Loans And Allowance For Loan Losses

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Loans and Allowance for Loan Losses

Note 5 - Loans and Allowance for Loan Losses

Aging and Non-Accrual Analysis

The following tables provide a summary of current, accruing past due, and non-accrual loans by portfolio class as of December 31, 2020 and December 31, 2019.

	December 31, 2020
(in thousands)	Current		Accruing 30-89 Days Past Due		Accruing 90 Days or Greater Past Due		Total Accruing Past Due		Non-accrual with an ALL		Non-accrual without an ALL		Total
Commercial, financial, and agricultural	$	12,486,261	$	10,256	$	996	$	11,252	$	55,527	$	21,859	$	12,574,899
Owner-occupied	6,776,756		1,913		92		2,005		20,019		—		6,798,780
Total commercial and industrial	19,263,017		12,169		1,088		13,257		75,546		21,859		19,373,679
Investment properties	9,318,994		2,751		154		2,905		24,631		—		9,346,530
1-4 family properties	621,965		3,548		36		3,584		2,383		1,236		629,168
Land and development	592,151		422		—		422		1,899		264		594,736
Total commercial real estate	10,533,110		6,721		190		6,911		28,913		1,500		10,570,434
Consumer mortgages	5,489,624		8,851		485		9,336		8,740		—		5,507,700
Home equity lines	1,507,685		4,006		—		4,006		12,145		—		1,523,836
Credit cards	276,778		2,363		1,877		4,240		—		—		281,018
Other consumer loans	1,062,014		9,122		477		9,599		2,376		—		1,073,989
Total consumer	8,336,101		24,342		2,839		27,181		23,261		—		8,386,543
Total loans	$	38,132,228	$	43,232	$	4,117	$	47,349	$	127,720	$	23,359	$	38,330,656	(1)

	December 31, 2019
(in thousands)	Current		Accruing 30-89 Days Past Due		Accruing 90 Days or Greater Past Due		Total Accruing Past Due		Non-accrual		ASC 310-30 Loans(2)		Total
Commercial, financial, and agricultural	$	9,124,285	$	38,916	$	1,206	$	40,122	$	56,017	$	1,019,135	$	10,239,559
Owner-occupied	5,691,095		5,164		576		5,740		9,780		823,196		6,529,811
Total commercial and industrial	14,815,380		44,080		1,782		45,862		65,797		1,842,331		16,769,370
Investment properties	7,264,794		1,344		—		1,344		1,581		1,736,608		9,004,327
1-4 family properties	733,984		2,073		304		2,377		2,253		41,401		780,015
Land and development	629,363		808		—		808		1,110		78,161		709,442
Total commercial real estate	8,628,141		4,225		304		4,529		4,944		1,856,170		10,493,784
Consumer mortgages	3,681,553		4,223		730		4,953		11,369		1,848,493		5,546,368
Home equity lines	1,691,759		7,038		171		7,209		12,034		2,155		1,713,157
Credit cards	263,065		3,076		2,700		5,776		—		—		268,841
Other consumer loans	2,363,101		18,688		616		19,304		5,704		8,185		2,396,294
Total consumer	7,999,478		33,025		4,217		37,242		29,107		1,858,833		9,924,660
Total loans	$	31,442,999	$	81,330	$	6,303	$	87,633	$	99,848	$	5,557,334	$	37,187,814	(3)

(1)    Total before net deferred fees and costs of $77.7 million, of which $48.9 million relates to PPP loans.

(2)    Represents loans (at fair value) acquired from FCB accounted for under ASC 310-30, net of discount of $90.3 million and payments since Acquisition Date and also include $1.8 million in non-accruing loans, $9.6 million in accruing 90 days or greater past due loans, and $26.5 million in accruing 30-89 days past due loans.

(3)    Total before net deferred fees and costs of $25.4 million.

Interest income on non-accrual loans outstanding that would have been recorded if the loans had been current and performing in accordance with their original terms was $12.6 million and $6.1 million during the years ended December 31, 2020 and 2019, respectively. Of the interest income recognized during the years ended December 31, 2020 and 2019, cash-basis interest income was $3.9 million and $3.3 million, respectively.

