-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PWP3fuE3HNSAXYmPMFY3ICmSGxTuSc8XSWVSqUY6U9IHXhe2FkYwKiN7vEoJ3kv1 Md6jEYSF3doI2D8J/X+JKw== 0000018349-96-000010.txt : 19960326 0000018349-96-000010.hdr.sgml : 19960326 ACCESSION NUMBER: 0000018349-96-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960325 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNOVUS FINANCIAL CORP CENTRAL INDEX KEY: 0000018349 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581134883 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10312 FILM NUMBER: 96537915 BUSINESS ADDRESS: STREET 1: ONE ARSENAL PLACE STE 301 STREET 2: 901 FRONT AVE CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: P.O.BOX 120 CITY: COLUMBUS STATE: GA ZIP: 31902 FORMER COMPANY: FORMER CONFORMED NAME: CB&T BANCSHARES INC DATE OF NAME CHANGE: 19890912 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended 1995 or ---- [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________to___________ Commission file number 1-10312 SYNOVUS FINANCIAL CORP. (Exact Name of Registrant as specified in its charter) Georgia 58-1134883 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Arsenal Place, 901 Front Avenue Suite 301, Columbus, Georgia 31901 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (706) 649-2387 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- Common Stock, $1.00 Par Value New York Stock Exchange Common Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section l2(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during the preceding l2 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO -------- -------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 23, 1996, 77,264,014 (which number will be 115,896,021 after adjustment to reflect the three-for-two stock split which will be effected in the form of a 50% stock dividend to be issued on April 8, 1996) shares of the $1.00 par value common stock of Synovus Financial Corp. were outstanding, and the aggregate market value of the shares of $1.00 par value common stock of Synovus Financial Corp. held by non-affiliates was approximately $1,544,000,000 (based upon the closing per share price of such stock on said date). Portions of the 1995 Annual Report to Shareholders of Registrant are incorporated in Parts I, II, III and IV of this report. Portions of the Proxy Statement of Registrant dated March 8, 1996 are incorporated in Part III of this report. Registrant's Documents Incorporated by Reference Part Number and Item Document Incorporated Number of Form 10-K Into by Reference Which Incorporated - --------------------- ------------------------- Pages F-10, F-20 through Part I, Item 1, Business F-25, and F-28 through F-48 of Registrant's 1995 Annual Report to Shareholders Pages F-16, F-17, F-20 and F-21 Part I, Item 2, Properties of Registrant's 1995 Annual Report to Shareholders Pages F-20 and F-21 of Part I, Item 3, Legal Registrant's 1995 Annual Report Proceedings to Shareholders Pages F-43 through F-46 Part II, Item 5, Market of Registrant's 1995 Annual for Registrant's Common Report to Shareholders Equity and Related Stockholder Matters Page F-28 of Registrant's Part II, Item 6, 1995 Annual Report to Selected Shareholders Financial Data Pages F-28 through F-48 Part II, Item 7, of Registrant's Management's Discussion 1995 Annual Report to and Analysis of Financial Shareholders Condition and Results of Operations Pages F-2 through F-26, and F-48 Part II, Item 8, of Registrant's 1995 Financial Statements and Annual Report to Shareholders Supplementary Data Pages 3 through 6, 8, Part III, Item 10, 9, and 26 of Registrant's Proxy Directors and Executive Statement in connection with Officers of the Registrant its Annual Shareholders' Meeting to be held April 25, 1996 Pages 11 through 15, and Part III, Item 11, 19 and 20 of Registrant's Proxy Executive Compensation Statement in connection with its Annual Shareholders' Meeting to be held April 25, 1996 Pages 6, 7, and 21 through Part III, Item 12, 24 of Registrant's Proxy Statement Security Ownership of in connection with its Annual Certain Beneficial Owners Shareholders' Meeting to be held and Management April 25, 1996 Pages 19 through 26 of Registrant's Part III, Item 13, Proxy Statement in connection with Certain Relationships its Annual Shareholders' Meeting to and Related Transactions be held April 25, 1996 Pages F-2 through F-26 Part IV, Item 14, of Registrant's 1995 Exhibits, Financial Statement Annual Report to Shareholders Schedules and Reports on Form 8-K Table of Contents Item No. Caption Page No. Part I 1. Business 2. Properties 3. Legal Proceedings 4. Submission of Matters to a Vote of Security Holders Part II 5. Market for Registrant's Common Equity and Related Stockholder Matters 6. Selected Financial Data 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 8. Financial Statements and Supplementary Data 9. Changes In And Disagreements With Accountants on Accounting and Financial Disclosure Part III 10. Directors and Executive Officers of the Registrant 11. Executive Compensation 12. Security Ownership of Certain Beneficial Owners and Management 13. Certain Relationships and Related Transactions Part IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Item 1. Business. Business and Business Segments. Synovus Financial Corp.(R) ("Synovus(R)") is a $7.9 billion asset multi-financial services company which is a registered bank holding company as defined under federal law in the Bank Holding Company Act of 1956, as amended (the "BHCA"), and under the bank holding company laws of the State of Georgia (the "Georgia Act"). As a bank holding company, Synovus is subject to supervision and regulation by the Board of Governors of the Federal Reserve System ("Board") and the Department of Banking and Finance of the State of Georgia ("Georgia Banking Department"). Synovus conducts a broad range of financial services through its banking and bank-related subsidiaries and affiliates. Synovus is engaged in two principal business segments: banking (which encompasses commercial banking, trust services, mortgage banking, credit card banking and certain securities brokerage operations), and bankcard data processing. While each of these activities is directly related to the provision of financial services, their separation for accounting purposes is appropriate under Statement of Financial Accounting Standards No. 14 and the rules of the Securities and Exchange Commission ("SEC"). See Note 11 of Notes to Consolidated Financial Statements on page F-22 of Synovus' 1995 Annual Report to Shareholders which is specifically incorporated herein by reference. Banking and Bank-Related Subsidiaries and Services. Synovus currently has thirty-four wholly-owned first and second tier commercial banking subsidiaries located in four states. Of the 34 bank subsidiaries, 21 are located in Georgia with approximately $4.6 billion in assets, seven are located in Alabama with approximately $1.6 billion in assets, five are located in Florida with approximately $550,000 in assets and one is located in South Carolina with approximately $1.2 billion in assets. Synovus' commercial banking subsidiaries are hereinafter sometimes collectively referred to as the "Banks." The Banks offer a broad range of commercial banking services, including accepting customary types of demand and savings deposits, making individual, consumer, commercial, installment, first mortgage and second mortgage loans, offering money transfers, safe deposit services, trust, investment, IRA, Keogh and corporate employee benefit and other fiduciary services, correspondent banking services, automated banking and electronic switch services, automated fund transfers and bank credit card services, including MasterCard and Visa services. All of the Banks' commercial banking activities are conducted within the United States. - ------------------ Synovus Financial Corp., Synovus, Synovus Securities, Inc., Columbus Bank and Trust Company and CB&T are federally registered service marks of Synovus Financial Corp. TSYS and TS2 are federally registered service marks and Total System Services, Inc. is a service mark of Total System Services, Inc. 1 Synovus owns the federally registered service marks of Synovus Financial Corp., Synovus, the stylized S logo and Synovus Securities, Inc. Synovus also owns other service marks. In the opinion of management of Synovus, the loss of the right to use such marks would not materially affect Synovus' business. The bank-related subsidiaries of Synovus are: (1) Synovus Securities, Inc.(R), Columbus, Georgia ("Synovus Securities"), which specializes in professional portfolio management for fixed-income securities, the execution of securities transactions as a broker/dealer and the provision of individual investment advice on equity and other securities; (2) Synovus Trust Company, Columbus, Georgia, one of the southeast's largest providers of trust services; (3) Synovus Mortgage Corp., Birmingham, Alabama, which offers mortgage servicing; and (4) Synovus Data Corp., Columbus, Georgia, which provides general bank data processing services to Synovus and its banking subsidiaries. Bankcard Data Processing and Other Affiliates and Services. Business. Established in 1983 as an outgrowth of an on-line accounting and bankcard data processing system developed for Synovus' wholly owned subsidiary, Columbus Bank and Trust Company(R) ("CB&T(R)"), Total System Services, Inc.(sm) ("TSYS(R)") is now one of the world's largest credit, debit and private-label card processing companies. Based in Columbus, Georgia, and traded on the New York Stock Exchange under the symbol "TSS," TSYS provides a comprehensive on-line system of data processing services marketed as THE TOTAL SYSTEM(sm), servicing issuing and acquiring institutions throughout the United States, Puerto Rico, Canada and Mexico, representing more than 63 million cardholder and over 600,000 merchant accounts. TSYS provides card production, domestic and international clearing, statement preparation, customer service support, merchant accounting, merchant services and management support. Synovus owns 80.8 percent of TSYS. TSYS has four wholly-owned subsidiaries: (1) Columbus Depot Equipment Company(sm) ("CDEC(sm)"), which sells and leases computer related equipment associated with TSYS' bankcard data processing services and bank data processing services provided by an affiliate; (2) Mailtek, Inc.(sm) ("Mailtek"), which provides full-service direct mail production services and offers data processing, list management, laser printing, computer output microfiche, card embossing, encoding and mailing services; (3) Lincoln Marketing, Inc.(sm) ("LMI"), which provides correspondence, fulfillment, telemarketing, data processing and mailing services; and (4) Columbus Productions, Inc.(sm) ("CPI"), which provides full-service commercial printing and related services. TSYS also holds a 49% equity interest in a Mexican company named Total System Services de Mexico, S.A. de C.V., which provides credit card related processing services to Mexican banks. Service Marks. TSYS owns a family of service marks containing the name Total System, and the federally registered service marks TSYS and TS2, to which TSYS believes strong customer identification attaches. TSYS also owns service marks 2 associated with its subsidiaries. Management does not believe the loss of such marks would have a material impact on the business of TSYS. Major Customers. A significant amount of TSYS' revenues are derived from certain major customers who are processed under long-term contracts. For the year ended December 31, 1995, AT&T Universal Card Services Corp. and NationsBank accounted for 21.4% and 12.4%, respectively, of TSYS' total revenues. As a result, the loss of one of TSYS' major customers could have a material adverse effect on TSYS' results of operations. See "Non-Interest Income" under the "Financial Review" Section on pages F-32 and F-33, "Non-Interest Expense" under the "Financial Review" Section on pages F-33 and F-34, and Note 9 of Notes to Consolidated Financial Statements on pages F-20 and F-21 of Synovus' 1995 Annual Report to Shareholders which are specifically incorporated herein by reference. Acquisitions Consummated During 1995. See Note 1 of Notes to Consolidated Financial Statements on page F-10 and "Acquisitions" under the "Financial Review" Section on page F-29 of Synovus' 1995 Annual Report to Shareholders which are specifically incorporated herein by reference for a detailed description of the acquisitions consummated by Synovus during 1995. Supervision, Regulation and Other Factors. Synovus is a registered multi-bank holding company, subject to supervision and regulation by the Board under the BHCA, and by the Georgia Banking Department under the Georgia Act. As a bank holding company, Synovus is required to furnish the Board and the Georgia Banking Department with annual reports of the financial condition, management and inter-company relationships of Synovus and its subsidiaries and affiliates at the end of each fiscal year, and such additional information as the Board and the Georgia Banking Department may require from time to time. The Board and the Georgia Banking Department also make examinations of Synovus and certain of its subsidiaries and affiliates. The BHCA and the Georgia Act require each bank holding company to obtain the prior approval of the Board and the Georgia Banking Department before: (i) it may acquire direct or indirect ownership or control of any voting shares of any bank, if, after such acquisition, such bank holding company will, directly or indirectly, own or control more than 5% of the voting shares of such bank; (ii) it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of a bank; or (iii) it may merge or consolidate with any other bank holding company. In addition, under the Georgia Act, it is unlawful for any bank holding company to acquire, direct or indirect, ownership or control of more than 5% of the voting shares of any presently operating bank, unless such bank has been in existence and continuously operating as a bank for a period of five years or more prior to the date 3 of making application to the Georgia Banking Department for approval of said acquisition. Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate Banking Act"), effective September 29, 1995, bank holding companies were permitted to acquire banks in any state. Under the Interstate Banking Act, effective June 1, 1997, banks may merge or consolidate across state lines, unless both of the states involved either authorize such merger or consolidation at an earlier date or either of the states involved elect to prohibit such merger or consolidation prior to May 31, 1997. Finally, under the Interstate Banking Act, states may authorize banks from other states to engage in branching across state lines. In addition, a bank holding company is, with certain exceptions, prohibited by the BHCA from engaging in, or acquiring or retaining direct or indirect control of the voting shares of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the Board to be so closely related to banking, or managing or controlling banks, as to be a proper incident thereto. Federal law also imposes certain restrictions on extensions of credit to bank holding companies by its Federal Deposit Insurance Corporation ("FDIC") insured subsidiary banks, or, with certain exceptions, to other affiliates. In addition, and with certain exceptions, Section 106 of the 1970 Amendments to the BHCA and the Board's regulations, generally prohibit a bank holding company and its banking and nonbanking subsidiaries from tying a product or service to another product or service offered by the bank or any of its bank or nonbank affiliates. The Board has issued guidelines for the implementation of risk-based capital requirements by U.S. banks and bank holding companies. See "Capital Resources and Dividends" under the "Financial Review" Section on pages F-43 through F-46 of Synovus' 1995 Annual Report to Shareholders which is specifically incorporated herein by reference. Under the Board's current policy, Synovus is expected to act as a source of financial strength to its subsidiary banks and to commit resources to support its subsidiary banks in circumstances when it might not do so absent such policy. In addition, any capital loans by Synovus to any of its subsidiary banks would also be subordinate in right of payment to depositors and to certain other indebtedness of such bank. As a result of the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), a depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC after August 9, 1989 in connection with: (i) the default of a commonly controlled FDIC insured depository institution; or (ii) any assistance provided by the FDIC to a commonly controlled FDIC insured depository institution in danger of default. "Default" is defined generally as the appointment of a conservator or receiver and "in 4 danger of default" is defined generally as the existence of certain conditions indicating that a "default" is likely to occur in the absence of regulatory assistance. All of Synovus' subsidiary banks are FDIC insured depository institutions within the meaning of FIRREA. The principal source of funds for the payment of dividends by Synovus is dividends paid to it by its subsidiary banks. Various federal and state statutory provisions limit the assessment of dividends that may be paid to Synovus by its subsidiary banks. See "Parent Company" under the "Financial Review" Section on page F-47, and Note 12 of Notes to Consolidated Financial Statements on pages F-23 through F-25 of Synovus' 1995 Annual Report to Shareholders which are specifically incorporated herein by reference. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") requires the various banking regulatory agencies to issue regulations on a broad range of issues including capital standards, non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation, additional disclosure regarding loans and deposits to enhance consumer protection, limits on state bank powers, audit requirements and examination requirements. The FDIC has adopted regulations which, among other matters, implement provisions of FDICIA that require or permit the FDIC to take specific supervisory actions when FDIC-insured institutions come within one of five specific capital categories. The five capital categories are designated as (1) well capitalized, (2) adequately capitalized, (3) undercapitalized, (4) significantly undercapitalized and (5) critically undercapitalized. FDICIA defines well capitalized banks or bank holding companies as entities having a total risk-based capital ratio of 10% or higher, a Tier 1 risk-based capital ratio of 6% or higher and a leverage ratio of 5% or higher. At December 31, 1995 Synovus and its bank subsidiaries had adequate capital to be classified as well capitalized institutions under the FDICIA regulations. Synovus does not presently believe that FDICIA will have a material effect on its business. FIRREA and FDICIA provide the federal banking agencies with significantly expanded powers to take enforcement action against institutions which fail to comply with capital or other standards. Such action may include the termination of deposit insurance by the FDIC. Because Synovus is a registered multi-bank holding company, the Banks are also subject to examination, supervision and regulation by the Board. The Banks which are chartered under the banking laws of the States of Georgia, Florida and Alabama are subject to examination, supervision and regulation by the Georgia Banking Department, Florida Banking Department and the Alabama Banking Department, respectively. The Banks which are chartered under the banking laws of the United States are subject to examination, supervision and regulation by the Office of the Comptroller of the Currency ("OCC"). In addition, the deposits of the Banks are insured by the FDIC to the extent provided by law, and are subject to examination, supervision and regulation by the FDIC. 5 The Georgia Banking Department, Florida Banking Department, Alabama Banking Department, OCC and the FDIC regulate all areas of the Banks' banking and trust operations, including, where appropriate, reserves, investments, loans, mergers, the issuance of securities, payment of dividends, interest rates, extension of credit to officers and directors, establishment of branches, maintenance of capital and other aspects of their operations. Also, the payment of management fees by banking subsidiaries of a bank holding company is subject to supervision and regulation by the Georgia Banking Department, Florida Banking Department, Alabama Banking Department, the OCC, the Board and the FDIC. The payment of management fees by non-banking subsidiaries of a bank holding company is also subject to supervision and regulation by the Board. Numerous other federal and state laws, as well as regulations promulgated by the Board, the Georgia Banking Department, Florida Banking Department, Alabama Banking Department, the OCC and the FDIC govern almost all aspects of the operations of the Banks. Employees. As of December 31, 1995, Synovus had 6,727 full-time employees, 2,269 of whom are employees of TSYS. Competition. Banking. Synovus and the Banks encounter vigorous competition from other commercial banks, savings and loan associations and other financial institutions and intermediaries in their respective market areas. Certain of the Banks are smaller than many of the financial institutions in their respective market areas. The Banks compete with other banks in their respective market areas in obtaining new deposits and accounts, making loans, obtaining branch banking locations and providing other banking services. The Banks also compete with savings institutions and credit unions in their respective markets for savings and transaction deposits, certificates of deposit and various types of loans. Competition for loans is also offered by other financial intermediaries, including savings institutions, mortgage banking firms and real estate investment trusts, small loan and finance companies, insurance companies, credit unions, leasing companies and certain government agencies. Competition for time deposits and, to a more limited extent, demand and transaction deposits is also offered by a number of other financial intermediaries and investment alternatives, including "money-market" mutual funds, brokerage firms, government and corporate bonds and other securities. In the offering of fiduciary services, the Banks and Synovus Trust Company, a wholly-owned subsidiary of CB&T, compete with commercial banks and savings institutions having trust powers, trust companies, and investment advisory and 6 brokerage firms and other individuals and firms that offer fiduciary, escrow, or corporate trust services. Synovus Securities competes with full-service brokerage firms. In the offering of investment advisory and securities brokerage services, Synovus Securities competes with banking and brokerage concerns which provide investment advisory and broker-dealer services for fixed income portfolios. Bankcard Data Processing Subsidiary. TSYS encounters vigorous competition in providing bankcard data processing services from several different sources. The national market in third party bankcard data processors is presently being provided by approximately five vendors. TSYS believes that it is the second largest third party bankcard processor in the United States. In addition, TSYS competes against software vendors which provide their products to institutions which process in-house. TSYS is presently encountering, and in the future anticipates continuing to encounter, substantial competition from bankcard associations, data processing and bankcard computer service firms and other such third party vendors located throughout the United States. TSYS' major competitor in the bankcard data processing industry is First Data Resources, Inc., which is headquartered in Omaha, Nebraska, and provides bankcard data processing services, including authorization and data entry services. The principal methods of competition between TSYS and First Data Resources are price and the type and quality of services provided. In addition, there are a number of other companies which have the necessary financial resources and the technological ability to develop or acquire products and, in the future, to provide services similar to those being offered by TSYS. Selected Statistical Information. The "Financial Review" Section, which is set forth on pages F-28 through F-48 of Synovus' 1995 Annual Report to Shareholders, which includes the information encompassed within "Selected Statistical Information", is specifically incorporated herein by reference. Item 2. Properties. Synovus and its subsidiaries own, in some cases subject to mortgages or other security interests, or lease all of the real property and/or buildings on which it is located. All of such buildings are in a good state of repair and are appropriately designed for the purposes for which they are used. See Note 6 and Note 9 of Notes to Consolidated Financial Statements on pages F-16 and F-17, and pages F-20 and F-21, of Synovus' 1995 Annual Report to Shareholders which are specifically incorporated herein by reference. 7 CB&T occupies an approximately 225,000 square foot building known as the Uptown Center in Columbus, Georgia which provides office space for most of its operations. TSYS occupies a 210,000 square foot production center which is located on a 40.4 acre tract of land in north Columbus, Georgia. Primarily a production center, this facility houses TSYS' primary data processing computer operations, statement preparation, mail handling, microfiche production and purchasing, as well as other related operations. During 1995, TSYS purchased a 110,000 square foot building on a 23 acre site in Columbus, Georgia to accommodate current and future space needs. On March 7, 1996, TSYS announced its plans to purchase approximately 50 acres in downtown Columbus, Georgia on which it will begin building a campus-like complex for its corporate headquarters in early 1997. Item 3. Legal Proceedings. See Note 9 of Notes to Consolidated Financial Statements on pages F-20 and F-21 of Synovus' 1995 Annual Report to Shareholders which is specifically incorporated herein by reference. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. Shares of common stock of Synovus are traded on the New York Stock Exchange under the symbol "SNV." See "Capital Resources and Dividends" under the "Financial Review" Section which is set forth on pages F-43 through F-46 of Synovus' 1995 Annual Report to Shareholders which is specifically incorporated herein by reference. Item 6. Selected Financial Data. On March 11, 1996, Synovus' Board of Directors declared a three-for-two stock split to be issued on April 8, 1996, to shareholders of record on March 21, 1996. The financial information included in Item 5, Item 6, Item 7, Item 8, Item 11, Item 12, Item 13 and Item 14 has not been restated to reflect this stock split. The table below reflects selected financial data on both a pre-split and post-split basis. 8
December 31, 1995 December 31, 1994 December 31, 1993 ---------------------------------------------------------------------------------------------------------- Pre-Split Post-Split Pre-Split Post-Split Pre-Split Post-Split ---------------------------------------------------------------------------------------------------------- Period end shares outstanding 77,237,000 115,855,000 75,633,000 113,450,000 74,572,000 111,857,000 Weighted average shares outstanding 76,636,000 114,954,000 75,167,000 112,750,000 74,009,000 111,013,000 Net income per share $ 1.50 1.00 1.19 .79 1.05 .70 Closing stock price $ 28.500 19.000 18.125 12.125 18.625 12.375
See "Five Year Selected Financial Data" under the "Financial Review" Section which is set forth on page F-28 of Synovus' 1995 Annual Report to Shareholders which is specifically incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The "Financial Review" Section which is set forth on pages F-28 through F-48 of Synovus' 1995 Annual Report to Shareholders, which includes the information encompassed by "Management's Discussion and Analysis of Financial Condition and Results of Operations", is specifically incorporated herein by reference. Such information has not been restated to reflect the stock split discussed in Item 6. Item 8. Financial Statements and Supplementary Data. The "Summary of Quarterly Financial Data" Section which is set forth on page F-48, and the "Consolidated Statements of Condition, Consolidated Statements of Income, Consolidated Statements of Shareholders' Equity, Consolidated Statements of Cash Flows, Summary of Significant Accounting Policies, Notes to Consolidated Financial Statements and Independent Auditors' Report" Sections which are set forth on pages F-2 through F-26 of Synovus' 1995 Annual Report to Shareholders are specifically incorporated herein by reference. Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 10. Directors and Executive Officers of the Registrant. The "ELECTION OF DIRECTORS - Information Concerning Directors and Nominees" Section which is set forth on pages 3 and 4, the "ELECTION OF DIRECTORS -Information Concerning Directors and Nominees for Class II Directors General Information" Section which is set forth on pages 4 through 6, the "ELECTION OF DIRECTORS - Executive Officers" Section which is set forth on pages 8 and 9, and the "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT SECTION" which is set forth on page 26 of Synovus' Proxy Statement in connection 9 with its Annual Shareholders' Meeting to be held on April 25, 1996 are specifically incorporated herein by reference. Item 11. Executive Compensation. The "EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option Exercises and Grants; Compensation of Directors; Employment Contracts and Termination of Employment and Change in Control Arrangements; and Compensation Committee Interlocks and Insider Participation" Sections which are set forth on pages 11 through 15 and pages 19 and 20 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 1996 are specifically incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The "ELECTION OF DIRECTORS - Information Concerning Directors and Nominees for Class II Directors - Synovus Common Stock Ownership of Directors and Management" Section which is set forth on pages 6 and 7, the "PRINCIPAL SHAREHOLDERS" Section which is set forth on pages 21 and 22, and the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - TSYS Common Stock Ownership of Directors and Management" Section which is set forth on pages 23 and 24 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 1996 are specifically incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. The "EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider Participation Section" which is set forth on pages 19 and 20 "EXECUTIVE COMPENSATION" -Transactions with Management" Section which is set forth on pages 20 and 21, the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - Beneficial Ownership of TSYS Common Stock by Columbus Bank" Section which is set forth on pages 22 and 23, the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - Interlocking Directorates of Synovus, Columbus Bank and TSYS" Section which is set forth on page 23, and the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - Transactions and Agreements Between Synovus, Columbus Bank, TSYS and Certain of Synovus' Subsidiaries" Section which is set forth on pages 24 through 26 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 1996 are specifically incorporated herein by reference. 10 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1. Financial Statements The following Consolidated Financial Statements of Synovus Financial Corp. and its subsidiaries are specifically incorporated by reference from pages F-2 through F-26 of Synovus' 1995 Annual Report to Shareholders, in response to Item 8, Part II, Financial Statements and Supplementary Data. Consolidated Statements of Condition - December 31, 1995 and 1994 Consolidated Statements of Income - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Shareholders' Equity - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993 Summary of Significant Accounting Policies - December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements - December 31, 1995, 1994 and 1993 Independent Auditors' Report 2. Financial Statement Schedules Financial Statement Schedules - None applicable because the required information has been incorporated in the Consolidated Financial Statements of Synovus Financial Corp. and its subsidiaries incorporated by reference herein. 3. Exhibits Exhibit Number Description 3.1 Articles of Incorporation, as amended, of Synovus Financial Corp. ("Synovus") incorporated by reference to Exhibit 4(a) of Synovus' Registration Statement on Form S-8 filed with the Securities and 11 Exchange Commission on July 23, 1990 (File No. 33-35926). 3.2 Bylaws, as amended, of Synovus. 4.1 Form of Rights Agreement incorporated by reference to Exhibit 1 of Synovus' Registration Statement on Form 8-A dated May 3, 1989 pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. 9.1 Voting Lease Agreement incorporated by reference to Exhibit 9.1 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 24, 1995. 10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 10.1 Employment Agreements of James H. Blanchard and James D. Yancey with Synovus incorporated by reference to Exhibit 10.1 of Synovus' Registration Statement on Form S-1 filed with the Commission on December 18, 1990 (File No. 33-38244). 10.2 Incentive Bonus Plan of Synovus incorporated by reference to Exhibit 10.5 of Synovus' Registration Statement on Form S-1 filed with the Commission on December 18, 1990 (File No. 33-38244). 10.3 Director Stock Purchase Plan of Synovus incorporated by reference to Exhibit 10(a) of Synovus' Registration Statement on Form S-8 filed with the Commission on December 3, 1984 (File No. 2-94639). 10.4 Key Executive Restricted Stock Bonus Plan of Synovus incorporated by reference to Exhibit 10.6 of Synovus' Registration Statement on Form S-1 filed with the Commission on December 18, 1990 (File No. 33-38244). 10.5 1989 Stock Option Plan of Synovus incorporated by reference to Exhibit "A" of Synovus' Registration Statement on Form S-8 filed with the Commission on July 23, 1990 (File No. 12 33-35926), which Option Plan was amended on March 16, 1992 to eliminate the stock appreciation rights feature of the outstanding options under the Plan and reduce the exercise price from $16 5/8 per share to $9.70 per share. 10.6 Employment Agreements of Joe E. Beverly, John T. Oliver, Jr. and Richard E. Anthony with Synovus and Consulting Agreement of H. Lynn Page with Synovus incorporated by reference to Exhibit 10.6 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.7 Excess Benefit Agreement of Synovus incorporated by reference to Exhibit 10.7 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 24, 1995. 10.8 Wage Continuation Agreement of Synovus incorporated by reference to Exhibit 10.8 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.9 1991 Stock Option Plan for Key Executives of Synovus incorporated by reference to Exhibit 10.9 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.10 Synovus Financial Corp. 1992 Long-Term Incentive Plan incorporated by reference to Exhibit 10.10 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.11 Agreement in Connection with Use of Aircraft incorporated by reference to Exhibit 10.11 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.12 Life Insurance Trusts incorporated by reference to Exhibit 10.12 of Synovus' Annual Report on Form 13 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.13 Supplemental Compensation Agreement, Incentive Compensation Agreements and Performance Compensation Agreement with Richard E. Anthony; which Agreements were assumed by Synovus on December 31, 1992 as a result of its acquisition of First Commercial Bancshares, Inc.; and which stock awards made pursuant to the Agreements were converted at a ratio of 1.5 to 1, the exchange ratio applicable to the merger incorporated by reference to Exhibit 10.13 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 29, 1993. 10.14 1993 Split Dollar Insurance Agreement of Synovus incorporated by reference to Exhibit 10.14 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as filed with the Commission on March 28, 1994. 10.15 1995 Split Dollar Insurance Agreement of Synovus incorporated by reference to Exhibit 10.15 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 24, 1995. 10.16 Synovus Financial Corp. 1995 Long-Term Incentive Plan incorporated by reference to Exhibit 10.16 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 24, 1995. 10.17 Employment Agreement of Robert V. Royall, Jr. and Employment and Retirement Agreements of William L. Pherigo. 10.18 Synovus Financial Corp. Executive Bonus Plan. 10.19 Change of Control Agreements. 11.1 Statement of Net Income Per Common Share (reflects the three-for-two stock split to be issued on April 8, 1996). 14 11.2 Statement of Net Income Per Common Share (does not reflect the three-for-two stock split to be issued on April 8, 1996). 13.1 Certain specified pages of Synovus' 1995 Annual Report to Shareholders which are specifically incorporated herein by reference. 20.1 Proxy Statement, for the Annual Meeting of Shareholders of Synovus to be held on April 25, 1996, certain specified pages of which are specifically incorporated herein by reference. 21.1 Subsidiaries of Synovus Financial Corp. 23.1 Independent Auditors' Consents. 24.1 Powers of Attorney contained on the signature pages of the 1995 Annual Report on Form 10-K. 27.1 Financial Data Schedule (for SEC use only). 99.1 Annual Report on Form 11-K for the Synovus Financial Corp. Employee Stock Purchase Plan for the year ended December 31, 1995 (to be filed as an amendment hereto within 120 days of the end of the period covered by this report). 99.2 Annual Report on Form 11-K for the Synovus Financial Corp. Director Stock Purchase Plan for the year ended December 31, 1995 (to be filed as an amendment hereto within 120 days of the end of the period covered by this report). Synovus agrees to furnish the Commission, upon request, a copy of each instrument with respect to issues of long-term debt. The principal amount of any individual instrument, which has not been previously filed, does not exceed ten percent of the total assets of Synovus and its subsidiaries on a consolidated basis. (b) Reports on Form 8-K. On October 26, 1995, Synovus filed a Form 8-K with the Commission in connection with the October 25, 1995 announcement by Total System Services, Inc., an 80.8% subsidiary of Synovus, of the renewal of a long-term credit card processing contract with NationsBank. 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Synovus Financial Corp. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SYNOVUS FINANCIAL CORP. (Registrant) March 22, 1996 By:/s/ James H. Blanchard ---------------------- James H. Blanchard, Chairman of the Board and Principal Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James H. Blanchard, James D. Yancey and Stephen L. Burts, Jr., and each of them, his or her true and lawful attorney(s)-in-fact and agent(s), with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this report and to file the same, with all exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons in the capacities and on the dates indicated. /s/ William B. Turner Date: March 22, 1996 - ------------------------------------------ William B. Turner, Director and Chairman of the Executive Committee /s/ James H. Blanchard Date: March 22, 1996 - ------------------------------------------- James H. Blanchard, Chairman of the Board and Principal Executive Officer /s/ John T. Oliver, Jr. Date: March 22, 1996 - ------------------------------------------ John T. Oliver, Jr., Director and Vice Chairman of the Executive Committee /s/ James D. Yancey Date: March 22, 1996 - ------------------------------------------ James D. Yancey, Vice Chairman of the Board /s/ Joe E. Beverly Date: March 22, 1996 - ------------------------------------------- Joe E. Beverly, Vice Chairman of the Board /s/ Richard E. Anthony Date: March 22, 1996 - ------------------------------------------ Richard E. Anthony, Vice Chairman of the Board /s/ Stephen L. Burts, Jr. Date: March 22, 1996 - ------------------------------------------ Stephen L. Burts, Jr., President, Principal Financial Officer and Director /s/ G. Sanders Griffith, III Date: March 22, 1996 - ------------------------------------------ G. Sanders Griffith, III, Senior Executive Vice President, General Counsel and Secretary /s/ Thomas J. Prescott Date: March 22, 1996 - ------------------------------------------ Thomas J. Prescott, Executive Vice President, Treasurer and Principal Accounting Officer /s/ Jay C. McClung Date: March 22, 1996 - ------------------------------------------ Jay C. McClung, Executive Vice President /s/ Daniel P. Amos Date: March 22, 1996 - ------------------------------------------ Daniel P. Amos, Director /s/ Richard Y. Bradley Date: March 22, 1996 - ------------------------------------------ Richard Y. Bradley, Director /s/ Salvador Diaz-Verson, Jr. Date: March 22, 1996 - ------------------------------------------ Salvador Diaz-Verson, Jr., Director /s/ C. Edward Floyd Date: March 22, 1996 - ------------------------------------------ C. Edward Floyd, Director /s/ Gardiner W. Garrard, Jr. Date: March 22, 1996 - ------------------------------------------ Gardiner W. Garrard, Jr., Director /s/ V. Nathaniel Hansford Date: March 22, 1996 - ------------------------------------------ V. Nathaniel Hansford, Director /s/ Mason H. Lampton Date: March 22, 1996 - ------------------------------------------ Mason H. Lampton, Director /s/ John L. Moulton Date: March 22, 1996 - ------------------------------------------ John L. Moulton, Director /s/ Elizabeth C. Ogie Date: March 22, 1996 - ------------------------------------------ Elizabeth C. Ogie, Director /s/ William L. Pherigo Date: March 22, 1996 - ------------------------------------------ Wiliam L. Pherigo, Director /s/ Robert V. Royall, Jr. Date: March 22, 1996 - ------------------------------------------ Robert V. Royall, Jr., Director /s/H. Lynn Page Date: March 22, 1996 - ------------------------------------------ H. Lynn Page, Director /s/ George C. Woodruff, Jr. Date: March 22, 1996 - ------------------------------------------ George C. Woodruff, Jr., Director filings\snv\199610k.snv EX-3.2 2 As Amended Effective December 20, 1995 BYLAWS OF SYNOVUS FINANCIAL CORP. ARTICLE I. OFFICES Section 1. Principal Office. The principal office for the transaction of the business of the corporation shall be located in Muscogee County, Georgia, at such place within said County as may be fixed from time to time by the Board of Directors. Section 2. Other Offices. Branch offices and places of business may be established at any time by the Board of Directors at any place or places where the corporation is qualified to do business, whether within or without the State of Georgia. ARTICLE II. SHAREHOLDERS' MEETINGS Section 1. Meetings, Where Held. Any meeting of the shareholders of the corporation, whether an annual meeting or a special meeting, may be held either at the principal office of the corporation or at any place in the United States within or without the State of Georgia. Section 2. Annual Meeting. The annual meeting of the shareholders of the corporation shall be held on such date as is determined by the Board of Directors of the corporation each year. Provided, however, that if the Board of Directors shall fail to set a date for the annual meeting of shareholders in any year, that the annual meeting of the shareholders of the corporation shall be held on the fourth Thursday in April of each year; provided, that if said day shall fall upon a legal holiday, then such annual meeting shall be held on the next day thereafter ensuing which is not a legal holiday. Section 3. Special Meetings. A special meeting of the shareholders of the corporation, for any purpose or purposes whatsoever, may be called at any time by the Chairman of the Board, any Vice Chairman of the Board, the President, any Vice President, a majority of the Board of Directors, or one or more shareholders of the corporation representing at least 66 1 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Such a call for a special meeting must state the purpose of the meeting. This section, as it relates to the call of a special meeting of the shareholders of the corporation by one or more shareholders representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Section 4. Notice of Meetings. Unless waived, written notice of each annual meeting and of each special meeting of the shareholders of the corporation shall be given to each shareholder of record entitled to vote, either personally or by first class mail (postage prepaid) addressed to such shareholder at his last known address, not less than ten (10) days nor more than seventy (70) days prior to said meeting. Such written notice shall specify the place, day and hour of the meeting; and in the case of a special meeting, it shall also specify the purpose or purposes for which the meeting is called. Section 5. Waiver of Notice. Notice of an annual or special meeting of the shareholders of the corporation may be waived by any shareholder, either before or after the meeting; and the attendance of a shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to the place or time of the meeting, or to the manner in which it has been called or convened, except when a shareholder attends solely for the purpose of stating, at the beginning of the meeting, an objection or objections to the transaction of business at such meeting. Section 6. Quorum, Voting and Proxy. Shareholders representing a majority of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation shall constitute a quorum at a shareholders' meeting. Any shareholder may be represented and vote at any shareholders' meeting by written proxy filed with the Secretary of the corporation on or before the date of such meeting; provided, however, that no proxy shall be valid for more than 11 months after the date thereof unless otherwise specified in such proxy. The common stock of the corporation shall have the following voting rights: (a) Except as otherwise provided in paragraph (b) below, every holder of record of the common stock shall be entitled to one (1) vote in person or by proxy on each matter submitted to a vote at a meeting of shareholders for each share of the common stock held of record by such holder as of the record date of such meeting. 2 (b) Notwithstanding paragraph (a) above, every holder of record of a share of the common stock meeting any one of the following criteria, shall be entitled to ten (10) votes in person or by proxy on each matter submitted to a vote at a meeting of shareholders for each share of the common stock held of record by such holder as of the record date of such meeting which: (1) has had the same beneficial owner since April 24, 986; or (2) has had the same beneficial owner for a continuous period of greater than 48 months prior to the record date of such meeting; or (3) is held by the same beneficial owner to whom it was issued by the corporation in or as a part of an acquisition of a banking or non-banking company by the corporation where the resolutions adopted by the corporation's Board of Directors approving said acquisition specifically reference and grant such rights; or (4) is held by the same beneficial owner to whom it was issued by the corporation, or to whom it transferred by the corporation from treasury shares held by the corporation, and the resolutions adopted by the corporation's Board of Directors approving such issuance and/or transfer specifically reference and grant such rights; or (5) was acquired under any employee, officer and/or director benefit plan maintained for one or more employees, officers and/or directors of the corporation, and/or its subsidiaries, and is held by the same beneficial owner for whom it was acquired under the terms and provisions of such plan; or (6) was acquired by reason of participation in a dividend reinvestment plan approved by the corporation and is held by the same beneficial owner for whom it was acquired under the terms and provisions of such plan; or (7) is owned by a holder who, in addition to shares which are beneficially owned under the provisions of paragraph (b) (1)-(6) above, is the beneficial owner of less than 100,000 shares of common stock of the corporation, with such amount to be appropriately adjusted to properly reflect any change in the shares of common stock of the corporation by means of a stock split, a stock dividend, a recapitalization or otherwise occurring after April 24, 1986. (c) For purposes of paragraphs (b) above and (e) below: (1) any transferee of a share of the common stock receiving such stock: (i) by gift; or (ii) by bequest, devise or otherwise through the law of inheritance, 3 descent and distribution from a descendant's estate; or (iii) by distribution from a trust holding such stock for the benefit of such transferee; or (2) any corporate transferee receiving such common stock solely in exchange for the capital stock of such corporate transferee prior to December 31, 1986, provided that the transferor(s) of such common stock and their respective donees, legatees and devises own all of the issued and outstanding shares of capital stock of such corporate transferee; shall be deemed in each case to be the same beneficial owner as the transferor. Any transfer of any share of the capital stock of a corporate transferee described in subparagraph c(2) above, other than by means described in subparagraph c(l) above shall disqualify all shares of the common stock held by such corporate transferee from the operation of this paragraph c. (d) For purposes of paragraph (b) above, shares of the common stock acquired pursuant to a stock option shall be deemed to have been acquired on the date the option was granted, and any shares of common stock acquired by the beneficial owner as a direct result of a stock split, stock dividend or other type of distribution of shares with respect to existing shares ("Dividend Shares") will be deemed to have been acquired and held continuously from the date on which the shares with regard to which the Dividend Shares were issued were acquired. (e) For purposes of paragraph (b) above, any share of the common stock held in "street" or "nominee" name shall be presumed to have been acquired by the beneficial owner subsequent to April 24, 1986 and to have had the same beneficial owner for a continuous period of less than 48 months prior to the record date of the meeting in question. This presumption shall be rebuttable by presentation to the corporation's Board of Directors by such beneficial owner of evidence satisfactory to the corporation's Board of Directors that such share has had the same beneficial owner continuously since April 24, 1986 or such share has had the same beneficial owner for a period greater than 48 months prior to the record date of the meeting in question. (f) For purposes of this section, a beneficial owner of a share of common stock is defined to include a person or group of persons who, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares (1) voting power, which includes the power to vote, or to direct the voting of such share of common stock, (2) investment power, which includes the power to direct the sale or other disposition of such share of common stock, (3) the right to receive, retain or direct the distribution of the proceeds of any sale or other disposition of such share of common stock, or (4) the right to receive or direct the disposition of any distributions, including cash dividends, in respect of such share of common stock. For purposes of paragraphs (a) through (e) above, all determinations concerning beneficial ownership, changes 4 therein, or the absence of any such change, shall be made by the corporation's Board of Directors. Written procedures designed to facilitate such determinations shall be established by the corporation's Board of Directors and refined from time to time. Such procedures shall provide, among other things, the manner of proof of facts that will be accepted and the frequency with which such proof may be required to be renewed. The corporation's Board of Directors shall be entitled to rely on all information concerning beneficial ownership of the common stock coming to its attention from any source and in any manner reasonably deemed by it to be reliable, but the corporation shall not be charged with any other knowledge concerning the beneficial ownership of the common stock. Any disputes arising concerning beneficial ownership, changes therein, or the absence of any such changes, pursuant to this paragraph (f), shall be definitively resolved by a determination of the corporation's Board of Directors made in good faith. Section 7. Voting Rights. The voting rights of shares of common stock of the corporation shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Section 8. No Meeting Necessary When. Any action required by law or permitted to be taken at any shareholders' meeting may be taken without a meeting if, and only if, written consent, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the shareholders and shall be filed with the Secretary and recorded in the Minute Book of the corporation. ARTICLE III. DIRECTORS Section 1. Number. The Board of Directors of the corporation shall consist of not less than 8 nor more than 60 Directors. The number of Directors may vary between said minimum and maximum, and within said limits, the shareholders representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation may, from time to time, by resolution fix the number of Directors to comprise said Board. This section, as it relates to, from time to time, fixing the number of Directors of the corporation by the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation, shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Section 2. Election and Tenure. The Board of Directors of the corporation shall be divided into three classes 5 serving staggered 3-year terms, with each class to be as nearly equal in number as possible. At the first annual meeting of the shareholders of the corporation on or after the date of adoption of this provision, all members of the Board of Directors shall be elected with the terms of office of Directors comprising the first class to expire at the first annual meeting of the shareholders of the corporation after their election, the terms of office of Directors comprising the second class to expire at the second annual meeting of the shareholders of the corporation after their election and the terms of office of Directors comprising the third class to expire at the third annual meeting of the shareholders of the corporation after their election, and as their terms of office expire, the Directors of each class will be elected to hold office until the third succeeding annual meeting of the shareholders of the corporation after their election. In such elections, the nominees receiving a plurality of votes shall be elected. This section, as it relates to the division of the Board of Directors into three classes serving staggered 3-year terms, shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Section 3. Powers. The Board of Directors shall have authority to manage the affairs and exercise the powers, privileges and franchises of the corporation as they may deem expedient for the interests of the corporation, subject to the terms of the Articles of Incorporation, bylaws, any valid Shareholders' Agreement, and such policies and directions as may be prescribed from time to time by the shareholders of the corporation. Section 4. Meetings. The annual meeting of the Board of Directors shall be held without notice immediately following the annual meeting of the shareholders of the corporation, on the same date and at the same place as said annual meeting of the shareholders. The Board by resolution may provide for regular meetings, which may be held without notice as and when scheduled in such resolution. Special meetings of the Board may be called at any time by the Chairman of the Board, any Vice Chairman of the Board, the President, or by any two or more Directors. Section 5. Notice and Waiver; Quorum. Notice of any special meeting of the Board of Directors shall be given to each Director personally or by mail, telegram or cablegram addressed to him at his last known address, at least one day prior to the meeting. Such notice may be waived, either before or after the meeting; and the attendance of a Director at any special meeting shall of itself constitute a waiver of notice of such meeting and of any and all objections to the place or time of the meeting, or to the manner in which it has been called or convened, except where a Director states, at the beginning of the meeting, any such objection or objections to the transaction of business. A majority of the Board of Directors shall constitute a quorum at any Directors' meeting. Section 6. No Meeting Necessary, When. Any action required by law or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if written consent, setting forth the 6 action so taken, shall be signed by all the Directors. Such consent shall have the same force and effect as a unanimous vote of the Board of Directors and shall be filed with the Secretary and recorded in the Minute Book of the corporation. Section 7. Voting. At all meetings of the Board of Directors each Director shall have one vote and, except as otherwise provided herein or provided by law, all questions shall be determined by a majority vote of the Directors present. Section 8. Removal. Any one or more Directors or the entire Board of Directors may be removed from office, with or without cause, by the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation at any shareholders' meeting with respect to which notice of such purpose has been given. This section, as it relates to the removal of Directors of the corporation by the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation, shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. Section 9. Vacancies. Any vacancy occurring in the Board of Directors caused by an increase in the number of Directors may be filled by the shareholders of the corporation for a full classified 3-year term, or such vacancy may be filled by the Board of Directors until the next annual meeting of the shareholders. Any vacancy occurring in the Board of Directors caused by the removal of a Director shall be filled by the shareholders, or if authorized by the shareholders, by the Board of Directors, for the unexpired term of the Director so removed. Any vacancy occurring in the Board of Directors caused by a reason other than an increase in the number of Directors or removal of a Director may be filled by the Board of Directors, or the shareholders, for the unexpired term of the Director whose position is vacated. Vacancies in the Board of Directors filled by the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors, though less than a quorum, or the sole remaining Director, as the case may be. Section 10. Dividends. The Board of Directors may declare dividends payable in cash or other property out of the unreserved and unrestricted net earnings of the current fiscal year, computed to the date of declaration of the dividend, or the preceding fiscal year, or out of the unreserved and unrestricted earned surplus of the corporation, as they may deem expedient. 7 Section 11. Committees. In the discretion of the Board of Directors, said Board from time to time may elect or appoint, from its own members, an Executive Committee, an Audit Committee, a Nominating Committee, a Corporate Development Committee, a Compensation Committee and such other committee or committees as said Board may see fit to establish. Each such committee shall consist of two or more Directors, and each shall possess such powers and be charged with such responsibilities, subject to the limitations imposed herein these bylaws and by applicable law, as the Board by resolution may from time to time prescribe. Executive Committee The Executive Committee shall, during the intervals between meetings of the corporation's Board of Directors, possess and may exercise any and all powers of the corporation's Board of Directors in the management and direction of the business and affairs of the corporation in which specific direction has not been given by the corporation's Board of Directors. Nominating Committee The Nominating Committee shall possess the power and be charged with the responsibility of: (i) evaluating the performance of incumbent directors and non-directors in determining whether or not they should be nominated for re-election, or election in the first instance, by the shareholders to serve upon the Board of Directors of the corporation; and (ii) recommending to the Board of Directors of the corporation whether or not the Board should nominate such individuals for re-election or election, as the case may be, by the shareholders to serve upon the Board of Directors of the corporation. Compensation Committee The Compensation Committee shall possess the power and be charged with the responsibility of: (i) evaluating the remuneration of senior management and members of the Board of Directors of the corporation and the compensation and fringe benefit plans in which officers, employees and directors of the corporation are eligible to participate; and (ii) recommending to the Board of Directors of the corporation whether or not it should modify or approve such remuneration, compensation or fringe benefit plans. Corporate Development Committee The Corporate Development Committee shall possess the power and be charged with the responsibility of reviewing with and assisting the management of the corporation in the formalization of plans and strategies with regard to the future expansion and growth of, and the overall operation of, the market areas served by, and the services provided by the corporation and its subsidiaries, including, but not limited to, plans and strategies in connection with acquisitions by the corporation of control of organizations and firms 8 engaged in banking activities and activities determined by the Board of Governors of the Federal Reserve System to be closely related to banking, the provision by the corporation and its subsidiaries of additional services to the customers in the market areas served by the corporation and its subsidiaries and the expansion of the market areas served by the corporation and its subsidiaries. Audit Committee The Audit Committee shall possess the power and be charged with the responsibility of: (i) reviewing and determining the independence of the independent auditors to be engaged by the corporation to perform the annual audit and interim reviews of the financial condition of the corporation and its subsidiaries (hereinafter referred to as the "corporation's independent auditors"); (ii) reviewing, determining and maintaining the independence of the corporation's internal auditors by assisting management of the corporation in the formulation of the job description of the head of the corporation's internal audit division and providing for direct reporting by the corporation's internal auditors to it in all matters relating to the audit function; (iii) instituting, directing and supervising investigations in matters relating to the audit function to be made by the corporation's internal auditors of the corporation and/or its subsidiaries; (iv) reviewing and approving each professional service to be provided by the corporation's independent auditors for the corporation and/or its subsidiaries prior to the performance of such services; (v) reviewing and approving the range of management advisory services provided by the corporation's independent auditors; (vi) reviewing the adequacy by the corporation's and its subsidiaries' systems of internal accounting controls; (vii) reviewing the scope and results of the corporation's procedures for internal auditing of the corporation and its subsidiaries; (viii) reviewing the results of regulatory examination of the corporation and its subsidiaries; (ix) reviewing the corporation's independent auditor's plan and results of its audit engagement; (x) periodically reviewing with the corporation's independent auditors with the assistance of management of the corporation the financial statement of the corporation and consolidated financial statements of the corporation and its subsidiaries with the primary goal of such review being to insure that such financial statements fairly present the financial results of the corporation in conformity with generally accepted accounting principles; (xi) reviewing and recommending to the Board of Directors of the corporation any engagement or termination of the corporation's independent auditors; and (xii) considering such other matters with regard to the internal and independent audit of the corporation and its subsidiaries as, in its discretion, it deems to be desirable, periodically reporting to the Board of Directors of the corporation as to the exercise of its duties and responsibilities and, where appropriate, recommending to the Board of Directors matters in connection with the audit function upon which it should consider taking action. Section 12. Officers, Salaries and Bonds. The Board of Directors shall elect all officers of the corporation and fix their compensation. The fact that any officer is a Director shall not preclude him from receiving a salary or from voting upon the resolution providing the same. The Board of Directors may or may not, in their discretion, require bonds from either or all of the 9 officers and employees of the corporation for the faithful performance of their duties and good conduct while in office. Section 13. Compensation of Directors. Directors, as such shall be entitled to receive compensation for their service as Directors and such fees and expenses, if any, for attendance at each regular or special meeting of the Board and any adjournments thereof, as may be fixed from time to time by resolution of the Board, and such fees and expenses shall be payable even though an adjournment be had because of the absence of a quorum; provided, however, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of either standing or special committees may be allowed such compensation as may be provided from time to time by resolution of the Board for serving upon and attending meetings of such committees. Section 14. Advisory Directors. The Board of Directors of the corporation may at its annual meeting, or from time to time thereafter, appoint any individual to serve as a member of an Advisory Board of Directors of the corporation. Any individual appointed to serve as a member of an Advisory Board of Directors of the corporation shall be entitled to attend all meetings of the Board of Directors and may participate in any discussion thereat, but such individual may not vote at any meeting of the Board of Directors or be counted in determining a quorum for such meeting. It shall be the duty of members of the Advisory Board of Directors of the corporation to advise and provide general policy advice to the Board of Directors of the corporation at such times and places and in such groups and committees as may be determined from time to time by the Board of Directors, but such individuals shall not have any responsibility or be subject to any liability imposed upon a director or in any manner otherwise deemed a director. The same compensation paid to directors for their services as directors shall be paid to members of an Advisory Board of Directors of the corporation for their services as advisory directors. Each member of the Advisory Board of Directors except in the case of his earlier death, resignation, retirement, disqualification or removal, shall serve until the next succeeding annual meeting of the Board of Directors and thereafter until his successor shall have been appointed. Section 15. Emeritus Directors. When a member of the Board of Directors or the Advisory Board of Directors of the corporation, as the case may be: (a) attains seventy (70) years of age or, (b) prior to his attainment of seventy (70) years of age, retires from his principal occupation, under the retirement policy and criteria established from time to time by the Board of Directors of the corporation (except for a member of the Board of Directors or the Advisory Board of Directors of the corporation: (1) who is, upon the attainment of age seventy (70), then serving as an executive officer of the corporation; or (2) who was sixty (60) years of age on June 14, 1973), such director shall automatically, at his option, either (i) retire from the Board of Directors or the Advisory Board of Directors of the corporation, as the case may be; or (ii) be appointed as a member of the Emeritus Board of Directors of the corporation. A member of the Board of Directors or the Advisory 10 Board of Directors of the corporation: (1) who is, upon the attainment of age seventy (70), then serving as an executive officer of the corporation; or (2) who was sixty (60) years of age on June 14, 1973, may, at his option, either: (a) continue his service as a member of the Board of Directors or the Advisory Board of Directors of the corporation, as the case may be; or (b) be appointed as a member of the Emeritus Board of Directors of the corporation. Members of the Emeritus Board of Directors of the corporation shall be appointed annually by the Chairman of the Board of Directors of the corporation at the Annual Meeting of the Board of Directors of the corporation, or from time to time thereafter. Each member of the Emeritus Board of Directors of the corporation, except in the case of his earlier death, resignation, retirement, disqualification or removal, shall serve until the next succeeding Annual Meeting of the Board of Directors of the corporation. Any individual appointed as a member of the Emeritus Board of Directors of the corporation may, but shall not be required to, attend meetings of the Board of Directors of the corporation and may participate in any discussions thereat, but such individual may not vote at any meeting of the Board of Directors of the corporation or be counted in determining a quorum at any meeting of the Board of Directors of the corporation, as provided in Section 5 of Article III of the bylaws of the corporation. It shall be the duty of the members of the Emeritus Board of Directors of the corporation to serve as goodwill ambassadors of the corporation, but such individuals shall not have any responsibility or be subject to any liability imposed upon a member of the Board of Directors of the corporation or in any manner otherwise be deemed to be a member of the Board of Directors of the corporation. Each member of the Emeritus Board of Directors of the corporation shall be paid such compensation as may be set from time to time by the Chairman of the Board of Directors of the corporation and shall remain eligible to participate in any Director Stock Purchase Plan maintained by, or participated in, from time to time by the corporation according to the terms and conditions thereof. ARTICLE IV. OFFICERS Section 1. Selection. The Board of Directors at each annual meeting shall elect or appoint a President (who shall be a Director), a Secretary and a Treasurer, each to serve for the ensuing year and until his successor is elected and qualified, or until his earlier resignation, removal from office, or death. The Board of Directors, at such meeting, may or may not, in the discretion of the Board, elect a Chairman of the Board, one or more Vice Chairmen of the Board, one or more Chairmen of the Board-Emeritus and/or one or more Vice Presidents and, also may elect or appoint one or more Assistant Vice Presidents and/or one or more Assistant Secretaries and/or one or more Assistant Treasurers. When more than one Vice President is elected, they may, in the discretion of the Board, be designated Executive Vice President, First Vice President, Second Vice President, etc., according to seniority or rank, and any person may hold two or more offices, except that the President shall not also serve as the Secretary. 