Note 2 - Acquisition

On October 1, 2016, Synovus completed its acquisition of all of the outstanding stock of Global One. Prior to its acquisition, Global One was an Atlanta-based private specialty financial services company that lended primarily to commercial entities, with all loans fully collateralized by cash value life insurance policies and/or annuities issued by investment grade life insurance companies. Under the terms of the merger agreement, Synovus acquired Global One for an up-front payment of $30 million, consisting of the issuance of 821 thousand shares of Synovus common stock valued at $26.6 million and $3.4 million in cash, with additional payments to Global One's former shareholders over the next three to five years based on earnings from the Global One business as further discussed below.

The acquisition of Global One constituted a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as shown in the following table. The determination of fair value required management to make estimates about discount rates, future expected earnings and cash flows, market conditions, future loan growth, and other future events that are highly subjective in nature and subject to change. These fair value estimates reflect adjustments to the amounts reported as of December 31, 2016, the most significant of which consist of a reduction in recorded goodwill of $2.7 million and a decrease in the estimated fair value of contingent consideration of $2.6 million. Further, these fair value estimates are considered preliminary and are subject to change for up to one year after the closing date of the acquisition as additional information becomes available.



Global One	October 1, 2016
(in thousands)	Fair Value
Assets acquired:
Cash and due from banks	$	9,554
Commercial and industrial loans⁽¹⁾	357,307
Goodwill⁽²⁾	32,579
Other intangible assets	12,500
Other assets	2,742
Total assets acquired	$	414,682
Liabilities assumed:
Notes payable⁽³⁾	$	358,560
Contingent consideration	11,421
Deferred tax liability, net	2,798
Other liabilities	11,903
Total liabilities assumed	$	384,682
Consideration paid	$	30,000

Cash paid	$	3,408
Fair value of common stock issued	26,592

⁽¹⁾The unpaid principal balance of the loans was $356.7 million.

⁽²⁾The goodwill is not expected to be deductible for tax purposes.

⁽³⁾ The unpaid principal balance of the notes payable was $357.0 million.

Under the terms of the merger agreement, the purchase price includes additional annual payments ("Earnout Payments") to Global One's former shareholders over the next three to five years, with amounts based on a percentage of net income attributable to "Global One Earnings," as defined in the merger agreement. The Earnout Payments will consist of shares of Synovus common stock as well as a smaller cash consideration component.

Other intangible assets consist of existing borrower relationships (11 years useful life), trade name (10 years useful life), and distribution network (8 years useful life).

The following is a description of the methods used to determine the fair values of significant assets and liabilities:

Commercial and industrial loans: The fair value of loans was determined based on a discounted cash flow approach. The most significant assumptions used in the valuation of the loan portfolio consisted of the prepayment rate, the probability of extension at maturity, the interest rates on extended loans, and the discount rates. All loans are fully collateralized by cash value life insurance policies and/or annuities issued by investment grade insurance companies. Based on a history of no principal losses on the loan portfolio since inception as well as the collateral position, no losses were estimated in the event of default.

Notes payable: The notes payable were extinguished immediately after the closing of the acquisition. Accordingly, the fair value of notes payable was determined based on the amounts paid to extinguish such notes, inclusive of applicable prepayment penalties, which is consistent with the perspective of a market participant.

Contingent consideration: The fair value of the contingent consideration, which represents the fair value of the above referenced Earnout Payments, was determined based on option pricing methods and a Monte Carlo simulation. The most significant assumptions used in the valuation of the contingent consideration were the expected cash flows, volatility, and discount rates. Future changes in the fair value of the contingent consideration will be recognized in earnings until the contingent consideration arrangement is settled.