Pledged Loans

Loans with carrying values of $15.05 billion and $12.11 billion, respectively, were pledged as collateral for borrowings and capacity at December 31, 2020 and 2019 respectively, to the FHLB and Federal Reserve Bank.

Portfolio Segment Risk Factors

The risk characteristics and collateral information of each portfolio segment are as follows:

Commercial and Industrial Loans - The C&I loan portfolio is comprised of general middle market and commercial banking clients across a diverse set of industries. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. These loans are secured by collateral such as business equipment, inventory, and real estate. Whether for real estate or non-real estate purpose, credit decisions on loans in the C&I portfolio are based on cash flow from the operations of the business as the primary source of repayment of the debt, with underlying real estate or other collateral being the secondary source of repayment. PPP loans, which are categorized as C&I loans, were $2.19 billion net of unearned fees at December 31, 2020 and are guaranteed by the SBA.

Commercial Real Estate Loans - CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).

Consumer Loans - The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network including first and second residential mortgages, HELOCs, and credit card loans, as well as home improvement loans and personal loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s).

Credit Quality Indicators

The credit quality of the loan portfolio is monitored on an ongoing basis and updated as warranted using the standard asset classification system utilized by the federal banking agencies. These classifications are divided into three groups – Not Classified (Pass), Special Mention, and Classified or Adverse rating (Substandard, Doubtful, and Loss) and are defined as follows:

Pass - loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell in a timely manner, of any underlying collateral.

Special Mention - loans which have potential weaknesses that deserve management's close attention. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

Substandard - loans which are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.

Loss - loans which are considered by management to be uncollectible and of such little value that their continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. Synovus fully reserves for any loans rated as Loss.

In the following tables, consumer loans are generally assigned a risk grade similar to the classifications described above; however, upon reaching 90 days and 120 days past due, they are generally downgraded to Substandard and Loss, respectively, in accordance with the FFIEC Retail Credit Classification Policy. Additionally, in accordance with Interagency Supervisory Guidance, the risk grade classifications of consumer loans (consumer mortgages and HELOCs) secured by junior liens on 1-4

family residential properties also consider available information on the payment status of the associated senior liens with other financial institutions.

The following table summarizes each loan portfolio class by regulatory risk grade and origination year as of December 31, 2020 as required by CECL.

	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total
Commercial, financial and agricultural
Pass	$	3,862,940	$	1,334,892	$	847,647	$	582,854	$	552,666	$	685,326	$	4,168,795	$	49,827	$	12,084,947
Special Mention	63,307		40,618		12,723		22,070		1,665		5,545		60,741		489		207,158
Substandard(1)	28,698		36,618		24,867		36,072		12,808		35,172		84,498		514		259,247
Doubtful(2)	—		3,721		19,778		—		—		—		48		—		23,547
Total commercial, financial and agricultural	3,954,945		1,415,849		905,015		640,996		567,139		726,043		4,314,082		50,830		12,574,899
Owner-occupied
Pass	1,326,170		1,134,402		1,061,206		983,684		555,346		1,246,775		294,103		—		6,601,686
Special Mention	6,170		9,995		10,682		14,138		1,582		13,768		—		—		56,335
Substandard(1)	2,570		22,793		42,615		26,033		7,316		29,794		—		—		131,121
Doubtful(2)	—		—		9,638		—		—		—		—		—		9,638
Total owner-occupied	1,334,910		1,167,190		1,124,141		1,023,855		564,244		1,290,337		294,103		—		6,798,780
Total commercial and industrial	5,289,855		2,583,039		2,029,156		1,664,851		1,131,383		2,016,380		4,608,185		50,830		19,373,679
Investment properties
Pass	1,066,755		2,278,012		2,074,887		1,092,635		484,223		1,302,097		231,786		—		8,530,395
Special Mention	1,482		66,160		176,794		136,004		138,362		129,401		55,440		—		703,643
Substandard(1)	1,007		4,770		24,476		19,820		21,875		40,509		35		—		112,492
Total investment properties	1,069,244		2,348,942		2,276,157		1,248,459		644,460		1,472,007		287,261		—		9,346,530
1-4 family properties
Pass	197,442		95,210		70,314		88,507		38,742		97,379		27,825		—		615,419
Special Mention	402		—		508		109		786		118		—		—		1,923
Substandard(1)	1,527		653		4,312		1,141		554		2,299		1,340		—		11,826
Total 1-4 family properties	199,371		95,863		75,134		89,757		40,082		99,796		29,165		—		629,168
Land and development
Pass	85,335		173,735		83,784		92,979		12,261		76,430		53,390		—		577,914
Special Mention	857		1,995		2,866		282		—		1,332		636		—		7,968
Substandard(1)	1,229		425		4,664		915		136		1,485		—		—		8,854
Total land and development	87,421		176,155		91,314		94,176		12,397		79,247		54,026		—		594,736
Total commercial real estate	1,356,036		2,620,960		2,442,605		1,432,392		696,939		1,651,050		370,452		—		10,570,434

