Fair Value Accounting

12 Months Ended

Dec. 31, 2023

Note 12 - Fair Value Accounting

Fair value accounting guidance defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an "exit price") in the principal or most advantageous market available to the entity in an orderly transaction between market participants, on the measurement date. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of this Report for a description of how fair value measurements are determined.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents all financial instruments measured at fair value on a recurring basis as of December 31, 2023 and 2022.


	December 31, 2023								December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value		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	$	—	$	2,910	$	—	$	2,910	$	—	$	2,991	$	—	$	2,991
Other mortgage-backed securities	—		2,149		—		2,149		—		3,185		—		3,185
State and municipal securities	—		—		—		—		—		48		—		48
Asset-backed securities	—		7,839		—		7,839		—		2,071		—		2,071
Total trading securities	$	—	$	12,898	$	—	$	12,898	$	—	$	8,295	$	—	$	8,295
Investment securities available for sale:
U.S. Treasury securities	$	597,629	$	—	$	—	$	597,629	$	471,813	$	—	$	—	$	471,813
U.S. Government agency securities	—		28,940		—		28,940		—		48,798		—		48,798
Mortgage-backed securities issued by U.S. Government agencies	—		925,664		—		925,664		—		792,749		—		792,749
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		6,430,379		—		6,430,379		—		6,895,070		—		6,895,070
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		587,595		—		587,595		—		655,127		—		655,127
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	—		1,209,783		—		1,209,783		—		805,945		—		805,945

Corporate debt securities and other debt securities	—		8,672		—		8,672		—		8,601		—		8,601
Total investment securities available for sale	$	597,629	$	9,191,033	$	—	$	9,788,662	$	471,813	$	9,206,290	$	—	$	9,678,103
Mortgage loans held for sale	$	—	$	47,338	$	—	$	47,338	$	—	$	51,136	$	—	$	51,136
Other investments	—		—		12,560		12,560		—		—		11,172		11,172
Mutual funds and mutual funds held in rabbi trusts	53,742		—		—		53,742		42,659		—		—		42,659

Derivative assets	—		94,903		—		94,903		—		89,815		—		89,815
Liabilities
Securities sold short	$	3,496	$	—	$	—	$	3,496	$	3,370	$	—	$	—	$	3,370
Mutual fund held in rabbi trusts	38,735		—		—		38,735		27,944		—		—		27,944
Derivative liabilities(1)	—		259,650		—		259,650		—		339,227		—		339,227

(1) Excludes from Level 3 the Visa derivative of $589 thousand and $3.5 million at December 31, 2023 and 2022, respectively. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in this Report for discussion of fair value accounting related to this in the Derivative Instruments section.

Fair Value Option

Synovus has elected the fair value option for mortgage loans held for sale primarily to ease the operational burden required to maintain hedge accounting for these loans. Synovus is still able to achieve effective economic hedges on mortgage loans held for sale without the time and expense needed to manage a hedge accounting program.

The following table summarizes the difference between the fair value and the UPB of mortgage loans held for sale and the changes in fair value of these loans. An immaterial portion of these changes in fair value was attributable to instrument-specific credit risk.


	Years Ended December 31,
(in thousands)	2023		2022		2021
Changes in fair value included in net income:
Mortgage loans held for sale	$	839	$	(1,541)	$	(3,942)
Mortgage loans held for sale:
Fair value	47,338		51,136		108,198
Unpaid principal balance	45,627		50,264		105,785
Fair value less aggregate unpaid principal balance	$	1,711	$	872	$	2,413

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

During 2023 and 2022, Synovus did not have any transfers in or out of Level 3 in the fair value hierarchy.



(in thousands)	Other Investments
Beginning balance at December 31, 2022	$	11,172
Total gains (losses) realized/unrealized:
Included in earnings	376

Additions	1,012

Ending balance at December 31, 2023	$	12,560
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, 2023	$	376



(in thousands)	Other Investments
Beginning balance at December 31, 2021	$	12,185
Total gains (losses) realized/unrealized:
Included in earnings	(7,201)

Additions	6,188

Ending balance at December 31, 2022	$	11,172
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, 2022	$	(7,201)

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.

December 31, 2023

December 31, 2022

(dollars in thousands)

Valuation Technique

Significant Unobservable Input

Level 3 Fair Value

Rate/Range

Level 3 Fair Value

Rate/Range

Assets (liabilities) measured at fair value on a recurring basis

Other 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

$12,560

N/A

$11,172

N/A

Assets (Liabilities) Measured at Fair Value on a Non-recurring Basis

Certain assets and liabilities are required to be measured at fair value on a non-recurring basis subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The following table presents items measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment.


	December 31, 2023								December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Loans(1)	$	—	$	—	$	54,616	$	54,616	$	—	$	—	$	19,410	$	19,410

Other assets held for sale	—		—		—		—		—		—		7,548		7,548


	Years Ended December 31,
(in thousands)	2023		2022		Location in Consolidated Statements of Income
Loans(1)	$	32,503	$	7,098	Provision for credit losses

Other assets held for sale	—		1,843		Other operating expense

(1) Collateral-dependent loans that are written down to fair value of collateral.

