Fair Value Accounting (Tables)
|
3 Months Ended |
Mar. 31, 2017 |
Fair Value Disclosures [Abstract] |
|
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 March 31, 2017 and December 31, 2016, 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 during the three months ended March 31, 2017 and year ended December 31, 2016 were inconsequential. | | | | | | | | | | | | | | | March 31, 2017 | (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 | — |
| | 980 |
| | — |
| | 980 |
| Collateralized mortgage obligations issued by U.S. Government sponsored enterprises | — |
| | 455 |
| | — |
| | 455 |
| State and municipal securities | — |
| | 343 |
| | — |
| | 343 |
| Total trading securities | $ | — |
| | 1,778 |
| | — |
| | 1,778 |
| Mortgage loans held for sale | — |
| | 57,686 |
| | — |
| | 57,686 |
| Investment securities available for sale: | | | | | | | | U.S. Treasury securities | 82,891 |
| | — |
| | — |
| | 82,891 |
| U.S. Government agency securities | — |
| | 12,431 |
| | — |
| | 12,431 |
| Mortgage-backed securities issued by U.S. Government agencies | — |
| | 166,279 |
| | — |
| | 166,279 |
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | — |
| | 2,802,544 |
| | — |
| | 2,802,544 |
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises | — |
| | 696,892 |
| | — |
| | 696,892 |
| State and municipal securities | — |
| | 1,801 |
| | — |
| | 1,801 |
| Other investments(1) | 3,108 |
| | 15,145 |
| | 1,851 |
| | 20,104 |
| Total investment securities available for sale | $ | 85,999 |
| | 3,695,092 |
| | 1,851 |
| | 3,782,942 |
| Private equity investments | — |
| | — |
| | 23,679 |
| | 23,679 |
| Mutual funds held in rabbi trusts | 12,431 |
| | — |
| | — |
| | 12,431 |
| GGL/SBA loans servicing asset | — |
| | — |
| | 4,178 |
| | 4,178 |
| Derivative assets: | | | | | | | | Interest rate contracts | — |
| | 15,548 |
| | — |
| | 15,548 |
| Mortgage derivatives(2) | — |
| | 2,243 |
| | — |
| | 2,243 |
| Total derivative assets | $ | — |
| | 17,791 |
| | — |
| | 17,791 |
| Liabilities | | | | | | | | Trading account liabilities | — |
| | 1,000 |
| | — |
| | 1,000 |
| Other liabilities(3) | — |
| | — |
| | 11,421 |
| | 11,421 |
| Derivative liabilities: | | | | | | | | Interest rate contracts | — |
| | 15,923 |
| | — |
| | 15,923 |
| Mortgage derivatives(2) | — |
| | 561 |
| | — |
| | 561 |
| Visa derivative | — |
| | — |
| | 5,412 |
| | 5,412 |
| Total derivative liabilities | $ | — |
| | 16,484 |
| | 5,412 |
| | 21,896 |
| | | | | | | | |
| | | | | | | | | | | | | | | December 31, 2016 | (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 | — |
| | 3,460 |
| | — |
| | 3,460 |
| Collateralized mortgage obligations issued by U.S. Government sponsored enterprises | — |
| | 3,438 |
| | — |
| | 3,438 |
| State and municipal securities | — |
| | 426 |
| | — |
| | 426 |
| Other investments | 1,890 |
| | 100 |
| | — |
| | 1,990 |
| Total trading securities | $ | 1,890 |
| | 7,424 |
| | — |
| | 9,314 |
| Mortgage loans held for sale | — |
| | 51,545 |
| | — |
| | 51,545 |
| Investment securities available for sale: | | | | | | | | U.S. Treasury securities | 107,802 |
| | — |
| | — |
| | 107,802 |
| U.S. Government agency securities | — |
| | 12,993 |
| | — |
| | 12,993 |
| Mortgage-backed securities issued by U.S. Government agencies | — |
| | 174,202 |
| | — |
| | 174,202 |
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | — |
| | 2,506,340 |
| | — |
| | 2,506,340 |
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises | — |
| | 890,442 |
| | — |
| | 890,442 |
| State and municipal securities | — |
| | 2,794 |
| | — |
| | 2,794 |
| Equity securities | 3,782 |
| | — |
| | — |
| | 3,782 |
| Other investments(1) | 3,092 |
| | 14,952 |
| | 1,796 |
| | 19,840 |
| Total investment securities available for sale | $ | 114,676 |
| | 3,601,723 |
| | 1,796 |
| | 3,718,195 |
| Private equity investments | — |
| | — |
| | 25,493 |
| | 25,493 |
| Mutual funds held in rabbi trusts | 11,479 |
| | — |
| | — |
| | 11,479 |
| Derivative assets: | | | | | | | | Interest rate contracts | — |
| | 17,157 |
| | — |
| | 17,157 |
| Mortgage derivatives(2) | — |
| | 3,466 |
| | — |
| | 3,466 |
| Total derivative assets | $ | — |
| | 20,623 |
| | — |
| | 20,623 |
| | | | | | | | | Liabilities | | | | | | | | Other liabilities | — |
| | — |
| | 14,000 |
| | 14,000 |
| Derivative liabilities: | | | | | | | | Interest rate contracts | — |
| | 17,531 |
| | — |
| | 17,531 |
| Visa derivative | — |
| | — |
| | 5,768 |
| | 5,768 |
| Total derivative liabilities | $ | — |
| | 17,531 |
| | 5,768 |
| | 23,299 |
| | | | | | | | |
(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. (3) Other liabilities include contingent consideration obligation related to Global One acquisition.