	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total
Consumer mortgages
Pass	$	1,865,670	$	874,795	$	425,721	$	678,265	$	685,814	$	965,383	$	1,040	$	—	$	5,496,688
Substandard(1)	33		961		748		889		866		7,224		—		—		10,721
Loss(3)	—		—		—		—		—		291		—		—		291
Total consumer mortgages	1,865,703		875,756		426,469		679,154		686,680		972,898		1,040		—		5,507,700
Home equity lines
Pass	—		—		—		—		—		—		1,416,272		90,425		1,506,697
Substandard(1)	—		—		—		—		—		—		9,698		5,996		15,694
Doubtful(2)	—		—		—		—		—		—		—		19		19
Loss(3)	—		—		—		—		—		—		1,283		143		1,426
Total home equity lines	—		—		—		—		—		—		1,427,253		96,583		1,523,836
Credit cards
Pass	—		—		—		—		—		—		279,142		—		279,142
Substandard(1)	—		—		—		—		—		—		595		—		595
Loss(4)	—		—		—		—		—		—		1,281		—		1,281
Total credit cards	—		—		—		—		—		—		281,018		—		281,018
Other consumer loans																	—
Pass	252,158		190,837		89,193		100,457		80,364		61,029		296,745		—		1,070,783
Substandard(1)	19		762		262		1,195		121		585		227		—		3,171
Loss	—		—		—		—		—		35		—		—		35
Total other consumer loans	252,177		191,599		89,455		101,652		80,485		61,649		296,972		—		1,073,989
Total consumer	2,117,880		1,067,355		515,924		780,806		767,165		1,034,547		2,006,283		96,583		8,386,543
Total loans(5)	$	8,763,771	$	6,271,354	$	4,987,685	$	3,878,049	$	2,595,487	$	4,701,977	$	6,984,920	$	147,413	$	38,330,656

(1)    The majority of loans within Substandard risk grade are accruing loans at December 31, 2020.

(2)    Loans within Doubtful risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.

(3)    Loans within Loss risk grade are on non-accrual status and have an ALL equal to the full loan amount.

(4)    Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an ALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.

(5)    Total before net deferred fees and costs of $77.7 million, of which $48.9 million relates to PPP loans..

The following table summarizes each loan portfolio class by regulatory risk grade as of December 31, 2019.

	December 31, 2019
(in thousands)	Pass		Special Mention		Substandard(1)		Doubtful(2)		Loss(3)			Total
Commercial, financial, and agricultural	$	9,927,059	$	128,506	$	182,831	$	1,163	$	—		$	10,239,559
Owner-occupied	6,386,055		58,330		85,426		—		—			6,529,811
Total commercial and industrial	16,313,114		186,836		268,257		1,163		—			16,769,370
Investment properties	8,930,360		16,490		57,477		—		—			9,004,327
1-4 family properties	766,529		3,249		10,237		—		—			780,015
Land and development	681,003		18,643		9,796		—		—			709,442
Total commercial real estate	10,377,892		38,382		77,510		—		—			10,493,784
Consumer mortgages	5,527,746		—		18,376		97		149			5,546,368
Home equity lines	1,697,086		—		14,806		21		1,244			1,713,157
Credit cards	266,146		—		818		—		1,877		(4)	268,841
Other consumer loans	2,390,199		—		6,095		—		—			2,396,294
Total consumer	9,881,177		—		40,095		118		3,270			9,924,660
Total loans	$	36,572,183	$	225,218	$	385,862	$	1,281	$	3,270		$	37,187,814	(5)

(1)    The majority of loans within Substandard risk grade are accruing loans at December 31, 2019.

