10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2004

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
incorporation or organization)	Identification No.)
1111 Bay Avenue
Suite 500, Columbus, Georgia	31901
(Address of principal executive offices)	(Zip Code)
(Registrant’s telephone number, including area code)	(706) 649-5220

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 Common Stock Purchase Rights	New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
NONE

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

YES  þ     NO  o

     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. o

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

YES  þ     NO  o

     As of February 17, 2005, 310,853,897 shares of the $1.00 par value common stock of Synovus Financial Corp. were outstanding. The aggregate market value of the shares of $1.00 par value common stock of Synovus Financial Corp. held by nonaffiliates on December 31, 2004 was approximately $6,128,350,000 (based upon the closing share price of such stock on June 30, 2004).

DOCUMENTS INCORPORATED BY REFERENCE

Incorporated Documents	Form 10-K Reference Locations
Portions of the 2005 Proxy Statement	Part III
for the Annual Meeting of Shareholders
to be held April 28, 2005 (“Proxy
Statement”)
Financial Appendix for the year ended	Parts I, II, III and IV
December 31, 2004 to the Proxy
Statement (“Financial Appendix”)

Table of Contents

		Page
Part I
Safe Harbor Statement		1
Item 1.	Business	2
Item 2.	Properties	12
Item 3.	Legal Proceedings	13
Item 4.	Submission of Matters to a Vote of Security Holders	None
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities	14
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8.	Financial Statements and Supplementary Data	14
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	None
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	15
Part III
Item 10.	Directors and Executive Officers of the Registrant	16
Item 11.	Executive Compensation	17
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13.	Certain Relationships and Related Transactions	17
Item 14.	Principal Accountant Fees and Services	18
Part IV
Item 15.	Exhibits and Financial Statement Schedules	18

Part I

Safe Harbor Statement

     Certain statements contained in this annual report on Form 10-K of Synovus Financial Corp. (“Synovus”) and the exhibits hereto which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the “Act”). These forward-looking statements include, among others, statements regarding: (i) management’s belief with respect to the adequacy of the allowance for loan losses; (ii) the expected financial impact of recent accounting pronouncements; (iii) the expected issuance of debt in 2005; (iv) Total System Services, Inc.’s belief with respect to its ability to meet its contractual commitments; (v) management’s belief with respect to legal proceedings and other claims; (vi) any matter that might arise out of the United States Department of Justice’s investigation of TSYS; (vii) management’s belief with respect to the benefit of rising short-term rates; (viii) TSYS’ expectation that it will convert Chase Card Services’ portfolios in the second half of 2005 and maintain the card-processing functions of Chase for at least two years; (ix) the expected earnings per share impact on TSYS of the Vital Processing Services L.L.C. acquisition; (x) TSYS’ expectation with respect to the impact of the Chase contract on its earnings per share growth for 2005 and 2006; (xi) management’s belief with respect to the resolution of certain loan delinquencies and the inclusion of all material loans in which doubt exists as to collectibility in nonperforming assets and impaired loans; (xii) management’s belief with respect to the use of derivatives to manage interest rate risk; (xiii) the Board of Directors’ present intent to continue to pay cash dividends; (xiv) management’s belief with respect to having sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year; (xv) the expected expenses and investments associated with the retail banking strategy; (xvi) Synovus’ expected growth in earnings per share for 2005 and the assumptions underlying such statements, including, with respect to Synovus’ expected increase in earnings per share for 2005, the economy will continue to expand; short-term interest rates will increase modestly; the credit environment will remain favorable; TSYS’ net income growth will be in the 19% – 22% range; and the expense of equity-based compensation will be approximately $9.0 million (net of tax). In addition, certain statements in future filings by Synovus with the Securities and Exchange Commission, in press releases, and in oral and written statements made by or with the approval of Synovus which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure, efficiency ratios and other financial terms; (ii) statements of plans and objectives of Synovus or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “estimates,” “projects,” “plans,” “may,” “could,” “should,” “would,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

     These statements are based on the current beliefs and expectations of Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors

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could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of these factors are beyond Synovus’ ability to control or predict. These factors include, but are not limited to: (i) competitive pressures arising from aggressive competition from other financial service providers; (ii) factors that affect the delinquency rate of Synovus’ loans and the rate at which Synovus’ loans are charged off; (iii) changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which Synovus is perceived in such markets; (iv) TSYS’ inability to achieve its net income goals for 2005; (v) the strength of the U.S. economy in general and the strength of the local economies in which operations are conducted may be different than expected; (vi) the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate policies of the Federal Reserve Board; (vii) inflation, interest rate, market and monetary fluctuations; (viii) the timely development of and acceptance of new products and services and perceived overall value of these products and services by users; (vix) changes in consumer spending, borrowing, and saving habits; (x) technological changes are more difficult or expensive than anticipated; (xi) acquisitions are more difficult to integrate than anticipated; (xii) the ability to increase market share and control expenses; (xiii) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which Synovus and its subsidiaries must comply; (xiv) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies; (xv) changes in Synovus’ organization, compensation, and benefit plans; (xvi) the costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto; (xvii) a deterioration in credit quality or a reduced demand for credit; (xviii) Synovus’ inability to successfully manage any impact from slowing economic conditions or consumer spending; (xix) TSYS does not convert the Chase portfolio as expected and maintain the card-processing functions of Chase for at least two years as expected; (xx) the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; (xxi) successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection; (xxii) the impact on Synovus’ business, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (xxiii) the success of Synovus at managing the risks involved in the foregoing.