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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 are recorded as a component of mortgage banking income in the Consolidated Statements of Income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk. | | | | | | | | Changes in Fair Value Included in Net Income | | | | | For the Three Months Ended March 31, | (in thousands) | 2017 | | 2016 | Mortgage loans held for sale | $ | 1,203 |
| | 971 |
| | | | |
| | | | | | | | Mortgage Loans Held for Sale | | (in thousands) | As of March 31, 2017 | | As of December 31, 2016 | Fair value | $ | 57,686 |
| | 51,545 |
| Unpaid principal balance | 56,052 |
| | 51,114 |
| Fair value less aggregate unpaid principal balance | $ | 1,634 |
| | 431 |
| | | | |
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Changes in Level 3 Fair Value Measurements |
The table below includes a roll-forward of the amounts on the Consolidated Balance Sheets for the three months ended March 31, 2017 and 2016 (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 the three months ended March 31, 2017 and 2016, Synovus did not have any transfers between levels in the fair value hierarchy. | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2017 | (in thousands) | Investment Securities Available for Sale | | Private Equity Investments | | Visa Derivative | | Other Liabilities(1) | | GGL / SBA Loans Servicing Asset(2) | Beginning balance, January 1, 2017 | $ | 1,796 |
| | 25,493 |
| | (5,768 | ) | | (14,000 | ) | | — |
| Total gains (losses) realized/unrealized: | | | | | | | | | | Included in earnings | — |
| | (1,814 | ) | | — |
| | — |
| | — |
| Unrealized gains included in other comprehensive income | 55 |
| | — |
| | — |
| | — |
| | — |
| Settlements | — |
| | — |
| | 356 |
| | — |
| | — |
| Fair value election for outstanding GGL/SBA loans servicing asset | — |
| | — |
| | — |
| | — |
| | 4,178 |
| Purchase accounting adjustment related to Global One acquisition | — |
| | — |
| | — |
| | 2,579 |
| | — |
| Ending balance, March 31, 2017 | $ | 1,851 |
| | 23,679 |
| | (5,412 | ) | | (11,421 | ) | | 4,178 |
| Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at March 31, 2017 | $ | — |
| | (1,814 | ) | | — |
| | — |
| | — |
| | | | | | | | | | |
| | | | | | | | | | | | Three Months Ended March 31, 2016 | (in thousands) | Investment Securities Available for Sale | | Private Equity Investments | | Visa Derivative | Beginning balance, January 1, 2016 | $ | 1,745 |
| | 27,148 |
| | (1,415 | ) | Total gains (losses) realized/unrealized: | | | | | | Included in earnings | — |
| | (391 | ) | | (360 | ) | Unrealized gains (losses) included in other comprehensive income | (107 | ) | | — |
| | — |
| Settlements | — |
| | — |
| | 360 |
| Ending balance, March 31, 2016 | $ | 1,638 |
| | 26,757 |
| | (1,415 | ) | Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at March 31, 2016 | $ | — |
| | (391 | ) | | (360 | ) | | | | | | |
(1) Other liabilities include contingent consideration obligation related to Global One acquisition. The purchase accounting adjustment was primarily the result of finalizing the purchase price allocation for Global One. (2) Effective January 1, 2017, Synovus elected the fair value option for determining the value of the GGL/SBA loans servicing asset. Synovus has retained servicing responsibilities on sold GGL/SBA loans and receives a servicing fee. The servicing asset is established at fair value at the time of the sale based on an analysis of future cash flows that incorporates estimates for discount rates, prepayment speeds, and delinquency rates. The servicing asset is measured at fair value on a quarterly basis with changes in fair value included with the associated servicing fee in other non-interest income. Previously, Synovus accounted for the GGL/SBA loans servicing asset using the amortization method.
