the pending regulatory matter described below, loss contingencies are not both probable and reasonably estimable in the view of management, and, accordingly, a reserve has not been established for this matter. Based on current knowledge, advice of counsel and available insurance coverage, management does not believe that the eventual outcome of pending litigation and/or regulatory matters, including the pending regulatory matter described below, will have a material adverse effect on Synovus’ consolidated financial condition, results of operations or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to Synovus’ results of operations for any particular period.

      Columbus Bank and Trust Company (“CB&T”), a wholly owned banking subsidiary of Synovus, and CompuCredit Corporation (“CompuCredit”) have agreed to an Assurance of Discontinuance (“Agreement”) with the New York State Attorney General’s office regarding allegations that CB&T and CompuCredit were in violation of New York state law with respect to identified marketing, servicing and collection practices pertaining to the Aspire credit card program. CB&T issues Aspire credit cards that are marketed and serviced by CompuCredit. Among other things, the Agreement provides for a civil penalty of $500,000 and requires specified restitution to cardholders.

      Synovus and CB&T did not incur any financial loss in connection with the Agreement as CompuCredit agreed to be responsible for all amounts to be paid pursuant to the Agreement. A provision of the Affinity Agreement between CB&T and CompuCredit, pursuant to which CB&T issues the Aspire credit card, generally requires CompuCredit to indemnify CB&T for losses incurred as a result of the failure of the Aspire credit card program to comply with applicable law. Synovus is subject to a per event 10% share of any such loss, but Synovus’ 10% payment obligation is limited to a cumula-

F-30

Notes to Consolidated Financial Statements 

tive total of $2 million for all losses incurred. CompuCredit waived Synovus’ 10% payment obligation in connection with the Agreement.

      In addition, the FDIC is currently conducting an investigation of the policies, practices and procedures used by CB&T in connection with the credit card programs offered pursuant to the Affinity Agreement with CompuCredit. CB&T is cooperating with the FDIC’s investigation. Synovus cannot predict the eventual outcome of the FDIC’s investigation; however, the investigation has resulted in material changes to CB&T’s policies, practices and procedures in connection with the credit card programs offered pursuant to the Affinity Agreement. It is probable that the investigation will result in further changes to CB&T’s policies, practices and procedures in connection with the credit card programs offered pursuant to the Affinity Agreement and the imposition of one or more regulatory sanctions, including a civil money penalty and/or restitution of certain fees to affected cardholders. At this time, management of Synovus does not expect the ultimate resolution of the investigation to have a material adverse effect on its consolidated financial condition, results of operations or cash flows as a result of the expected performance by CompuCredit of its indemnification obligations described in the paragraph above.

Note 13 Regulatory Requirements and Restrictions

      The amount of dividends paid to the Parent Company from each of the subsidiary banks is limited by various banking regulatory agencies. The amount of cash dividends available from subsidiary banks for payment in 2007, in the aggregate, without prior approval from the banking regulatory agencies, is approximately $445.0 million. In prior years, certain Synovus banks have received permission and have paid cash dividends to the Parent Company in excess of these regulatory limitations.

      Synovus is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Synovus must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

      Quantitative measures established by regulation to ensure capital adequacy require Synovus on a consolidated basis, and the Parent Company and subsidiary banks individually, to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets as defined, and of Tier I capital to average assets, as defined. Management believes that as of December 31, 2006, Synovus meets all capital adequacy requirements to which it is subject.

      As of December 31, 2006, the most recent notification from the Federal Reserve Bank of Atlanta categorized all of the subsidiary banks as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, Synovus and its subsidiaries must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table shown below on the following page. Management is not currently aware of the existence of any conditions or events occurring subsequent to December 31, 2006 which would affect the well-capitalized classification.

F-31

Notes to Consolidated Financial Statements 

      The following table summarizes regulatory capital information at December 31, 2006 and 2005 on a consolidated basis and for each significant subsidiary, defined as any direct subsidiary of the Company with assets or net income exceeding 10% of the consolidated totals.

										To be Well
										Capitalized Under
						For Capital Adequacy				Prompt Corrective
	Actual					Purposes				Action Provisions
	2006			2005		2006		2005		2006		2005
(Dollars in thousands)
Synovus Financial Corp.
Tier I capital	$	3,254,603			2,660,704		1,197,211		1,040,352		n/a		n/a
Total risk-based capital		4,319,062			3,700,315		2,394,423		2,080,704		n/a		n/a
Tier I capital ratio		10.87	%		10.23		4.00		4.00		n/a		n/a
Total risk-based capital ratio		14.43			14.23		8.00		8.00		n/a		n/a
Leverage ratio		10.64			9.99		4.00		4.00		n/a		n/a
Columbus Bank and Trust Company
Tier I capital	$	1,405,072			1,145,365		230,533		211,243		345,830		316,865
Total risk-based capital		1,440,232			1,177,604		461,106		422,487		576,383		528,108
Tier I capital ratio		24.38	%		21.69		4.00		4.00		6.00		6.00
Total risk-based capital ratio		24.99			22.30		8.00		8.00		10.00		10.00
Leverage ratio		24.56			23.15		4.00		4.00		5.00		5.00
Bank of North Georgia
Tier I capital	$	380,545			283,613		160,556		120,228		240,834		180,343
Total risk-based capital		424,567			316,432		321,112		240,457		401,390		300,571
Tier I capital ratio		9.48	%		9.44		4.00		4.00		6.00		6.00
Total risk-based capital ratio		10.58			10.53		8.00		8.00		10.00		10.00
Leverage ratio		9.74			9.96		4.00		4.00		5.00		5.00
The National Bank of South Carolina
Tier I capital	$	360,985			305,544		152,762		128,994		229,143		193,491
Total risk-based capital		399,398			340,828		305,524		257,988		381,905		322,485
Tier I capital ratio		9.45	%		9.47		4.00		4.00		6.00		6.00
Total risk-based capital ratio		10.46			10.57		8.00		8.00		10.00		10.00
Leverage ratio		8.77			8.35		4.00		4.00		5.00		5.00
n/a - The prompt corrective actions are applicable at the bank level only.

Note 14 Employment Expenses and Benefit Plans

      Synovus generally provides noncontributory money purchase and profit sharing plans, and 401(k) plans, which cover all eligible employees. Annual discretionary contributions to these plans are set each year by the respective Boards of Directors of each subsidiary, but cannot exceed amounts allowable as a deduction for federal income tax purposes. Synovus made aggregate contributions to these money purchase, profit sharing, and 401(k) plans recorded as expense for the years ended December 31, 2006, 2005, and 2004 of approximately $85.7 million, $85.5 million, and $57.8 million, respectively.

      Synovus has stock purchase plans for directors and employees whereby Synovus makes contributions equal to one-half of employee and director voluntary contributions. The funds are used to purchase outstanding shares of Synovus common stock. TSYS has established director and employee stock purchase plans, modeled after Synovus’ plans, except that the funds are used to purchase outstanding shares of TSYS common stock. Synovus and TSYS recorded as expense $12.8 million, $11.9 million, and $10.3 million for contributions to these plans in 2006, 2005, and 2004, respectively.

      Synovus has entered into employment agreements with certain executives for past and future services which provide for current compensation in addition to salary in the form of

F-32

Notes to Consolidated Financial Statements 

deferred compensation payable at retirement or in the event of death, total disability, or termination of employment. The aggregate cost of these salary continuation plans and employment agreements is not material to the consolidated financial statements.

      Synovus provides certain medical benefits to qualified retirees through a postretirement medical benefits plan. The benefit expense and accrued benefit cost is not material to the consolidated financial statements.

Note 15 Share-Based Compensation

General Description of Share-Based Compensation Plans

      Synovus has various long-term incentive plans under which the Compensation Committee of the Board of Directors has the authority to grant share-based compensation to Synovus employees. At December 31, 2006, Synovus had a total of 4,220,937 shares of its authorized but unissued common stock reserved for future grants under two long-term incentive plans. The general terms of each of these plans are substantially the same, permitting the grant of share-based compensation including stock options, non-vested shares, and stock appreciation rights. These plans generally include vesting periods ranging from two to three years and contractual terms ranging from five to ten years. Stock options are granted at exercise prices which equal the fair market value of a share of common stock on the grant-date. Synovus historically issues new shares to satisfy share option exercises.

      Stock options granted in 2006 generally become exercisable over a three-year period, with one-third of the total grant amount vesting on each anniversary of the grant-date, and expire ten years from the date of grant. Vesting for stock options granted during 2006 accelerates upon retirement for plan participants who have reached age 62 and who also have no less than fifteen years of service at the date of their election to retire. For stock options granted in 2006, share-based compensation expense is recognized for plan participants on a straight-line basis over the shorter of the vesting period or the period until reaching retirement eligibility.

      Stock options granted prior to 2006 generally become exercisable at the end of a two to three-year vesting period and expire seven to ten years from the date of grant. Vesting for stock options granted prior to 2006 accelerates upon retirement for plan participants who have reached age 50 and who also have no less than fifteen years of service at the date of their election to retire. Prior to adoption of SFAS No. 123R, share-based compensation expense was determined in Synovus’ pro forma disclosure over the nominal vesting period without consideration for retirement eligibility. Following adoption of SFAS No. 123R, share-based compensation expense for all new awards is recognized in income over the shorter of the vesting period or the period until reaching retirement eligibility.

      Non-vested shares granted in 2006 vest over a three-year period, with one-third of the total grant amount vesting on each anniversary of the grant-date. For non-vested shares granted in 2006, share-based compensation expense is recognized for plan participants on a straight-line basis over the vesting period.

      Total System Services, Inc. (TSYS), an 81% owned subsidiary, also grants share-based compensation to certain executives and non-employee directors in the form of options to purchase shares of TSYS common stock (TSYS stock options) or non-vested shares of TSYS common stock (TSYS non-vested shares), which are described below at TSYS Share-Based Compensation.

Share-Based Compensation Expense

      Synovus’ share-based compensation costs are recorded as a component of salaries and other personnel expense in the Consolidated Statements of Income. Total share-based compensation expense recognized in income was $27.2 million, $2.0 million and $55 thousand for 2006, 2005 and 2004, respectively. The total income tax benefit recognized in the Consolidated Statements of Income for share-based compensation arrangements was $9.3 million, $665 thousand and $20 thousand for 2006, 2005 and 2004, respectively.

      No share-based compensation costs have been capitalized as of December 31, 2006. Aggregate compensation expense recognized in 2006 with respect to Synovus stock options included $9.3 million that would have been recognized in previous years had the policy under SFAS No. 123R with respect to retirement eligibility been applied to awards granted prior to January 1, 2006.

      As of December 31, 2006, there was total unrecognized compensation cost of approximately $32.0 million related to the unvested portion of share-based compensation arrangements involving shares of Synovus stock, and approximately $9.5 million related to the unvested portion of share-based compensation arrangements involving shares of TSYS stock.

Stock Option Awards

      The weighted-average grant-date fair value of stock options granted to key Synovus employees during 2006, 2005 and 2004 was $6.40, $7.06 and $7.36, respectively. The fair value of the option grants was determined using the Black-Scholes-

F-33

Notes to Consolidated Financial Statements 

Merton option-pricing model with the following weighted-average assumptions:

	Years Ended December 31,
	2006		2005		2004
Risk-free interest rate		4.5%		4.1%		4.5%
Expected stock price volatility		24.9		21.4		28.8
Dividend yield		2.8		2.4		2.6
Expected life of options		5.8 years		8.5 years		6.5 years

      The expected volatility for stock option awards in 2006 was determined with equal weighting of implied volatility and historical volatility, and for awards prior to 2006, was determined using implied volatility. The expected life for stock options granted during 2006 was calculated using the “simplified” method, as prescribed by the SEC’s Staff Accounting Bulletin No. 107. Option awards for plan participants who met the early retirement provisions, as described above, on the grant-date were assigned an expected life of 5 years and all other option awards were assigned an expected life of 6 years. The expected life for stock options granted prior to 2006 was determined from historical experience.

      Prior to the adoption of SFAS No. 123R, Synovus elected to calculate compensation cost for purposes of pro forma disclosure assuming that all options would vest and reverse any recognized compensation costs for forfeited awards when the awards were actually forfeited. SFAS No. 123R requires that compensation cost be recognized net of estimated forfeitures. The estimate of forfeitures is adjusted as actual forfeitures differ from estimates, resulting in compensation cost only for those awards that actually vest. The effect of the change in estimated forfeitures is recognized as compensation cost in the period of the change in estimate. In estimating the forfeiture rate, Synovus stratified its grantees and used historical experience to determine separate forfeiture rates for the different award grants. Currently, Synovus estimates forfeiture rates for its grantees in the range of 0% to 10%.

      A summary of stock option activity (including performance-accelerated stock options as described below) and changes during the years ended December 31, 2006, 2005, and 2004 is presented below:

	2006					2005					2004
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Exercise					Exercise					Exercise
Stock Options	Shares			Price		Shares			Price		Shares			Price
Outstanding at beginning of year		25,546,776		$	22.66		25,769,908		$	21.51		25,473,518		$	20.23
Options granted		868,966			27.66		2,575,053			29.02		2,724,306			26.03
Options assumed in connection with acquisitions		877,915			8.36		—			—		288,884			7.49
Options exercised		(3,418,550	)		18.89		(2,551,310	)		17.34		(2,495,858	)		11.62
Options forfeited		(173,050	)		27.49		(209,842	)		24.05		(136,264	)		24.32
Options expired		(62,796	)		21.01		(37,033	)		22.84		(84,678	)		21.51
Options outstanding at end of year		23,639,261		$	22.83		25,546,776		$	22.66		25,769,908		$	21.51
Options exercisable at end of year		14,179,889		$	21.21		12,415,332		$	21.75		12,452,702		$	19.88

F-34

Notes to Consolidated Financial Statements 

      The following table summarizes information about Synovus’ stock options outstanding and exercisable at December 31, 2006.

		As of December 31, 2006
		Options		Options
		Outstanding		Exercisable
Weighted-average remaining
	contractual life		4.51 years		3.95 years
Aggregate intrinsic value		$	189,183,148	$	136,437,439

      The intrinsic value of stock options exercised during the years ended December 31, 2006, 2005 and 2004 was $31.8 million, $27.8 million and $35.7 million, respectively. The total fair value of stock options vested during 2006 was $27.8 million. At December 31, 2006, there was approximately $17.7 million of total unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a weighted-average remaining period of 1.27 years.

      Synovus has granted performance-accelerated stock options to certain key executives. The exercise price per share is equal to the fair market value at the date of grant. The options are exercisable in equal installments when the per share market price of Synovus common stock exceeds $40, $45, and $50. However, all options may be exercised after seven years from the grant-date. The grant-date fair value is being amortized on a straight-line basis over seven years with the portion related to periods prior to 2006 having previously been included in pro forma disclosures and the portion related to periods from January 1, 2006 to the respective vesting dates being recognized in the Consolidated Statements of Income.

      Summary information regarding these performance-accelerated stock options is presented below. There were no performance-accelerated stock options granted during 2006, 2005, or 2004.

				Options
Year	Number		Exercise	Outstanding at
Options	of Stock		Price	December 31,
Granted	Options		Per Share	2006
2000		4,100,000	$17.69 - 18.06		4,100,000
2001		2,600,000	$28.99		2,600,000

Non-Vested Shares

      In addition to the stock options described above, non-transferable, non-vested shares of Synovus common stock have been awarded to certain key Synovus employees and non-employee directors of Synovus. The weighted-average grant-date fair value of non-vested shares granted during 2006 and 2005 was $27.19 and $27.28, respectively. The total fair value of shares vested during 2006 was $235 thousand. There were no grants of non-vested shares during 2004. Except for the grant of 63,386 performance-vesting shares described below, the market value of the common stock at the date of issuance is amortized as compensation expense using the straight-line method over the vesting period of the awards. Dividends are declared for these non-vested shares during the holding period. These non-vested shares are titled with voting rights.

      A summary of non-vested shares outstanding (excluding the 63,386 performance-vesting shares as described below) and changes during the years ended December 31, 2006 and 2005 is presented below:

				Weighted-
				Average
				Grant-Date
Non-Vested Shares	Shares			Fair Value
Outstanding at January 1, 2005		—		$	—
Granted		82,583			27.28
Vested		—			—
Forfeited		—			—
Outstanding at December 31, 2005		82,583			27.28
Granted		616,495			27.19
Vested		(8,520	)		27.62
Forfeited		(6,004	)		27.13
Outstanding at December 31, 2006		684,554		$	27.19

      As of December 31, 2006, there was approximately $14.2 million of total unrecognized compensation cost related to the foregoing non-vested share based compensation arrangements. This cost is expected to be recognized over a weighted-average remaining period of 1.75 years.

      During 2005, Synovus authorized a total grant of 63,386 shares of non-vested stock to a key executive with a performance-vesting schedule (performance-vesting shares). These performance-vesting shares have seven one-year performance periods (2005-2011) during each of which the Compensation Committee establishes an earnings per share goal and, if such goal is attained during any performance period, 20% of the performance-vesting shares will vest. Compensation expense for each tranche of this grant is measured based on the quoted market value of Synovus’ stock as of the date that each period’s earnings per share goal is determined and is recorded as a charge to expense on a straight-line basis during each year in which the performance criteria is expected to be met. The total fair value of performance-vesting shares vested during 2006 was $340 thousand.

F-35

Notes to Consolidated Financial Statements 

      The following is a summary of performance-vesting shares outstanding at December 31, 2006 and 2005:

				Weighted-
				Average
				Grant-Date
Performance-Vesting Shares	Shares			Fair Value
Outstanding at January 1, 2005		—		$	—
Granted		12,677			26.82
Vested		—			—
Forfeited		—			—
Outstanding at December 31, 2005		12,677			26.82
Granted		12,677			27.72
Vested		(12,677	)		26.82
Forfeited		—			—
Outstanding at December 31, 2006		12,677		$	27.72

      At December 31, 2006, there remained 38,032 performance-vesting shares to be granted between 2007 and 2011.

      Cash received from option exercises under all share-based payment arrangements of Synovus common stock for the years ended December 31, 2006, 2005, and 2004 was $65.5 million, $43.1 million, and $23.5 million, respectively.

      As stock options for the purchase of Synovus common stock are exercised and non-vested shares vest, Synovus recognizes a tax benefit which is recorded as a component of additional paid-in capital within shareholders’ equity. Synovus recognized such tax benefits in the amount of $11.4 million, $9.5 million and $12.7 million for the years 2006, 2005, and 2004, respectively.

      Synovus elected to adopt the alternative method of calculating the beginning pool of excess tax benefits as permitted by FASB Staff Position (FSP) No. SFAS 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards.” This is a simplified method to determine the pool of excess tax benefits that is used in determining the tax effects of share-based compensation in the Consolidated Statements of Income and cash flow reporting for awards that were outstanding as of the adoption of SFAS No. 123R.

Pro forma

      Had Synovus determined compensation expense based on the fair value at the grant date for its stock option grants under SFAS No. 123, net income would have been reduced to the pro forma amounts indicated in the following table for 2005 and 2004. Due to the adoption of SFAS No. 123R in 2006, such proforma information is not applicable for 2006.

		Years Ended
		December 31,
		2005			2004
(In thousands, except per share data)
Net income as reported		$	516,446			437,033
Add: Share-based employee compensation expense recognized, net of tax			1,117			35
Deduct: Total share-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects			(15,167	)		(13,379	)
	Pro forma	$	502,396			423,689
Earnings per share:
	Basic-as reported	$	1.66			1.42
	Basic-pro forma		1.61			1.38
	Diluted-as reported		1.64			1.41
	Diluted-pro forma		1.60			1.36

TSYS Share-Based Compensation

      TSYS granted 7,000 TSYS stock options during the year ended December 31, 2004 with a grant-date fair value of $200 thousand. TSYS did not grant any TSYS stock options during 2006 or 2005. At December 31, 2006, there were 1,066,000 TSYS stock options outstanding with a weighted-average exercise price of $15.53, weighted-average remaining contractual life of 2.2 years, and an aggregate intrinsic value of $11.6 million. Of these 1,066,000 stock options, 1,058,000 were exercisable at December 31, 2006 with a weighted-average exercise price of $15.46, a weighted-average remaining contractual life of 2.2 years, and an aggregate intrinsic value of $11.6 million. At December 31, 2006, there was approximately $41 thousand of total unrecognized compensation cost related to TSYS stock options that is expected to be recognized over a remaining weighted-average period of 0.9 years.

      During the years ended December 31, 2006 and 2005, TSYS issued 425,925 and 100,815 TSYS non-vested shares with a grant-date fair value of $9.6 million and $2.3 million, respectively, to certain key executives and non-employee directors of TSYS. There were no non-vested TSYS shares issued in 2004. At December 31, 2006, there was approximately $9.5 million of total unrecognized compensation cost related to TSYS’ non-vested share based compensation arrangements. This cost is expected to be recognized over a remaining weighted-average period of 2.6 years.

F-36

Notes to Consolidated Financial Statements 

      Additionally, during the year ended December 31, 2005, TSYS granted 126,087 TSYS non-vested shares to two key executives with a performance-vesting schedule (TSYS performance-vesting shares). There were no performance-vesting shares granted in 2006 or 2004. These performance-vesting shares have seven one-year performance periods (2005-2011) during each of which the Compensation Committee of TSYS’ Board of Directors establishes an earnings per share goal and, if such goal is attained during any performance period, 20% of the performance-vesting shares will vest. Compensation expense for each tranche of this grant is measured based on the quoted market value of TSYS’ stock as of the date that each period’s earnings per share goal is determined and is recorded as a charge to expense on a straight-line basis during each year in which the performance criteria is expected to be met. At December 31, 2006, there were 25,217 non-vested TSYS performance-vesting shares outstanding, with a weighted-average grant-date fair value of $20.00 per share. At December 31, 2006, there remained 75,651 TSYS performance-vesting shares to be granted between 2007 and 2011.

      The following table provides aggregate information regarding grants under all Synovus equity compensation plans through December 31, 2006.

						(c)
	(a)			(b)		Number of shares
	Number of securities			Weighted-average		remaining available for
	to be issued			exercise price of		issuance excluding
	upon exercise of			outstanding		shares reflected
Plan Category(1)	outstanding options			options		in column (a)
Shareholder approved equity compensation plans for shares of Synovus stock		22,809,794	(2)	$	23.31		4,220,937	(3)
Non-shareholder approved equity compensation plans		—			—		—
Total		22,809,794		$	23.31		4,220,937

(1)	Does not include information for equity compensation plans assumed by Synovus in mergers. A total of 829,467 shares of common stock was issuable upon exercise of options granted under plans assumed in mergers and outstanding at December 31, 2006. The weighted average exercise price of all options granted under plans assumed in mergers and outstanding at December 31, 2006 was $9.62. Synovus cannot grant additional awards under these assumed plans.
(2)	Does not include an aggregate of 735,263 shares of restricted stock which will vest over the remaining years through 2011.
(3)	Includes 4,220,937 shares available for future grants as share awards under the 2002 and 2000 Plans.