     These forward-looking statements speak only as of the date on which the statements are made, and Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect the occurrence of unanticipated events.

Item 1. Business

Business and Business Segments

     Synovus is a $25 billion asset diverse financial services company which is a registered bank holding company. Synovus provides integrated financial services including banking, financial management, insurance, mortgage and leasing services through affiliate banks and other Synovus offices in Georgia, Alabama, South Carolina, Florida and Tennessee and electronic

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payment processing services through its 81% owned subsidiary, TSYS. Synovus is based in Columbus, Georgia and its stock is traded on the New York Stock Exchange under the symbol “SNV.”

     Synovus is engaged in two reportable business segments: Financial Services (which is primarily involved in commercial banking activities and also provides retail banking, financial management, mortgage, leasing and insurance services), and Transaction Processing Services (which primarily provides electronic payment processing services including consumer, commercial, retail, government services, debit and stored value card processing and related services.) See Note 17 of Notes to Consolidated Financial Statements on pages F-31 through F-33 of the Financial Appendix which is incorporated herein by reference.

Financial Services Subsidiaries

     As of December 31, 2004, Synovus had 40 wholly owned first and second tier banking subsidiaries located in five southeastern states. Our banking subsidiaries offer commercial banking services, including commercial, financial, agricultural and real estate loans, and retail banking services, including accepting customary types of demand and savings deposits; making individual, consumer, installment and mortgage loans; safe deposit services; leasing services; automated banking services; automated fund transfers; and bank credit card services, including MasterCard and Visa services.

     The bank-related wholly owned subsidiaries of Synovus are: (1) Synovus Securities, Inc., Columbus, Georgia, 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, N.A., Columbus, Georgia, which provides trust services; (3) Synovus Mortgage Corp., Birmingham, Alabama, which offers mortgage services; (4) Synovus Insurance Services, Columbus, Georgia, which offers insurance agency services; (5) Creative Financial Group, LTD., Atlanta, Georgia, which provides financial planning services; (6) GLOBALT, Inc., Atlanta, Georgia, which provides asset management services; and (7) Synovus Investment Advisors, Inc., Columbus, Georgia, which provides investment advisory services.

Transaction Processing Affiliates

     Business. TSYS provides electronic payment processing and related services to financial and nonfinancial institutions. Services include processing consumer, retail, commercial, government services, stored value and debit cards. Based in Columbus, Georgia, and traded on the New York Stock Exchange under the symbol “TSS,” TSYS provides services to financial and nonfinancial institutions throughout the United States, Canada, Mexico, Honduras, Puerto Rico and Europe. TSYS currently offers merchant services to financial institutions and other organizations in Japan through its majority owned subsidiary, GP Network Corporation. TSYS also provides back-end processing services for its joint venture, Vital Processing Services L.L.C., to support merchant processing in the United States. TSYS also offers value added products and services to support its core processing services. Value added products and services include: risk management tools and techniques, such as credit evaluation, fraud detection and prevention and

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behavior analysis tools; and revenue enhancement tools and customer retention programs, such as loyalty programs and bonus rewards.

     As of December 31, 2004, TSYS had nine wholly owned subsidiaries: (1) Columbus Depot Equipment Company, which sells and leases computer related equipment associated with TSYS’ electronic payment processing services; (2) Columbus Productions, Inc., which provides full-service commercial printing and related services; (3) TSYS Canada, Inc., which provides programming support and assistance with the conversion of card portfolios to TS2; (4) TSYS Total Debt Management, Inc., which provides recovery collections, bankruptcy process management, legal account management and skip tracing services; (5) ProCard, Inc., which provides Internet, Intranet and client/server software solutions for commercial card management programs; (6) Enhancement Services Corporation, which provides targeted loyalty consulting, as well as travel, gift card and reward programs; (7) TSYS Technology Center, Inc., which provides programming support; (8) TSYS Japan Co., Ltd., which primarily provides gift card processing services to Japanese clients; and (9) TSYS Prepaid, Inc., which provides prepaid card solutions.

     As of December 31, 2004, TSYS also held: (1) a 49% equity interest in a joint venture company named Total System Services de México, S.A. de C.V., which provides statement production and card-issuing support services to financial and nonfinancial Mexican institutions; (2) a 50% interest in Vital Processing Services L.L.C., a joint venture with Visa U.S.A. Inc., that offers fully integrated merchant transaction and related electronic transaction processing services to financial and nonfinancial institutions and their merchant customers; and (3) a 51% equity interest in GP Network Corporation, a company which provides merchant processing services to financial institutions and retailers in Japan.

