Fair Value Accounting (Tables)

12 Months Ended

Dec. 31, 2013

Financial Instruments Measured at Fair Value on Recurring Basis

The following table presents all financial instruments measured at fair value on a recurring basis as of December 31, 2013 and 2012, according to the valuation hierarchy included in ASC 820-10. For equity and debt securities, class was determined based on the nature and risks of the investments. Transfers between levels for the years ended December 31, 2013 and 2012 were inconsequential.



	December 31, 2013
(in thousands)	Level 1		Level 2	Level 3	Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	$	—	2,465	—	2,465
State and municipal securities	—		429	—	429
All other residential mortgage-backed securities	—		968	—	968
Other investments	—		2,251	—	2,251
Total trading securities	—		6,113	—	6,113
Mortgage loans held for sale	—		45,384	—	45,384
Investment securities available for sale:
U.S. Treasury securities	17,791		—	—	17,791
U.S. Government agency securities	—		34,641	—	34,641
Securities issued by U.S. Government sponsored enterprises	—		113,745	—	113,745
Mortgage-backed securities issued by U.S. Government agencies	—		195,117	—	195,117
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		2,421,360	—	2,421,360
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		398,540	—	398,540
State and municipal securities	—		6,889	—	6,889
Equity securities	6,956		—	628	7,584
Other investments⁽¹⁾	1,969		—	1,722	3,691
Total investment securities available for sale	26,716		3,170,292	2,350	3,199,358
Private equity investments	—		1,615	27,745	29,360
Mutual funds held in Rabbi Trusts	11,246		—	—	11,246
Derivative assets:
Interest rate contracts	—		38,482	—	38,482
Mortgage derivatives⁽²⁾	—		1,522	—	1,522
Total derivative assets	—		40,004	—	40,004
Liabilities
Trading account liabilities	—		1,763	—	1,763
Salary stock units	1,764		—	—	1,764
Derivative liabilities:
Interest rate contracts	—		39,436	—	39,436
Visa Derivative	—		—	2,706	2,706
Total derivative liabilities	$	—	39,436	2,706	42,142



	December 31, 2012
(in thousands)	Level 1		Level 2	Level 3	Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Mortgage-backed securities issued by U.S. Government agencies	$	—	2,171	—	2,171
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	—		4,875	—	4,875
State and municipal securities	—		451	—	451
All other residential mortgage-backed securities	—		1,159	—	1,159
Other investments	—		2,446	—	2,446
Total trading securities	—		11,102	—	11,102
Mortgage loans held for sale	—		212,663	—	212,663
Investment securities available for sale:
U.S. Treasury securities	356		—	—	356
U.S. Government agency securities	—		38,046	—	38,046
Securities issued by U.S. Government sponsored enterprises	—		293,310	—	293,310
Mortgage-backed securities issued by U.S. Government agencies	—		245,593	—	245,593
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		1,867,493	—	1,867,493
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		514,489	—	514,489
State and municipal securities	—		15,798	—	15,798
Equity securities	2,849		—	891	3,740
Other investments⁽¹⁾	—		—	2,287	2,287
Total investment securities available for sale	3,205		2,974,729	3,178	2,981,112
Private equity investments	—		1,168	30,708	31,876
Mutual funds held in Rabbi Trusts	10,001		—	—	10,001
Derivative assets:
Interest rate contracts	—		61,869	—	61,869
Mortgage derivatives ⁽²⁾	—		2,793	—	2,793
Total derivative assets	—		64,662	—	64,662
Liabilities
Trading account liabilities	—		91	—	91
Salary stock units	1,888		—	—	1,888
Derivative liabilities:
Interest rate contracts	—		62,912	—	62,912
Mortgage derivatives ⁽²⁾	—		525	—	525
Visa Derivative	—		—	2,956	2,956
Total derivative liabilities	$	—	63,437	2,956	66,393

⁽¹⁾ Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate.

⁽²⁾Mortgage derivatives consist of customer interest rate lock commitments that relate to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third-party investors.