11 Section 2. Removal, Vacancies. Any officers of the corporation may be removed from office at any time by the Board of Directors, with or without cause. Any vacancy occurring in any office of the corporation may be filled by the Board of Directors. Section 3. Chairman of the Board. The Chairman of the Board of Directors, when and if elected, shall, whenever present, preside at all meetings of the Board of Directors and at all meetings of the shareholders. The Chairman of the Board of Directors shall have all the powers of the President in the event of his absence or inability to act, or in the event of a vacancy in the office of the President. The Chairman of the Board of Directors shall confer with the President on matters of general policy affecting the business of the corporation and shall have, in his discretion, power and authority to generally supervise all the affairs of the corporation and the acts and conduct of all the officers of the corporation, and shall have such other duties as may be conferred upon the Chairman of the Board by the Board of Directors. Section 4. President. If there be no Chairman of the Board or Vice Chairman of the Board elected, or in their absence, the President shall preside at all meetings of the Board of Directors and at all meetings of the shareholders. The immediate supervision of the affairs of the corporation shall be vested in the President. It shall be his duty to attend constantly to the business of the corporation and maintain strict supervision over all of its affairs and interests. He shall keep the Board of Directors fully advised of the affairs and condition of the corporation, and shall manage and operate the business of the corporation pursuant to such policies as may be prescribed from time to time by the Board of Directors. The President shall, subject to approval of the Board, hire and fix the compensation of all employees and agents of the corporation, other than officers, and any person thus hired shall be removable at his pleasure. Section 5. Vice President. Any Vice President of the corporation may be designated by the Board of Directors to act for and in the place of the President in the event of sickness, disability or absence of said President or the failure of said President to act for any reason, and when so designated, such Vice President shall exercise all the powers of the President in accordance with such designation. The Vice Presidents shall have such duties as may be required of, or assigned to, them by the Board of Directors, the Chairman of the Board or the President. Section 6. Secretary. It shall be the duty of the Secretary to keep a record of the proceedings of all meetings of the shareholders and Board of Directors; to keep the stock records of the corporation; to notify the shareholders and Directors of meetings as provided by these bylaws; and to perform such other duties as may be prescribed by the Chairman of the Board, President or Board of Directors. Any Assistant Secretary, if elected, shall perform the duties of the Secretary during the absence or disability of the Secretary and shall perform such other duties as may be prescribed by the Chairman of the Board, 12 President, Secretary or Board of Directors. Section 7. Treasurer. The Treasurer shall keep, or cause to be kept, the financial books and records of the corporation, and shall faithfully account for its funds. He shall make such reports as may be necessary to keep the Chairman of the Board, the President and Board of Directors fully informed at all times as to the financial condition of the corporation, and shall perform such other duties as may be prescribed by the Chairman of the Board, President or Board of Directors. Any Assistant Treasurer, if elected, shall perform the duties of the Treasurer during the absence or disability of the Treasurer, and shall perform such other duties as may be prescribed by the Chairman of the Board, President, Treasurer or Board of Directors. ARTICLE V. CONTRACTS, ETC. Section 1. Contracts, Deeds and Loans. All contracts, deeds, mortgages, pledges, promissory notes, transfers and other written instruments binding upon the corporation shall be executed on behalf of the corporation by the Chairman of the Board, if elected, the President, or by such other officers or agents as the Board of Directors may designate from time to time. Any such instrument required to be given under the seal of the corporation may be attested by the Secretary or Assistant Secretary of the corporation. Section 2. Proxies. The Chairman of the Board, any Vice Chairman of the Board, the President, any Executive Vice President, Secretary or Treasurer of the corporation shall have full power and authority, on behalf of the corporation, to attend and to act and to vote at any meetings of the shareholders, bond holders or other security holders of any corporation, trust or association in which the corporation may hold securities, and at and in connection with any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such securities and which as owner thereof the corporation might have possessed and exercised if present, including the power to execute proxies and written waivers and consents in relation thereto. In the case of conflicting representation at any such meeting, the corporation shall be represented by its highest ranking officer, in the order first above stated. Notwithstanding the foregoing, the Board of Directors may, by resolution, from time to time, confer like powers upon any other person or persons. ARTICLE VI. CHECKS AND DRAFTS Checks and drafts of the corporation shall be signed by such officer or officers or such other employees or persons as the Board of Directors may from time to time designate. 13 ARTICLE VII. STOCK Section 1. Certificates of Stock. The certificates for shares of capital stock of the corporation shall be in such form as shall be determined by the Board of Directors. They shall be numbered consecutively and entered into the stock book of the corporation as they are issued. Each certificate shall state on its face the fact that the corporation is a Georgia corporation, the name of the person to whom the shares are issued, the number and class of shares (and series, if any) represented by the certificate and their par value, or a statement that they are without par value. In addition, when and if more than one class of shares shall be outstanding, all share certificates of whatever class shall state that the corporation will furnish to any shareholder upon request and without charge a full statement of the designations, relative rights, preferences and limitations of the shares of each class authorized to be issued by the corporation. Section 2. Signature; Transfer Agent; Registrar. Share certificates shall be signed by the President or Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation, and shall bear the seal of the corporation or a facsimile thereof. The Board of Directors may from time to time appoint transfer agents and registrars for the shares of capital stock of the corporation or any class thereof, and when any share certificate is countersigned by a transfer agent or registered by a registrar, the signature of any officer of the corporation appearing thereon may be a facsimile signature. In case any officer who signed, or whose facsimile signature was placed upon, any such certificate shall have died or ceased to be such officer before such certificate is issued, it may nevertheless be issued with the same effect as if he continued to be such officer on the date of issue. Section 3. Stock Book. The corporation shall keep at its principal office, or at the office of its transfer agent, wherever located, with a copy at the principal office of the corporation, a book, to be known as the stock book of the corporation, containing in alphabetical order the name of each shareholder of record, together with his address, the number of shares of each kind, class or series of stock held by him and his social security number. The stock book shall be maintained in current condition. The stock book, including the share register, or the duplicate copy thereof maintained at the principal office of the corporation, shall be available for inspection by any shareholder at any meeting of the shareholders upon request and shall also be made available for inspection and copying upon the request of any shareholder owning in excess of 2% of the corporation's common stock, which request must be made in accordance with the provisions of ss. 14-2- 1602 of the Official Code of Georgia Annotated, as amended. The information contained in the stock book and share register may be stored on punch cards, magnetic tape, or any other approved information storage devices related to electronic data processing equipment, provided that any such method, device, or system employed shall first be approved by the Board of Directors, and provided further that the same is capable of 14 reproducing all information contained therein, in legible and understandable form, for inspection by shareholders or for any other proper corporate purpose. Section 4. Transfer of Stock; Registration of Transfer. The stock of the corporation shall be transferred only by surrender of the certificate and transfer upon the stock book of the corporation. Upon surrender to the corporation, or to any transfer agent or registrar for the class of shares represented by the certificate surrendered, of a certificate properly endorsed for transfer, accompanied by such assurances as the corporation, or such transfer agent or registrar, may require as to the genuineness and effectiveness of each necessary endorsement and satisfactory evidence of compliance with all applicable laws relating to securities transfers and the collection of taxes, it shall be the duty of the corporation, or such transfer agent or registrar, to issue a new certificate, cancel the old certificate and record the transactions upon the stock book of the corporation. Section 5. Registered Shareholders. Except as otherwise required by law, the corporation shall be entitled to treat the person registered on its stock book as the owner of the shares of the capital stock of the corporation as the person exclusively entitled to receive notification, dividends or other distributions, to vote and to otherwise exercise all the rights and powers of ownership and shall not be bound to recognize any adverse claim. Section 6. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action affecting the interests of shareholders, the Board of Directors may fix, in advance, a record date. Such date shall not be more than fifty (50) nor less than ten (10) days before the date of any such meeting nor more than fifty (50) days prior to any other action. In each case, except as otherwise provided by law, only such persons as shall be shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting and any adjournment thereof, to express such consent or dissent, or to receive payment of such dividend or such allotment of rights, or otherwise be recognized as shareholders for any other related purpose, notwithstanding any registration of a transfer of shares on the stock book of the corporation after any such record date so fixed. Section 7. Lost Certificates. When a person to whom a certificate of stock has been issued alleges it to have been lost, destroyed or wrongfully taken, and if the corporation, transfer agent or registrar is not on notice that such certificate has been acquired by a bona fide purchaser, a new certificate may be issued upon such owner's compliance with all of the following conditions, to-wit: (a) He shall file with the Secretary of the corporation, and the transfer agent or the registrar, his request for the issuance of a new certificate, with an affidavit setting forth the time, place and circumstances of the loss; (b) He shall also file with the Secretary, and the transfer agent or the registrar, a bond with good and 15 sufficient security acceptable to the corporation and the transfer agent or the registrar, or other agreement of indemnity acceptable to the corporation and the transfer agent or the registrar, conditioned to indemnify and save harmless the corporation and the transfer agent or the registrar from any and all damage, liability and expense of every nature whatsoever resulting from the corporation's or the transfer agent's or the registrar's issuing a new certificate in place of the one alleged to have been lost; and (c) He shall comply with such other reasonable requirements as the Chairman of the Board, the President or the Board of Directors of the corporation, and the transfer agent or the registrar shall deem appropriate under the circumstances. Section 8. Replacement of Mutilated Certificates. A new certificate may be issued in lieu of any certificate previously issued that may be defaced or mutilated upon surrender for cancellation of a part of the old certificate sufficient in the opinion of the Secretary and the transfer agent or the registrar to duly identify the defaced or mutilated certificate and to protect the corporation and the transfer agent or the registrar against loss or liability. Where sufficient identification is lacking, a new certificate may be issued upon compliance with the conditions set forth in Section 7 of this Article VII. ARTICLE VIII. INDEMNIFICATION AND REIMBURSEMENT Subject to any express limitations imposed by applicable law, every person now or hereafter serving as a director, officer, employee or agent of the corporation and all former directors and officers, employees or agents shall be indemnified and held harmless by the corporation from and against the obligation to pay a judgement, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), and reasonable expenses (including attorneys' fees and disbursements) that may be imposed upon or incurred by him or her in connection with or resulting from any threatened, pending, or completed, action, suit, or proceeding, whether civil, criminal, administrative, investigative, formal or informal, in which he or she is, or is threatened to be made, a named defendant or respondent: (a) because he or she is or was a director, officer, employee, or agent of the corporation; (b) because he or she is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; or (c) because he or she is or was serving as an employee of the corporation who was employed to render professional services as a lawyer or an accountant to the corporation; regardless of whether such person is acting in such a capacity at the time such obligation shall have been imposed or incurred, if (i) such person acted in a manner he or she believed in good faith to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceeding, if such person had no reasonable cause to believe his or her conduct was unlawful or (ii), with respect to an employee benefit plan, such person believed in good faith that his or her conduct was in the interests of the participants in and beneficiaries of the plan. Reasonable expenses incurred in any proceeding shall be paid by the corporation 16 in advance of the final disposition of such proceeding if authorized by the Board of Directors in the specific case, or if authorized in accordance with procedures adopted by the Board of Directors, upon receipt of a written undertaking executed personally by or on behalf of the director, officer, employee, or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation, and a written affirmation of his or her good faith belief that he or she has met the standard of conduct required for indemnification. The foregoing rights of indemnification and advancement of expenses shall not be deemed exclusive of any other right to which those indemnified may be entitled, and the corporation may provide additional indemnity and rights to its directors, officers, employees or agents to the extent they are consistent with law. The provisions of this Article VIII shall cover proceedings whether now pending or hereafter commenced and shall be retroactive to cover acts or omissions or alleged acts or omissions which heretofore have taken place. In the event of death of any person having a right of indemnification or advancement of expenses under the provisions of this Article VIII, such right shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. If any part of this Article VIII should be found to be invalid or ineffective in any proceeding, the validity and effect of the remaining provisions shall not be affected. ARTICLE IX. MERGERS, CONSOLIDATIONS AND OTHER DISPOSITIONS OF ASSETS The affirmative vote of the shareholders of the corporation representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation shall be required to approve any merger or consolidation of the corporation with or into any corporation, and the sale, lease, exchange or other disposition of all, or substantially all, of the assets of the corporation to or with any other corporation, person or entity, with respect to which the approval of the corporation's shareholders is required by the provisions of the corporate laws of the State of Georgia. This Article shall not be altered, deleted or rescinded except upon the affirmative vote of the shareholders representing at least 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation. ARTICLE X. CRITERIA FOR CONSIDERATION OF TENDER OR OTHER OFFERS Section 1. Factors to Consider. The Board of Directors of the corporation may, if it deems it advisable, oppose a tender or other offer for the corporation's securities, whether the offer is in 17 cash or in the securities of a corporation or otherwise. When considering whether to oppose an offer, the Board of Directors may, but is not legally obligated to, consider any pertinent issues; by way of illustration, but not of limitation, the Board of Directors may, but shall not be legally obligated to, consider any or all of the following: (i) whether the offer price is acceptable based on the historical and present operating results or financial condition of the corporation; (ii) whether a more favorable price could be obtained for the corporation's securities in the future; (iii) the impact which an acquisition of the corporation would have on the employees, depositors and customers of the corporation and its subsidiaries and the communities which they serve; (iv) the reputation and business practices of the offeror and its management and affiliates as they would affect the employees, depositors and customers of the corporation and its subsidiaries and the future value of the corporation's stock; (v) the value of the securities, if any, that the offeror is offering in exchange for the corporation's securities, based on an analysis of the worth of the corporation as compared to the offeror or any other entity whose securities are being offered; and (vi) any antitrust or other legal or regulatory issues that are raised by the offer. Section 2. Appropriate Actions. If the Board of Directors determines that an offer should be rejected, it may take any lawful action to accomplish its purpose including, but not limited to, any or all of the following: (i) advising shareholders not to accept the offer; (ii) litigation against the offeror; (iii) filing complaints with governmental and regulatory authorities; (iv) acquiring the corporation's securities; (v) selling or otherwise issuing authorized but unissued securities of the corporation or treasury stock or granting options or rights with respect thereto; (vi) acquiring a company to create an antitrust or other regulatory problem for the offeror; and (vii) soliciting a more favorable offer from another individual or entity. ARTICLE XI. AMENDMENT Except as otherwise specifically provided herein, the bylaws of the corporation may be altered, amended or added to by the affirmative vote of the shareholders of the corporation representing 66 2/3% of the votes entitled to be cast by the holders of all of the issued and outstanding shares of common stock of the corporation present and voting therefor at a shareholders' meeting or, subject to such limitations as the 18 shareholders may from time to time prescribe, by a majority vote of all the Directors then holding office at any meeting of the Board of Directors. files\bylaws.snv 19 EX-10.17 3 EMPLOYMENT AGREEMENT, AS AMENDED THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into by and among Synovus Financial Corp., a Georgia business corporation ("Synovus"), and National Bank of South Carolina, a national banking association ("Bank"), Synovus and Bank being sometimes hereinafter collectively referred to as "Employer", and Robert V. Royall, Jr., an individual resident of South Carolina ("Employee"), Employer and Employee being sometimes hereinafter collectively referred to as the "Parties", pursuant to the terms of an Agreement and Plan of Merger by and between Synovus and NBSC Corporation ("Merger Agreement") and is intended to amend and restate in its entirety that certain Employment Agreement dated February 25, 1991, as amended on February 17, 1994, by and among Bank, NBSC Corporation and Employee. W I T N E S S E T H T H A T: The Parties, for and in consideration of the mutual and reciprocal covenants and agreements hereinafter contained, and other good and valuable consideration, the receipt of which is acknowledged, and intending to be legally bound, do contract and agree as follows, to-wit: I. Employment The purpose of this Agreement is to define the relationship between Employer, as an employer, and Employee, as an employee. Employer hereby employs Employee and agrees to cause Employee to be elected as Chairman of the Board and Chief Executive Officer of Bank and to use its best efforts to cause Employee to be elected as a member of the Board of Directors of Synovus, and Employee hereby accepts employment by Employer in the above-referenced capacities, upon all of the terms and conditions as hereinafter set forth. II. Duties Employee shall have the responsibilities, powers and duties which he exercised prior to the acquisition of Bank by Synovus and which are customarily associated with the office specified in Article I above. Employee agrees to perform such other duties as may be mutually agreed from time to time by him, on the one hand, and by the Boards of Directors of Synovus or the Bank, on the other. Employee shall faithfully and diligently discharge his duties and responsibilities under this Agreement, and shall, subject to the provisions of Article XV hereof, use his full-time best efforts to discharge such duties and responsibilities. 1 III. Term The term of Employee's employment under this Agreement shall begin on the date the merger contemplated by the Merger Agreement is consummated ("Effective Date of this Agreement") and shall end on the fifth anniversary date hereof ("Agreement Termination Date"), unless otherwise terminated pursuant to the terms of this Agreement; provided, however, the term of this Agreement may be extended pursuant to the terms and conditions of a written amendment to this Agreement executed by Employer and Employee according to the procedure set forth in Article XVI hereof. IV. Base Salary In consideration of all services to be rendered by Employee in any capacity hereunder for Employer during the term of this Agreement, and in consideration of the covenants and agreements of Employee herein contained, Employer shall pay Employee a base salary of $268,000 per calendar year while Employee is employed on a full-time basis. Employee may thereafter receive an annual cost of living increase in the base salary payable to him during the term of his employment hereunder; provided, however, that Employee shall be entitled to an annual cost of living increase in base salary if other senior executive officers of Synovus receive such an increase. V. Adjustments to Base Salary In addition to the annual cost of living increase in Employee's base salary referenced in Article IV above, Employer and Employee may, from time to time, reflect increases in Employee's base salary as may be mutually agreed upon by entering any such change upon the "Schedule of Compensation," attached hereto as Exhibit "A" and made a part hereof. If a change in the base salary of Employee is entered on said Schedule and duly signed by Employee and the proper officers of Employer, such entry shall constitute an amendment to this Agreement as of the date of said entry and shall supersede the base salary provided for in Article IV of this Agreement and any other change in such base salary previously entered on said Schedule. VI. Executive Compensation Plans Employee shall be eligible to participate in the various executive benefit plans as are made available to other senior executives of Synovus including, but not limited to, incentive cash bonuses, stock options and restricted stock awards. 2 VII. Benefit and Retirement Plans Employee shall be entitled to participate in the various welfare and fringe benefit plans and the tax qualified retirement plans which may be authorized and adopted from time to time by the Board of Directors of Bank, with Employee's participation in such plans to be governed and controlled by the terms and provisions of such plans. VIII. Board of Directors Employer shall cause Employee, during the term of this Agreement, to be elected as Chairman of the Board of Bank and use its best efforts to cause Employee to be elected as a director of Synovus, and Employee shall be entitled to receive, in addition to the base salary described in Article IV above, the usual director and/or committee fees associated therewith. IX. Club Dues During the term of this Agreement, Employer will pay (i) Employee's reasonable expenses for dues and capital assessments for country club memberships and if Employee is not already a member of such clubs, any initiation fees and required bond purchases; provided, that if Employee ceases to be a member of such clubs and any bonds or other capital payments paid by Employer are redeemed and repaid to Employee, Employee shall pay over such payments to Employer, and (ii) such reasonable civic and community club dues requested by Employee upon the approval of such dues by the Board of Directors of Bank. Any expenditures made in the use of such clubs in connection with Employee's duties will be reimbursed in accordance with the last sentence of Article XI of this Agreement. X. Stock Purchase Plans Employee shall be allowed to participate in the Synovus Financial Corp. Employee and Director Stock Purchase Plans if adopted by the Board of Directors of Bank, and such participation shall be effective upon the effective date of their adoption by the Board of Directors of Bank. XI. Automobile and Other Expenses During the term of this Agreement, Employer shall provide Employee with an automobile owned or leased by Employer, such automobile to be a make and model appropriate to Employee's status (and at least commensurate with the automobile provided to Employee by the Bank immediately preceding the consummation of the merger contemplated by the Merger Agreement) and shall pay all reasonable expenses associated with the use thereof, including, but not limited to, maintenance and insurance. Alternatively, 3 Employee shall be entitled to an automobile allowance of at least $4,000.00 per year. Additionally, Employee shall be reimbursed by Employer for reasonable travel and other reasonable expenses relating to Employee's duties, which expenses are incurred and accounted for in accordance with Employer's normal practices. XII. Termination and Change In Control A. Termination by Employer and Termination by Employee for Good Reason; Other Rights Upon Change in Control. (1) This Agreement may be terminated by Employee for Good Reason upon delivery of a Notice of Termination to Employer at any time beginning 60 days after the occurrence of a Change in Control. If Employee's employment shall be terminated by Employer in violation of this Agreement or if Employee's employment shall be terminated by Employee for Good Reason, Employee shall be released from the terms of the Covenant Not to Compete contained in Section XIII hereof, and in addition to other rights and remedies available in law or equity, Employee shall be entitled to the following: (i) Employer shall pay Employee in cash within fifteen days of the Termination Date an amount equal to all Accrued Compensation and the Pro Rata Bonus; (ii) Employer shall pay to Employee in cash at the end of each of the thirty-six consecutive 30 day periods following the Termination Date the following amounts: (a) at the end of the first through twelfth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) one; (b) at the end of the thirteenth through twenty-fourth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) two-thirds; and (c) at the end of the twenty-fifth through the thirty-sixth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) one-third; and (iii) for the period from the Termination Date through the date that Employee attains the age of 65 (the "Continuation Period"), Employer shall at its expense, less standard employee contributions in effect as of the Termination Date for such benefits for which Employee shall remain 4 responsible, continue on behalf of Employee and his dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits provided (x) to Employee at any time during the 90-day period prior to the Change in Control or at any time thereafter or (y) to other similarly situated executives who continue in the employ of Bank during the Continuation Period. Notwithstanding the foregoing, the coverage and benefits (including deductibles and employee contributions to costs) provided in this Section XII(A)(1)(iii) during the Continuation Period shall be no less favorable to Employee and his dependents and beneficiaries than the most favorable of such coverages and benefits for employees of Bank during any of the periods referred to in clauses (x) and (y) above. Employer's obligation hereunder with respect to the foregoing benefits shall be limited to the extent that Employee obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case Employer may reduce the coverage of any benefits it is required to provide Employee hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to Employee than the coverages and benefits required to be provided hereunder. This subsection (iii) shall not be interpreted so as to limit any benefits to which Employee or his dependents or beneficiaries may be entitled under any of Bank's employee benefit plans, programs or practices following Employee's termination of employment, including without limitation, retiree medical and life insurance benefits. (2) In the event of a Change of Control (regardless of whether Employee's employment is terminated hereunder), the restrictions on any outstanding incentive awards (including restricted stock) granted to Employee shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to Employee shall become immediately exercisable and shall become 100% vested, and all performance units granted to Employee shall become 100% vested. (3) Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Employee in any subsequent employment except as provided in Section XII(A)(1)(iii). (4) The severance pay and benefits provided for in this Section XII(A) shall be in lieu of any other severance or termination pay to which Employee may be entitled under any Employer severance or termination plan, program, practice or arrangement. Employee's entitlement to any other compensation or benefits shall be determined in accordance with Employer's employee benefit plans and other applicable programs, policies and practices then in effect. B. Termination By Employee Other Than For Good Reason.If Employee voluntarily terminates his employment hereunder, other than for Good Reason, by 5 delivering a Notice of Termination to Employer, Employee shall: (i) receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus; (ii) immediately forfeit any rights to any compensation and employee benefits, to the extent not vested, including options and restricted stock, which would have become vested after the Termination Date; and (iii) continue to be subject to the Covenant Not to Compete contained in Section XIII hereof. C. Termination For Cause. Employee's employment with Employer may be terminated by Employer For Cause, as defined in Section XVI(d) hereof. In such event Employee shall: (i) receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation; (ii) immediately forfeit any rights to any further compensation and employee benefits, including the Pro Rata Bonus, to the extent not vested, including options and restricted stock, which would have become vested after the Termination Date; and (iii) continue to be subject to the Covenant Not to Compete contained in Section XIII hereof. D. Death or Permanent Disability of Employee. Upon Employee's death or upon notice of Employee's permanent disability during the term hereof, this Agreement shall terminate, and Employee or his legal or personal representative, as the case may be, shall receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus. No further compensation or employee benefits shall be due and payable to Employee under this Agreement, from and after said date; provided, however, Employee shall be entitled to receive life insurance and/or disability benefits and/or vested retirement or other benefits made available to him by Employer outside the terms of this Agreement, including the Stock Option Agreement to be entered into pursuant to Article XIV hereof. For purposes of this Agreement, Employee shall be deemed "permanently disabled" by bodily or mental illness, disease or injury, to the extent that, in the reasonable judgment of Employers' boards of directors he is prevented from performing the material and substantial duties of his Employment and such disability has continued substantially for six months. If requested by Employer, Employee shall submit to an examination by a physician mutually acceptable to Employer and Employee for the purpose of determining or confirming the existence or extent of any disability. XIII. Covenant Not to Compete and Confidentiality For and in consideration of: (i) Employers' employment of Employee pursuant to Article I of this Agreement; (ii) the acquisition of all of the shares of common stock of NBSC Corporation held by Employee by Synovus; (iii) Employers' entering into this Agreement; and (iv) the issuance under this Agreement of options to purchase shares of common stock of Synovus pursuant to the terms hereof, Employee hereby agrees to the following: A. Employee agrees that for the five-year period prior to the Agreement Termination Date, and for a period of 18 months subsequent to the Agreement Termination Date if Employee is employed by Employer on the Agreement Termination Date, and in no event for less than 18 months after any Termination Date, he will not form, organize or 6 acquire more than 5% of the capital stock of, or cause his affiliates or other persons or entities under his control to form, organize or acquire more than 5% of the capital stock of, or serve as an executive officer or director of a depository financial institution (i) which is not an affiliate of Synovus (including any holding company thereof) and (ii) which is located or has offices in the State of South Carolina. B.(1) Employee agrees that, both during the term of this Agreement and after the termination of this Agreement, Employee will hold in a fiduciary capacity for the benefit of Employer, and shall not directly or indirectly use or disclose, except as authorized by Employer in connection with the performance of Employee's duties, any Trade Secret, as defined hereinafter, that Employee may have or acquire during the term of this Agreement for so long as such information remains a Trade Secret. The term "Trade Secret" as used in this Agreement shall mean information including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, loan portfolios, marketing plans, product plans, or a list of actual or potential customers or suppliers, including without limitation, information received by Employer or Employee from any client or potential client of Employer, which: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of reasonable efforts by Employer or the client from which the information was received to maintain its secrecy. These rights of Employer are in addition to those rights Employer has under the common law or applicable statute for protection of trade secrets. (2) In addition to the foregoing and not in limitation thereof, Employee agrees that, during the term of this Agreement and for a term of two (2) years after any Termination Date, Employee will hold in a fiduciary capacity for the benefit of Employer and shall not directly or indirectly use or disclose, except as authorized by Employer in connection with the performance of Employee's duties, any confidential or proprietary information, as defined hereinafter, that Employee may have or acquire (whether or not developed or compiled by Employee and whether or not Employee has been authorized to have access to such confidential or proprietary information) during the term of this Agreement. The term "Confidential or Proprietary Information" as used in this Agreement means any secret, confidential or proprietary information of Employer, including information received by Employer or Employee from any client or potential client of Employer, not otherwise included in the definition of "Trade Secret" in Paragraph B.1 above. The term "Confidential or Proprietary Information" does not include information that has become generally available to the public by any means other than a violation of the restrictions contained in this paragraph. (3) Employee agrees and acknowledges that, if a violation of any covenant contained in this paragraph occurs or is threatened, such violation or threatened violation 7 will cause irreparable injury to Employer, that the remedy at law for any such violation or threatened violation will be inadequate and that Employer shall be entitled to appropriate equitable relief. (4) Employee hereby agrees that the restrictions contained in this paragraph are fair and reasonable and necessary for the protection of the legitimate business interest of Employer. XIV. Stock Options In consideration of Employee's entering into this Agreement, Synovus hereby agrees to cause to be granted Employee an option to purchase 20,000 shares of common stock of Synovus at an exercise price of $19.75 per share on the Effective Date of this Agreement, pursuant to the terms of the Synovus Financial Corp. 1994 Long-Term Incentive Plan, to become exercisable as to one hundred percent (100%) of such shares on the fifth anniversary date of the date of Synovus' grant of such shares if Employee is employed on a full-time or limited basis on such date. The option may be exercised at any time during the five year period following the date that such option first becomes exercisable. In the event of Employee's termination of employment by death (other than by suicide) or termination of employment by reason of permanent disability, the option shall thereafter become immediately exercisable. In addition, Employee shall be entitled to exercise his options with respect to NBSC stock for which provision is made in Section 1(d) of his Employment Agreement with NBSC as amended prior to this amendment and restatement and to receive the additional payments for which provision is made therein. XV. Change in Status Notwithstanding any other provision of this Agreement, Employee shall determine the date upon which Employee shall begin to discharge his duties and responsibilities under this Agreement on a limited basis and on such date Employee's title with Employer shall change and Employee will be entitled to receive one-half of the current base salary which Employee was then receiving pursuant to Article IV above. XVI. Amendments This Agreement may be amended at any time and from time to time by an agreement in writing signed by Employer and Employee and approved by the Boards of Directors of Employer. The Parties shall be deemed to have consented to any amendment by accepting any benefits thereunder after having received from the other Party written notice of such amendment. 8 XVII. Definitions For purposes of this Agreement, the following terms shall have the following meanings: (a) "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the Termination Date but not paid as of the Termination Date including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by Employee on behalf of Employer during the period ending on the Termination Date, and (iii) bonuses and incentive compensation (other than the Pro Rata Bonus), less applicable withholdings of federal, state and local taxes. (b) "Base Amount" shall mean the greater of Employee's annual base salary (i) at the rate in effect on the Termination Date or (ii) at the highest rate in effect at any time during the 90 day period prior to the Change in Control, and shall include all amounts of his base salary that are deferred under the qualified and non-qualified employee benefit plans of Employer or any other agreement or arrangement. (c) "Bonus Amount" shall mean the greater of (i) the most recent annual cash bonus paid or payable to Employee or, if greater, the annual bonus paid or payable for the most recent full fiscal year ended prior to the fiscal year during which a Change in Control occurred or (ii) the average of the annual cash bonuses paid or payable during the three full fiscal years ended prior to the Termination Date or, if greater, the three most recent full fiscal years ended prior to the Change in Control (or, in each case, such lesser period for which annual cash bonuses were paid or payable to Employee. (d) The termination of Employee's employment shall be "For Cause" if it is a result of: (i) any act that (A) constitutes, on the part of Employee, fraud, dishonesty, gross malfeasance of duty, or conduct grossly inappropriate to Employee's office, and (B) is demonstrably likely to lead to material injury to Employer or resulted or was intended to result in direct or indirect gain to or personal enrichment of Employee; or (ii) the conviction (from which no appeal may be or is timely taken) of Employee of a felony; or (iii) the suspension or removal of Employee by federal or state banking regulatory authorities acting under lawful authority pursuant to provisions of federal or state law or regulation which may be in effect from time to time; or (iv) the breach of the covenants in Section XIII hereof; 9 provided, however, that in the case of clause (i) above, such conduct shall not constitute Cause unless (A) there shall have been delivered to Employee a written notice setting forth with specificity the reasons that the Boards of Employer believe Employee's conduct constitutes the criteria set forth in clause (i), (B) Employee shall have been provided the opportunity to be heard in person by the Boards of Employer (with the assistance of Employee's counsel if Employee so desires), and (C) after such hearing, the termination is evidenced by a resolution adopted in good faith by two-thirds of all the members of each of the Boards of Directors of Synovus and Bank not counting Employee for purposes of determining the number of members on each such Board. (e) A "Change in Control" shall mean the occurrence during the term of this Agreement of any of the following events; provided, however, that Employee hereby agrees that the acquisition of NBSC Corporation by Synovus shall not be deemed to be a change in control for purposes of this Agreement other than Section XII of this Agreement and the definition of Good Reason in which case such acquisition shall be deemed a "Change in Control": (i) An acquisition (other than directly from Employer) of any voting securities of Employer (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of the combined voting power of Employer's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) Employer or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by Employer (a "Subsidiary"), (2) Employer or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); (ii) The individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board") cease for any reason, other than death, resignation or retirement pursuant to the bylaws of Employer, to constitute at least two-thirds of the Board; provided, however, that if the election or nomination for election by the Corporation's shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 10 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (iii) Approval by shareholders of Employer of: (a) A merger, consolidation or reorganization involving Employer, unless (1) the shareholders of Employer, immediately before such merger, consolidation or reorganization, own directly or indirectly, immediately following such merger, consolidation or reorganization, at least two-thirds of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, and (2) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation. (A transaction described in clauses (1) and (2) shall herein be referred to as a "Non-Control Transaction.") (b) A complete liquidation or dissolution of Employer; or (c) An agreement for the sale or other disposition of all or substantially all of the assets of Employer to any Person (other than a transfer to a subsidiary). (iv) Notwithstanding anything contained in this Agreement to the contrary, if Employee's employment is terminated prior to a Change in Control and Employee reasonably demonstrates that such termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (B) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to Employee shall mean the date immediately prior to the date of such termination of Employee's employment. (f) "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in subsections (i) through (viii) hereof: 11 (i) a change in Employee's status, title, position or responsibilities (including reporting responsibilities) which, in Employee's reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a Change in Control or at any time thereafter; the assignment to Employee of any duties or responsibilities which, in Employee's reasonable judgment, are inconsistent with his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a Change in Control or at any time thereafter; any removal of Employee from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment by Employer For Cause or by Employee other than for Good Reason; or any other change in condition or circumstances that in Employee's reasonable judgment makes it materially more difficult for Employee to carry out the duties and responsibilities of his office than was the case at any time within ninety days preceding the date of Change in Control or at any time thereafter; (ii) a reduction in Employee's base salary or any failure to pay Employee any compensation or benefits to which he is entitled within five days of the date due; (iii) Employer's requiring Employee to be based at any place outside a 50- mile radius from the executive offices occupied by Employee immediately prior to the Change in Control, except for reasonably required travel on Employer's business which is not materially greater than such travel requirements prior to the Change in Control; (iv) the failure by Employer to (A) continue in effect (without reduction in benefit level and/or reward opportunities) any material compensation or employee benefit plan in which Employee was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to Employee or (B) provide Employee with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which Employee was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter; (v) the insolvency or the filing (by any party, including Employer) of a petition for bankruptcy of Employer, which petition is not dismissed within sixty days; (vi) any material breach by Employer of any provision of this Agreement; (vii) any purported termination of Employee's employment For Cause by Employer which does not comply with the terms of this Agreement; or 12 (viii) the failure of Employer to obtain an agreement, satisfactory to Employer, from any successors and assigns to assume and agree to perform this Agreement, as contemplated in Section XVIII hereof. Any event or condition described in clause (i) through (viii) above which occurs prior to a Change in Control but which Employee reasonably demonstrates (A) was at the request of a Third Party, or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this Agreement, notwithstanding that it occurred prior to the change in Control. Employee's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. Notwithstanding anything to the contrary contained above in this paragraph (f), changes agreed to by Employee in this Agreement, or otherwise agreed to between Employer and Employee, from the facts and circumstances in existence prior to the consummation of the merger contemplated by the Merger Agreement in respect of clauses (i) or (iv) above shall not constitute "Good Reason." (g) "Notice of Termination" shall mean a written notice of termination from Employer or Employee which specifies an effective date of termination, indicates the specific termination provision in this Agreement relied upon, and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (h) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which is 365, less applicable withholdings of federal, state and local taxes. (i) "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of Employer (including this Agreement), whether by operation of law or otherwise. (j) "Termination Date" shall mean in the case of Employee's death, his date of death, or in the case of permanent disability, the date described in Section XII(E) hereof, and in all other cases, the date specified in the Notice of Termination. XVIII. Parties Bound This Agreement shall be binding upon and shall inure to the benefit of Employer, its Successors and Assigns, and Employer shall require any Successors and Assigns to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform it if no such succession or assignment had taken place. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Employee, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be 13 enforceable by Employee's legal personal representative against Employer, its Successors and Assigns. IX. Entire Agreement This Agreement contains the entire agreement of the Parties and shall supersede all prior oral understandings related to the subject matter of this Agreement. XX. Waiver of Breach or Violations Not Deemed Continuing The waiver by any Party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof. XXI. Notices Any and all notices required or permitted to be given under this Agreement will be sufficient if furnished in writing and sent by registered or certified mail or personally delivered to Employer or Employee at the following addresses or such other addresses designated in writing by Employer or Employee in a written notice to the other Party: A. If to Employer: Mr. James H. Blanchard Chairman and CEO Synovus Financial Corp. 901 Front Avenue, Suite 301 Columbus, Georgia 31901 B. If to Employee: Mr. Robert V. Royall, Jr. National Bank of South Carolina 1241 Main Street Columbia, South Carolina 29201 XXII. Governing Law This Agreement shall be interpreted, construed and governed according to the laws of the State of Georgia. XXIII. Paragraph Headings Paragraph headings contained in this Agreement are for convenience only and shall in no manner be construed as part of this Agreement. 14 XXIV. Counterparts This Agreement is executed in multiple counterparts, each of which shall be deemed an original and together shall constitute one and the same agreement, with at least one complete counterpart being delivered to Employee and to Employer. XXV. Invalidity of Provisions Should any part of this Agreement for any reason be declared by a court of competent jurisdiction to be invalid, such decision shall not effect the validity of any remaining parts, which remaining parts shall continue in full force and effect as if this Agreement had been executed with the invalid part or parts thereof eliminated, it being the intent of the Parties that they would have executed the remaining parts of the Agreement without including any such part or parts which may for any reason be hereinafter declared invalid. XXVI. Construction When used herein, the masculine gender shall be used to include the feminine gender, and the singular shall be deemed to include the plural, unless the context clearly indicates to the contrary. 15 IN WITNESS WHEREOF, Synovus and the Bank have each hereunto caused its corporate name to be signed and its corporate seal to be affixed by its duly authorized corporate officers, and Employee has hereunto set his hand and seal, all being done in triplicate originals, with one original being delivered to each Party hereto, all as of the respective dates set forth below. Synovus Financial Corp. By:/s/Stephen L. Burts Title: President & CFO Attest: G.S. Griffith, III Title: Secretary (Corporate Seal) November 18, 1994 Date "Synovus" National Bank of South Carolina By:/s/Charl Butler Title: EVP, CFO & Secretary Attest:Miriam M. Hutto Title:Assistant Vice President November 18, 1994 (Corporate Seal) Date "Bank" November 18, 1994 /s/Robert V. Royall, Jr.(L.S.) Date Robert V. Royall, Jr. "Employee" emp\Royall.agr 16 EXHIBIT "A" SCHEDULE OF COMPENSATION The undersigned hereby agree that Employee's base salary under Article IV of the foregoing Employment Agreement shall be $__________ per calendar year beginning_______________________, 19____ and for such period thereafter until hereafter changed by mutual agreement. This _____________________day of_______________________, 19________. NATIONAL BANK OF SOUTH CAROLINA SYNOVUS FINANCIAL CORP. By:______________________________________ By:____________________________ Title:__________________________ Tile:_____________________ Attest:__________________________________ Attest:_______________________ Title:__________________________ Title:__________________ (Corporate Seal) (Corporate Seal) "Bank" "Synovus" ____________________________(L.S.) Robert V. Royall, Jr. "Employee" emp\Royall.agr EMPLOYMENT AGREEMENT, AS AMENDED THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into by and among Synovus Financial Corp., a Georgia business corporation ("Synovus"), and National Bank of South Carolina, a national banking association ("Bank"), Synovus and Bank being sometimes hereinafter collectively referred to as "Employer", and William L. Pherigo, an individual resident of South Carolina ("Employee"), Employer and Employee being sometimes hereinafter collectively referred to as the "Parties" and is intended to amend and restate in its entirety that certain Employment Agreement dated February 25, 1991, as amended on February 17, 1994, by and among Bank, NBSC Corporation and Employee. W I T N E S S E T H T H A T: The Parties, for and in consideration of the mutual and reciprocal covenants and agreements hereinafter contained, and other good and valuable consideration, the receipt of which is acknowledged, and intending to be legally bound, do contract and agree as follows, to-wit: I. Employment The purpose of this Agreement is to define the relationship between Employer, as an employer, and Employee, as an employee. Employer hereby employs Employee and agrees to cause Employee to be elected as President and Chief Operating Officer of Bank until January 1, 1996, at which time Employee shall be elected as President and Chief Executive Officer of Bank. In addition, Employer agrees to cause Employee to be elected as a director of Bank, designated as a member of Synovus' Executive Management Team and to use its best efforts to cause Employee to be elected as a member of the Board of Directors of Synovus, and Employee hereby accepts employment by Employer in the above-referenced capacities, upon all of the terms and conditions as hereinafter set forth. II. Duties Employee shall have the responsibilities, powers and duties which he exercised prior to the acquisition of Bank by Synovus and which are customarily associated with the offices specified in Article I above, including the responsibilities, powers and duties associated with the office of Chief Executive Officer commencing January 1, 1996. Employee agrees to perform such other duties as may be mutually agreed from time to time by him, on the one hand, and by the Boards of Directors of Synovus or the Bank, on the other. Employee shall faithfully and diligently discharge his duties and responsibilities under this Agreement, and shall use his full-time best efforts to discharge such duties and responsibilities. III. Term The term of Employee's employment under this Agreement shall begin on September 11, 1995 ("Effective Date of this Agreement") and shall end on December 31, 1997 ("Agreement 1 Termination Date"), unless otherwise terminated pursuant to the terms of this Agreement; provided, however, the term of this Agreement may be extended pursuant to the terms and conditions of a written amendment to this Agreement executed by Employer and Employee according to the procedure set forth in Article XVI hereof, in which event the Agreement Termination Date shall be the last day of such extended term of this Agreement. IV. Base Salary In consideration of all services to be rendered by Employee in any capacity hereunder for Employer during the term of this Agreement, and in consideration of the covenants and agreements of Employee herein contained, Employer shall pay Employee a base salary of $230,000 per calendar year while Employee is employed on a full-time basis. Employee may thereafter receive an annual cost of living increase in the base salary payable to him during the term of his employment hereunder; provided, however, that Employee shall be entitled to an annual cost of living increase in base salary if other senior executive officers of Synovus receive such an increase. V. Adjustments to Base Salary In addition to the annual cost of living increase in Employee's base salary referenced in Article IV above, Employer and Employee may, from time to time, reflect increases in Employee's base salary as may be mutually agreed upon by entering any such change upon the "Schedule of Compensation," attached hereto as Exhibit "A" and made a part hereof. If a change in the base salary of Employee is entered on said Schedule and duly signed by Employee and the proper officers of Employer, such entry shall constitute an amendment to this Agreement as of the date of said entry and shall supersede the base salary provided for in Article IV of this Agreement and any other change in such base salary previously entered on said Schedule. VI. Executive Compensation Plans Employee shall be eligible to participate in the various executive benefit plans as are made available to other senior executives of Synovus including, but not limited to, incentive cash bonuses, stock options and restricted stock awards. VII. Benefit and Retirement Plans Employee shall be entitled to participate in the various welfare and fringe benefit plans and the tax qualified retirement plans which may be authorized and adopted from time to time by the Board of Directors of Bank, with Employee's participation in such plans to be governed and controlled by the terms and provisions of such plans. 2 VIII. Board of Directors Employer shall cause Employee, during the term of this Agreement, to be elected as President and Chief Operating Officer (with Employee to be elected as Chief Executive Officer of Bank effective January 1, 1996) and a director of Bank and use its best efforts to cause Employee to be elected as a director of Synovus, and Employee shall be entitled to receive, in addition to the base salary described in Article IV above, the usual director and/or committee fees associated therewith. IX. Club Dues During the term of this Agreement, Employer will pay (i) Employee's reasonable expenses for dues and capital assessments for country club memberships and if Employee is not already a member of such clubs, any initiation fees and required bond purchases; provided, that if Employee ceases to be a member of such clubs and any bonds or other capital payments paid by Employer are redeemed and repaid to Employee, Employee shall pay over such payments to Employer; and (ii) such reasonable civic and community club dues requested by Employee upon the approval of such dues by the Board of Directors of Bank. Any expenditures made in the use of such clubs in connection with Employee's duties will be reimbursed in accordance with the last sentence of Article XI of this Agreement. X. Stock Purchase Plans Employee shall be allowed to participate in the Synovus Financial Corp. Employee and Director Stock Purchase Plans if adopted by the Board of Directors of Bank, and such participation shall be effective upon the effective date of their adoption by the Board of Directors of Bank. XI. Automobile and Other Expenses During the term of this Agreement, Employer shall provide Employee with an automobile owned or leased by Employer, such automobile to be a make and model appropriate to Employee's status (and at least commensurate with the automobile provided to Employee by the Bank on September 11, 1995) and shall pay all reasonable expenses associated with the use thereof, including, but not limited to, maintenance and insurance. Alternatively, Employee shall be entitled to an automobile allowance of at least $4,000.00 per year. Additionally, Employee shall be reimbursed by Employer for reasonable travel and other reasonable expenses relating to Employee's duties, which expenses are incurred and accounted for in accordance with Employer's normal practices. XII. Termination and Change In Control A. Termination by Employer and Termination by Employee for Good Reason; Other Rights Upon Change in Control. 3 (1) This Agreement may be terminated by Employee for Good Reason upon delivery of a Notice of Termination to Employer at any time beginning 60 days after the occurrence of a Change in Control. If Employee's employment shall be terminated by Employer in violation of this Agreement or if Employee's employment shall be terminated by Employee for Good Reason, Employee shall be released from the terms of the Covenant Not to Compete contained in Section XIII hereof, and in addition to other rights and remedies available in law or equity, Employee shall be entitled to the following: (i)Employer shall pay Employee in cash within fifteen days of the Termination Date an amount equal to all Accrued Compensation and the Pro Rata Bonus; (ii) Employer shall pay to Employee in cash at the end of each of the thirty-six consecutive 30 day periods following the Termination Date the following amounts: (a) at the end of the first through twelfth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) one; (b) at the end of the thirteenth through twenty-fourth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) two-thirds; and (c) at the end of the twenty-fifth through the thirty-sixth 30-day periods an amount equal to one-twelfth of the product of (1) the sum of the Base Amount and the Bonus Amount, multiplied by (2) one-third; and (iii) for the period from the Termination Date through the date that Employee attains the age of 65 (the "Continuation Period"), Employer shall at its expense, less standard employee contributions in effect as of the Termination Date for such benefits for which Employee shall remain responsible, continue on behalf of Employee and his dependents and beneficiaries the life insurance, disability, medical, dental and hospitalization benefits provided (x) to Employee at any time during the 90-day period prior to the Change in Control or at any time thereafter or (y) to other similarly situated executives who continue in the employ of Bank during the Continuation Period, or comparable benefits. Notwithstanding the foregoing, the coverage and benefits (including deductibles and employee contributions to costs) provided in this Section XII(A)(1)(iii) during the Continuation Period shall be no less favorable to Employee and his dependents and beneficiaries than the most favorable of such coverages and benefits for employees of Bank during any of the periods referred to in clauses (x) and (y) above. Employer's obligation hereunder with respect to the foregoing benefits shall be limited to the extent that Employee obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case Employer may reduce the coverage of any benefits it is required to provide Employee hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to Employee than the coverages and benefits required to be provided hereunder. This subsection (iii) shall not be interpreted so as to limit any benefits to which Employee or his dependents or beneficiaries may be entitled under any of 4 Bank's employee benefit plans, programs or practices following Employee's termination of employment, including without limitation, retiree medical and life insurance benefits. (2) In the event of a Change of Control (regardless of whether Employee's employment is terminated hereunder), the restrictions on any outstanding incentive awards (including restricted stock) granted to Employee shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to Employee shall become immediately exercisable and shall become 100% vested, and all performance units granted to Employee shall become 100% vested. (3) Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Employee in any subsequent employment except as provided in Section XII(A)(1)(iii). (4) The severance pay and benefits provided for in this Section XII(A) shall be in lieu of any other severance or termination pay to which Employee may be entitled under any Employer severance or termination plan, program, practice or arrangement. Employee's entitlement to any other compensation or benefits shall be determined in accordance with Employer's employee benefit plans and other applicable programs, policies and practices then in effect. B. Termination By Employee Other Than For Good Reason. If Employee voluntarily terminates his employment hereunder, other than for Good Reason, by delivering a Notice of Termination to Employer, Employee shall: (i) receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus; (ii) immediately forfeit any rights to any compensation and employee benefits, to the extent not vested, including options and restricted stock, which would have become vested after the Termination Date; and (iii) continue to be subject to the Covenant Not to Compete contained in Section XIII hereof. C. Termination For Cause. Employee's employment with Employer may be terminated by Employer For Cause, as defined in Section XVI(d) hereof. In such event Employee shall: (i) receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation; (ii) immediately forfeit any rights to any further compensation and employee benefits, including the Pro Rata Bonus, to the extent not vested, including options and restricted stock, which would have become vested after the Termination Date; and (iii) continue to be subject to the Covenant Not to Compete contained in Section XIII hereof. D. Death or Permanent Disability of Employee. Upon Employee's death or upon notice of Employee's permanent disability during the term hereof, this Agreement shall terminate, and Employee or his legal or personal representative, as the case may be, shall receive within 30 days after the Termination Date a lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus. No further compensation or employee benefits shall be due and payable to Employee under this Agreement, from and after said date; provided, however, Employee shall be entitled to receive life insurance and/or disability benefits and/or vested retirement or other benefits made available to him by Employer outside the terms of this Agreement, including the Stock Option 5 Agreement to be entered into pursuant to Article XIV hereof. For purposes of this Agreement, Employee shall be deemed "permanently disabled" by bodily or mental illness, disease or injury, to the extent that, in the reasonable judgment of Employers' boards of directors he is prevented from performing the material and substantial duties of his Employment and such disability has continued substantially for six months. If requested by Employer, Employee shall submit to an examination by a physician mutually acceptable to Employer and Employee for the purpose of determining or confirming the existence or extent of any disability. XIII. Covenant Not to Compete and Confidentiality For and in consideration of: (i) Employers' employment of Employee pursuant to Article I of this Agreement; (ii) Employers' entering into this Agreement; and (iii) the issuance under this Agreement of options to purchase shares of common stock of Synovus pursuant to the terms hereof, Employee hereby agrees to the following: A. Employee agrees that at all times prior to the Agreement Termination Date, and for a period of 18 months subsequent to the Agreement Termination Date if Employee is employed by Employer on the Agreement Termination Date, and in no event for less than 18 months after any Termination Date, he will not form, organize or acquire more than 5% of the capital stock of, or cause his affiliates or other persons or entities under his control to form, organize or acquire more than 5% of the capital stock of, or serve as an executive officer or director of a depository financial institution (i) which is not an affiliate of Synovus (including any holding company thereof) and (ii) which is located or has offices in the State of South Carolina. B.(1) Employee agrees that, both during the term of this Agreement and after the termination of this Agreement, Employee will hold in a fiduciary capacity for the benefit of Employer, and shall not directly or indirectly use or disclose, except as authorized by Employer in connection with the performance of Employee's duties, any Trade Secret, as defined hereinafter, that Employee may have or acquire during the term of this Agreement for so long as such information remains a Trade Secret. The term "Trade Secret" as used in this Agreement shall mean information including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, loan portfolios, marketing plans, product plans, or a list of actual or potential customers or suppliers, including without limitation, information received by Employer or Employee from any client or potential client of Employer, which: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of reasonable efforts by Employer or the client from which the information was received to maintain its secrecy. These rights of Employer are in addition to those rights Employer has under the common law or applicable statute for protection of trade secrets. 