     Seasonality. Due to the somewhat seasonal nature of the credit card industry, TSYS’ revenues and results of operations have generally increased in the fourth quarter of each year because of increased transaction and authorization volumes during the traditional holiday shopping season.

     Major Customers. A significant amount of TSYS’ revenues are derived from long-term contracts with significant customers, including certain major customers. For the year ended December 31, 2004, Bank of America Corporation accounted for approximately 18.5% of TSYS’ total revenues. As a result, the loss of Bank of America Corporation, or other major or significant customers, could have a material adverse effect on TSYS’ financial condition, results of operations and cash flows.

     Backlog of Accounts. As of January 31, 2005, TSYS had a pipeline of approximately 46 million accounts associated with new clients. TSYS expects to convert its entire backlog of new accounts in 2005.

     See “Non-Interest Income” under the “Financial Review” Section on pages F-49 through F-53, “Non-Interest Expense” under the “Financial Review” Section on pages F-53 through F-56, and Note 17 of Notes to Consolidated Financial Statements on pages F-31 through F-33 of the Financial Appendix which are incorporated herein by reference.

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Intellectual Property

     Synovus owns the federally registered service marks of Synovus Financial Corp., Synovus, the stylized S logo, Synovus Mortgage Corp., Synovus Securities, Inc. and Synovus Trust Company. Synovus also owns additional registered service marks and 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.

     TSYS’ intellectual property portfolio is a component of its ability to be a leading electronic payment services provider. TSYS diligently protects and works to build its intellectual property rights through patent, servicemark and trade secret laws. TSYS also uses various licensed intellectual property to conduct its business. In addition to using intellectual property in its own operations, TSYS grants licenses to certain of its clients to use its intellectual property.

Acquisitions

     Synovus has pursued a strategy of acquiring banks and financial services companies which are used to augment Synovus’ internal growth. TSYS also acquires companies to enhance its functionality and product offerings. See Note 2 of Notes to Consolidated Financial Statements on pages F-13 through F-16 and “Acquisitions” under the “Financial Review” Section on page F-45 of the Financial Appendix which are incorporated herein by reference.

Supervision, Regulation and Other Factors

     The following discussion sets forth some of the material elements of the regulatory framework applicable to financial holding companies and bank holding companies and their subsidiaries and provides some specific information relevant to us. The regulatory framework is intended primarily for the protection of depositors and the Bank Insurance Fund and not for the protection of security holders and creditors. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions.

     General. Synovus is a registered bank holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System (“Board”) under the Bank Holding Company Act (“BHC Act”), and by the Georgia Banking Department under the bank holding company laws of the State of Georgia. Synovus became a financial holding company under the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) in April 2000. Synovus’ affiliate national banking associations are subject to regulation and examination primarily by the Office of the Comptroller of the Currency (“OCC”) and, secondarily, by the Federal Deposit Insurance Corporation (“FDIC”) and the Board. Synovus’ state-chartered banks which are not members of the Federal Reserve System are subject to primary federal regulation and examination by the FDIC. Synovus’ state-chartered banks that are members of the Federal Reserve System are subject to primary federal regulation and examination by the Board. In addition, all of our state-chartered banks are regulated and examined by their respective state banking departments. Numerous other federal and state laws, as well as regulations promulgated by the Board, the state

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banking regulators, the OCC and the FDIC govern almost all aspects of the operations of our banking subsidiaries. Various federal and state bodies regulate and supervise Synovus’ nonbanking subsidiaries including its brokerage, investment advisory, insurance agency and processing operations. These include, but are not limited to, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., federal and state banking regulators and various state regulators of insurance and brokerage activities.

     As a financial holding company, we are eligible to engage in, or acquire companies engaged in, a broader range of activities than permitted for bank holding companies and their subsidiaries. These activities include those that are determined to be “financial in nature,” as defined by the GLB Act and Board interpretations, including insurance underwriting, securities underwriting and dealing, and making merchant banking investments in commercial and financial companies. If any of our banking subsidiaries ceases to be well-capitalized or well-managed under applicable regulatory standards, the Board may, among other things, place limitations on our ability to conduct these broader financial activities or, if the deficiencies persist, require us to divest the banking subsidiary. In addition, if any of our banking subsidiaries receives a rating of less than satisfactory under the Community Reinvestment Act of 1977 (“CRA”), we would be prohibited from engaging in any additional activities other than those permissible for bank holding companies that are not financial holding companies. Our banking subsidiaries currently meet the capital, management and CRA requirements.

     Interstate Banking. The Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Interstate Act”) authorized interstate acquisitions of banks and bank holding companies without geographic limitation. Under the Interstate Act a bank holding company cannot make an interstate acquisition of a bank if, as a result, it would control more than 10% of the total United States insured depository deposits and more than 30% or applicable state law limit of deposits in that state.