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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. | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2017 | | December 31, 2016 | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Impaired loans* | $ | — |
| | — |
| | 8,412 |
| | 8,412 |
| | — |
| | — |
| | 21,742 |
| | 21,742 |
| Other loans held for sale | — |
| | — |
| | 12,065 |
| | 12,065 |
| | — |
| | — |
| | — |
| | — |
| Other real estate | — |
|
| — |
|
| 5,479 |
|
| 5,479 |
| | — |
| | — |
| | 19,305 |
| | 19,305 |
| Other assets held for sale | — |
| | — |
| | 2,103 |
| | 2,103 |
| | — |
| | — |
| | 12,083 |
| | 12,083 |
| | | | | | | | | | | | | | | | |
* Collateral-dependent impaired loans that were written down to collateral value during the period.
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Assets Measured at Fair Value on a Nonrecurring Basis |
The following table presents fair value adjustments recognized in earnings for the three months ended March 31, 2017 and 2016 for the assets measured at fair value on a non-recurring basis. | | | | | | | | | Three Months Ended March 31, | (in thousands) | 2017 | | 2016 | Impaired loans* | $ | 2,230 |
| | 1,270 |
| Other loans held for sale | 3,519 |
| | — |
| Other real estate | 399 |
| | 1,643 |
| Other assets held for sale | 238 |
| | 1,032 |
| | | | |
* Collateral-dependent impaired loans that were written down to collateral value during the period.
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Fair Value Inputs, Assets, Quantitative Information |
The table below provides 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 and are measured at fair value on a recurring basis. 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. | | | | | | | | | | | | March 31, 2017 | | December 31, 2016 | | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | | Range (Weighted Average)(1) | Assets measured at fair value on a recurring basis | | | | | | | | | | | | | | Investment Securities Available for Sale - Other Investments: | | | | | | | | | | | | | | Trust preferred securities | | Discounted cash flow analysis | Credit spread embedded in discount rate | 429 bps | | 442 bps | | | | | | | | Private equity investments | | Individual analysis of each investee company | Multiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies | N/A | | N/A | | | | Discount for lack of liquidity(2) | N/A | | 15% | | | | | | | | GGL/SBA loans servicing asset | | Discounted cash flow analysis | Discount rate Prepayment speeds | 12.20% 7.08% | | N/A | | | | | | | | Other liabilities | | Internal valuation | Percentage of net income attributable to Global One Earnings as defined in merger agreement for three to five years | 3-5 years | | 3-5 years | | | | | | | | Visa derivative liability | | Internal valuation | Estimated timing of resolution of covered litigation, future cumulative deposits to the litigation escrow for settlement of the covered litigation, and estimated future monthly fees payable to the derivative counterparty | 1-5 years | | 1-5 years | | | | | | | |
(1) Represents management's best estimate of the high and low of the value that would be assigned to a particular input. (2) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity. The table below provides 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 and are measured at fair value on a non-recurring basis. 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. | | | | | | | | | | | | March 31, 2017 | | December 31, 2016 | | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | | Range (Weighted Average)(1) | Assets measured at fair value on a non-recurring basis | | | | | | | | | | | | | | Collateral dependent impaired loans | | Third-party appraised value of collateral less estimated selling costs | Discount to appraised value (2) Estimated selling costs | 0% - 100% (30%) 0% - 10% (7%) | | 0%-52% (25%) 0%-10% (7%) | | | | | | | | Other loans held for sale | | Third-party appraised value of collateral less estimated selling costs | Discount to appraised value (2) Estimated selling costs | 0%-21% (21%) 0%-10% (7%) | | N/A | | | | | | | | Other real estate | | Third-party appraised value of real estate less estimated selling costs | Discount to appraised value (2) Estimated selling costs | 0% - 15% (12%) 0% - 10% (7%) | | 0%-10% (5%) 0%-10% (7%) | | | | | | | | Other assets held for sale | | Third-party appraised value less estimated selling costs or BOV | Discount to appraised value (2) Estimated selling costs | 0%-16% (13%) 0%-10% (7%) | | 0%-81% (47%) 0%-10% (7%) | | | | | | | |
(1) The range represents management's estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability. (2) Synovus also makes adjustments to the values of the assets listed above for reasons including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical condition of the property, and other factors.