Changes in Fair Value Included in Consolidated Statements of Income

The following table summarizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. Mortgage loans held for sale are initially measured at fair value with subsequent changes in fair value recognized in earnings. Changes in fair value were recorded as a component of mortgage banking income and other non-interest income in the consolidated statements of income, as appropriate. An immaterial portion of these changes in fair value were attributable to changes in instrument-specific credit risk.



	Twelve Months Ended December 31,
(in thousands)	2013			2012	2011
Changes in fair value included in net income:
Mortgage loans held for sale	$	(5,566	)	1,813	5,185
Mortgage loans held for sale:
Fair value	45,384			212,663	161,509
Unpaid principal balance	44,943			206,657	157,316
Fair value less aggregate unpaid principal balance	$	441		6,006	4,193

Changes in Level 3 Fair Value Measurements

The table below includes a roll-forward of the amounts on the consolidated balance sheet for the year ended December 31, 2013 and 2012 (including the change in fair value), for financial instruments of a material nature that are classified by Synovus within Level 3 of the fair value hierarchy and are measured at fair value on a recurring basis. Transfers between fair value levels are recognized at the end of the reporting period in which the associated changes in inputs occur. During 2013, Synovus did not have any material transfers between levels in the fair value hierarchy. During the first quarter of 2012, Synovus transferred the mortgage derivative asset, which consists of interest rate lock commitments totaling $1.9 million, from Level 3 to Level 2 within the fair value hierarchy, reflecting increased transparency of the inputs used to value these financial instruments, which are based on the mortgage banking subsidiary's historical experience, conversion ratios for similar loan commitments, market conditions and other observable inputs, instead of previously used external industry data. Additionally, during the first quarter of 2012, Synovus transferred assets totaling $501 thousand that were classified as a Level 3 equity security to other assets to more accurately reflect the financial characteristics of the financial instruments.



	2013
(in thousands)	Investment Securities Available for Sale			Private Equity Investments				Other Derivative Contracts
Beginning balance, January 1,	$	3,178		30,708				(2,956	)
Total gains (losses) realized/unrealized:
Included in earnings⁽¹⁾	(264		)	(2,963	)			(1,600	)
Unrealized gains (losses) included in other comprehensive income	436			—				—
Purchases	—			—				—
Sales	—			—				—
Issuances	—			—				—
Settlements	(1,000		)	—				1,850
Amortization of discount/premium	—			—				—
Transfers in and/or out of Level 3	—			—				—
Ending balance, December 31,	$	2,350		27,745				(2,706	)
The amount of total net gains (losses) for the year included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at December 31,	$	(264	)	(2,963	)			(1,600	)

	2012
(in thousands)	Investment Securities Available for Sale			Private Equity Investments				Other Derivative Contracts, Net⁽³⁾
Beginning balance, January 1,	$	6,842		21,418				(7,242	)
Total gains (losses) realized/unrealized:
Included in earnings⁽¹⁾	(450		)	8,233				(6,304	)
Unrealized gains (losses) included in other comprehensive income	(713		)	—				—
Purchases	—			1,057		⁽²	⁾	—
Sales	—			—				—
Issuances	—			—				—
Settlements	(2,000		)	—				12,441
Amortization of discount/premium	—			—				—
Transfers in and/or out of Level 3	(501		)	—				(1,851	)
Ending balance, December 31,	$	3,178		30,708				(2,956	)
The amount of total net gains (losses) for the year included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at December 31,	$	(450	)	8,233				(6,304	)

⁽¹⁾Included in earnings as a component of other non-interest income(expense).

⁽²⁾Represents additional capital contributed to a private equity investment fund for capital calls. There are no such calls outstanding as of December 31, 2013.

⁽³⁾Other derivative contracts include the Visa Derivative and the mortgage derivatives for the year ended December 31, 2012.

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

The following table presents assets measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment during the period, according to the valuation hierarchy included in ASC 820-10.