     As a bank holding company, we are required to obtain prior Board approval before acquiring more than 5% of the voting shares, or substantially all of the assets, of a bank holding company, bank or savings association. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, the projected capital ratios and levels on a post-acquisition basis and the acquiring institution’s record of addressing the credit needs of the communities it serves, including the needs of low and moderate income neighborhoods, consistent with the safe and sound operation of the bank, under the CRA.

     Monetary Policy and Economic Controls. The earnings of our banking subsidiaries, and therefore the earnings of Synovus, are affected by the policies of regulatory authorities, including the Board. An important function of the Board is to promote orderly economic growth by influencing interest rates and the supply of money and credit. Among the methods that have been used to achieve this objective are open market operations in United States government securities, changes in the discount rate for member bank borrowings and changes in reserve requirements against bank deposits. These methods are used in varying combinations to influence

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overall growth and distribution of bank loans, investments and deposits, interest rates on loans and securities, and rates paid for deposits.

     The effects of the various Board policies on the future business and earnings of Synovus cannot be predicted. Synovus cannot predict the nature or extent of any effects that possible future governmental controls or legislation might have on its business and earnings.

     Dividends. Under the laws of the State of Georgia, Synovus, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in its Articles of Incorporation, and unless, after payment of the dividend, it would not be able to pay its debts when they become due in the usual course of its businesses or its total assets would be less than the sum of its total liabilities. Synovus is also subject to certain contractual and regulatory capital restrictions that limit the amount of cash dividends that Synovus may pay.

     The primary sources of funds for Synovus’ payment of dividends to its shareholders are dividends and fees to Synovus from its banking and nonbanking affiliates. Various federal and state statutory provisions and regulations limit the amount of dividends that the subsidiary banks of Synovus may pay. Pursuant to the regulations of the Georgia Banking Department, a Georgia bank must have approval of the Georgia Banking Department to pay cash dividends if, at the time of such payment: (1) the ratio of Tier 1 Capital to its adjusted total assets is less than 6%; (2) the aggregate amount of dividends to be declared or anticipated to be declared during the current calendar year exceeds 50% of its net after-tax profit for the previous calendar year; or (3) its total classified assets in its most recent regulatory examination exceeded 80% of its Tier 1 Capital plus its allowance for loan losses as reflected in the examination. In general, the approval of the Alabama Banking Department, the Florida Office of Financial Regulation and the Tennessee Department of Financial Institutions, as applicable, is required if the total of all dividends declared by an Alabama, Florida or Tennessee bank, as the case may be, in any year would exceed the total of its net profits, as defined by the regulatory agencies, for that year combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank’s retained net income, as defined by the OCC, for the current year plus retained net income for the preceding two years. Approval of the Board is required for payment of any dividend by a state chartered bank that is a member of the Federal Reserve System and is sometimes referred to as a state member bank, if the total of all dividends declared by the bank in any calendar year would exceed the total of its net profits, as defined by regulatory agencies, for that year combined with its retained net profits for the preceding two years. In addition, a state member bank may not pay a dividend in an amount greater than its net profits then on hand.

     Federal and state banking regulations applicable to Synovus and its banking subsidiaries require minimum levels of capital which limit the amounts available for payment of dividends. See “Parent Company” under the “Financial Review” Section on page F-73 and Note 12 of Notes to Consolidated Financial Statements on pages F-25 and F-26 of the Financial Appendix which are incorporated herein by reference.

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     Capital Requirements. Synovus is required to comply with the capital adequacy standards established by the Board and its banking subsidiaries must comply with similar capital adequacy standards established by the OCC, FDIC and the Board, as applicable. As a financial holding company, Synovus and each of its banking subsidiaries are required to maintain capital levels required for a well capitalized institution, as defined in “Prompt Corrective Action” below. There are two basic measures of capital adequacy for bank holding companies and their banking subsidiaries that have been promulgated by the Board, the FDIC and the OCC: a risk-based measure and a leverage measure. All applicable capital standards must be satisfied for a bank holding company or a bank to be considered in compliance. See “Capital Resources” and “Dividends” under the “Financial Review” Section on pages F-70 through F-72 and Note 12 of Notes to Consolidated Financial Statements on pages F-25 and F-26 of the Financial Appendix which are incorporated herein by reference.

     Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on the taking of brokered deposits, and certain other restrictions on its business. As described below, substantial additional restrictions can be imposed upon FDIC insured depository institutions that fail to meet applicable capital requirements. See “Prompt Corrective Action” below.

     Commitments to Subsidiary Banks. Under the Board’s 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.