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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 March 31, 2017 and December 31, 2016 are as follows: | | | | | | | | | | | | | | | | | | March 31, 2017 |
(in thousands) | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Financial assets | | | | | | | | | | Cash and cash equivalents | $ | 380,493 |
| | 380,493 |
| | 380,493 |
| | — |
| | — |
| Interest bearing funds with Federal Reserve Bank | 622,460 |
| | 622,460 |
| | 622,460 |
| | — |
| | — |
| Interest earning deposits with banks | 24,259 |
| | 24,259 |
| | 24,259 |
| | — |
| | — |
| Federal funds sold and securities purchased under resale agreements | 50,003 |
| | 50,003 |
| | 50,003 |
| | — |
| | — |
| Trading account assets | 1,778 |
| | 1,778 |
| | — |
| | 1,778 |
| | — |
| Mortgage loans held for sale | 57,686 |
| | 57,686 |
| | — |
| | 57,686 |
| | — |
| Other loans held for sale | 8,442 |
| | 8,442 |
| | — |
| | 8,442 |
| | | Investment securities available for sale | 3,782,942 |
| | 3,782,942 |
| | 85,999 |
| | 3,695,092 |
| | 1,851 |
| Private equity investments | 23,679 |
| | 23,679 |
| | — |
| | — |
| | 23,679 |
| Mutual funds held in rabbi trusts | 12,431 |
| | 12,431 |
| | 12,431 |
| | — |
| | — |
| Loans, net of deferred fees and costs | 24,258,468 |
| | 24,031,001 |
| | — |
| | — |
| | 24,031,001 |
| GGL/SBA loans servicing asset | 4,178 |
| | 4,178 |
| | | | | | 4,178 |
| Derivative assets | 17,791 |
| | 17,791 |
| | — |
| | 17,791 |
| | — |
| | | | | | | | | | | Financial liabilities | | | | | | | | | | Trading account liabilities | 1,000 |
| | 1,000 |
| | | | 1,000 |
| | | Non-interest bearing deposits | 7,264,856 |
| | 7,264,856 |
| | — |
| | 7,264,856 |
| | — |
| Interest bearing deposits | 17,840,856 |
| | 17,837,691 |
| | — |
| | 17,837,691 |
| | — |
| Federal funds purchased, other short-term borrowings and other short-term liabilities | 146,480 |
| | 146,480 |
| | 146,480 |
| | — |
| | — |
| Long-term debt | 2,160,867 |
| | 2,212,520 |
| | — |
| | 2,212,520 |
| | — |
| Other liabilities | 11,421 |
| | 11,421 |
| | — |
| | — |
| | 11,421 |
| Derivative liabilities | 21,896 |
| | 21,896 |
| | — |
| | 16,484 |
| | 5,412 |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | December 31, 2016 |
(in thousands) | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Financial assets | | | | | | | | | | Cash and cash equivalents | $ | 395,175 |
| | 395,175 |
| | 395,175 |
| | — |
| | — |
| Interest bearing funds with Federal Reserve Bank | 527,090 |
| | 527,090 |
| | 527,090 |
| | — |
| | — |
| Interest earning deposits with banks | 18,720 |
| | 18,720 |
| | 18,720 |
| | — |
| | — |
| Federal funds sold and securities purchased under resale agreements | 58,060 |
| | 58,060 |
| | 58,060 |
| | — |
| | — |
| Trading account assets | 9,314 |
| | 9,314 |
| | 1,890 |
| | 7,424 |
| | — |
| Mortgage loans held for sale | 51,545 |
| | 51,545 |
| | — |
| | 51,545 |
| | — |
| Investment securities available for sale | 3,718,195 |
| | 3,718,195 |
| | 114,676 |
| | 3,601,723 |
| | 1,796 |
| Private equity investments | 25,493 |
| | 25,493 |
| | — |
| | — |
| | 25,493 |
| Mutual funds held in rabbi trusts | 11,479 |
| | 11,479 |
| | 11,479 |
| | — |
| | — |
| Loans, net of deferred fees and costs | 23,856,391 |
| | 23,709,434 |
| | — |
| | — |
| | 23,709,434 |
| Derivative assets | 20,623 |
| | 20,623 |
| | — |
| | 20,623 |
| | — |
| | | | | | | | | | | Financial liabilities | | | | | | | | | | Non-interest bearing deposits | 7,085,804 |
| | 7,085,804 |
| | — |
| | 7,085,804 |
| | — |
| Interest bearing deposits | 17,562,256 |
| | 17,560,021 |
| | — |
| | 17,560,021 |
| | — |
| Federal funds purchased, other short-term borrowings and other short-term liabilities | 159,699 |
| | 159,699 |
| | 159,699 |
| | — |
| | — |
| Long-term debt | 2,160,881 |
| | 2,217,544 |
| | — |
| | 2,217,544 |
| | — |
| Other liabilities | 14,000 |
| | 14,000 |
| | — |
| | — |
| | 14,000 |
| Derivative liabilities | 23,299 |
| | 23,299 |
| | — |
| | 17,531 |
| | 5,768 |
| | | | | | | | | | |
|