6 (2) In addition to the foregoing and not in limitation thereof, Employee agrees that, during the term of this Agreement and for a term of two (2) years after any Termination Date, Employee will hold in a fiduciary capacity for the benefit of Employer and shall not directly or indirectly use or disclose, except as authorized by Employer in connection with the performance of Employee's duties, any confidential or proprietary information, as defined hereinafter, that Employee may have or acquire (whether or not developed or compiled by Employee and whether or not Employee has been authorized to have access to such confidential or proprietary information) during the term of this Agreement. The term "Confidential or Proprietary Information" as used in this Agreement means any secret, confidential or proprietary information of Employer, including information received by Employer or Employee from any client or potential client of Employer, not otherwise included in the definition of "Trade Secret" in Paragraph B.1 above. The term "Confidential or Proprietary Information" does not include information that has become generally available to the public by any means other than a violation of the restrictions contained in this paragraph. (3) Employee agrees and acknowledges that, if a violation of any covenant contained in this paragraph occurs or is threatened, such violation or threatened violation will cause irreparable injury to Employer, that the remedy at law for any such violation or threatened violation will be inadequate and that Employer shall be entitled to appropriate equitable relief. (4) Employee hereby agrees that the restrictions contained in this paragraph are fair and reasonable and necessary for the protection of the legitimate business interest of Employer. XIV. Stock Options In consideration of Employee's entering into this Agreement, Synovus hereby agrees to cause to be granted Employee an option to purchase 15,000 shares of common stock of Synovus at an exercise price of $22.75 per share on the Effective Date of this Agreement, pursuant to the terms of the Synovus Financial Corp. 1994 Long-Term Incentive Plan, to become exercisable as to one hundred percent (100%) of such shares on the fifth anniversary date of the date of Synovus' grant of such shares if Employee is employed on a full-time basis on such date or if Employee is providing services to Employer pursuant to the Retirement Agreement referenced in Article XV below. The option may be exercised at any time during the five year period following the date that such option first becomes exercisable. In the event of Employee's termination of employment by death (other than by suicide) or termination of employment by reason of permanent disability, the option shall thereafter become immediately exercisable. In addition, Employee shall be entitled to exercise his options with respect to NBSC stock for which provision is made in Section 1(d) of his Employment Agreement with NBSC as amended prior to this amendment and restatement and to receive the additional payments for which provision is made therein. XV. Retirement Agreement Upon the original Agreement Termination Date, or upon any other Agreement Termination Date which may be mutually agreed to by Employer and Employee according to the procedure set forth in Article XVI hereof, the Retirement Agreement attached hereto as Exhibit "B" shall become effective. 7 XVI. Amendments This Agreement may be amended or extended at any time and from time to time by an agreement in writing signed by Employer and Employee and approved by the Boards of Directors of Employer. The Parties shall be deemed to have consented to any amendment by accepting any benefits thereunder after having received from the other Party written notice of such amendment. XVII. Definitions For purposes of this Agreement, the following terms shall have the following meanings: (a) "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the Termination Date but not paid as of the Termination Date including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by Employee on behalf of Employer during the period ending on the Termination Date, and (iii) bonuses and incentive compensation (other than the Pro Rata Bonus), less applicable withholdings of federal, state and local taxes. (b) "Base Amount" shall mean the greater of Employee's annual base salary (i) at the rate in effect on the Termination Date or (ii) at the highest rate in effect at any time during the 90 day period prior to the Change in Control, and shall include all amounts of his base salary that are deferred under the qualified and non-qualified employee benefit plans of Employer or any other agreement or arrangement. (c) "Bonus Amount" shall mean the greater of (i) the most recent annual cash bonus paid or payable to Employee or, if greater, the annual bonus paid or payable for the most recent full fiscal year ended prior to the fiscal year during which a Change in Control occurred or (ii) the average of the annual cash bonuses paid or payable during the three full fiscal years ended prior to the Termination Date or, if greater, the three most recent full fiscal years ended prior to the Change in Control (or, in each case, such lesser period for which annual cash bonuses were paid or payable to Employee. (d) The termination of Employee's employment shall be "For Cause" if it is a result of: (i) any act that (A) constitutes, on the part of Employee, fraud, dishonesty, gross malfeasance of duty, or conduct grossly inappropriate to Employee's office, and (B) is demonstrably likely to lead to material injury to Employer or resulted or was intended to result in direct or indirect gain to or personal enrichment of Employee; or (ii) the conviction (from which no appeal may be or is timely taken) of Employee of a felony; or (iii) the suspension or removal of Employee by federal or state banking regulatory authorities acting under lawful authority pursuant to provisions of federal or state law or regulation which may be in effect from time to time; or 8 (iv) the breach of the covenants in Section XIII hereof; provided, however, that in the case of clause (i) above, such conduct shall not constitute Cause unless (A) there shall have been delivered to Employee a written notice setting forth with specificity the reasons that the Boards of Employer believe Employee's conduct constitutes the criteria set forth in clause (i), (B) Employee shall have been provided the opportunity to be heard in person by the Boards of Employer (with the assistance of Employee's counsel if Employee so desires), and (C) after such hearing, the termination is evidenced by a resolution adopted in good faith by two-thirds of all the members of each of the Boards of Directors of Synovus and Bank not counting Employee for purposes of determining the number of members on each such Board. (e) A "Change in Control" shall mean the occurrence during the term of this Agreement of any of the following events; provided, however, that Employee hereby agrees that the acquisition of NBSC Corporation by Synovus shall not be deemed to be a change in control for purposes of this Agreement other than Section XII of this Agreement and the definition of Good Reason in which case such acquisition shall be deemed a "Change in Control": (i) An acquisition (other than directly from Employer) of any voting securities of Employer (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of the combined voting power of Employer's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non- Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) Employer or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by Employer (a "Subsidiary"), (2) Employer or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined); (ii) The individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board") cease for any reason, other than death, resignation or retirement pursuant to the bylaws of Employer, to constitute at least two-thirds of the Board; provided, however, that if the election or nomination for election by the Corporation's shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or 9 (iii) Approval by shareholders of Employer of: (a) A merger, consolidation or reorganization involving Employer, unless (1) the shareholders of Employer, immediately before such merger, consolidation or reorganization, own directly or indirectly, immediately following such merger, consolidation or reorganization, at least two-thirds of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger consolidation or reorganization, and (2) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation. (A transaction described in clauses (1) and (2) shall herein be referred to as a "Non-Control Transaction.") (b) A complete liquidation or dissolution of Employer; or (c) An agreement for the sale or other disposition of all or substantially all of the assets of Employer to any Person (other than a transfer to a subsidiary). (iv) Notwithstanding anything contained in this Agreement to the contrary, if Employee's employment is terminated prior to a Change in Control and Employee reasonably demonstrates that such termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (B) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to Employee shall mean the date immediately prior to the date of such termination of Employee's employment. (f) "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in subsections (i) through (viii) hereof: (i) a change in Employee's status, title, position or responsibilities (including reporting responsibilities) which, in Employee's reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a Change in Control or at any time thereafter; the assignment to Employee of any duties or responsibilities which, in Employee's reasonable judgment, are inconsistent with his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a 10 Change in Control or at any time thereafter; any removal of Employee from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment by Employer For Cause or by Employee other than for Good Reason; or any other change in condition or circumstances that in Employee's reasonable judgment makes it materially more difficult for Employee to carry out the duties and responsibilities of his office than was the case at any time within ninety days preceding the date of Change in Control or at any time thereafter; (ii) a reduction in Employee's base salary or any failure to pay Employee any compensation or benefits to which he is entitled within five days of the date due; (iii) Employer's requiring Employee to be based at any place outside a 50-mile radius from the executive offices occupied by Employee immediately prior to the Change in Control, except for reasonably required travel on Employer's business which is not materially greater than such travel requirements prior to the Change in Control; (iv) the failure by Employer to (A) continue in effect (without reduction in benefit level and/or reward opportunities) any material compensation or employee benefit plan in which Employee was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to Employee or (B) provide Employee with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which Employee was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter; (v) the insolvency or the filing (by any party, including Employer) of a petition for bankruptcy of Employer, which petition is not dismissed within sixty days; (vi) any material breach by Employer of any provision of this Agreement; (vii) any purported termination of Employee's employment For Cause by Employer which does not comply with the terms of this Agreement; or (viii) the failure of Employer to obtain an agreement, satisfactory to Employer, from any successors and assigns to assume and agree to perform this Agreement, as contemplated in Section XVIII hereof. Any event or condition described in clause (i) through (viii) above which occurs prior to a Change in Control but which Employee reasonably demonstrates (A) was at the request of a Third Party, or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this Agreement, notwithstanding that it occurred prior to the change in Control. Employee's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. Notwithstanding anything to the contrary contained above in this paragraph (f), changes agreed to by Employee 11 in this Agreement, or otherwise agreed to between Employer and Employee, from the facts and circumstances in existence prior to the consummation of the merger of NBSC Corporation into Synovus in respect of clauses (i) or (iv) above shall not constitute "Good Reason." (g) "Notice of Termination" shall mean a written notice of termination from Employer or Employee which specifies an effective date of termination, indicates the specific termination provision in this Agreement relied upon, and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (h) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which is 365, less applicable withholdings of federal, state and local taxes. (i) "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of Employer (including this Agreement), whether by operation of law or otherwise. (j) "Termination Date" shall mean in the case of Employee's death, his date of death, or in the case of permanent disability, the date described in Section XII(E) hereof, and in all other cases, the date specified in the Notice of Termination. XVIII. Parties Bound This Agreement shall be binding upon and shall inure to the benefit of Employer, its Successors and Assigns, and Employer shall require any Successors and Assigns to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform it if no such succession or assignment had taken place. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Employee, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Employee's legal personal representative against Employer, its Successors and Assigns. XIX. Entire Agreement This Agreement contains the entire agreement of the Parties and shall supersede all prior oral understandings related to the subject matter of this Agreement. XX. Waiver of Breach or Violations Not Deemed Continuing The waiver by any Party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof. 12 XXI. Notices Any and all notices required or permitted to be given under this Agreement will be sufficient if furnished in writing and sent by registered or certified mail or personally delivered to Employer or Employee at the following addresses or such other addresses designated in writing by Employer or Employee in a written notice to the other Party: A. If to Employer: Mr. James H. Blanchard Chairman and CEO Synovus Financial Corp. 901 Front Avenue, Suite 301 Columbus, Georgia 31901 B. If to Employee: Mr. William L. Pherigo National Bank of South Carolina 1241 Main Street Columbia, South Carolina 29201 XXII. Governing Law This Agreement shall be interpreted, construed and governed according to the laws of the State of Georgia. XXIII. Paragraph Headings Paragraph headings contained in this Agreement are for convenience only and shall in no manner be construed as part of this Agreement. XXIV. Counterparts This Agreement is executed in multiple counterparts, each of which shall be deemed an original and together shall constitute one and the same agreement, with at least one complete counterpart being delivered to Employee and to Employer. XXV. Invalidity of Provisions Should any part of this Agreement for any reason be declared by a court of competent jurisdiction to be invalid, such decision shall not effect the validity of any remaining parts, which remaining parts shall continue in full force and effect as if this Agreement had been executed with the invalid part or parts thereof eliminated, it being the intent of the Parties that they would have executed the remaining parts of the Agreement without including any such part or parts which may for any reason be hereinafter declared invalid. 13 XXVI. Construction When used herein, the masculine gender shall be used to include the feminine gender, and the singular shall be deemed to include the plural, unless the context clearly indicates to the contrary. c:\emp\Pherigo.adm 14 IN WITNESS WHEREOF, Synovus and the Bank have each hereunto caused its corporate name to be signed and its corporate seal to be affixed by its duly authorized corporate officers, and Employee has hereunto set his hand and seal, all being done in triplicate originals, with one original being delivered to each Party hereto, all as of the respective dates set forth below. Synovus Financial Corp. By: /s/James D. Yancey Title: Vice Chairman Attest:/s/Kathleen Moates Title: Assistant Secretary (Corporate Seal) September 11, 1995 Date "Synovus" National Bank of South Carolina By:/s/Robert V. Royall, Jr. Title:Chairman Attest:/s/Miriam M. Hutto Title: Assistant Vice President September 11, 1995 (Corporate Seal) Date "Bank" September 11, 1995 /s/William L. Pherigo (L.S.) Date William L. Pherigo "Employee" emp\pherigo.adm 15 EXHIBIT "A" SCHEDULE OF COMPENSATION The undersigned hereby agree that Employee's base salary under Article IV of the foregoing Employment Agreement shall be $ per calendar year beginning , 19 and for such period thereafter until hereafter changed by mutual agreement. This day of , 19 . NATIONAL BANK OF SOUTH CAROLINA SYNOVUS FINANCIAL CORP. By:________________________________________ By:_______________________ Title:_________________________________ Tile:__________________ Attest:____________________________________ Attest:___________________ Title:_________________________________ Title:_________________ (Corporate Seal) (Corporate Seal) "Bank" "Synovus" ________________________________________(L.S.) William L. Pherigo "Employee" emp\Pherigo.adm RETIREMENT AGREEMENT THIS RETIREMENT AGREEMENT ("Agreement") is made and entered into by and between WILLIAM L. PHERIGO, an individual resident of the state of South Carolina ("Pherigo"), SYNOVUS FINANCIAL CORP., a business corporation organized and existing under the laws of the State of Georgia ("Synovus"), and NATIONAL BANK OF SOUTH CAROLINA, a national banking association ("NBSC"); WITNESSETH THAT: WHEREAS, Pherigo has agreed to retire from his offices as the President and Chief Executive Officer of NBSC upon the Agreement Termination Date as defined in that certain Employment Agreement dated September 11, 1995 by and between Synovus, NBSC and Pherigo ("Agreement Termination Date"); WHEREAS, Synovus and NBSC desire to provide for the retention by Synovus and NBSC of Pherigo's services as a consultant and business developer after his retirement; WHEREAS, Pherigo desires to serve Synovus and NBSC as a consultant and business developer under the terms and conditions of this Agreement; NOW, THEREFORE, for and in consideration of the mutual covenants and Agreements set forth herein, Pherigo, Synovus and NBSC intending to be legally bound, do hereby agree as follows: Section I. RELATIONSHIP Synovus and NBSC hereby engage Pherigo, and Pherigo accepts such engagement, to perform such consulting and advisory services as may be requested from time to time by the Chief Executive Officers of Synovus and NBSC. In providing such services, Pherigo shall not be required to adhere to a fixed schedule or to work for a certain number of hours. Pherigo shall not be required to devote a major or substantial part of his time to such services. The Chief Executive Officers of Synovus and NBSC may establish the results to be accomplished in connection with consulting and advisory services requested from Pherigo, but Pherigo shall control the means and methods of accomplishing the results. Pherigo may establish his own work schedule and shall be free at all times to arrange the time and manner of performance of consulting and advisory services requested from him. During the term of his engagement hereunder, Pherigo will not provide services of any sort to, or assist in any way, with or without compensation, any financial institution or intermediary (including, but not limited to, a bank or bank holding company, a savings and loan association or a brokerage concern) or any enterprise engaged in the business of bankcard account processing, other than Synovus and its affiliates. In addition, during the term of engagement hereunder, Pherigo agrees to engage in business development activities on behalf of Synovus and NBSC and to serve as a goodwill ambassador for Synovus and NBSC in various social and civic activities. Section II. TERM OF ENGAGEMENT Subject to early termination under Section VI hereof, Pherigo's engagement under this Agreement shall commence as of the Agreement Termination Date ("Effective Date") and shall end three years thereafter. Section III. COMPENSATION 3.1 In consideration of all services to be rendered by Pherigo hereunder, and in consideration of the covenants and Agreements of Pherigo herein contained, Synovus and NBSC agree to pay to Pherigo each year during the three year term of this Agreement an amount equal to the sum of one-half of the current base salary Pherigo is receiving on the Effective Date of this Agreement plus one-half of the average of the incentive cash bonus which Pherigo received for the two years preceding the Effective Date of this Agreement. 3.2 Pherigo acknowledges that he is an independent contractor for all purposes. Pherigo agrees to treat all payments made to him hereunder as payments received by an independent contractor for all tax purposes and to pay any and all taxes payable in connection with his engagement hereunder, including, without limitation, all applicable income and self employment taxes. 3.3 The obligations of Synovus and NBSC under Section 3.1 hereof shall terminate if, during Pherigo's engagement hereunder or during the two years after the termination of such engagement, Pherigo, unless acting with the prior written consent of the Boards of Directors of Synovus and NBSC, provides services of any sort to, or assists in any way, with or without compensation, any financial institution or intermediary (including, but not limited to, a bank or bank holding company, a savings and loan association or a brokerage concern) or any enterprise engaged in the business of bankcard account processing, other than Synovus and its affiliates. Section IV. TERMINATION OF EMPLOYMENT The parties acknowledge and agree that for no purpose (including, without limitation, any employee benefit or pension plan) shall Pherigo be considered an employee of NBSC or Synovus after the Agreement Termination Date. Effective on the Agreement Termination Date, Pherigo will resign as President and Chief Executive Officer of NBSC and as a director of Synovus. Section V. INSURANCE Notwithstanding any other provision in this Agreement to the contrary, from the Agreement Termination Date through the date that Pherigo attains the age of 65 (the "Coverage Period"), Synovus and NBSC shall at their expense, less standard employee contributions in effect from time to time during the Coverage Period for such benefits for which Pherigo shall remain responsible, continue on behalf of Pherigo and his dependents and beneficiaries life insurance, disability, medical, dental and hospitalization benefits provided (x) to Pherigo at any time during the ninety day period prior to the Agreement Termination Date or at any time thereafter or (y) to other similarly situated executives who continue under the employ of NBSC during the coverage period, or comparable benefits. Notwithstanding the foregoing, the coverage and benefits (including deductibles and employee contributions to costs) provided in this Section V during the Coverage Period shall be no less favorable to Pherigo and his dependents and beneficiaries than the most favorable of such coverages and benefits for employees of NBSC during any of the periods referred to in clauses (x) and (y) above. Synovus and NBSC's obligations hereunder with respect to the foregoing benefits shall be limited to the extent that Pherigo obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case, Synovus and NBSC may reduce the coverage of any benefits they are required to provide Pherigo hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to Pherigo than the coverages and the benefits required to be provided for hereunder. This Section shall not be interpreted so as to limit any benefits to which Pherigo or his dependents or beneficiaries may be entitled under any of NBSC's employee benefit plans, programs or practices following Pherigo's termination of employment, including, without limitation, retiree medical and life insurance benefits. Section VI. TERMINATION Pherigo's engagement under this Agreement and his receipt of compensation hereunder shall terminate upon Pherigo's death or total and permanent disability. For purposes of this Agreement, Pherigo shall be deemed "permanently disabled" by bodily or mental illness, disease or injury, to the extent that, in the reasonable judgment of Synovus' and NBSC's boards of directors he is prevented from performing the material and substantial duties under this Agreement and such disability has continued substantially for six months. If requested by Synovus and NBSC, Pherigo shall submit to an examination by a physician mutually acceptable to Synovus and NBSC and Pherigo for the purpose of determining or confirming the existence or extent of any disability. Section VII. CONFIDENTIALITY (1) Pherigo agrees that, both during the term of this Agreement and after the termination of this Agreement, Pherigo will hold in a fiduciary capacity for the benefit of Synovus and NBSC, and shall not directly or indirectly use or disclose, except as authorized by Synovus and NBSC in connection with the performance of Pherigo's duties, any Trade Secret, as defined hereinafter, that Pherigo may have or acquire during the term of this Agreement for so long as such information remains a Trade Secret. The term "Trade Secret" as used in this Agreement shall mean information including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, loan portfolios, marketing plans, product plans, or a list of actual or potential customers or suppliers, including without limitation, information received by Synovus and NBSC or Pherigo from any client or potential client of Synovus and NBSC, which: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of reasonable efforts by Synovus and NBSC or the client from which the information was received to maintain its secrecy. These rights of Synovus and NBSC are in addition to those rights Synovus and NBSC has under the common law or applicable statute for protection of trade secrets. (2) In addition to the foregoing and not in limitation thereof, Pherigo agrees that, during the term of this Agreement and for a term of two (2) years after the termination hereof, Pherigo will hold in a fiduciary capacity for the benefit of Synovus and NBSC and shall not directly or indirectly use or disclose, except as authorized by Synovus and NBSC in connection with the performance of Pherigo's duties, any confidential or proprietary information, as defined hereinafter, that Pherigo may have or acquire (whether or not developed or compiled by Pherigo and whether or not Pherigo has been authorized to have access to such confidential or proprietary information) during the term of this Agreement. The term "Confidential or Proprietary Information" as used in this Agreement means any secret, confidential or proprietary information of Synovus and NBSC, including information received by Synovus and NBSC or Pherigo from any client or potential client of Synovus and NBSC, not otherwise included in the definition of "Trade Secret" in Paragraph 1 above. The term "Confidential or Proprietary Information" does not include information that has become generally available to the public by any means other than a violation of the restrictions contained in this paragraph. (3) Pherigo agrees and acknowledges that, if a violation of any covenant contained in this paragraph occurs or is threatened, such violation or threatened violation will cause irreparable injury to Synovus and NBSC, that the remedy at law for any such violation or threatened violation will be inadequate and that Synovus and NBSC shall be entitled to appropriate equitable relief (4) Pherigo hereby agrees that the restrictions contained in this paragraph are fair and reasonable and necessary for the protection of the legitimate business interest of Synovus and NBSC. Section VIII. MISCELLANEOUS 8.1 Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of Georgia without regard to its conflict or choice of law provisions. 8.2. Notices. All notices or other communications required or permitted hereunder or necessary and convenient in connection herewith shall be in writing and delivered in person or by express delivery service or postage prepaid first-class mail, return receipt requested, to the following addresses: If to Pherigo: Mr. William L. Pherigo 1235 Bookman Loop Winnsboro, S.C. 29180 If to Synovus or NBSC: Synovus Financial Corp. P.O. Box 120 Columbus, Georgia 31902 or to such other addresses as Pherigo, Synovus or NBSC may designate by notice to the other parties hereto in the manner set forth in this Section VIII. 8.3 Entire Agreement. This Agreement sets forth the entire Agreement of the parties hereto with respect to the subject matter hereof and may not be changed or amended except upon written amendment executed by the parties hereto. 8.4 Assignment. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Pherigo hereunder shall not be assignable in whole or in part by Pherigo. 8.5 Counterparts. This Agreement may be executed in counterparts, each of which, when executed, shall be deemed an original instrument. IN WITNESS WHEREOF, Synovus and NBSC have caused this Agreement to be executed on their behalf and Pherigo has hereunto set his hand and seal, as of the respective dates set forth below. SYNOVUS FINANCIAL CORP. By:/s/James D. Yancey Title: Vice Chairman Attest:/s/Kathleen Moates Date: September 11, 1995 Title:Assistant Secretary [CORPORATE SEAL] NATIONAL BANK OF SOUTH CAROLINA By:/s/Robert V. Royall, Jr. Title: Chairman Attest:/s/Miram M. Hutto Date: September 11, 1995 Title: Assistant Vice President [BANK SEAL] Date: September 11, 1995 /s/William L. Pherigo (L.S.) William L. Pherigo EX-10.18 4 APPENDIX B SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN ARTICLE I OBJECTIVE OF THE PLAN The purposes of this Synovus Financial Corp. Executive Bonus Plan ("Plan") to reward selected officers of Synovus Financial Corp. (the "Company") and certain of its subsidiaries ("Subsidiaries") for superior corporate performance measured by achievement of financial performance and strategic corporate objectives and to attract and retain top quality officers. ARTICLE II PLAN ADMINISTRATION This Plan is administered by the Compensation Committee (the "Committee") of the Company's Board of Directors (the "Board"), with the approval, as to matters involving employees of any publicly-traded Subsidiary of the Company, of the compensation committee of such publicly-traded Subsidiary. The Committee (and the compensation committee of any publicly-traded Subsidiary of the Company) shall be composed of two or more outside directors as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"). ARTICLE III PARTICIPANTS Participation is limited to the Chief Executive Officer and the four highest compensated officers of the Company and any publicly-traded Subsidiary of the Company as selected from year-to-year by the members of the Committee ("Participants"). ARTICLE IV PERFORMANCE OBJECTIVES Each fiscal year, the Committee shall establish (i) performance objectives for such and/or the succeeding fiscal year for the Company, any Subsidiary, or any business segment or business unit of the Company or any Subsidiary, based upon such criteria as may be from time to time considered by the Committee, which criteria may include, not to the exclusion of other criteria, criteria that has been approved by the shareholders of the Company or the shareholders of any publicly-traded Subsidiary of the Company; and (ii) a system which equates the attainment of various performance objectives by the Company and Subsidiaries for such and/or the succeeding fiscal year into various percentages of the base salaries of eligible officers of the Company and Subsidiaries for such and/or the succeeding fiscal year which may be awarded to such Employees who are selected to be Participants in the Plan as bonuses. The maximum award under this Plan to any participant shall be 150% of base salary, provided, however, that no participant may receive an award for any performance period in excess of $1,500,000. ARTICLE V AWARD OF BONUSES As soon as practicable after each fiscal year for which performance objectives have, pursuant to Article IV, been established, the Committee shall determine whether the Company and each Subsidiary attained the previously-established performance objectives. Assuming such performance objectives shall be attained, the Committee shall determine, in its sole and exclusive discretion, whether any bonuses shall be awarded for such fiscal year. Such bonuses shall be awarded as soon as practicable thereafter and the officers who are determined to be entitled to receive such bonuses shall be promptly notified of the award thereof. ARTICLE VI PAYMENT OF BONUSES Any bonus or any portion of any bonus awarded to a Participant shall, at the election of such Participant, be deferred and made subsequently payable to such Participant and/or his beneficiary, as provided in Article VIII hereof. In order to properly provide for timely elections as to the deferral of receipt of bonuses, each eligible officer of the Company or Subsidiary eligible to become a Participant in the Plan may elect by an instrument in writing, the form for said written election being attached hereto and marked Exhibit "A" and entitled "Election Regarding Deferral of Executive Bonus Awarded Pursuant to Synovus Financial Corp. Executive Bonus Plan" on or before the 31st day of December of the year preceding the fiscal year for which such bonus is to be awarded, to have any percentage of any bonus which may be awarded to him for such fiscal year paid to him in cash on the distribution date for such fiscal year, with the balance being deferred and payable to him as provided in Article VIII hereof. Said written forms of election shall be filed with the Committee. ARTICLE VII DEFERRED EXECUTIVE BONUS ACCOUNTS There shall be established for each Participant who elects to defer receipt of any portion of any bonus awarded to him an account to be designated as such Participant's Deferred Executive Bonus Account to which amounts so elected to be deferred shall be allocated. Interest, at a rate equal to the average annual short-term prime rate as established by Columbus Bank and Trust Company for each fiscal year and applied to the average balance in said Account for said fiscal year, shall be credited to such Participants' Deferred Executive Bonus Accounts on December 31st of each fiscal year until all amounts allocated thereto have been distributed to such Participants or their beneficiaries as provided in Article VIII hereof. ARTICLE VIII DISTRIBUTION AFTER PARTICIPANT'S DEFERRAL TERMINATION DATE When a Participant's employment termination date shall occur, the balance in such Participant's Deferred Executive Bonus Account shall be distributed to such Participant or his beneficiary as provided hereinbelow: (A) Distribution shall be made in one lump sum or in up to 120 approximately equal and consecutive monthly installments. The method of payment, lump sum or installment, and, in the event the distribution is determined to be made by installments, the number of installments in which such distribution is to be made, for each Participant shall be determined solely and exclusively by the Committee. (B) If a Participant's termination of employment occurs by reason of his death (except by suicide) or total disability, the lump sum payment or the first monthly installment, provided for in paragraph (A) hereinabove, shall be paid within 30 days after the last day of the month in which the Participant's termination of employment occurs. (C) If a Participant's termination of employment with the Company and/or Subsidiary is for a reason other than death (except by suicide) or disability, the distributions made pursuant to paragraph (A) hereinabove shall commence at such time as shall be determined by the Committee; PROVIDED, HOWEVER, that in no event shall such distributions begin later than the date upon which such Participant attains age 70 1/2, and PROVIDED FURTHER, HOWEVER, that if such Participant dies or becomes totally disabled prior to his attaining age 70 1/2, the distributions to which such Participant would have been entitled to receive under this paragraph shall commence to be made within thirty (30) days after the last day of the month in which such Participant's death or total disability occurred. (D) If a Participant shall cease to be an Employee of the Company by reason of his death or if he shall die after his employment termination date but prior to his receipt of all distributions provided for herein, all cash distributable hereunder, or the undistributed balance thereof, shall be distributed to such beneficiary or beneficiaries as he shall have designated by an instrument in writing, the form for said written designation being attached hereto and marked Exhibit "B" and entitled "Beneficiary Designation," filed with the Committee in the same manner and at the same intervals as they would have been made to the Participant had he continued to live, or, in the absence of an effective Beneficiary Designation, in a lump sum to the Participant's estate. ARTICLE IX DISTRIBUTION IN THE EVENT OF SEVERE FINANCIAL HARDSHIP In the event a Participant or any beneficiary of a Participant incurs "severe financial hardship," the Committee may authorize the acceleration of the payment of benefits hereunder to, and only to, the extent reasonably necessary to eliminate such "severe financial hardship." The Committee possesses the sole discretion as to the determination of the existence, in a particular factual setting, of "severe financial hardship;" PROVIDED, HOWEVER, in the exercise of such discretion, the Committee is charged with the responsibility of exercising its discretion in a fair, reasonable and nondiscriminatory manner and determinations of "severe financial hardship" shall be limited solely to factual situations caused by accident, illness or other event beyond the control of the Participant or his beneficiary, which shall not have been an event that such Participant or his beneficiary would voluntarily incur. ARTICLE X NO ENTITLEMENT TO BONUS Participants are entitled to a distribution under this Plan only upon the approval of the award by the Committee and no Participant shall be entitled to a bonus under the Plan due to the attainment of performance objectives. In addition, any Participant not employed by the Company or a Subsidiary on December 31 of any fiscal year will not be entitled to a bonus unless otherwise --- determined by the Committee. ARTICLE XI TERMINATION OF PLAN The Company Board of Directors may amend or terminate the Plan at any time. Upon termination of the Plan, distributions in respect of credits to Participants' Deferred Executive Bonus Accounts as of the date of termination shall be made in the manner and at the time prescribed in Article VIII hereof. ARTICLE XII PARTICIPANT'S RIGHT OF ASSIGNABILITY Except as provided in subsection (D) of Article VIII hereof, regarding beneficiary designation, amounts credited to Deferred Executive Bonus Accounts of Participants shall not be subject to assignment, pledge or other disposition, nor shall such amounts be subject to garnishment, attachment, transfer by operation of law, or any legal process. ARTICLE XIII GOVERNING LAW The validity, construction, performance and effect of the Plan shall be governed by Georgia law. EXHIBIT "A" ELECTION REGARDING DEFERRAL OF BONUS AWARDED PURSUANT TO THE SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN __________________("Employee"), in the event Employee is awarded a bonus under the Synovus Financial Corp. Executive Bonus Plan (the "Plan") for the period commencing January 1, 199_____, and ending December 31, 199_____, hereby makes the following elections. I. Employee elects to have____________percent of the bonus awarded to him for the above elected period of participation in the Plan paid in cash to him on the distribution date provided for under the Plan. II. Employee further elects to defer receipt of the balance of the bonus awarded to him for the above elected period of participation in the Plan, said balance to be payable to Employee or his Beneficiary pursuant to the terms of Article VIII of this Plan. IN WITNESS WHEREOF, Employee has affixed his hand and seal, all as of the_______day of ______________ , 199____ . _________________________________(L.S.) "EMPLOYEE" Received and accepted as of the ________day of________ , 199_____ . COMPENSATION COMMITTEE By:________________________________ Secretary EXHIBIT "B" BENEFICIARY DESIGNATION ________________________("Participant") hereby designates the following persons as beneficiaries entitled, upon the death of Participant, to any payments in accordance with the terms and provisions of the Synovus Financial Corp. Executive Bonus Plan ("Plan"), this beneficiary designation being made by Participant pursuant to Article VIII of the Plan: Primary Beneficiary: Name:__________________________________________________________________ Address:_______________________________________________________________ It is understood and agreed that in the event of the death of the above-named Primary Beneficiary, the Contingent Beneficiary (or Beneficiaries) shall be entitled to receive the payments under the Plan the Primary Beneficiary was receiving or would have received. In the event more than one Contingent Beneficiary is designated, said Contingent Beneficiaries shall be entitled to receive payments made pursuant to the Plan per capita: Names: ____________________________________________________________ ____________________________________________________________ Addresses: ____________________________________________________________ ____________________________________________________________ This beneficiary designation supersedes all beneficiary designations, if any, previously made by Participant and may be amended at any time by filing another such beneficiary designation with the Compensation Committee. IN WITNESS WHEREOF, Participant has affixed his hand and seal, this _______ day of_________, 199______ . ____________________________(L.S.) "PARTICIPANT" Received this day of ___________day of__________ , 199________. COMPENSATION COMMITTEE By:_______________________________ Secretary EX-10.19 5 CHANGE OF CONTROL AGREEMENT THIS AGREEMENT ("Agreement"), by and between SYNOVUS FINANCIAL CORP., a Georgia corporation (the "Company") and __________________________ (the "Employee") is entered into as of the 1st day of January, 1996 (the "Effective Date"); WHEREAS, the Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company; WHEREAS, the Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Employee's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Employee with appropriate compensation and benefits arrangements upon a Change of Control which are competitive with those of other corporations; and WHEREAS, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Change of Control Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Employee's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by Employee that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement the "Change of Control Date" shall mean the date immediately prior to the date of such termination of employment. (b) The "Change of Control Period" shall mean the period commencing on the Effective Date and ending on the day after the date of Employee's termination of employment from the Company or, if earlier, the date which is 396 days after the Change of Control Date. (c) "Cause" shall mean: (1) the willful and continued failure of the Employee to perform substantially the Employee's duties with the Company or one of its affiliates after a written demand for substantial performance is delivered to the Employee by the Executive Committee of the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Executive Committee of the Board or Chief Executive Officer believes that the Employee has 1 not substantially performed the Employee's duties, after which Employee shall have a reasonable amount of time to remedy such failure to substantially perform his or her duties; or (2) the willful engaging by the Employee in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. For purposes of this provision, no act, or failure to act, on the part of the Employee shall be considered "willful" unless it is done, or omitted to be done, by the Employee in bad faith or without reasonable belief that the Employee's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, or the Executive Committee of the Board, or upon the instructions of the Chief Executive Officer, or an Executive Vice President (or higher ranking officer), of the Company, or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by the Employee in good faith and in the best interests of the Company. The cessation of employment of the Employee shall not be deemed to be for Cause unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Executive Committee of the Board at a meeting of the Executive Committee of the Board called and held for such purpose (after reasonable notice is provided to the Employee and the Employee is given an opportunity, together with counsel, to be heard before the Executive Committee of the Board), finding that, in the good faith opinion of the Executive Committee of the Board, the Employee is guilty of the conduct described in subparagraph (1) or (2) above, and specifying the particulars thereof in detail. (d) "Good Reason" shall mean: (1) the assignment to the Employee of any duties inconsistent in any respect with the Employee's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect on either the Change of Control Date or the date which is 120 days prior to the Change of Control Date (if such earlier date is selected by Employee) or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Employee; (2) the Company's requiring the Employee to be based at any office or location more than 35 miles from the location where Employee was employed on the Change of Control Date or the date which is 120 days prior to the Change of Control Date (if such earlier date is selected by Employee); (3) a reduction in Employee's annual base salary, maximum annual bonus opportunity (including, without limitation, the use of bonus goals that are not reasonable and consistent with the bonus goals established for the preceding year), or participation in employee benefit plans, as such salary, bonus and plans were in effect on either the Change of Control Date or the date which is 120 days prior to the Change of Control Date (if such earlier date is selected by Employee) provided, however, that a reduction in the level of retirement or welfare benefits shall not be considered "Good Reason" so long as Employee is participating in retirement and welfare 2 plans that are substantially equivalent to those provided to peer employees of Company and its affiliated companies; or (4) any failure by the Company to comply with and satisfy Section 8(c) of this Agreement. For purposes of this Section 1(d), any good faith determination of "Good Reason" made by the Employee shall be conclusive. (e) "Disability" shall be defined the same as such term is defined in either, at the selection of the Employee, (a) the group long-term disability insurance plan sponsored or maintained by Company on the Change of Control Date in which Employee participates or (b) any individual long-term disability insurance arrangement in effect on the Change of Control Date, the premiums of which are paid by Company for the benefit of Employee. 2. Change of Control. For the purposes of this Agreement, a "Change of Control" shall mean: (a) the acquisition by any "person" ("Person"), as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company or a subsidiary or any Company employee benefit plan (including its trustee) or an "Exempt Person" as defined below), of "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the total number of shares of the Company's then outstanding securities; (b) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (c) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets or stock of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the total number of shares of the Company's outstanding securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than two-thirds (2/3) of, respectively, the total number of shares of the then outstanding securities of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the total number of shares of the Company's outstanding securities, (ii) no Person (excluding any corporation resulting from such Business Combination, or any 3 employee benefit plan (including its trustee) of the Company or such corporation resulting from such Business Combination, or an "Exempt Person" as defined below) beneficially owns, directly or indirectly, 20% or more of, respectively, the total number of shares of the then outstanding securities of the corporation resulting from such Business Combination except to the extent that such ownership existed prior to the Business Combination and (iii) at least two-thirds (2/3) of the members of the board of directors of the Corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) the occurrence of a "Triggering Event" as such term is defined in the Rights Agreement dated April 20, 1989, by and between the Company and Trust Company Bank ("Rights Agreement"), the provisions of which, as such provisions and Rights Agreement may be amended from time to time, are incorporated herein by this reference, but only so long as the Rights Agreement is in effect. For purposes of this Section 2, an "Exempt Person" shall mean (1) any shareholder who (i) is a descendent of D. Abbott Turner (the "Turner Family"), (ii) any shareholder who is affiliated or associated, as defined in the Rights Agreement, with the Turner Family, or (iii) any person who would otherwise become a "beneficial owner" of 20% of the total number of shares of the Company's then outstanding securities as a result of the receipt of the Company's securities or a beneficial interest in the Company's securities from one or more members of the Turner Family by way of gift, devise, descent or distribution (but not by way of sale) unless any such person, together with his or her affiliates and associates, becomes the "beneficial owner" of more than 30% of the total number of shares of the Company's then outstanding securities; and (2) any person who is not otherwise an Exempt Person and who as of April 20, 1989 was the beneficial owner of 10% or more of the total number of shares of the Company's then outstanding securities unless and until such person shall become the beneficial owner of any additional outstanding Company securities. For purposes of this Section 2, a "Change of Control" shall not result from any transaction precipitated by the Company's insolvency, appointment of a conservator, or determination by a regulatory agency that the Company is insolvent, nor from any transaction initiated by the Company in regard to converting from a publicly traded company to a privately held company. 3. Obligations of Company Upon Termination. In the event Employee's employment by Company (a) is terminated before the one-year anniversary date of the Change of Control Date either (i) by the Company for any reason other than Cause or Employee's death or Disability or (ii) by Employee for Good Reason; or (b) is terminated on, or within the 30-day period following, the one-year anniversary date of the Change of Control Date by Employee for any reason or no reason, or by the Company for any reason other than Cause or Employee's death or Disability, then (a) The Company shall pay to Employee in a lump sum in cash within 30 days after the date of termination the aggregate of the following amounts: (1) three times the sum of: (a) Employee's annual base salary as in effect immediately prior to Employee's termination; plus (b) the product of (i) Employee's annual base salary as in effect immediately prior to Employee's termination of employment multiplied by (ii) a percentage equal to the average percentage of Employee's annual bonus earned with respect to the 4 three calendar years ended prior to Employee's termination, measured as a percentage of Employee's annual base salary for the year the bonus was earned; (2) the product of (a) a fraction, the numerator of which is the greater of (i) six, or (ii) number of full months Employee worked in the calendar year of Employee's termination (e.g., an October 1 termination date results in a numerator of 9) and the denominator of which is 12; multiplied by (b) the maximum annual bonus for which Employee was eligible immediately prior to Employee's termination; and (3) the product of (a) Employee's long-term market grant (equal to Employee's annual base salary as in effect immediately prior to Employee's termination multiplied by the market multiple for long-term incentive grants for Employee's position on the Change of Control Date as set forth in the market survey being used by Company in making long-term incentive grants); multiplied by (b) either (i) 150%, if Employee has received a long-term incentive award in the calendar year of Employee's termination of employment, or (ii) 250%, if Employee has not received a long-term incentive award in the calendar year of Employee's termination. For purposes of this Agreement, "annual base salary" means Employee's annual rate of pay excluding all other elements of compensation such as, without limitation, bonuses, perquisites, restricted stock awards, stock options, and retirement and welfare benefits. (b) For three years after Employee's termination of employment, the Company shall continue to provide medical and welfare benefits (including, without limitation, medical, prescription, dental, disability (both individual and group arrangements), life (both individual and group arrangements), and accidental death and dismemberment plans and programs) to Employee and Employee's dependents at the level of coverage elected by Employee during the open enrollment period immediately preceding Employee's termination of employment date under benefit plans that are generally equivalent to those provided generally at any time after the Effective Date to other peer employees of the Company and its affiliated companies (excluding individual disability and individual life insurance arrangements, which must continue to be provided regardless of whether provided to peer employees); provided, however, that if Employee becomes reemployed with another employer (specifically excluding self-employment) and is eligible to receive medical or other welfare benefits under another employer provided plan, Company shall terminate all medical and other welfare benefits being provided hereunder; and provided further, however, that, at the election of Employee, or at the election of Company if Employee is not eligible to participate under the terms of such medical and welfare benefit plans (including COBRA continuation coverage for which Executive is eligible), Company shall pay Employee an agreed upon lump sum amount in cash in lieu of the benefits described in this Section 3(b), not to exceed 25% of the lump sum amount payable to Employee pursuant to Section 3(a) of this Agreement. (c) The Company shall not be obligated under this Agreement to provide outplacement assistance or any other benefits and perquisites not covered above, such as a Company-provided automobile, country club and dining club dues, health club dues, retirement benefits, etc. 4. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Employee may qualify, nor, 5 subject to Section 9(f), shall anything herein limit or otherwise affect such rights as the Employee may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the date of termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 5. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement and, except as otherwise provided in this Agreement, such amounts shall not be reduced whether or not the Employee obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Employee or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Employee about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 6. Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section (6) (a "Payment")) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes on the Gross-Up Payment including, without limitation, any income taxes, employment taxes, excise taxes, and interest and penalties imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or such other nationally recognized certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee may appoint another nationally recognized certified public accounting firm to make the determinations 6 required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to the Employee within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 6(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (1) give the Company any information reasonably requested by the Company relating to such claim, (2) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (3) cooperate with the Company in good faith in order effectively to contest such claim, and (4) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee 7 to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 6(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 7. Confidential Information. The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Employee during the Employee's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement). After termination of the Employee's employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. 8. Successors. (a) This Agreement is personal to the Employee and without the prior written consent of the Company shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 8 (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid If to the Employee: To the Employee's most recent home address as filed with the Company If to the Company: Synovus Financial Corp. P. O. Box 120 Columbus, GA 31902 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Employee's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Employee or the Company may have hereunder, including, without limitation, the right of the Employee to terminate employment for Good Reason pursuant to Section 3 of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Employee and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Employee and the Company, the 9 employment of the Employee by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Change of Control Date, the Employee's employment may be terminated by either the Employee or the Company at any time prior to the Change of Control Date, in which case the Employee shall have no further rights under this Agreement. In addition, in the event Employee's employment is terminated as a result of Employee's death or Disability, Employee shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof. (g) This Agreement is executed in two counterparts, each of which shall be deemed an original and together shall constitute one and the same agreement, with one counterpart being delivered to each party hereto. IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all being done in duplicate originals, with one original being delivered to each party hereto, all as of the day and year first above written. --------------------------------- [Employee] SYNOVUS FINANCIAL CORP. By: _________________________________ Title: _________________________________ 10 EX-11.1 6 EXHIBIT 11.1 SYNOVUS FINANCIAL CORP. COMPUTATION OF NET INCOME PER COMMON SHARE (UNAUDITED)
Twelve Months Ended Three Months Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Primary Net income $114,582,630 89,452,498 33,633,732 21,752,597 ==================================================================================================================================== Average common shares outstanding 114,954,483 112,750,294 115,823,254 113,315,210 Average common shares added, assuming exercise of dilutive stock options 1,163,926 1,246,003 1,517,108 1,307,018 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares, as adjusted 116,118,409 113,996,297 117,340,362 114,622,228 ==================================================================================================================================== Net income per common share $ 0.99 0.78 0.29 0.19 ==================================================================================================================================== Assuming Full Dilution Net income $114,582,630 89,452,498 33,633,732 21,752,597 Adjustments: Interest expense on subordinated debentures -- 136,474 -- 34,118 Income tax effect on such interest expense -- (47,766) -- (11,941) - ------------------------------------------------------------------------------------------------------------------------------------ Net income, as adjusted $114,582,630 89,541,206 33,633,732 21,774,774 ==================================================================================================================================== Average common shares outstanding 114,954,483 112,750,294 115,823,254 113,315,210 Average common shares added, assuming exercise of dilutive stock options 1,582,660 1,260,370 1,582,660 1,307,018 Average common shares to be issued, assuming conversion of subordinated debentures -- 452,921 -- 452,921 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares, as adjusted 116,537,143 114,463,585 117,405,914 115,075,149 ==================================================================================================================================== Net income per common share, assuming full dilution $ 0.98 0.78 0.29 0.19 ====================================================================================================================================
Share and per share data presented in Exhibit 11.1 has been retroactively restated to reflect the three-for-two stock split declared by the Synovus Board of Directors on March 11, 1996, effective April 8, 1996, to shareholders of record as of March 21, 1996. EX-11.2 7 EXHIBIT 11.2 SYNOVUS FINANCIAL CORP. COMPUTATION OF NET INCOME PER COMMON SHARE (UNAUDITED)
Twelve Months Ended Three Months Ended December 31, December 31, - ------------------------------------------------------------------------------------------------------------------------------------ 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Primary Net income $114,582,630 89,452,498 33,633,732 21,752,597 ==================================================================================================================================== Average common shares outstanding 76,636,322 75,166,862 77,215,502 75,543,473 Average common shares added, assuming exercise of dilutive stock options 778,092 829,448 1,011,881 871,346 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares, as adjusted 77,414,414 75,996,310 78,227,383 76,414,819 ==================================================================================================================================== Net income per common share $ 1.48 1.18 0.43 0.28 ==================================================================================================================================== Assuming Full Dilution Net income $114,582,630 89,452,498 33,633,732 21,752,597 Adjustments: Interest expense on subordinated debentures -- 136,474 -- 34,118 Income tax effect on such interest expense -- (47,766) -- (11,941) - ------------------------------------------------------------------------------------------------------------------------------------ Net income, as adjusted $114,582,630 89,541,206 33,633,732 21,774,774 ==================================================================================================================================== Average common shares outstanding 76,636,322 75,166,862 77,215,502 75,543,473 Average common shares added, assuming exercise of dilutive stock options 1,055,107 836,672 1,055,107 871,346 Average common shares to be issued, assuming conversion of subordinated debentures -- 301,947 -- 301,947 - ------------------------------------------------------------------------------------------------------------------------------------ Average common shares, as adjusted 77,691,429 76,305,481 78,270,609 76,716,766 ==================================================================================================================================== Net income per common share, assuming full dilution $ 1.47 1.17 0.43 0.28 ====================================================================================================================================
Share and per share data presented in Exhibit 11.2 has not been retroactively restated to reflect the three-for-two stock split declared by the Synovus Board of Directors on March 11, 1996, effective April 8, 1996, to shareholders of record as of March 21, 1996. EX-13.1 8 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- LOGO(R) SYNOVUS(R) FINANCIAL CORP. FINANCIAL APPENDIX Consolidated Statements of Condition as of December 31, 1995 and 1994 ................................. F-2 Consolidated Statements of Income for the Years ended December 31, 1995, 1994, and 1993 ............... F-3 Consolidated Statements of Shareholders' Equity for the Years ended December 31, 1995, 1994, and 1993.. F-4 Consolidated Statements of Cash Flows for the Years ended December 31, 1995, 1994, and 1993 ........... F-5 Summary of Significant Accounting Policies ............................................................ F-6 Notes to Consolidated Financial Statements ............................................................ F-10 Independent Auditors' Report .......................................................................... F-26 Financial Highlights .................................................................................. F-27 Financial Review ...................................................................................... F-28 Summary of Quarterly Financial Data, Unaudited ........................................................ F-48
F-1 SYNOVUS FINANCIAL CORP. - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION (In thousands, except share data) December 31, 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks, including cash deposits of $31,144 and $33,693 for 1995 and 1994, respectively, on deposit to meet Federal Reserve requirements ...................................................... $ 382,696 344,637 Interest earning deposits with banks ...................................................................... 1,093 1,172 Federal funds sold ........................................................................................ 123,832 43,907 Investment securities available for sale (note 2) ......................................................... 1,106,298 804,769 Investment securities held to maturity (approximate market value of $386,579 and $510,504 for 1995 and 1994, respectively) (notes 2 and 6) ........................................ 380,918 532,933 Loans (notes 3 and 6) ..................................................................................... 5,526,842 5,089,567 Less: Unearned income ...................................................................................... (14,812) (14,691) Reserve for loan losses (note 3) ..................................................................... (81,384) (75,018) - ------------------------------------------------------------------------------------------------------------------------------------ Loans, net ................................................................................. 5,430,646 4,999,858 - ------------------------------------------------------------------------------------------------------------------------------------ Premises and equipment, net (note 6) ...................................................................... 220,197 203,106 Other assets (notes 4 and 8) .............................................................................. 281,915 245,697 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets ............................................................................... $7,927,595 7,176,079 ==================================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits (note 5): Non-interest bearing ............................................................................ $1,141,716 983,056 Interest bearing ................................................................................ 5,586,163 4,941,547 - ------------------------------------------------------------------------------------------------------------------------------------ Total deposits ............................................................................. 6,727,879 5,924,603 Federal funds purchased and securities sold under agreement to repurchase ............................ 229,477 412,082 Long-term debt (note 6) .............................................................................. 106,815 139,811 Other liabilities (notes 7 and 8) .................................................................... 142,079 97,220 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities........................................................................... 7,206,250 6,573,716 - ------------------------------------------------------------------------------------------------------------------------------------ Minority interest in consolidated subsidiary .............................................................. 27,790 22,483 Shareholders'equity (notes 1, 2, 6, 8, and 12): Common stock - $1.00 par value. Authorized 600,000,000 shares; issued 77,280,695 in 1995 and 76,134,451 in 1994; outstanding 77,236,765 in 1995 and 75,633,387 in 1994 .................................. 77,281 76,134 Surplus .............................................................................................. 127,021 118,782 Less treasury stock - 43,930 and 501,064 shares in 1995 and 1994, respectively ....................... (1,022) (7,680) Less unamortized restricted stock .................................................................... (2,663) (1,538) Net unrealized gain (loss) on investment securities available for sale ............................... 5,774 (20,744) Retained earnings .................................................................................... 487,164 414,926 - ------------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity .................................................................. 693,555 579,880 Commitments (note 9) --- --- - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity ..................................................$7,927,595 7,176,079 ====================================================================================================================================