December 31, 2023

December 31, 2022

Valuation Technique

Significant Unobservable Input

Range

(Weighted Average)(1)

Range

(Weighted Average)(1)

Assets (liabilities) measured at fair value on a non-recurring basis

Loans

Third-party appraised value of collateral less estimated selling costs

Appraised value
Estimated selling costs

0%-61% (30%) 0%-10% (7%)

0%-74% (21%) 0%-10% (7%)

Other assets held for sale

Third-party appraised value, contractual sales price, or BOV, as warranted, less estimated selling costs

Appraised value/contractual sales price
Estimated selling costs

N/A

0%-35% (13%) 0%-10% (7%)

(1) The weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.

Fair Value of Financial Instruments

The following table presents the carrying and estimated fair values of financial instruments at December 31, 2023 and 2022. The fair values represent management’s best estimates based on a range of methodologies and assumptions. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" of this Report for a description of how fair value measurements are determined.


	December 31, 2023
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Total cash, cash equivalents, and restricted cash	$	2,451,426	$	2,451,426	$	2,451,426	$	—	$	—
Trading securities	12,898		12,898		—		12,898		—
Investment securities available for sale	9,788,662		9,788,662		597,629		9,191,033		—
Loans held for sale	52,768		52,770		—		47,338		5,432
Other investments	12,560		12,560		—		—		12,560
Mutual funds and mutual funds held in rabbi trusts	53,742		53,742		53,742		—		—
Loans, net (1)	42,925,105		41,298,149		—		—		41,298,149

FRB and FHLB stock	184,944		184,944		—		184,944		—
Derivative assets	94,903		94,903		—		94,903		—
Financial liabilities
Non-interest-bearing deposits	$	12,507,616	$	12,507,616	$	—	$	12,507,616	$	—
Non-time interest-bearing deposits	27,449,088		27,449,088		—		27,449,088		—
Time deposits	10,782,481		10,769,002		—		10,769,002		—
Total deposits(2)	$	50,739,185	$	50,725,706	$	—	$	50,725,706	$	—
Federal funds purchased and securities sold under repurchase agreements	189,074		189,074		189,074		—		—
Securities sold short	3,496		3,496		3,496		—		—

Long-term debt	1,932,534		1,939,604		—		1,939,604		—
Mutual fund held in rabbi trusts	38,735		38,735		38,735		—		—
Derivative liabilities(3)	259,650		259,650		—		259,650		—

(1) Synovus estimates the fair value of loans based on present value of the future cash flows using the interest rate that would be charged for a similar loan to a borrower with similar risk, adjusted for a discount based on the estimated time period to complete a sale transaction with a market participant.

(2) The fair value of deposits with no stated maturity, such as non-interest-bearing demand, interest bearing demand, money market, and savings accounts reflects the carrying amount which is payable on demand, as of the respective date, and may not align with other valuation methods or processes. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

(3) Excludes from Level 3 the Visa derivative of $589 thousand at December 31, 2023. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in this Report for discussion of fair value accounting related to this in the Derivative Instruments section.


	December 31, 2022
(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Total cash, cash equivalents, and restricted cash	$	1,977,780	$	1,977,780	$	1,977,780	$	—	$	—
Trading securities	8,295		8,295		—		8,295		—
Investment securities available for sale	9,678,103		9,678,103		471,813		9,206,290		—
Loans held for sale	391,502		391,085		—		51,136		339,949
Other investments	11,172		11,172		—		—		11,172
Mutual funds and mutual funds held in rabbi trusts	42,659		42,659		42,659		—		—
Loans, net(1)	43,272,929		42,192,295		—		—		42,192,295

FRB and FHLB stock	308,321		308,321		—		308,321		—
Derivative assets	89,815		89,815		—		89,815		—
Financial liabilities
Non-interest-bearing deposits	$	15,639,899	$	15,639,899	$	—	$	15,639,899	$	—
Non-time interest-bearing deposits	26,936,635		26,936,635		—		26,936,635		—
Time deposits	6,295,025		6,260,315		—		6,260,315		—
Total deposits(2)	$	48,871,559	$	48,836,849	$	—	$	48,836,849	$	—
Federal funds purchased and securities sold under repurchase agreements	146,588		146,588		146,588		—		—
Securities sold short	3,370		3,370		3,370		—		—
Other short-term borrowings	600,014		600,014		—		600,014		—
Long-term debt	4,109,597		4,120,113		—		4,120,113		—

Mutual fund held in rabbi trusts	27,944		27,944		27,944		—		—
Derivative liabilities(3)	339,227		339,227		—		339,227		—

(3) Excludes from Level 3 the Visa derivative of $3.5 million at December 31, 2022. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in this Report for discussion of fair value accounting related to this in the Derivative Instruments section.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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