	As of December 31, 2013					Fair Value Adjustments for the Year Ended December 31, 2013
(in thousands)	Level 1		Level 2	Level 3		Fair Value Adjustments for the Year Ended December 31, 2013
Impaired loans*	$	—	—	$	170,693	29,132
Other loans held for sale	—		—	9,670		5,988
Other real estate	—		—	50,070		10,431
Other assets held for sale	—		—	4,945		2,294

	As of December 31, 2012					Fair Value Adjustments for the Year Ended December 31, 2012
	Level 1		Level 2	Level 3		Fair Value Adjustments for the Year Ended December 31, 2012
Impaired loans*	$	—	—	$	80,299	52,916
Other loans held for sale	—		—	7,420		5,144
Other real estate	—		—	79,293		22,615
Other assets held for sale	—		—	5,804		2,425

*Impaired loans that are collateral-dependent.

Fair Value Inputs, Assets, Quantitative Information

The tables below provide an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments. The tables below present both the total balance as of the dates indicated for assets measured at fair value on a recurring basis and the assets measured at fair value on a non-recurring basis for which there was a fair value adjustment during the period, according to the valuation hierarchy included in ASC 820-10.



December 31, 2013
(dollars in thousands)	Level 3 Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)⁽¹⁾
Assets measured at fair value on a recurring basis

Investment Securities Available for Sale
Equity securities	$	628	Individual analysis of each investment	Multiple data points, including, but not limited to evaluation of past and projected business performance	N/A⁽⁴⁾

Other investments:

Trust preferred securities	1,722		Discounted cash flow analysis	Credit spread embedded in discount rate	400-480 bps (441 bps)
				Discount for lack of marketability⁽²⁾	0%-10% (0%)

Private equity investments	27,745		Individual analysis of each investee company	Multiple factors, including but not limited to, current operations, financial conditions, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies ⁽²⁾	N/A

Visa derivative liability	$	2,706	Internal valuation	Estimated future cumulative deposits to the litigation escrow for settlement of the Covered Litigation, and estimated future monthly fees payable to the derivative counterparty	$400 thousand to $2.7 million ($2.7 million)



December 31, 2013
(dollars in thousands)	Level 3 Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)⁽¹⁾
Assets measured at fair value on a non-recurring basis
Collateral dependent impaired loans	$	170,693	Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	0%-65% (25%) 0%-10% (7%)

Other loans held for sale	9,670		Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	18%-93% (70%) 0%-10% (7%)

Other real estate	50,070		Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	0%-85% (25%) 0%-10% (7%)

Other assets held for sale	$	4,945	Third-party appraised value of collateral less estimated selling costs or BOV	Discount to appraised value ⁽³⁾ Estimated selling costs	5%-36% (20%) 0%-10% (7%)

⁽¹⁾ The range represents management's best estimate of the high and low of the value that would be assigned to a particular input. The weighted average is the measure of central tendencies; it is the value that management is using for the asset or liability.

⁽²⁾ Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.

⁽³⁾ Synovus also makes adjustments to the values of the assets listed above for various reasons, including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical conditions of the property, and other factors.

⁽⁴⁾ The range has not been disclosed due to the wide range of possible values given the methodology used.



December 31, 2012
(dollars in thousands)	Level 3 Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)⁽¹⁾
Assets measured at fair value on a recurring basis

Investment Securities Available for Sale
Equity securities	$	891	Individual analysis of each investment	Multiple data points, including, but not limited to evaluation of past and projected business performance	N/A⁽⁴⁾

Other investments:

Trust preferred securities	2,287		Discounted cash flow analysis	Credit spread embedded in discount rate	425-650 bps (571 bps)
				Discount for lack of marketability⁽²⁾	0%-10% (0%)

Private equity investments	30,708		Individual analysis of each investee company	Multiple factors, including but not limited to, current operations, financial conditions, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies ⁽²⁾	N/A

Visa derivative liability	$	2,956	Internal valuation	Estimated future cumulative deposits to the litigation escrow for settlement of the Covered Litigation, and estimated future monthly fees payable to the derivative counterparty	$400 thousand to $3.0 million ($3.0 million)