Note 16 Fair Value of Financial Instruments

      The following table presents the carrying and estimated fair values of on-balance sheet financial instruments at December 31, 2006 and 2005. The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

      The carrying and estimated fair values relating to derivative instruments and off-balance sheet financial instruments are discussed in Note 12.

      The fair value of derivative instruments, consisting of interest rate contracts, is equal to the estimated amount that Synovus would receive or pay to terminate the interest rate swap contracts at the reporting date, taking into account current interest rates and the credit-worthiness of the counterparties. The fair value of derivative instruments consisting of commitments to fund and sell fixed-rate mortgage loans is determined based on quoted market prices.

      Cash and due from banks, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements are repriced on a short-term basis; as such, the carrying value closely approximates fair value.

      The fair values of trading account assets and available for sale investment securities is determined based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

      The fair value of mortgage loans held for sale is based on quoted prices from secondary market investors.

      The fair value of loans is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, such as commercial, mortgage, home equity, credit card, and other consumer loans. Commercial loans are further segmented into certain collateral code groupings. The fair value of the loan portfolio is calculated by discounting contractual cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loan.

F-37

Notes to Consolidated Financial Statements 

      The fair value of deposits with no stated maturity, such as non-interest bearing demand accounts, interest bearing demand deposits, money market accounts, and savings accounts, is estimated to be equal to the amount payable on demand as of that respective date. 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.

      Short-term debt that matures within ten days is assumed to be at fair value. The fair value of other short-term and long-term debt with fixed interest rates is calculated by discounting contractual cash flows using estimated market discount rates.

		2006				2005
		Carrying		Estimated		Carrying		Estimated
		Value		Fair Value		Value		Fair Value
(In thousands)
Financial assets:
	Cash and due from banks	$	889,975		889,975		880,886		880,886
	Interest earning deposits with banks		19,389		19,389		2,980		2,980
	Federal funds sold and securities purchased under resale agreements		101,091		101,091		68,922		68,922
	Trading account assets		15,266		15,266		27,322		27,322
	Mortgage loans held for sale		175,042		175,277		143,144		143,283
	Investment securities available for sale		3,352,357		3,352,357		2,958,320		2,958,320
	Loans, net		24,340,093		24,315,920		21,102,735		21,066,751
	Derivative asset positions		67,652		67,652		20,401		20,401
Financial liabilities:
	Non-interest bearing deposits		3,538,598		3,538,598		3,700,750		3,700,750
	Interest bearing deposits		20,755,849		20,732,125		17,083,615		17,043,482
	Federal funds purchased and securities sold under repurchase agreements		1,572,809		1,572,809		1,158,669		1,158,669
	Long-term debt		1,350,139		1,327,894		1,933,638		1,927,525
	Derivative liability positions		48,270		48,270		37,493		37,493

Note 17 Income Taxes

      For the years ended December 31, 2006, 2005, and 2004, income tax expense (benefit) consists of:

			2006			2005			2004
(In thousands)
Current:
	Federal		$	371,469			331,807			215,633
	State			26,435			24,657			12,767
	Foreign			3,682			4,687			1,447
				401,586			361,151			229,847
Deferred:
	Federal			(44,872	)		(46,394	)		19,120
	State			178			(5,054	)		1,491
	Foreign			(276	)		(2,127	)		1,790
				(44,970	)		(53,575	)		22,401
		Total income tax expense	$	356,616			307,576			252,248

      Income tax expense as shown in the consolidated statements of income differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to pretax income as a result of the following:

		2006			2005			2004
(Dollars in thousands)
Taxes at statutory federal income tax rate		$	340,737			288,408			241,248
Tax-exempt income			(3,964	)		(3,745	)		(4,124	)
State income taxes, net of federal income tax benefit			17,298			12,742			9,268
Minority interest			16,836			13,083			10,053
Tax credits			(9,355	)		(5,793	)		(1,980	)
Other, net			(4,936	)		2,881			(2,217	)
	Total income tax expense	$	356,616			307,576			252,248
	Effective income tax rate		36.63	%		37.33			36.60

F-38

Notes to Consolidated Financial Statements 

      At December 31, 2006 and 2005, Synovus had state income tax credit carryforwards of $3.9 million and $8.8 million, respectively. The credits will begin to expire in the year 2010. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

      Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets become deductible, management believes that it is more likely than not that Synovus will realize the benefits of these deductible differences, net of existing valuation allowances, at December 31, 2006. The valuation allowance for deferred tax assets was $4.1 million and $2.2 million at December 31, 2006 and 2005, respectively. The increase in the valuation allowance for deferred income tax assets was $1.8 million for the year ended December 31, 2006. The increase relates to state and foreign losses recognized in 2006, which more likely than not will not be realized in later years.

      For the year ended December 31, 2006, net deferred tax assets of $849 thousand were added as a result of the acquisition of Riverside and First Florida.

      The tax effects of temporary differences that gave rise to significant portions of the deferred income tax assets and liabilities at December 31, 2006 and 2005 are presented below:

				2006			2005
(In thousands)
Deferred income tax assets:
	Provision for losses on loans			$	128,339			119,850
	Finance lease transactions				12,484			25,998
	Net operating loss and income tax credit carryforwards				9,898			16,081
	Deferred revenue				17,160			11,265
	Deferred compensation				11,620			5,051
	Share-based compensation				10,236			657
	Impact of adoption of SFAS No. 158				2,067			—
	Unrealized loss on derivative instruments				3,941			—
	Net unrealized loss on cash flow hedges				1,698			3,957
	Net unrealized loss on investment securities available for sale				9,525			17,831
	Other				25,188			8,588
		Total gross deferred income tax assets			232,156			209,278
	Less valuation allowance				(4,081	)		(2,241	)
		Total net deferred income tax assets			228,075			207,037
Deferred income tax liabilities:
	Computer software development costs				(46,686	)		(37,160	)
	Excess tax over financial statement depreciation				(83,295	)		(116,097	)
	Purchase accounting adjustments				(17,228	)		(14,916	)
	TSYS stock repurchase				(1,918	)		—
	Foreign currency translation				(4,333	)		(3,424	)
	Ownership interest in partnership				(5,010	)		(2,739	)
	Other				(11,660	)		(12,100	)
		Total gross deferred income tax liabilities			(170,130	)		(186,436	)
			Net deferred income tax assets	$	57,945			20,601

F-39

Notes to Consolidated Financial Statements 

Note 18 Operating Segments

      Synovus has two reportable segments: Financial Services and Transaction Processing Services (TSYS). The Financial Services segment provides financial services including banking, financial management, insurance, mortgage and leasing services through 40 wholly-owned affiliate banks and other Synovus offices in Georgia, Alabama, South Carolina, Florida, and Tennessee. TSYS provides electronic payment processing and related services, primarily through TSYS’ cardholder systems, TS1 and TS2, to financial institutions and other organizations throughout the United States, and internationally. TSYS currently offers merchant services to financial institutions and other organizations in the United States through TSYS Acquiring and in Japan through GP Net. The significant accounting policies of the segments are described in the summary of significant accounting policies. All inter-segment services provided are charged at the same rates as those charged to unaffiliated customers. Such services are included in the results of operations of the respective segments and are eliminated to arrive at consolidated totals.

      Segment information for the years ended December 31, 2006, 2005, and 2004 is presented in the following table.

				Financial
		Year		Services		TSYS(a)		Eliminations			Consolidated
(In thousands)
Interest income			2006	$	2,016,466		8,238		(8,238	)(b)		2,016,466
			2005		1,496,262		3,873		(3,910	)(b)		1,496,225
			2004		1,159,020		1,348		(1,348	)(b)		1,159,020
Interest expense			2006		890,677		153		(8,238	)(b)		882,592
			2005		531,046		242		(3,910	)(b)		527,378
			2004		299,489		200		(1,348	)(b)		298,341
Net interest income			2006		1,125,789		8,085		—			1,133,874
			2005		965,216		3,631		—			968,847
			2004		859,531		1,148		—			860,679
Provision for losses on loans			2006		75,148		—		—			75,148
			2005		82,532		—		—			82,532
			2004		75,319		—		—			75,319
Net interest income after provision			2006		1,050,641		8,085		—			1,058,726
	for losses on loans		2005		882,684		3,631		—			886,315
			2004		784,212		1,148		—			785,360
Total non-interest income			2006		359,430		1,798,519		(24,363	)(c)		2,133,586
			2005		327,412		1,611,897		(20,830	)(c)		1,918,479
			2004		327,441		1,212,414		(18,844	)(c)		1,521,011
Total non-interest expense			2006		764,533		1,430,507		(24,363	)(c)		2,170,677
			2005		646,757		1,317,464		(20,830	)(c)		1,943,391
			2004		621,674		985,536		(18,844	)(c)		1,588,366
Income before income taxes			2006		645,538		376,097		(48,102	)(d)		973,533
			2005		563,339		298,064		(37,381	)(d)		824,022
			2004		489,979		228,026		(28,724	)(d)		689,281
Income tax expense			2006		230,435		126,181		—			356,616
			2005		204,289		103,287		—			307,576
			2004		175,039		77,209		—			252,248
Net income			2006		415,103		249,916		(48,102	)(d)		616,917
			2005		359,050		194,777		(37,381	)(d)		516,446
			2004		314,940		150,817		(28,724	)(d)		437,033
Total assets			2006		30,496,950		1,612,684		(254,861	)(e)		31,854,773
			2005		26,401,125		1,395,633		(176,086	)(e)		27,620,672
			2004		23,966,347		1,241,797		(157,966	)(e)		25,050,178

(a)	Includes equity in income of joint ventures which is included in non-interest income.
(b)	Primarily, interest on TSYS’ cash deposits with the Financial Services segment.
(c)	Primarily, electronic payment processing services and other services provided by TSYS to the Financial Services segment.
(d)	Minority interest in TSYS and GP Net (a TSYS subsidiary).
(e)	Primarily TSYS’ cash deposits with the Financial Services segment.

F-40

Notes to Consolidated Financial Statements 

      Segment information for the changes in the carrying amount of goodwill for the years ended December 31, 2006 and 2005 are shown in the following table. There were no impairment losses for the years ended December 31, 2006 and 2005.

	Financial
	Services			TSYS			Consolidated
(In thousands)
Balance as of December 31, 2004	$	345,722			70,561			416,283
Goodwill acquired		235	(1)		43,632	(2)		43,867
Impairment losses		—			—			—
Currency translation adjustments(3)		—			(16	)		(16	)
Other		(440	) (4)		(1,312	) (5)		(1,752	)
Balance as of December 31, 2005		345,517			112,865			458,382
Goodwill acquired		177,271	(1)(6)		41,381	(7)(8)(9)		218,652
Impairment losses		—			—			—
Currency translation adjustments(3)		—			(805	)		(805	)
Other		(238	) (10)		(6,476	) (11)		(6,714	)
Balance as of December 31, 2006	$	522,550			146,965			669,515

(1)	During 2005, $226 thousand pertains to contingent consideration relating to the GLOBALT acquisition. The remaining $9 thousand pertains to additional acquisition expenses related to the Trust One acquisition. See Note 2 for additional information on these business combinations. During 2006, $585 thousand pertains to contingent consideration relating to the GLOBALT acquisition.
(2)	Goodwill acquired during 2005 consists of $36.7 million in goodwill based on the preliminary purchase price allocation for the Vital acquisition which was completed on March 1, 2005. $4.9 million in additional goodwill consists of fifty percent of the previously recorded goodwill on Vital’s balance sheet, which is now being consolidated in TSYS’ balance sheet. The remaining $2.0 million in goodwill relates to the acquisition of Merlin Solutions, L.L.C. See Note 2 for additional information regarding these acquisitions.
(3)	Consists of foreign currency translation adjustments for GP Net.
(4)	During 2005, Synovus recorded a reduction in goodwill of $440 thousand associated with the sale of two bank charters.
(5)	On August 2, 2004, TSYS completed the acquisition of Clarity. During 2005, TSYS recorded a final adjustment to the purchase price allocation, which resulted in a $1.3 million reduction in other liabilities with a corresponding $1.3 million decrease in goodwill.
(6)	Goodwill acquired during 2006 includes $122.1 million resulting from the Riverside acquisition on March 25, 2006, and $54.6 million resulting from the First Florida acquisition on April 1, 2006. See Note 2 for additional information regarding these acquisitions.
(7)	Goodwill acquired during 2006 includes $27.4 million resulting from TSYS’ acquisition of TSYS Card Tech. See Note 2 for additional information regarding this acquisition.
(8)	On November 16, 2006, TSYS acquired 55% of TSYS Managed Services. TSYS has preliminary allocated approximately $323 thousand to goodwill. See Note 2 for additional information regarding this acquisition.
(9)	During 2006, the TSYS Board of Directors announced a plan to repurchase up to 2 million shares of TSYS common stock over the next two years. Goodwill of $13.6 million recorded during 2006 is associated with 1.1 million shares of TSYS common stock repurchased by TSYS.

(10)	During 2006, Synovus recorded a reduction in goodwill of $238 thousand associated with the dissolution of a bank owned leasing company.
(11)	On March 1, 2005, TSYS completed the acquisition of TSYS Acquiring. During 2006, TSYS recorded a final adjustment to the purchase price allocation, which resulted in a $6.5 million decrease in goodwill. See Note 2 for additional information regarding this acquisition.

F-41

Notes to Consolidated Financial Statements 

Note 19 Condensed Financial Information of Synovus Financial Corp. (Parent Company only)

Condensed Balance Sheets

				December 31,
				2006			2005
(In thousands)
Assets
	Cash			$	3,294			1,747
	Investment in consolidated bank subsidiaries, at equity (including TSYS)				4,162,387			3,383,050
	Investment in consolidated nonbank subsidiaries, at equity				57,541			53,829
	Notes receivable from bank subsidiaries				167,439			197,677
	Notes receivable from nonbank subsidiaries				3,773			4,014
	Other assets				192,410			137,009
			Total assets	$	4,586,844			3,777,326
Liabilities and Shareholders’ Equity
	Liabilities:
		Long-term debt		$	771,285			759,369
		Other liabilities			106,909			68,628
			Total liabilities		878,194			827,997
	Shareholders’ equity:
		Common stock			331,214			318,301
		Additional paid-in capital			1,033,055			686,447
		Treasury stock			(113,944	)		(113,944	)
		Unearned compensation			—			(3,126	)
		Accumulated other comprehensive loss			(2,129	)		(29,536	)
		Retained earnings			2,460,454			2,091,187
			Total shareholders’ equity		3,708,650			2,949,329
			Total liabilities and shareholders’ equity	$	4,586,844			3,777,326

F-42

Notes to Consolidated Financial Statements 

Condensed Statements of Income

			Years Ended December 31,
			2006			2005			2004
(In thousands)
Income:
	Dividends received from bank subsidiaries (including TSYS)		$	245,687			251,202			228,586
	Management and information technology fees from affiliates			107,133			85,092			78,945
	Securities gains, net			—			166			—
	Interest income			5,503			3,698			7,308
	Other income			29,996			17,332			29,295
		Total income		388,319			357,490			344,134
Expenses:
	Interest expense			41,343			41,560			27,200
	Other expenses			218,803			166,856			141,603
		Total expenses		260,146			208,416			168,803
		Income before income taxes and equity in undistributed income of subsidiaries		128,173			149,074			175,331
Allocated income tax benefit				(45,260	)		(38,471	)		(20,513	)
		Income before equity in undistributed income of subsidiaries		173,433			187,545			195,844
Equity in undistributed income of subsidiaries				443,484			328,901			241,189
	Net income		$	616,917			516,446			437,033

F-43

Notes to Consolidated Financial Statements 

Condensed Statements of Cash Flows

				Years ended December 31,
				2006			2005			2004
(In thousands)
Operating Activities
	Net income			$	616,917			516,446			437,033
	Adjustments to reconcile net income to net cash provided by operating activities:
		Equity in undistributed income of subsidiaries			(443,484	)		(328,901	)		(241,189	)
		Depreciation, amortization, and accretion, net			22,235			17,243			17,365
		Share-based compensation			9,889			862			55
		Net increase (decrease) in other liabilities			43,158			(3,029	)		20,784
		Net (increase) decrease in other assets			(37,106	)		7,302			(15,522	)
		Gain on sale of other assets			(1,940	)		—			—
		Other, net			9,416			(1,370	)		(10,235	)
			Net cash provided by operating activities		219,085			208,553			208,291
Investing Activities
	Net investment in subsidiaries				(33,757	)		(85,887	)		(73,920	)
	Cash paid for acquisitions				—			(10	)		(32,077	)
	Cash proceeds from sales of subsidiaries				—			—			26,164
	Purchases of premises and equipment				(26,941	)		(17,503	)		(18,364	)
	Proceeds from sale of other assets				2,135			—			—
	Net decrease (increase) in short-term notes receivable from bank subsidiaries				30,238			(170,399	)		81,559
	Net decrease (increase) in short-term notes receivable from nonbank subsidiaries				241			(2,384	)		(899	)
		Net cash used in investing activities			(28,084	)		(276,183	)		(17,537	)
Financing Activities
	Dividends paid to shareholders				(244,654	)		(224,303	)		(209,883	)
	Purchase of treasury stock				—			—			(4	)
	Principal repayments on long-term debt				(10,310	)		(200,000	)		—
	Proceeds from issuance of long-term debt				—			445,644			—
	Proceeds from issuance of common stock				65,510			43,125			23,465
		Net cash (used in) provided by financing activities			(189,454	)		64,466			(186,422	)
Increase (decrease) in cash					1,547			(3,164	)		4,332
Cash at beginning of year					1,747			4,911			579
Cash at end of year				$	3,294			1,747			4,911

      For the years ended December 31, 2006, 2005, and 2004, the Parent Company paid income taxes (net of refunds received) of $380.9 million, $315.0 million, and $181.0 million, and interest in the amount of $41.7 million, $41.3 million, and $27.4 million, respectively.

F-44

Notes to Consolidated Financial Statements 

Note 20     Supplemental Financial Data

      Components of other operating expenses in excess of 1% of total revenues for any of the respective years are as follows:

		Years ended December 31,
		2006		2005		2004
(In thousands)
Expenses:
	Stationery, printing, and supplies	$	35,870		37,245		33,273
	Third-party processing services		71,639		66,464		30,057
	Attorney commissions and court costs		25,935		32,116		33,930
	Consulting fees		29,225		33,954		15,594

F-45

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Synovus Financial Corp.:

      We have audited the accompanying consolidated balance sheets of Synovus Financial Corp. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Synovus Financial Corp. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

      As discussed in the Notes 1 and 15 to the consolidated financial statements, effective January 1, 2006, the Company adopted the fair value method of accounting for share-based compensation as required by Statement of Financial Accounting Standards No. 123(R), Share-Based Payment.

      As discussed in Note 1 to the consolidated financial statements, the Company adopted the recognition and disclosure provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, as of December 31, 2006.

      Also, as discussed in Note 1 to the consolidated financial statements, the Company elected application of Staff Accounting Bulletin, No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements in December 2006.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Synovus’ internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 1, 2007 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

Atlanta, Georgia

March 1, 2007

F-46

MANAGEMENT’S REPORT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

      The management of Synovus Financial Corp. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.

      The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.

      In conducting the Company’s evaluation of the effectiveness of its internal control over financial reporting, the Company has excluded the following acquisitions completed by the Company in 2006: TSYS Card Tech, Ltd., TSYS Managed Services EMEA, Ltd., and Banking Corporation of Florida. Combined, these acquisitions constituted 1.67% of consolidated assets as of December 31, 2006 and 0.85% and 0.34% of consolidated total revenue and consolidated net income, respectively, for the year then ended. Please refer to Note 2 to the consolidated financial statements for further discussion of these acquisitions and their impact on Synovus’ consolidated financial statements.

      Based on our assessment, we believe that, as of December 31, 2006, the Company’s internal control over financial reporting is effective based on the criteria set forth in Internal Control — Integrated Framework.

      Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 has been audited by KPMG LLP, the independent registered public accounting firm which also audited the Company’s consolidated financial statements. KPMG LLP’s attestation report on management’s assessment of the Company’s internal control over financial reporting appears on page F-48 hereof.

Richard E. Anthony	Thomas J. Prescott
Chairman &	Executive Vice President &
Chief Executive Officer	Chief Financial Officer

F-47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Synovus Financial Corp.:

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Synovus Financial Corp. and subsidiaries (Synovus) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Synovus’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of Synovus’ internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that Synovus maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Synovus maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

      During 2006, Synovus acquired TSYS Card Tech, Ltd., TSYS Managed Services EMEA, Ltd., and Banking Corporation of Florida (the Acquisitions). Management excluded from its assessment of the effectiveness of Synovus’ internal control over financial reporting as of December 31, 2006, the Acquisitions’ internal control over financial reporting. Combined, these Acquisitions constituted 1.67% of consolidated total assets of Synovus as of December 31, 2006 and 0.85% and 0.34% of consolidated total revenue and consolidated net income, respectively, of Synovus for the year then ended. Our audit of internal control over financial reporting of Synovus also excluded an evaluation of the internal control over financial reporting of the Acquisitions.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Synovus as of December 31, 2006 and 2005, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006, and our report dated March 1, 2007 expressed an unqualified opinion on those consolidated financial statements. Our report refers to a change in accounting for share-based payments and postretirement benefits after the adoption of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, respectively, in 2006, and application of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, in 2006.

