Investment Securities Available for Sale

6 Months Ended

Jun. 30, 2020

Investment Securities Available for Sale

Note 3 - Investment Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at June 30, 2020 and December 31, 2019 are summarized below.


	June 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	19,921	$	—	$	—	$	19,921
U.S. Government agency securities	168,918		2,504		(56)		171,366
Mortgage-backed securities issued by U.S. Government agencies	860,773		3,721		(66)		864,428
Mortgage-backed securities issued by U.S. Government sponsored enterprises	4,293,563		150,689		—		4,444,252
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	1,191,630		21,597		(146)		1,213,081
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	342,974		22,335		(56)		365,253
State and municipal securities	1,003		4		—		1,007
Corporate debt securities and other debt securities	119,573		40		(1,428)		118,185
Total investment securities available for sale	$	6,998,355	$	200,890	$	(1,752)	$	7,197,493

	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	19,855	$	—	$	—	$	19,855
U.S. Government agency securities	35,499		1,042		—		36,541
Mortgage-backed securities issued by U.S. Government agencies	56,328		560		(72)		56,816
Mortgage-backed securities issued by U.S. Government sponsored enterprises	5,079,396		103,495		(2,076)		5,180,815
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	629,706		7,349		(204)		636,851
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	357,291		14,301		—		371,592
State and municipal securities	2,069		6		—		2,075
Asset-backed securities	323,237		4,315		(152)		327,400
Corporate debt securities and other debt securities	144,410		2,317		(2)		146,725
Total investment securities available for sale	$	6,647,791	$	133,385	$	(2,506)	$	6,778,670

At June 30, 2020 and December 31, 2019, investment securities with a carrying value of $2.49 billion and $1.71 billion, respectively, were pledged to secure certain deposits and other liabilities, as required by law or contractual agreements.

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 June 30, 2020 and December 31, 2019 are presented below.


	June 30, 2020
	Less than 12 Months						12 Months of Longer						Total
(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Government agency securities	$	47,091	$	(56)	$	—	$	—	$	47,091	$	(56)
Mortgage-backed securities issued by U.S. Government agencies	25,126		(66)		—		—		25,126		(66)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	142,634		(146)		—		—		142,634		(146)
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	33,285		(56)		—		—		33,285		(56)
Corporate debt securities and other debt securities	42,782		(1,428)		—		—		42,782		(1,428)
Total	$	290,918	$	(1,752)	$	—	$	—	$	290,918	$	(1,752)

	December 31, 2019
	Less than 12 Months						12 Months of Longer						Total
(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Mortgage-backed securities issued by U.S. Government agencies	$	19,543	$	(70)	$	355	$	(2)	19,898		$	(72)
Mortgage-backed securities issued by U.S. Government sponsored enterprises	768,040		(2,076)		—		—		768,040		(2,076)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	57,670		(204)		—		—		57,670		(204)
Asset-backed securities	37,156		(116)		4,954		(36)		42,110		(152)
Corporate debt securities and other debt securities	9,505		(2)		—		—		9,505		(2)
Total	$	891,914	$	(2,468)	$	5,309	$	(38)	$	897,223	$	(2,506)

As of June 30, 2020, Synovus had 12 investment securities in a loss position for less than twelve months and no investment securities in a loss position for twelve months or longer. At December 31, 2019, Synovus had 26 investment securities in a loss position for less than twelve months and 5 investment securities in a loss position for twelve months or longer. Synovus does not intend to sell investment securities in an unrealized loss position prior to the recovery of the unrealized loss, which may not be until maturity, and has the ability and intent to hold those securities for that period of time. Additionally, Synovus is not currently aware of any circumstances which will require it to sell any of the securities that are in an unrealized loss position prior to the respective securities' recovery of all such unrealized losses. As such, no write-downs to the amortized cost basis of the portfolio were recorded in the current period. During the latter part of the second quarter of 2020, as part of an overall strategic repositioning of the investment securities portfolio, Synovus realized net gains of $69.4 million from sales of investment securities, including losses of $5.7 million related to the sale of Synovus' remaining portfolio of asset-backed securities.

Synovus has evaluated investment securities that are in an unrealized loss position as of June 30, 2020 and determined the following:

Corporate debt securities - Synovus considers the credit quality of each issuer and whether payments of principal and interest are current. None of the investment securities described above are past due as of June 30, 2020. At June 30, 2020, these

securities are rated investment grade and the decline in fair value was largely driven by liquidity and wider market spreads. As such, no ACL was recorded during the period and unrealized losses were recognized in other comprehensive income, net of tax.

The amortized cost and fair value by contractual maturity of investment securities available for sale at June 30, 2020 are shown below. The expected life of MBSs or CMOs may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, MBSs and CMOs, which are not due at a single maturity date, have been classified based on the final contractual maturity date.


	Distribution of Maturities at June 30, 2020
(in thousands)	Within One Year		1 to 5 Years		5 to 10 Years		More Than 10 Years		Total
Amortized Cost
U.S. Treasury securities	$	19,921	$	—	$	—	$	—	$	19,921
U.S. Government agency securities	568		27,714		140,636		—		168,918
Mortgage-backed securities issued by U.S. Government agencies	—		1,398		715		858,660		860,773
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		410		83,168		4,209,985		4,293,563
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		—		273		1,191,357		1,191,630
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	—		109,753		116,092		117,129		342,974
State and municipal securities	—		—		500		503		1,003
Corporate debt securities and other debt securities	24,049		84,869		8,655		2,000		119,573
Total amortized cost	$	44,538	$	224,144	$	350,039	$	6,379,634	$	6,998,355

Fair Value
U.S. Treasury securities	$	19,921	$	—	$	—	$	—	$	19,921
U.S. Government agency securities	571		27,770		143,025		—		171,366
Mortgage-backed securities issued by U.S. Government agencies	—		1,442		743		862,243		864,428
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		423		89,415		4,354,414		4,444,252
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		—		285		1,212,796		1,213,081
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	—		116,639		125,274		123,340		365,253
State and municipal securities	—		—		501		506		1,007
Corporate debt securities and other debt securities	23,967		83,922		8,634		1,662		118,185
Total fair value	$	44,459	$	230,196	$	367,877	$	6,554,961	$	7,197,493

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the three and six months ended June 30, 2020 and 2019 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale.


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Proceeds from sales of investment securities available for sale	$	2,269,682	$	104,434	$	2,682,861	$	1,746,673
Gross realized gains on sales	75,105		—		83,839		9,129
Gross realized losses on sales⁽¹⁾	(5,696)		(1,845)		(5,695)		(10,900)
Investment securities gains, net	$	69,409	$	(1,845)	$	78,144	$	(1,771)