(2)    Loans within Doubtful risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.

(3)    Loans within Loss risk grade are on non-accrual status and have an ALL equal to the full loan amount.

(4)    Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an ALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.

(5)    Total before net deferred fees and costs of $25.4 million.

Collateral-Dependent Loans

We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.

There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the year ended December 31, 2020.    

Rollforward of Allowance for Loan Losses

The following tables detail the changes in the ALL by loan segment for the years ended December 31, 2020, 2019, and 2018. On January 1, 2020, Synovus adopted ASC 326, which replaced the existing incurred loss methodology with an expected credit loss methodology (referred to as CECL). Under the incurred loss methodology, reserves for credit losses were recognized only when the losses were probable or had been incurred; under CECL, companies are required to recognize the full amount of expected credit losses for the lifetime of the financial assets, based on historical experience, current conditions and reasonable and supportable forecasts. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of this Report for more information on Synovus' adoption of CECL.

For the year ended December 31, 2020, Synovus reversed a net amount of $18.3 million, in previously established reserves for credit losses associated with net transfers to held for sale of $1.43 billion, in performing loans primarily related to third-party single-service consumer loans and non-relationship consumer mortgages. For the year ended December 31, 2019, Synovus had no significant transfers to loans held for sale.

	As Of and For The Year Ended December 31, 2020
(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:
Beginning balance, prior to adoption of ASC 326	$	145,782	$	67,430	$	68,190	$	281,402
Impact from adoption of ASC 326	(2,310)		(651)		85,955		82,994
Beginning balance, after adoption of ASC 326	$	143,472	$	66,779	$	154,145	$	364,396
Charge-offs	(76,260)		(13,213)		(29,789)		(119,262)
Recoveries	13,544		2,857		8,149		24,550
Provision for loan losses	148,799		74,319		112,934		336,052
Ending balance	$	229,555	$	130,742	$	245,439	$	605,736

	As Of and For The Year Ended December 31, 2019
(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:
Beginning balance	$	133,123	$	68,796	$	48,636	$	250,555
Charge-offs	(49,572)		(5,540)		(24,023)		(79,135)
Recoveries	7,827		8,618		5,078		21,523
Provision for loan losses	53,665		(4,444)		38,499		87,720
Transfer of unfunded commitment reserve	739		—		—		739
Ending balance	$	145,782	$	67,430	$	68,190	$	281,402
	As Of and For The Year Ended December 31, 2018
(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:
Beginning balance	$	126,803	$	74,998	$	47,467	$	249,268
Charge-offs	(48,775)		(4,408)		(20,871)		(74,054)
Recoveries	7,165		10,188		6,291		23,644
Provision for loan losses	47,930		(11,982)		15,749		51,697
Ending balance	$	133,123	$	68,796	$	48,636	$	250,555

The ALL of $605.7 million and the reserve for unfunded commitments of $47.8 million, which is recorded in other liabilities, comprise the total ACL of $653.5 million at December 31, 2020. Since the adoption of CECL on January 1, 2020, the ACL has increased $260.3 million. Provision for credit losses (which includes the provision for loan losses and unfunded commitments) of $355.0 million for the year ended December 31, 2020 resulted in the building of the ACL required under CECL, primarily as a result of deterioration in the economic environment due to the impact of COVID-19. The economic forecast used to determine the ACL as of December 31, 2020 was approved late in the fourth quarter of 2020 pursuant to Synovus' economic forecasting governance processes. The modeling assumptions for the fourth quarter of 2020 utilized a two-year reasonable and supportable period and comprised a multi-scenario framework including a base economic outlook which incorporated the most recently enacted stimulus with modest economic growth and improvement in the unemployment rate throughout 2021 and 2022. The forecast as of December 31, 2020, still represented a deteriorated economic scenario compared to January 1, 2020 when CECL was adopted. This, along with credit migration and other loan portfolio activity, resulted in an ACL to loans coverage ratio of 1.71%, or 1.81% excluding PPP loans, at December 31, 2020.