December 31, 2012
(dollars in thousands)	Level 3 Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)⁽¹⁾
Assets measured at fair value on a non-recurring basis
Collateral dependent impaired loans	$	80,299	Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	0%-12% (4%) 0%-10% (7%)

Other loans held for sale	7,420		Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	0%-12% (4%) 0%-10% (7%)

Other real estate	79,293		Third-party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽³⁾ Estimated selling costs	0%-7% (2%) 0%-10% (7%)

Other assets held for sale	$	5,804	Third-party appraised value of collateral less estimated selling costs or BOV	Discount to appraised value ⁽³⁾ Estimated selling costs	13%-51% (29%) 0%-10% (7%)

⁽²⁾ Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.

⁽⁴⁾ The range has not been disclosed due to the wide range of possible values given the methodology used.

Carrying and Estimated Fair Values of Financial Instruments Carried on Balance Sheet

The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of December 31, 2013 and 2012 are as follows:



	December 31, 2013
(in thousands)	Carrying Value		Fair Value	Level 1	Level 2	Level 3
Financial Assets
Cash and cash equivalents	$	469,630	469,630	469,630	—	—
Interest bearing funds with Federal Reserve Bank	644,528		644,528	644,528	—	—
Interest earning deposits with banks	24,325		24,325	24,325	—	—
Federal funds sold and securities purchased under resale agreements	80,975		80,975	80,975	—	—
Trading account assets	6,113		6,113	—	6,113	—
Mortgage loans held for sale	45,384		45,384	—	45,384	—
Other loans held for sale	10,685		10,685	—	—	10,685
Investment securities available for sale	3,199,358		3,199,358	26,716	3,170,292	2,350
Private equity investments	29,360		29,360	—	1,615	27,745
Mutual funds held in Rabbi Trusts	11,246		11,246	11,246	—	—
Loans, net of deferred fees and costs	20,057,798		19,763,708	—	—	19,763,708
Derivative assets	40,004		40,004	—	40,004	—
Financial Liabilities
Trading account liabilities	$	1,763	1,763	—	1,763	—
Non-interest bearing deposits	5,642,751		5,642,751	—	5,642,751	—
Interest bearing deposits	15,234,039		15,244,020	—	15,244,020	—
Federal funds purchased, other short-term borrowings and other short-term liabilities	148,132		148,132	—	148,132	—
Salary stock units	1,764		1,764	1,764	—	—
Long-term debt	2,033,141		2,095,720	—	2,095,720	—
Derivative liabilities	42,142		42,142	—	39,436	2,706



	December 31, 2012
(in thousands)	Carrying Value		Fair Value	Level 1	Level 2	Level 3
Financial assets
Cash and cash equivalents	$	614,630	614,630	614,630	—	—
Interest bearing funds with Federal Reserve Bank	1,498,390		1,498,390	1,498,390	—	—
Interest earning deposits with banks	23,442		23,442	23,442	—	—
Federal funds sold and securities purchased under resale agreements	113,517		113,517	113,517	—	—
Trading account assets	11,102		11,102	—	11,102	—
Mortgage loans held for sale	212,663		212,663	—	212,663	—
Other loans held for sale	10,690		10,690	—	—	10,690
Investment securities available for sale	2,981,112		2,981,112	3,205	2,974,729	3,178
Private equity investments	31,876		31,876	—	1,168	30,708
Mutual funds held in Rabbi Trusts	10,001		10,001	10,001	—	—
Loans, net of deferred fees and costs	19,541,690		19,254,199	—	—	19,254,199
Derivative assets	64,662		64,662	—	64,662	—
Financial liabilities
Trading account liabilities	$	91	91	—	91	—
Non-interest bearing deposits	5,665,527		5,665,527	—	5,665,527	—
Interest bearing deposits	15,391,517		15,415,160	—	15,415,160	—
Federal funds purchased, other short-term borrowings, and other short-term liabilities	201,243		201,243	—	201,243	—
Salary stock units	1,888		1,888	1,888	—	—
Long-term debt	1,726,455		1,784,223	—	1,784,223	—
Derivative liabilities	66,393		66,393	—	63,437	2,956

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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