See accompanying summary of significant accounting policies and notes to consolidated financial statements. F-2 ANNUAL REPORT 1995 - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Years ended December 31, 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Interest income: Loans, including fees ........................................................................ $ 525,080 415,242 361,744 Investment securities: U.S. Treasury and U.S. Government agencies .............................................. 59,866 53,479 48,948 Mortgage-backed securities .............................................................. 15,975 17,456 17,671 State and municipal ..................................................................... 7,397 7,772 9,307 Other investments ....................................................................... 1,357 1,611 2,875 Federal funds sold ........................................................................... 6,006 2,787 3,200 Interest earning deposits with banks ......................................................... 107 35 127 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest income ......................................................... 615,788 498,382 443,872 - ------------------------------------------------------------------------------------------------------------------------------------ Interest expense Deposits (note 5) ............................................................................ 253,761 176,919 164,644 Federal funds purchased and securities sold under agreement to repurchase .................... 12,092 10,021 5,045 Long-term debt ............................................................................... 8,060 10,211 10,970 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest expense ........................................................ 273,913 197,151 180,659 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income ........................................................... 341,875 301,231 263,213 Provision for losses on loans (note 3) ............................................................ 25,787 25,387 24,924 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income after provision for losses on loans ....................... 316,088 275,844 238,289 - ------------------------------------------------------------------------------------------------------------------------------------ Non-interest income Data processing services ..................................................................... 236,125 178,122 148,364 Service charges on deposit accounts .......................................................... 46,657 41,447 39,160 Fees for trust services ...................................................................... 9,649 8,796 8,923 Credit card fees ............................................................................. 7,288 7,703 7,493 Securities gains (losses), net (note 2) ...................................................... 368 (721) 1,108 Other operating income ....................................................................... 40,747 38,985 31,214 - ----------------------------------------------------------------------------------------------------------------------------------- Total non-interest income ..................................................... 340,834 274,332 236,262 - ------------------------------------------------------------------------------------------------------------------------------------ Non-interest expense: Salaries and other personnel expense (note 8) ................................................ 252,479 211,531 180,414 Net occupancy and equipment expense (notes 4 and 9) .......................................... 99,629 83,419 72,679 Other operating expenses (note 10) ........................................................... 120,012 111,975 94,258 Minority interest in subsidiary's net income .................................................. 5,333 4,325 3,896 - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest expense .................................................... 477,453 411,250 351,247 - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes and extraordinary item ............................. 179,469 138,926 123,304 Income tax expense (note 7) ....................................................................... 64,886 49,474 42,925 - ------------------------------------------------------------------------------------------------------------------------------------ Income before extraordinary item .............................................. 114,583 89,452 80,379 - ------------------------------------------------------------------------------------------------------------------------------------ Extraordinary item-loss related to early extinguishment of debt (net of income tax benefit of $1,568) --- --- 2,912 - ------------------------------------------------------------------------------------------------------------------------------------ Net income .................................................................... $ 114,583 89,452 77,467 ==================================================================================================================================== Net income per share: Income before extraordinary item ............................................................. $ 1.50 1.19 1.09 Extraordinary item ........................................................................... --- --- (.04) - ------------------------------------------------------------------------------------------------------------------------------------ Net income .................................................................... $ 1.50 1.19 1.05 ==================================================================================================================================== Weighted average shares outstanding ............................................................... 76,636 75,167 74,009 ====================================================================================================================================
See accompanying summary of significant accounting policies and notes to consolidated financial statements. F-3 SYNOVUS FINANCIAL CORP. - --------------------------------------------------------------------------------
Net CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Unreal- (In thousands, except per share data) ized Gain/ Unamort- (Loss)on ized Securities Shares Common Treasury Restric- Avail. Retained Years ended December 31, 1995, 1994, and 1993 Issued Stock Surplus Stock ted Stock for Sale Earnings Total - ---------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1992 .............................66,842 $ 66,842 75,696 (2,974) (1,792) -- 278,235 416,007 Issuance of common stock for acquisition ................. 6,593 6,593 23,484 -- (750) -- 23,964 53,291 Issuance of common stock by pooled subsidiary prior to acquisition ............................................ 1,269 1,269 11,724 -- -- -- -- 12,993 Net income ............................................... -- -- -- -- -- -- 77,467 77,467 Cash dividends declared - $.373 per share ................ -- -- -- -- -- -- (24,880) (24,880) Cash dividends of pooled subsidiary prior to acquisition . -- -- -- -- -- -- (2,311) (2,311) Issuance of restricted stock ............................. 3 3 23 -- (26) -- -- -- Amortization of restricted stock issued under restricted stock bonus plan (note 8) .............................. -- -- -- -- 746 -- -- 746 Amortization of subsidiary restricted stock bonus plan.... -- -- 497 -- -- -- -- 497 Stock options exercised................................... 196 196 1,258 -- -- -- -- 1,454 Repayment of obligation of employee stock ownership plan at subsidiary...................................... -- -- -- -- 150 -- -- 150 Net unrealized gain on investment securities available for sale................................................ -- -- -- -- -- 11,643 -- 11,643 Purchase of fractional shares upon acquisition............ (2) (2) (58) -- -- -- -- (60) - ----------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1993 .............................74,901 74,901 112,624 (2,974) (1,672) 11,643 352,475 546,997 Issuance of common stock for acquisitions ................ 1,097 1,097 3,656 -- -- -- 5,802 10,555 Net income ............................................... -- -- -- -- -- -- 89,452 89,452 Cash dividends declared - $.450 per share ................ -- -- -- -- -- -- (30,298) (30,298) Cash dividends of pooled subsidiary prior to acquisition . -- -- -- -- -- -- (2,708) (2,708) Treasury shares purchased ................................ -- -- -- (6,013) -- -- -- (6,013) Issuance of restricted stock ............................. 65 65 1,156 455 (1,676) -- -- -- Amortization of restricted stock issued under restricted stock bonus plan (note 8) .............................. -- -- -- -- 1,421 -- -- 1,421 Amortization of subsidiary restricted stock bonus plan ... -- -- 499 -- -- -- -- 499 Stock options exercised .................................. 71 71 347 852 -- -- -- 1,270 Stock option tax benefit ................................. -- -- 692 -- -- -- -- 692 Repayment of obligation of employee stock ownership plans at subsidiaries .................................. -- -- -- -- 389 -- (26) 363 Net unrealized gain (loss) on investment securities available for sale ..................................... -- -- -- -- -- (32,387) 229 (32,158) Ownership change at majority-owned subsidiary ............ -- -- (192) -- -- -- -- (192) - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1994 .............................76,134 76,134 118,782 (7,680) (1,538) (20,744) 414,926 579,880 Issuance of common stock for acquisitions ................ 529 529 4,492 6,078 -- 183 547 11,829 Net income ............................................... -- -- -- -- -- -- 114,583 114,583 Cash dividends declared - $.540 per share................. -- -- -- -- -- -- (42,042) (42,042) Treasury shares purchased ................................ -- -- -- (1,303) -- -- -- (1,303) Issuance of restricted stock............................. 90 90 1,964 -- (2,054) -- -- -- Amortization of restricted stock issued under restricted stock bonus plan (note 8) .............................. -- -- 493 -- 779 -- -- 1,272 Stock options exercised .................................. 226 226 459 1,883 -- -- -- 2,568 Repayment of obligation of employee stock ownership plan at subsidiary ..................................... -- -- -- -- 150 -- -- 150 Net unrealized gain on investment securities available for sale ............................................... -- -- -- -- -- 26,335 -- 26,335 Ownership change at majority-owned subsidiary ............ -- -- (4) -- -- -- -- (4) Loss on foreign currency translation ..................... -- -- -- -- -- -- (850) (850) Conversion of subordinated debentures into common stock (note 6) ............................................... 302 302 835 -- -- -- -- 1,137 - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1995 .............................77,281 $ 77,281 127,021 (1,022) (2,663) 5,774 487,164 693,555 ====================================================================================================================================
See accompanying summary of significant accounting policies and notes to consolidated financial statements. F-4 ANNUAL REPORT 1995 - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years ended December 31, 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Operating Activities Net income ................................................................. $ 114,583 89,452 77,467 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary item - loss related to early extinguishment of debt, net .... -- -- 2,912 Provision for losses on loans ............................................. 25,787 25,387 24,924 Depreciation, amortization, and accretion, net ............................ 38,617 38,409 32,843 Deferred income tax benefit ............................................... (4,171) (1,097) (1,062) (Increase) decrease in interest receivable ................................ (9,973) (6,701) 2,775 Increase (decrease) in interest payable ................................... 14,680 7,316 (1,868) Minority interest in subsidiary's net income .............................. 5,333 4,325 3,896 (Increase) decrease in mortgage loans held for sale ....................... (15,398) 13,944 (11,665) Other, net ................................................................ (17,009) (3,122) (191) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities ............................... 152,449 167,913 130,031 - ------------------------------------------------------------------------------------------------------------------------------------ Investing Activities Cash acquired from acquisitions ............................................ 4,431 9,056 30,362 Net business aquisitions by subsidiary ..................................... -- -- 88,997 Net decrease in interest earning deposits with banks ....................... 1,956 553 100 Net (increase) decrease in federal funds sold .............................. (70,770) 137,464 67,734 Proceeds from maturities of investment securities available for sale ....... 173,109 192,186 24,182 Proceeds from sales of investment securities available for sale ............ 136,502 182,972 43,613 Purchases of investment securities available for sale ...................... (394,406) (347,177) (78,544) Proceeds from maturities of investment securities held to maturity ......... 82,837 87,943 343,760 Proceeds from sales of investment securities held to maturity .............. -- -- 33,803 Purchases of investment securities held to maturity ........................ (92,966) (141,153) (566,335) Net increase in loans ...................................................... (385,228) (566,101) (431,564) Purchases of premises and equipment ........................................ (48,212) (41,938) (52,885) Disposals of premises and equipment ........................................ 1,888 1,007 9,645 Proceeds from sale of other real estate .................................... 12,032 9,078 13,622 Additions to internally developed computer software ........................ (2,617) (10,624) (11,688) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities ................................... (581,444) (486,734) (485,198) - ------------------------------------------------------------------------------------------------------------------------------------ Financing Activities Net increase in demand and savings deposits ................................ 193,870 87,229 279,355 Net increase in certificates of deposit .................................... 528,690 135,539 43,001 Net (decrease) increase in federal funds purchased and securities sold under agreement to repurchase ....................................... (182,870) 142,125 122,457 Principal repayments on long-term debt ..................................... (33,682) (36,204) (86,446) Extraordinary item - loss related to early extinguishment of debt, net ..... -- -- (2,912) Proceeds from issuance of long-term debt ................................... 1,823 17,006 92,260 Purchase of treasury stock ................................................. (1,303) (6,013) -- Dividends paid to shareholders ............................................. (42,042) (33,006) (27,191) Proceeds from issuance of common stock ..................................... 2,568 1,270 14,447 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities ............................... 467,054 307,946 434,971 - ------------------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in cash and cash equivalents ............................. 38,059 (10,875) 79,804 Cash and cash equivalents at beginning of period ............................. 344,637 355,512 275,708 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period ................................... $ 382,696 344,637 355,512 ====================================================================================================================================
See accompanying summary of significant accounting policies and notes to consolidated financial statements. F-5 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Operations The consolidated financial statements include the accounts of Synovus Financial Corp. (Parent Company) and its subsidiaries, all but one of which were wholly-owned at December 31, 1995. Synovus has 34 wholly-owned bank affiliates predominantly involved in commercial banking activities and a wholly-owned broker/dealer company. Total System Services, Inc. (TSYS), an 80.8% owned subsidiary, is a bankcard data processing company. The consolidated revenues are primarily contributed from the banking operations, with TSYS' revenues contributing approximately one quarter of consolidated revenues. The banking operations revenues are earned in four southeastern states: Georgia (61%), Alabama (20%), South Carolina (11%), and Florida (8%). TSYS has two major customers which account for approximately 34% of their revenues. The remainder of TSYS' revenues are generated from customer institutions located in North America. Basis of Presentation In preparing the financial statements in accordance with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the reserve for loan losses; the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans; and the disclosures for contingent assets and liabilities. In connection with the determination of the reserve for loan losses and the valuation of other real estate, management obtains independent appraisals for significant properties and properties collateralizing impaired loans. The accounting and reporting policies of Synovus Financial Corp. and subsidiaries (Synovus) conform to generally accepted accounting principles and to general practices within the banking and technology industries. All significant intercompany accounts and transactions have been eliminated in consolidation. The following is a description of the more significant of those policies. Cash Flow Information For the years ended December 31, 1995, 1994, and 1993, income taxes of $68 million, $48 million, and $42 million, and interest of $259 million, $190 million, and $183 million, respectively, were paid. Loans receivable of approximately $9 million, $8 million, and $16 million were transferred to real estate acquired in settlement of loans during 1995, 1994, and 1993, respectively. Investment securities held to maturity with an amortized cost of approximately $161 million, $5 million, and $791 million were transferred during 1995, 1994, and 1993, respectively, to investment securities available for sale. Federal Funds Sold, Federal Funds Purchased, and Securities Sold Under Agreement to Repurchase Federal funds sold, federal funds purchased, and securities sold under agreement to repurchase generally mature in one day. Investment Securities Synovus classifies its securities into three categories: trading, available for sale, or held to maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held to maturity securities are those securities for which Synovus has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. Trading and available for sale securities are recorded at fair value. Held to maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized gains and losses on trading securities are included in earnings. Unrealized gains and losses, net of the related tax effect, on securities available for sale are excluded from earnings and are reported as a separate component of shareholders' equity until realized. Transfers of securities between categories are recorded at fair value at the date of transfer. Unrealized gains and losses are recognized in earnings for transfers into trading securities. Unrealized gains or losses associated with transfers of securities from held to maturity to available for sale are recorded as a separate component of shareholders' equity. The unrealized gains or losses included in the separate component of shareholders' equity for a security transferred from available for sale to held to maturity are maintained and amortized into earnings over the remaining life of the security as an adjustment to yield in a manner consistent with the amortization or accretion of premium or discount on the associated security. A decline in the market value of any available for sale or held to maturity security below cost that is deemed other than temporary results in a charge to earnings resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield using the effective interest method and prepayment assumptions. Dividend and interest income are recognized when earned. Realized gains and losses for securities classified as available for sale and held to maturity are included in earnings and are derived using the specific identification method for determining the amortized cost of securities sold. Gains and losses on sales of investment securities are recognized on the settlement date, based on the amortized cost of the specific security. The financial statement impact of settlement date accounting versus trade date accounting was immaterial. F-6 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Loans and Interest Income Loans are reported at principal amounts outstanding, less unearned income and the reserve for loan losses. First mortgage loans held for sale are reported at the lower of aggregate cost or market. No valuation allowances were required at December 31, 1995 or 1994. Interest income on consumer loans, made on a discount basis, is recognized in a manner which approximates the level yield method. Interest income on substantially all other loans is recognized on a level yield basis. Loan fees, net of certain direct origination costs, are deferred and amortized over the terms of the loans using a method which approximates a level yield. Annual fees, net of costs, collected for credit cards are recognized on a straight-line basis over the period the fee entitles the cardholder to use the card. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal or when they become contractually in default for 90 days or more as to either interest or principal, unless they are both well-secured and in the process of collection. When a loan is placed on nonaccrual status, previously accrued and uncollected interest for the fiscal year in which the loan is placed on nonaccrual status is charged to interest income on loans, unless management believes that the accrued interest is recoverable through the liquidation of collateral. Interest payments received on nonaccrual loans are applied as a reduction of principal. Loans are returned to accruing status only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. Such interest, when ultimately collected, is recorded as interest income in the period received. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual classification. Reserve for Loan Losses Synovus adopted the provisions of Statement of Financial Accounting Standard (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures", on January 1, 1995. Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a loan to be impaired when the ultimate collectibility of all amounts due, according to the contractual terms of the loan agreement, is in doubt. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate. If the loan is collateral-dependent, the fair value of the collateral is used to determine the amount of impairment. Impairment losses are included in the reserve for loan losses through a charge to the provision for losses on loans. Subsequent recoveries are added to the reserve for loan losses. Prior periods have not been restated. SFAS No. 114 applies to all loans, except for large pools of smaller balance homogeneous loans that are collectively evaluated for impairment, loans that are measured at fair value or at the lower of cost or fair value, and debt securities. The reserve for loan losses for large pools of smaller balance homogeneous loans is established through consideration of such factors as changes in the nature and volume of the portfolio, overall portfolio quality, adequacy of the underlying collateral, loan concentrations, historical charge-off trends, and economic conditions that may affect the borrowers' ability to pay. Loans are charged against the reserve for loan losses when management believes that the collection of principal is unlikely. Management believes that the reserve for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the reserve for loan losses may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review Synovus' affiliate banks' reserve for loan losses. Such agencies may require Synovus' affiliate banks to recognize additions to the reserve for loan losses based on their judgments about information available to them at the time of their examination. Premises and Equipment Premises and equipment, including leasehold improvements, are reported at cost, less accumulated depreciation and amortization, which are computed using straight-line or accelerated methods over the estimated useful life of the related asset. Other Assets Included in other assets are other real estate, originated and purchased mortgage servicing rights, intangibles, and computer software as described in the paragraphs below. Other Real Estate: Other real estate, consisting of properties obtained through foreclosure or in satisfaction of loans, is reported at the lower of cost or fair value, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources, adjusted for estimated selling costs. Any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is treated as a loan charge-off. Gain or loss on sale and any subsequent adjustment to the value are recorded as a component of non-interest expense. Originated and Purchased Mortgage Servicing Rights: Effective July 1, 1995, Synovus adopted SFAS No. 122, "Accounting for Mortgage Servicing Rights", as an amendment to SFAS No. 65, "Accounting for Certain Mortgage Banking Activities". SFAS No. 122 requires that a mortgage banking enterprise recognize as separate assets, rights to service mortgage loans for others regardless of whether the servicing rights are acquired through either the purchase or origination of mortgage loans. SFAS No. 122 also requires that capitalized mortgage servicing rights be evaluated for impairment based upon the fair value of those rights, including those rights purchased F-7 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- before adoption of SFAS No. 122. Fair value is estimated by determining the present value of the estimated future cash flows using discount rates commensurate with the risks involved. In determining the present value, Synovus stratifies its mortgage servicing rights based on risk characteristics including loan types, note rates, and note terms. Capitalized mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income, using a method that approximates level yield and taking into consideration prepayment of the underlying loans. Management re-evaluates the terms used for amortization based upon prepayment history and adjusts the terms as necessary. Intangibles: Goodwill, which represents the excess of cost over the fair value of net assets acquired of purchased companies, is being amortized using the straight-line method over periods of 15 to 40 years. Core deposit premiums resulting from the valuation of core deposit intangibles acquired in business combinations or in the purchase of branch offices are amortized using accelerated methods over periods not exceeding the estimated average remaining life of the existing customer deposit bases acquired. Amortization periods range from 10 to 18 years. Intangible amortization periods are monitored to determine if events and circumstances require such periods to be reduced. Goodwill and core deposit premiums are reviewed for impairment on the basis of whether these assets are fully recoverable from expected undiscounted cash flows of the related business units. Computer Software: Software development costs are capitalized from the time technological feasibility of the software product or enhancement is established until the software is ready for use in providing processing services to customers. Research and development costs and other computer software maintenance costs related to software development are expensed as incurred. Software development costs related to providing processing services to customers are amortized using the greater of the straight-line method over the estimated useful life or the ratio of current revenues to current and anticipated revenues. The carrying value of computer software costs is reviewed for impairment, and impairment is recognized when the expected undiscounted future cash flows derived from such intangible assets are less than their carrying value. Data Processing Services TSYS' bankcard data processing revenues are derived from long-term processing agreements with banks and nonbank institutions and are recognized as revenues at the time the services are performed. TSYS' processing agreements generally contain terms ranging from three to ten years. Income Taxes Synovus accounts for income taxes in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes". Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Postretirement Benefits Synovus sponsors a defined benefit health care plan for substantially all employees and early retirees. Effective January 1, 1993, Synovus adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions", which established a new accounting principle for the cost of retiree health care and other postretirement benefits. Effective in 1993, the expected costs of such postretirement benefits are being expensed over the period that employees provide service. Prior to 1993, Synovus recognized these benefits on the pay-as-you-go method (i.e., cash basis). Net Income per Share Net income per common share is based on the weighted average number of shares outstanding. The effect of dilutive stock options on net income per share is insignificant. All share and per share data has been restated to reflect the March 1993 three-for-two stock split, which was effective on April 1, 1993, in the form of a 50% stock dividend. Disclosure About the Fair Value of Financial Instruments SFAS No. 107, "Disclosures About Fair Value of Financial Instruments", requires all entities to disclose the fair value of financial instruments, both assets and liabilities (on- and off-balance sheet), for which it is practicable to estimate fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale, at one time, Synovus' entire holdings of a particular financial instrument. Because no market exists for a portion of Synovus' financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. F-8 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred tax accounts, premises and equipment, and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. The following summarizes the fair value of financial instruments at December 31, 1995 and 1994.
December 31, 1995 December 31, 1994 ------------------- ----------------- Carrying Fair Carrying Fair (In thousands) Note Value Value Value Value - ---------------------------------------------------------------------------------------------------------------------------- Federal funds sold ...................................................... -- $123,832 123,832 43,907 43,907 Investment securities available for sale ................................ 2 1,106,298 1,106,298 804,769 804,769 Investment securities held to maturity .................................. 2 380,918 386,579 532,933 510,504 Loans, net unearned income .............................................. 3 5,512,030 5,475,170 5,074,876 4,993,463 Deposits ................................................................ 5 6,727,879 6,732,584 5,924,603 5,915,483 Federal funds purchased and securities sold under agreement to repurchase 6 229,477 229,477 412,082 412,082 Long-term debt .......................................................... 6 106,815 105,874 139,811 129,658 Commitments ............................................................. 9 1,860,427 1,860,427 1,656,510 1,656,510 Interest rate swaps ..................................................... 9 -- 1,776 -- --
Other Certain amounts in 1994 and 1993 have been reclassified to conform with presentation adopted in 1995. Recent Accounting Pronouncements On October 23, 1995, SFAS No. 123, "Accounting for Stock-Based Compensation" was issued. SFAS No. 123 allows companies to retain the current approach set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", for recognizing stock-based compensation expense in the basic financial statements; however, companies are encouraged to adopt a new accounting method based on the estimated fair value of employee stock options. Companies that do not follow the new fair value based method will be required to provide expanded disclosures in the footnotes. SFAS No. 123 is effective for fiscal years ended December 31, 1996, and Synovus intends to provide such information in expanded disclosures in the footnotes. F-9 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 1 Business Combinations On April 28, 1995, Synovus completed the acquisition of Citizens & Merchants Corporation (CMC), the parent company of the $52 million asset, Citizens & Merchants State Bank, Douglasville, Georgia. Synovus issued 626,469 shares of common stock for all the issued and outstanding shares of CMC. This transaction has been accounted for as a pooling of interests, except that the financial statements for periods prior to the acquisition were not restated since the effect was not material. On February 28, 1995, Synovus completed the acquisition of NBSC Corporation (NBSC), the parent company of the $1.1 billion asset, The National Bank of South Carolina, Columbia, South Carolina. Synovus issued 7,929,348 shares of common stock for all the issued and outstanding shares of NBSC. This acquisition has been accounted for as a pooling of interests and, accordingly, the financial statements for all periods presented have been restated to include the financial condition and results of operations of this entity. Synovus' financial statements for the years ended December 31, 1994 and 1993 have been restated for the NBSC acquisition as follows:
1994 1993 ----------------------- ----------------------- Before Before (In thousands, except per share data) Acquisition Restated Acquisition Restated - ------------------------------------------------------------------------------------------------------------------------ Net interest income .................................................. $ 259,502 301,231 229,063 263,213 ========================================================================================================================= Income before extraordinary item ..................................... $ 86,448 89,452 74,058 80,379 Extraordinary item - loss related to early extinguishment of debt (net of income tax benefit of $1,568) ................................... -- -- 2,912 2,912 - ----------------------------------------------------------------------------------------------------------------------- Net income ........................................................... $ 86,448 89,452 71,146 77,467 ======================================================================================================================== Net income per share: Income before extraordinary item ..................................... $ 1.29 1.19 1.11 1.09 Extraordinary item ................................................... -- -- (.04) (.04) - ------------------------------------------------------------------------------------------------------------------------ Net income ........................................................... $ 1.29 1.19 1.07 1.05 =======================================================================================================================
On January 31, 1995, Synovus completed the acquisition of the $43 million asset Peach State Bank (PSB), Riverdale, Georgia. Synovus issued 266,498 treasury shares for all of the issued and outstanding shares of PSB. This acquisition was accounted for as a purchase. Effective October 31, 1994, Synovus completed the acquisition of State Banchares, Inc. (SBI), the parent company of the $62 million asset, Coffee County Bank, Enterprise, Alabama. Synovus issued 548,879 shares of common stock for all of the issued and outstanding shares of SBI. This acquisition has been accounted for as a pooling of interests, except that financial statements for periods prior to the acquisition were not restated since the effect was not material. Effective May 31, 1994, Synovus completed the acquisition of PNB Bankshares, Inc. (PNB), the parent company of the $78 million asset, Peachtree National Bank, Peachtree City, Georgia. Synovus issued 548,213 shares of common stock for all of the issued and outstanding shares of PNB. This acquisition has been accounted for as a pooling of interests, except that the financial statements for periods prior to the acquisition were not restated since the effect was not material. - -------------------------------------------------------------------------------- F-10 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note 2 Investment Securities The carrying and approximate market values of investment securities are summarized as follows:
December 31, 1995 ----------------------------------------------- Investment Securities Available for Sale: Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value - --------------------------------------------------------------------------------------------- U. S. Treasury and U. S. Government agencies $ 996,129 10,466 (2,309) 1,004,286 Mortgage-backed securities ................. 87,741 758 (303) 88,196 State and municipal ........................ 1,251 72 (1) 1,322 Other investments .......................... 12,254 678 (438) 12,494 - --------------------------------------------------------------------------------------------- Total .................................... $1,097,375 11,974 (3,051) 1,106,298 ============================================================================================ December 31, 1994 ----------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value - --------------------------------------------------------------------------------------------- U. S. Treasury and U. S. Government agencies $ 798,990 286 (31,732) 767,544 Mortgage-backed securities ................. 24,819 160 (566) 24,413 State and municipal ........................ 1,523 -- (32) 1,491 Other investments .......................... 11,355 741 (775) 11,321 - ---------------------------------------------------------------------------------------------- Total .................................... $ 836,687 1,187 (33,105) 804,769 ============================================================================================== December 31, 1995 ------------------------------------------------- Investment Securities Held to Maturity Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value - --------------------------------------------------------------------------------------------- U. S. Treasury and U. S. Government agencies $ 81,772 1,415 (607) 82,580 Mortgage-backed securities ................. 171,275 1,629 (1,477) 171,427 State and municipal ........................ 121,761 4,779 (115) 126,425 Other investments .......................... 6,110 37 -- 6,147 - --------------------------------------------------------------------------------------------- Total .................................... $ 380,918 7,860 (2,199) 386,579 ============================================================================================= December 31, 1994 ------------------------------------------------ Gross Gross Estimated Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value - --------------------------------------------------------------------------------------------- U. S. Treasury and U. S. Government agencies $ 159,354 24 (9,326) 150,052 Mortgage-backed securities ................. 243,220 152 (13,725) 229,647 State and municipal ........................ 121,834 1,893 (1,531) 122,196 Other investments .......................... 8,525 84 -- 8,609 - ----------------------------------------------------------------------------------------------- Total .................................... $ 532,933 2,153 (24,582) 510,504 ===============================================================================================
Prior to January 1, 1994, unrealized losses on mutual funds were included in retained earnings. However, these amounts, $229,000, have been reclassified and included in the net unrealized gain (loss) component of shareholders' equity effective December 31, 1994. On December 21, 1995, Synovus exercised an option permitted by the "Special Report - a Guide to Implementation of FASB No. 115, Accounting for Certain Investments in Debt and Equity Securities - Questions and Answers" to make a one time transfer of securities held to maturity to securities available for sale. This transfer was made to add further liquidity and flexibility to the portfolio that will enable Synovus to more effectively manage its interest rate risk position. The amortized cost and estimated fair value of the securities transferred was $133.7 million and $133.9 million, respectively. On February 28, 1995, immediately following the acquisition, Synovus transferred certain held to maturity securities of NBSC to the available for sale portfolio to adhere to Synovus' existing asset-liability management policy and interest rate risk strategy. Such transfers consisted of investment securities with an estimated fair value of $27.1 million and an amortized cost of $27.4 million. F-11 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The amortized cost and estimated fair value of investment securities at December 31, 1995 and 1994, are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Investment Securities Investment Securities Held to Maturity Available for Sale December 31, 1995 December 31, 1995 ----------------------- --------------------- Amortized Estimated Amortized Estimated (In thousands) Cost Fair Value Cost Fair Value - --------------------------------------------------------------------------------------------- U. S. Treasury and U. S. Government Agencies: Within 1 year ............................. $ 14,924 14,994 241,142 241,688 1 to 5 years .............................. 44,615 44,708 553,647 557,958 5 to 10 years ............................. 22,233 22,878 200,840 204,131 More than 10 years ........................ -- -- 500 509 - --------------------------------------------------------------------------------------------- $ 81,772 82,580 996,129 1,004,286 ============================================================================================= Mortgage-backed securities: Within 1 year ............................. $ 1,692 1,710 1,237 1,239 1 to 5 years .............................. 73,793 72,846 34,702 34,612 5 to 10 years ............................. 22,174 22,465 11,577 11,644 More than 10 years ........................ 73,616 74,406 40,225 40,701 - --------------------------------------------------------------------------------------------- $ 171,275 171,427 87,741 88,196 ============================================================================================= State and municipal: Within 1 year ............................. $ 17,986 18,265 299 298 1 to 5 years .............................. 52,596 54,225 594 668 5 to 10 years ............................. 35,218 36,717 100 98 More than 10 years ........................ 15,961 17,218 258 258 - --------------------------------------------------------------------------------------------- $ 121,761 126,425 1,251 1,322 ============================================================================================= Other investments: Within 1 year ............................. $ 98 99 3,329 3,382 1 to 5 years .............................. 1,832 1,869 3,005 3,325 5 to 10 years ............................. 265 265 2,082 2,251 More than 10 years ........................ 3,915 3,914 3,838 3,536 - --------------------------------------------------------------------------------------------- $ 6,110 6,147 12,254 12,494 ============================================================================================= Total investment securities: Within 1 year ............................. $ 34,700 35,068 246,007 246,607 1 to 5 years .............................. 172,836 173,648 591,948 596,563 5 to 10 years ............................. 79,890 82,325 214,599 218,124 More than 10 years ........................ 93,492 95,538 44,821 45,004 - --------------------------------------------------------------------------------------------- $ 380,918 386,579 1,097,375 1,106,298 =============================================================================================
A summary of investment security sales transactions for 1995, 1994, and 1993 is as follows:
Investment Securities Held to Maturity Investment Securities Available for Sale -------------------------------------- --------------------------------------- Gross Gross Gross Gross Realized Realized Realized Realized (In thousands) Proceeds Gains Losses Proceeds Gains Losses - ---------------------------------------------------------------------------------------------------------- 1995....................$ -- -- -- 136,502 1,164 (796) 1994.................... -- -- -- 182,972 957 (1,678) 1993.................... 33,803 333 (69) 43,613 844 --
Securities with a carrying value of $879,232,000 and $879,038,000 at December 31, 1995 and 1994, respectively, were pledged to secure certain deposits as required by law. - -------------------------------------------------------------------------------- F-12 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 3 Loans Loans outstanding, by classification, are summarized as follows:
December 31, -------------------------- 1995 1994 -------------------------- Commercial: Commercial, financial, and agricultural ... $ 1,931,004 1,783,928 Real estate-construction .................. 578,712 472,131 Real estate-mortgage ...................... 1,160,089 1,030,524 - -------------------------------------------------------------------------------- Total commercial ........................ 3,669,805 3,286,583 - -------------------------------------------------------------------------------- Retail: Real estate-mortgage ...................... 824,998 865,642 Installment loans-credit card ............. 222,204 171,475 Installment loans-other ................... 784,972 756,402 Mortgage loans held for sale .............. 24,863 9,465 - -------------------------------------------------------------------------------- Total retail ............................ 1,857,037 1,802,984 - -------------------------------------------------------------------------------- Total loans ............................. $ 5,526,842 5,089,567 ================================================================================
Activity in the reserve for loan losses is summarized as follows: (In thousands) 1995 1994 1993 - -------------------------------------------------------------------------------- Balance at beginning of year .............. $ 75,018 67,270 61,336 Loan loss reserves of acquired subsidiaries 1,001 1,535 -- Provision for losses on loans ............. 25,787 25,387 24,924 Recoveries of loans previously charged off 4,510 5,874 4,767 Loans charged off ......................... (24,932) (25,048) (23,757) - -------------------------------------------------------------------------------- Balance at end of year .................... $ 81,384 75,018 67,270 ================================================================================
As discussed in the Summary of Significant Accounting Policies, Synovus adopted SFAS No. 114 and SFAS No. 118 effective January 1, 1995. No adjustment to the loan loss reserve was needed upon adoption of SFAS No. 114 and SFAS No. 118. The table below illustrates the impaired loans and related amounts included in the reserve for loan losses at December 31, 1995. Allocated Loan Loan Loss (In thousands) Balance Reserve - -------------------------------------------------------------------------------- Impaired loans, nonaccruing, with loan loss reserve .... $13,083 5,619 Impaired loans, nonaccruing, with no loan loss reserve . 7,151 -- Impaired loans, accruing, with loan loss reserve ....... 35,833 13,255 Impaired loans, accruing, with no loan loss reserve .... 23,735 -- Impaired loans, accruing, partially charged off ........ 329 62 - -------------------------------------------------------------------------------- Total .............................................. $80,131 18,936 ================================================================================
F-13 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- These loan loss reserve amounts were primarily determined using the fair value of the loans' collateral. The average recorded investment in impaired loans was approximately $87,000,000 for the year ended December 31, 1995 and the related amount of interest income recognized during the period that such loans were impaired was approximately $5,695,000. Loans on nonaccrual status amounted to approximately $21,469,000, $26,497,000, and 30,296,000 at December 31, 1995, 1994, and 1993, respectively. If nonaccruing loans had been on a full accruing basis, interest income on these loans would have been increased by approximately $2,606,000, $2,931,000, and $2,632,000 in 1995, 1994, and 1993, respectively. A substantial portion of Synovus' loans are secured by real estate in markets in which affiliate banks are located throughout Georgia, Alabama, South Carolina, and Northwest Florida. Accordingly, the ultimate collectibility of a substantial portion of Synovus' loan portfolio and the recovery of a substantial portion of the carrying amount of real estate owned are susceptible to changes in market conditions in these areas. At December 31, 1995, an affiliate company serviced mortgage loans for unaffiliated investors in the amount of $664,931,000. This company carries error and omissions insurance in the amount of $1,000,000. Synovus records servicing fee income on these loans based upon the outstanding balance of the loans serviced. The following table presents information for mortgage loans held for sale as of December 31, 1995 and 1994: December 31,
--------------------- (In thousands) 1995 1994 - -------------------------------------------------------------------------------- Beginning balance ..................................... $ 9,465 23,409 Loans originated during the year ...................... 213,645 210,056 Loans sold during the year ............................ (198,247) (224,000) - -------------------------------------------------------------------------------- Ending balance ........................................ $ 24,863 9,465 ================================================================================
Fair value of loans is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, such as commercial, mortgage, home equity, credit card, and other consumer loans. Fixed rate commercial loans are further segmented into certain collateral code groupings. Commercial and other consumer loans with adjustable interest rates are assumed to be at fair value. Mortgage loans are further segmented into fixed and adjustable rate interest terms. Home equity and credit card loans have adjustable interest rates and are, therefore, assumed to be at fair value. The fair value of loans, except mortgage loans, is calculated by discounting contractual cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loan. For mortgage loans, fair value is estimated by discounting contractual cash flows adjusted for certain prepayment assumptions, estimated using discount rates based on secondary market sources adjusted to reflect differences in servicing and credit costs. The following table presents information for the fair value of loans as of December 31, 1995 and 1994: 1995 1994 ---------------------- -----------------------
Carrying Estimated Carrying Estimated (In thousands) Amount Fair Value Amount Fair Value - -------------------------------------------------------------------------------------------------------------------------- Adjustable rate loans, net of unearned income ................... $ 3,197,420 3,239,448 2,730,818 2,727,760 Fixed rate loans, net of unearned income ........................ 2,314,610 2,235,722 2,344,058 2,265,703
In the ordinary course of business, Synovus has direct and indirect loans outstanding to certain executive officers, directors, and principal holders of equity securities (including their associates). Management believes that such loans are made substantially on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other customers. The following is a summary of such loans outstanding and the activities in these loans for the year ended December 31, 1995 (in thousands). Balance at December 31, 1994 .......................................................................... $ 135,645 Adjustment for executive officer and director changes ................................................. (9,399) - ----------------------------------------------------------------------------------------------------------------------- Adjusted balance at December 31, 1994 ................................................................. 126,246 New loans ............................................................................................. 66,482 Repayments ............................................................................................ (65,310) - ----------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 .......................................................................... $ 127,418 ======================================================================================================================== - --------------------------------------------------------------------------------
F-14 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 4 Other Assets Included in other assets are two significant balances; purchased and originated mortgage servicing rights, and computer software costs. Synovus adopted SFAS No. 122 as of July 1, 1995 and has capitalized all mortgage servicing rights since the adoption date. As of December 31, 1995, Synovus had approximately $8,569,000 in capitalized mortgage servicing rights, the fair value of which was approximately $9,844,000 and, at year end 1995, there was no valuation allowance. The following table summarizes TSYS computer software at December 31, 1995 and 1994:
(In thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ TS2 ......................................................................................... $33,049 33,049 Other internally developed software, including enhancements to TS2 .......................... 5,346 3,804 Purchased computer software ................................................................. 17,138 11,781 - ------------------------------------------------------------------------------------------------------------------------------------ 55,533 48,634 Less accumulated amortization ............................................................... 16,317 9,394 - ------------------------------------------------------------------------------------------------------------------------------------ Computer software, net ...................................................................... $39,216 39,240 ====================================================================================================================================
Capitalized software development costs, related to the bankcard data processing, for the years ended December 31, 1995, 1994, and 1993 were $2,617,000, $10,624,000, and $11,688,000, respectively. Amortization expense related to computer software costs was $7,358,000, $3,669,000 and $2,175,000 for the years ended December 31, 1995, 1994, and 1993, respectively. - -------------------------------------------------------------------------------- Note 5 Deposits In accordance with SFAS No. 107, the fair value of deposits with no stated maturity, such as non-interest bearing demand accounts, interest bearing demand deposits, money market accounts, and savings accounts, is equal to the amount payable on demand as of that respective date. 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. The following table presents fair value information on deposits as of December 31, 1995 and 1994: 1995 1994
------------------------------ --------------------------- Carrying Estimated Carrying Estimated (In thousands) Value Fair Value Value Fair Value - ------------------------------------------------------------------------------------------------------------------------------------ Non-interest bearing demand deposits ....................... $1,141,716 1,141,716 983,056 983,056 Interest bearing demand deposits ........................... 932,351 932,351 911,869 911,869 Money market accounts ...................................... 925,861 925,861 843,619 843,619 Savings accounts ........................................... 465,491 465,491 485,989 485,989 Time deposits .............................................. 3,262,460 3,267,165 2,700,070 2,690,950 - ------------------------------------------------------------------------------------------------------------------------------------ $6,727,879 6,732,584 5,924,603 5,915,483 ====================================================================================================================================
Time deposits over $100,000 at December 31, 1995, 1994, and 1993, were $1,023,900,000, $804,936,000, and $688,332,000, respectively. Interest expense for the years ended December 31, 1995, 1994, and 1993 on these large denomination deposits was $57,259,000, $31,865,000, and $27,605,000, respectively. - -------------------------------------------------------------------------------- F-15 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 6 Long-Term Debt
Long-term debt consists of the following: December 31, - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Parent Company: 6.125% senior notes, due October 15, 2003, with semi-annual interest payments and principal to be paid at maturity..$75,000 75,000 9.50% promissory notes, due October 31, 1995, with interest due monthly............................................. -- 13,000 Unsecured revolving credit agreement, due May 1, 1995, with interest due quarterly at .50% below the prime rate..... -- 12,500 8.75% Debenture, due May 15, 2004, with annual principal payments of $120,000 and $1,600,000 at maturity............ 2,440 2,560 - ------------------------------------------------------------------------------------------------------------------------------------ Total Parent Company Debt ..................................................................................... 77,440 103,060 - ------------------------------------------------------------------------------------------------------------------------------------
Subsidiaries: Federal Home Loan Bank advances with monthly interest payments and principal payments due at various maturity dates through 2004 and interest rates ranging from 5.03% to 5.90% at December 31, 1995............... 26,300 34,140 12.00% mandatory convertible subordinated debentures, due August 19, 1995, with interest payments due semi-annually. (See details below regarding conversion)................................................... -- 1,137 9.23% note payable, due October 31, 2003, with annual principal and interest payments.............................. 348 376 8.00% capital lease obligation payable, due in monthly principal and interest payments through 2002................ 274 301 Other notes payable and capital lease obligations payable, with a weighted average interest rate of 5.44%, maturing at various dates through 2000......................................................... 2,453 797 - ------------------------------------------------------------------------------------------------------------------------------------ Total Subsidiaries Debt.................................................................................. 29,375 36,751 - ------------------------------------------------------------------------------------------------------------------------------------ Total Long-Term Debt.....................................................................................$106,815 139,811 ====================================================================================================================================
The more significant debt agreements held by the Parent Company provide for certain limitations on: payments of cash dividends, issuance of additional debt, creation of liens upon property, disposition of common stock or assets, and investments in subsidiaries. As of December 31, 1995, the most restrictive of these allow for the payment of cash dividends up to a maximum of $114,583,000. The Federal Home Loan Bank advances are secured by certain mortgage loans receivable as well as all of the stock of the Federal Home Loan Bank owned by Synovus. Mandatory convertible subordinated debentures of $1,137,280 matured on August 19, 1995. In accordance with the terms of these debentures, Synovus issued 301,886 shares of common stock to extinguish the debentures. The capital lease obligations payable and certain notes payable are secured by land, buildings, and equipment with a net carrying value at December 31, 1995, of approximately $829,000. Synovus has an unsecured line of credit, with an unaffiliated bank, for $20 million with an interest rate of 50 basis points above the "short-term index", as defined. There were no advances on this line of credit outstanding at any time in the years ended December 31, 1995 or 1994. Required annual principal payments on long-term debt for the five years subsequent to December 31, 1995, are as follows:
Parent (In thousands) Company Subsidiaries Total - -------------------------------------------------------------------------------- 1996....................$120 12,503 12,623 1997.................... 120 8,104 8,224 1998.................... 120 7,079 7,199 1999.................... 120 382 502 2000.................... 120 307 427
F-16 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Short-term and long-term debt with adjustable interest rates are assumed to be at fair value. Short-term debt that matures within ten days is also assumed to be at fair value. The fair value of short-term and long-term debt with fixed interest rates is calculated by discounting contractual cash flows using estimated market discount rates. The following table presents fair value information on short-term and long-term debt as of December 31, 1995 and 1994:
1995 1994 ------------------------- -------------------------- Carrying Estimated Carrying Estimated (In thousands) Amount Fair Value Amount Fair Value - -------------------------------------------------------------------------------------------------------------------- Long-term debt with adjustable interest rates.......... $ -- -- 12,500 12,500 Long-term debt with fixed interest rates............... 106,815 105,874 127,311 117,158 - --------------------------------------------------------------------------------------------------------------------
Note 7 Income Taxes Income tax expense (benefit) attributable to income before extraordinary item consists of:
(In thousands) 1995 1994 1993 - -------------------------------------------------------------------------------- Currently payable: Federal .......... $ 65,009 46,304 39,634 State ............ 4,048 4,267 4,353 - -------------------------------------------------------------------------------- 69,057 50,571 43,987 - -------------------------------------------------------------------------------- Deferred: Federal .......... (3,792) (997) (989) State ............ (379) (100) (73) - -------------------------------------------------------------------------------- (4,171) (1,097) (1,062) - -------------------------------------------------------------------------------- Total income taxes $ 64,886 49,474 42,925 ================================================================================
Income tax expense attributable to income before extraordinary item differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to pretax income before extraordinary item as a result of the following:
(In thousands) 1995 1994 1993 - ----------------------------------------------------------------------------------------- Taxes at statutory federal income tax rate .......... $ 62,814 48,624 43,156 Tax-exempt income ................................... (2,956) (3,654) (4,287) State income taxes, net of federal income tax benefit 2,385 2,709 2,782 Minority interest ................................... 1,867 1,514 1,364 Other, net .......................................... 776 281 (90) - ---------------------------------------------------------------------------------------- Total income tax expense .......................... $ 64,886 49,474 42,925 ======================================================================================== Effective tax rate ................................ 36.15% 35.61 34.81 =========================================================================================
The significant components of deferred income tax expense for the years ended December 31, 1995 and 1994 are as follows:
(In thousands) 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------------------------- (Decrease) increase in net tax benefit (exclusive of the components listed below) .............. $ (9,065) 17,339 208 Adjustments to deferred income tax assets and liabilities for enacted tax rate change .......... -- 240 786 Change in valuation allowance .................................................................. (418) 406 95 Change in deferred income tax assets and liabilities related to net unrealized gain (loss) on securities available for sale ............................................................. 13,788 (16,555) (27) Deferred tax assets of acquired companies ...................................................... (134) (333) -- - ------------------------------------------------------------------------------------------------------------------------------------ $ 4,171 1,097 1,062 ====================================================================================================================================
F-17 SYNOVUS FINANCIAL CORP. - ------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The tax effects of temporary differences that gave rise to significant portions of the deferred income tax assets and liabilities at December 31, 1995 and 1994 are presented below:
(In thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Deferred income tax assets: Provision for losses on loans ........................................................... $ 32,244 28,406 Net unrealized loss on investment securities available for sale ......................... -- 10,638 Other ................................................................................... 11,610 8,857 - ------------------------------------------------------------------------------------------------------------------------------------ Total gross deferred income tax assets ................................................ 43,854 47,901 Less valuation allowance .............................................................. (383) (801) - ------------------------------------------------------------------------------------------------------------------------------------ Net deferred income tax assets ..................................................... 43,471 47,100 - ------------------------------------------------------------------------------------------------------------------------------------ Deferred income tax liabilities: Differences in depreciation ............................................................. (6,220) (5,134) Restricted stock awards ................................................................. (1,206) (1,163) Computer software development costs ..................................................... (14,958) (13,050) Net unrealized gain on investment securities available for sale ......................... (3,150) -- Pension ................................................................................. (241) (2,111) Purchase accounting adjustments ......................................................... (1,338) (1,593) Other, net .............................................................................. (7,791) (6,417) - ------------------------------------------------------------------------------------------------------------------------------------ Total gross deferred income tax liabilities .......................................... (34,904) (29,468) - ------------------------------------------------------------------------------------------------------------------------------------ Net deferred income tax assets .................................................... $ 8,567 17,632 ====================================================================================================================================
The valuation allowance for deferred tax assets as of December 31, 1995 and 1994 was $383,000, and $801,000, respectively. The net change in the total valuation allowance for the years ended December 31, 1995 and 1994 was a decrease of $418,000 and an increase of $406,000, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that Synovus will realize the benefits of these deductible differences, net of the existing valuation allowances, at December 31, 1995. - -------------------------------------------------------------------------------- Note 8 Employee Benefit Plans In 1994 and 1993, Synovus had noncontributory, trusteed pension plans (collectively referred to as "Plan") covering substantially all employees over 201/2 years of age. Total pension expense recorded in the accompanying financial statements was approximately $1,516,000 and $1,182,000, in 1994 and 1993, respectively. In 1995, Synovus terminated the Plan and began to settle the benefit obligations. During the year ended December 31, 1995, approximately $15,849,000 of the accumulated benefit obligation was settled with a loss on settlement of $3,195,000. The remaining obligations will be settled in 1996 with an expected loss on settlement of approximately $600,000. In 1995, Synovus adopted a 7% defined-contribution, money purchase plan to replace the terminated pension plan above. In addition, Synovus generally provides noncontributory, trusteed, profit sharing and 401(k) plans which cover all eligible employees. Annual discretionary contributions to these profit sharing and 401(k) plans are set each year by the respective Boards of Directors of each affiliate, but cannot exceed amounts allowable as a deduction for federal income tax purposes. Aggregate contributions to these money purchase, profit sharing, and 401(k) plans were $23,238,000, $12,853,000, and $12,107,000, in 1995, 1994, and 1993, respectively. Synovus has stock purchase plans for directors and employees whereby Synovus makes contributions equal to one-half of employee and director voluntary contributions. The funds are used to purchase outstanding shares of Synovus common stock. TSYS has established director and employee stock purchase plans, modeled after Synovus' plans, except that the funds are used to purchase outstanding shares of TSYS common stock. Synovus and TSYS contributed $2,623,000, $1,949,000, and $1,552,000 to these plans in 1995, 1994, and 1993, respectively. F-18 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Synovus has entered into employment agreements with certain executive officers for past and future services which provide for current compensation in addition to salary in the form of deferred compensation payable at retirement or in the event of death, total disability, or termination of employment. The estimated present value of the deferred compensation is being accrued over the remaining expected term of active employment. Aggregate compensation expense under the foregoing employment agreements, together with the cost of salary continuation plans for certain other officers, was approximately $260,000, $460,000, and $377,000 in 1995, 1994, and 1993, respectively. Synovus provides certain medical benefits to qualified retirees through a postretirement medical benefits plan. The benefit expense and accrued benefit cost are not material to Synovus' consolidated financial statements. Under key executive restricted stock bonus plans, Synovus has awarded an aggregate of 232,732 non-transferable, restricted shares of Synovus common stock to various key executives. The market value of the common stock at the date of issuance is included as a reduction of shareholders' equity in the consolidated statements of condition and is amortized as compensation expense using the straight-line method over the vesting period of the awards. Aggregate compensation expense with respect to the foregoing restricted stock awards was approximately $779,000, $1,421,000, and $746,000 in 1995, 1994, and 1993, respectively.