In the fourth quarter, Synovus began using a third-party provider’s economic projections as the starting point for our economic outlook. Changing to a third-party provider did not have a material impact on the resulting allowance.

Our modeling process incorporates qualitative considerations in addition to the quantitative inputs to the CECL estimate. The CARES Act programs that supported business and consumers through PPP loans, unemployment benefits, and other stimulus had a positive impact on borrowers during 2020. Qualitative adjustments are used to ensure modeled results remain consistent with the expected loss requirement. This includes factoring in enacted stimulus as well as the expected impact on future defaults.

While certain financial and economic metrics suggest improving economic conditions, uncertainty remains regarding the trajectory of the economic recovery, the impact of government stimulus, and the success of the COVID-19 vaccine, which will impact subsequent period CECL reserves.

Information about Synovus' TDRs is presented in the following tables. Synovus began entering into loan modifications with borrowers in response to the COVID-19 pandemic, some of which have not been classified as TDRs, and therefore are not included in the discussion below. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of this Report for more information on Synovus' loan modifications due to COVID-19. The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the years ended December 31, 2020, 2019, and 2018 that were reported as accruing or non-accruing TDRs.

TDRs by Concession Type
	Year Ended December 31, 2020
(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)		Total
Commercial, financial, and agricultural	152	$	10,939	$	11,912	$	22,851
Owner-occupied	22	4,536		1,530		6,066
Total commercial and industrial	174	15,475		13,442		28,917
Investment properties	9	29,679		1,420		31,099
1-4 family properties	22	1,769		1,105		2,874
Land and development	4	606		—		606
Total commercial real estate	35	32,054		2,525		34,579
Consumer mortgages	23	1,866		2,789		4,655
Home equity lines	63	1,970		2,530		4,500
Other consumer loans	57	1,185		2,779		3,964
Total consumer	143	5,021		8,098		13,119
Total loans	352	$	52,550	$	24,065	$	76,615	(2)

	Year Ended December 31, 2019
(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)		Total
Commercial, financial, and agricultural	127	$	9,042	$	9,873	$	18,915
Owner-occupied	22	9,017		861		9,878
Total commercial and industrial	149	18,059		10,734		28,793
Investment properties	8	1,548		—		1,548
1-4 family properties	18	2,182		643		2,825
Land and development	8	1,187		30		1,217
Total commercial real estate	34	4,917		673		5,590
Consumer mortgages	18	1,587		1,361		2,948
Home equity lines	70	3,024		2,522		5,546
Other consumer loans	109	1,712		5,270		6,982
Total consumer	197	6,323		9,153		15,476
Total loans	380	$	29,299	$	20,560	$	49,859	(3)

TDRs by Concession Type (continued)
	Year Ended December 31, 2018
(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)		Total
Commercial, financial, and agricultural	46	$	3,807	$	3,957	$	7,764
Owner-occupied	16	7,589		5,705		13,294
Total commercial and industrial	62	11,396		9,662		21,058
Investment properties	10	8,070		2,215		10,285
1-4 family properties	25	2,481		2,014		4,495
Land and development	5	122		1,856		1,978
Total commercial real estate	40	10,673		6,085		16,758
Consumer mortgages	19	5,590		93		5,683
Home equity lines	4	172		339		511
Other consumer loans	92	1,834		3,983		5,817
Total consumer	115	7,596		4,415		12,011
Total loans	217	$	29,665	$	20,162	$	49,827	(4)

(1)    Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for the years ended December 31, 2020, 2019, and 2018.

(2)    No charge-offs were recorded during the year ended December 31, 2020 upon restructuring of these loans.

(3)    No charge-offs were recorded during the year ended December 31, 2019 upon restructuring of these loans

(4)    Net charge-offs of $403 thousand were recorded during the year ended December 31, 2018 upon restructuring of these loans.

For the years ended December 31, 2020, 2019 and 2018, there were seven defaults with a recorded investment of $21.7 million, four defaults with a recorded investment of $326 thousand, and eight defaults with a recorded investment of $10.5 million, respectively, on accruing TDRs restructured during the previous twelve months (defaults are defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments). As of December 31, 2020, there were no commitments to lend a material amount of additional funds to any customers whose loans were classified as TDRs.