Atlanta, Georgia

March 1, 2007

F-48

Selected Financial Data 

		Years Ended December 31,
		2006			2005		2004		2003		2002
(In thousands, except per share data)
Income Statement:
	Total revenues(a)	$	3,269,578			2,886,863		2,381,615		2,129,902		1,949,688
	Net interest income		1,133,874			968,847		860,679		763,064		717,504
	Provision for losses on loans		75,148			82,532		75,319		71,777		65,327
	Non-interest income		2,133,586			1,918,479		1,521,011		1,369,329		1,234,822
	Non-interest expense		2,170,677			1,943,391		1,588,366		1,422,143		1,299,470
	Net income		616,917			516,446		437,033		388,925		365,347
Per share data:
	Net income — basic		1.92			1.66		1.42		1.29		1.23
	Net income — diluted		1.90			1.64		1.41		1.28		1.21
	Cash dividends declared		0.78			0.73		0.69		0.66		0.59
	Book value		11.39			9.43		8.52		7.43		6.79
Balance Sheet:
	Investment securities		3,352,357			2,958,320		2,695,593		2,529,257		2,237,725
	Loans, net of unearned income		24,654,552			21,392,347		19,480,396		16,464,914		14,463,909
	Deposits		24,294,447			20,784,365		18,577,468		15,941,609		13,928,834
	Long-term debt		1,350,139			1,933,638		1,879,583		1,575,777		1,336,200
	Shareholders’ equity		3,708,650			2,949,329		2,641,289		2,245,039		2,040,853
	Average total shareholders’ equity		3,369,954			2,799,496		2,479,404		2,166,777		1,855,492
	Average total assets		29,831,172			26,291,490		23,275,001		20,412,853		17,414,654
Performance ratios and other data:
	Return on average assets		2.07	%		1.96		1.88		1.91		2.10
	Return on average equity		18.31			18.45		17.63		17.95		19.69
	Net interest margin, before fees		4.15			4.05		3.92		3.90		4.27
	Net interest margin, after fees		4.30			4.19		4.22		4.26		4.65
	Efficiency ratio(b)		51.18			49.79		52.06		53.34		52.07
	Dividend payout ratio(c)		40.99			44.51		48.94		51.56		48.76
	Average shareholders’ equity to average assets		11.37			10.65		10.65		10.61		10.65
	Average shares outstanding, basic		321,241			311,495		307,262		302,010		297,325
	Average shares outstanding, diluted		324,232			314,815		310,330		304,928		301,197

(a)	Consists of net interest income and non-interest income, excluding securities gains (losses).
(b)	For the Financial Services segment.
(c)	Determined by dividing dividends declared per share by diluted net income per share.

F-49

Financial Review 

Executive Summary

      The following financial review provides a discussion of Synovus’ financial condition, changes in financial condition, and results of operations as well as a summary of Synovus’ critical accounting policies. This section should be read in conjunction with the preceding audited consolidated financial statements and accompanying notes.

About Our Business

      Synovus is a diversified financial services holding company, based in Columbus, Georgia, with more than $31 billion in assets. Synovus operates two business segments: the Financial Services and the Transaction Processing Services (TSYS) segments. The Financial Services segment provides integrated financial services including banking, financial management, insurance, mortgage and leasing services through 40 banks and other Synovus offices in five southeastern states. At December 31, 2006, our banks ranged in size from $69.2 million to $5.79 billion in total assets. The Transaction Processing Services segment provides electronic payment processing services through our 81% owned subsidiary Total System Services, Inc. (TSYS), one of the world’s largest companies for outsourced payment services. Our ownership in TSYS gives us a unique mix: for 2006, 55% of our consolidated revenues and 33% of our consolidated net income came from TSYS.

Our Key Financial Performance Indicators

      In terms of how we measure success in our business, the following are our key financial performance indicators:

Financial Services

• Loan Growth	• Credit Quality
• Deposit Growth	• Fee Income Growth
• Net Interest Margin	• Expense Management

TSYS

• Revenue Growth • Expense Management

2006 Financial Performance vs. 2005

Consolidated

•  Net income $616.9 million, up 19.5%

•  Diluted earnings per share (EPS) $1.90, up 16.0%

Financial Services

•  Loan growth: 15.2% (11.4% excluding the impact of the acquisition of Riverside and First Florida)

•  Deposit growth: 16.9% (11.1% excluding brokered deposits and the impact of the acquisition of Riverside and First Florida).

•  Net interest margin: 4.30%, up 11 basis points from 4.19% in 2005.

•  Credit quality:

•  Nonperforming assets (NPA) ratio of .50%, compared to .46% at year-end 2005, and

•  Past dues over 90 days as a percentage of total loans of .14% compared to .07% at year-end 2005, and

•  Net charge-off ratio of .26%, compared to .29% for 2005.

•  Fee income growth: $359.4 million, up 9.8% from 2005 (up 9.3% excluding the impact of acquisitions).

•  General and administrative expenses: up 18.2% (13.4% increase excluding the impact of acquisitions and share-based compensation).

•  Net income growth: 15.6%

•  Return on assets: 1.45% compared to 1.43% for 2005.

•  Return on equity: 16.77% compared to 17.59% for 2005.

      Additionally, during 2006:

•  Synovus acquired Riverside Bank on March 25, 2006 and acquired First Florida Bank on April 1, 2006.

•  Synovus opened 17 new banking locations, all in markets with high growth potential.

TSYS

•  Net income growth: 28.1%

•  Revenue growth before reimbursable items: 11.2%

•  Expense growth before reimbursable items: 7.4%

•  Accounts on file processed on TSYS’ systems decreased 4.9% to 416.4 million at December 31, 2006, compared to 437.9 million at December 31, 2005.

F-50

Financial Review 

      Additionally during 2006:

•  TSYS’ Board of Directors approved a share repurchase plan for up to 2 million shares of TSYS common stock.

•  TSYS converted the vast majority of the Capital One Financial Corporation (Capital One) account portfolio onto its TS2 platform. In a related transaction, Capital One became the first client on the new TSYS Loyalty Platform, and is currently processing loyalty transactions on this industry-leading platform.

•  TSYS reached a long-term agreement with Wachovia Corporation to provide core-processing and other related services in support of their re-entry into the consumer credit-card line of business.

•  TSYS deconverted the Sears consumer MasterCard and private-label accounts in June 2006, as well as deconverted the Bank of America consumer card portfolio in October 2006.

•  TSYS received a contract termination fee of $68.9 million from Bank of America in the fourth quarter of 2006, which was partially offset by approximately $6.0 million in accelerated amortization of contract acquisition costs related to the Bank of America consumer card portfolio.

•  TSYS announced Toyota Finance Corporation as TSYS’ first processing relationship in Japan.

•  TSYS increased its equity interest in China UnionPay Data Services Co., Ltd. (CUP Data) to 44.56%.

•  TSYS continued expansion of its global footprint with the acquisition of London-based Card Tech, Ltd., now known as TSYS Card Tech.

      Synovus exceeded its expectations for 2006 with excellent growth momentum in both its Financial Services segment and TSYS. An important initiative focused on accelerating commercial and industrial loan growth began implementation in the second half of 2006, and is expected to broaden existing relationships with the cross sales and penetration of specialty products such as corporate cash management, asset-based loans, and capital markets products. Synovus’ retail banking initiative, which was implemented in 2005, has exceeded expectations in 2006 by expanding core retail deposit growth, home equity loan growth, and fee income from retail product sales this year. Diluted earnings per share was $1.90, a 16.0% increase from 2005. Key drivers for the Financial Services segment were loan growth of 15.2% (11.4% excluding the impact of acquisitions); deposit growth of 16.9% (11.1% excluding brokered deposits and the impact of acquisitions); an 11 basis point increase in the net interest margin; and good credit quality with a NPA ratio of ..50% at year-end, a net charge-off ratio of .26%, and past dues greater than 90 days of .14%. TSYS was another key driver in our financial results, with a net income increase of 28.1% (above our original expectation of 21%-23%).

2007 Earnings Outlook

      Synovus expects 2007 diluted earnings per share to be in the range of $1.96 to $1.98, based in part upon the following assumptions:

•  Stable to modestly lower short-term interest rates as compared to the fourth quarter of 2006.

•  Annual net interest margin near fourth quarter 2006 net interest margin of 4.20% (with compression during the first half of the year followed by some expansion).

•  A favorable credit environment.

•  TSYS’ net income growth, excluding the Bank of America termination fee and associated amortization of contract acquisition costs in 2006, in the 14% to 17% range.

•  Financial Services segment net income growth of approximately 10%.

      Excluding the aforementioned Bank of America termination fee and associated amortization of contract acquisition costs in 2006 (of $33 million, net of tax and after minority interest), Synovus’ earnings per share is expected to increase between 9% and 10% in 2007.

F-51

Financial Review 

      Presentation of net income and diluted earnings per share excluding the Bank of America termination fee, net of acceleration of amortization of related contract acquisition costs, are non-GAAP financial measures. The following table reconciles the range of changes from 2006 to 2007, comparing non-GAAP financial measures to GAAP financial measures.

	2007
	Earnings	2006	% Increase
	Guidance	Actual	(Decrease)
(Dollars in thousands, except per share data)
TSYS net income before minority interest	$238 to $243	$249	(5%) to (3%)
Less: Termination fee net of acceleration of amortization of related contract acquisition costs and income taxes		$(41)
TSYS net income, excluding impact of termination fee, net of acceleration of amortization of contract acquisition costs	$238 to $243	$208	14% to 17%

	2007
	Earnings	2006	% Increase
	Guidance	Actual	(Decrease)
(Dollars in thousands, except per share data)
Financial Services net income	$456	$415	10%
TSYS net income, net of minority interest	$193 to $197	$202	(5%) to (3%)
Synovus consolidated net income	$649 to $653	$617	5% to 6%
Less: Termination fee net of acceleration of amortization of related contract acquisition costs, minority interest, and income taxes		$(33)
Synovus consolidated net income, excluding impact of termination fee, net of acceleration of amortization of contract acquisition costs	$649 to $653	$584	11% to 12%
Synovus earnings per share — diluted	$1.96 to $1.98	$1.90	3% to 4%
Less: Termination fee, net of acceleration of amortization of related contract acquisition costs, minority interest, and income taxes		$(0.10)
Synovus earnings per share — diluted, excluding impact of termination fee, net of acceleration of amortization of contract acquisition costs, minority interest, and income taxes	$1.96 to $1.98	$1.80	9% to 10%

      Synovus believes that the above non-GAAP financial measures provide meaningful information to assist investors in understanding Synovus’ financial estimates for changes in net income and diluted earnings per share from 2006 to 2007 as a result of TSYS’ deconversion of the Bank of America consumer card portfolio as the non-GAAP financial measures exclude amounts that Synovus does not consider part of ongoing operating results. The non-GAAP percentage changes should not be considered by themselves or as a substitute for the GAAP percentage changes year over year. The non-GAAP measures should be considered as an additional view of the way Synovus’ financial measures are affected by the one-time Bank of America contract termination fee, net of acceleration of amortization of related contract acquisition costs.

F-52

Financial Review 

Critical Accounting Policies

      The accounting and financial reporting policies of Synovus conform to U.S. generally accepted accounting principles and to general practices within the banking and electronic payment processing industries. Following is a description of the accounting policies applied by Synovus which are deemed “critical.” In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. The application of these policies has a significant impact on Synovus’ financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are applied in the application of these policies.

Allowance for Loan Losses

      Note 5 in the notes to Synovus’ consolidated financial statements contains a discussion of the allowance for loan losses. The allowance for loan losses is determined based on an analysis which assesses the risk within the loan portfolio. The two most significant judgments or estimates made in the determination of the allowance for loan losses are the risk ratings for loans in the commercial loan portfolio and the valuation of the collateral for loans that are classified as impaired loans.

Commercial Loans — Risk Ratings and Loss Factors

      Commercial loans are assigned a risk rating on a 9 point scale. For commercial loans that are not considered impaired, the allocated allowance for loan losses is determined based upon the loss percentage factors that correspond to each risk rating. Commercial loans that are not impaired represent 85.3% of total loans at December 31, 2006. The corresponding allowance for these loans was $227.4 million. The rating process is subject to certain subjective factors and estimates. Synovus uses a well-defined risk rating methodology, and has established policies that require “checks and balances” to manage the risks inherent in estimating loan losses.

      The risk ratings are based on the borrowers’ credit risk profile, considering factors such as debt service history and capacity, inherent risk in the credit (e.g., based on industry type and source of repayment), and collateral position. Ratings 6 through 9 are modeled after the bank regulatory classifications of special mention, substandard, doubtful, and loss. Loss percentage factors are based on historical loss rates, bank regulatory guidance, and Synovus’ assessment of losses within each risk rating. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified as necessary.

      Each loan is assigned a risk rating during the approval process. This process begins with a rating recommendation from the loan officer responsible for originating the loan. The rating recommendation is subject to approvals from other members of management and/or loan committees depending on the size and type of credit. Ratings are re-evaluated at least every twelve months in connection with the loan review process at each affiliate bank. Additionally, an independent holding company credit review function evaluates each affiliate bank’s risk rating process at least every twelve to eighteen months.

Collateral Valuation

      A majority of our impaired loans are collateral dependent. The impairment on these loans is determined based upon fair value estimates (net of selling costs) of the respective collateral. The actual losses on these loans could differ significantly if the fair value of the collateral is different from the estimates used by Synovus in determining the impairment. The majority of Synovus’ impaired loans are secured by real estate. The fair value of these real estate properties is generally determined based upon appraisals performed by a certified or licensed appraiser. Management also considers other factors or recent developments which could result in adjustments to the collateral value estimates indicated in the appraisals.

Retail Loans — Loss Factors

      The allocated allowance for loan losses for retail loans is generally determined by segregating the retail loan portfolio into pools of homogeneous loan categories. Loss factors applied to these pools are generally based on average historical losses for the previous two years and current delinquency trends. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified as necessary.

Other Loss Factors

      Certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses and corresponding credit costs. The allowance for loan losses for loans not considered impaired and for large pools of smaller-balance, homogeneous loans is established through consideration of such factors as changes in the nature and volume of the portfolio, overall portfolio quality, individual loan risk ratings, loan concentrations and historical charge-off trends. Additionally, a rapidly rising interest rate environment could have a material impact on certain borrowers’ ability to pay.

F-53

Financial Review 

Asset Impairment

Contract Acquisition Costs

      TSYS evaluates the carrying value of contract acquisition costs associated with each customer for impairment on the basis of whether these costs are fully recoverable from expected undiscounted net operating cash flows of the related contract. The determination of expected undiscounted net operating cash flows requires management to make estimates.

      These costs may become impaired with the loss of a contract, the financial decline of a client, termination of conversion efforts after a contract is signed, diminished prospects for current clients or if the TSYS’ actual results differ from its estimates of future cash flows.

      If the actual cash flows are not consistent with the TSYS’ estimates, a material impairment charge may result.

      Note 6 in the notes Synovus’ Consolidated Financial Statements contains a discussion of contract acquisition costs. The net carrying value of contract acquisition costs on Synovus’ Consolidated Balance Sheets as of December 31, 2006 was $167.4 million.

Software Development Costs

      TSYS evaluates the unamortized capitalized costs of software development for impairment as compared to the net realizable value of the software product which is determined by expected undiscounted net operating cash flows. The amount by which the unamortized software development costs exceed the net realizable value is written off in the period that such determination is made. If the actual cash flows are not consistent with TSYS’ estimates, a material write-off may result.

      Note 6 in the notes to Synovus’ Consolidated Financial Statements contains a discussion of internally developed software costs. The net carrying value of TSYS’ computer software on Synovus’ Consolidated Balance Sheets as of December 31, 2006 was $216.5 million.

Goodwill

      Under Statement of Financial Accounting Standards Board No. 142 (SFAS 142), goodwill is required to be tested for impairment annually. The combination of the income approach utilizing the discounted cash flow (DCF) method and the market approach, utilizing readily available market valuation multiples, is used to estimate the fair value.

      Under the DCF method, the fair value of the reporting unit reflects the present value of the projected earnings that will be generated by each reporting unit after taking into account the revenues and expenses associated with the reporting unit, the relative risk that the cash flows will occur, the contribution of other assets, and an appropriate discount rate to reflect the value of invested capital. Cash flows are estimated for future periods based on historical data and projections provided by management. If the actual cash flows are not consistent with the Company’s estimates, a material impairment charge may result.

      Notes 2 and 18 in the notes to Synovus’ Consolidated Financial Statements contain a discussion of goodwill. The net carrying value of goodwill on the Synovus’ Consolidated Balance Sheets as of December 31, 2006 was $669.5 million.

Long-Lived Assets and Other Intangibles

      The Company reviews long-lived assets, such as property and equipment and other intangibles subject to amortization, including core deposit premiums and customer relationships, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the actual cash flows are not consistent with the Company’s estimates, a material impairment charge may result.

Transaction Processing Provisions

      A significant number of TSYS’ contracts with large clients contain service level agreements which can result in TSYS incurring performance penalties if contractually required service levels are not met. When providing these accruals, TSYS takes into consideration such factors as the prior history of performance penalties and processing errors incurred, actual contractual penalties inherent in TSYS’ contracts, progress towards milestones and known processing errors not covered by insurance.

      If the actual performance penalties incurred are not consistent with TSYS’ estimates, performance penalties and processing errors, which are recorded in other operating expenses, may be materially different than was initially recorded. TSYS’ experience and extensive data accumulated historically indicates that these estimates have proven reliable over time.

F-54

Financial Review 

Acquisitions

      Table 1 summarizes the acquisitions completed during the past three years.

Table 1 Acquisitions

(Dollars in thousands)

				Total		Shares
Company and Location		Date Closed		Assets		Issued		Cash
TSYS Managed Services EMEA, Ltd.			November 16, 2006	$	13,281		—	$	2,530
	Milton Keynes, England
Card Tech, Ltd. (TSYS Card Tech)			July, 11 2006		69,980		—		59,291
	London, England
Banking Corporation of Florida			April 1, 2006		417,528		2,938,791		—
	Naples, Florida
Riverside Bancshares, Inc.			March 25, 2006		766,257		5,883,427		—
	Marietta, GA
Vital Processing Services, L.L.C. (TSYS Acquiring Solutions, L.L.C.)			March 1, 2005		127,673		—		95,794
	Tempe, Arizona
Clarity Payment Solutions, Inc. (TSYS Prepaid, Inc.)			August 2, 2004		74,430		—		53,000
	New York, New York
Trust One Bank			June 1, 2004		513,000		3,841,302		—
	Memphis, Tennessee
Peoples Florida Banking Corporation			January 30, 2004		324,000		1,636,827		32,100
	Palm Harbor, Florida

This information is discussed in further detail in Note 2 of the consolidated financial statements.

Earning Assets, Sources of Funds, and Net Interest Income

Earning Assets and Sources of Funds

      Average total assets for 2006 were $29.83 billion or 13.5% over 2005 average total assets of $26.29 billion. Average earning assets for 2006 were $26.52 billion, which represented 88.9% of average total assets. Average earning assets increased $3.25 billion, or 14.0%, over 2005. The $3.25 billion increase consisted primarily of a $2.82 billion increase in average net loans and a $382.8 million increase in average investment securities available for sale. The primary funding source for this earning asset growth was a $3.01 billion increase in average deposits. Average shareholders’ equity for 2006 was $3.39 billion, which represents an increase of $592.3 million over 2005.

      For 2005, average total assets increased $3.01 billion, or 13.0% from 2004. Average earning assets for 2005 were $23.27 billion, which represented 88.5% of average total assets. For more detailed information on the average balance sheets for the years ended December 31, 2006, 2005, and 2004, refer to Table 3.

Net Interest Income

      Net interest income (interest income less interest expense) is a major component of net income, representing the earnings of the primary business of gathering funds from customer deposits and other sources and investing those funds in loans and investment securities. Our long-term objective is to manage those assets and liabilities to maximize net interest income while balancing interest rate, credit, liquidity, and capital risks.

      Net interest income is presented in this discussion on a tax-equivalent basis, so that the income from assets exempt from federal income taxes is adjusted based on a statutory marginal federal tax rate of 35% in all years (See Table 2). The net interest margin is defined as taxable-equivalent net interest income divided by average total interest earning assets and provides an indication of the efficiency of the earnings from balance sheet activities. The net interest margin is affected by changes in the spread between interest earning asset yields and interest bearing liability costs (spread rate), and by the percentage of interest earning assets funded by non-interest bearing funding sources.

F-55

Financial Review 

      Net interest income for 2006 was $1.13 billion, up $165.0 million, or 17.0%, from 2005. On a taxable-equivalent basis, net interest income was $1.14 billion, up $164.4 million, or 16.9%, over 2005. During 2006, average interest earning assets increased $3.25 billion, or 14.0%, with the majority of this increase attributable to loan growth. Increases in the level of deposits and other borrowed funds were the primary funding sources for the increase in earning assets.

      During the third quarter of 2004, Synovus reassessed the standard loan origination costs and classification methodology used in conjunction with its accounting for loan origination fees and costs. As part of this assessment, Synovus changed its methodology and now recognizes these costs netted against origination fees over the life of the respective loans as an adjustment of yield (interest income). Synovus had previously recognized fee income over the life of its loans after recognizing a portion of fee income upon loan origination to offset origination costs. The new methodology was implemented on a prospective basis effective October 18, 2004. The change was not material to Synovus’ financial position, results of operations, or cash flows. The new methodology did, however, result in a decrease in general and administrative expenses of $37.7 million for 2005 as compared to 2004 with a corresponding decrease (of approximately the same amount) in interest income and the net interest margin compared to 2004.

Net Interest Margin

      The net interest margin after fees was 4.30% for 2006, up 11 basis points from 2005. The yield on earning assets increased 116 basis points, which was partially offset by a 105 basis point increase in the effective cost of funds, which includes non-interest bearing funding sources, primarily demand deposits.

      The primary increase in the yield on earning assets came from increased yields on loans, which increased 127 basis points, primarily due to increased yields on the variable rate portion of the loan portfolio. These loan yields were favorably impacted by a 177 basis point increase in the average prime rate in 2006 as compared to 2005. The primary factors driving the 105 basis point increase in the effective cost of funds were a 137 basis point increase in the cost of non-brokered time deposits and a 156 basis point increase in the cost of money market accounts. These rate increases were a result of the higher interest rate environment and growth in these accounts as consumer preference continued to favor higher yielding deposit accounts. A more competitive pricing environment in our marketplace also contributed to the increase in the cost of funds.

      The net interest margin was 4.19% for 2005, down 3 basis points from 2004. This decrease was due to the aforementioned change in classification methodology for loan origination fees and costs. The net interest margin before fees was 4.05% in 2005, up 13 basis points from 3.92% in 2004. This increase resulted from a 95 basis point increase in the yield on earning assets, which was partially offset by an 82 basis point increase in the effective cost of funds, which includes non-interest bearing funding sources, primarily demand deposits.

      The primary increase in the yield on earning assets came from increased yields on loans before fees. Loan yields, which increased by 105 basis points, were favorably impacted by a 185 basis point increase in the average prime rate in 2005 as compared to 2004. The effective cost of funds increased by 82 basis points, primarily due to an 86 basis point increase in the cost of time deposits (including brokered time deposits) and a 135 basis point increase in the cost of money market accounts. These rate increases were a result of the higher interest rate environment as well as strong growth in these accounts as consumer behavior shifted to take advantage of higher yielding deposit accounts.