Year plan Market value adopted at award date Vesting period - -------------------------------------------------------------------------------- 1990 $ 185,000 5 years 1992 1,576,000 4 years 1994 870,000 5 years 1995 2,054,000 5 years
TSYS has awarded 653,400 non-transferable, restricted shares of its common stock to various key executives under restricted stock bonus plans. The aggregate market value of the shares is being amortized on a straight-line basis over the vesting period of the awards. The amounts and terms of common stock issued under restricted stock bonus awards are summarized as follows:
Year plan Market value adopted at award date Vesting period - -------------------------------------------------------------------------------- 1985 $ 228,125 10 years 1990 165,886 70 months 1992 1,801,250 6 years 1992 1,332,800 5 years
Under the various stock option plans, Synovus has granted options for 2,256,264 shares of common stock to officers of Synovus and its affiliates. Synovus has expensed $1,016,000, $1,129,000, and $1,074,000 in 1995, 1994, and 1993, respectively, related to the compensation element of these plans. At December 31, 1995, unamortized deferred compensation expense of $2,239,000 related to these options remained and will be amortized over the vesting period through 1997. The options outstanding at December 31, 1995, had an average price of $15.17. Additional information relating to these stock options is as follows:
1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------ Options outstanding at beginning of period .............. 1,876,888 1,584,344 1,462,687 Options granted ......................................... 825,124 542,177 334,279 Options exercised ....................................... (436,410) (177,409) (212,622) Options cancelled ....................................... (9,338) (72,224) -- - ------------------------------------------------------------------------------------------------------------------- Options outstanding at end of period .................. 2,256,264 1,876,888 1,584,344 =================================================================================================================== Options exercisable at end of period .................. 741,356 589,142 491,291 =================================================================================================================== Options' prices per share: Options granted during the period ..................... $ 9.74 to 22.75 7.14 to 19.12 9.72 to 10.67 Options exercised during the period ................... $ 4.55 to 11.70 4.12 to 10.83 3.93 to 15.23 Options outstanding at end of period .................. $ 4.55 to 22.75 4.55 to 19.12 3.93 to 15.23 - -------------------------------------------------------------------------------------------------------------------
F-19 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 9 Commitments Off-Balance Sheet Financial Instruments Synovus is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers, reduce its own exposure to fluctuations in interest rates, and to conduct lending activities. These financial instruments include commitments to extend credit, standby and commercial letters of credit, and interest rate swaps. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated financial statements. Synovus' exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and commercial letters of credit is represented by the contract amount of those instruments. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. For interest rate swap agreements held at year end, Synovus had insignificant credit risk. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Loan commitments and letters of credit at December 31, 1995 and 1994 include the following:
(In thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------ Standby letters of credit .................................................. $ 255,230 192,162 Undisbursed construction loans ............................................ 316,139 269,549 Unused credit card lines .................................................. 552,831 557,270 Other loan commitments ..................................................... 700,227 624,029 Commitments to sell mortgage loans.......................................... 36,000 13,500 - ------------------------------------------------------------------------------------------------------ Total .................................................................... $1,860,427 1,656,510 ======================================================================================================
Interest rate swap transactions generally involve the exchange of fixed and floating rate interest payment obligations without the exchange of the underlying principal amounts. Entering into interest rate swap agreements involves not only the risk of dealing with counterparties and their ability to meet the terms of the contracts, but also the interest rate risk associated with hedged positions. Notional principal amounts often are used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. In October of 1995, Synovus and its subsidiary bank, Columbus Bank and Trust Company, entered the interest rate swap market for interest rate risk management purposes. The consolidated notional amount of interest rate swap contracts is $125,000,000 with no carrying amount and an estimated fair value of $1,776,000 at December 31, 1995. These interest rate swaps have been entered into to convert floating rate assets to fixed rate assets. The weighted average fixed rate is 5.98% and the variable rate, based on three month LIBOR, was 5.88% at December 31, 1995, with contract maturities in October 1999. Lease Commitments Synovus has entered into long-term operating leases for various branch locations, data processing equipment, and furniture. Management expects that, as these leases expire, they will be renewed or replaced by other leases. At December 31, 1995, minimum rental commitments under all such noncancellable leases aggregated $84,296,000 of which the following approximate amounts are due for the next five years:
Equipment Real and (In thousands) Property Furniture Total - -------------------------------------------------------------------------------- 1996....................... $5,136 26,253 31,389 1997....................... 4,253 22,484 26,737 1998....................... 3,650 5,203 8,853 1999....................... 2,999 3,919 6,918 2000....................... 2,632 1,453 4,085
Rental expense on equipment, including cancellable leases, was $33,445,000, $25,111,000, and $21,716,000 in 1995, 1994, and 1993, respectively. Rental expense on facilities was $6,144,000, $5,586,000, and $4,659,000 in 1995, 1994, and 1993, respectively. F-20 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Contract Commitments In the normal course of its business, TSYS maintains processing agreements with its customers. These processing agreements contain contractual commitments, including, but not limited to, minimum standards and time frames against which TSYS' performance is measured. In the event TSYS does not meet its contractual commitments with its customers, TSYS may incur penalties and/or certain customers may have the right to terminate their agreements with TSYS. TSYS does not believe that it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its financial condition or results of operations. Legal Proceedings Synovus is subject to various legal proceedings and claims which arise in the ordinary course of its business. Any litigation is vigorously defended by Synovus and, in the opinion of management, based on consultation with external legal counsel, any outcome of such litigation would not materially affect Synovus' consolidated financial position. Currently, multiple lawsuits, some seeking class action treatment, are pending against one of Synovus' Alabama banking subsidiaries that involve: (1) the sale of credit life insurance made in connection with consumer credit transactions; (2) payments of service fees or interest rebates to automobile dealers in connection with the assignment of automobile credit sales contracts to that Synovus subsidiary; and (3) the forced placement of insurance to protect that Synovus subsidiary's interest in collateral for which consumer credit customers have failed to obtain or maintain insurance. These lawsuits seek unspecified damages, including punitive damages, and some purport to be class actions which, if certified, may involve many of such subsidiary's consumer credit transactions in Alabama for a number of years. Synovus intends to vigorously contest these lawsuits and all other litigation to which Synovus and its subsidiaries are parties. Based on information presently available, and in light of legal and other defenses available to Synovus and its subsidiaries, contingent liabilities arising from the threatened and pending litigation are not considered material. It should be noted, however, that large punitive damage awards, bearing little relation to the actual damages sustained by plantiffs, have been awarded in Alabama. - -------------------------------------------------------------------------------- Note 10 Supplemental Financial Data Components of other operating expenses in excess of 1% of total revenues for any of the respective periods are as follows:
(In thousands) 1995 1994 1993 - -------------------------------------------------------------------------------- Stationery, printing, and supplies............. $23,692 19,552 16,240 FDIC insurance ................................ 7,849 12,742 11,450 - --------------------------------------------------------------------------------
F-21 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 11 Industry Segments Synovus operates principally in the banking industry through its affiliate banks and broker/dealer company. Synovus also operates in the computerized data processing industry through its majority-owned subsidiary, TSYS, which provides bankcard data processing for unaffiliated financial institutions and for Synovus. All inter-segment services provided are charged at the same rates as unaffiliated customers, are included in the revenues and net income of the respective segments, and are eliminated to arrive at consolidated totals. Industry segment information for the years ended December 31, 1995, 1994, and 1993 is presented below.
Data General (In thousands) Banking Processing Corporate Eliminations Consolidated - --------------------------------------------------------------------------------------------------------------------- Revenues.......................... 1995 $ 709,774 249,708 -- (2,860) 956,622 1994 586,917 187,571 -- (1,774) 772,714 1993 529,722 152,074 -- (1,662) 680,134 Net income........................ 1995 105,692 27,730 (13,506) (5,333) 114,583 1994 83,983 22,490 (12,696) (4,325) 89,452 1993 76,364 20,223 (15,224) (3,896) 77,467 Identifiable assets............... 1995 7,719,615 199,000 51,478 (42,498) 7,927,595 1994 6,989,998 165,042 55,111 (34,072) 7,176,079 1993 6,508,231 133,339 34,267 (19,663) 6,656,174 Capital expenditures......... 1995 22,835 25,108 269 -- 48,212 1994 19,117 22,501 320 -- 41,938 1993 30,786 21,630 469 -- 52,885 Depreciation and amortization on premises, equipment, and purchased software ....................... 1995 13,999 17,126 332 -- 31,457 1994 12,871 13,472 365 -- 26,708 1993 11,834 12,556 280 -- 24,670 - --------------------- Principally, data processing service revenues provided to the banking segment. Minority interest in the data processing segment. Excludes expenditures related to data processing subsidiary's capitalization of internal software development costs. - --------------------------------------------------------------------------------------------------------------------
F-22 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 12 Condensed Financial Information of Synovus Financial Corp. (Parent Company only) Condensed Statements of Condition (In thousands) December 31, 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Cash .......................................................................................... $ 47 239 Investment in consolidated bank subsidiaries, at equity ....................................... 736,379 639,801 Investment in consolidated nonbank subsidiaries, at equity .................................... 6,775 4,874 Notes receivable from subsidiaries ............................................................ 27,853 24,288 Other assets .................................................................................. 24,040 33,069 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets ........................................................................ $ 795,094 702,271 ==================================================================================================================================== Liabilities and Shareholders' Equity Long-term debt ................................................................................ $ 77,440 103,060 Other liabilities ............................................................................. 24,099 19,331 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities ................................................................... 101,539 122,391 - ------------------------------------------------------------------------------------------------------------------------------------ Shareholders' equity: Common stock ............................................................................. 77,281 76,134 Surplus .................................................................................. 127,021 118,782 Less treasury stock ...................................................................... (1,022) (7,680) Less unamortized restricted stock ........................................................ (2,663) (1,538) Net unrealized gain (loss) on investment securities available for sale ................... 5,774 (20,744) Retained earnings ........................................................................ 487,164 414,926 - ------------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity .......................................................... 693,555 579,880 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity .......................................... $ 795,094 702,271 ====================================================================================================================================
F-23 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - --------------------------------------------------------------------------------
Condensed Statements of Income (In thousands) Years ended December 31, 1995 1994 1993 - -------------------------------------------------------------------------------------------------------------------------------- Income: Dividends received from bank subsidiaries .............................................. $ 76,464 72,800 46,407 Dividends received from nonbank subsidiaries ........................................... -- 300 733 Management fees ........................................................................ 2,511 3,586 3,273 Interest income ........................................................................ 2,149 1,425 546 Other income ........................................................................... 2,616 2,330 1,851 - ------------------------------------------------------------------------------------------------------------------------------------ Total income ...................................................................... 83,740 80,441 52,810 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses: Interest expense ....................................................................... 6,046 6,874 6,983 Other expenses ......................................................................... 23,904 19,758 17,103 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses .................................................................... 29,950 26,632 24,086 - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes and equity in undistributed income of subsidiaries ..... 53,790 53,809 28,724 Allocated income tax benefit ................................................................ (9,246) (6,931) (3,585) - ------------------------------------------------------------------------------------------------------------------------------------ Income before equity in undistributed income of subsidiaries ...................... 63,036 60,740 32,309 Equity in undistributed income of subsidiaries .............................................. 51,547 28,712 48,070 - ------------------------------------------------------------------------------------------------------------------------------------ Income before extraordinary item .................................................. 114,583 89,452 80,379 Extraordinary item - loss related to early extinguishment of debt (net of income tax benefit of $1,568)..................................................................... -- -- 2,912 - ------------------------------------------------------------------------------------------------------------------------------------ Net income ........................................................................ $ 114,583 89,452 77,467 ====================================================================================================================================
F-24 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - --------------------------------------------------------------------------------
Condensed Statements of Cash Flows (In thousands) Years ended December 31, 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Operating Activities Net income ..................................................................... $ 114,583 89,452 77,467 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries ..................... (51,547) (28,712) (48,070) Net income of equity method investment ............................... (78) (337) (329) Extraordinary item - loss related to early extinguishment of debt, net -- -- 2,912 Depreciation, amortization, and accretion, net ....................... 739 1,312 1,326 Net increase in other liabilities .................................... 5,723 5,474 5,383 Net decrease (increase) in other assets .............................. 8,799 (10,632) (1,047) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities ....................... 78,219 56,557 37,642 - ------------------------------------------------------------------------------------------------------------------------------------ Investing Activities Net investment in subsidiaries ................................................. (9,835) (11,005) (22,180) Cash from merged parent company operations ..................................... 515 -- -- Net decrease (increase) in notes receivable from subsidiaries .................. 1,200 1,700 (400) Net increase in short-term notes receivable from subsidiaries .................. (4,765) (6,907) (11,481) Purchase of premises and equipment, net ........................................ (266) (301) (913) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities ........................... (13,151) (16,513) (34,974) - ------------------------------------------------------------------------------------------------------------------------------------ Financing Activities Dividends paid to shareholders ................................................. (42,042) (33,006) (27,191) Net decrease in short-term borrowings .......................................... -- (5,404) (620) Principal repayments on long-term debt ......................................... (25,620) (2,166) (69,065) Extraordinary item - loss related to early extinguishment of debt, net ......... -- -- (2,912) Proceeds from issuance of long-term debt ....................................... -- 5,000 82,500 Purchase of treasury stock ..................................................... (1,303) (6,013) -- Proceeds from issuance of common stock ......................................... 3,705 1,270 14,447 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used in financing activities ........................... (65,260) (40,319) (2,841) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in cash .................................................................... (192) (275) (173) Cash at beginning of period ......................................................... 239 514 687 - ------------------------------------------------------------------------------------------------------------------------------------ Cash at end of period ............................................................... $ 47 239 514 ====================================================================================================================================
Supplemental Information: For the years ended December 31, 1995, 1994, and 1993, the Parent Company paid income taxes of $68 million, $48 million, and $42 million, and interest in the amounts of $6 million, $7 million, and $7 million, respectively. The amount of dividends paid to the Parent Company from the affiliate banks is limited by various banking regulatory agencies. The amount of cash dividends available from subsidiary banks for payment in 1996, without prior approval from the banking regulatory agencies, is approximately $98,375,000. In prior years, Synovus' banks have received permission and have paid cash dividends to the Parent Company in excess of these regulatory limitations. As a result of the regulatory limitations, at December 31, 1995, approximately $644,779,000 of the Parent Company's investment in net assets of subsidiary banks of $743,154,000, as shown in the accompanying condensed statements of condition, was restricted from transfer by subsidiary banks to the Parent Company in the form of cash dividends. The Federal Reserve Board issues guidelines for insured banks' minimum capital requirements. The capital requirements are based upon the perceived risk inherent in the assets of the company. The minimum risk-based capital required is 8% of which 4% must be Tier 1 Capital. Synovus exceeded minimum levels of required regulatory capital at December 31, 1995. The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) established five capital categories for banks and bank holding companies. The bank regulators adopted regulations defining these five capital categories in September 1992. Under the regulations, each bank is classified into one of the five categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized) based on its level of risk-based capital as measured by the bank's Tier 1 capital ratio, total risk-based capital ratio, leverage ratio, and supervisory rating. FDICIA defines "well-capitalized" banks or bank holding companies as entities having a total risk-based capital ratio of 10% or higher, a Tier I risk-based capital ratio of 6% or higher, and a leverage ratio of 5% or higher. At December 31, 1995, Synovus and its bank subsidiaries have adequate capital to be classified as well-capitalized institutions under the FDICIA regulations. - -------------------------------------------------------------------------------- F-25 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- [LOGO]KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Synovus Financial Corp.: We have audited the accompanying consolidated statements of condition of Synovus Financial Corp. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995. These consolidated financial statements are the responsibility of Synovus' management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Synovus Financial Corp. and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in the summary of significant accounting policies and note 2, Synovus changed its method of accounting for investments to adopt the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", at December 31, 1993. /s/KPMG Peat Marwick LLP January 26, 1996 Member Firm of Klynveld Peat Marwick Goerdeler F-26 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (In thousands, except per share data)
Percent Years ended December 31, 1995 1994 Change - ------------------------------------------------------------------------------------------------------------------------------------ Statements of Condition Assets ................................................ $7,927,595 7,176,079 10.5% Loans, net ............................................ 5,430,646 4,999,858 8.6 Deposits .............................................. 6,727,879 5,924,603 13.6 Shareholders' equity .................................. 693,555 579,880 19.6 Book value per share .................................. 8.98 7.67 17.1 Cash dividends declared per share ..................... .54 .45 20.0 Equity to assets ...................................... 8.75% 8.08 Reserve for loan losses to loans ...................... 1.48 1.48 - ------------------------------------------------------------------------------------------------------------------------------------ Statements of Income Net income ............................................ $ 114,583 89,452 28.1% Net income per share .................................. 1.50 1.19 25.6 - ------------------------------------------------------------------------------------------------------------------------------------ Performance Ratios Return on assets ...................................... 1.53% 1.32 Return on equity ...................................... 17.92 15.79 Net interest margin ................................... 5.15 5.05 Net overhead ratio .................................... 1.75 1.95 - ------------------------------------------------------------------------------------------------------------------------------------
F-27 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- FINANCIAL REVIEW Summary Synovus Financial Corp. (Synovus) has continued to improve performance with the most successful year in its history. Net income for 1995 was $114.6 million, increasing 28.1% over the $89.5 million earned in 1994. Net income per share increased to $1.50 in 1995, up 25.6% from the $1.19 earned in 1994. Return on assets continued to improve in 1995 increasing 21 basis points to 1.53%, compared to 1.32% in 1994. Return on equity also improved to 17.92% in 1995, compared to 15.79% in 1994. These record results are attributable to significant improvements in Synovus' banking operations and at Total System Services, Inc.(TSYS), Synovus' majority owned bankcard processing subsidiary. During 1995, net interest income and non-interest income grew 13.5% and 24.2%, respectively, over 1994 while non-interest expense increased 16.0% and the provision for loan losses increased only 1.6%. Synovus' banking operations results, which exclude TSYS, also continued to improve during 1995. Net income for Synovus' banking operations increased 29.3% to $92.2 million from $71.3 million in 1994. Return on assets for Synovus' banking operations improved in 1995 increasing 19 basis points to 1.26%, compared to 1.07% in 1994. Return on equity allocated to Synovus' banking operations also improved to 17.31% in 1995, compared to 15.01% in 1994. Synovus' total assets ended the year at $7.9 billion, a growth rate of 10.5% over 1994. This growth resulted from an $803.3 million increase, or 13.6%, in total deposits. Net loans grew $430.8 million, or 8.6%. The increases in both loans and deposits reflect a strong Southeastern economic environment as well as market share gains. Shareholders' equity grew 19.6% to $693.6 million, which represented 8.75% of total assets. The following discussion reviews the results of operations and assesses the financial condition of Synovus. This discussion should be read in conjunction with the preceding consolidated financial statements and accompanying notes. On March 8, 1993, Synovus declared a three-for-two stock split effective April 1, 1993, to shareholders of record on March 18, 1993. Share and per share data for all periods presented have been retroactively restated to reflect the additional shares outstanding resulting from the stock split. - -------------------------------------------------------------------------------- Table 1
Five Year Selected Financial Data (In thousands, except per share data) Years Ended December 31, - ------------------------------------------------------------------------------------------------------------------------------------ 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income ........................................ $341,875 301,231 263,213 241,203 203,728 Provision for losses on loans .............................. 25,787 25,387 24,924 33,302 29,161 Income before extraordinary item ........................... 114,583 89,452 80,379 66,685 51,959 Net income ................................................. 114,583 89,452 77,467 66,685 51,959 Per share data: Income before extraordinary item ...................... 1.50 1.19 1.09 .92 .74 Net income ............................................ 1.50 1.19 1.05 .92 .74 Cash dividends declared ............................... .540 .450 .373 .310 .267 Long-term debt ............................................. 106,815 139,811 143,481 143,215 109,794 Average total equity ....................................... 639,426 566,562 505,027 444,565 383,352 Average total assets ....................................... 7,498,299 6,782,659 6,141,794 5,702,968 4,966,446 Ratios: Return on assets before extraordinary item ............ 1.53% 1.32 1.31 1.17 1.05 Return on assets after extraordinary item ............. 1.53 1.32 1.26 1.17 1.05 Return on equity before extraordinary item ............ 17.92 15.79 15.92 15.00 13.55 Return on equity after extraordinary item ............. 17.92 15.79 15.34 15.00 13.55 Dividend payout ratio (a) ............................. 36.69 36.90 35.10 28.59 30.79 Average equity to average assets ...................... 8.53 8.35 8.22 7.80 7.72 (a) Determined by dividing dividends declared by net income, including pooled subsidiaries.
- -------------------------------------------------------------------------------- F-28 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Acquisitions The 1995 merger activity resulted in Synovus' entry into South Carolina and an expanded presence in Georgia. The merger with NBSC Corporation of Columbia, South Carolina, represents the largest in our history. NBSC brings a veteran management team and an opportunity to provide products and services to the growing markets in South Carolina. In addition, the mergers with Douglasville, Georgia, based Citizens & Merchants Corporation and Riverdale, Georgia, based Peach State Bank continue to provide Synovus with access to the growth in the Atlanta suburbs. A list of the bank acquisitions completed during the past two years follows:
(Dollars in thousands) Acquired Shares Financial Company and Location Date Assets Issued Statement Presentation - ----------------------------------------------------------------------------------------------------------------------------------- Citizens & Merchants Corporation April 28, 1995 $ 52,000 626,469 Pooling (Non-restated) Douglasville, Georgia NBSC Corporation February 28, 1995 $1,100,000 7,929,348 Restated Pooling Columbia, South Carolina Peach State Bank January 31, 1995 $ 43,000 266,498 Purchase Riverdale, Georgia State Bancshares, Inc. October 31, 1994 $ 62,000 548,879 Pooling (Non-restated) Enterprise, Alabama PNB Bankshares, Inc. May 31, 1994 $ 78,000 548,213 Pooling (Non-restated) Peachtree City, Georgia
This information is discussed in further detail in Note 1 of the financial statements. - -------------------------------------------------------------------------------- Table 2 Net Interest Income (In thousands) Years Ended December 31,
---------------------------------------------------- 1995 1994 1993 ---------------------------------------------------- Interest income .......................................................... $615,788 498,382 443,872 Taxable-equivalent adjustment ............................................ 5,107 5,599 6,830 - ------------------------------------------------------------------------------------------------------------------------------------ Interest income, taxable-equivalent ............................ 620,895 503,981 450,702 Interest expense ......................................................... 273,913 197,151 180,659 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income, taxable-equivalent ........................ $346,982 306,830 270,043 ==================================================================================================================================== - -------------------------------------------------------------------------------- Earning Assets, Sources of Funds, and Net Interest Income Average total assets for 1995 were $7.5 billion, or 10.6% over 1994 average total assets of $6.8 billion. Average earning assets for 1995 were $6.7 billion, which represented 90% of average total assets. A $664.6 million, or 11.6%, increase in average deposits for 1995 provided the funding for a $628.3 million, or 13.6%, increase in average net loans. Average shareholders' equity for 1995 ended the year at $639.4 million. For 1994, average total assets increased $640.9 million, or 10.4%. Average earning assets for 1994 were $6.1 billion, which represented 90% of average total assets. For more detailed information on Synovus average statement of condition for the years ended 1995, 1994, and 1993, refer to Table 3. Net interest income (interest income less interest expense) is the largest component of Synovus' net income. This major source of income represents the earnings of Synovus' primary business of gathering funds from deposit sources and investing those funds in loans and securities. Synovus' long term objective is to manage those assets and liabilities to provide the largest possible amount of income while balancing interest rate, credit, liquidity, and capital risks. Net interest income is presented in this discussion on a tax-equivalent basis, so that the income from assets exempt from federal income taxes is adjusted based on a statutory marginal federal tax rate of 35% in all years (See Table 2). The net interest margin is defined as taxable-equivalent net interest income divided by average total interest earning assets and provides an indication of the efficiency of the earnings from balance sheet activities. The net interest margin is affected by changes in the spread between interest earning asset yields and interest bearing costs (spread rate), and by the percentage of interest earning assets funded by interest bearing liabilities. F-29 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- Net interest income for 1995 was a record $341.9 million, up $40.6 million, or 13.5%, from 1994. On a taxable-equivalent basis, net interest income was $347.0 million, up $40.2 million, or 13.1%, over 1994. During 1995, average interest earning assets increased $658.3 million, or 10.8%, with the majority of this growth being in loans. Increases in the level of time deposits were the main contributor to the $516.7 million, or 9.9%, growth in average interest bearing liabilities. The 5.15% net interest margin achieved in 1995 is a 10 basis point increase over the 5.05% reported for 1994. This increase was primarily due to a 92 basis point increase in interest earning asset yields and a greater contribution from non-interest bearing funding sources. In 1995, the earning asset mix shifted more toward loans versus investment securities. This mix change had a favorable impact on the overall earning asset yield. Increases in the rate paid on interest bearing liabilities are primarily attributable to two factors. One factor is the continued repricing of deposits upward during 1995 with a general lag in deposit repricing as compared to interest earning assets. The other factor is the change in the mix of interest bearing liabilities as customers began moving their deposits back to higher paying time deposits from lower paying transaction accounts, as their expectations of the market rates changed in 1995. Another influence impacting the net interest margin is the percentage of earning assets funded by interest bearing liabilities. Funding for Synovus' earning assets comes from interest bearing liabilities, non-interest bearing liabilities, and shareholders' equity. Earning assets funded by non-interest bearing liabilities continue to provide a positive impact on the net interest margin. During 1994, net interest income and tax-equivalent net interest income increased 14.4% and 13.6%, respectively. Average interest earning assets grew 10.0% while interest bearing liabilities increased 8.6%. This growth, along with a 16 basis point improvement in the net interest margin to 5.05% from 4.89%, contributed to Synovus' earnings. The increase in the spread rate of 11 basis points was the result of a 13 basis point increase in the yield on earning assets offset by a 2 basis point increase in the rate paid on interest bearing liabilities. The net interest margin also increased as a result of a 14.8% increase in average non-interest bearing demand deposits. The increasing market rates experienced during 1994 resulted in the repricing of interest earning assets upward, while depositors reinvested funds from maturing time deposits into savings accounts, interest bearing demand accounts, and money market accounts on a temporary basis, as their expectations were for further increases in market rates. Despite the growth in net interest income and the strong net interest margin, the margin declined from a first quarter high of 5.25% to 5.10% in the fourth quarter of 1995. This decline during 1995 primarily resulted from a shift of transaction oriented deposit accounts to time deposits. Synovus sought to manage this decline through the use of product and pricing management as well as hedging opportunities using off-balance sheet derivatives. These activities are discussed further in the "Off-Balance Sheet Derivatives for Interest Rate Risk Management" section of this report. F-30 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 3 Consolidated Average Balances, Interest, and Yields (In thousands) 1995 1994 1993 ---------------------------------------------------------------------------------------- Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate - ------------------------------------------------------------------------------------------------------------------------------------ Assets Interest earning assets: Taxable loans, net ........ $5,288,863 522,258 9.87% $4,643,731 412,086 8.87% $4,175,384 358,366 8.58% Tax-exempt loans, net ..... 38,044 4,230 11.12 45,755 4,747 10.37 54,048 5,197 9.62 Reserve for loan losses ........... (80,034) -- (70,893) -- (66,057) -- - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net ................... 5,246,873 526,488 10.03 4,618,593 416,833 9.03 4,163,375 363,563 8.73 - ----------------------------------------------------------------------------------------------------------------------------------- Taxable investment securities . 1,270,063 77,198 6.08 1,270,976 72,546 5.71 1,115,237 69,494 6.23 Tax-exempt investment securities120,064 11,096 9.24 123,437 11,780 9.54 137,744 14,318 10.39 - ----------------------------------------------------------------------------------------------------------------------------------- Total investment securities .. 1,390,127 88,294 6.35 1,394,413 84,326 6.05 1,252,981 83,812 6.69 - ----------------------------------------------------------------------------------------------------------------------------------- Interest earning deposits with banks 1,828 107 5.85 641 35 5.46 2,324 127 5.46 Federal funds sold ................ 101,334 6,006 5.93 68,196 2,787 4.09 107,850 3,200 2.97 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest earning assets 6,740,162 620,895 9.21 6,081,843 503,981 8.29 5,526,530 450,702 8.16 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and due from banks ................ 298,328 284,651 273,921 Premises and equipment, net ............ 209,415 197,313 183,665 Other real estate ...................... 13,582 15,182 19,045 Other assets ....................... 236,812 203,670 138,633 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets ................. $7,498,299 $6,782,659 $6,141,794 =================================================================================================================================== Liabilities and Shareholders' Equity Interest bearing liabilities: Interest bearing demand deposits .. $ 887,694 23,947 2.70% $ 873,992 22,614 2.59% $ 780,292 20,512 2.63% Money market accounts ............. 915,710 36,817 4.02 863,081 26,126 3.03 829,275 23,529 2.84 Savings deposits .................. 475,962 13,746 2.89 510,380 14,226 2.79 434,037 12,643 2.91 Time deposits ..................... 3,113,375 179,251 5.76 2,574,468 113,953 4.43 2,443,877 107,960 4.42 Federal funds purchased and securities sold under agreement to repurchase ................ 216,342 12,092 5.59 235,858 10,021 4.25 158,050 5,045 3.19 Other borrowed funds .............. 125,317 8,060 6.43 159,900 10,211 6.39 157,181 10,970 6.98 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest bearing liabilities................. 5,734,400 273,913 4.78 5,217,679 197,151 3.78 4,802,712 180,659 3.76 - ----------------------------------------------------------------------------------------------------------------------------------- Spread rate .................. 4.43% 4.51% 4.40% =================================================================================================================================== Non-interest bearing demand deposits ... 986,582 892,800 777,973 Other liabilities ...................... 137,891 105,618 56,082 Shareholders' equity ................... 639,426 566,562 505,027 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity .... $7,498,299 $6,782,659 $6,141,794 =================================================================================================================================== Net interest income/margin ............ 346,982 5.15% 306,830 5.05% 270,043 4.89% =================================================================================================================================== Taxable-equivalent adjustment ......... (5,107) (5,599) (6,830) - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income, actual ........... $341,875 $301,231 $263,213 =================================================================================================================================== - ---------------- Average loans are shown net of unearned income. Nonperforming loans are included. Interest income includes loan fees as follows: 1995 - $20,825, 1994 - $19,140, 1993 - $19,176. Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis. Includes certain investment securities available for sale, at their respective average amortized cost. For the years ended December 31, 1995, 1994, and 1993, the average amortized cost of these securities amounted to $881,063, $863,655, and $55,781, respectively. In 1995 and 1994 there were $7,674 and $8,293, respectively, of average net unrealized losses on investment securities available for sale. Synovus adopted SFAS No. 115 on December 31, 1993. Prior to that date, the average recorded balance of net unrealized gains or losses was insignificant.