     In the event of Synovus’ bankruptcy, any commitment by Synovus to a federal bank regulatory agency to maintain the capital of a banking subsidiary will be assumed by the bankruptcy trustee and entitled to a priority of payment. In addition, the Federal Deposit Insurance Act provides that any financial institution whose deposits are insured by the FDIC generally shall be liable for any loss incurred by the FDIC in connection with the default of, or any assistance provided by the FDIC to, a commonly controlled financial institution. All of our banking subsidiaries are FDIC-insured depository institutions.

     Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. Under this system the federal banking regulators are required to rate supervised institutions on the basis of five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and to take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions in the three undercapitalized categories, the severity of which will depend upon the capital category in which the institution is placed. Generally, subject to a narrow exception, FDICIA requires the banking regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.

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     Pursuant to FDICIA, the Board, the FDIC, the OCC and the Office of Thrift Supervision (“OTS”) have adopted regulations setting forth a five-tier scheme for measuring the capital adequacy of the financial institutions they supervise. Under the regulations, an institution would be placed in one of the following capital categories:

•   well capitalized (an institution that has a Total Capital ratio of at least 10%, a Tier 1 Capital ratio of at least 6% and a Tier 1 Leverage Ratio of at least 5%);

•   adequately capitalized (an institution that has a Total Capital ratio of at least 8%, a Tier 1 Capital ratio of at least 4% and a Tier 1 Leverage Ratio of at least 4%);

•   undercapitalized (an institution that has a Total Capital ratio of under 8%, a Tier 1 Capital ratio of under 4% or a Tier 1 Leverage Ratio of under 4%);

•   significantly undercapitalized (an institution that has a Total Capital ratio of under 6%, a Tier 1 Capital ratio of under 3% or a Tier 1 Leverage Ratio of under 3%); and

•   critically undercapitalized (an institution whose tangible equity is not greater than 2% of total tangible assets).

     The regulations permit the appropriate federal banking regulator to downgrade an institution to the next lower category if the regulator determines (1) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (2) that the institution has received, and not corrected, a less-than-satisfactory rating for any of the categories of asset quality, management, earnings or liquidity in its most recent examination. Supervisory actions by the appropriate federal banking regulator depend upon an institution’s classification within the five categories. Synovus’ management believes that Synovus and its bank subsidiaries have the requisite capital levels to qualify as well capitalized institutions under the FDICIA regulations. See Note 12 of Notes to Consolidated Financial Statements on pages F-25 and F-26 of the Financial Appendix which is incorporated herein by reference.

     FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions are subject to growth limitations and are required to submit capital restoration plans. A depository institution’s holding company must guarantee the capital plan, up to an amount equal to the lesser of 5% of the depository institution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan. Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.

     Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator.

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     Depositor Preference Statute. Federal law provides that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution are afforded a priority over other general unsecured claims against such institution, including federal funds and letters of credit, in the liquidation or other resolution of the institution by any receiver.

     USA Patriot Act. The USA Patriot Act of 2001 substantially broadens anti-money laundering legislation and the extraterritorial jurisdiction of the United States, imposes new compliance and due diligence obligations, creates new crimes and penalties, compels the production of documents located both inside and outside the United States, including those of foreign institutions that have a correspondent relationship in the United States, and clarifies the safe harbor from civil liability to customers. The U.S. Treasury Department has issued a number of regulations implementing the USA Patriot Act that apply certain of its requirements to financial institutions such as our banking and broker-dealer subsidiaries. The regulations impose new obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing.

     Privacy. Under the GLB Act, federal banking regulators adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.

     TSYS. TSYS is subject to being examined, and is indirectly regulated, by federal and state financial institution regulatory agencies which regulate the financial institutions for which TSYS provides electronic payment processing services. Matters reviewed and examined by these federal and state financial institution regulatory agencies have included TSYS’ internal controls in connection with its present performance of electronic payment processing services, and the agreements pursuant to which TSYS provides such services.

     As the Federal Reserve Bank of Atlanta has approved Synovus’ indirect ownership of TSYS through Columbus Bank and Trust Company, TSYS is subject to direct regulation by the Board. TSYS was formed with the prior written approval of, and is subject to regulation and examination by, the Georgia Banking Department as a subsidiary of Columbus Bank and Trust Company. In addition, as TSYS and its subsidiaries operate as subsidiaries of Columbus Bank and Trust Company, they are subject to regulation by the FDIC.

Competition

     Financial Services. The financial services business is highly competitive. Our banks and bank-related subsidiaries compete actively with national and state banks, savings and loan associations and credit unions and other nonbank financial institutions, including securities brokers and dealers, investment advisory firms, personal loan companies, insurance companies, trust companies, finance companies, leasing companies, mortgage companies and certain governmental agencies, all of which actively engage in marketing various types of loans, deposit

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accounts and other financial services. These competitors have been successful in developing products that are in direct competition with or are alternatives to the banking services offered by traditional banking institutions. Synovus’ ability to maintain its history of strong financial performance will depend in part on its ability to expand the scope of and effectively deliver products and services, allowing it to meet the changing needs of its customers.