Table 2     Net Interest Income

(In thousands)

		Years Ended December 31,
		2006		2005		2004
Interest income		$	2,016,466		1,496,225		1,159,020
Taxable-equivalent adjustment			5,828		6,439		6,960
	Interest income, taxable-equivalent		2,022,294		1,502,664		1,165,980
Interest expense			882,592		527,378		298,341
	Net interest income, taxable-equivalent	$	1,139,702		975,286		867,639

F-56

Financial Review 

________________________________________________________________________________

Table 3 Consolidated Average Balances, Interest, and Yields

(Dollars in thousands)

			2006									2005									2004
			Average						Yield/			Average						Yield/			Average						Yield/
			Balance			Interest			Rate			Balance			Interest			Rate			Balance			Interest			Rate
Assets
Interest earning assets:
	Taxable loans, net(a)(b)		$	23,254,147			1,857,004			7.99	%	$	20,406,102			1,372,428			6.73	%	$	17,881,572			1,048,337			5.86	%
	Tax-exempt loans, net(a)(b)(c)			61,791			4,413			7.14			63,582			4,265			6.71			71,394			4,257			5.96
	Allowance for loan losses			(309,658	)		—			—			(279,534	)		—			—			(247,054	)		—			—
		Loans, net		23,006,280			1,861,417			8.09			20,190,150			1,376,693			6.82			17,705,912			1,052,594			5.94
	Investment securities available for sale:
		Taxable investment securities		3,009,962			129,218			4.29			2,609,113			98,728			3.78			2,366,631			88,560			3.74
		Tax-exempt investment securities(c)		198,691			13,533			6.81			216,773			15,044			6.94			230,815			16,268			7.05
		Total investment securities		3,208,653			142,751			4.45			2,825,886			113,772			4.03			2,597,446			104,828			4.04
Trading account assets				43,201			2,691			6.23			11,380			642			5.64			—			—			—
	Interest earning deposits with banks			8,837			375			4.23			6,362			172			2.70			4,197			32			0.76
	Federal funds sold and securities purchased under resale agreements			124,903			6,422			5.14			120,809			4,082			3.38			148,685			1,945			1.31
	Mortgage loans held for sale			132,332			8,638			6.53			113,969			7,303			6.41			117,479			6,581			5.60
		Total interest earning assets		26,524,206			2,022,294			7.62			23,268,556			1,502,664			6.46			20,573,719			1,165,980			5.67
	Cash and due from banks			646,782									706,158									655,069
	Premises and equipment, net			919,083									913,551									855,197
	Other real estate			26,000									22,690									26,420
	Other assets(d)			1,715,101									1,380,535									1,164,596
		Total assets	$	29,831,172								$	26,291,490								$	23,275,001
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
	Interest bearing demand deposits		$	3,006,308			57,603			1.92		$	2,975,016			35,085			1.18		$	2,762,104			16,764			0.61
	Money market accounts			6,388,862			263,334			4.12			5,193,943			132,739			2.56			4,481,042			54,387			1.21
	Savings deposits			542,793			3,538			0.65			555,205			1,958			0.35			548,736			1,002			0.18
	Time deposits (less brokered time deposits)			6,340,959			281,211			4.43			4,918,781			150,809			3.07			4,481,935			103,683			2.31
	Brokered time deposits			2,855,191			134,263			4.70			2,557,660			86,714			3.39			1,730,937			40,448			2.34
	Federal funds purchased and securities sold under repurchase agreements			1,534,312			71,439			4.66			1,103,005			31,569			2.86			1,479,815			19,286			1.30
	Long-term debt			1,519,997			71,204			4.68			2,087,749			88,504			4.24			1,718,556			62,771			3.65
		Total interest bearing liabilities		22,188,422			882,592			3.97			19,391,359			527,378			2.72			17,203,125			298,341			1.73
Non-interest bearing demand deposits				3,488,580									3,408,289									3,048,465
Other liabilities				784,216									692,346									544,007
Shareholders’ equity				3,369,954									2,799,496									2,479,404
		Total liabilities and shareholders’ equity	$	29,831,172								$	26,291,490								$	23,275,001
Net interest income/margin							1,139,702			4.30	%					975,286			4.19	%					867,639			4.22	%
Taxable-equivalent adjustment							(5,828	)								(6,439	)								(6,960	)
Net interest income, actual						$	1,133,874								$	968,847								$	860,679

(a)	Average loans are shown net of unearned income. Nonperforming loans are included.
(b)	Interest income includes loan fees as follows: 2006 — $40.4 million, 2005  — $33.5 million, 2004 — $60.4 million.

(c) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.

(d) Includes average net unrealized gains (losses) on investment securities available for sale of ($54.5) million, ($22.6) million, and $12.6 million for the years ended December 31, 2006, 2005, and 2004, respectively.

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________________________________________________________________________________

Table 4     Rate/Volume Analysis

(In thousands)

			2006 Compared to 2005									2005 Compared to 2004
			Change Due to (a)									Change Due to (a)
						Yield/			Net						Yield/			Net
			Volume			Rate			Change			Volume			Rate			Change
Interest earned on:
	Taxable loans, net		$	191,673			292,903			484,576			147,937			176,154			324,091
	Tax-exempt loans, net(b)			(120	)		267			147			(466	)		474			8
	Taxable investment securities			15,152			15,338			30,490			9,069			1,099			10,168
	Tax-exempt investment securities(b)			(1,255	)		(257	)		(1,512	)		(990	)		(234	)		(1,224	)
	Trading account assets			1,795			255			2,050			642			—			642
	Interest earning deposits with banks			67			135			202			16			124			140
	Federal funds sold and securities purchased under resale agreements			138			2,203			2,341			(365	)		2,502			2,137
	Mortgage loans held for sale			1,177			159			1,336			(197	)		919			722
		Total interest income		208,627			311,003			519,630			155,646			181,038			336,684
Interest paid on:
	Interest bearing demand deposits			369			22,149			22,518			1,299			17,022			18,321
	Money market accounts			30,590			100,006			130,596			8,626			69,726			78,352
	Savings deposits			(43	)		1,623			1,580			12			944			956
	Time deposits (less brokered time deposits)			43,661			86,741			130,402			10,091			37,035			47,126
	Brokered time deposits			10,086			37,463			47,549			19,345			26,921			46,266
	Federal funds purchased and securities sold under repurchase agreements			12,335			27,535			39,870			(4,899	)		17,182			12,283
	Other borrowed funds			(24,073	)		6,772			(17,301	)		13,476			12,257			25,733
		Total interest expense		72,925			282,289			355,214			47,950			181,087			229,037
		Net interest income	$	135,702			28,714			164,416			107,696			(49	)		107,647

(a)	The change in interest due to both rate and volume has been allocated to the rate component.
(b)	Reflects taxable-equivalent adjustments using the statutory federal income tax rate of 35% in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.

Non-Interest Income

      Non-interest income consists of TSYS revenues as well as a wide variety of fee generating services from the Financial Services segment. Consolidated non-interest income was $2.13 billion, $1.92 billion, and $1.52 billion for the years ended December 31, 2006, 2005, and 2004, respectively. TSYS’ combined revenues represented 83.2% of consolidated non-interest income in 2006 compared to 82.9% in 2005.

      Non-interest income excluding reimbursable items totaled $1.78 billion in 2006, an increase of 10.9% from 2005. For 2005, non-interest income excluding reimbursable items was $1.61 billion, an increase of 24.4% from 2004. Revenues from electronic payment processing, merchant acquiring services, and other transaction processing services offered by TSYS were the largest contributors, increasing $143.8 million, or 11.2% in 2006, and increasing $336.4 million, or 35.3% in 2005 over the previous year. Reported Financial Services’ non-interest income was $359.4 million in 2006, up 9.8% compared to 2005. Excluding amounts related to acquisitions completed in 2006, Financial Services non-interest income was up $30.5 million or 9.3% over 2005. Financial Services’ non-interest income was $327.4 million in 2005, flat compared to 2004.

Transaction Processing Services

      TSYS’ revenues are derived from providing electronic payment processing and related services to financial and

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nonfinancial institutions, generally under long-term processing contracts. TSYS’ services are provided primarily through its cardholder systems, TS2 and TS1, to financial institutions and other organizations throughout the United States and internationally. TSYS currently offers merchant acquiring services to financial institutions and other organizations mainly through its majority owned subsidiary, GP Network Corporation (GP Net), and its wholly owned subsidiary, TSYS Acquiring Solutions, L.L.C. (TSYS Acquiring). The following table summarizes TSYS’ accounts on file at December 31, 2006, 2005, and 2004.

Accounts on File (AOF) Information

							Percent Change
	2006		2005		2004		2006 vs. 2005			2005 vs. 2004
(In millions)
At December 31		416.4		437.9		357.6		(4.9	)%		22.4	%
YTD Average		415.6		401.1		303.1		3.6			32.3

Major Customers

      A significant amount of TSYS’ revenues is derived from long-term contracts with large clients, including its major customers. TSYS derives revenues from providing various processing and other services to these clients, including processing of consumer and commercial accounts, and providing merchant acquiring services, as well as revenues for reimbursable items. For 2006, TSYS’ major customers included Bank of America and JP Morgan Chase & Co (Chase). Due to the deconversion of the Bank of America consumer card portfolio in October 2006, as discussed below, Bank of America is not expected to be a major customer in 2007.

      On January 25, 2005, TSYS announced that it had extended its agreement with Bank of America for an additional five years through 2014. Additionally, on October 6, 2005, TSYS Acquiring announced the renewal of its agreement to provide merchant acquiring services to Bank of America.

      On June 30, 2005, Bank of America announced its planned acquisition of MBNA. In December 2005, TSYS received official notification from Bank of America of its intent, pending its acquisition of MBNA, to shift the processing of its consumer card portfolio in house in October 2006. On January 1, 2006, Bank of America’s acquisition of MBNA was completed and in October 2006 TSYS deconverted the Bank of America consumer card portfolio. TSYS continues to provide commercial and small business card processing for Bank of America and MBNA, as well as merchant acquiring for Bank of America, according to the terms of the existing agreements for those services.

      TSYS’ processing agreement with Bank of America provided that Bank of America could terminate its agreement with TSYS for consumer credit card services upon the payment of a termination fee, the amount of which was dependent upon several factors. This fee of approximately $68.9 million was received in October 2006 in conjunction with the Bank of America consumer card portfolio deconversion, and is included in income from electronic payment processing services in the 2006 consolidated statement of income. In anticipation of the deconversion, TSYS accelerated the amortization of approximately $6 million in contract acquisition costs (comprised of $4 million of amortization related to payments for processing rights, which was recorded as a reduction of revenues, and $2 million of amortization expense related to conversion costs). The loss of Bank of America could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

      In 2006, all relationships with Bank of America generated a combined total of $434.2 million in revenues, or 24.3% and 13.3% of TSYS and Synovus’ total revenues, respectively. TSYS projects an annualized loss of approximately $243.0 million in revenues with the deconversion of the consumer card portfolio, or approximately 13.6% of TSYS’ total revenues in 2006. Excluding reimbursable items, TSYS projects an annualized reduction of approximately $143.8 million in revenues from the loss of the consumer card portfolio, which is approximately 10.0% of TSYS’ revenues before reimbursables in 2006.

      Bank of America accounted for approximately 24.3%, 22.3% and 18.5% of TSYS’ total revenues for the years ended December 31, 2006, 2005, and 2004, respectively. This amount consists of processing revenues for consumer, commercial and merchant acquiring services, as well as reimbursable items. Of the $434.2 million in revenues for the year ended December 31, 2006, approximately 29.8% was derived from Bank of America for reimbursable items. Bank of America accounted for approximately 21.2%, 17.8% and 14.9% of TSYS’ revenues before reimbursable items for the years ended December 31, 2006, 2005 and 2004, respectively. Bank of America accounted for approximately 13.3%, 12.4% and 9.2% of Synovus’ total revenues and accounted for 10.5%, 8.9% and 6.6% of Synovus’ revenues before reimbursable items for the years ended December 31, 2006, 2005 and 2004. The majority of the increase in revenues derived from Bank of America for 2005, as compared to 2004, is the result of including TSYS Acquiring’s revenues for merchant acquiring services from Bank of America. With the deconversion of the consumer card portfolio in 2006, TSYS believes that revenues from Bank of America in 2007 will represent less than 10% of TSYS’ consolidated revenues.

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      On October 13, 2004, TSYS finalized a definitive agreement with Chase to service the combined card portfolios of Chase Card Services and to upgrade its card-processing technology. Pursuant to the agreement, TSYS converted the consumer accounts of Chase to the modified version of TS2 in July 2005. TSYS expects to maintain the card-processing functions of Chase Card Services for at least two years. Chase Card Services then has the option to either extend the processing agreement for up to five additional two-year periods or migrate the portfolio in-house, under a perpetual license of a modified version of TS2 with a six-year payment term. TSYS expects that Chase will discontinue its processing agreement according to the original schedule and will license TSYS’ processing software in the third quarter of 2007.

      Chase accounted for approximately 10.1%, 10.1% and 9.0% of TSYS’ total revenues for the years ended December 31, 2006, 2005 and 2004, respectively. The loss of Chase could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

      TSYS works to maintain a large and diverse customer base across various industries. However, in addition to its major customers, TSYS has other large clients representing a significant portion of its total revenues. The loss of any one of TSYS’ large clients could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

International Revenue

      Total revenues from clients based in Europe were $158.8 million for 2006, a 19.9% increase over the $132.6 million in 2005, which was a 29.2% increase over the $102.6 million in 2004. The growth in revenues in 2006 from clients based in Europe was a result of the growth of existing clients, the conversion of new accounts, the effect of currency translation and the increased use of value added products and services by clients in Europe.

      Total revenues from clients based in Mexico were $12.3 million for 2006, a 60.8% increase over the $7.6 million in 2005, which was a 32.0% decrease from the $11.2 million in 2004. The growth in revenues in 2006 from clients based in Mexico was a result of the conversion of new accounts and the growth of existing clients.

      International revenues for the year ended December 31, 2006 include revenues of approximately $13.1 million associated with TSYS Card Tech for several countries and regions, including Europe, Japan and Others.

      On July 11, 2006, TSYS acquired Card Tech, Ltd., a privately owned London-based payments firm, and related companies, increasing TSYS’ electronic payment processing and merchant acquiring capabilities and extending its geographic reach to Asia Pacific, Europe, the Middle East and Africa. TSYS paid an aggregate consideration of approximately $59.3 million, including direct acquisition costs. Card Tech, Ltd. was established in 1989 and maintains service centers in London, England; Dubai, United Arab Emirates; Nicosia, Cyprus; and Kuala Lumpur, Malaysia. TSYS formed and/or acquired five companies in connection with the Card Tech, Ltd. acquisition, which TSYS collectively refers to as TSYS Card Tech.

      TSYS Card Tech’s software applications are utilized globally. TSYS Card Tech offers a server-based system with an established global footprint for comprehensive issuing and acquiring services. TSYS Card Tech offers products and services for installment loans, credit, debit, merchant acquiring and prepaid payment platforms in addition to fraud, risk management, authorizations, chargebacks, e-commerce and m-commerce solutions. TSYS Card Tech’s applications are browser-based, multilingual, multicurrency and multi-country (including double-byte-enabled).

Value Added Products and Services

      TSYS’ revenues are impacted by the use of optional value added products and services of TSYS’ processing systems. Value added products and services are optional features to which each client can choose to subscribe in order to potentially increase the financial performance of its portfolio. Value added products and services include: risk management tools and techniques, such as credit evaluation, fraud detection and prevention, and behavior analysis tools; and revenue enhancement tools and customer retention programs, such as loyalty programs and bonus rewards. These revenues can increase or decrease from period to period as clients subscribe to or cancel these services. Value added products and services are included primarily in electronic payment processing services revenue.

      For the years ended December 31, 2006, 2005, and 2004, value added products and services represented 12.4%, 12.6%, and 13.8%, respectively, of TSYS’ total revenues. Revenues from these products and services, which include some reimbursable items paid to third-party vendors, increased 9.7%, or $19.6 million, for 2006 compared to 2005, and increased 23.2%, or $38.0 million, for 2005 compared to 2004.

Electronic Payment Processing Services

      Electronic payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, cards embossed and mailed, and other

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processing services for cardholder accounts on file. Cardholder accounts on file include active and inactive consumer credit, retail, debit, stored value, government services and commercial card accounts. Due to the strong organic growth of TSYS clients and the expanding use of cards, as well as increases in the scope of services offered to clients, revenues relating to electronic payment processing services have continued to grow.

      Electronic payment processing services revenues increased 13.6%, or $118.0 million, for the year ended December 31, 2006, compared to the year ended December 31, 2005, which increased 14.9%, or $112.6 million, compared to the year ended December 31, 2004. The impact of acquisitions on consolidated electronic payment processing services revenues was $24.4 million in 2006, $19.6 million in 2005 and $8.2 million in 2004.

      In March 2004, Bank of America acquired FleetBoston. In connection with the extended agreement with Bank of America, TSYS converted the FleetBoston card portfolio to TSYS’ processing system in March 2005.

      In August 2005, TSYS finalized a five year definitive agreement with Capital One to provide processing services for its North American portfolio of consumer and small business credit card accounts. TSYS plans to complete the conversion of Capital One’s portfolio from its in house processing system to TS2 in phases, beginning in July 2006 and ending in early 2007. In October 2006, TSYS converted the vast majority of the Capital One portfolio onto its TS2 platform. TSYS expects to maintain the card processing functions of Capital One for at least five years. After a minimum of three years of processing with TSYS, the agreement provides Capital One the opportunity to license TS2 under a long-term payment structure.

      In July 2003, Sears and Citigroup announced an agreement for the sale by Sears to Citigroup of the Sears credit card and financial services businesses. The TSYS/Sears agreement granted to Sears the one-time right to market test TSYS’ pricing and functionality after May 1, 2004, which right was exercised by Citigroup. In June 2005, TSYS announced that Citigroup would move the Sears consumer MasterCard and private-label accounts from TSYS in a deconversion that occurred in June 2006. During the year ended December 31, 2006, TSYS’ revenues from the agreement with Sears represented less than 10% of TSYS’ consolidated revenues. TSYS expects to continue supporting commercial card accounts for Citibank, as well as Citibank’s Banamex USA consumer accounts, according to the terms of the existing agreements for those portfolios.

Merchant Acquiring Services

      Merchant acquiring services revenues are derived from providing acquiring solutions, related systems and integrated support services to financial institutions and other merchant acquirers. Revenues from merchant acquiring services include processing all payment forms including credit, debit, prepaid, electronic benefit transfer and electronic check for merchants of all sizes across a wide array of retail market segments. Merchant acquiring services include authorization and capture of transactions; clearing and settlement of transactions; information reporting services related to transactions; merchant billing services; and point-of-sale equipment sales and service.

      On March 1, 2005, TSYS acquired the remaining 50% of TSYS Acquiring, formerly operating as Vital Processing Services, L.L.C., from Visa U.S.A. (Visa) for $95.8 million in cash, including direct acquisition costs of $794 thousand. TSYS Acquiring operates as a separate, wholly owned subsidiary of TSYS. As a result of the acquisition of control of TSYS Acquiring, TSYS changed from the equity method of accounting for the investment in TSYS Acquiring and began consolidating TSYS Acquiring’s balance sheet and results of operations.

      Revenues from merchant acquiring services are mainly generated by TSYS’ wholly owned subsidiary, TSYS Acquiring, and majority owned subsidiary, GP Net. Merchant acquiring services revenues increased 9.6%, or $22.9 million, for the year ended December 31, 2006, compared to the year ended December 31, 2005. Merchant acquiring services revenue for the years ended December 31, 2006, 2005, and 2004 were $260.3 million, $237.4 million, and $26.2 million, respectively. The increase is completely attributable to the consolidation of TSYS Acquiring’s results effective March 1, 2005. Prior to the acquisition of TSYS Acquiring, TSYS’ revenues included fees TSYS charged to TSYS Acquiring for clearing and settlement processing support. The impact of acquisitions on consolidated merchant acquiring services revenues was $229.9 million in 2006 and $209.3 million in 2005.

      TSYS Acquiring’s results are driven by the authorization and capture transactions processed at the point-of-sale and clearing and settlement transactions. TSYS Acquiring’s authorization and capture transactions are primarily through dial-up or Internet connectivity.

      During 2006, TSYS Acquiring renewed long-term agreements with five of its top 20 clients, as well as signed several new clients. TSYS Acquiring also announced plans to integrate clearing and settlement processing for Discover Network card acceptance into its offering for merchant acquirers and independent sales organizations.

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      TSYS Acquiring also expanded its solution set during the year to include enhanced gift card, enhanced statements, new Internet-based reporting capabilities, contactless, merchant cash advance services and upgraded Dynamic Currency Conversion and multi-currency processing services.

      In December 2005, TSYS Acquiring closed its point of sale terminal direct distribution sales office in San Diego, CA, resulting in a decrease of approximately $13.3 million in revenue in 2006, as compared to 2005. TSYS Acquiring is also experiencing moderate market price compression as well as client deconversions.

Other Transaction Processing Services

      Revenues from other transaction processing services consist primarily of revenues generated by TSYS’ wholly owned subsidiaries not included in electronic payment processing services or merchant acquiring services, as well as TSYS’ business process management services. These services include mail and correspondence processing services, teleservicing, data documentation capabilities, offset printing, client service, collections and account solicitation services. TSYS provides clients, through its wholly owned subsidiary, Columbus Depot Equipment Company, with an option to lease certain equipment necessary for online communications and for the use of TSYS applications. Through its wholly owned subsidiary Columbus Productions, Inc., TSYS provides full-service commercial printing services to TSYS clients and others. TSYS Total Debt Management, Inc. (TDM) provides recovery collections work, bankruptcy process management, legal account management and skip tracing. ESC provides targeted loyalty consulting, as well as travel, gift card and merchandise reward programs to more than 40 national and regional financial institutions in the United States. TSYS Managed Services EMEA, Ltd. (TSYS Managed Services) provides specialized customer-servicing operations, including back-office, cross-selling and up-selling activities for financial institutions engaged in electronic payment processing and merchant acquiring activities.

      Revenues from other transaction processing services increased $3.0 million, or 1.6%, in 2006, compared to 2005. In 2005, revenues from other transaction processing services increased $12.5 million, or 7.3%, compared to 2004. Other services revenues increased primarily as a result of increased debt collection services performed by TDM, acquisitions and the revenues associated with ESC. The impact of acquisitions on consolidated other services revenues was $3.2 million in 2006, $1.2 million in 2005 and $0.1 million in 2004.