- -------------------------------------------------------------------------------- F-31 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 4
Rate/Volume Analysis (In thousands) - ------------------------------------------------------------------------------------------------------------------------------------ 1995 Compared to 1994 1994 Compared to 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Change Due to Change Due to - ------------------------------------------------------------------------------------------------------------------------------------ Yield/ Net Yield/ Net Volume Rate Change Volume Rate Change - ------------------------------------------------------------------------------------------------------------------------------------ Interest earned on: Taxable loans, net .............................. $ 57,249 52,923 110,172 40,197 13,523 53,720 Tax-exempt loans, net ....................... (800) 283 (517) (797) 347 (450) Taxable investment securities ................... (52) 4,704 4,652 9,705 (6,653) 3,052 Tax-exempt investment securities ............ (322) (362) (684) (1,487) (1,051) (2,538) Interest earning deposits with banks ............ 65 7 72 (92) -- (92) Federal funds sold .............................. 1,354 1,865 3,219 (1,177) 764 (413) - ------------------------------------------------------------------------------------------------------------------------------------ Total interest income ...................... 57,494 59,420 116,914 46,349 6,930 53,279 - ------------------------------------------------------------------------------------------------------------------------------------ Interest paid on: Interest bearing demand deposits ................ 355 978 1,333 2,463 (361) 2,102 Money market accounts ........................... 1,593 9,098 10,691 959 1,638 2,597 Savings deposits ................................ (959) 479 (480) 2,224 (641) 1,583 Time deposits ................................... 23,853 41,445 65,298 5,769 224 5,993 Federal funds purchased and securities sold under agreement to repurchase .................... (829) 2,900 2,071 2,482 2,494 4,976 Other borrowed funds ............................ (2,210) 59 (2,151) 190 (949) (759) - ------------------------------------------------------------------------------------------------------------------------------------ Total interest expense ..................... 21,803 54,959 76,762 14,087 2,405 16,492 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income ........................ $ 35,691 4,461 40,152 32,262 4,525 36,787 ==================================================================================================================================== - --------- The change in interest due to both rate and volume has been allocated to the rate component. Reflects taxable-equivalent adjustments using the statutory federal income tax rate of 35% in 1995 and 1994 in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
- -------------------------------------------------------------------------------- Non-Interest Income Non-interest income consists of a wide variety of fee generating services viewed as traditional banking services along with revenues earned by TSYS, Synovus' bankcard data processing company. During 1995, total non-interest income increased $66.5 million, or 24.2%. The majority of this increase was due to growth at TSYS. TSYS contributed approximately 70% of Synovus' total non-interest income in 1995 with the majority of this reported as data processing services income. Data processing services income is derived principally from the servicing of individual bankcard accounts for the card issuing customers of TSYS. The growth in TSYS is evidenced by the average number of total cardholder accounts processed by TSYS, which was approximately 53.1 million in 1995, compared to 39.3 million in 1994, and 32.5 million in 1993. TSYS currently processes 63 million cardholder accounts across the United States, Puerto Rico, Canada, and Mexico. A significant amount of TSYS' revenues are derived from certain major customers. For the years ended December 31, 1995, 1994, and 1993, two customers accounted for approximately 34%, 36%, and 37% of revenues, respectively. As a result, the loss of one of these major customers could have a material adverse effect on TSYS' results of operations. In January of 1996, TSYS successfully completed the conversion of approximately 20,000 Bank of America cardholder accounts to TS2, and in early February of 1996, Bank of America began opening new cardholder accounts on TS2. TSYS' conversion schedule with Bank of America contemplated completion of the conversion of the balance of Bank of America's cardholder accounts by the end of 1996; however, there have been delays and this conversion schedule may be changed and portions of Bank of America's cardholder accounts may be converted in 1997. While delays in Bank of America's conversion schedule allow Bank of America certain remedies, including the receipt of financial penalties and the right to terminate its relationship with TSYS, TSYS' management believes all of Bank of America's cardholder accounts will be successfully converted. The conversion and processing of Bank of America's cardholder accounts is not expected to have a material impact on TSYS' 1996 financial condition or results of operations. Revenues derived from the processing of TSYS' merchant account customers who accept certain private label cards, as well as bankcards, are included in data processing services income. Due to a significantly higher volume of transactions and item charges per individual account than consumer cardholder accounts, merchant accounts generally provide more revenue per account processed. At year-end 1995, TSYS was processing over 600,000 F-32 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- merchant accounts, a 57.9% increase over the 380,000 accounts being processed at year-end 1994; 269,000 merchant accounts were being processed at year-end 1993. The majority of the increase in merchant accounts being processed is attributable to the over 100,000 merchant accounts converted in connection with TSYS joint venture with a number of banks in Mexico, Total System Services de Mexico, S.A. de C.V., (TSYS de Mexico). Additionally 40,000 merchant accounts of an existing customer previously processed by another processor contributed to the increase. Revenues from merchant accounts processing were approximately $12.9 million, $9.2 million, and $7.0 million in 1995, 1994, and 1993, respectively. Synovus continues to emphasize the importance of growth in non-interest related sources of income in its banking operations. Synovus looks to develop new sources of non-interest related income and to reprice services and products to reflect their related costs and value to customers. Non-interest income reported by Synovus banking operations increased $5.1 million, or 5.7%, in 1995. Excluding the $2.9 million gain on the sale of certain credit card accounts recorded in 1994, banking operations non-interest income increased $7.8 million, or 9.1%. Service charges on deposit accounts have historically been one of the primary sources of other income for Synovus' banking operations. In 1995, service charges on deposit accounts increased $5.2 million, or 13.0%, as a result of increases in the number of accounts serviced and increased fee structures. On January 1, 1995, Synovus formed Synovus Trust Company, a new affiliate in which to consolidate all Synovus' Georgia trust operations. This new affiliate is expected to bring continued efficiencies and expertise to this banking service. Trust fees for 1995 increased $.9 million, or 9.7%, over 1994. Fees for trust services are derived from performing estate administration, personal trust, corporate trust, and employee benefit plan administration. At December 31, 1995 and 1994, total market value of assets administered by Synovus Trust Company and affiliate bank trust operations was approximately $3.5 billion and $2.6 billion, respectively. Non-interest income in 1995 has also been positively impacted by increases in revenues from mortgage banking and related servicing. In June of 1994, Synovus Mortgage Corp. was formed to enhance the mortgage products offered by the banking affiliates and to generate additional fee income through mortgage servicing. Synovus Mortgage Corp. provides expertise in the areas of products and pricing to the affiliate banks and serves as an outlet for placing these mortgage loans into the secondary market while retaining the related servicing rights. The adoption of SFAS No. 122, in July of 1995, had a small favorable impact on non-interest income. In 1994, total non-interest income increased $38.1 million, or 16.1%. Revenues from bankcard data processing services offered by TSYS were the largest contributor increasing $29.8 million, or 20.1%, over 1993. Service charges on banking operations deposit accounts increased $2.3 million, or 5.8%, primarily as a result of continued growth in the number of accounts serviced. Fees for trust services fell slightly, less than 2%, in 1994 from an extremely strong 1993. Other operating income increased $7.8 million, or 24.9%, in 1994 primarily due to two acquisitions in 1994, increases in gains on sales of other real estate, merchant fees on credit cards, and a $2.9 million gain on the sale of certain credit card accounts. Non-Interest Expense Non-interest expense increased $66.2 million, or 16.1%, in 1995 over 1994. Management analyzes non-interest expense in two separate components: banking operations and TSYS. The table below summarizes this data for 1995, 1994, and 1993:
1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) Banking TSYS Banking TSYS Banking TSYS - ------------------------------------------------------------------------------------------------------------------------------------ Salaries and other personnel expense ................ $157,533 94,946 138,480 73,051 125,897 54,517 Net occupancy and equipment expense ................. 35,080 64,549 32,136 51,283 29,258 43,421 Other operating expenses ............................ 72,721 47,291 83,836 28,139 72,737 21,521 Minority Interest ................................... 5,333 -- 4,325 -- 3,896 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total non-interest expense ..................... $270,667 206,786 258,777 152,473 231,788 119,459 ====================================================================================================================================
Non-interest expense related to TSYS increased $54.3 million, or 35.6%, in 1995 over 1994 with a significant portion of this increase being employment expenses. The average number of employees increased from 1,874 in 1994 to 2,087 in 1995. This growth in employees along with salary increases and a new employee retirement plan resulted in a $21.9 million, or 30.0%, increase in employment expenses. As TSYS expanded its fee-generating services, equipment rental, depreciation, and amortization expense related to the acquisition of facilities, equipment, and computer software increased. Total occupancy and equipment expenses increased $13.3 million, or 25.9%, in 1995. A significant portion of this increase can be attributed to the amortization of TS2, which commenced in October 1994 and amounted to $3.3 million in 1995 compared to $.8 million in 1994. TSYS continues to monitor and assess its building and equipment needs as it positions itself for future growth and expansion. Other operating expenses at TSYS increased $19.2 million, or 68.1%, in 1995 over 1994. A number of factors contributed to this increase. The volume of supplies related to the processing of accounts increased due to the growth in number of accounts serviced, coupled with an increase in the costs of supplies, especially paper. Travel expenses were up significantly in 1995 due to travel necessitated by the startup of TSYS de Mexico, which required a significant amount of on-site training. Other operating expenses also increased in 1995 as a result of certain provisions made for contractual or negotiated processing commitments. These provisions were deemed necessary in view of the increased risks associated with the significant growth in the number of accounts processed. Also contributing to the growth in other operating expenses are costs related to the conversion of clients to TS2. In 1995, non-interest expense for Synovus banking operations increased $11.9 million, or 4.6%. The majority of increased expenses were in employment expense and related primarily to additional employees hired in 1995. The average number of employees in banking operations increased from 4,025 in 1994 to 4,272 in 1995. This growth was primarily due to growth within the banking affiliates, with a portion of this increase related to acquisitions. Other factors causing an increase in non-interest expense include salary increases, a new employee retirement plan, and a $3.2 million expense related to the termination of the previous employee retirement plan. The banking operations efficiency ratio improved from 64.76% in 1994 to 60.95% in 1995. These improvements were primarily the result of increased revenues, expense control, and a decrease in the FDIC insurance rate. F-33 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- Increases in non-interest expense were partially offset by a $4.9 million decrease in FDIC premium expense in 1995 over 1994 due to the lowering, in 1995, of the FDIC assessment rate on deposits. Synovus believes that the current banking legislation will result in additional 1996 reductions in FDIC insurance paid by the well-capitalized banks. Additionally, deposits of approximately $600 million, guaranteed by the Savings Association Insurance Fund, may be subject to a one-time assessment which would result in a $4 million to $6 million pre-tax charge to 1996 earnings. Quality service for Synovus' customers, provided in the most efficient manner, continues to be a priority. During 1994, Synovus embarked upon a "modernization" effort, under which all banking support functions are being reviewed for potential improvements. Synovus is investing in improved technology, such as platform automation, and is standardizing certain support processes. Synovus believes that this effort will provide a greatly improved product delivery mechanism and will increase the productivity of the support functions. Efforts are also directed toward the development of new banking services as well as enhancements to existing banking services. Recent developments are in the areas of touchtone banking, on-line capabilities, and new investment management services. Synovus continues to reorganize and refocus its resources whenever it can more effectively and efficiently deliver products and services to its customers. Some of these efforts are being accomplished through a new non-bank subsidiary, Synovus Administrative Services Corp. (SASC). SASC will provide future efficiency by eliminating some of the duplicative functions that exist among Synovus affiliates. In 1994, total non-interest expense increased $60.0 million, or 17.1%, over 1993. Expenses incurred at TSYS increased $33.0 million, or 27.6%, in 1994 over 1993 as TSYS prepared for expansion of its fee-generating services. In 1994, the average number of employees at TSYS increased from 1,504 in 1993 to 1,874 in 1994. The Quickstart programmer class which began in the second quarter of 1994 added 100 analyst trainees upon enrollment. Employee additions were also necessary to serve the growing cardholder base. Remaining increases in employment expenses were due to normal salary increases and related benefits. Increases in equipment and occupancy expenses were also required in 1994, as compared to 1993, as TSYS obtained substantial new, technologically-advanced equipment in order to meet its business needs. Non-interest expense for Synovus' banking operations increased $27.0 million, or 11.6%, in 1994 over 1993. New hires, salary increases, and related benefits account for most of this increase. Other factors include FDIC insurance increases related to deposit growth, professional fee increases, and general increases related to two acquisitions completed in 1994. In October of 1993, Synovus issued ten year, non-callable Senior notes totaling $75 million at a rate of 6.125%. A portion of the proceeds were used to prepay $45 million in long-term debt that carried a higher rate than the new issue. This prepayment resulted in a one-time after-tax charge of $2.9 million that was expensed in the third quarter of 1993 and has reduced interest costs in subsequent years. Investment Securities Synovus' investment securities portfolio consists of debt and equity securities which are categorized as either available for sale or held to maturity. Synovus has an insignificant balance of trading investment securities used to facilitate business at Synovus Securities, Inc., Synovus' wholly-owned broker/dealer company. Investment securities provide Synovus with a source of liquidity and a relatively stable source of income. The investment securities portfolio also provides management with a tool to balance interest rate risk and credit risk related to the loans on the balance sheet. At December 31, 1995, approximately $879.2 million of these investment securities were pledged as required collateral for certain deposits. See Table 14 for maturity and average yield information for the available for sale and held to maturity investment securities. Synovus' investment strategy focuses on the use of the investment securities portfolio to manage the interest rate risk created by the natural mismatch inherent in the loan and deposit portfolios. With the strong loan demand at Synovus' affiliate banks, there is little need for investment securities solely to augment income or utilize uninvested deposits. Therefore, Synovus maintains a fairly conservative posture with respect to the types of investment securities in which it invests. As such, Synovus' investment securities are primarily U.S. Treasuries, U.S. Government agencies, and Government agency sponsored mortgage-backed securities, all of which have a high degree of liquidity. A mortgage-backed security depends on the underlying pool of mortgage loans to provide a cash flow "pass-through" of principal and interest. At December 31, 1995, substantially all of the collateralized mortgage obligations and mortgage-backed pass-through securities held by Synovus were issued or backed by Federal agencies. As of December 31, 1995 and 1994, the estimated fair value of investment securities as a percentage of their amortized cost was 101.0% and 96.0%, respectively. During 1995, the bond market performance was strong due to expectations of future interest rate declines. This strong performance had a positive impact on the market value of Synovus' investment securities portfolio. The investment securities portfolio had gross unrealized gains of $19.8 million and gross unrealized losses of $5.2 million, for a net unrealized gain of $14.6 million as of December 31, 1995. As of December 31, 1994, the investment securities portfolio had a net unrealized loss of $54.3 million. In accordance with SFAS No. 115, shareholders' equity contained a net unrealized gain of $5.8 million and a net unrealized loss of $20.7 million recorded on the available for sale portfolio as of December 31, 1995 and 1994, respectively. Table 5 presents the carrying value of investment securities held to maturity and investment securities available for sale at December 31, 1995, 1994, and 1993. During 1995, the average balance of investment securities remained flat at $1.4 billion as compared to 1994. Synovus earned a taxable-equivalent rate of 6.35% and 6.05% for 1995 and 1994, respectively, on its investment securities portfolio. As of December 31, 1995 and 1994, average investment securities represented 20.6% and 22.9%, respectively, of average interest earning assets. This decrease in the percentage of average investment securities to average interest earning assets is due to strong growth in the loan portfolio. Refer to Table 3 for more information on average investment securities. On December 21, 1995, Synovus exercised an option allowed by "Special Report - a Guide to Implementation of FASB No. 115, Accounting for Certain Investments in Debt and Equity Securities - Questions and Answers" to make a one time transfer of investment securities held to maturity to investment securities available for sale. This transfer was made to add further liquidity and flexibility to the portfolio that will enable Synovus to more effectively manage its interest rate risk position. The amortized cost and estimated fair value of the investment securities transferred was $133.7 million and $133.9 million, respectively. F-34 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 5 Investment Securities (In thousands)
December 31, ---------------------------------------------------- 1995 1994 1993 ---------------------------------------------------- Investment Securities Held to Maturity: U.S. Treasury and U.S. Government agencies .......................... $ 81,772 159,354 89,111 Mortgage-backed securities .......................................... 171,275 243,220 244,586 State and municipal ................................................. 121,761 121,834 135,041 Other investments ................................................... 6,110 8,525 7,243 - ------------------------------------------------------------------------------------------------------------------------------------ Total securities held to maturity .............................. $ 380,918 532,933 475,981 ==================================================================================================================================== Investment Securities Available for Sale: U.S. Treasury and U.S. Government agencies .......................... $1,004,286 767,544 807,353 Mortgage-backed securities .......................................... 88,196 24,413 49,092 State and municipal ................................................. 1,322 1,491 939 Other investments ................................................... 12,494 11,321 14,984 - ------------------------------------------------------------------------------------------------------------------------------------ Total securities available for sale ............................ $1,106,298 804,769 872,368 ==================================================================================================================================== Total Investment Securities: U.S. Treasury and U.S. Government agencies .......................... $1,086,058 926,898 896,464 Mortgage-backed securities .......................................... 259,471 267,633 293,678 State and municipal ................................................. 123,083 123,325 135,980 Other investments ................................................... 18,604 19,846 22,227 - ------------------------------------------------------------------------------------------------------------------------------------ Total investment securities .................................... $1,487,216 1,337,702 1,348,349 ====================================================================================================================================
- ------------------------------------------------------------------------------- Loans Loans are the primary interest earning asset for Synovus. When analyzing prospective loans, management assesses both interest rate objectives and credit quality objectives in determining whether to extend a given loan and the appropriate pricing for that loan. Operating under a decentralized structure, management emphasizes lending in affiliates respective communities. As illustrated in Table 6, Synovus strives toward maintaining a diversified loan portfolio to spread risk and reduce exposure to economic downturns that may occur in different segments of the economy, geographic locations, or in particular industries. Demonstration of that strategy results in the fact that Synovus does not have any concentration of loans to any single industry or borrower, no foreign loans, and only $1.5 million in highly leveraged transaction credits as of the end of 1995. Representing 78% of average earning assets and 70% of average total assets, net loans increased $430.8 million, or 8.6%, during 1995. Continued market share gains through successful business development and additional products and services offered to the current customer base has afforded Synovus this loan growth. In addition, the acquisitions of Citizens & Merchants Corporation and Peach State Bank contributed approximately $60.0 million in loan growth. Synovus has enjoyed a relatively strong average loan-to-deposit ratio over the past three years. The average loan-to-deposit ratio for 1995, 1994, and 1993 was 83.5%, 82.1%, and 80.3%, respectively. The loan growth during 1995 was primarily internally generated through an ever increasing focus on affiliate bank customers. The growth in commercial loans was primarily centered in the larger markets in Alabama, South Carolina, and Georgia. These markets have experienced economic growth in 1995, especially with respect to real estate and working capital loans. Real estate construction and commercial real estate mortgage loans increased in 1995 due to economic growth in many of the Southeastern communities Synovus affiliate banks serve. Credit card loan growth has been most dramatically impacted by the increased number of customer accounts in several affiliate banks. Other installment loans have increased with targeted consumer loan products offered at selected affiliate banks. The growth in mortgage loans held for sale is mostly attributable to underwriting mortgage loans that are sold to third party investors, while retaining the servicing of those loans at Synovus Mortgage Corp. Synovus mortgage loans held for sale are pre-commited extensions and are generally held less than thirty days, after which the loans are sold in the market to an unaffiliated investor. The slight decrease in retail real estate mortgage loans from 1994 to 1995 results primarily from the fact that Synovus has generated more mortgage loans for sale versus loans retained as interest earning assets. In addition, the decrease in mortgage loan interest rates during 1995 encouraged refinancings, which also reduced retail real estate mortgage loans. Synovus has reduced nonperforming assets during 1995 as a result of constant attention and focus on loan quality while at the same time meeting the customers' needs. Loan officers work with each customer to determine which loan products will optimally meet their individual and specific lending needs. This focus on underwriting loans that benefit the customer, while maintaining credit quality standards, causes Synovus to be optimistic about the future growth and quality of the loan portfolio. The composition of the loan portfolio at the end of the past five years, as shown in Table 6 and Table 7, presents the maturity distribution of selected categories within the loan portfolio. F-35 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 6
Loans by Type (In thousands) December 31, - ----------------------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------------- Commercial: Commercial, financial, and agricultural ............ $1,931,004 1,783,928 1,567,310 1,423,124 1,358,425 Real estate-construction ........................... 578,712 472,131 414,801 376,641 359,518 Real estate-mortgage ............................... 1,160,089 1,030,524 890,297 817,905 779,765 - ------------------------------------------------------------------------------------------------------------------------------------ Total commercial .............................. 3,669,805 3,286,583 2,872,408 2,617,670 2,497,708 - ------------------------------------------------------------------------------------------------------------------------------------ Retail: Real estate-mortgage ............................... 824,998 865,642 760,530 690,563 659,170 Installment loans-credit card ...................... 222,204 171,475 150,653 136,794 130,575 Installment loans-other ............................ 784,972 756,402 664,554 603,418 575,985 Mortgage loans held for sale ....................... 24,863 9,465 23,409 11,744 12,165 - ------------------------------------------------------------------------------------------------------------------------------------ Total retail .................................. 1,857,037 1,802,984 1,599,146 1,442,519 1,377,895 - ------------------------------------------------------------------------------------------------------------------------------------ Total loans ................................... 5,526,842 5,089,567 4,471,554 4,060,189 3,875,603 Unearned income .................................... (14,812) (14,691) (18,148) (25,371) (31,214) - ------------------------------------------------------------------------------------------------------------------------------------ Total loans, net of unearned .................. $5,512,030 5,074,876 4,453,406 4,034,818 3,844,389 ==================================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------
Table 7
Loan Maturity Distribution and Interest Sensitivity (In thousands) December 31, 1995 - ------------------------------------------------------------------------------------------------------------------------------------ One Over One Year Over Year Through Five Five Or Less Years Years Total - ------------------------------------------------------------------------------------------------------------------------------------ Selected loan categories: Commercial, financial, and agricultural ................ $1,015,108 680,264 235,632 1,931,004 Real estate-construction ............................... 439,671 93,886 45,155 578,712 - ------------------------------------------------------------------------------------------------------------------------------------ Total ............................................. $1,454,779 774,150 280,787 2,509,716 ==================================================================================================================================== Loans due after one year: Having predetermined interest rates ...................................................................... $ 510,175 Having floating interest rates ........................................................................... 544,762 - ------------------------------------------------------------------------------------------------------------------------------------ Total ............................................................................................... $1,054,937 ===================================================================================================================================
- -------------------------------------------------------------------------------- Commercial, financial, and agricultural loans include industrial revenue bonds and other loans that are granted primarily on the strength of the borrower's ability to generate repayment cash flows from income sources as well as the borrower's general credit standing, even though such loans and bonds may be secured by real estate or other assets. Real estate construction and mortgage loans represent extensions of credit used as interim or permanent financing of commercial properties that are secured by real estate as well as 1-4 family first mortgage loans. Generally, retail lending decisions are made based upon the cash flow or earning power of the borrower which represents the primary source of repayment. However, in many lending transactions collateral is taken to provide an additional measure of security. Transactions secured by collateral result in a secondary source of repayment in that the collateral may be liquidated. Synovus determines the need for collateral on a case-by-case basis. Factors considered include the current and prospective credit-worthiness of the customer, terms of the loan, and economic conditions. F-36 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Provision for Losses on Loans and Net Charge-Offs Despite Synovus' credit standards, internal controls, and continuous loan review process, the inherent risk in the nature of lending results in periodic charge-offs. The provision for loan losses is the charge to operating earnings necessary to maintain an adequate reserve for loan losses. Through the provision for loan losses, Synovus maintains a reserve for loan losses that management believes is adequate to absorb losses within the loan portfolio. However, future additions to the reserve may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination procedures, periodically review Synovus' affiliate banks' reserve for loan losses. Based on their judgments about information available to them at the time of their examination, such agencies may require Synovus' affiliate banks to recognize additions to their reserve for loan losses. - -------------------------------------------------------------------------------- Table 8
Reserve for Loan Losses (In thousands) Years Ended December 31, --------------------------------------------------------- 1995 1994 1993 1992 1991 --------------------------------------------------------- Reserve for loan losses at beginning of year ......................... $75,018 67,270 61,336 55,279 45,512 Reserve for loan losses of acquired affiliates ....................... 1,001 1,535 -- 8 7,135 Loans charged off during year: Commercial: Commercial, financial, and agricultural .................... 13,746 13,809 13,097 17,761 16,731 Real estate-construction ................................... 239 240 228 309 291 Real estate-mortgage ....................................... 1,840 1,849 1,753 2,378 2,240 - ------------------------------------------------------------------------------------------------------------------------------------ Total commercial ...................................... 15,825 15,898 15,078 20,448 19,262 - ------------------------------------------------------------------------------------------------------------------------------------ Retail: Real estate-mortgage ....................................... 209 210 200 271 255 Installment loans-credit card .............................. 6,627 6,658 6,315 8,563 8,066 Installment loans-other .................................... 2,271 2,282 2,164 2,935 2,765 Mortgage loans head for sale ............................... -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total retail .......................................... 9,107 9,150 8,679 11,769 11,086 - ------------------------------------------------------------------------------------------------------------------------------------ Total loans charged off ............................... 24,932 25,048 23,757 32,217 30,348 - ------------------------------------------------------------------------------------------------------------------------------------ Recoveries of loans previously charged off during the year: Commercial: Commercial, financial, and agricultural .................... 1,217 1,585 1,287 1,339 1,030 Real estate-construction ................................... 50 65 52 55 42 Real estate-mortgage ....................................... 92 120 97 101 78 - ------------------------------------------------------------------------------------------------------------------------------------ Total commercial ...................................... 1,359 1,770 1,436 1,495 1,150 - ------------------------------------------------------------------------------------------------------------------------------------ Retail: Real estate-mortgage ....................................... 115 149 121 126 97 Installment loans-credit card .............................. 1,237 1,611 1,308 1,362 1,048 Installment loans-other .................................... 1,799 2,344 1,902 1,981 1,524 Mortgage loans held for sale ............................... -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total retail .......................................... 3,151 4,104 3,331 3,469 2,669 - ------------------------------------------------------------------------------------------------------------------------------------ Total loans recovered ................................. 4,510 5,874 4,767 4,964 3,819 - ------------------------------------------------------------------------------------------------------------------------------------ Net loans charged off during year .................................... 20,422 19,174 18,990 27,253 26,529 - ------------------------------------------------------------------------------------------------------------------------------------ Additions to reserve through provision expense ....................... 25,787 25,387 24,924 33,302 29,161 - ------------------------------------------------------------------------------------------------------------------------------------ Reserve for loan losses at end of year ............................... $81,384 75,018 67,270 61,336 55,279 ==================================================================================================================================== Reserve for loan losses to loans ..................................... 1.48% 1.48 1.51 1.52 1.44 ==================================================================================================================================== Ratio of net loans charged off during the year to average net loans outstanding during the year ........................... .38% .41 .45 .68 .78 ====================================================================================================================================
- -------------------------------------------------------------------------------- In order to determine the adequacy of the reserve for loan losses and to determine the need for potential charges to the reserve, a formal review is prepared, quarterly, to assess the risk within the loan portfolio. This review, conducted by lending officers, as well as an independent loan administration department, includes analyses of historical performance, the level of nonperforming loans, specific analyses of certain problem loans, loan activity since the last quarter, consideration of current economic conditions, and other pertinent information. The resulting conclusions are reviewed and approved by senior management. F-37 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- In accordance with SFAS No. 114, management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a loan to be impaired when the ultimate collectibility of all amounts due, according to the contractual terms of the loan agreement, is in doubt. When a loan becomes impaired, management calculates the impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, if the loan is collateral dependent, the fair value of the collateral is used to measure the amount of impairment. The amount of impairment and any subsequent changes are recorded, through a charge to earnings, as an adjustment to the reserve for loan losses. When management considers a loan, or a portion thereof, as uncollectible, it is charged against the reserve for loan losses. Through improved underwriting standards and the resolution of certain identified problem assets, Synovus' asset quality continued to improve during 1995 as measured by asset quality indicators. Synovus' provision for loan losses during 1995 was $25.8 million, up 1.6%, compared to $25.4 in 1994. Nonperforming assets are at their lowest level in more than ten years and the reserve is 350.8% of nonperforming loans. The slight increase in the provision for loan losses is primarily a result of management's ongoing assessment of the loan portfolio and the potential for increased loan weaknesses in light of the slowing economy. Synovus was able to reduce the nonperforming asset ratio to its lowest level in over ten years to .64% as of December 31, 1995. Net charge-offs of $20.4 million were 6.5% higher in 1995 compared to $19.2 million in 1994. However, as a percent of average net loans, the net charge-off ratio improved from .41% in 1994 to .38% in 1995. A summary, by loan category, of loans charged off, recoveries of loans previously charged off, and additions to the reserve through provision expense is presented in Table 8. An allocation of the reserve for loan losses has been made according to the respective amounts deemed necessary to provide for the possibility of incurred losses within the various loan categories. Although other relevant factors are considered, the allocation is primarily based on previous charge-off experience adjusted for risk characteristic changes among each category. Additional reserve amounts are allocated by evaluating the loss potential of individual loans that management has considered impaired. The reserve for loan loss allocation is based on subjective judgment and estimates, and therefore is not necessarily indicative of the specific amounts or loan categories in which charge-offs may ultimately occur. In 1995, Synovus adopted SFAS No. 114, and prior years have not been restated to reflect this accounting change. Refer to Table 9 for a five year comparison of the allocation of the reserve for loan losses. - -------------------------------------------------------------------------------- Table 9
Allocation of Reserve for Loan Losses (In thousands) December 31, ------------------------------------------------------------------- 1995 1994 1993 1992 1991 ------------------------------------------------------------------- Reserve %* Reserve %* Reserve %* Reserve %* Reserve %* ------------------------------------------------------------------- Commercial: Commercial, financial and agricultural ...................................... $32,810 35% $32,343 36% $28,539 35% $28,427 35% $27,214 35% Real estate-construction ............................... 570 10 562 9 496 9 494 9 473 9 Real estate-mortgage ................................... 4,392 21 4,329 20 3,820 20 3,805 20 3,643 20 - ------------------------------------------------------------------------------------------------------------------------------------ Total commercial .................................. 37,772 66 37,234 65 32,855 64 32,726 64 31,330 64 - ------------------------------------------------------------------------------------------------------------------------------------ Retail: Real estate-mortgage ................................... 499 15 492 17 434 17 432 17 414 17 Installment loans-credit card .......................... 6,627 4 6,658 3 6,315 3 8,563 3 8,066 3 Installment loans-other ................................ 14,610 14 14,277 15 12,159 15 9,838 15 9,550 15 Mortgage loans held for sale ........................... -- 1 -- -- -- 1 -- 1 -- 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total retail for loan losses ...................... 21,736 34 21,427 35 18,908 36 18,833 36 18,030 36 - ------------------------------------------------------------------------------------------------------------------------------------ Unallocated ............................................ 21,876 -- 16,357 -- 15,507 -- 9,777 -- 5,919 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total reserve for loan losses ..................... $81,384 100% $75,018 100% $67,270 100% $61,336 100% $55,279 100% ==================================================================================================================================== * Loan amount in each category expressed as a percentage of total loans.
- -------------------------------------------------------------------------------- Nonperforming Assets Nonperforming assets consist of nonaccrual loans, loans restructured due to debtors' financial difficulties, and real estate acquired through foreclosure and repossession. Nonaccrual loans consist of those loans on which recognition of interest income has been discontinued. Loans may be restructured as to rate, maturity, or other terms as determined on an individual credit basis. Demand and time loans, whether secured or unsecured, are generally placed on nonaccrual status when principal and/or interest is 90 days or more past due, or earlier if it is known or expected that the collection of all principal and interest is unlikely. Any loan past due 90 days or more, and based on a determination of collectibility not classified as nonaccrual, is classified as a past due loan. Nonaccrual loans are reduced by the direct application of interest receipts to loan principal, for accounting purposes only. Any payments in excess of the F-38 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- interest that would have been earned had the loan been an accruing loan, is applied to the principal balance. If the principal amount of the loan is well collateralized, interest income on such loans will be recognized as interest income in the period in which payments are received. In all circumstances, the determination of when to place loans on nonaccrual status is also based on evaluation of the individual characteristics of each particular loan, which may result in policy deviations in some circumstances. Table 10 presents the amount of interest income that would have been received on nonaccrual loans if the loans had been current and performing in accordance with their original terms. Synovus' nonperforming assets declined $5.5 million to $35.3 million, with a corresponding nonperforming asset ratio improving to .64% as of December 31, 1995 compared to .80% as of year end 1994. Synovus was able to reduce nonperforming assets while increasing loans $437.2 million, or 8.6%, during 1995. During 1995, the reserve for loan losses increased $6.4 million, or 8.5%, to $81.4 million. Based on management's analysis of potential risk within the loan portfolio, additions are periodically made to maintain the reserve for loan losses at an appropriate level. Loans 90 days past due and still accruing increased $4.0 million during 1995. Management believes that sufficient collateral value securing these loans exists to cover contractual interest and principal payments on the loans and management further believes the resolution of these delinquencies will not cause a material increase in nonperforming assets. - -------------------------------------------------------------------------------- Table 10
Nonperforming Assets (In thousands) December 31, ------------------------------------------------------- 1995 1994 1993 1992 1991 ------------------------------------------------------- Nonaccrual loans ..................................................... $21,469 26,497 30,296 45,812 43,246 Restructured loans ................................................... 1,733 1,900 224 135 819 - ------------------------------------------------------------------------------------------------------------------------------------ Nonperforming loans ........................................ 23,202 28,397 30,520 45,947 44,065 90 days past due and still accruing loans ............................ 11,417 7,383 9,870 11,106 14,224 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................................................... $34,619 35,780 40,390 57,053 58,289 ==================================================================================================================================== Nonperforming assets: Nonperforming loans ......................................... $23,202 28,397 30,520 45,947 44,065 Other real estate ............................................... 12,071 12,355 15,838 18,986 19,246 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................................................... $35,273 40,752 46,358 64,933 63,311 ==================================================================================================================================== Nonperforming assets to total loans and other real estate ............ .64% .80 1.04 1.60 1.64 ==================================================================================================================================== Reserve for loan losses to nonperforming loans ....................... 350.76% 264.18 220.41 133.49 125.45 ==================================================================================================================================== Non- Rest- accrual tructured Total - ------------------------------------------------------------------------------------------------------------------------------------ Year ended December 31, 1995: Interest at contracted rates ............................... $3,670 200 3,870 Interest recorded as income .................................... 1,064 197 1,261 - ----------------------------------------------------------------------------------------------------------------------------------- Reduction of interest income during 1995 ............................ $2,606 3 2,609 ==================================================================================================================================== - ------- Nonperforming assets exclude loans 90 days past due and still accruing. Interest income that would have been recorded, if the loans had been current and in accordance with their original terms.
- -------------------------------------------------------------------------------- Each one of Synovus' loans is assigned a rating, either individually or as part of a homogeneous pool, based on an internally developed grading system. An organizationally independent department also reviews grade assignments on an ongoing basis. Management continuously monitors nonperforming, impaired, and past due loans, in order to prevent further deterioration regarding the condition of these loans. Management is not aware of any material loans classified for regulatory purposes as loss, doubtful, substandard, or special mention, that have been excluded from nonperforming assets or impaired loans. Management further believes nonperforming assets and impaired loans include any material loans in which doubts exist as to the collectibility of amounts due according to the contractual terms of the loan agreement. Deposits Deposits provide the most significant funding source for Synovus' interest earning assets. Table 11 shows the relative composition of average deposits for 1995, 1994, and 1993. Refer to Table 12 for the maturity distribution of time deposits of $100,000 or more. These larger deposits represented 15.2% F-39 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- and 13.6% of total deposits at December 31, 1995 and 1994, respectively. Synovus' large denomination time deposits are generally from customers within the local market area, therefore, providing a greater degree of stability than is typically associated with this source of funds. For 1995, Synovus' average deposits increased $664.6 million, or 11.6%, to $6.4 billion from $5.7 billion in 1994. Average interest bearing deposits for 1995, which include interest bearing demand deposits, money market accounts, saving deposits, and time deposits, increased $570.8 million, or 11.8%, from 1994. This strong deposit growth occurred throughout several of the Synovus affiliate banks who used targeted time deposit programs to increase their deposits during 1995. Average non-interest bearing demand deposits increased $93.8 million, or 10.5%, during 1995. Average interest bearing deposits increased $334.4 million, or 7.5%, from 1993 to 1994, while non-interest bearing demand deposits increased $114.8 million, or 14.8%. See Table 3 for further information on average deposits, including the average rates paid for 1995, 1994, and 1993. - -------------------------------------------------------------------------------- Table 11
Average Deposits (In thousands) Years Ended December 31, - ----------------------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Non-interest bearing demand deposits .................................. $986,582 892,800 777,973 Interest bearing demand deposits ...................................... 887,694 873,992 780,292 Money market accounts ................................................. 915,710 863,081 829,275 Savings deposits ...................................................... 475,962 510,380 434,037 Time deposits ......................................................... 3,113,375 2,574,468 2,443,877 - ------------------------------------------------------------------------------------------------------------------------------------ Total average deposits ........................................... $6,379,323 5,714,721 5,265,454 ====================================================================================================================================
- -------------------------------------------------------------------------------- Table 12
Maturity Distribution of Time Deposits of $100,000 or More (In thousands) Time Deposits at December 31, 1995 - --------------------------------------------------------------------------------------------------------------------------- 3 months or less................................................................................... $ 422,176 Over 3 months through 6 months .................................................................... 185,451 Over 6 months through 12 months ................................................................... 213,497 Over 12 months .................................................................................... 202,776 - --------------------------------------------------------------------------------------------------------------------------- Total outstanding ............................................................................. $1,023,900 =========================================================================================================================== - -------------------------------------------------------------------------------- Interest Rate Risk Management Managing interest rate risk is the primary goal of Synovus' asset/liability management function. Synovus attempts to achieve consistent growth in net interest income while limiting volatility arising from changes in interest rates. Synovus seeks to accomplish this goal by balancing the maturity and repricing characteristics of balance sheet assets and liabilities along with the selective use of off-balance sheet financial instruments. Synovus' asset/liability mix is sufficiently balanced so that the effect of interest rates moving in either direction is not expected to be significant over time. Simulation modeling is the primary tool used by Synovus to measure its interest rate sensitivity. On at least a quarterly basis, the remainder of the current year and the next full fiscal year are simulated to determine the sensitivity of net interest income to changes in interest rates. The magnitude and velocity of rate changes among the various asset and liability groups exhibit different characteristics for each possible interest rate scenario. Simulation modeling enables Synovus to capture the effect of these differences as well as the effect of changes in asset and liability volumes. This modeling, combined with historical experience, indicates that Synovus is positioned such that its net interest income will generally increase slightly in the near term during a rising rate environment and decrease slightly in a declining rate environment. Another tool utilized by Synovus' management is cumulative gap analysis, which seeks to measure the repricing differentials, or gap, between rate sensitive assets and liabilities over various time periods. Table 13 reflects the gap positions of Synovus' consolidated balance sheet on December 31, 1995 and 1994, at various repricing intervals. The projected deposit repricing volumes reflect adjustments based on management's assumptions of the expected rate sensitivity relative to the prime rate for core deposits without contractual maturity (i.e., interest bearing checking, savings, and money market accounts). Management believes that these adjustments allow for a more accurate profile of Synovus' interest rate risk position. This gap analysis indicates that Synovus was moderately asset sensitive at December 31, 1995, with a cumulative one-year gap of 3.2%. Management believes that adjusted gap analysis is a useful tool for measuring interest rate risk only when used in conjunction with its simulation model. F-40 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 13
Interest Rate Sensitivity (In millions) December 31, 1995 - ------------------------------------------------------------------------------------------------------------------------------------ 0-3 4-12 1-5 Over 5 Months Months Years Years - ------------------------------------------------------------------------------------------------------------------------------------ Investment securities ............................................... $ 48.5 232.2 764.8 432.8 Loans, net of unearned income ........................................... 2,861.9 789.1 1,434.7 426.3 Other ................................................................... 124.9 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitive assets .......................................... 3,035.3 1,021.3 2,199.5 859.1 - ------------------------------------------------------------------------------------------------------------------------------------ Deposits ................................................................ 2,012.2 1,450.3 801.8 1,321.9 Other borrowings ........................................................ 229.5 12.6 21.3 72.9 - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitive liabilities ..................................... 2,241.7 1,462.9 823.1 1,394.8 - ------------------------------------------------------------------------------------------------------------------------------------ Interest rate swaps ................................................ (125.0) -- 125.0 -- - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitivity gap ...................................... $ 668.6 (441.6) 1,501.4 (535.7) ==================================================================================================================================== Cumulative interest sensitivity gap ........................... $ 668.6 227.0 1,728.4 1,192.7 ==================================================================================================================================== Cumulative interest sensitivity gap as a percentage of total interest sensitive assets........................... 9.4% 3.2 24.3 16.8 ==================================================================================================================================== December 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------------ 0-3 4-12 1-5 Over 5 Months Months Years Years - ------------------------------------------------------------------------------------------------------------------------------------ Investment securities .............................................. $ 55.5 153.9 836.0 324.2 Loans, net of unearned income .......................................... 2,597.8 784.7 1,388.0 304.4 Other .................................................................. 45.1 -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitive assets ......................................... 2,698.4 938.6 2,224.0 628.6 - ------------------------------------------------------------------------------------------------------------------------------------ Deposits ............................................................... 1,905.4 1,062.0 699.4 1,274.7 Other borrowings ....................................................... 412.1 29.3 31.5 79.0 - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitive liabilities .................................... 2,317.5 1,091.3 730.9 1,353.7 - ------------------------------------------------------------------------------------------------------------------------------------ Interest sensitivity gap ...................................... $ 380.9 (152.7) 1,493.1 (725.1) ==================================================================================================================================== Cumulative interest sensitivity gap ........................... $ 380.9 228.2 1,721.3 996.2 ==================================================================================================================================== Cumulative interest sensitivity gap as a percentage of total interest sensitive assets ........................ 5.9% 3.5 26.5 15.4 ==================================================================================================================================== - ----------- Excludes the effect of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", consisting of net unrealized gains in the amount of $8.9 million in 1995 and net unrealized losses of $31.9 million in 1994.
- -------------------------------------------------------------------------------- F-41 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 14
Maturities of Investment Securities and Average Yields (In thousands) Investment Securities Investment Securities Held to Maturity Available for Sale December 31, 1995 December 31, 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Amortized Average Estimated Average Cost Yield Fair Value Yield - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Treasury and U.S. Government agencies: Within 1 year ........................ $ 14,924 6.80% $ 241,688 5.81% 1 to 5 years ......................... 44,615 6.55 557,958 6.03 5 to 10 years ........................ 22,233 7.44 204,131 7.02 More than 10 years ................... -- -- 509 7.75 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................... $ 81,772 6.84% $ 1,004,286 6.18% - ------------------------------------------------------------------------------------------------------------------------------------ Mortgage-backed securities: Within 1 year ........................ $ 1,692 7.43% $ 1,239 7.41% 1 to 5 years ......................... 73,793 5.93 34,612 6.46 5 to 10 years ........................ 22,174 7.24 11,644 6.96 More than 10 years ................... 73,616 7.15 40,701 6.63 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................... $171,275 6.64% $ 88,196 6.62% - ------------------------------------------------------------------------------------------------------------------------------------ State and municipal: Within 1 year ........................ $ 17,986 9.63% $ 298 10.51% 1 to 5 years ......................... 52,596 8.70 668 11.77 5 to 10 years ........................ 35,218 8.68 98 6.62 More than 10 years ................... 15,961 10.60 258 8.64 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................... $121,761 9.08% $ 1,322 10.41% - ------------------------------------------------------------------------------------------------------------------------------------ Other investments: Within 1 year ........................ $ 98 4.04% $ 3,382 9.03% 1 to 5 years ......................... 1,832 7.09 3,325 8.15 5 to 10 years ........................ 265 7.92 2,251 7.64 More than 10 years ................... 3,915 5.82 3,536 5.76 - ------------------------------------------------------------------------------------------------------------------------------------ Total ...................... $ 6,110 6.27% $ 12,494 7.55% - ------------------------------------------------------------------------------------------------------------------------------------ Total Investment Securities: Within 1 year ........................ $ 34,700 8.29% $ 246,607 5.87% 1 to 5 years ......................... 172,836 6.95 596,563 6.08 5 to 10 years ........................ 79,890 7.93 218,124 7.03 More than 10 years ................... 93,492 7.69 45,004 6.58 - ------------------------------------------------------------------------------------------------------------------------------------ Total ....................... $380,918 7.46% $ 1,106,298 6.24% ====================================================================================================================================
The calculation of weighted average yields for securities is based on the amortized cost and effective yields of each security weighted for the scheduled maturity of each security. The yield on state and municipal securities is computed on a taxable-equivalent basis using the statutory federal income tax rate of 35% for 1995. - -------------------------------------------------------------------------------- F-42 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Off-Balance Sheet Derivatives for Interest Rate Risk Management As part of our overall interest rate risk management activities, Synovus utilizes off-balance sheet derivatives to modify the repricing characteristics of on-balance sheet assets and liabilities. As of December 31, 1995, all off-balance sheet derivatives were interest rate swaps where Synovus receives a fixed rate of interest and pays a floating rate. These swaps have the effect of converting on-balance sheet floating rate assets to fixed rate assets, thereby reducing the natural asset sensitivity of Synovus' core banking business. The nature of these transactions is essentially the same as purchasing a fixed-rate security funded with a floating-rate liability. All swaps utilized by Synovus represent end-user activities designed as hedges, all of which are linked to specific assets as part of overall interest rate risk management practices. Management feels that the utilization of these instruments provides greater financial flexibility and is a very efficient tool for managing interest rate risk position. The notional amount of interest swaps utilized by Synovus as of December 31, 1995, was $125 million. The notional amounts represent the amount on which calculations of interest payments to be exchanged are based. Although Synovus is not exposed to credit risk equal to the notional amounts, there is exposure to potential credit risks equal to the fair or replacement values of the swaps if the counterparty fails to perform. This credit risk is normally a very small percentage of the notional amount and fluctuates as interest rates change. Synovus minimizes this risk by subjecting the transaction to the same approval process as on-balance sheet credit activities, by dealing with only highly-rated counterparties, and by obtaining collateral agreements for exposure above certain predetermined limits. Weighted Weighted Average December 31, 1995 Notional Average Average Maturity Unrealized Unrealized Net (In thousands) Amount Receive Rate Pay Rate In Months Gains Losses Fair Value - ------------------------------------------------------------------------------------------------------------------------------------ Receive Fixed Swaps $125,000 5.98% 5.88% 46 1,776 -- 1,776
The above table represents the December 31, 1995 status of all off-balance sheet derivative positions at Synovus and its affiliate bank, Columbus Bank and Trust Company. There were no maturities, offsets, or terminations in 1995. Liquidity Liquidity represents the availability of funding to meet the needs of depositors, borrowers, and creditors at a reasonable cost, on a timely basis, and without adverse consequences. Management actively analyzes and manages Synovus' liquidity position in coordination with similar committees at each affiliate bank. These affiliates, with the help of management, maintain liquidity in the form of cash on deposit, federal funds, securities available for sale, and cash derived from prepayments and maturities of both their investment and loan portfolios. Liquidity is also enhanced by the acquisition of new deposits and the well established core deposits of Synovus' 211 banking offices in four states. The affiliate banks monitor deposit flow and evaluate alternate pricing structures to retain and grow deposits. Certain Synovus affiliate banks maintain correspondent banking relationships with various national and regional financial organizations. These relationships provide access to short-term borrowings through federal funds which allows Synovus to meet immediate liquidity needs if required. Synovus serves a diversity of markets. Some of these are rapidly growing areas where loan demand outpaces the generation of deposits. However, through the loan participations between Synovus' affiliate banks, these loans can be funded by affiliates having lower local loan demand. Additionally, lending is focused within the local markets served by Synovus, enabling the development of comprehensive banking relationships. Additionally, the Parent Company requires cash for various operating needs including dividends to shareholders, business combinations, capital infusions into affiliates, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent Company is dividends from the affiliate banks. In addition, the Parent Company has access to a $20 million line of credit. The Parent Company enjoys an excellent reputation and credit standing in the market place and has the ability to raise substantial amounts of funds in the form of either short or long-term borrowings. The Parent Company's current principal debt, senior notes totaling $75 million at a rate of 6.125%, has been rated "A" by Standard and Poors Corp., "A3" by Moody's Investor Service and "AA-" by Thomson Bankwatch. For a complete description of these borrowings and other borrowings by other Synovus affiliates, see Note 6 to Synovus' consolidated financial statements. The consolidated statements of cash flows detail Synovus' cash flows from operating, investing, and financing activities. Net cash provided by operating activities was $152.4 million for the year ended December 31, 1995, while financing activities provided $467.1 million. Investing activities used $581.4 million of this amount, resulting in a net increase in cash and cash equivalents of $38.1 million. Management is not aware of any trends, events, or uncertainties that will have, or that are reasonably likely to have a material impact on Synovus' liquidity, capital resources, or operations. Further, management is not aware of any current recommendations by regulatory agencies which, if they were to be implemented, would have such effect. Capital Resources and Dividends Synovus has always placed great emphasis on maintaining a strong capital base and continues to exceed all minimum regulatory capital requirements. Management is committed to maintaining a capital level sufficient to assure shareholders, customers, and regulators that Synovus is financially sound, and to enable Synovus to sustain an appropriate degree of leverage to provide a desirable level of profitability. Synovus has the ability to generate internal capital F-43 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- growth sufficient to support the asset growth it has experienced. Total shareholders' equity of $693.6 million represented 8.75% of total assets at December 31, 1995. Regulators use a risk-adjusted calculation to aid them in their determination of capital adequacy by weighting assets based on the credit risk associated with on- and off-balance sheet assets. The majority of these risk-weighted assets are on-balance sheet assets for Synovus in the form of loans. A small portion of risk-weighted assets are considered off-balance sheet assets and are primarily made up of letters of credit, loan commitments, and to a lesser extent interest rate swaps, that Synovus makes in the normal course of business. Capital is categorized into two types: Tier I and Tier II. The capital guidelines used by regulators require an 8% total risk-based capital ratio of which 4% must be Tier I capital. Additionally, the regulatory agencies define a well-capitalized bank as one which has a leverage ratio of at least 5%, a Tier 1 capital ratio of at least 6%, and a total risk-based capital ratio of at least 10%. At the end of 1995, Synovus and all affiliate banks were in excess of the minimum capital requirements with a consolidated Tier 1 capital ratio of 11.28% and a total risk-based capital ratio of 12.57%, compared to Tier I and total risk-based capital ratios of 11.04% and 12.36%, respectively, in 1994 as shown in Table 15. In addition to the risk-based capital standards, a minimum leverage ratio of 4% is required for the highest-rated bank holding companies which are not undertaking significant expansion programs. An additional 1% to 2% may be required for other companies, depending upon their regulatory ratings and expansion plans. The leverage ratio is defined as Tier I capital divided by quarterly average assets, net of certain intangibles. As of December 31, 1995, Synovus had a leverage ratio of 8.71%, which significantly exceeds the regulatory requirements. Synovus' capital level also exceeds all requirements under the Federal Reserve Board's guidelines. The Federal Reserve Board requires a minimum primary capital ratio of 5.50% and a total capital ratio of 6.00% for bank holding companies and banks. At December 31, 1995, Synovus' primary and total capital ratios as defined by the Federal Reserve Board were 9.49% and 9.52%, respectively, compared to 9.18% and 9.23%, respectively, at year end 1994. During the third quarter of 1994, Synovus announced its plan to acquire up to 750,000 shares of Synovus common stock in the open market. Through December 31, 1995, 362,600 shares of Synovus common stock have been purchased under this plan at an average price of $23.51. Of these shares, 266,498 shares were used in 1995 to acquire Peach State Bank. Approximately 52,000 shares were issued to employees for vested stock option exercises. The remaining shares under this plan along with other treasury shares acquired before this plan amount to 43,930 as of December 31, 1995. These shares will be used to fund incentive stock award plans and other employee benefit plans. The remaining shares to be purchased under the stock repurchase plan will be purchased based on market conditions over the next two years. Synovus' 80.8% ownership of TSYS is an important aspect of the market price of Synovus common stock and should be considered in a comparison of the relative market price of Synovus common stock to other financial service companies. As of December 31, 1995, there were approximately 17,000 shareholders of record of Synovus common stock, some of which are holders in nominee name for the benefit of a number of different shareholders. Table 16 displays high and low quotations of Synovus common stock which are based on actual transactions. F-44 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 15
Capital Ratios (In thousands) December 31, - ----------------------------------------------------------------------------------------------------------------------------------- 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Tier I capital: Shareholders' equity ............................................................ $ 693,555 579,880 Adjustment for SFAS No. 115 ..................................................... (5,774) 20,744 Plus: Minority interest ......................................................... 27,790 22,483 Less: Disallowed intangibles .................................................... (41,406) (32,890) - ------------------------------------------------------------------------------------------------------------------------------------ Total Tier I capital ....................................................... 674,165 590,217 - ------------------------------------------------------------------------------------------------------------------------------------ Tier II capital: Eligible portion of the reserve for loan losses ................................. 74,818 66,947 Subordinated and other qualifying debt .......................................... 2,440 3,697 - ------------------------------------------------------------------------------------------------------------------------------------ Total Tier II capital ...................................................... 77,258 70,644 - ------------------------------------------------------------------------------------------------------------------------------------ Total risk-based capital ............................................................. $ 751,423 660,861 ==================================================================================================================================== Total risk-adjusted assets ........................................................... $5,978,913 5,347,687 ==================================================================================================================================== Tier I capital ratio ................................................................. 11.28% 11.04 Total risk-based capital ratio ....................................................... 12.57 12.36 Leverage ratio ....................................................................... 8.71 8.45 Regulatory Minimums: Tier I capital ratio ............................................................ 4.00% Total risk-based capital ratio .................................................. 8.00 Leverage ratio .................................................................. 4.00 - ----------- Risk-based capital ratios, for both years presented, were prepared using risked-based capital rules finalized in November, 1994, which exclude the impact of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
- -------------------------------------------------------------------------------- Table 16 Market and Stock Price Information High Low - ------------------------------------------------------------------------------------------------------------------------------------ 1995 Quarter ended December 31, 1995 ............................................. $30 1/4 25 Quarter ended September 30, 1995 ............................................ 27 1/4 22 1/2 Quarter ended June 30, 1995 ................................................. 22 7/8 19 1/4 Quarter ended March 31, 1995 ................................................ 19 3/4 17 3/4 1994 Quarter ended December 31, 1994 ............................................. $19 7/8 18 Quarter ended September 30, 1994 ............................................ 19 3/8 16 5/8 Quarter ended June 30, 1994 ................................................. 18 1/2 16 3/4 Quarter ended March 31, 1994 ................................................ 19 1/4 16 3/4 - ------------------------------------------------------------------------------------------------------------------------------------
Dividends It is Synovus' objective to pay out approximately one-third of earnings to shareholders in cash dividends. Synovus' dividend payout ratio in 1995, 1994, and 1993 was 36.69%, 36.90%, and 35.10%, respectively. The total dollar amount of dividends declared increased 28.5% in 1995 to $42.0 million, from $33.0 million in 1994. Cash dividends have been paid on the common stock of Synovus (including its predecessor companies) in every year since 1891. It is the present intention of the Synovus Board of Directors to continue to pay cash dividends on its common stock in accordance with the previously mentioned objective. Table 17 presents the declared and paid dates from recent dividends, as well as per share dividend amounts. F-45 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table 17 Dividends
Per Share Date Declared Date Paid Amount - -------------------------------------------------------------------------------- November 13, 1995 January 2, 1996 $ .1350 September 11, 1995 October 2, 1995 .1350 May 8, 1995 July 3, 1995 .1350 February 14, 1995 April 3, 1995 .1350 November 14, 1994 January 3, 1995 .1125 September 12, 1994 October 1, 1994 .1125 May 9, 1994 July 1, 1994 .1125 February 23, 1994 April 1, 1994 .1125
- -------------------------------------------------------------------------------- Commitments Synovus believes it has sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year. Table 18, Note 6, and Note 9 to Synovus' consolidated financial statements provide additional information on Synovus' short-term and long-term borrowings. In the normal course of its business, TSYS maintains processing agreements with its customers. These processing agreements contain contractual commitments, including, but not limited to, minimum standards and time frames against which TSYS' performance is measured. In the event TSYS does not meet its contractual commitments with its customers, TSYS may incur penalties and/or certain customers may have the right to terminate their agreements with TSYS. TSYS does not believe that it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its financial condition or results of operations. Synovus is subject to various legal proceedings and claims which arise in the ordinary course of its business. Any litigation is vigorously defended by Synovus and, in the opinion of management, based on consultation with external legal counsel, any outcome of such litigation would not materially affect Synovus' consolidated financial position. Currently, multiple lawsuits, some seeking class action treatment, are pending against one of Synovus' Alabama banking subsidiaries that involve: (1) the sale of credit life insurance made in connection with consumer credit transactions; (2) payments of service fees or interest rebates to automobile dealers in connection with the assignment of automobile credit sales contracts to that Synovus subsidiary; and (3) the forced placement of insurance to protect that Synovus subsidiary's interest in collateral for which consumer credit customers have failed to obtain or maintain insurance. These lawsuits seek unspecified damages, including punitive damages, and some purport to be class actions which, if certified, may involve many of such subsidiary's consumer credit transactions in Alabama for a number of years. Synovus intends to vigorously contest these lawsuits and all other litigation to which Synovus and its subsidiaries are parties. Based on information presently available, and in light of legal and other defenses available to Synovus and its subsidiaries, contingent liabilities arising from the threatened and pending litigation are not considered material. It should be noted, however, that large punitive damage awards, bearing little relation to the actual damages sustained by plantiffs, have been awarded in Alabama. - -------------------------------------------------------------------------------- Table 18 Short-Term Borrowings (In thousands) The following table sets forth certain information regarding federal funds purchased and securities sold under agreement to repurchase, one of the principal components of short-term borrowings.