     As of December 31, 2004, Synovus was the second largest bank holding company headquartered in Georgia, based on assets. Customers for financial services are generally influenced by convenience, quality of service, personal contacts, price of services and availability of products. Although the market share of Synovus varies in different markets, Synovus believes that its affiliates effectively compete with other banks and thrifts in their relevant market areas.

     Transaction Processing Services. TSYS encounters vigorous competition in providing electronic payment processing services from several different sources. Most of the national market in third party payment processors is presently being provided by approximately three vendors. TSYS believes that as of December 31, 2004 it is the second largest third party card processor in the United States. In addition, TSYS competes with in-house processors and 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 card associations, data processing and bankcard computer service firms and other such third party vendors located throughout the United States and from certain international processors with respect to international-based services. Based upon available market share data that includes cards processed in-house, TSYS believes it holds a 20.9% share of the domestic consumer card processing market, a 75.5% share of the Visa and MasterCard domestic commercial card processing market, a 16.2% share of the domestic retail card processing market and a 6.9% share of the domestic off-line debit processing market. In addition to processing cards for United States clients, based upon available market share data that includes cards processed in-house, TSYS also believes it holds an approximate 8% share of the Mexican credit card processing market, an approximate 43% share of the Canadian credit card processing market and an approximate 17% share of the European credit card processing market.

     TSYS’ major competitor in the card processing industry is First Data Resources, Inc., a wholly owned subsidiary of First Data Corporation, which provides card processing services. The principal methods of competition between TSYS and First Data Resources are price, system performance and reliability, breadth of features and functionality, disaster recovery capabilities, data security, scalability and flexibility of infrastructure and customer service. Certain other subsidiaries of First Data Corporation also compete with TSYS.

Employees

     On December 31, 2004, Synovus had 11,353 full time employees, 5,622 of whom are employees of TSYS.

11

Selected Statistical Information

     The “Financial Review” Section, which is set forth on pages F-41 through F-75 and the “Summary of Quarterly Financial Data” Section which is set forth on page F-76 of the Financial Appendix, which includes the information encompassed within “Selected Statistical Information,” are incorporated herein by reference.

Available Information

     Synovus’ website address is www.synovus.com. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports in the Investor Relations Section of our website under the heading “Financial Info” and then under “SEC Filings.” These reports are available on our website as soon as reasonably practicable after we electronically file them with the SEC.

     Synovus has adopted a Code of Business Conduct and Ethics for its directors, officers and employees and has also adopted Corporate Governance Guidelines. Our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of our board committees are available in the Corporate Governance Section of our web site at www.synovus.com/governance. Copies of these documents are also available in print upon written request to the Corporate Secretary, Synovus Financial Corp., 1111 Bay Avenue, Suite 500, Columbus, Georgia 31901.

Subsequent Event

     On January 18, 2005, TSYS announced it had entered into a Purchase Agreement to acquire the remaining 50-percent equity stake that Visa U.S.A. holds in Vital Processing Services L.L.C. for $95.0 million in cash. The transaction closed on March 1, 2005 and Vital became a wholly owned subsidiary of TSYS.

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.

     Synovus and its Financial Services subsidiaries own 275 facilities encompassing approximately 2,090,000 square feet and lease from third parties 88 facilities encompassing approximately 536,812 square feet. The owned and leased facilities are primarily comprised of office space from which we conduct our Financial Services business. At December 31, 2004, total leasehold improvements (net of accumulated depreciation) related to the leased facilities amounted to $13.9 million. The following table provides additional information with respect to our leased facilities:

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		Average
Square Footage	Number of Locations	Square Footage
Under 3,000	41	1,345
3,000 – 9,999	32	5,026
10,000 – 18,999	5	13,486
19,000 – 30,000	4	21,580
Over 30,000	6	32,681

     See Note 11 of Notes to Consolidated Financial Statements on pages F-22 through F-25 of the Financial Appendix which is incorporated herein by reference.

     TSYS owns a 540,000 square foot campus-type facility on approximately 46 acres of land in downtown Columbus, Georgia. The campus facility serves as TSYS’ corporate headquarters and houses administrative, client contact and programming team members.

     TSYS owns a 377,000 square foot production center and a 72,000 square foot production center which are located on a 40.4 acre tract of land in north Columbus, Georgia. Primarily production centers, these facilities house TSYS’ primary data processing computer operations, statement preparation, mail handling, microfiche production, purchasing and card production, as well as other related operations.

     TSYS owns a 110,000 square foot building on a 23-acre site in Columbus, Georgia, which accommodates current and future office space needs, 82,500 square feet of which houses TSYS’ Business Process Management Division. TSYS also owns a 104,000 square foot building on an 18-acre site in Columbus which functions as a second data center.

     Columbus Productions, Inc. owns a 61,000 square foot production facility, located in Columbus, Georgia.