      In May 2006, TSYS’ collection subsidiary renegotiated a contract with its largest client. One of the provisions that was changed related to the handling of attorney fees and court costs. In reviewing the indicators set forth in EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” TSYS met the indicators of “gross reporting,” specifically, TSYS is the primary obligor and adds value as part of the service. Prior to the renegotiation, TSYS recognized $25.9 million, $32.1 million and $33.9 million of attorney fees and court costs for the years ended December 31, 2006, 2005 and 2004, respectively, as other transaction processing services revenues.

      On November 16, 2006, TSYS announced a joint venture with Merchants, a customer-contact company and a wholly owned subsidiary of Dimension Data, to deliver a comprehensive range of managed services to financial institutions across Europe, the Middle East and Africa. The new venture is called TSYS Managed Services and includes existing Merchants centers that comprise more than 200 seats in Milton Keynes, England, near London, and Barneveld, The Netherlands, near Amsterdam. TSYS Managed Services is expected to add future centers in other countries throughout Europe and in South Africa.

      Prior to the new agreement, TSYS contracted with Merchants to provide these services to TSYS’ international clients, and these services were characterized as reimbursable items. With the new agreement, these services will be characterized as other transaction processing services revenues. TSYS Managed Services operates as a separate, majority owned subsidiary of TSYS.

Financial Services

      Financial Services’ total non-interest income was $359.4 million, $327.4 million, and $327.4 million for the years ended December 31, 2006, 2005, and 2004, respectively. Table 5 shows the principal components of Financial Services’ non-interest income.

      Service charges on deposits represent the single largest fee income component for Financial Services. Service charges on deposits totaled $112.4 million in 2006, a increase of 2.2% from the previous year, and $110.0 million in 2005, a decrease of 7.3% from 2004. Service charges on deposit accounts consist of non-sufficient funds (NSF) fees (which represent approximately two-thirds of the total), account analysis fees, and all other service charges. Account analysis fees were down $1.6 million or 9.9% from 2005 levels. The decrease is mainly due to higher earnings credits on commercial demand deposit accounts (DDA). All other service charges on deposit accounts, which consist primarily of monthly fees on consumer DDA and savings accounts, were down $1.8 million or 7.8% compared to 2005. The decline in all other service

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charges was largely due to growth in the number of checking accounts with no monthly service charge. We experienced an increase in NSF fees, with a year-over-year increase of $5.8 million or 8.2%.

      Fiduciary and asset management fees are derived from providing estate administration, employee benefit plan administration, personal trust, corporate trust, investment management and financial planning services. At December 31, 2006 and 2005, the market value of assets under management was approximately $8.80 billion and $8.56 billion, respectively. Assets under management increased 2.8% over 2005. Assets under management consist of all assets where Synovus has investment authority as well as our proprietary mutual funds. Assets under advisement were approximately $3.82 billion and $3.60 billion at December 31, 2006 and 2005, respectively. Assets under advisement consist of non-managed assets as well as non-custody assets where Synovus earns a consulting fee. Assets under advisement increased 6.2% over 2005. Total assets under management and advisement by Synovus were $12.63 billion in 2006 compared to $12.16 billion in 2005. The increase in fiduciary and asset management fees is primarily due to higher basis points on average being earned on managed assets in 2006 as well as certain one-time termination fees recognized in 2006.

      At December 31, 2005 and 2004, the market value of total assets under management and advisement was approximately $12.16 billion and $12.67 billion, respectively. These assets decreased 4.0% primarily due to the loss of one account in 2005.

      Brokerage and investment banking revenue was $26.7 million in 2006, a 9.2% increase over the $24.5 million reported in 2005. Brokerage assets were $4.14 billion and $4.18 billion as of December 31, 2006 and 2005, respectively. The increase in revenue was primarily due to the expansion of our Capital Markets unit during 2005 with a full year of operation in 2006.

      Total brokerage and investment banking revenue for 2005 was $24.5 million, up 12.6% over 2004. The increase in revenue was mainly driven by expansion of our Capital Markets unit during 2005.

      Mortgage banking income was $29.3 million in 2006, a 2.0% increase from 2005 levels. Mortgage production volume is $1.51 billion in 2006, flat compared to 2005.

      Total mortgage banking income for 2005 was $28.7 million, up 9.1% from 2004 levels. Total mortgage production volume was $1.51 billion in 2005, compared to $1.39 billion in 2004.

      Bankcard fees totaled $44.3 million in 2006, an increase of 14.1% over the previous year, and $38.8 million in 2005, an increase of 17.7% from 2004. Bankcard fees consist of credit card merchant and interchange fees and debit card interchange fees. Debit card interchange fees were $14.6 million in 2006, an increase of 21.0% over 2005. Credit card fees were $29.7 million in 2005, up 11.1% compared to 2005.

      Other fee income includes fees for letters of credit, safe deposit box fees, access fees for automatic teller machine use, official check issuance fees, and other miscellaneous fee-related income. The increase for 2006 was primarily due to additional fee income generated from customer interest rate swap transactions of $1.9 million, and $1.2 million in trading gains. For the year ended December 31, 2005, $3.0 million of the total increase was due to customer swaps.

      Other operating income was $61.5 million in 2006, compared to $45.4 million in 2005. The main components of other operating income are income from company-owned life insurance policies, insurance commissions, and other items discussed below.

      Other operating income includes $6.3 million and $4.1 million of gains from private equity investments in 2006 and 2005 respectively, and a $15.8 million gain from the sale of a banking location in 2004.

Table 5 Non-Interest Income - Financial Services Segment

(In thousands)

		2006			2005		2004
Service charges on deposits		$	112,417			109,960		118,649
Fiduciary and asset management fees			48,627			45,453		43,757
Brokerage and investment banking revenue			26,729			24,487		21,748
Mortgage banking income			29,255			28,682		26,300
Bankcard fees			44,303			38,813		32,975
Securities gains, net			(2,118	)		463		75
Other fee income			38,743			34,148		29,158
Other operating income			61,474			45,406		54,779
	Total non-interest income	$	359,430			327,412		327,441

Non-Interest Expense

      Management analyzes non-interest expense in two separate components: Financial Services and Transaction Processing Services. Table 6 summarizes this data for the years ended December 31, 2006, 2005, and 2004.

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Financial Services

2006 vs. 2005

      Reported total non-interest expense for the Financial Services segment increased $117.8 million or 18.2% over 2005. This increase reflects the impact of share-based compensation, required by SFAS No. 123R “Share-Based Payment,” which was effective January 1, 2006 as described in the “Notes To Consolidated Financial Statements” section titled “Note 15 Share-Based Compensation”. The increase for 2006, excluding share-based compensation and the impact of acquisitions, was 13.4%.

      Total salaries and other personnel expense increased $80.2 million or 21.6% in 2006 compared to 2005. Total employees were 7,189 at December 31, 2006, up 550 from 6,639 employees at December 31, 2005. Excluding the impact of acquisitions, the net addition in the number of employees was 352. In addition to normal merit and promotional salary adjustments as well as increases in headcount, this category is impacted by certain items as follows:

•  Incremental share-based compensation expense resulted in an increase in salaries and other personnel expense of $17.0 million.

•  Total performance-based incentive compensation was approximately $62.9 million in 2006, an $11.8 million increase from 2005 levels.

•  The total increase related to the net effect of acquisitions completed in 2006 was approximately $7.3 million.

      Net occupancy and equipment expense increased $9.7 million or 10.7% during 2006. Approximately $2.2 million of the total increase was related to the net effect of acquisitions completed in 2006. Rent expense increased by approximately $2.0 million during 2006. Depreciation increased by $3.0 million.

      Other operating expenses increased $27.9 million or 15.0% over 2005. Approximately $5.0 million of the total increase was related to the net effect of acquisitions completed in 2006. The largest expense category increase was from third party processing services. Excluding acquisitions, third party processing services increased $9.2 million, or 31.1%, in 2006 compared to 2005.

      The efficiency ratio (non-interest expense divided by the sum of federal taxable equivalent net interest income and non-interest income excluding net securities gains) was 51.18% for 2006 compared to 49.79% in 2005. The net overhead ratio (non-interest expense less non-interest income — excluding net securities gains divided by total average assets) was 1.41% for the year compared to 1.27% for 2005.

2005 vs. 2004

      Non-interest expense increased $25.1 million, or 4.0% in 2005 over 2004.

      Salaries and other personnel expenses increased $5.7 million or 1.6%. Approximately $2.0 million of the total increase was related to the net effect of acquisitions and divestitures completed in 2004. The change in classification methodology for loan origination costs, which was implemented on a prospective basis on October 18, 2004, resulted in a decrease in salaries and other personnel expense of $37.7 million. The remaining net increase related to normal merit and promotional salary adjustments, and performance-based incentive compensation.

      Net occupancy and equipment expense increased $8.4 million or 10.2% during 2005. Approximately $1.0 million of the total increase was related to the net effect of acquisitions and divestitures completed in 2004. Rent expense increased by approximately $1.1 million during 2005. Repairs and maintenance expense on equipment increased by $1.2 million. Amortization on the S-Link technology platform implemented in 2004 represented $1.3 million of the increase.

      Other operating expenses increased $11.0 million or 6.3% during 2005. Approximately $1.8 million of the total increase was related to acquisitions and divestitures completed in 2004. This comparison is also impacted by an $8.1 million expense recognized in 2004 related to an estimated loss from non-recovered credit card charge backs. Professional fees increased $4.4 million in 2005 compared to 2004.

Transaction Processing Services

      During 2006, TSYS’ non-interest expense as a percentage of revenues, decreased to 79.5%, compared to 81.7% and 81.3% for 2005 and 2004, respectively. As a percentage of revenues, the decrease in expenses for the year ended December 31, 2006 and the increase for the year ended December 31, 2005, include an increase of $1.1 million and a decrease of $1.3 million related to the effects of currency translation of TSYS’ foreign based subsidiaries, branches and divisions, respectively. The impact of acquisitions on consolidated total expenses was $251.8 million in 2006, $221.4 million in 2005, and $9.8 million in 2004. Non-interest expense was $1.43 billion in 2006, compared to $1.32 billion in 2005 and $985.5 million in 2004.

      Salaries and other personnel expense increased 12.4%, or $58.1 million in 2006 over 2005, compared to 26.9% in 2005

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over 2004. The impact of acquisitions on consolidated salaries and other personnel expenses was $91.5 million in 2006, $64.4 million in 2005 and $3.3 million in 2004. In addition, the change in salaries and other personnel expense is associated with the normal salary increases and related benefits, offset by the level of employment costs capitalized as software development and contract acquisition costs. Salaries and other personnel expense include the accrual for performance-based incentive benefits, which includes salary bonuses, profit sharing and employer 401(k) expenses. For the years ended December 31, 2006, 2005 and 2004, TSYS accrued $39.0 million, $48.1 million and $22.5 million, respectively, of performance-based incentives.

      TSYS’ salaries and other personnel expense is greatly influenced by the number of employees. During 2006, the average number of employees increased to 6,642 compared to 6,317 in 2005 and 5,598 in 2004. The majority of the increase in the number of employees in 2006 as compared to 2005 is a result of the acquisitions of TSYS Card Tech and TSYS Managed Services, which added 265 employees. The majority of the increase in the number of employees in 2005 as compared to 2004 is a result of the acquisition of TSYS Acquiring.

      Share-based compensation expenses include the impact of expensing the fair value of stock options in 2006, in accordance with SFAS No. 123R, as well as expenses associated with non-vested shares. For the year ended December 31, 2006, share-based compensation was $9.2 million, compared to $1.1 million for the same period in 2005.

      Net occupancy and equipment expense increased 13.1% in 2006 over 2005, compared to 15.9% in 2005 over 2004. The impact of acquisitions on consolidated net occupancy and equipment expenses was $35.7 million in 2006, $24.6 million in 2005, and $1.0 million in 2004.

      Depreciation and amortization expense increased $26.6 million, or 24.6%, to $135.1 million for the year ended December 31, 2006, compared to $108.5 million for the year ended December 31, 2005, which increased $27.2 million, or 33.5%, from $81.3 million for the year ended December 31, 2004. Amortization expense of licensed computer software increased by $21.7 million, or 40.8%, in 2006 over 2005 as TSYS expanded its processing capacity. Amortization expense of licensed computer software increased by $15.6 million in 2005 compared to 2004. TSYS has certain license agreements requiring increased license fees based upon achieving certain thresholds of processing capacity commonly referred to as millions of instructions per second or MIPS. These licenses are amortized using a units-of-production basis. As a result of the deconversions scheduled during 2006 and 2007, TSYS’ total future MIPS are expected to decline, resulting in an increase in software amortization for the periods prior to the deconversion dates. As it converted the vast majority of the Capital One portfolio, TSYS was operating at its highest production capacity in TSYS’ history. This capacity level was designed to maintain the service processing needs of all clients and was reduced as a certain client deconverted in October 2006. Amortization expense of developed software increased $327 thousand for the year ended December 31, 2006, as compared to the prior period in 2005, as a result of some of TSYS’ developed software becoming available for use in 2006 and being amortized. Amortization expense of developed software decreased $750 thousand for the year ended December 31, 2005, as compared to the prior period in 2004, as a result of some of the TSYS’ developed software becoming fully amortized during 2005 and 2004. As a result of the deconversion of a consumer portfolio in October 2006, TSYS accelerated the amortization of a mainframe software operating system dedicated solely to the processing of the deconverted portfolio. The acceleration resulted in an increase of approximately $11.0 million in software amortization and related prepaid maintenance in 2006.

      Through December 2004, TSYS invested a total of $6.3 million in developing its Integrated Payments (IP) Platform supporting the on-line and off-line debit and stored value markets. IP Platform would have given clients access to all national and regional networks, EBT programs, ATM driving and switching services for on-line debit processing.

      Development relating specifically to the IP on-line debit platform primarily consisted of a third party software solution. During the first quarter of 2005, TSYS evaluated its debit solution and decided to modify its approach in the debit processing market. With the acquisition of TSYS Acquiring and debit alternatives now available, TSYS determined that it would no longer market this third-party software product as its on-line debit solution. TSYS will continue to support this product for existing clients and will enhance and develop a new solution. As a result, TSYS recognized an impairment charge in net occupancy and equipment expense of approximately $3.1 million related to this asset during the first quarter of 2005. As of December 31, 2006, TSYS has approximately $500 thousand capitalized, net of amortization, related to this asset. In September 2005, TSYS also recognized an impairment loss on developed software of $482 thousand.

      During 2004, TSYS decided to change its approach for entry into the Asia-Pacific market. As a result, TSYS recognized a $10.1 million charge to net occupancy and equipment expense for the write-off of the double-byte software development project.

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      TSYS’ equipment and software needs are fulfilled primarily through operating leases and software licensing arrangements. Equipment and software rental expense was $109.4 million for the year ended December 31, 2006, an increase of $12.9 million, or 13.4%, compared to $96.5 million for the year ended December 31, 2005, an increase of $7.8 million, or 8.7%, compared to $88.7 million for the year ended December 31, 2004. TSYS’ equipment and software rentals increased in 2006, as compared to 2005, as a result of software licenses that are leased under processing capacity or MIPS agreements, as well as increased equipment expenses associated with providing additional capacity for the Capital One portfolio conversions.

      Other operating expenses decreased 8.0% in 2006 compared to 2005, and increased 75.8% in 2005 compared to 2004. The impact of acquisitions on consolidated other operating expenses was $78.3 million in 2006, $92.8 million in 2005, and $4.7 million in 2004. The decrease of the impact of acquisitions for other operating expenses between 2006 and 2005 is the result of the closing of TSYS Acquiring’s point of sale terminal direct distribution sales office at the beginning of 2006. Other operating expenses were also impacted by the court costs associated with a debt collection arrangement, amortization of contract acquisition costs and the provision for transaction processing accruals. Amortization of contract acquisition costs associated with conversions was $17.8 million, $15.9 million and $11.5 million in 2006, 2005, and 2004, respectively.

      Other operating expenses also include, among other things, costs associated with delivering merchant acquiring services, professional advisory fees, charges for processing errors, contractual commitments, and bad debt expense. Management’s evaluation of the adequacy of its transaction processing reserves and allowance for doubtful accounts is based on a formal analysis which assesses the probability of losses related to contractual contingencies, processing errors and uncollectible accounts. Increases and decreases in transaction processing provisions and charges for bad debt expense are reflected in other operating expenses. For 2006, 2005, and 2004, transaction processing provisions were $11.0 million, $7.4 million, and $9.9 million, respectively. For the years ended December 31, 2006 and 2005, TSYS had recoveries of bad debt expense of $164 thousand and provisions for bad debt expense of $3.5 million, respectively, and for the year ended December 31, 2004, TSYS had recoveries of bad debt expense of $1.1 million.

Table 6     Non-Interest Expense

(In thousands)

		2006 *				2005 *				2004 *
				Transaction				Transaction				Transaction
		Financial		Processing		Financial		Processing		Financial		Processing
		Services		Services		Services		Services		Services		Services
Salaries and other personnel expense		$	450,373		524,968		370,223		466,901		364,514		367,881
Net occupancy and equipment expense			100,269		313,922		90,549		277,671		82,156		239,534
Other operating expenses			213,891		238,879		185,985		259,751		175,004		147,732
	Total non-interest expense before reimbursable items		764,533		1,077,769		646,757		1,004,323		621,674		755,147
	Reimbursable items		—		352,738		—		313,141		—		230,388
	Total non-interest expense	$	764,533		1,430,507		646,757		1,317,464		621,674		985,535

*  The added totals are greater than the consolidated totals due to inter-segment balances which are eliminated in consolidation.

Investment Securities Available for Sale

      The investment securities portfolio consists principally of debt and equity securities classified as available for sale. Investment securities available for sale provide Synovus with a source of liquidity and a relatively stable source of income. The investment securities portfolio also provides management with a tool to balance the interest rate risk of its loan and deposit portfolios. At December 31, 2006, approximately $2.90 billion of these investment securities were pledged as required collateral for certain deposits, securities sold under agreements to repurchase, and FHLB advances. See Table 8 for maturity and average yield information of the investment securities available for sale portfolio.

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      The investment strategy focuses on the use of the investment securities portfolio to manage the interest rate risk created by the inherent mismatch between the loan and deposit portfolios. Synovus’ interest rate risk management strategy during 2006 was to gradually reduce its asset sensitive positioning. In coordination with this strategy, Synovus increased the duration of the portfolio while simultaneously reducing overall prepayment sensitivity. The average duration of Synovus’ investment securities portfolio was 3.69 years at December 31, 2006 compared to 2.82 years at December 31, 2005.

      Due to strong loan demand at subsidiary banks, there is little need for investment securities to utilize unpledged deposits. As such, the investment securities are primarily U.S. Government agencies and Government agency sponsored mortgage-backed securities, both of which have a high degree of liquidity and limited credit risk. A mortgage-backed security depends on the underlying pool of mortgage loans to provide a cash flow pass-through of principal and interest. At December 31, 2006, substantially all of the collateralized mortgage obligations and mortgage-backed pass-through securities held by Synovus were issued or backed by Federal agencies.

      As of December 31, 2006 and 2005, the estimated fair value of investment securities available for sale as a percentage of their amortized cost was 99.3% and 98.5%, respectively. The investment securities available for sale portfolio had gross unrealized gains of $13.9 million and gross unrealized losses of $38.7 million, for a net unrealized loss of $24.8 million as of December 31, 2006. As of December 31, 2005, the investment securities available for sale portfolio had a net unrealized loss of $46.3 million. Shareholders’ equity included a net unrealized loss of $15.2 million and a net unrealized loss of $28.5 million on the available for sale portfolio as of December 31, 2006 and 2005, respectively.

      During 2006, the average balance of investment securities available for sale increased to $3.21 billion, compared to $2.83 billion in 2005. Synovus earned a taxable-equivalent rate of 4.45% and 4.03% for 2006 and 2005, respectively, on its investment securities available for sale portfolio. For the years ended December 31, 2006 and 2005, average investment securities available for sale represented 12.1% and 12.2%, respectively, of average interest earning assets.

      The calculation of weighted average yields for investment securities available for sale in Table 8 is based on the amortized cost and effective yields of each security. The yield on state and municipal securities is computed on a taxable-equivalent basis using the statutory federal income tax rate of 35%. Maturity information is presented based upon contractual maturity. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Table 7 Investment Securities Available for Sale

(In thousands)

		December 31,
		2006		2005		2004
U.S. Treasury and U.S. Government agency securities		$	1,770,570		1,624,612		1,305,471
Mortgage-backed securities			1,275,358		1,006,728		1,026,724
State and municipal securities			196,185		212,371		237,832
Other investments			110,244		114,609		125,566
	Total	$	3,352,357		2,958,320		2,695,593

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________________________________________________________________________________

Table 8 Maturities and Average Yields of Investment Securities Available for Sale

(Dollars in thousands)

			December 31, 2006
			Investment Securities
			Available for Sale
			Estimated		Average
			Fair Value		Yield
U.S. Treasury and U.S. Government agency securities:
	Within 1 year		$	349,750		3.23	%
	1 to 5 years			1,056,858		4.47
	5 to 10 years			284,815		5.43
	More than 10 years			79,147		5.69
		Total	$	1,770,570		4.43
State and municipal securities:
	Within 1 year		$	21,402		6.52
	1 to 5 years			70,814		6.93
	5 to 10 years			78,004		7.38
	More than 10 years			25,965		7.24
		Total	$	196,185		7.10
Other investments:
	Within 1 year		$	264		3.29
	1 to 5 years			1,087		4.02
	5 to 10 years			2,796		8.55
	More than 10 years			9,744		8.39
		Total	$	13,891		7.98
Equity securities			$	96,353		5.68
Mortgage-backed securities			$	1,275,358		4.70
Total investment securities:
	Within 1 year		$	371,416		3.41
	1 to 5 years			1,128,759		4.62
	5 to 10 years			365,615		5.86
	More than 10 years			114,856		6.27
	Equity securities			96,353		5.68
	Mortgage-backed securities			1,275,358		4.70
		Total	$	3,352,357		4.73	%

Loans

      Since lending activities are a significant source of revenue, our main objective is to adhere to sound lending practices. When analyzing prospective loans, management considers both interest rate and credit quality objectives in determining whether to extend a given loan and the appropriate pricing for that loan. Operating under a decentralized structure, management emphasizes lending in the local markets we serve. Synovus strives to maintain a diversified loan portfolio to spread risk and reduce exposure to economic downturns that may occur in different segments of the

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economy, geographic locations, or in particular industries. Table 9 illustrates that a significant portion of the loan portfolio is in the real estate sector. However, as discussed further, these loans are diversified by geography, industry and loan type. The loan policy discourages loans to highly speculative real estate developments, highly leveraged transactions, and other industries known for excessive risk.