1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Month end balance for year ended December 31, ........................... $229,477 412,082 260,619 Weighted average interest rate at December 31, .......................... 5.65% 5.40 2.81 Maximum month end balance during the year ............................... $362,035 412,082 260,619 Average amount outstanding during the year .............................. $216,342 235,858 158,050 Weighted average interest rate during the year .......................... 5.59% 4.18 3.01 - -------------------------------------------------------------------------------- F-46 ANNUAL REPORT 1995 - -------------------------------------------------------------------------------- Income Tax Expense As reported in the consolidated statements of income, Synovus' income tax expense increased to $64.9 million in 1995, up from $49.5 million in 1994, and $42.9 million in 1993. The effective tax rate was 36.2%, 35.6%, and 34.8% in 1995, 1994, and 1993 , respectively. The increases in both 1995 and 1994 were primarily the result of increases in pre-tax income and in the relative percentage of taxable income to total income. The increase in 1995 was also affected by a decrease in certain research and experimentation credits. Factors affecting 1994 were fewer state tax credits and loss carryovers in 1994 as compared to 1993. See Note 7 to Synovus' consolidated financial statements for a detailed analysis of income taxes. Inflation Inflation has an important impact on the growth of total assets in the banking industry and may create a need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio. Synovus has been able to maintain a high level of equity through retention of an appropriate percentage of its earnings. Synovus copes with the effects of inflation by managing its interest rate sensitivity gap position through its asset/liability management program and by periodically adjusting its pricing of services and banking products to take into consideration current costs. Parent Company The Parent Company's assets, primarily its investment in affiliates, are funded, for the most part, by shareholders' equity. It also utilizes short-term and long-term debt. The Parent Company is responsible for providing the necessary funds to strengthen the capital of its affiliates if necessary, acquire new affiliates, pay corporate operating expenses, and pay dividends to its shareholders. These operations are funded by dividends and fees received from affiliates, and borrowings from outside sources. In connection with dividend payments to the Parent Company from its affiliate banks, certain rules and regulations of the various state and federal banking regulatory agencies limit the amount of dividends which may be paid. As of December 31, 1995, $98.4 million in dividends could be paid in 1996 to the Parent Company from its affiliates without prior regulatory approval. Synovus anticipates receiving regulatory approval to allow affiliates to pay dividends in excess of these regulatory limits. F-47 SYNOVUS FINANCIAL CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Summary of Quarterly Financial Data (Unaudited) (In thousands, except per share data) Presented below is a summary of the unaudited consolidated quarterly financial data for the years ended December 31, 1995 and 1994. Fourth Third Second First Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------------------------------------------------------------ 1995 Interest income ....................................... $160,683 157,443 153,318 144,344 ==================================================================================================================================== Net interest income ................................... 88,274 86,262 84,509 82,830 ==================================================================================================================================== Provision for losses on loans ......................... 8,589 6,214 5,739 5,245 ==================================================================================================================================== Income before income taxes ............................ 52,966 47,197 41,788 37,518 ==================================================================================================================================== Net income ............................................ 33,634 30,279 26,600 24,070 ==================================================================================================================================== Net income per share .................................. .44 .39 .35 .32 ==================================================================================================================================== 1994 Interest income ....................................... $135,736 127,675 122,354 112,617 ==================================================================================================================================== Net interest income ................................... 81,100 77,469 74,789 67,873 ==================================================================================================================================== Provision for losses on loans ......................... 8,358 5,463 5,566 6,000 ==================================================================================================================================== Income before income taxes ............................ 33,613 37,853 35,163 32,297 ==================================================================================================================================== Net income ............................................ 21,752 24,683 22,598 20,419 ==================================================================================================================================== Net income per share .................................. .29 .33 .30 .27 ====================================================================================================================================
- -------------------------------------------------------------------------------- F-48 EX-20.1 9 [LOGO](R) SYNOVUS(Registration Mark) FINANCIAL CORP. JAMES H. BLANCHARD CHAIRMAN OF THE BOARD March 8, 1996 Dear Shareholder: The Annual Meeting of the Shareholders of Synovus Financial Corp. will be held on April 25, 1996 in the North Hall of the Columbus, Georgia Convention & Trade Center, beginning at 10:00 o'clock A.M., E.T., for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement. We encourage you to attend the Annual Meeting of Shareholders and let us give you a review of 1995. Whether you own a few or many shares of stock and whether or not you plan to attend in person, it is important that your shares be voted on matters that come before the meeting. To make sure your shares are represented, we urge you to complete the enclosed Proxy Card, including the Certificate of Beneficial Owner on the reverse side of the Proxy, and mail it to us promptly. Thank you for helping us make 1995 a good year. We look forward to your continued support in 1996 and another good year. Sincerely yours, /s/James H. Blanchard JAMES H. BLANCHARD Synovus Financial Corp. Post Office Box 120 Columbus, Georgia 31902-0120 SYNOVUS(R) FINANCIAL CORP. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held April 25, 1996 NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of Synovus Financial Corp. ("Synovus") will be held in the North Hall of the Columbus, Georgia Convention & Trade Center, on April 25, 1996, at 10:00 o'clock A.M., E.T., for: (1) The election of seven nominees as Class II directors of Synovus to serve until the 1999 Annual Meeting of Shareholders; (2) To approve the Synovus Financial Corp. Executive Bonus Plan; and (3) The transaction of such other business as may properly come before the Annual Meeting. Information relating to the above matters is set forth in the accompanying Proxy Statement. Only shareholders of record at the close of business on February 23, 1996 will be entitled to notice of and to vote at the Annual Meeting. /s/G. S. Griffith, III G. SANDERS GRIFFITH, III Secretary Columbus, Georgia March 8, 1996 WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING IN PERSON, PLEASE VOTE, DATE AND SIGN THE ENCLOSED PROXY, COMPLETE AND SIGN THE CERTIFICATE OF BENEFICIAL OWNER ON THE REVERSE SIDE OF THE ENCLOSED PROXY, AND RETURN THEM PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES. SYNOVUS(R) FINANCIAL CORP. PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS To Be Held April 25, 1996 I. INTRODUCTION A. Purposes of Solicitation -- Terms of Proxies. The Annual Meeting of the Shareholders ("Annual Meeting") of Synovus Financial Corp. ("Synovus") will be held on April 25, 1996 for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders and in this Proxy Statement. The enclosed Proxy is solicited BY AND ON BEHALF OF SYNOVUS' BOARD OF DIRECTORS in connection with such Annual Meeting, or any adjournment thereof. The costs of the solicitation of Proxies by Synovus' Board of Directors will be paid by Synovus. Forms of Proxies and Proxy Statements will also be distributed through brokers, banks, nominees, custodians and other like parties to the beneficial owners of shares of the $1.00 par value common stock of Synovus ("Synovus Common Stock"), and Synovus will reimburse such parties for their reasonable out-of-pocket expenses therefor. Synovus' mailing address is Post Office Box 120, Columbus, Georgia 31902-0120. The shares represented by the Proxy in the accompanying form, which when properly executed, returned to Synovus' Board of Directors and not revoked, will be voted in accordance with the instructions specified in such Proxy. If a choice is not specified in a Proxy, the shares represented by such Proxy will be voted "FOR" the election of the seven nominees for election as Class II directors of Synovus named herein and in accordance with the recommendations of the Board of Directors on the other matters brought before the Meeting. Each Proxy granted may be revoked in writing at any time before the authority granted thereby is exercised. Attendance at the Annual Meeting will constitute a revocation of the Proxy for such Annual Meeting if the maker thereof elects to vote in person. This Proxy Statement and the enclosed Proxy are being first mailed to shareholders on or about March 8, 1996. B. Shareholder Proposals. From time to time, Synovus' shareholders may present proposals which may be proper subjects for inclusion in Synovus' Proxy Statement for consideration at Synovus' Annual Meeting. To be considered for inclusion, shareholder proposals must be submitted on a timely basis. Proposals for Synovus' 1997 Annual Meeting must be received by Synovus no later than November 8, 1996, and any such proposals, as well as any questions related thereto, should be directed to the Secretary of Synovus. 1 C. Securities Entitled to Vote and Record Date. Only shareholders of record at the close of business on February 23, 1996 are entitled to vote at the Annual Meeting, or any adjournment thereof. As of that date, there were 77,264,014 shares of Synovus Common Stock outstanding and entitled to vote. Synovus owned 43,930 shares of Synovus Common Stock on February 23, 1996 as treasury shares, which are not considered to be outstanding and are not entitled to be voted at the Annual Meeting. In accordance with the amendment to Synovus' Articles of Incorporation which was adopted by the shareholders of Synovus and became effective on April 24, 1986 (the "Voting Amendment"), a holder of Synovus Common Stock will be entitled to ten votes on each matter submitted to a vote of shareholders for each share of Synovus Common Stock beneficially owned on February 23, 1996 which: (1) has had the same beneficial owner since February 23, 1992; (2) was acquired by reason of participation in a dividend reinvestment plan offered by Synovus and is held by the same beneficial owner for whom it was acquired under such plan; (3) is held by the same beneficial owner to whom it was issued as a result of an acquisition of a company or business by Synovus where the resolutions adopted by Synovus' Board of Directors approving such issuance specifically reference and grant such rights; (4) was acquired under any employee, officer and/or director benefit plan maintained for one or more employees, officers and/or directors of Synovus and/or its subsidiaries, and is held by the same beneficial owner for whom it was acquired under any such plan; (5) is held by the same beneficial owner to whom it was issued by Synovus, or to whom it was transferred by Synovus from treasury shares, and the resolutions adopted by Synovus' Board of Directors approving such issuance and/or transfer specifically reference and grant such rights; (6) was acquired as a direct result of a stock split, stock dividend or other type of share distribution if the share as to which it was distributed was acquired prior to, and has been held by the same beneficial owner since, February 23, 1992; (7) has been beneficially owned continuously by the same shareholder for a period of 48 consecutive months prior to the record date of any meeting of shareholders at which the share is eligible to be voted; or (8) is owned by a holder who, in addition to shares which are beneficially owned under the provisions of (1)-(7) above, is the beneficial owner of less than 337,500 shares of Synovus Common Stock (which amount has been appropriately adjusted to reflect the three-for-two stock splits effected in the form of 50% stock dividends paid on October 1, 1986, October 3, 1988 and April 1, 1993, respectively, and with such amount to be appropriately adjusted to properly reflect any other change in Synovus Common Stock by means of a stock split, a stock dividend, a recapitalization or otherwise occurring after April 24, 1986). Shareholders of shares of Synovus Common Stock not described above are entitled to one vote per share for each such share. The actual voting power of each holder of shares of Synovus Common Stock will be based on information possessed by Synovus at the time of the Annual Meeting. As Synovus Common Stock is registered with the Securities and Exchange Commission ("SEC") and is traded on the New York Stock Exchange ("NYSE"), Synovus Common Stock is subject to the provisions of an NYSE rule which, in general, prohibits a company's common stock and equity securities from being authorized or remaining authorized for trading on the NYSE if the company issues securities or takes other corporate action that would have the effect of nullifying, restricting or disparately reducing the voting rights of existing shareholders of the company. However, such rule contains a "grandfather" provision, under which Synovus' Voting Amendment falls, which, in general, permits grandfathered disparate voting rights plans to continue to operate as adopted. The number of votes that each shareholder will be entitled to exercise at the Annual Meeting will depend upon whether each share held by the shareholder meets the requirements which entitle one share of Synovus Common Stock to ten votes on each matter submitted to a vote of shareholders. Shareholders of Synovus Common Stock must complete the Certification on the reverse side of the Proxy in order for any of the shares represented by the Proxy to be entitled to ten votes per share. SHAREHOLDERS AND BENEFICIAL OWNERS WHO DO NOT COMPLETE THE CERTIFICATIONS ON THE REVERSE SIDES OF THEIR PROXY CARDS AND WHO WOULD, IF THEY HAD COMPLETED SUCH CERTIFICATIONS, BE ENTITLED TO TEN VOTES PER SHARE, WILL BE ENTITLED TO ONLY ONE VOTE PER SHARE. 2 D. Columbus Bank and Trust Company and Total System Services, Inc. Synovus is the owner of all of the issued and outstanding shares of voting common stock of Columbus Bank and Trust Company(R)("Columbus Bank"). Columbus Bank owns individually 80.8% of the outstanding shares of Total System Services, Inc.(SM) ("TSYS(R)"), a bankcard data processing company having 64,644,361 shares of $.10 par value voting common stock ("TSYS Common Stock") outstanding on February 23, 1996. II. ELECTION OF DIRECTORS A. Information Concerning Directors and Nominees. (1) Number and Classification of Directors. In accordance with the vote of shareholders taken at Synovus' 1995 Annual Meeting, the number of members of Synovus' Board of Directors was set at 20. Synovus' Board of Directors is currently comprised of 20 members. The 20 members who comprise Synovus' Board of Directors are divided into three classes of directors: Class I directors, Class II directors and Class III directors, with each of such Classes of directors serving staggered 3-year terms. At Synovus' 1995 Annual Meeting, Class I directors were elected to serve 3-year terms to expire at Synovus' 1998 Annual Meeting and at Synovus' 1994 Annual Meeting, Class III directors were elected to serve 3-year terms to expire at Synovus' 1997 Annual Meeting. The terms of office of the Class II directors expire at Synovus' 1996 Annual Meeting. Given the division of Synovus' Board of Directors into three classes, shareholders who do not favor the policies of Synovus' Board of Directors would require at least two Annual Meetings of Shareholders to replace a majority of the members of the Board. (2) Nominees for Class II Directors and Vote Required. Synovus' Board of Directors has selected seven nominees which it proposes for election to Synovus' Board as Class II directors. The nominees for Class II directors of Synovus will be elected to serve 3-year terms that will expire at Synovus' 1999 Annual Meeting. The seven nominees for Class II directors of Synovus are: Richard E. Anthony, Joe E. Beverly, Mason H. Lampton, John L. Moulton, Elizabeth C. Ogie, John T. Oliver, Jr. and William L. Pherigo. Proxies cannot be voted at the 1996 Annual Meeting for a greater number of persons than the number of nominees named. Under Georgia law, a majority of the issued and outstanding shares of Synovus Common Stock entitled to vote must be represented at the 1996 Annual Meeting to constitute a quorum. However, as is allowed by Georgia law, under Synovus' bylaws and the Voting Amendment, a majority of the votes entitled to be cast by the holders of all of the issued and outstanding shares of Synovus Common Stock entitled to vote must be represented at the 1996 Annual Meeting in order to constitute a quorum. Under both Georgia law and Synovus' bylaws, all shares represented at the meeting, including shares abstaining and withholding authority, are counted for purposes of determining whether a quorum exists. The nominees for election as directors at the Annual Meeting who receive the greatest number of votes (a plurality), a quorum being present, shall become directors at the conclusion of the tabulation of votes. Thus, once a quorum has been established, abstentions and broker non-votes have no effect upon the election of directors. The shares represented by Proxies executed for Synovus' 1996 Annual Meeting in such manner as not to withhold authority to vote for the election of any nominee for Synovus' Board of Directors shall be voted "FOR" the election of the seven nominees for Class II directors on Synovus' Board named herein. If any nominee for Class II director of Synovus becomes unavailable for any reason before Synovus' 1996 Annual Meeting, the shares represented by executed Proxies may be voted for such substitute nominee as may be determined by the holders of such Proxies. It is not anticipated that any nominee will be unavailable for election. 3 SYNOVUS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE SEVEN NOMINEES FOR ELECTION AS CLASS II DIRECTORS ON SYNOVUS' BOARD SET FORTH HEREIN. B. Information Concerning Directors and Nominees for Class II Directors. (1) General Information. The following table sets forth the name, age, principal occupation and employment (which, except as noted, has been for the past five years) of each of the seven nominees for election as Class II directors of Synovus and the remaining directors who will continue to serve on Synovus' Board of Directors, his or her director classification, length of service as a director of Synovus, any family relationships with other directors or executive officers of Synovus, and any Board of Directors of which he or she is a member with respect to any company with a class of securities registered with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or any company which is subject to the requirements of Section 15(d) of that Act, including TSYS, or any company registered with the SEC as an investment company under the Investment Company Act of 1940 ("Public Company").
Synovus Year Director First Principal Occupation Classifi- Elected and Other Directorships Name Age cation Director of Public Companies - ------------------------------ ----- ---------- ------------ -------------------------- Daniel P. Amos 44 III 1991 Chief Executive Officer and Director, AFLAC Incorporated (Insurance Holding Company) Richard E. Anthony 49 II 1993 Vice Chairman of the Board, Synovus Financial Corp.; Chairman of the Board, First Commercial Bank of Birmingham (Banking Subsidiary of Synovus) Joe E. Beverly 54 II 1983 Vice Chairman of the Board, Synovus Financial Corp.; Chairman of the Board, Commercial Bank, Thomasville, Georgia (Banking Subsidiary of Synovus); Director, Davis Water & Waste Industries, Inc. James H. Blanchard 54 I 1972 Chairman of the Board and Chief Executive Officer, Synovus Financial Corp.; Chairman of the Executive Committee, Total System Services, Inc.; Director, BellSouth Corporation Richard Y. Bradley 57 III 1991 Partner, Bradley & Hatcher (Law Firm); Director, Total System Services, Inc. Stephen L. Burts, Jr. 43 I 1992 President and Chief Financial Officer, Synovus Financial Corp. Salvador Diaz-Verson, Jr. 44 III 1985 Chairman of the Board, Diaz-Verson Capital Investments, Inc. (Investments and Money Management); Chairman of the Board, Diaz-Verson Funds Inc.; Director, Clemente Capital, Inc., Miramar Securities, Inc. and Total System Services, Inc. C. Edward Floyd, M.D 61 I 1995 Vascular Surgeon Gardiner W. Garrard, Jr. 55 I 1972 President, The Jordan Company (Real Estate Development); Director, Total System Services, Inc. V. Nathaniel Hansford 52 I 1985 Professor and Dean Emeritus -- School of Law, University of Alabama 4 Synovus Year Director First Principal Occupation Classifi- Elected and Other Directorships Name Age cation Director of Public Companies - ------------------------------ ----- ---------- ------------ -------------------------- Mason H. Lampton 48 II 1993 President, The Hardaway Company (Construction Company); Director, Total System Services, Inc. John L. Moulton 68 II 1980 President, Moulton, Lane & Hardin, Inc. (Insurance, Estate Planning and Employee Benefits); Chairman of the Board, Security Bank and Trust Company of Albany (Banking Subsidiary of Synovus) Elizabeth C. Ogie 45 II 1993 Philanthropist John T. Oliver, Jr. 66 II 1993 Vice Chairman of the Executive Committee, Synovus Financial Corp.; Chairman of the Board, First National Bank of Jasper (Banking Subsidiary of Synovus) H. Lynn Page 55 I 1978 Vice Chairman of the Board (Retired) and Director, Synovus Financial Corp., Columbus Bank and Trust Company and Total System Services, Inc. William L. Pherigo 54 II 1995 President and Chief Executive Officer, The National Bank of South Carolina (Banking Subsidiary of Synovus) Robert V. Royall, Jr. 61 I 1995 Chairman of the Board, The National Bank of South Carolina (Banking Subsidiary of Synovus); Director, Blue Cross Blue Shield of South Carolina; Secretary of Commerce, State of South Carolina William B. Turner 73 III 1972 Chairman of the Board, Columbus Bank and Trust Company; Chairman of the Executive Committee, W.C. Bradley Co. (Metal Manufacturer and Real Estate); Director, The Coca-Cola Company and Total System Services, Inc.; Chairman of the Executive Committee, Synovus Financial Corp. George C. Woodruff, Jr. 67 III 1972 Real Estate and Personal Investments; Director, Total System Services, Inc. and United Cities Gas Company James D. Yancey 54 I 1978 Vice Chairman of the Board, Synovus Financial Corp. and Columbus Bank and Trust Company; Director, Total System Services, Inc. - ------------- Richard E. Anthony was elected Vice Chairman of Synovus in September, 1995. Prior to 1995, Mr. Anthony served, and continues to serve, as President of Synovus Financial Corp. of Alabama and Chairman of the Board of First Commercial Bank of Birmingham, both of which companies are subsidiaries of Synovus. Richard Y. Bradley formed Bradley & Hatcher in September, 1995. From 1991 until 1995, Mr. Bradley served as President of Bickerstaff Clay Products Company, Inc. Stephen L. Burts, Jr. was elected President and Chief Financial Officer of Synovus in March, 1992. Prior to 1992, Mr. Burts served in various capacities with Synovus and/or Columbus Bank, including Executive Vice President and Treasurer. Salvador Diaz-Verson, Jr. formed Diaz-Verson Capital Investments, Inc. in September, 1991. From 1985 until 1991, Mr. Diaz-Verson was President of AFLAC Incorporated. Elizabeth C. Ogie is William B. Turner's niece. 5 John T. Oliver, Jr. was elected Vice Chairman of the Executive Committee of Synovus in September, 1995. Prior to 1995, Mr. Oliver served, and continues to serve, as Chairman of the Board of Synovus Financial Corp. of Alabama and First National Bank of Jasper, both of which companies are subsidiaries of Synovus. William L. Pherigo was elected President and Chief Executive Officer of The National Bank of South Carolina effective January, 1996. From 1991 until 1996, Mr. Pherigo served as President and Chief Operating Officer of The National Bank of South Carolina. James D. Yancey was elected Vice Chairman of the Board of Synovus in March, 1992. Prior to 1992, Mr. Yancey served in various capacities with Synovus and/or Columbus Bank, including Vice Chairman of the Board and President of both Synovus and Columbus Bank.
(2) Synovus Common Stock Ownership of Directors and Management. The following table sets forth, as of December 31, 1995, the number of shares of Synovus Common Stock beneficially owned by each of Synovus' directors and Synovus' five most highly compensated executive officers. To the best of Synovus' knowledge, all shares of Synovus Common Stock beneficially owned by such persons qualify for ten votes per share, subject to the completion by such persons of the Certifications contained on the reverse side of their Proxy Cards. Information relating to beneficial ownership of Synovus Common Stock is based upon information furnished by each person or entity using "beneficial ownership" concepts set forth in the rules of the SEC under Section 13(d) of the Exchange Act.
Shares of Shares of Synovus Shares of Synovus Common Synovus Common Percentage of Stock Common Stock Stock Total Shares Outstanding Beneficially Beneficially Beneficially of Synovus Shares of Owned with Owned with Owned with Common Synovus Sole Voting Shared Voting Sole Voting Stock Common Stock and Invest- and Invest- but no Invest- Beneficially Beneficially ment Power ment Power ment Power Owned as of Owned as of Name as of 12/31/95 as of 12/31/95 as of 12/31/95 12/31/95 12/31/95 - ---------------------- ------------------- -------------- -------------- -------------- -------------- Daniel P. Amos 24,415 135,912 --- 160,327 .20% Richard E. Anthony 149,669 21,587 7,752 179,008 .23 Joe E. Beverly 126,591 1,350 27,117 155,058 .20 James H. Blanchard 448,729 7,381 24,526 480,636 .62 Richard Y. Bradley 4,521 37,481 --- 42,002 .05 Stephen L. Burts, Jr. 42,103 --- 26,189 68,292 .09 Salvador Diaz-Verson, Jr. 17,806 175 --- 17,981 .02 C. Edward Floyd, M.D. 323,763 44,999 --- 368,762 .48 Gardiner W. Garrard, Jr. 57,605 423,959 --- 481,564 .62 V. Nathaniel Hansford 60,231 113,212 --- 173,443 .22 Mason H. Lampton 118,892 81,488 --- 200,380 .26 John L. Moulton 102,055 54 --- 102,109 .13 Elizabeth C. Ogie 9,364 9,037,456 --- 9,046,820 11.71 John T. Oliver, Jr. 214,909 27,535 9,218 251,662 .33 H. Lynn Page 265,118 3,412 --- 268,530 .35 William L. Pherigo 120,742 1,524 --- 122,266 .16 Robert V. Royall, Jr. 161,649 50,058 --- 211,707 .27 William B. Turner 27,661 9,002,249 --- 9,029,910 11.69 George C. Woodruff, Jr. 36,794 --- --- 36,794 .05 James D. Yancey 306,393 13,275 14,658 334,326 .43 - --------------------------- 6 Includes 22,700 shares of Synovus Common Stock held by a charitable foundation of which Mr. Amos is a trustee. Includes 6,750 shares of Synovus Common Stock with respect to which Mr. Burts has options to acquire. Includes 74,118 shares of Synovus Common Stock held in a trust for which Mr. Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of such shares. Includes 35,246 shares of Synovus Common Stock held by a charitable foundation of which Mrs. Ogie is a trustee. Includes 760,950 shares of Synovus Common Stock held by a charitable foundation of which Mrs. Ogie and Mr. Turner are trustees and 8,235,427 shares of Synovus Common Stock beneficially owned by TB&C Bancshares, Inc., of which Mrs. Ogie and Mr. Turner are officers, directors and shareholders. Includes 30,285 shares of Synovus Common Stock held by a charitable foundation of which Mr. Oliver is trustee. Includes 56,036 shares of Synovus Common Stock with respect to which Mr. Pherigo has options to acquire. Includes 61,979 shares of Synovus Common Stock with respect to which Mr. Royall has options to acquire.
The following table sets forth information, as of December 31, 1995, with respect to the beneficial ownership of Synovus Common Stock by all directors and executive officers of Synovus as a group. To the best of Synovus' knowledge, all shares of Synovus Common Stock beneficially owned by all directors and executive officers of Synovus qualify for ten votes per share, subject to the completion by such persons of the Certifications contained on the reverse sides of their Proxy Cards. Percentage of
Shares of Outstanding Shares of Synovus Common Stock Synovus Common Stock Name of Beneficially Owned Beneficially Owned Beneficial Owner as of 12/31/95 as of 12/31/95 - ----------------------- ------------------------ ---------------------------- All directors and executive officers of Synovus as a group 12,812,934 16.59% (includes 23 persons)
For a detailed discussion of the beneficial ownership of TSYS Common Stock by Synovus' named executive officers and directors and by all directors and executive officers of Synovus as a group, see Section VI(C) hereof captioned "TSYS Common Stock Ownership of Directors and Management." C. Board Committees and Attendance. The business and affairs of Synovus are under the direction of Synovus' Board of Directors. During 1995, Synovus' Board of Directors held six regular meetings and one special meeting. During 1995, each of Synovus' directors attended at least 75% of the aggregate meetings of Synovus' Board of Directors and the Committees thereof on which he or she sat, except Daniel P. Amos, who attended 72%. John P. Illges, III, Senior Vice President of The Robinson-Humphrey Company, Inc., serves as a non-voting advisory director of Synovus. Mr. Illges' service as a non-voting advisory director of Synovus is required under the provisions of The Glass-Steagall Act and Regulation R promulgated thereunder, which forbid an individual associated with an entity engaged in the offering and underwriting of securities from serving as a director of a national bank, or as a director of a parent bank holding company of a national bank. Mr. Illges continues to serve as a director of Columbus Bank and TSYS. Synovus' Board of Directors has three principal committees -- an Audit Committee, a Compensation Committee and an Executive Committee. There is no Nominating Committee of Synovus' Board of Directors. 7 Audit Committee. The members of the Audit Committee of Synovus' Board of Directors are: Gardiner W. Garrard, Jr., Chairman, Salvador Diaz-Verson, Jr. and George C. Woodruff, Jr. The primary functions engaged in by Synovus' Audit Committee include: (i) annually recommending to Synovus' Board the independent certified public accountants ("Independent Auditors") to be engaged by Synovus for the next fiscal year; (ii) reviewing the plan and results of the annual audit by Synovus' Independent Auditors; (iii) reviewing and approving the range of management advisory services provided by Synovus' Independent Auditors; (iv) reviewing Synovus' internal audit function and the adequacy of the internal accounting control systems of Synovus and its subsidiaries; (v) reviewing the results of regulatory examinations of Synovus and its subsidiaries; (vi) periodically reviewing the financial statements of Synovus and the consolidated financial statements of Synovus and its subsidiaries; and (vii) considering such other matters with regard to the internal and independent audit of Synovus and its subsidiaries as, in its discretion, it deems to be necessary or desirable, periodically reporting to Synovus' Board as to the exercise of its duties and responsibilities and, where appropriate, recommending matters in connection with the audit function with respect to which Synovus' Board should consider taking action. During 1995, Synovus' Audit Committee held one meeting. Compensation Committee. The members of the Compensation Committee of Synovus' Board of Directors are: William B. Turner, Chairman, George C. Woodruff, Jr. and Gardiner W. Garrard, Jr. The primary functions engaged in by Synovus' Compensation Committee include: (i) evaluating the remuneration of senior management and board members of Synovus and its subsidiaries and the compensation and fringe benefit plans in which officers, employees and directors of Synovus and its subsidiaries are eligible to participate; and (ii) recommending to Synovus' Board whether or not it should modify, alter, amend, terminate or approve such remuneration, compensation or fringe benefit plans. During 1995, Synovus' Compensation Committee held two meetings. Executive Committee. The members of Synovus' Executive Committee are: William B. Turner, Chairman, James H. Blanchard, Gardiner W. Garrard, Jr., George C. Woodruff, Jr., James D. Yancey, John T. Oliver, Jr. and Richard Y. Bradley. During the intervals between meetings of Synovus' Board of Directors, Synovus' Executive Committee possesses and may exercise any and all the powers of Synovus' Board of Directors in the management and direction of the business and affairs of Synovus with respect to which specific direction has not been previously given by Synovus' Board of Directors. During 1995, Synovus' Executive Committee held five meetings. D. Executive Officers. The following table sets forth the name, age and position with Synovus of each present executive officer of Synovus.
Name Age Position with Synovus - ---------------------- --- ----------------------------------------------- James H. Blanchard 54 Chairman of the Board and Chief Executive Officer William B. Turner 73 Chairman of the Executive Committee John T. Oliver, Jr. 66 Vice Chairman of the Executive Committee James D. Yancey 54 Vice Chairman of the Board Joe E. Beverly 54 Vice Chairman of the Board Richard E. Anthony 49 Vice Chairman of the Board Stephen L. Burts, Jr. 43 President and Chief Financial Officer G. Sanders Griffith, III 42 Senior Executive Vice President, General Counsel and Secretary Thomas J. Prescott 41 Executive Vice President and Treasurer Jay C. McClung 47 Executive Vice President
Synovus' executive officers serve at the pleasure of Synovus' Board of Directors. All of the executive officers of Synovus are members of Synovus' Board of Directors, except G. Sanders Griffith, III, Thomas J. Prescott and Jay C. McClung. 8 G. Sanders Griffith, III serves as Senior Executive Vice President, General Counsel and Secretary of Synovus, positions he has held since October, 1995. From 1988 until 1995, Mr. Griffith served in various capacities with Synovus, including Executive Vice President, General Counsel and Secretary. Thomas J. Prescott was elected Executive Vice President and Treasurer of Synovus in January, 1994. From 1987 until 1994, Mr. Prescott served in various capacities with Synovus, including Senior Vice President. Jay C. McClung was elected Executive Vice President of Synovus in January, 1995. From 1986 until 1995, Mr. McClung served in various capacities with Columbus Bank, including Senior Vice President. III. DIRECTORS' PROPOSAL TO APPROVE THE SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN Synovus' executive compensation program will include short-term incentive bonus awards under the Synovus Financial Corp. Executive Bonus Plan (the "Plan") beginning in 1996. The purposes of the Plan are to reward selected executive officers for superior corporate performance and to attract and retain top quality executive officers. Subject to approval by Synovus' shareholders, compensation paid pursuant to the Plan is intended, to the extent reasonable, to qualify for tax deductibility under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, as may be amended from time to time ("Section 162(m)"). Eligibility and Participation. The Chief Executive Officer and the four highest compensated officers of Synovus and any publicly-traded subsidiary of Synovus are eligible to participate in the Plan. Approximately 10 employees are eligible to participate in the Plan. The Committee, as described below, has discretion to select participants from among eligible employees from year to year. Description of Awards Under the Plan. Pursuant to the Plan, Synovus may award incentive bonus opportunities to participants. Each fiscal year, the Committee shall establish, in writing, the performance goals applicable to such and/or any succeeding fiscal year. The performance measures which shall be used to determine the amount of the incentive bonus award for each such performance period shall be chosen from among the following for Synovus, any of its business segments and/or any of its business units, unless and until the Committee proposes a change in such measures for shareholder vote or applicable tax and/or securities laws change to permit the Committee discretion to alter such performance measures without obtaining shareholder approval: (i) return on assets; (ii) net income; (iii) operating income; (iv) nonperforming assets and/or loans as a percentage of total assets and/or loans; (v) return on capital compared to cost of capital; (vi) earnings per share and/or earings per share growth; (vii) return on equity; (viii) noninterest expense as a percentage of total expense; (ix) loan charge-offs as a percentage of total loans; (x) productivity and expense control; (xi) number of cardholder, merchant and/or other customer accounts processed and/or converted by TSYS; (xii) successful negotiation or renewal of contracts with new and/or existing customers by TSYS; (xiii) stock price; and (xiv) asset growth. Awards shall be determined based on the achievement of such preestablished performance goals, and shall be awarded based on a percentage of a participant's base salary. The Committee shall have no discretion to increase the amount of any award under the Plan, but will retain the ability to eliminate or decrease an award otherwise payable to a participant. The Committee shall certify, in writing, that the performance goals have been met before any payments to participants may be made. Payment of the incentive bonus award earned, if any, shall be made in cash, as soon as practicable thereafter. Termination of Employment. Any participant not employed by Synovus or a publicly-traded subsidiary of Synovus on December 31 of any fiscal year will not be entitled to an award unless otherwise determined by the Committee. Maximum Amount Payable to Any Participant. The maximum amount payable for each performance period under the Plan to any participant is one hundred fifty percent (150%) of such participant's base salary; provided, however, that no participant may receive an award for any performance period in excess of $1.5 million. 9 Deferral of Bonus Awards. Participants may elect to defer all or a portion of an incentive bonus award payable under the Plan by providing an election, in writing, to Synovus prior to the beginning of the year in which the incentive bonus is to be earned. Deferred amounts shall earn interest at a rate equal to the average annual short-term prime rate established by Columbus Bank for each fiscal year. Distributions of deferred amounts and interest earned thereon to participants, or their beneficiaries, as applicable, shall be made in cash in one lump sum or in up to 120 approximately equal monthly installments, as determined by the Committee. Commencement of payment, in the form determined by the Committee, shall begin within 30 days after the last day of the month of the participant's termination of employment by reason of death (except by suicide) or total disability, or at such time as determined by the Committee in the event of termination of employment for any other reason; provided that no distribution shall begin later than the date the participant attains age 70 1/2. Amendment of the Plan. The Board of Directors may amend the Plan at any time including amendments that increase the costs of the Plan and allocate benefits between persons and groups in the table below differently; provided, however, that no amendment shall be made without shareholder approval that increases the maximum amount payable to any participant in excess of the limits set forth above. Duration of the Plan. The Plan shall remain in effect from the date it is approved by Synovus' shareholders until the date it is terminated by the Board of Directors. The Board of Directors may terminate the Plan at any time. Administration. The Plan will be administered by the Compensation Committee of the Board of Directors (the "Committee"). The Committee will be comprised of two or more "outside" directors within the meaning of Section 162(m). Estimate of Benefits. The amounts that will be paid pursuant to the Plan are not currently determinable. The amounts that would have been awarded for fiscal year 1995 if the Plan had been in effect and if the Chief Executive Officer and the four highest compensated officers of Synovus participated in the Plan are as follows:
NEW PLAN BENEFITS SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN Name Position Dollar Value ($) - ------------------------------- ----------------------------------- --------------------- James H. Blanchard Chairman of the Board and Chief $ 356,250 Executive Officer James D. Yancey Vice Chairman of the Board 224,250 Stephen L. Burts, Jr. President and Chief Financial 168,500 Officer Joe E. Beverly Vice Chairman of the Board 154,500 John T. Oliver, Jr. Vice Chairman of the Executive 145,800 Committee Executive Group 1,049,300 Non-Executive Director Group -0- Non-Executive Officer Employee Group -0-
Adoption of the proposal requires an affirmative vote by the holders of a majority of the votes cast thereon. Any shares not voted (whether by absention, broker non-vote, or otherwise) have no impact on the vote. SYNOVUS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN. 10 IV. EXECUTIVE COMPENSATION (1) Summary Compensation Table. The following table summarizes the cash and noncash compensation for each of the last three fiscal years for the chief executive officer of Synovus and for the other four most highly compensated executive officers of Synovus. SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation Awards -------------------------------------------------------- -------------------------------- Other Restricted Securities All Annual Stock Underlying Other Name and Compen- Award(s) Options/ Compen- Principal Position Year Salary Bonus sation SARs sation - --------------------- -------- --------------- -------------- --------------- --------------- -------------- ------------ James H. Blanchard 1995 $475,000 $356,250 $ 2,000 $454,664 53,229 $240,351 Chairman of the 1994 377,650 253,238 2,000 146,246 25,434 146,943 Board and Chief 1993 288,750 144,375 2,000 -0- -0- 113,216 Executive Officer James D. Yancey 1995 345,000 224,250 2,000 263,579 30,857 201,192 Vice Chairman 1994 273,310 177,652 2,000 94,254 16,392 133,817 of the Board 1993 246,750 123,375 2,000 -0- -0- 105,537 Stephen L. Burts, Jr. 1995 272,500 168,500 1,833 162,206 18,989 110,172 President and Chief 1994 208,050 129,830 -0- 56,252 9,783 61,360 Financial Officer 1993 183,750 91,875 5,000 -0- -0- 86,902 Joe E. Beverly 1995 257,500 154,500 2,000 167,254 19,582 125,699 Vice Chairman 1994 234,660 140,796 2,000 72,002 12,522 95,406 of the Board 1993 220,500 110,250 2,000 -0- -0- 97,452 John T. Oliver, Jr. 1995 243,000 145,800 2,000 152,059 17,802 64,565 Vice Chairman of the 1994 -- -- -- -- -- -- Executive Committee 1993 -- -- -- -- -- -- - --------------------- Bonus amount for 1995 includes special recognition award of $5,000 for Mr. Burts. Amount for 1995 includes matching contributions under the Director Stock Purchase Plan of $2,000 each for Messrs. Blanchard, Yancey and Beverly and $1,833 for Mr. Burts. Perquisites and other personal benefits are excluded because the aggregate amount does not exceed the lesser of $50,000 or 10% of annual salary and bonus for the named executives. Amount consists of value of award, net of consideration paid by the executive. As of December 31, 1995, Messrs. Blanchard, Yancey, Burts, Beverly and Oliver held 24,526, 14,658, 26,189, 27,117 and 9,218 restricted shares, respectively, with a value of $702,057, $419,585, $749,660, $776,224 and $263,865, respectively. On September 5, 1995, restricted stock was awarded in the amount of 17,743, 10,286, 6,330, 6,527 and 5,934 shares to Messrs. Blanchard, Yancey, Burts, Beverly and Oliver, respectively, with the following vesting schedule: 20% on September 4, 1996; 20% on September 4, 1997; 20% on September 4, 1998; 20% on September 4, 1999; and 20% on September 4, 2000. On June 29,1994, restricted stock was awarded in the amount of 8,478, 5,464, 3,261, 4,174 and 4,104 shares to Messrs. Blanchard, Yancey, Burts, Beverly and Oliver, respectively, with the following vesting schedule: 20% on June 28, 1995; 20% on June 28, 1996; 20% on June 28, 1997; 20% on June 28, 1998; and 20% on June 28, 1999. Dividends are paid on all restricted shares. 11 The 1995 amount includes director fees of $55,150, $56,900, $29,000, $43,600 and $24,600 for Messrs. Blanchard, Yancey, Burts, Beverly and Oliver, respectively, in connection with their service as directors of Synovus and certain of its subsidiaries; contributions or other allocations to defined contribution plans of $30,000 for each executive; allocations pursuant to defined contribution excess benefit agreements of $102,891, $66,309, $44,899, $31,655 and $9,965 for each of Messrs. Blanchard, Yancey, Burts, Beverly and Oliver, respectively; premiums paid for group term life insurance coverage of $720, $720, $648 and $691 for each of Messrs. Blanchard, Yancey, Burts and Beverly, respectively; the economic benefit of life insurance coverage related to split-dollar life insurance policies of $879, $656, $25 and $355 for each of Messrs. Blanchard, Yancey, Burts and Beverly, respectively; and the dollar value of the benefit of premiums paid for split-dollar life insurance policies (unrelated to term life insurance coverage) projected on an actuarial basis of $50,711, $46 607, $5,600 and $19,398 for each of Messrs. Blanchard, Yancey, Burts and Beverly, respectively. Disclosure is not required for 1994 and 1993.
(2) Stock Option Exercises and Grants. The following tables provide certain information regarding stock options granted and exercised in the last fiscal year and the number and value of unexercised options at the end of the fiscal year. OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants - ----------------------------------------------------------------------------------------- % of Total Potential Options/ Realized Value at SARs Exercise Assumed Annual Rates of Options/ Granted to or Stock Price Appreciation SARs Employees Base For Option Term Granted in Fiscal Price Expiration --------------------- Name (#) Year ($/Share) Date 5%($) 10% ($) - ------------------------------ ------------ -------------- -------------- --------------- ---------- --------- James H. Blanchard 53,229 7.32% $22.75 09/04/03 $578,067 $1,385,019 James D. Yancey 30,857 4.24% 22.75 09/04/03 335,107 802,899 Stephen L. Burts, Jr. 18,989 2.61% 22.75 09/04/03 206,221 494,094 Joe E. Beverly 19,582 2.69% 22.75 09/04/03 212,661 509,524 John T. Oliver, Jr. 17,802 2.45% 22.75 09/04/03 193,330 463,208 - ----------- Options granted on September 4, 1995 at fair market value to executives in tandem with restricted stock awards as part of the Synovus 1994 Long-Term Incentive Plan. Options become exercisable on September 4, 1997. The dollar gains under these columns result from calculations using the identified growth rates and are not intended to forecast future price appreciation of Synovus Common Stock.
12 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Shares Value Options/SARs at FY-End (#) Options/SARs at FY-End ($) Acquired on Realized -------------------------- ------------------------------- Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable - ------------------------ ------------ --------- --------------------------- ------------------------------- James H. Blanchard -0- -0- 0 / 78,663 0 / $602,032 James D. Yancey -0- -0- 0 / 47,249 0 / $367,744 Stephen L. Burts, Jr. -0- -0- 6,750 / 28,772 $155,883 / $222,842 Joe E. Beverly -0- -0- 0 / 32,104 0 / $257,482 John T. Oliver, Jr -0- -0- 0 / 52,614 0 / $546,249 - ---------- Market value of underlying securities at exercise or year-end, minus the exercise or base price.