     TSYS owns a 40,000 square foot building in York, England, 23,000 square feet of which are occupied by TSYS, which houses client service and administrative personnel for TSYS Europe. TSYS also owns a 53,000 square foot data center on three acres of land in Knaresborough, England which is utilized by TSYS Europe.

Item 3. Legal Proceedings

     See Note 11 of Notes to Consolidated Financial Statements on pages F-22 through F-25 of the Financial Appendix which is incorporated herein by reference.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

13

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities

     Shares of common stock of Synovus are traded on the NYSE under the symbol “SNV.” See “Capital Resources” and “Dividends” under the “Financial Review” Section which are set forth on pages F-70 through F-72 and “Share Repurchase Plan” under the “Financial Review” Section which is set forth on page F-73 of the Financial Appendix to Synovus’ Proxy Statement which are incorporated herein by reference.

Item 6. Selected Financial Data

     The “Selected Financial Data” Section which is set forth on page F-40 of the Financial Appendix is 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-41 through F-75 and the “Summary of Quarterly Financial Data” Section which is set forth on page F-76 of the Financial Appendix to which include the information encompassed by “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     See “Market Risk and Interest Rate Sensitivity” and “Derivative Instruments for Interest Rate Risk Management” under the “Financial Review” Section which are set forth on pages F-66 through F-69 and Note 1 of Notes to Consolidated Financial Statements on pages F-6 through F-13 of the Financial Appendix which are incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

     The “Summary of Quarterly Financial Data” Section which is set forth on page F-76 and the “Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, Consolidated Statements of Cash Flows, Notes to Consolidated Financial Statements, Report of Independent Registered Public Accounting Firm, Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm” Sections which are set forth on pages F-2 through F-39 of the Financial Appendix are incorporated herein by reference.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

     None.

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Item 9A. Controls and Procedures

     Evaluation of Disclosure Controls and Procedures. We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this annual report as required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended. This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer and chief financial officer. Based on this evaluation, the chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to Synovus (including its consolidated subsidiaries) required to be included in our periodic SEC filings.

     Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm. “Management’s Report on Internal Control Over Financial Reporting,” which is set forth on page F-37 of the Financial Appendix, and “Report of Independent Registered Public Accounting Firm,” which is set forth on page F-38 of the Financial Appendix, are incorporated herein by reference.

     Changes in Internal Control Over Financial Reporting. No change in Synovus’ internal control over financial reporting occurred during the fourth fiscal quarter covered by this annual report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

     On January 13, 2005, the Compensation Committee (the “Committee”) of the Board of Directors of Synovus approved the annual base salaries of Synovus’ named executive officers for the Proxy Statement after a review of competitive market data, effective January 1, 2005. The following table sets forth the 2005 annual base salary levels of Synovus’ named executive officers:

Name	Position	Base Salary
James H. Blanchard	Chief Executive Officer	$	844,000
James D. Yancey	Chairman of the Board		(1	)
Richard E. Anthony	President and Chief Operating Officer	$	531,000
G. Sanders Griffith, III	Senior Executive Vice President, General Counsel and Secretary	$	397,500
Elizabeth R. James	Vice Chairman, Chief Information Officer and Chief People Officer	$	354,000

(1) Mr. Yancey retired as an executive employee of Synovus effective December 31, 2004.

     Also, on January 13, 2005, the Committee authorized the payment of annual incentive bonus awards to each of Synovus’ named executive officers with respect to the year ended December 31, 2004. The incentive awards are made pursuant to the terms of Synovus’ Executive Bonus Plan (for Messrs. Blanchard, Yancey and Anthony) and Incentive Bonus Plan (for Mr.

15

Griffith and Ms. James). The incentive bonus awards were made based upon a payout matrix established by the Committee for 2004 that utilizes earnings per share growth targets to determine bonus awards. The following table sets forth the cash payments to the named executive officers for their annual incentive bonus awards for 2004:

	Amount of
Name	Bonus Payment for 2004
James H. Blanchard	$811,000
James D. Yancey	$614,000
Richard E. Anthony	$510,000
G. Sanders Griffith, III	$267,400
Elizabeth R. James	$238,000

     Aditional information with respect to compensation of our named executive officers is set forth under the caption “EXECUTIVE COMPENSATION” in the Proxy Statement and is incorporated in Part III, Item 11 by reference.

Part III

Item 10. Directors and Executive Officers of the Registrant

     Information included under the following captions in Synovus’ Proxy Statement is incorporated herein by reference:

•   “PROPOSALS TO BE VOTED ON – PROPOSAL 1: ELECTION OF DIRECTORS”;

•   “EXECUTIVE OFFICERS”;

•   “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE”; and

•   “CORPORATE GOVERNANCE AND BOARD MATTERS – Committees of the Board.”

     Synovus has a Code of Business Conduct and Ethics that applies to all directors, officers and employees, including our principal executive officer and principal financial officer (who is also our principal accounting officer). You can find our Code of Business Conduct and Ethics in the Corporate Governance section of our website at www.synovus.com/governance. We will post any amendments to the Code of Business Conduct and Ethics and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE in the Corporate Governance section of our website.