Portfolio Composition

      Synovus continues to operate its highly successful relationship banking model, and has continued to maintain and further develop a strong presence in each of its local markets. The loan portfolio spreads across five southeastern states with diverse economies. The Georgia banks represent a majority with 52.8% of the consolidated portfolio. The Alabama and South Carolina banks each represent 14.5%, followed by Florida with 13.9%, and Tennessee with 4.3%.

      The commercial loan portfolio consists of commercial, financial, agricultural, and real estate loans. These loans are granted primarily on the borrower’s general credit standing and on the strength of the borrower’s ability to generate repayment cash flows from income sources. Real estate construction and mortgage loans are secured by commercial real estate as well as 1-4 family residences, and represent extensions of credit used as interim or permanent financing of real estate properties.

      Total commercial real estate loans at December 31, 2006 were $15.17 billion or 61.5% of the total loan portfolio. As shown on Table 14, the commercial real estate loan portfolio is diversified among various property types: investment properties, 1-4 family properties, land acquisition, owner-occupied, and other property.

      Included in the commercial real estate category are $4.08 billion in loans for the purpose of financing owner-occupied properties and other properties such as churches and other charitable properties, healthcare facilities, restaurants, and recreational properties. 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 on these loans is the real estate.

      The commercial real estate loan portfolio includes loans in the Atlanta market totaling $3.42 billion, of which $772.0 million are investment property loans.

      Total retail loans as of December 31, 2006 were $3.66 billion. Retail loans consist of residential mortgages, equity lines, credit card loans, installment loans and other credit line loans. Retail lending decisions are made based upon the cash flow or earning power of the borrower that represents the primary source of repayment. However, in many lending transactions collateral is taken to provide an additional measure of security. Collateral securing these loans provides a secondary source of repayment in that the collateral may be liquidated. Synovus determines the need for collateral on a case-by-case basis. Factors considered include the purpose of the loan, current and prospective credit-worthiness of the customer, terms of the loan, and economic conditions.

Portfolio Growth

      At December 31, 2006, total loans outstanding were $24.65 billion, an increase of 15.2% over 2005. Excluding the impact of acquisitions completed in 2006, total loans increased by 11.4% over year-end 2005. Average loans increased 13.9% or $2.85 billion compared to 2005, representing 87.9% of average earning assets and 78.2% of average total assets. Growth in the commercial real estate portfolio continued to outpace growth in the commercial and industrial portfolio and the retail portfolio. However, the Company’s strong focus on commercial and industrial lending and retail lending should continue to narrow the gap in relation to commercial real estate lending. The growth for the second half of 2006 was almost evenly distributed among the three portfolios.

      Total commercial real estate loans increased by $2.34 billion, or 18.3% from year-end 2005. This growth includes $646.1 million in total loans added to our portfolio as a result of the acquisitions completed in 2006. Excluding the impact of these acquisitions, the commercial real estate portfolio grew by $1.70 billion or 13.2% over year-end 2005. The commercial real estate portfolio growth was led by strong growth in residential development and 1-4 family construction. The housing market remains strong in the Southeast, due in part to job growth and population growth. Synovus continues to monitor market conditions, including absorption rates, affordability index, foreclosure rates, and price appreciation to assess its portfolio risk and underwriting criteria. Credit quality trends remain favorable in this sector.

      Retail loans increased by $309.7 million or 9.2% from year-end 2005. Real estate mortgage loans grew $322.5 million, or 12.6%, driven by another year of strong growth in home equity loans. Home equity loans increased $148.4 million or 12.5% compared to a year ago.

      Table 10 shows the maturity of selected loan categories as of December 31, 2006. Also provided are the amounts due after one year, classified according to the sensitivity in interest rates.

      Actual repayments of loans may differ from the contractual maturities reflected in Table 10 because borrowers have

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the right to prepay obligations with and without prepayment penalties. Additionally, the refinancing of such loans or the potential delinquency of such loans could create differences between the contractual maturities and the actual repayment of such loans.

Table 9 Loans by Type

(Dollars in thousands)

				December 31,
				2006						2005						2004						2003						2002
				Amount			% *			Amount			% *			Amount			% *			Amount			% *			Amount			% *
Commercial:
	Commercial, financial, and agricultural			$	5,875,854			23.8	%		5,268,042			24.6	%		5,064,828			26.0	%		4,651,864			28.3	%		4,382,558			30.3
	Real estate — construction				8,246,380			33.4			6,374,859			29.8			5,173,275			26.6			3,958,649			24.1			3,119,508			21.6
	Real estate — mortgage				6,920,107			28.1			6,448,325			30.1			6,116,308			31.4			5,095,247			30.9			4,304,024			29.8
		Total commercial			21,042,341			85.3			18,091,226			84.5			16,354,411			84.0			13,705,760			83.2			11,806,090			81.7
Retail:
	Real estate — mortgage				2,881,880			11.8			2,559,339			12.0			2,298,681			11.8			1,865,700			11.4			1,701,332			11.8
	Consumer loans — credit card				276,269			1.1			268,348			1.3			256,298			1.3			232,931			1.4			223,613			1.5
	Consumer loans — other				500,757			2.0			521,521			2.4			612,957			3.1			691,557			4.2			757,625			5.2
		Total retail			3,658,906			14.9			3,349,208			15.7			3,167,936			16.2			2,790,188			17.0			2,682,570			18.5
		Total loans			24,701,247						21,440,434						19,522,347						16,495,948						14,488,660
	Unearned income				(46,695	)		(0.2	)		(48,087	)		(0.2	)		(41,951	)		(0.2	)		(31,034	)		(0.2	)		(24,752	)		(0.2	)
			Total loans, net of unearned income	$	24,654,552			100.0			21,392,347			100.0			19,480,396			100.0			16,464,914			100.0			14,463,908			100.0

*  Loan balance in each category, expressed as a percentage of total loans, net of unearned income.

Table 10 Loan Maturity and Interest Rate Sensitivity

(In thousands)

			December 31, 2006
					Over One Year		Over
			One Year		Through Five		Five
			Or Less		Years		Years		Total
Selected loan categories:
	Commercial, financial, and agricultural		$	3,637,134		1,955,511		283,209		5,875,854
	Real estate-construction			6,089,475		2,009,308		147,597		8,246,380
		Total	$	9,726,609		3,964,819		430,806		14,122,234
Loans due after one year:
	Having predetermined interest rates								$	1,642,932
	Having floating interest rates									2,752,693
		Total							$	4,395,625

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Provision and Allowance for Loan Losses

      Despite credit standards, internal controls, and a continuous loan review process, the inherent risk in the lending process results in periodic charge-offs. The provision for loan losses is the charge to operating earnings necessary to maintain an adequate allowance for loan losses. Through the provision for loan losses, Synovus maintains an allowance for loan losses that management believes is adequate to absorb losses within the loan portfolio. However, future additions to the allowance may be necessary based on changes in economic conditions, as well as changes in assumptions regarding a borrower’s ability to pay and/or collateral values. In addition, various regulatory agencies, as an integral part of their examination procedures, periodically review each banks allowance for loan losses. Based on their judgments about information available to them at the time of their examination, such agencies may require the banks to recognize additions to their allowance for loan losses.

Allowance for Loan Losses Methodology

      To determine the adequacy of the allowance for loan losses, a formal analysis is completed quarterly to assess the risk within the loan portfolio. This assessment, conducted by lending officers and each bank’s loan administration department, as well as an independent holding company credit review function, includes analyses of historical performance, past due trends, the level of nonperforming loans, reviews of certain impaired loans, loan activity since the previous quarter, consideration of current economic conditions, and other pertinent information. Each loan is assigned a rating, either individually or as part of a homogeneous pool, based on an internally developed risk rating system. The resulting conclusions are reviewed and approved by senior management.

      The allowance for loan losses consists of two components: the allocated and unallocated allowances. Both components of the allowance are available to cover inherent losses in the portfolio. The allocated component of the allowance is determined by type of loan within the commercial and retail portfolios. The allocated allowance for commercial loans includes an allowance for impaired loans which is determined as described in the following paragraph. Additionally, the allowance for commercial loans includes an allowance for non-impaired loans which is based on application of loss reserve factors to the components of the portfolio based on the assigned loan grades. The allocated allowance for retail loans is generally determined on pools of homogeneous loan categories. Loss factors applied to these pools are generally based on average historical losses for the past two years, current delinquency trends, and other factors. The unallocated component of the allowance is established for losses that specifically exist in the remainder of the portfolio, but have yet to be identified. This also compensates for the uncertainty in estimating loan losses. The unallocated component of the allowance is based upon management’s evaluation of various conditions, the effects of which are not directly considered in the allocated allowance. These include credit concentrations, recent levels and trends in delinquencies and nonaccrual loans, new credit products, changes in lending policies and procedures, changes in personnel, and regional and local economic conditions.

      Considering current information and events regarding the borrowers’ ability to repay their obligations, management considers a loan to be impaired when the ultimate collectibility of all principal and interest amounts due, according to the contractual terms of the loan agreement, is in doubt. When a loan becomes impaired, management calculates the impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral dependent, the fair value of the collateral is used to measure the amount of impairment. The amount of impairment and any subsequent changes are recorded through a charge to earnings, as an adjustment to the allowance for loan losses. When management considers a loan, or a portion thereof, as uncollectible, it is charged against the allowance for loan losses. A majority of Synovus’ impaired loans are collateral dependent. Accordingly, Synovus has determined the required allowance on these loans based upon fair value estimates (net of selling costs) of the respective collateral. Any deficiency of the collateral coverage is charged against the allowance. The required allowance (or the actual losses) on these impaired loans could differ significantly if the ultimate fair value of the collateral is significantly different from the fair value estimates used by Synovus in estimating such potential losses.

      A summary by loan category of loans charged off, recoveries of loans previously charged off, and additions to the allowance through provision expense is presented in Table 11.

Allocation of the Allowance for Loan Losses at December 31, 2006

      Table 12 shows a five year comparison of the allocation of the allowance for loan losses. The allocation of the allowance for loan losses is based on historical data, subjective judgment, and estimates, and therefore is not necessarily indicative of the specific amounts or loan categories in which charge-offs may ultimately occur.

      At December 31, 2006, the allocated component of the allowance for loan losses related to commercial real estate

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construction loans was $80.0 million, up 33.6% from $59.9 million in 2005. The increase is primarily due to a 29.4% increase in the related loan balances. As a percentage of commercial real estate construction loans, the allocated allowance in this category was .97% at December 31, 2006, compared to .94% the previous year-end.

      Commercial, financial and agricultural loans had an allocated allowance of $74.6 million or 1.27% of loans in the respective category at December 31, 2006, compared to $84.0 million or 1.59% at December 31, 2005. Certain loans in this category, which were impaired at December 31, 2005, were charged-off to the allocated allowance during 2006. These charge-offs, together with improved risk ratings assigned to credits in this category resulted in the decrease in the allocated allowance.

      The unallocated allowance is .26% of total loans and 20.0% of the total allowance at December 31, 2006. This compares to ..25% of total loans and 18.2% of the total allowance at December 31, 2005. Management believes that this level of unallocated allowance is adequate to provide for probable losses that are inherent in the loan portfolio and that have not been fully provided through the allocated allowance. Factors considered in determining the adequacy of the unallocated allowance include the concentration in commercial real estate loans, particularly the level of 1-4 family construction and residential development loans, and the continued change in our footprint from rural markets into larger urban markets, which introduces more uncertainty into the allocation estimation. Other factors include the national and local economic conditions.

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________________________________________________________________________________

Table 11 Allowance for Loan Losses

(Dollars in thousands)

				December 31,
				2006			2005		2004		2003		2002
Allowance for loan losses at beginning of year				$	289,612			265,745		226,059		199,841		170,769
Allowance for loan losses of acquired/divested subsidiaries, net					9,915			—		5,615		10,534		7,967
Loans charged off:
	Commercial:
		Commercial, financial, and agricultural			44,676			38,087		30,697		37,535		28,338
		Real estate — construction			5,174			1,367		383		2,918		444
		Real estate — mortgage			6,215			6,575		3,145		2,533		1,745
			Total commercial		56,065			46,029		34,225		42,986		30,527
	Retail:
		Real estate — mortgage			3,604			4,393		2,327		2,972		1,375
		Consumer loans — credit card			8,270			11,383		7,728		7,631		10,408
		Consumer loans — other			4,867			5,421		6,688		10,616		8,951
			Total retail		16,741			21,197		16,743		21,219		20,734
			Total loans charged off		72,806			67,226		50,968		64,205		51,261
Recoveries on loans previously charged off:
	Commercial:
		Commercial, financial, and agricultural			7,304			3,890		5,334		3,454		2,512
		Real estate — construction			132			50		172		189		50
		Real estate — mortgage			914			483		826		325		284
			Total commercial		8,350			4,423		6,332		3,968		2,846
	Retail:
		Real estate — mortgage			527			511		521		330		346
		Consumer loans — credit card			2,130			1,828		1,612		1,467		1,554
		Consumer loans — other			1,583			1,799		1,255		2,347		2,293
			Total retail		4,240			4,138		3,388		4,144		4,193
			Total loans recovered		12,590			8,561		9,720		8,112		7,039
Net loans charged off					60,216			58,665		41,248		56,093		44,222
Provision expense					75,148			82,532		75,319		71,777		65,327
Allowance for loan losses at end of year				$	314,459			289,612		265,745		226,059		199,841
Allowance for loan losses to loans, net of unearned income					1.28	%		1.35		1.36		1.37		1.38
Ratio of net loans charged off to average loans outstanding, net of unearned income					0.26	%		0.29		0.23		0.36		0.33

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Table 12 Allocation of Allowance for Loan Losses

(Dollars in thousands)

			December 31,
			2006					2005					2004					2003					2002
			Amount		% *			Amount		% *			Amount		% *			Amount		% *			Amount		% *
Commercial:
	Commercial, financial, and agricultural		$	74,649		23.8			83,995		24.6			77,293		25.9			66,418		28.1			67,365		30.2
	Real estate — construction			79,971		33.4			59,869		29.8			50,224		26.6			39,921		24.1			26,476		21.6
	Real estate — mortgage			72,823		28.1			69,334		30.1			66,954		31.4			51,140		30.9			40,334		29.8
		Total commercial		227,443		85.3			213,198		84.5			194,471		83.9			157,479		83.1			134,175		81.6
Retail:
	Real estate — mortgage			6,625		11.8			6,445		12.0			5,335		11.8			4,032		11.3			3,951		11.8
	Consumer loans — credit card			8,252		1.1			8,733		1.3			8,054		1.4			7,602		1.5			8,800		1.6
	Consumer loans — other			9,237		2.0			8,403		2.4			7,086		3.1			8,006		4.3			9,590		5.2
		Total retail		24,114		14.9			23,581		15.7			20,475		16.3			19,640		17.1			22,341		18.6
	Unearned Income					(0.2	)				(0.2	)				(0.2	)				(0.2	)				(0.2	)
	Unallocated			62,902					52,833					50,799					48,940					43,325
		Total allowance for loan losses	$	314,459		100.0			289,612		100.0			265,745		100.0			226,059		100.0			199,841		100.0

*  Loan balance in each category expressed as a percentage of total loans, net of unearned income.

Nonperforming Assets and Past Due Loans

      Nonperforming assets consist of loans classified as nonaccrual or restructured, and real estate acquired through foreclosure. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full collection of interest or principal, or when they become contractually in default for 90 days or more as to either interest or principal, unless they are both well-secured and in the process of collection. Nonaccrual loans consist of those loans on which recognition of interest income has been discontinued. Loans may be restructured as to rate, maturity, or other terms as determined on an individual credit basis. Demand and time loans, whether secured or unsecured, are generally placed on nonaccrual status when principal and/or interest is 90 days or more past due, or earlier if it is known or expected that the collection of all principal and/or interest is unlikely. Loans past due 90 days or more, which based on a determination of collectibility are accruing interest, are classified as past due loans. Nonaccrual loans are reduced by the direct application of interest and principal payments to loan principal, for accounting purposes only. Table 13 presents the amount of interest income that would have been recorded on non-performing loans if those loans had been current and performing in accordance with their original terms.

      Nonperforming assets increased $23.9 million to $122.5 million at December 31, 2006. The nonperforming assets ratio increased to .50% as of December 31, 2006 compared to .46% as of year-end 2005. There were no non-performing assets over $5 million at year-end 2006. The largest increases in nonperforming assets during 2006 were a $3.4 million loan in the entertainment industry and a residential property in ORE with a recorded balance of $3.3 million.

      As a percentage of total loans outstanding, loans 90 days past due and still accruing interest were .14%. This compares to ..07% at year-end 2005 and .09% at year-end 2004. These loans are in the process of collection, and management believes that sufficient collateral value securing these loans exists to cover contractual interest and principal payments. Management further believes that the resolution of these delinquencies will not cause a material increase in nonperforming assets.

      Impaired loans at December 31, 2006 and 2005 were $42.2 million and $95.3 million, respectively. The decrease in

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impaired loans is the result of certain charge-offs of impaired loans during 2006 plus a change in the definition of what constitutes an impaired loan during 2006. The change had no material impact on provision expense or the allowance for loan losses.

      Management continuously monitors nonperforming, impaired, and past due loans to prevent further deterioration regarding the condition of these loans. Management is not aware of any material loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have been excluded from the determination of nonperforming assets or impaired loans. Management believes nonperforming loans and loans past due over 90 days and still accruing include all material loans where known information about possible credit problems of borrowers causes management to have serious doubts as to the collectibility of amounts due according to the contractual terms of the loan agreement.

Table 13 Nonperforming Assets and Past Due Loans

(Dollars in thousands)

		December 31,
		2006			2005		2004		2003		2002
Nonperforming loans(a)		$	96,622			82,175		80,456		67,442		66,736
Other real estate			25,923			16,500		21,492		28,422		26,517
	Nonperforming assets	$	122,545			98,675		101,948		95,864		93,253
Loans 90 days past due and still accruing interest
	Total outstanding	$	34,495			16,023		18,138		21,138		30,192
	As a % of loans		0.14	%		0.07		0.09		0.13		0.21
Allowance for loan losses		$	314,459			289,612		265,745		226,059		199,841
Allowance for loan losses as a % of loans			1.28	%		1.35		1.36		1.37		1.38
As a % of loans and other real estate:
	Nonperforming loans		0.39	%		0.38		0.41		0.41		0.46
	Other real estate		0.11			0.08		0.11		0.17		0.18
	Nonperforming assets		0.50	%		0.46		0.52		0.58		0.64
Allowance for loan losses to nonperforming loans			325.45	%		352.43		330.30		335.19		299.45

      Interest income on nonperforming loans that would have been reported for the years ended December 31, 2006, 2005, and 2004 is summarized as follows:

		2006		2005		2004
(Dollars in thousands)
Interest at contractual rates(b)		$	8,594		5,205		4,197
Less interest recorded as income			4,676		2,713		1,537
	Reduction of interest income	$	3,918		2,492		2,660

(a)	Nonperforming loans exclude loans 90 days past due and still accruing interest.
(b)	Interest income that would have been recorded if the loans had been current and performing in accordance with their original terms.

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Table 14

			December 31, 2006						December 31, 2005
						Nonperforming						Nonperforming
			Loans as a			Loans as a			Loans as a			Loans as a
			Percentage			Percentage of			Percentage			Percentage of
			of Total			Total			of Total			Total
			Loans			Nonperforming			Loans			Nonperforming
Loan Type			Outstanding			Loans			Outstanding			Loans
Commercial Real Estate
	Multi-family			2.0	%		0.2	%		2.5	%		0.3%
	Hotels			2.6			1.3			3.2			—
	Office buildings			3.6			4.5			3.5			6.1
	Shopping centers			3.1			—			3.1			—
	Commercial development			3.6			—			4.0			0.7
	Other investment property			1.8			0.1			1.7			0.8
		Total Investment Properties		16.7			6.1			18.0			7.9
1-4 Family Properties
	1-4 family construction			9.5			5.8			7.3			2.4
	1-4 family perm/mini-perm			4.8			8.0			5.1			3.3
	Residential development			8.3			2.0			7.0			9.3
		Total 1-4 Family Properties		22.6			15.8			19.4			15.0
Land Acquisition				5.7			8.7			5.3			0.5
	Total Investment-Related Real Estate			45.0			30.6			42.7			23.4
Owner-Occupied				12.7			10.1			12.6			13.7
Other Property				3.8			5.9			4.6			6.6
	Total Commercial Real Estate			61.5			46.6			59.9			43.7
Commercial and Industrial				23.8			43.3			24.6			46.6
Retail (consumer)				14.9			10.1			15.7			9.7
Unearned Income				(0.2	)		—			(0.2	)		—
	Total			100.0	%		100.0	%		100.0	%		100.0%

      Table 14 shows the composition of the loan portfolio and nonperforming loans classified by loan type as of December 31, 2006 and 2005. The commercial real estate category is further segmented into the various property types determined in accordance with the purpose of the loan. Owner-occupied and other property loans represent 16.5% of total loans, or 26.9% of total commercial real estate loans at December 31, 2006. Other property includes loans secured by non-investment real estate, including charitable, recreational, educational and healthcare facilities. Like owner-occupied loans, these loans depend upon the underlying business cash flow for repayment. Investment-related real estate represents 45.0% of total loans and is diversified among many property types. These include commercial investment properties, 1-4 family properties, and land acquisition. Commercial investment properties, as shown in Table 14, represent 16.7% of total loans and 27.1% of total commercial real estate loans at December 31, 2006. No category of commercial investment properties exceeds 5% of the total loan portfolio. The greatest concentration in commercial real estate is 1-4 family properties, which include 1-4 family construction, commercial 1-4 family mortgages, and residential development loans. These properties are further diversified geographically; approximately 29% of 1-4 family property loans are secured by properties in the Atlanta market and approximately 15% are secured by properties in coastal markets. Land acquisition represents less than 6% of total loans.

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      At December 31, 2006, commercial real estate (CRE) loans represent 61.5% of the total portfolio, while CRE nonperforming loans represent 46.6% or $45.0 million of total nonperforming loans. The largest loan in this category is a $3.0 million loan to a residential construction company. No other CRE nonperforming loans exceed $3 million.