(3) Compensation of Directors. Compensation. During 1995, each of Synovus' directors received a $15,000 annual retainer, and fees of $800 for each meeting of Synovus' Board of Directors and each Executive Committee meeting they personnally attended. Members of the Committees of Synovus' Board of Directors (other than the Executive Committee) received fees of $500, with the Chairmen of such Committees receiving fees of $750, for each Committee meeting they personally attended. In addition, directors of Synovus received an $800 fee for each board meeting from which their absence was excused and an $800 fee for one meeting without regard to the reason for their absence. Director Stock Purchase Plan. Synovus' Director Stock Purchase Plan ("DSPP") is a non-tax-qualified, contributory stock purchase plan pursuant to which qualifying directors can purchase, with the assistance of contributions from Synovus, presently issued and outstanding shares of Synovus Common Stock. Under the terms of the DSPP, qualifying directors can elect to contribute up to $1,000 per calendar quarter to make purchases of Synovus Common Stock, and Synovus contributes an additional amount equal to 50% of the director's cash contribution. Participants in the DSPP are fully vested in, and may request the issuance to them of, all shares of Synovus Common Stock purchased for their benefit thereunder. Consulting Agreement. H. Lynn Page, a director and the former Vice Chairman of the Board of Synovus, and Synovus are parties to a Consulting Agreement pursuant to which Mr. Page was paid $24,000 by Synovus during 1995 for providing consulting and advisory services to Synovus in connection with portfolio management and potential opportunities for business expansion. (4) Employment Contracts and Change in Control Arrangements. Blanchard Employment Agreement. On October 13, 1977, Synovus entered into an Employment Agreement with James H. Blanchard ("Blanchard"), Chairman of the Board of Synovus, whereunder Synovus paid Blanchard a salary of $475,000 during 1995. The base salary paid to Blanchard is determined by the Compensation Committee of the Board of Directors of Synovus on an annual basis. The Blanchard Employment Agreement provides that Synovus shall pay deferred compensation of $468,000 to Blanchard or his beneficiaries over a 10 to 15 year period in the event of Blanchard's death, total disability or termination of employment, subject to certain conditions of forfeiture in the event Synovus terminates Blanchard's employment "for cause" (as defined), in the event of his violation of his 2-year Covenant Not to Compete, or in the event of his death by suicide. The Blanchard Employment Agreement is automatically renewable annually and is subject to termination on 30 days written notice. 13 Yancey Employment Agreement. On December 8, 1977, effective January 1, 1977, Synovus entered into an Employment Agreement with James D. Yancey ("Yancey"), Vice Chairman of the Board of Synovus and Columbus Bank, whereunder Synovus paid Yancey a salary of $345,000 during 1995. The base salary paid to Yancey is determined by the Compensation Committee of the Board of Directors of Synovus on an annual basis. The Yancey Employment Agreement provides that Synovus shall pay deferred compensation of $375,000 to Yancey or his beneficiaries over a 10 to 15 year period in the event of the death, total disability or termination of employment of Yancey, subject to certain conditions of forfeiture in the event Synovus terminates Yancey's employment "for cause" (as defined), in the event of his violation of his 2-year Covenant Not to Compete, or in the event of his death by suicide. The Yancey Employment Agreement is automatically renewable annually and is subject to termination on 30 days written notice. Beverly Employment Agreement. On January 15, 1979, Synovus entered into an Employment Agreement with Joe E. Beverly ("Beverly"), Vice Chairman of the Board of Synovus, whereunder Beverly was paid a salary of $257,500 during 1995. The base salary paid to Beverly is determined by the Compensation Committee of the Board of Directors of Synovus on an annual basis. The Beverly Employment Agreement provides that Synovus shall pay deferred compensation of $375,000 to Beverly or his beneficiaries over a 10 to 15 year period in the event of Beverly's death, total disability or termination of employment, subject to certain conditions of forfeiture in the event Synovus terminates Beverly's employment "for cause" (as defined), in the event of his violation of his 2-year Covenant Not to Compete, or in the event of his death by suicide. The Beverly Employment Agreement is automatically renewable annually and is subject to termination on 30 days written notice. Oliver Employment Agreement. On December 31, 1992, Synovus entered into an Employment Agreement with John T. Oliver, Jr. ("Oliver"), Vice Chairman of the Executive Committee of Synovus, whereunder Oliver was paid a salary of $243,000 during 1995. The base salary paid to Oliver is determined by the Compensation Committee of the Board of Directors of Synovus on an annual basis. The Oliver Employment Agreement is for a five year term. Long-Term Incentive Plans. Messrs. Blanchard, Yancey, Burts, Beverly and Oliver each hold shares of restricted stock of Synovus and options to purchase stock of Synovus which were issued pursuant to the Synovus Financial Corp. 1992 and 1994 Long-Term Incentive Plans. Under the terms of the Synovus Financial Corp. 1992 and 1994 Long-Term Incentive Plans, in the event of a change in control of Synovus, the vesting of any stock options, stock appreciation and other similar rights, restricted stock and performance awards will be accelerated so that all awards not previously exercisable and vested will become fully exercisable and vested. Change of Control Agreements. Effective January 1, 1996, Synovus entered into Change of Control Agreements ("Agreements") with Messrs. Blanchard, Yancey, Burts, Beverly and Oliver and certain other executive officers. The Change of Control Agreements provide severance pay and continuation of certain benefits in the event of a Change of Control. In order to receive benefits under the Agreements, the executive's employment must be terminated involuntarily, without cause, whether actual or "constructive" within one year following a Change of Control or the executive may voluntarily or involuntarily terminate employment during the thirteenth month following a Change of Control. Generally, a "Change of Control" is deemed to occur in any of the following circumstances: (1) the acquisition by any person of 20% or more of the "beneficial ownership" of Synovus' outstanding voting stock, with certain exceptions for Turner family members; (2) the persons serving as directors of Synovus as of January 1, 1996 and those replacements or additions subsequently approved by a two-thirds (2/3) vote of the Board ceasing to comprise at least two-thirds (2/3) of the Board; (3) a merger, consolidation, reorganization or sale of Synovus' assets unless (a) the previous beneficial owners of Synovus own more than two-thirds (2/3) of the new company, (b) no person owns more than 20% of the new company, and (c) two-thirds (2/3) of the new company's Board were members of the incumbent Board which approved the business combination; or (4) a "triggering event" occurs as defined in the Synvous Rights Agreement. 14 Under the Agreements, severance pay would equal three times current base salary and bonus, with bonus being defined as the average of the previous three years measured as a percentage of base salary multiplied by current base salary. Medical, life, disability and other welfare benefits will be provided at the expense of Synovus for three years with the level of coverage being determined by the amount elected by the executive during the open enrollment period immediately preceding the Change of Control. Executives would also receive a short-year bonus for the year of separation based on the greater of a half year's maximum bonus or pro rata maximum bonus to the date of termination and a cash amount in lieu of a long-term incentive award for the year of separation. If the executive has already received a long-term incentive award in the separation year, the amount would equal 1.5 times the market grant and if the executive has not, the amount would equal 2.5 times the market grant. Executives who are impacted by the Internal Revenue Service excise tax that applies to certain change of control agreements would receive additional gross up payments so that they are in the same position as if there were no excise tax. The Agreements do not provide for retirement benefits or perquisites. Notwithstanding anything to the contrary set forth in any of Synovus' previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, including this Proxy Statement, in whole or in part, the following Performance Graph and Compensation Committee Report on Executive Compensation shall not be incorporated by reference into any such filings. 15 (5) Stock Performance Graph. The following graph compares the yearly percentage change in cumulative shareholder return on Synovus Common Stock with the cumulative total return of the Standard & Poor's 500 Index and the Keefe, Bruyette & Woods 50 Bank Index for the last five fiscal years (assuming a $100 investment on December 31, 1990 and reinvestment of all dividends). [Omitted Stock Performance Graph is represented by the following table.]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN SYNOVUS FINANCIAL CORP., S&P 500 AND KBW 50 BANK INDEX 1990 1991 1992 1993 1994 1995 SNV $100 $125 $164 $202 $202 $324 S&P 500 $100 $130 $140 $154 $156 $215 KBW 50 $100 $158 $202 $213 $202 $323
16 (6) Compensation Committee Report on Executive Compensation. The Compensation Committee (the "Committee") of the Board of Directors of Synovus is responsible for evaluating the remuneration of senior management and board members of Synovus and its subsidiaries and the compensation and fringe benefit plans in which officers, employees and directors of Synovus and its subsidiaries are eligible to participate. Because Synovus' mission is to create superior shareholder value by retaining and attracting well-trained and highly-motivated people who deliver the very best quality customer service, the Committee's executive compensation policies are designed to attract and retain highly-motivated and well-trained executives in order to create superior shareholder value. Elements of Executive Compensation. The four elements of executive compensation at Synovus are: o Base Salary o Annual Bonus o Long-Term Incentives o Other Benefits The Committee believes that a substantial portion, though not a majority, of an executive's compensation should be "at-risk" based upon Synovus' short-term performance (through the annual bonus and the Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS 401(k) Savings Plan) and long-term performance (through long-term incentives including stock options and restricted stock awards). The remainder of each executive's compensation is primarily based upon the competitive practices of a select group of approximately 18 banks that had similar "market value added" as Synovus during the previous ten years ("similar companies"). "Market value added," or "MVA," as used by the Committee in this context, equals stock price increase during the ten-year period, plus dividends for the ten-year period, minus increases to paid-in capital during such period. This subtraction eliminates value added through acquisitions. Prior to 1995, the Committee made market comparisons with banking companies that were similar in size to Synovus. The Committee decided to use the "MVA" approach instead of a "size-based" approach in 1995 because it believes the MVA approach more accurately reflects Synovus' competitors and represents the most appropriate market data for the compensation of Synovus executives. The companies used for comparison under both the "size-based" and "MVA" approaches are not the same companies included in the peer group index appearing in the Stock Performance Graph above. A description of each element of executive compensation and the factors and criteria used by the Committee in determining these elements is discussed below: Base Salary. Base salary is an executive's annual rate of pay without regard to any other elements of compensation. The primary consideration in determining an executive's base salary is a market comparison of the base salaries at similar companies for similar positions based upon the executive's level of responsibility and experience. Base salaries are targeted at the median level of the similar companies used in the comparison. In addition to market comparisons, individual performance (measured by the quality of Synovus' strategic plan, the executive's management responsibilities and development, and the executive's industry and civic involvement) is also considered in determining an executive's base salary, although these factors do not weigh heavily in determining base salary. Based solely upon market comparisons, the Committee increased Mr. Blanchard's base salary in 1995. The Committee also increased the base salaries of Synovus' other executive officers in 1995 based solely upon market comparisons. Annual Bonus. Annual bonuses are awarded pursuant to the terms of Synovus' Incentive Bonus Plan. Under the Incentive Bonus Plan, bonus amounts are paid as a percentage of base pay based on financial performance goals such as revenues, earnings and asset quality. The maximum percentage payouts under the Incentive Bonus Plan are 75% for Mr. Blanchard, 65% for Mr. Yancey and 60% for Messrs. Burts, Beverly and Oliver. For Mr. Blanchard and Synovus' other executive officers, 17 the 1995 goal under the Incentive Bonus Plan was a single net income goal for Synovus. Synovus' financial performance and individual performance, separate from the financial performance goals established at the beginning of the year, can reduce bonus awards determined by the attainment of the established goals, although this was not the case for any of Synovus' executive officers. Because the net income goal for 1995 under the Incentive Bonus Plan was exceeded and the overall financial results of Synovus were favorable, Mr. Blanchard and Synovus' other executive officers were awarded the maximum bonus amount for which each executive was eligible. Beginning in 1996, annual bonuses for Mr. Blanchard and Synovus' other four most highly compensated executive officers will be awarded under the Synovus Financial Corp. Executive Bonus Plan. See Section III hereof captioned "Directors' Proposal to Approve the Synovus Financial Corp. Executive Bonus Plan." Long-Term Incentives. The two types of long-term incentives awarded to executives to date are stock options and restricted stock awards. Restricted stock awards are designed to focus executives on the long-term performance of Synovus. Stock options provide executives with the opportunity to buy and maintain an equity interest in Synovus and to share in the appreciation of the value of Synovus Common Stock. Executives are encouraged to hold the shares received upon the lapse of restrictions on restricted stock awards and upon the exercise of stock options, linking their interests to those of Synovus' shareholders. The Committee restructured its approach for granting long-term incentive awards in 1994. During this restructuring, the Committee established a payout matrix for future long-term incentive grants that uses total shareholder return as measured by Synovus' performance (stock price increases plus dividends) and how Synovus' total shareholder return compares to the return of the peer group of companies appearing in the Stock Performance Graph above. For the long-term incentive awards made in 1995, total shareholder return and peer comparisons were measured during the 1992 to 1994 performance period. Applying the results of the 1992 to 1994 performance period to the payout matrix, the Committee granted Mr. Blanchard and Synovus' other executive officers restricted stock awards and stock options in 1995. Benefits. Benefits offered to executives serve a different purpose than the other elements of total compensation. In general, these benefits provide either retirement income or protection against catastrophic events such as illness, disability and death. Executives generally receive the same benefits offered to the general employee population, with the only exceptions designed to promote tax efficiency or to replace other benefits lost due to regulatory limits. The Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS 401(k) Savings Plan, including an excess benefit arrangement designed to replace benefits lost due to regulatory limits (collectively the "Plan"), is the largest component of Synovus' benefits package for executives. The Plan is directly related to corporate performance because the amount of contributions to the Plan (to a maximum of 14% of an executive's compensation) is a function of Synovus' profitability. For 1995, Mr. Blanchard and Synovus' other executive officers received a Plan contribution of 10.57% of their compensation based upon the profitability formula under the Plan. The remaining benefits provided to executives are primarily based upon the competitive practices of similar companies. In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was amended to limit the deductibility for federal income tax purposes of annual compensation paid by a publicly held corporation to its chief executive officer and four other highest paid executives for amounts greater than $1 million unless certain conditions are met. Although none of Synovus' executive officers are currently affected by this provision, the Committee believes that this provision could affect Synovus' executive officers in the future. Because the Committee seeks to maximize shareholder value, the Committee has taken steps to ensure the deductibility of compensation in excess of $1 million in the future, although the Committee reserves the ability to make awards which do not qualify for full deductibility under Section 162(m) of the Code if the Committee determines that the benefits of so doing outweigh full deductibility. 18 The Committee believes that the executive compensation policies serve the best interests of the shareholders and of Synovus. A substantial portion of the compensation of Synovus' executives is directly related to and commensurate with Synovus' performance. The Committee believes that the performance of Synovus to date validates the Committee's compensation philosophy. William B. Turner Gardiner W. Garrard, Jr. George C. Woodruff, Jr. (7) Compensation Committee Interlocks and Insider Participation. The members of Synovus' Compensation Committee during 1995 were William B. Turner, Gardiner W. Garrard, Jr. and George C. Woodruff, Jr. Messrs. Garrard and Woodruff are not current or former officers or employees of Synovus or its subsidiaries. Mr. Turner is Chairman of the Executive Committee of Synovus, Chairman of the Board of Columbus Bank, a director of TSYS and Chairman of the Executive Committee of W.C. Bradley Co. James H. Blanchard, Chairman of the Board of Synovus and Chairman of the Executive Committee of TSYS, serves as a director of Columbus Bank and W.C. Bradley Co. James D. Yancey is Vice Chairman of the Board of Synovus and Columbus Bank and is a director of TSYS. During 1995, Synovus and its subsidiaries, including Columbus Bank, paid to W.C. Bradley Co. an aggregate of $7,338, which payments were primarily for printing services and marketing materials provided by W.C. Bradley Co. These payments were made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with unrelated third parties. TSYS leases various properties in Columbus, Georgia from W.C. Bradley Co. for office space and storage. The rent paid for the space in 1995, which is approximately 107,295 square feet, is approximately $746,508. The lease agreements were made substantially on the same terms as those prevailing at the time for comparable leases for similar facilities with an unrelated third party in Columbus, Georgia. Columbus Bank and W.C. Bradley Co. are equal partners in B&C Company, a Georgia general partnership formed to acquire, own and operate aircraft for their mutual benefit and the benefit of their affiliated corporations and their employees. Columbus Bank and W.C. Bradley have each agreed to remit to B&C Company fixed fees for each hour they fly the aircraft owned and/or leased by B&C Company, plus certain other amounts for engine startup and reserves and other items, and have agreed to fly such aircraft for a fixed number of hours each per year. For use of such aircraft during 1995, Columbus Bank paid to B&C Company an aggregate sum of $664,999. This amount represents the charges incurred by Columbus Bank and its affiliated corporations for use of B&C Company aircraft, and includes $239,131 for TSYS' use of such aircraft, for which Columbus Bank was reimbursed by TSYS. TB&C Bancshares, Inc. is a principal shareholder of Synovus. TB&C Bancshares, Inc. is a "family bank holding company" organized by William B. Turner, and his sisters, Sarah T. Butler and Elizabeth T. Corn. TB&C Bancshares, Inc. is a party to a lease agreement pursuant to which it leases voting and certain other rights in a total of 3,944,253 shares of Synovus Common Stock held in trust by Synovus Trust Company, a subsidiary of Columbus Bank, as Trustee of three trusts for the benefit of Mr. Turner, Mrs. Butler and Mrs. Corn and their respective descendants. During 1995, TB&C Bancshares, Inc. paid Synovus Trust Company, as Trustee, $303,635 pursuant to the terms of the lease agreement, which amount represents the fair market value of the voting rights as determined by an independent appraiser. William B. Turner, Chairman of the Executive Committee of Synovus, Chairman of the Board of Columbus Bank and a director of TSYS, is an officer, director and shareholder of W.C. Bradley Co. and TB&C Bancshares, Inc. James H. Blanchard, Chairman of the Board of Synovus, Chairman of the Executive Committee of TSYS and a director of Columbus 19 Bank, is a director of W.C. Bradley Co. Elizabeth C. Ogie, the niece of William B. Turner, is a director of W.C. Bradley Co., Columbus Bank and Synovus and is an officer, director and shareholder of TB&C Bancshares, Inc. W. Walter Miller, Jr., the brother-in-law of Elizabeth C. Ogie, is a director of W.C. Bradley Co. and Senior Vice President and a director of TSYS. Stephen T. Butler, the nephew of William B. Turner, is an officer and director of W.C. Bradley Co., an officer, director and shareholder of TB&C Bancshares, Inc. and is a director of Columbus Bank. Samuel M. Wellborn, III, the President and a director of Columbus Bank, is a director of W.C. Bradley Co. W.B. Turner, Jr., the son of William B.Turner, is an officer and director of W.C. Bradley Co., an officer, director and shareholder of TB&C Bancshares, Inc. and a director of Columbus Bank. John T. Turner, the son of William B. Turner, is an officer and director of W.C. Bradley Co., a shareholder of TB&C Bancshares, Inc. and a director of Columbus Bank. Sarah T. Butler and Elizabeth T. Corn, the sisters of William B. Turner, are shareholders of W.C. Bradley Co., are officers, directors and shareholders of TB&C Bancshares, Inc. and may be deemed to be principal shareholders of Synovus as a result of their relationship with TB&C Bancshares, Inc. Gardiner W. Garrard, Jr. is President of The Jordan Company. On October 1, 1993, TSYS entered into a lease with The Jordan Company pursuant to which TSYS leases from The Jordan Company approximately 10,000 square feet of office space in Columbus, Georgia for $5,000 per month, payable in advance, which lease expires on September 30, 1996. The lease was made on substantially the same terms as those prevailing at the time for leases of comparable property between unrelated third parties. Gardiner W. Garrard, Jr., a director of TSYS, Columbus Bank and Synovus, is an officer, director and shareholder of The Jordan Company. Richard M. Olnick, the brother-in-law of Gardiner W. Garrard, Jr. and a director of Columbus Bank, is an officer, director and shareholder of The Jordan Company. George C. Woodruff, Jr. is a shareholder of George C. Woodruff Co. During 1995, George C. Woodruff Co. received payments of $4,582, $49,262 and $70,690 in connection with office space leased by, and landscaping services provided for, Synovus, Columbus Bank and TSYS, respectively. These payments were made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with unrelated third parties. George C. Woodruff, Jr. is a director of Synovus, Columbus Bank and TSYS. (8) Transactions with Management. During 1995, the subsidiary banks of Synovus had outstanding loans directly to or indirectly accruing to the benefit of certain of the then directors and executive officers of Synovus, and their related interests. These loans were made in the ordinary course of business and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others. In the opinion of Synovus' management, such loans do not involve more than normal risks of collectibility or present other unfavorable features. In the future, the subsidiary banks of Synovus expect to have banking transactions in the ordinary course of business with Synovus' directors, executive officers and their related interests. During 1995, Synovus and its wholly-owned subsidiaries and TSYS paid to Communicorp, Inc. an aggregate of $567,702 and $569,309, respectively. These payments were made in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with unrelated third parties, and were primarily for various printing and business communication services provided by Communicorp, Inc. to Synovus and its wholly-owned subsidiaries and TSYS. Communicorp, Inc. is a wholly-owned subsidiary of AFLAC Incorporated. Daniel P. Amos, a director of Synovus and Columbus Bank, is Chief Executive Officer and a director of AFLAC Incorporated. Bradley & Hatcher, a law firm located in Columbus, Georgia, performed legal services on behalf of Synovus Trust Company during 1995. Richard Y. Bradley, a director of Synovus, Columbus Bank and TSYS, is a partner of Bradley & Hatcher. 20 For information about transactions with companies that are affiliates of William B. Turner, Gardiner W. Garrard, Jr. and George C. Woodruff, Jr., directors of Synovus, See Section IV (7) hereof captioned "Compensation Committee Interlocks and Insider Participation." V. PRINCIPAL SHAREHOLDERS The following table sets forth the number of shares of Synovus Common Stock held by the only known holders of more than 5% of the outstanding shares of Synovus Common Stock. Percentage of
Shares of Outstanding Shares of Synovus Common Stock Synovus Common Stock Name and Address Beneficially Owned Beneficially Owned Beneficial Owner as of 12/31/95 as of 12/31/95 - ----------------------- ------------------------- --------------------------- Synovus Trust Company 10,383,409 13.44% 1148 Broadway Columbus, Georgia 31901 TB&C Bancshares, Inc. 8,235,427 10.66 1017 Front Avenue Columbus, Georgia 31901 William B. Turner 9,029,910 11.69 P.O. Box 120 Columbus, Georgia 31902 Sarah T. Butler 9,041,722 11.70 P.O. Box 120 Columbus, Georgia 31902 Elizabeth T. Corn 9,156,011 11.85 P.O. Box 120 Columbus, Georgia 31902 W.B. Turner, Jr. 9,010,783 11.66 P.O. Box 120 Columbus, Georgia 31902 Stephen T. Butler 9,021,708 11.68 P.O. Box 120 Columbus, Georgia 31902 Elizabeth C. Ogie 9,046,820 11.71 P.O. Box 120 Columbus, Georgia 31902 - ----------------------------------- As of December 31, 1995, the banking and trust company subsidiaries of Synovus, including Columbus Bank through its wholly-owned subsidiary Synovus Trust Company ("Synovus Trust"), held in various fiduciary capacities a total of 10,973,377 shares of Synovus Common Stock as to which they possessed sole or shared voting or investment power. Of this total, Synovus Trust held 6,089,873 shares as to which it possessed sole investment power, 5,893,582 shares as to which it possessed sole voting power, 269,639 shares as to which it possessed shared voting power and 4,293,536 shares as to which it possessed shared investment power. The other banking subsidiaries of Synovus held 589,968 shares as to which they possessed sole voting or investment power and no shares as to which they possessed shared voting and investment power. In addition, as of December 31, 1995, Synovus Trust and the banking subsidiaries of Synovus held in various agency capacities an additional 6,540,054 shares of Synovus Common 21 Stock as to which they possessed no voting or investment power. Of this additional amount as to which no voting or investment power was possessed, Synovus Trust and the banking subsidiaries of Synovus held 6,499,765 and 40,289 shares, respectively. Synovus and its subsidiaries disclaim beneficial ownership of all shares of Synovus Common Stock which are held by them in various fiduciary and agency capacities. TB&C Bancshares, Inc. ("TB&C") is a "family bank holding company" organized by William B. Turner (the Chairman of Synovus' Executive Committee) and his sisters, Sarah T. Butler and Elizabeth T. Corn. The six directors of TB&C, Mr. Turner, Mmes. Butler and Corn, Elizabeth C. Ogie (the daughter of Mrs. Corn), Stephen T. Butler (the son of Mrs. Butler), and William B. Turner, Jr. (the son of Mr. Turner), are each construed to be the beneficial owners of the 8,235,427 shares of Synovus Common Stock beneficially owned by TB&C. As TB&C owns 10.66% of the outstanding shares of Synovus Common Stock, TB&C is registered as a bank holding company. To the best of Synovus' knowledge, the shares of Synovus Common Stock beneficially owned by TB&C qualify for ten votes per share, subject to the completion by TB&C of the Certification contained on the reverse side of its Proxy Card. Includes 4,291,174 shares of Synovus Common Stock individually owned by TB&C; 760,950 shares held by a charitable foundation of which each of the directors of TB&C is a trustee; in the case of Mrs. Corn and Mrs. Ogie, 35,246 shares of Synovus Common Stock held by a charitable foundation of which Mrs. Corn and Mrs. Ogie are trustees; and 3,944,253 shares of Synovus Common Stock benefically owned by TB&C pursuant to a lease agreement between TB&C and Synovus Trust as Trustee of three trusts for the benefit of Mr. Turner, Mrs. Butler and Mrs. Corn and their respective descendants. Pursuant to the agreement, TB&C leases from Synovus Trust as Trustee of such trusts voting and certain other rights with respect to the shares of Synovus Common Stock held in such trusts.
VI. RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES A. Beneficial Ownership of TSYS Common Stock by Columbus Bank. The following table sets forth, as of December 31, 1995, the number of shares of TSYS Common Stock beneficially owned by Columbus Bank, the only known beneficial owner of more than 5% of the issued and outstanding shares of TSYS Common Stock. Percentage of
Shares of Outstanding Shares of TSYS Common Stock TSYS Common Stock Name and Address Beneficially Owned Beneficially Owned Beneficial Owner as of 12/31/95 as of 12/31/95 - ----------------------- ------------------------ ------------------------ Columbus Bank and Trust Company 52,200,646 80.8% 1148 Broadway Columbus, Georgia 31901 - ----------------- Columbus Bank individually owns these shares. As of December 31, 1995, Synovus Trust held in various fiduciary capacities a total of 316,617 shares (.49%) of TSYS Common Stock. Of this total, Synovus Trust held 287,139 shares as to which it possessed sole voting or investment power and 29,478 shares as to which it possessed shared voting and investment power. In addition, as of December 31, 1995, Synovus Trust held in various agency capacities an additional 492,982 shares of TSYS Common Stock as to which it possessed no voting or investment power. Synovus and Synovus Trust disclaim beneficial ownership of all shares of TSYS Common Stock which are held by Synovus Trust in various fiduciary and agency capacities.
22 Columbus Bank, by virtue of its ownership of 52,200,646 shares, or 80.8% of the outstanding shares of TSYS Common Stock on December 31, 1995, presently controls TSYS. Synovus presently controls Columbus Bank. B. Interlocking Directorates of Synovus, Columbus Bank and TSYS. Eight of the members of and nominees to serve on Synovus' Board of Directors also serve as members of the Boards of Directors of TSYS and Columbus Bank. They are James H. Blanchard, Richard Y. Bradley, Salvador Diaz-Verson, Jr., Gardiner W. Garrard, Jr., H. Lynn Page, William B. Turner, George C. Woodruff, Jr. and James D. Yancey. Daniel P. Amos and Elizabeth C. Ogie serve as members of the Board of Directors of Columbus Bank but do not serve as members of the Board of Directors of TSYS. Mason H. Lampton serves on the Board of Directors of TSYS and as an Advisory Director of Columbus Bank. C. TSYS Common Stock Ownership of Directors and Management. The following table sets forth, as of December 31, 1995, the number of shares of TSYS Common Stock beneficially owned by each of Synovus' directors and Synovus' five most highly compensated executive officers.
Shares of TSYS Shares of TSYS Common Stock Common Stock Percentage of Beneficially Beneficially Total Outstanding Owned with Owned with Shares Shares of Sole Voting Shared Voting of TSYS TSYS Common and Investment and Investment Common Stock Stock Power as of Power as of Owned as of Owned as of Name 12/31/95 12/31/95 12/31/95 12/31/95 - --------------------------- ------------------- --------------------- ------------------- ------------- Daniel P. Amos ----- 273,600 273,600 .42% Richard E. Anthony ----- ----- ----- --- Joe E. Beverly ----- ----- ----- --- James H. Blanchard 260,400 120,741 381,141 .59 Richard Y. Bradley 6,733 ----- 6,733 .01 Stephen L. Burts,Jr. ----- ----- ----- --- Salvador Diaz-Verson, Jr. 18,502 1,800 20,302 .03 C. Edward Floyd, M.D. ----- ----- ----- --- Gardiner W. Garrard, Jr. 2,865 ----- 2,865 .004 V. Nathaniel Hansford ----- 1,000 1,000 .002 Mason H. Lampton 8,752 34,210 42,962 .07 John L. Moulton 1,112 1,112 2,224 .003 Elizabeth C. Ogie 2,400 9,640 12,040 .02 John T. Oliver, Jr. ----- ----- ----- --- H. Lynn Page 229,307 31,882 261,189 .40 William L. Pherigo ----- ----- ----- --- Robert V. Royall, Jr. 1,200 ----- 1,200 .002 William B. Turner 50,057 192,000 242,057 .37 George C. Woodruff, Jr. 35,575 2,000 37,575 .06 James D. Yancey 288,380 8,000 296,380 .46 - -------------- Includes 9,600 shares of TSYS Common Stock held in a trust for which Mr. Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of such shares. 23 Includes 9,280 shares of TSYS Common Stock held by a charitable foundation of which Mrs. Ogie is a trustee.
The following table sets forth information, as of December 31, 1995, with respect to the beneficial ownership of TSYS Common Stock by all directors and executive officers of Synovus as a group. Percentage of
Shares of Outstanding Shares of TSYS Common Stock TSYS Common Stock Name of Beneficially Owned Beneficially Owned Beneficial Owner as of 12/31/95 as of 12/31/95 - ------------------------------ ----------------------- ---------------------- All directors and executive officers of Synovus as a group 1,588,142 2.46% (includes 23 persons)
D. Transactions and Agreements Between Synovus, Columbus Bank, TSYS and Certain of Synovus' Subsidiaries. During 1995, Columbus Bank and 30 of Synovus' other banking subsidiaries received bankcard data processing services from TSYS. The bankcard data processing agreement between Columbus Bank and TSYS can be terminated by Columbus Bank upon 60 days prior written notice to TSYS or terminated by TSYS upon 180 days prior written notice to Columbus Bank. During 1995, TSYS charged Columbus Bank and 30 of Synovus' other banking subsidiaries $2,641,337, in the aggregate, including the reimbursement of $836,057 of out of pocket expenses, for the performance of bankcard data processing services. TSYS' charges to Columbus Bank and Synovus' other banking subsidiaries for bankcard data processing services are comparable to, and are determined on the same basis as, charges by TSYS to similarly situated unrelated third parties. Synovus Administrative Services Corp. ("SASC"), a wholly-owned subsidiary of Synovus, was formed in 1995 to provide administrative services to Synovus' subsidiary companies, including TSYS. In connection with the formation of SASC, TSYS sold SASC property and equipment at book value of approximately $438,000. Additionally, TSYS and SASC are parties to a Lease Agreement pursuant to which SASC leased from TSYS office space for lease payments aggregating $198,578 during 1995. The terms of these transactions are comparable to those which could have been obtained in transactions with unaffiliated third parties. Synovus and TSYS and SASC and TSYS are parties to Management Agreements (having one year, automatically renewable, unless terminated, terms), pursuant to which Synovus and SASC provide certain management services to TSYS. During 1995, these services included human resource services, maintenance services, security services, communication services, corporate education services, travel services, investor relations services, corporate governance services, legal services, regulatory and statutory compliance services, executive management services performed on behalf of TSYS by certain of Synovus' officers and financial services. As compensation for management services provided during 1995, TSYS paid Synovus and SASC management fees of $1,039,693 and $3,158,695, respectively. As compensation for payroll processing support services provided by TSYS to Synovus during 1995, Synovus paid TSYS a management fee of $361,093. Management fees are subject to future adjustments based upon the management services then being provided, based upon charges at the time by unrelated third parties for comparable services. During 1995, Columbus Bank served as trustee of various employee benefit plans of TSYS. During 1995, TSYS paid Columbus Bank trustee's fees under these plans of $187,374. During 1995, Columbus Depot Equipment Company ("CDEC"), a wholly-owned subsidiary of TSYS, and Columbus Bank and 24 of Synovus' other subsidiaries were parties to Lease Agreements pursuant to which Columbus Bank and 24 of Synovus' other subsidiaries leased from CDEC computer related equipment for bankcard and bank data processing services for lease payments 24 aggregating $155,813. During 1995, CDEC sold Columbus Bank and certain of Synovus' other subsidiaries computer related equipment for bankcard and bank data processing services for payments aggregating $107,534. In addition, CDEC was paid $25,925 by Columbus Bank and certain of Synovus' other subsidiaries for monitoring such equipment and $160 for servicing various computer related equipment. The terms, conditions, rental rates and/or sales prices provided for in these Agreements are comparable to corresponding terms, conditions and rates provided for in leases and sales of similar equipment offered by unrelated third parties. During 1995, Synovus Data Corp., a wholly-owned subsidiary of Synovus, paid TSYS $701,159 for data links, network services and other miscellaneous items related to the data processing services which Synovus Data Corp. provides to its customers, which amount was reimbursed to Synovus Data Corp. by its customers, and $103,944 for management services. During 1995, TSYS paid Synovus Data Corp. $96,000 primarily for computer processing services. The charges for processing, management and other services are comparable to those between unrelated third parties. During 1995, TSYS and Synovus Data Corp. were parties to a Lease Agreement pursuant to which TSYS leased from Synovus Data Corp. portions of its office building for lease payments aggregating $214,650. During 1995, TSYS and Columbus Bank were parties to Lease Agreements pursuant to which Columbus Bank leased from TSYS portions of its maintenance and warehouse facilities for lease payments aggregating $20,203. In August, 1993, TSYS entered into a three-year Lease Agreement with Columbus Bank pursuant to which it leases office space from Columbus Bank for lease payments of $4,483 per month. The terms, conditions and rental rates provided for in these Lease Agreements are comparable to corresponding terms, conditions and rates provided for in leases of similar facilities offered by unrelated third parties in the Columbus, Georgia area. During 1995, Synovus, Columbus Bank and other Synovus subsidiaries paid to Columbus Productions, Inc., a wholly-owned subsidiary of TSYS, an aggregate of $523,660 for printing services. The charges for printing services are comparable to those between unrelated third parties. During 1995, TSYS purchased 17,122 shares of Synovus Common Stock from Synovus for $389,526 and simultaneously granted the shares to certain executive officers of TSYS as restricted stock awards. The per share purchase price of such shares was equal to the fair market value of a share of Synovus Common Stock on the date of purchase. Most customers of the services marketed as THE TOTAL SYSTEM(SM) maintain special clearing demand deposit accounts with Columbus Bank to facilitate the settlement of bankcard transactions between Visa(R), MasterCard(R), TSYS and the customers. In certain cases, with the approval of Columbus Bank, these special clearing accounts may also be utilized by customers for other correspondent banking transactions with Columbus Bank. During 1995, TSYS and its subsidiaries were paid $837,354 of interest by Columbus Bank in connection with deposit accounts with, and commercial paper purchased from, Columbus Bank. During 1995, a subsidiary of TSYS paid Columbus Bank $77,709 of interest in connection with a loan from Columbus Bank. These interest rates are comparable to those in transactions between unrelated third parties. Effective December 28, 1990, TSYS, the Development Authority of Columbus, Georgia, and Columbus Bank, as Trustee, consummated the issuance of, and various banking subsidiaries of Synovus purchased, $15,000,000 of industrial development revenue bonds, the proceeds of which were used by TSYS to acquire and construct its 210,000 square foot North Center production facility. As a result of the consummation of such financing, TSYS will lease its North Center facility from the Development Authority for a period of 30 years, with the lease payments to be paid thereon being used by the Authority to satisfy its obligations to the purchasers of the bonds. The terms of such bonds, including the 9.75% rate of interest to be paid thereon and the schedule upon which principal will be repaid included therein, and the various other documents pursuant to which 25 such bonds were issued, were arrived at as a result of arm's-length negotiations between TSYS, the Authority, the Trustee and the various subsidiary banks of Synovus which purchased the bonds, and are no less favorable than could be obtained from unrelated third parties. During 1995, TSYS made principal payments of $25,000 and interest payments of $609 in connection with such bonds. TSYS has entered into an agreement with Columbus Bank with respect to the use of aircraft owned or leased by B&C Company, a Georgia general partnership in which Columbus Bank and W.C. Bradley Co. are equal partners. TSYS paid Columbus Bank $239,131 for its use of the B&C Company aircraft during 1995. The charges payable by TSYS to Columbus Bank in connection with its use of this aircraft approximate charges available to unrelated third parties in the State of Georgia for use of comparable aircraft for commercial purposes. VII. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT Section 16(a) of the Exchange Act requires Synovus' officers and directors, and persons who own more than ten percent of Synovus Common Stock, to file reports of ownership and changes in ownership on Forms 3,4 and 5 with the SEC and the New York Stock Exchange. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish Synovus with copies of all Section 16(a) forms they file. To Synovus' knowledge, based solely on its review of the copies of such forms received by it, and written representations from certain reporting persons that no Forms 5 were required for those persons, Synovus believes that during the fiscal year ended December 31, 1995 all Section 16(a) filing requirements applicable to its officers, directors, and greater than ten percent beneficial owners were complied with, except that Mr. Burts filed one amended Form 4 reporting late one transaction; Mr. Anthony filed two amended Forms 4 reporting late three transactions; Mr. Blanchard filed one amended Form 4 reporting late one transaction; and Mr. Yancey filed one amended Form 4 reporting late one transaction. In addition, Mr. Page and Mr. Yancey each filed an amended Form 4 to correct a previously filed timely report that misstated the number of shares of Synovus Common Stock gifted to family members. VIII. INDEPENDENT AUDITORS On March 1, 1996, Synovus' Board of Directors appointed KPMG Peat Marwick LLP, Certified Public Accountants, as the independent auditors to audit the consolidated financial statements of Synovus and its subsidiaries for the fiscal year ending December 31, 1996. The Board of Directors knows of no direct or material indirect financial interest by KPMG Peat Marwick LLP in Synovus or any of its subsidiaries, or of any connection between KPMG Peat Marwick LLP and Synovus or any of its subsidiaries, in any capacity as promoter, underwriter, voting trustee, director, officer, shareholder or employee. Representatives of KPMG Peat Marwick LLP, Certified Public Accountants, will be present at Synovus' 1996 Annual Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. IX. FINANCIAL INFORMATION WITH REFERENCE TO SYNOVUS AND ITS SUBSIDIARIES CONTAINED IN SYNOVUS' 1995 ANNUAL REPORT Detailed financial information for Synovus and its subsidiaries for their 1995 fiscal year is included in Synovus' 1995 Annual Report that is being mailed to Synovus' shareholders together with this Proxy Statement. 26 X. OTHER MATTERS As of the time of the preparation of this Proxy Statement, Synovus' Board of Directors has not been informed of any matters to be presented by or on behalf of Synovus' Board of Directors or its management for action at Synovus' 1996 Annual Meeting which are not referred to herein. If any other matters come before the Annual Meeting or any adjournment thereof, it is the intention of the persons named in the accompanying Proxy to vote thereon in accordance with their best judgment. Synovus' shareholders are urged to vote, date and sign the enclosed Proxy solicited on behalf of Synovus' Board of Directors and return it at once in the envelope which is enclosed for that purpose. This should be done whether or not the shareholder plans to attend Synovus' 1996 Annual Meeting. By Order of the Board of Directors /s/James H. Blanchard JAMES H. BLANCHARD Chairman of the Board, Synovus Financial Corp. Columbus, Georgia March 8, 1996 27 EX-21.1 10 SUBSIDIARIES OF SYNOVUS FINANCIAL CORP.
Georgia Corporations Stock Ownership - -------------------------------------------------------------------------------- Columbus Bank and Trust Company 100% Commercial Bank 100% Commercial Bank and Trust Company of Troup County 100% Security Bank and Trust Company of Albany 100% Sumter Bank and Trust Company 100% The Coastal Bank of Georgia 100% First State Bank and Trust Company of Valdosta 100% Bank of Hazlehurst 100% Synovus Securities, Inc. 100% The Cohutta Banking Company 100% Bank of Coweta 100% Citizens Bank and Trust of West Georgia 100% First Community Bank of Tifton 100% Synovus Data Corp. 100% CB&T Bank of Middle Georgia 100% Sea Island Bank 100% 1 Citizens First Bank 100% The Citizens Bank 100% The Citizens Bank of Cochran 100% Athens First Bank & Trust Company 100% Citizens & Merchants State Bank 100% Synovus Administrative Services Corp. 100% Alabama Corporations - -------------------- Synovus Financial Corp. of Alabama 100% Community Bank and Trust of Southeast Alabama 100% First Commercial Bank of Huntsville 100% The Bank of Tuscaloosa 100% Sterling Bank 100% First Commercial Bank of Birmingham 100% CB&T Bank of Russell County 100% Florida Corporations - -------------------- Quincy State Bank 100% The Tallahassee State Bank 100% Bank of Pensacola 100% 2 Vanguard Bank and Trust Company 100% First Coast Community Bank 100% Arizona Corporations - -------------------- Sumbank Life Insurance Company 100% National Banking Associations - ----------------------------- The National Bank of Walton County (GA) 100% Peachtree National Bank (GA) 100% First National Bank of Jasper (AL) 100% National Bank of South Carolina (SC) 100% - -------- Columbus Bank and Trust Company has one majority-owned subsidiary, Total System Services, Inc., a Georgia corporation, and one wholly-owned subsidiary, Synovus Trust Company, a Georgia corporation. Total System Services, Inc. has four wholly-owned subsidiaries, Columbus Depot Equipment Company, Mailtek, Inc., Lincoln Marketing, Inc. and Columbus Productions, Inc., all of which are Georgia corporations. Citizens First Bank has one wholly-owned subsidiary, Citizens Service Company, a Georgia corporation. Athens First Bank & Trust Company has one wholly-owned subsidiary, Athena Service Corporation, a Georgia corporation. First Commercial Bank of Birmingham has three wholly-owned subsidiaries, First Commercial Mortgage Corporation, First Commercial Credit Corporation and Synvous Mortgage Corp., all of which are Alabama corporations.
filings\subsid2.snv 3 EX-23.1 11 Accountants' Consent The Board of Directors Synovus Financial Corp.: We consent to the incorporation by reference in the Registration Statements (No. 33-35926, No. 33-56614, No. 33-40738, No. 33-39845, No. 2-93472, No. 2-94639, No. 33-77900, No. 33-77980, No. 33-79518, No. 33-89782, No. 33-90630, No. 33-90632, No. 33-91690, No. 33-60473, and No. 33-60475) on Form S-8 of Synovus Financial Corp. of our report dated January 26, 1996, relating to the consolidated statements of condition of Synovus Financial Corp. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three- year period ended December 31, 1995, which report appears in Synovus' 1995 Annual Report to Shareholders and is incorporated by reference in the 1995 annual report on Form 10-K of Synovus Financial Corp. Our report dated January 26, 1996 refers to a change in the accounting for investment securities at December 31, 1993 to adopt the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." KPMG PEAT MARWICK LLP Atlanta, Georgia March 22, 1996 Accountants' Consent The Board of Directors Synovus Financial Corp.: We consent to the incorporation by reference in the Registration Statements (No. 33-42844 and No. 33-85948) on Form S-3 of Synovus Financial Corp. of our report dated January 26, 1996, relating to the consolidated statements of condition of Synovus Financial Corp. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1995, which report appears in Synovus' 1995 Annual Report to Shareholders and is incorporated by reference in the 1995 annual report on Form 10-K of Synovus Financial Corp. Our report dated January 26, 1996 refers to a change in the accounting for investment securities at December 31, 1993 to adopt the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." KPMG PEAT MARWICK LLP Atlanta, Georgia March 22, 1996 EX-24.1 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Synovus Financial Corp. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SYNOVUS FINANCIAL CORP. (Registrant) March 22, 1996 By:/s/ James H. Blanchard ---------------------- James H. Blanchard, Chairman of the Board and Principal Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James H. Blanchard, James D. Yancey and Stephen L. Burts, Jr., and each of them, his or her true and lawful attorney(s)-in-fact and agent(s), with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this report and to file the same, with all exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons in the capacities and on the dates indicated. /s/ William B. Turner Date: March 22, 1996 - ----------------------------- William B. Turner, Director and Chairman of the Executive Committee /s/ James H. Blanchard Date: March 22, 1996 - ----------------------------- James H. Blanchard, Chairman of the Board and Principal Executive Officer /s/ John T. Oliver, Jr. Date: March 22, 1996 - ----------------------------- John T. Oliver, Jr., Director and Vice Chairman of the Executive Committee /s/ James D. Yancey Date: March 22, 1996 - ----------------------------- James D. Yancey, Vice Chairman of the Board /s/ Joe E. Beverly Date: March 22, 1996 - ----------------------------- Joe E. Beverly, Vice Chairman of the Board /s/ Richard E. Anthony Date: March 22,1996 - ----------------------------- Richard E. Anthony, Vice Chairman of the Board /s/ Stephen L. Burts, Jr. Date: March 22, 1996 - ----------------------------- Stephen L. Burts, Jr., President, Principal Financial Officer and Director /s/ G. Sanders Griffith, III Date: March 22, 1996 - ----------------------------- G. Sanders Griffith, III, Senior Executive Vice President, General Counsel and Secretary /s/ Thomas J. Prescott Date: March 22, 1996 - ----------------------------- Thomas J. Prescott, Executive Vice President, Treasurer and Principal Accounting Officer /s/ Jay C. McClung Date: March 22, 1996 - ----------------------------- Jay C. McClung, Executive Vice President /s/ Daniel P. Amos Date: March 22, 1996 - ----------------------------- Daniel P. Amos, Director /s/ Richard Y. Bradley Date: March 22, 1996 - ----------------------------- Richard Y. Bradley, Director /s/ Salvador Diaz-Verson, Jr. Date: March 22, 1996 - ----------------------------- Salvador Diaz-Verson, Jr., Director /s/ C. Edward Floyd Date: March 22, 1996 - ----------------------------- C. Edward Floyd, Director /s/ Gardiner W. Garrard, Jr. Date: March 22, 1996 - ----------------------------- Gardiner W. Garrard, Jr., Director /s/ V. Nathaniel Hansford Date: March 22, 1996 - ----------------------------- V. Nathaniel Hansford, Director /s/ Mason H. Lampton Date: March 22, 1996 - ----------------------------- Mason H. Lampton, Director /s/ John L. Moulton Date: March 22, 1996 - ----------------------------- John L. Moulton, Director /s/ Elizabeth C. Ogie Date: March 22, 1996 - ----------------------------- Elizabeth C. Ogie, Director /s/ William L. Pherigo Date: March 22, 1996 - ----------------------------- Wiliam L. Pherigo, Director /s/ Robert V. Royall, Jr. Date: March 22, 1996 - ----------------------------- Robert V. Royall, Jr., Director /s/H. Lynn Page Date: March 22, 1996 - ----------------------------- H. Lynn Page, Director /s/ George C. Woodruff, Jr. Date: March 22, 1996 - ----------------------------- George C. Woodruff, Jr., Director EX-27.1 13
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SYNOVUS FINANCIAL CORP. FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018349 SYNOVUS FINANCIAL CORP. 1,000 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 382,696 1,093 123,832 0 1,106,298 380,918 386,579 5,512,030 81,384 7,927,595 6,727,879 229,477 142,079 106,815 0 0 77,281 616,274 7,927,595 525,080 84,595 6,113 615,788 253,761 273,913 341,875 25,787 368 477,453 179,469 114,583 0 0 114,583 1.00 1.00 5.15 23,202 11,417 80,131 0 75,018 24,932 4,510 81,384 18,936 0 62,448 ON MARCH 11, 1996 SYNOVUS FINANCIAL CORP. ANNOUNCED A THREE-FOR-TWO STOCK SPLIT EFFECTIVE APRIL 8, 1996 TO SHAREHOLDERS OF RECORD AS OF MARCH 21, 1996. PER SHARE DATA HAS BEEN RETROACTIVELY RESTATED TO REFLECT THE ADDITIONAL SHARES OUTSTANDING RESULTING FROM THE STOCK SPLIT.
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