      Commercial and industrial nonperforming loans represent 43.3% or $41.9 million of total nonperforming loans at December 31, 2006. The largest loan in this category is a $3.4 million loan to a company in the entertainment industry. No other non-performing commercial and industrial loans exceed $3 million.

Deposits

      Deposits provide the most significant funding source for interest earning assets. Table 15 shows the relative composition of average deposits for 2006, 2005, and 2004. Refer to Table 16 for the maturity distribution of time deposits of $100,000 or more. These larger deposits represented 29.2% and 25.2% of total deposits at December 31, 2006 and 2005, respectively. Synovus continues to maintain a strong base of large denomination time deposits from customers within the local market areas of subsidiary banks. Synovus also utilizes national market brokered time deposits as a funding source while continuing to maintain and grow its local market large denomination time deposit base. Time deposits over $100,000 at December 31, 2006, 2005, and 2004 were $7.10 billion, $5.24 billion, and $4.64 billion, respectively. Interest expense for the years ended December 31, 2006, 2005, and 2004, on these large denomination deposits was $299.5 million, $171.5 million, and $94.3 million, respectively.

      In 2006, Synovus continued to focus on growing in-market core deposits, with the objective of diversifying the composition of deposits and reducing reliance on wholesale funding. Core deposits (total deposits excluding brokered time deposits) grew 15.0% from December 31, 2005 to December 31, 2006, and grew 11.1% during the same period excluding the impact of acquisitions plus brokered time deposits. From December 31, 2004 to December 31, 2005, core deposits grew 13.6%.

      Average deposits increased $3.01 billion or 15.4%, to $22.62 billion from $19.61 billion in 2005. Average interest bearing deposits, which include interest bearing demand deposits, money market accounts, savings deposits, and time deposits, increased $2.93 billion or 18.1% from 2005. Average non-interest bearing demand deposits increased $80.29 million or 2.4% during 2006. Average interest bearing deposits increased $2.20 billion or 15.7% from 2004 to 2005, while average non-interest bearing demand deposits increased $359.82 million, or 11.8%. See Table 3 for further information on average deposits, including average rates paid in 2006, 2005, and 2004.

Table 15     Average Deposits

(Dollars in thousands)

		2006		% *		2005		% *		2004		% *
Non-interest bearing demand deposits		$	3,488,580		15.4		3,408,289		17.4		3,048,465		17.9
Interest bearing demand deposits			3,006,308		13.3		2,975,016		15.2		2,762,104		16.2
Money market accounts			6,388,862		28.3		5,193,943		26.5		4,481,042		26.3
Savings deposits			542,793		2.4		555,205		2.8		548,736		3.2
Time deposits under $100,000			2,791,759		12.3		2,294,158		11.7		2,223,854		13.0
Time deposits $100,000 and over			3,549,200		15.7		2,624,623		13.4		2,258,081		13.2
			19,767,502		87.4		17,051,234		87.0		15,322,282		89.8
Brokered time deposits ($100,000 and over)			2,855,191		12.6		2,557,660		13.0		1,730,937		10.2
	Total average deposits	$	22,622,693		100.0		19,608,894		100.0		17,053,219		100.0

*  Average deposits balance in each category expressed as percentage of total average deposits.

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________________________________________________________________________________

Table 16 Cash Maturity Distribution of Time Deposits of $100,000 or More

(In thousands)

		December 31, 2006
3 months or less		$	2,181,771
Over 3 months through 6 months			1,824,929
Over 6 months through 12 months			1,926,367
Over 12 months			1,142,939
	Total outstanding	$	7,076,006

Market Risk and Interest Rate Sensitivity

      Market risk reflects the risk of economic loss resulting from adverse changes in market prices and interest rates. This risk of loss can be reflected in either diminished current market values or reduced current and potential net income. Synovus’ most significant market risk is interest rate risk. This risk arises primarily from Synovus’ core community banking activities of extending loans and accepting deposits.

      Managing interest rate risk is a primary goal of the asset liability management function. Synovus attempts to achieve consistent growth in net interest income while limiting volatility arising from changes in interest rates. Synovus seeks to accomplish this goal by balancing the maturity and repricing characteristics of assets and liabilities along with the selective use of derivative instruments. Synovus manages its exposure to fluctuations in interest rates through policies established by its Asset Liability Management Committee (ALCO) and approved by the Board of Directors. ALCO meets periodically and has responsibility for developing asset liability management policies, reviewing the interest rate sensitivity of the Company, and developing and implementing strategies to improve balance sheet structure and interest rate risk positioning.

      Simulation modeling is the primary tool used by Synovus to measure its interest rate sensitivity. On at least a quarterly basis, the following twenty-four month time period is simulated to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. The baseline forecast assumes an unchanged or flat interest rate environment. These simulations include all of our earning assets, liabilities and derivative instruments. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts prepared by each bank, are included in the periods modeled. Projected rates for new loans and deposits are also provided by each bank and are primarily based on management’s outlook and local market conditions.

      The magnitude and velocity of rate changes among the various asset and liability groups exhibit different characteristics for each possible interest rate scenario; additionally, customer loan and deposit preferences can vary in response to changing interest rates. Simulation modeling enables Synovus to capture the effect of these differences. Synovus is also able to model expected changes in the shape of interest rate yield curves for each rate scenario. Simulation also enables Synovus to capture the effect of expected prepayment level changes on selected assets and liabilities subject to prepayment.

      Synovus entered 2006 with an asset sensitive interest rate risk positioning. This positioning would be expected to result in an increase in net interest income in a rising interest rate environment and a decrease in net interest income in a declining rate environment. This is generally due to a greater proportion of interest earning assets repricing on a variable rate basis as compared to variable rate funding sources. This position was maintained in anticipation of further increases in short-term rates. As these expected increases occurred, Synovus gradually reduced this asset sensitive positioning. In addition to actions taken by Synovus management, customer demand for more market rate sensitive deposit products served to increase the rate sensitivity of our deposit base and reduce overall asset sensitivity. As a result of these activities, Synovus ended the year in a more neutral position with respect to interest rate sensitivity.

      Synovus’ rate sensitivity position is indicated by selected results of net interest income simulations. In these simulations, Synovus has modeled the impact of a gradual increase and decrease in short-term interest rates of 100 and 200 basis points to determine the sensitivity of net interest income for the next twelve months. As illustrated in Table 18, the net interest income sensitivity model indicates that, compared with a net interest income forecast assuming stable rates, net interest income is projected to increase by 0.3% and 2.5% if interest rates increased by 100 and 200 basis points, respectively, and decrease by 1.0% and 2.7% if interest rates decreased by 100 and 200 basis points, respectively. These changes were within Synovus’ policy limit of a maximum 5% negative change. Synovus anticipates maintaining this relatively neutral positioning during 2007.

      The actual realized change in net interest income would depend on several factors. These factors include, but are not limited to, actual realized growth in asset and liability volumes, as well as the mix experienced over these time horizons. Market conditions and their resulting impact on

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loan, deposit, and wholesale funding pricing would also be a primary determinant in the realized level of net interest income.

      Another tool utilized by management is cumulative gap analysis, which seeks to measure the repricing differentials, or gap, between rate sensitive assets and liabilities over various time periods. Table 19 reflects the gap positions of the consolidated balance sheets at December 31, 2006 and 2005, at various repricing intervals. The projected deposit repricing volumes reflect adjustments based on management’s expectation for repricing behavior and runoff characteristics for core deposits without contractual maturity (i.e., interest bearing checking, savings, and money market accounts). Management believes that these adjustments allow for a more accurate profile of the interest rate risk position. The projected repricing of investment securities reflects expected prepayments on mortgage-backed securities and expected cash flows on securities subject to accelerated redemption options. These assumptions are made based on the interest rate environment as of each balance sheet date, and are subject to change as the general level of interest rates change. While these potential changes are not depicted in the static gap analysis, simulation modeling allows for the proper analysis of these and other relevant potential changes. Management believes that adjusted gap analysis is a useful tool for measuring interest rate risk only when used in conjunction with its simulation model.

      Synovus’ electronic payment processing subsidiary, TSYS, is subject to market risk due to its international operations. TSYS is exposed to foreign exchange risk because it has assets, liabilities, revenues and expenses denominated in foreign currencies including the Euro, British Pounds Sterling (BPS), Mexican Peso, Canadian Dollar, Japanese Yen, Chinese Renminbi, Brazilian Real, Cypriot Pounds and Malaysian Ringgets. These currencies are translated into U.S. dollars at current exchange rates, except for revenues, costs and expenses, and net income, which are translated at the average exchange rate for each reporting period. Net exchange gains or losses resulting from the translation of assets and liabilities of TSYS’ foreign operations, net of tax, are accumulated in a separate section of shareholders’ equity titled accumulated other comprehensive income. The amount of other comprehensive income (loss), net of minority interest related to foreign currency translation for the years ended December 31, 2006, 2005, and 2004 was $12.9 million, ($7.8) million, and $5.7 million, respectively.

      TSYS also records foreign currency translation adjustments associated with other balance sheet accounts. TSYS maintains several cash accounts denominated in foreign currencies, primarily in Euros and BPS. As TSYS translates the foreign-denominated cash balances into US dollars, the translated cash balance is adjusted upward or downward depending upon the foreign currency exchange movements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation in the consolidated statements of income. The balance of the foreign-denominated cash accounts subject to risk of translation gains or losses at December 31, 2006 was approximately $32.8 million, the majority of which is denominated in Euros.

      TSYS also provides financing to its international operations in Europe and Japan through intercompany loans that requires each operation to repay the financing in U.S. dollars. The functional currency of each operation is the respective local currency. As TSYS translates the foreign currency denominated financial statements into US dollars, the translated balance of the financing (liability) is adjusted upward or downward to match the US-dollar obligation (receivable) on the consolidated financial statements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation. The balance of the financing arrangements at December 31, 2006 was approximately $64.0 million.

      The following table represents the potential effect on income before income taxes of hypothetical shifts in the foreign currency exchange rates between the local currencies and the U.S. dollar of plus or minus 100 basis points, 500 basis points and 1,000 basis points based on the intercompany loan balance and the foreign denominated cash account at December 31, 2006. TSYS does not currently utilize foreign exchange forward contracts or other derivative instruments to reduce its exposure to foreign currency rate changes.

Table 17 Foreign Currency Exchange Rates Effect of Basis Point Change on Income before Taxes

(Dollars in thousands)

		Effect on
		Income
		before Taxes
Increase in basis points of:
	100	$	(253	)
	500		(1,263	)
	1,000		(2,526	)
Decrease in basis points of:
	100		253
	500		1,263
	1,000		2,526

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      Synovus is also subject to market risk in certain of its fee income business lines. Financial management services revenues 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 could have an adverse impact on the fees generated by these operations. Mortgage banking income is also subject to market risk. Mortgage loan originations are sensitive to levels of mortgage interest rates and therefore, mortgage revenue could be negatively impacted during a period of rising interest rates. The extension of commitments to customers to fund mortgage loans also subjects Synovus to market risk. This risk is primarily created by the time period between making the commitment and closing and delivering the loan. Synovus seeks to minimize this exposure by utilizing various risk management tools, the primary of which are best efforts commitments and forward sales commitments.

Table 18 Twelve Month Net Interest Income Sensitivity

Change in		Estimated change in Net Interest Income
Short-Term
Interest Rates		As of			As of
(In basis points)		December 31, 2006			December 31, 2005
	+ 200		2.5	%		4.4	%
	+ 100		0.3	%		1.9	%
	Flat		—			—
	- 100		(1.0	)%		(2.2	)%
	- 200		(2.7	)%		(4.8	)%

Table 19 Interest Rate Sensitivity

(Dollars in millions)

			December 31, 2006
			0-3			4-12			1-5		Over 5
			Months			Months			Years		Years
Investment securities available for sale*			$	270.9			429.8			1,811.9		864.5
Loans, net of unearned income				16,848.6			2,614.3			4,616.8		574.8
Mortgage loans held for sale				175.0			—			—		—
Other				135.7			—			—		—
	Interest sensitive assets			17,430.2			3,044.1			6,428.7		1,439.3
Deposits				8,787.2			6,097.1			5,378.2		483.1
Other borrowings				1,637.5			211.5			238.4		835.6
	Interest sensitive liabilities			10,424.7			6,308.6			5,616.6		1,318.7
	Interest rate swaps			(2,367.5	)		930.0			970.0		467.5
		Interest sensitivity gap	$	4,638.0			(2,334.5	)		1,782.1		588.1
		Cumulative interest sensitivity gap	$	4,638.0			2,303.5			4,085.6		4,673.7
		Cumulative interest sensitivity gap as a percentage of total interest sensitive assets		16.4	%		8.1			14.4		16.5

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			December 31, 2005
			0-3			4-12			1-5		Over 5
			Months			Months			Years		Years
Investment securities available for sale*			$	273.1			417.5			1,886.1		428.0
Loans, net of unearned income				15,258.6			2,091.7			3,569.1		473.0
Mortgage loans held for sale				143.1			—			—		—
Other				99.2			—			—		—
	Interest sensitive assets			15,774.0			2,509.2			5,455.2		901.0
Deposits				7,902.8			3,780.6			4,885.8		514.4
Other borrowings				1,851.2			110.6			236.9		893.6
	Interest sensitive liabilities			9,754.0			3,891.2			5,122.7		1,408.0
	Interest rate swaps			(1,107.5	)		295.0			395.0		417.5
		Interest sensitivity gap	$	4,912.5			(1,087.0	)		727.5		(89.5	)
		Cumulative interest sensitivity gap	$	4,912.5			3,825.5			4,553.0		4,463.5
		Cumulative interest sensitivity gap as a percentage of total interest sensitive assets		19.9	%		15.5			18.5		18.1

*  Excludes net unrealized losses of $24.8 million and net unrealized losses of $46.3 million at December 31, 2006 and 2005, respectively.

Derivative Instruments for Interest Rate Risk Management

      As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risks. The primary instruments utilized by Synovus are interest rate swaps where Synovus receives a fixed rate of interest and pays a floating rate tied to either the prime rate or LIBOR. These swaps are utilized to hedge the variability of cash flows or fair values of on-balance sheet assets and liabilities.

      Interest rate derivative contracts utilized by Synovus include end-user hedges, all of which are designated as hedging specific assets or liabilities. These hedges are executed and managed in coordination with the overall interest rate risk management function. Management believes that the utilization of these instruments provides greater flexibility and efficiency in managing interest rate risk.

      The notional amount of interest rate swap contracts utilized by Synovus as part of its overall interest rate risk management activities as of December 31, 2006 and 2005 was $2.78 billion and $1.16 billion, respectively. The notional amounts represent the amount on which calculations of interest payments to be exchanged are based.

      Entering into interest rate derivatives 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. This credit risk is normally a small percentage of the notional amount and fluctuates based on changes in interest rates. Synovus analyzes and approves credit risk for all potential derivative counterparties prior to execution of any derivative transaction. Synovus minimizes credit risk by dealing with highly-rated counterparties, and by obtaining collateralization for exposures above certain predetermined limits.

      A summary of these interest rate contracts and their terms at December 31, 2006 and 2005 is shown in Table 20. The fair value (net unrealized gains and losses) of these contracts has been recorded on the consolidated balance sheets.

      During 2006, there were eight maturities and one termination of interest rate contracts. There were seven maturities and two terminations in 2005. Interest rate contracts resulted in net interest expense of $8.0 million and a three basis point decrease in the net interest margin for 2006. For 2005, interest rate contracts resulted in net interest income of $910 thousand and less than a one basis point increase to the net interest margin.

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________________________________________________________________________________

Table 20 Interest Rate Contracts

(Dollars in thousands)

				Weighted		Weighted		Weighted							Net
				Average		Average		Average							Unrealized
		Notional		Receive		Pay		Maturity		Unrealized		Unrealized			Gains
		Amount		Rate		Rate *		In Months		Gains		Losses			(Losses)
December 31, 2006
Receive fixed swaps:
Fair value hedges		$	2,082,500		4.91%		5.11%		31	$	32,686		(14,787	)		17,899
Cash flow hedges			700,000		7.91%		8.25%		38		4,265		(2,253	)		2,012
	Total	$	2,782,500		5.66%		5.90%		32	$	36,951		(17,040	)		19,911
December 31, 2005
Receive fixed swaps:
Fair value hedges		$	807,500		4.38%		4.28%		70	$	1,270		(14,804	)		(13,534	)
Cash flow hedges			350,000		6.10%		7.25%		18		117		(3,667	)		(3,550	)
	Total	$	1,157,500		4.90%		5.18%		54	$	1,387		(18,471	)		(17,084	)

*  Variable pay rate based upon contract rates in effect at December 31, 2006 and 2005.

Liquidity

      Liquidity represents the availability of funding to meet the needs of depositors, borrowers, and creditors at a reasonable cost, on a timely basis, and without adverse consequences. Synovus’ strong capital position, solid core deposit base, and excellent credit ratings are the cornerstones of its liquidity management activities.

      The Synovus Asset Liability Management Committee (ALCO), operating under liquidity and funding policies approved by the Board of Directors, actively analyzes and manages the liquidity position in coordination with the subsidiary banks. These subsidiaries maintain liquidity in the form of cash, investment securities, and cash derived from prepayments and maturities of both their investment and loan portfolios. Liquidity is also enhanced by the acquisition of new deposits. The subsidiary banks monitor deposit flows and evaluate alternate pricing structures to retain and grow deposits. Liquidity is also enhanced by the subsidiary banks’ strong reputation in the national deposit markets. This reputation allows subsidiary banks to issue longer-term certificates of deposit across a broad geographic base to enhance their liquidity and funding positions. An additional liquidity source for selected Synovus subsidiary banks is available through their membership in the Federal Home Loan Bank System. At year-end 2006, these banks had access to significant incremental funding, subject to available collateral and Federal Home Loan Bank credit policies, through utilization of Federal Home Loan Bank advances.

      Certain Synovus subsidiary banks have access to overnight federal funds lines with various financial institutions. These lines allow Synovus banks to meet immediate liquidity needs if required. These lines total approximately $3.9 billion and are extended at the ongoing discretion of the correspondent financial institutions. Synovus’ strong credit rating is a primary determinant in the continued availability of these lines. Should Synovus’ credit rating decline to a level below investment grade, these lines’ availability would be significantly diminished. For this reason, selected Synovus banks maintain additional sources of liquidity including collateralized borrowing accounts with the Federal Reserve Bank.

      The Parent Company requires cash for various operating needs including dividends to shareholders, business combinations, capital infusions into subsidiaries, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent Company is dividends and management fees from the subsidiary banks. As a short-term liquidity source, the Parent Company has access to a $25 million line of credit with an unaffiliated banking organization. Synovus had no borrowings outstanding on this line of credit at December 31, 2006. The Parent Company also enjoys an excellent reputation and credit standing in the capital markets and has the ability to raise substantial amounts of funds in the form of either short or long-term borrowings. Maintaining adequate credit ratings is essential to Synovus’ continued cost effective access to these capital market funding sources.

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Financial Review 

      The consolidated statements of cash flows detail cash flows from operating, investing, and financing activities. Net cash provided by operating activities was $779.7 million for the year ended December 31, 2006, while financing activities provided $2.25 billion. Investing activities used $3.02 billion of these amounts, resulting in a net increase in cash and cash equivalents of $9.1 million.

      Management is not aware of any trends, events, or uncertainties that will have, or that are reasonably likely to have a material impact on liquidity, capital resources, or operations. Further, management is not aware of any current recommendations by regulatory agencies which, if they were to be implemented, would have such effect. Table 21 sets forth certain information about contractual cash obligations at December 31, 2006.

Table 21 Contractual Cash Obligations

(In thousands)

	Payments Due After December 31, 2006
	1 Year or Less		Over 1 - 3 Years		4 - 5 Years		After 5 Years		Total
Long-term debt	$	251,625		184,447		48,579		852,428		1,337,079
Capital lease obligations		3,015		3,971		1,389		3,549		11,924
Operating leases		118,009		120,372		48,701		97,031		384,113
Total contractual cash obligations	$	372,649		308,790		98,669		953,008		1,733,116

Capital Resources

      Synovus has always placed great emphasis on maintaining a strong capital base and continues to exceed regulatory capital requirements. Management is committed to maintaining a capital level sufficient to assure shareholders, customers, and regulators that Synovus is financially sound, and to enable Synovus to sustain an appropriate degree of leverage to provide a desirable level of profitability. Synovus has the ability to generate internal capital growth sufficient to support the asset growth it has experienced. Total shareholders’ equity of $3.70 billion represented 11.64% of total assets at December 31, 2006.

      The regulatory banking agencies use a risk-adjusted calculation to aid them in their determination of capital adequacy by weighting assets based on the credit risk associated with on- and off-balance sheet assets. The majority of these risk-weighted assets for Synovus are on-balance sheet assets in the form of loans. Approximately 12% of risk-weighted assets are considered off-balance sheet assets and primarily consist of letters of credit and loan commitments that Synovus enters into in the normal course of business. Capital is categorized into two types: Tier I and Tier II. As a financial holding company, Synovus and its subsidiary banks are required to maintain capital levels required for a well-capitalized institution, as defined in the regulations. The regulatory agencies define a well-capitalized bank as one that has a leverage ratio of at least 5%, a Tier I capital ratio of at least 6%, and a total risk-based capital ratio of at least 10%. At December 31, 2006, Synovus and all subsidiary banks were in excess of the minimum capital requirements with a consolidated Tier I capital ratio of 10.87% and a total risk-based capital ratio of 14.43%, compared to Tier I and total risk-based capital ratios of 10.23% and 14.23%, respectively, in 2005 as shown in Table 22.

      In addition to the risk-based capital standards, a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that are not undertaking significant expansion programs. An additional 1% to 2% may be required for other companies, depending upon their regulatory ratings and expansion plans. The leverage ratio is defined as Tier I capital divided by quarterly average assets, net of certain intangibles. Synovus had a leverage ratio of 10.64% at December 31, 2006 and 9.99% at December 31, 2005, significantly exceeding regulatory requirements.

      The 81% ownership of TSYS is an important aspect of the market price of Synovus common stock and should be considered in a comparison of the relative market price of Synovus common stock to other financial services companies. As of February 20, 2007, there were approximately 23,837 shareholders of record of Synovus common stock, some of which are holders in nominee name for the benefit of a number of different shareholders. Table 23 displays high and low stock price quotations of Synovus common stock which are based on actual transactions.

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Financial Review 

________________________________________________________________________________

Table 22 Capital Ratios

(Dollars in thousands)

				December 31,
				2006			2005
Tier I capital:
	Shareholders’ equity			$	3,708,650		$	2,949,329
	Net unrealized loss on investment securities available for sale				15,227			28,495
	Net unrealized loss on cash flow hedges				4,410			5,674
	Disallowed intangibles				(733,129	)		(532,295	)
	Disallowed deferred tax asset				(5,935	)		(6,939	)
	Other deductions from Tier 1 Capital				(2,855	)		—
	Deferred tax liability on core deposit premium related to acquisitions				11,035			9,215
	Minority interest				236,709			196,973
	Qualifying trust preferred securities				20,491			10,252
			Total Tier I capital		3,254,603			2,660,704
Tier II capital:
	Qualifying subordinated debt				750,000			750,000
	Eligible portion of the allowance for loan losses				314,459			289,612
			Total Tier II capital		1,064,459			1,039,612
Total risk-based capital				$	4,319,062		$	3,700,316
Total risk-adjusted assets				$	29,930,284		$	26,008,796
Tier I capital ratio					10.87	%		10.23	%
Total risk-based capital ratio					14.43			14.23
Leverage ratio					10.64			9.99
Regulatory minimums (for well-capitalized status):
		Tier I capital ratio			6.00	%		6.00	%
		Total risk-based capital ratio			10.00			10.00
		Leverage ratio			5.00			5.00

Table 23 Market and Stock Price Information

		High		Low
2006
	Quarter ended December 31, 2006	$	30.99		28.99
	Quarter ended September 30, 2006		29.73		25.83
	Quarter ended June 30, 2006		28.00		25.77
	Quarter ended March 31, 2006		28.61		26.51
2005
	Quarter ended December 31, 2005	$	28.42		26.49
	Quarter ended September 30, 2005		29.95		27.02
	Quarter ended June 30, 2005		29.49		26.98
	Quarter ended March 31, 2005		28.51		26.59

Dividends

      Synovus (and its predecessor companies) has paid cash dividends on its common stock in every year since 1891. Synovus’ dividend payout ratio was 40.99%, 44.51%, and 48.94%, in 2006, 2005, and 2004, respectively. It is the present intention of the Synovus Board of Directors to continue to pay cash dividends on its common stock in an amount that results in a dividend payout ratio of at least 40%. In addition to the Company’s general financial condition, the Synovus Board of Directors considers other factors in determining the amount of dividends to be paid each year. These factors include consideration of capital and liquidity needs based on projected balance sheet growth, acquisition activity, earnings growth, as well as the capital position of the individual business segments (Financial Services and TSYS).

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Financial Review 

      Table 24 presents information regarding dividends declared during the years ended December 31, 2006 and 2005.

Table 24 Dividends

				Per Share
Date Declared		Date Paid		Amount
2006
	November 21, 2006		January 2, 2007	$	.1950
	August 15, 2006		October 2, 2006		.1950
	May 16, 2006		July 1, 2006		.1950
	February 22, 2006		April 1, 2006		.1950
2005
	November 15, 2005		January 2, 2006	$	.1825
	August 16, 2005		October 1, 2005		.1825
	May 24, 2005		July 1, 2005		.1825
	February 23, 2005		April 1, 2005		.1825

Commitments and Contingencies

      Synovus believes it has sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year. Table 25 and Note 9 to the consolidated financial statements provide additional information on short-term and long-term borrowings.

      In the normal course of its business, TSYS maintains processing contracts with its clients. These processing contracts contain commitments, including, but not limited to, minimum standards and time frames against which its performance is measured. In the event TSYS does not meet its contractual commitments with its clients, TSYS may incur penalties and/or certain customers may have the right to terminate their contracts with TSYS. TSYS does not believe that it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its financial condition or results of operations.

      Synovus and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of its business. In the ordinary course of business, Synovus and its subsidiaries are also subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus establishes reserves for litigation and regulatory matters when those matters present loss contingencies that Synovus determines to be both probable and reasonably estimable. In the pending regulatory matter described below, loss contingencies are not both probable and reasonably estimable in the view of management, and, accordingly, a reserve has not been established for this matter. Based on current knowledge, advice of counsel and/or available insurance coverage, management does not believe that the eventual outcome of pending litigation and regulatory matters, including the pending regulatory matter described below, will have a material adverse effect on Synovus’ consolidated financial condition, results of operations or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to Synovus’ results of operations for any particular period.

      Columbus Bank and Trust Company (“CB&T”), a wholly owned banking subsidiary of Synovus, and CompuCredit Corporation (“CompuCredit”) have agreed to an Assurance of Discontinuance (“Agreement”) with the New York State Attorney General’s office regarding allegations that CB&T and CompuCredit were in violation of New York state law with respect to identified marketing, servicing and collection practices pertaining to the Aspire credit card program. CB&T issues Aspire credit cards that are marketed and serviced by CompuCredit. Among other things, the Agreement provides for a civil penalty of $500,000 and requires specified restitution to cardholders.

      Synovus and CB&T did not incur any financial loss in connection with the Agreement as CompuCredit agreed to be responsible for all amounts to be paid pursuant to the Agreement. A provision of the Affinity Agreement between CB&T and CompuCredit, pursuant to which CB&T issues the Aspire credit card, generally requires CompuCredit to indemnify CB&T for losses incurred as a result of the failure of the Aspire credit card program to comply with applicable law. Synovus is subject to a per event 10% share of any such loss, but Synovus’ 10% payment obligation is limited to a cumulative total of $2 million for all losses incurred. CompuCredit waived Synovus’ 10% payment obligation in connection with the Agreement.

      In addition, the FDIC is currently conducting an investigation of the policies, practices and procedures used by CB&T in connection with the credit card programs offered pursuant to the Affinity Agreement with CompuCredit. CB&T is cooperating with the FDIC’s investigation. Synovus cannot predict the eventual outcome of the FDIC’s investigation; however, the investigation has resulted in material changes to CB&T’s policies, practices and procedures in connection with the credit card programs offered pursuant to the Affinity Agreement. It is probable that the investigation will result in further changes to CB&T’s policies, practices and procedures in connection with the credit card programs offered pursuant to the Affinity Agreement and the imposition of one or more regulatory sanctions, including a civil money penalty and/or restitution of certain fees to affected cardholders. At this

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time, management of Synovus does not expect the ultimate resolution of the investigation to have a material adverse effect on its consolidated financial condition, results of operations or cash flows as a result of the expected performance by CompuCredit of its indemnification obligations described in the paragraph above.

Short-Term Borrowings

      The following table sets forth certain information regarding federal funds purchased and securities sold under repurchase agreements, the principal components of short-term borrowings.

Table 25 Short-Term Borrowings

(Dollars in thousands)

	2006			2005			2004
Balance at December 31	$	1,572,809			1,158,669			1,208,080
Weighted average interest rate at December 31		5.00	%		3.69	%		1.95	%
Maximum month end balance during the year	$	1,974,272			1,918,797			1,749,923
Average amount outstanding during the year	$	1,534,312			1,103,005			1,479,815
Weighted average interest rate during the year		4.66	%		2.86	%		1.30	%

Income Tax Expense

      Income tax expense was $356.6 million in 2006, up from $307.6 million in 2005, and $252.2 million in 2004. The effective income tax rate was 36.6%, 37.3%, and 36.6%, in 2006, 2005, and 2004, respectively. The calculation of the effective tax rate is determined based upon pre-tax income after minority interest in subsidiaries’ net income.

      In July 2006, TSYS changed the structure of its European operation from a branch structure to a statutory structure that will facilitate continued expansion in the European region. TSYS adopted the permanent reinvestment exception under Accounting Principles Board Opinion No. 23 (APB 23), “Accounting for Income Taxes — Special Areas,” with respect to future earnings of certain foreign subsidiaries. As a result, TSYS now considers foreign earnings related to these foreign operations to be permanently reinvested.

      The new statutory structure provides TSYS with marketing and personnel hiring advantages when compared to the former branch office, as well as providing TSYS with certain U.S. and foreign tax benefits. As a result of the new structure, during the third quarter of 2006, TSYS recorded a reduction of previously established income tax liabilities in the amount of $5.6 million, as these amounts would no longer be required under the new structure. Additionally, during the third quarter of 2006, TSYS reassessed its contingencies for federal and state tax exposures, which resulted in an increase in tax contingency amounts of approximately $1.5 million. The aforementioned items resulted in a decrease in 2006 income tax expense (net of minority interest) for Synovus of approximately $3.3 million.

      In the normal course of business, Synovus is subject to examinations from various tax authorities. These examinations may alter the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. During 2006, Synovus received notices of adjustment relating to taxes due for the years 2000 through 2003. As a result, Synovus recorded a reduction of previously recorded income tax liabilities, which reduced income tax expense (net of minority interest) in the amount of $3.7 million.

      Synovus continually monitors and evaluates the potential impact of current events and circumstances on the estimates and assumptions used in the analysis of its income tax positions, and accordingly, Synovus’ effective tax rate may fluctuate in the future. See Note 17 to the consolidated financial statements for a detailed analysis of income taxes.

Inflation

      Inflation has an important impact on the growth of total assets in the banking industry and may create a need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio. Synovus has been able to maintain a high level of equity through retention of an appropriate percentage of its net income. Synovus deals with the effects of inflation by managing its interest rate sensitivity position through its asset/liability management program and by periodically adjusting its pricing of services and banking products to take into consideration current costs.

Parent Company

      The Parent Company’s assets, primarily its investment in subsidiaries, are funded, for the most part, by shareholders’ equity. It also utilizes short-term and long-term debt. The Parent Company is responsible for providing the necessary funds to strengthen the capital of its subsidiaries, acquire new businesses, fund internal growth, pay corporate operating

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Financial Review 

expenses, and pay dividends to its shareholders. These operations are funded by dividends and fees received from subsidiaries, and borrowings from outside sources.

      In connection with dividend payments to the Parent Company from its subsidiary banks, certain rules and regulations of the various state and federal banking regulatory agencies limit the amount of dividends which may be paid. Approximately $445.0 million in dividends could be paid in 2007 to the Parent Company from its subsidiary banks without prior regulatory approval. Synovus expects to receive regulatory approval to allow certain subsidiaries to pay dividends in excess of their respective regulatory limits.

Issuer Purchases of Equity Securities

      Synovus does not currently have a publicly announced share repurchase plan in place. Synovus did not repurchase any shares of its common stock during the fourth quarter of 2006.

Recently Issued Accounting Standards

      In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” SFAS No. 155 eliminates the exemption from applying SFAS No. 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments. SFAS No. 155 also permits election of fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a re-measurement event, on an instrument-by-instrument basis. The provisions of this statement are effective for all financial instruments acquired or issued after the beginning of the entity’s first fiscal year that begins after September 15, 2006. Synovus does not expect the impact of SFAS No. 155 on its financial position, results of operations or cash flows to be material.

      In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets.” SFAS No. 156 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations and requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The provisions of this statement are effective as of the beginning of the first fiscal year that begins after September 15, 2006. Synovus does not expect the impact of SFAS No. 156 on its financial position, results of operations or cash flows to be material.

      In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

      FIN 48 provides a two-step process in the evaluation of a tax position. The first step is recognition. A company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including a resolution of any related appeals or litigation processes, based upon the technical merits of the position. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

      FIN 48 is effective for fiscal years beginning after December 15, 2006. Synovus expects the impact of adopting FIN 48 will not be material to its financial position, results of operations or cash flows.

      In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but applies under other accounting pronouncements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. The provisions of this statement are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Synovus does not expect the impact of SFAS No. 157 on its financial position, results of operations or cash flows to be material.

      In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and

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Financial Review 

Other Postretirement Plans.” SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity. This statement provides different effective dates for the recognition and related disclosure provisions and for the required change to a fiscal year-end measurement date. An employer with publicly traded equity securities shall apply the requirement to recognize the funded status of a benefit plan and the disclosure requirements at the end of the first fiscal year ended after December 15, 2006, and shall apply the requirement to measure plan assets and benefit obligations as of the date of the employers’ fiscal year-end statement of financial position for fiscal years ending after December 15, 2008. In December, 2006, Synovus adopted the recognition provisions of SFAS No. 158, and recognized an accrued liability of $3.2 million, net of tax, in connection with its unfunded postretirement health benefit obligation.

      In September 2006, the EITF reached a consensus on EITF Issue No. 06-4 (EITF 06-4), “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” EITF 06-4 requires an employer to recognize a liability for future benefits based on the substantive agreement with the employee. EITF 06-4 requires a company to use the guidance prescribed in FASB Statement No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” and Accounting Principles Board Opinion No. 12, “Omnibus Opinion,” when entering into an endorsement split-dollar life insurance agreement and recognizing the liability. EITF 06-4 is effective for fiscal periods beginning after December 15, 2007. Synovus is currently evaluating the impact of adopting EITF 06-4 on its financial position, results of operations and cash flows, but has yet to complete its assessment.

      In September 2006, the EITF reached a consensus on EITF Issue No. 06-5 (EITF 06-5), “Accounting for Purchases of Life Insurance — Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4.” EITF 06-5 requires that a determination of the amount that could be realized under an insurance contract should (1) consider any additional amounts beyond cash surrender value included in the contractual terms of the policy and (2) be based on an assumed surrender at the individual policy or certificate level, unless all policies or certificates are required to be surrendered as a group. EITF 06-5 is effective for fiscal periods beginning after December 15, 2006. Synovus is currently evaluating the impact of adopting EITF 06-5 on its financial position, results of operations and cash flows, but has yet to complete its assessment.

      In September 2006, the SEC issued SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.” In December 2006, Synovus adopted the provisions of SAB No. 108, which clarifies the way that a company should evaluate an identified unadjusted error for materiality. SAB No. 108 requires that the effect of misstatements that were not corrected at the end of the prior year be considered in quantifying misstatements in the current year financial statements. Two techniques were identified as being used by companies in practice to accumulate and quantify misstatements — the “rollover” approach and the “iron curtain” approach. The rollover approach, which is the approach that Synovus previously used, quantifies a misstatement based on the amount of the error originating in the current year income statement. Thus, this approach ignores the effects of correcting the portion of the current year balance sheet misstatement that originated in prior years. The iron curtain approach quantifies a misstatement based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatement’s year(s) of origination. The primary weakness of the iron curtain approach is that it does not consider the correction of prior year misstatements in the current year to be errors.

      Using the rollover approach resulted in an accumulation of misstatements to Synovus’ balance sheets that were deemed immaterial to Synovus’ financial statements because the amounts that originated in each year were quantitatively and qualitatively immaterial. Synovus has elected, as allowed under SAB No. 108, to reflect the effect of initially applying this guidance by adjusting the carrying amount of the impacted accounts as of the beginning of 2006 and recording an offsetting adjustment to the opening balance of retained earnings in 2006. Accordingly, Synovus recorded a cumulative adjustment to increase retained earnings by $3.4 million upon the adoption of SAB No. 108.

F-88

Financial Review 

      The following table presents a description of the individual adjustments included in the cumulative adjustment to retained earnings:

				Nature of Error	Years
	Adjustment			Being Corrected	Impacted
(In millions)
Brokered time deposits	$	(10.3	)	Adjusted to reflect incorrect use of hedges		2003 - 2005
Deferred income tax liability		3.8		Adjusted to reflect tax effect of incorrect use of hedges		2003 - 2005
Accumulated other comprehensive loss		(0.8	)	Adjusted to reflect incorrect use of hedges		2004 - 2005
Deferred income tax liability		10.7		Adjusted to reflect impact of calculation errors		1993 - 2005
Total increase in retained earnings	$	3.4

      In the first quarter of 2003, Synovus entered into interest rate swaps to hedge the fair value of certain brokered time deposits. Effectiveness was measured using the short-cut method. Upon further review of these arrangements at September 30, 2005, Synovus determined that these hedges did not qualify for the shortcut method of hedge accounting as the broker placement fee for the related certificates of deposit was factored into the pricing of the swaps. The hedging relationships were redesignated on September 30, 2005, using the cumulative dollar offset method to measure ineffectiveness. The prior years’ adjustments were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus’ results of operations in any of the years impacted. Brokered time deposits were increased by the amount of the cumulative fair value basis adjustment and the associated deferred tax liability was removed, resulting in a net decrease in shareholders’ equity of $6.5 million, to correct the incorrect use of hedge accounting.

      In the fourth quarter of 2004, Synovus entered into certain forward starting interest rate swaps to hedge the future interest payments on debt forecasted to be issued in 2005. Synovus accounted for these arrangements as cash flow hedges. Upon further review of these arrangements, during the second quarter of 2005, it was determined that the swaps did not qualify for hedge accounting treatment. The hedging relationships were redesignated during the second quarter of 2005. The prior years’ adjustments were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus’ results of operations in any of the years impacted. Accumulated other comprehensive losses were decreased and retained earnings were increased by $0.8 million, respectively, to correct the incorrect use of hedge accounting.

      From 1993 through 2005, Synovus had errors in its calculation of deferred taxes for temporary differences related to certain business combinations and premises and equipment. The prior years’ errors were evaluated under the rollover approach and the correction of these misstatements was not material to Synovus results of operations in any of the years impacted. The deferred income tax liability was reduced by $10.7 million to correct the calculation errors.

      In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to make an irrevocable election, at specified election dates, to measure eligible financial instruments and certain other items at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The provisions of this statement are effective as of the beginning of the first fiscal year that begins after November 15, 2007. Synovus is currently evaluating the impact of adopting SFAS No. 159, but has yet to complete its assessment.

Forward-Looking Statements

      Certain statements contained in this document which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the “Act”). These forward-looking statements include, among others, statements regarding: (i) management’s belief with respect to the adequacy of the allowance for loan losses; (ii) the expected financial impact of recent accounting pronouncements; (iii) TSYS’ belief with respect to its ability to meet its contractual commitments; (iv) management’s belief with respect to legal proceedings and other claims, including the pending regulatory matter with respect to credit card programs offered by CB&T pursuant to its agreement with CompuCredit; (v) TSYS’ expectation that it will continue to process commercial card accounts for Citibank, as well as Citibank’s Banamex USA consumer accounts; (vi) TSYS’ expectation that it will maintain the card-processing functions of Chase for at least two years and that Chase will discontinue its processing agreement according to the original schedule and license TSYS’ processing software in the third quarter of 2007; (vii) TSYS’ projections with respect to the impact of the Bank of America consumer card deconversion on revenues; (viii) TSYS’ expectation that it will convert Capital One’s portfolio in phases beginning in mid-2006 and ending in early 2007; (ix) TSYS’ expectation that it will maintain card processing functions of Capital One for at least five years; (x) management’s belief with respect to the adequacy of unallocated allowance for loan losses; (xi) management’s belief with respect to the existence of

F-89

Financial Review 

sufficient collateral for past due loans, the resolution of certain loan delinquencies and the inclusion of all material loans in which doubt exists as to collectibility in nonperforming assets and impaired loans; (xii) management’s belief with respect to the use of derivatives to manage interest rate risk; (xiii) the Board of Directors’ present intent to continue to pay cash dividends; (xiv) management’s belief with respect to having sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year; (xv) Synovus’ expected growth in diluted earnings per share for 2007, and the assumptions underlying such statements, including with respect to Synovus’ expected increase in diluted earnings per share for 2007: stable to modestly lower short-term interest rates as compared to the fourth quarter of 2006; an annual net interest margin near fourth quarter 2006 net interest margin of 4.20% (with compression during the first half of the year followed by some expansion); a favorable credit environment; TSYS’ net income growth, excluding the Bank of America termination fee and associated amortization of contract acquisition costs in 2006, in the 14% to 17% range; and Financial Services segment net income growth of approximately 10%. In addition, certain statements in future filings by Synovus with the Securities and Exchange Commission, in press releases, and in oral and written statements made by or with the approval of Synovus which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure, efficiency ratios and other financial terms; (ii) statements of plans and objectives of Synovus or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “estimates,” “projects,” “plans,” “may,” “could,” “should,” “would,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

      These 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: (i) competitive pressures arising from aggressive competition from other financial service providers; (ii) factors that affect the delinquency rate of Synovus’ loans and the rate at which Synovus’ loans are charged off; (iii) changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which Synovus is perceived in such markets, including a reduction in our debt ratings; (iv) TSYS’ inability to achieve its earnings goals for 2007; (v) the strength of the U.S. economy in general and the strength of the local economies in which operations are conducted may be different than expected; (vi) the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate policies of the Federal Reserve Board; (vii) inflation, interest rate, market and monetary fluctuations; (viii) the timely development of and acceptance of new products and services and perceived overall value of these products and services by users; (ix) changes in consumer spending, borrowing, and saving habits; (x) technological changes are more difficult or expensive than anticipated; (xi) acquisitions are more difficult to integrate than anticipated; (xii) the ability to increase market share and control expenses; (xiii) the effect of changes in governmental policy, laws and regulations, or the interpretation or application thereof, including restrictions, limitations and/or penalties arising from banking, securities and insurance laws, regulations and examinations; (xiv) the impact of the application of and/or the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies; (xv) changes in Synovus’ organization, compensation, and benefit plans; (xvi) the costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto; (xvii) a deterioration in credit quality or a reduced demand for credit; (xviii) Synovus’ inability to successfully manage any impact from slowing economic conditions or consumer spending; (xix) TSYS does not maintain the card-processing functions of Capital One for at least five years as expected; (xx) the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; (xxi) successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection; (xxii) the impact on Synovus’ business, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (xxiii) the success of Synovus at managing the risks involved in the foregoing.

      These forward-looking statements speak only as of the date on which the statements are made, and Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect the occurrence of unanticipated events.

F-90

Summary of Quarterly Financial Data (Unaudited) 

Presented below is a summary of the unaudited consolidated quarterly financial data for the years ended December 31, 2006 and 2005.

(In thousands, except per share data)		Fourth		Third		Second		First
		Quarter		Quarter		Quarter		Quarter
2006
	Interest income	$	545,630		533,629		497,713		439,493
	Net interest income		291,632		292,602		287,203		262,436
	Provision for losses on loans		18,675		18,390		18,534		19,549
	Income before income taxes		282,620		236,840		242,843		211,228
	Net income		175,547		154,066		152,797		134,506
	Net income per share, basic		.54		.48		.47		.43
	Net income per share, diluted		.54		.47		.47		.43
2005
	Interest income	$	419,332		386,412		359,175		331,306
	Net interest income		260,095		244,825		237,065		226,862
	Provision for losses on loans		20,787		19,639		22,823		19,283
	Income before income taxes		218,309		215,845		204,251		185,617
	Net income		137,260		133,992		128,460		116,734
	Net income per share, basic		.44		.43		.41		.38
	Net income per share, diluted		.44		.43		.41		.37

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