     Because our common stock is listed on the NYSE, our chief executive officer is required to make, and he has made, an annual certification to the NYSE stating that he was not aware of any violation by Synovus of the corporate governance listing standards of the NYSE. Our chief executive officer made his annual certification to that effect to the NYSE as of April 13, 2004. In addition, Synovus has filed, as exhibits to this annual report on Form 10-K, the certifications

16

of its chief executive officer and chief financial officer required under Section 302 of the Sarbanes-Oxley Act of 2002.

Item 11. Executive Compensation

     Information included under the following captions in Synovus’ Proxy Statement is incorporated herein by reference:

•   “DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES”; and

•   “EXECUTIVE COMPENSATION — Summary Compensation Table; Stock Option Exercises and Grants; and Employment Contracts and Change in Control Arrangements.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     Information pertaining to equity compensation plans is contained in Note 14 of Notes to Consolidated Financial Statements on pages F-27 and F-28 of the Financial Appendix and is incorporated herein by reference.

     Information included under the following captions in Synovus’ Proxy Statement is incorporated herein by reference:

•   “STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS”;

•   “PRINCIPAL SHAREHOLDERS”; and

•   “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — TSYS Stock Ownership of Directors and Management.”

Item 13. Certain Relationships and Related Transactions

     Information included under the following captions in Synovus’ Proxy Statement is incorporated herein by reference:

•   “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”;

•   “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Beneficial Ownership of TSYS Stock by CB&T”;

•   “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Interlocking Directorates of Synovus, CB&T and TSYS”; and

•   “RELATIONSHIPS BETWEEN SYNOVUS, CB&T, TSYS AND CERTAIN OF SYNOVUS’ SUBSIDIARIES AND AFFILIATES — Transactions and Agreements Between Synovus, CB&T, TSYS and Certain of Synovus’ Subsidiaries.”

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Item 14. Principal Accountant Fees and Services

     Information included under the following captions in Synovus’ Proxy Statement is incorporated herein by reference:

•   “AUDIT COMMITTEE REPORT – KPMG LLP Fees and Services”; (excluding the information under the main caption “AUDIT COMMITTEE REPORT”); and

•   “AUDIT COMMITTEE REPORT – Policy on Audit Committee Pre-Approval.”

Part IV

Item 15. Exhibits and Financial Statement Schedules

     (a) 1. Financial Statements

The following consolidated financial statements of Synovus and its subsidiaries are incorporated by reference from pages F-2 through F-39 of the Financial Appendix.

Consolidated Balance Sheets — December 31, 2004 and 2003

Consolidated Statements of Income — Years Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Changes in Shareholders’ Equity — Years Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows — Years Ended December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

     2. Financial Statement Schedules

Financial Statement Schedules — None applicable because the required information has been incorporated in the consolidated financial statements and notes thereto of Synovus and its subsidiaries which are incorporated by reference herein.

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     3. Exhibits

The following exhibits are filed herewith or are incorporated to other documents previously filed with the Securities and Exchange Commission. Exhibits 10.1 through 10.28 pertain to executive compensation plans and arrangements. With the exception of those portions of the Financial Appendix and Proxy Statement that are expressly incorporated by reference in this Form 10-K, such documents are not to be deemed filed as part of this Form 10-K.

Exhibit
Number		Description
	3.1	Articles of Incorporation of Synovus, as amended, incorporated by reference to Exhibit 4(a) of Synovus’ Registration Statement on Form S-8 filed with the SEC on July 23, 1990 (File No. 33-35926).
	3.2	Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 3.1 of Synovus’ Current Report on Form 8-K dated October 20, 2004 as filed with the SEC on October 20, 2004.
	4.1	Form of Rights Agreement, incorporated by reference to Exhibit 4.1 of Synovus’ Registration Statement on Form 8-A dated April 28, 1999 filed with the SEC on April 28, 1999 pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

10.1	Employment Agreement of James D. Yancey with Synovus, incorporated by reference to Exhibit 10.1 of Synovus’ Registration Statement on Form S-1 filed with the SEC 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 SEC on December 18, 1990 (File No. 33-38244).
10.3	Director Stock Purchase Plan of Synovus, incorporated by reference to Exhibit 10.3 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the SEC on March 22, 2000.
10.4	Synovus Financial Corp. 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.4 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.

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10.5	Synovus Financial Corp. Deferred Stock Option Plan, incorporated by reference to Exhibit 10.5 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.6	Synovus Financial Corp. Directors’ Deferred Compensation Plan, incorporated by reference to Exhibit 10.7 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.7	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 SEC on March 29, 1993.
10.8	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 SEC on March 29, 1993.
10.9	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 SEC on March 29, 1993.
10.10	Agreement in Connection with Personal Use of Company Aircraft, incorporated by reference to Exhibit 10.10 of Synovus’ Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the SEC on March 9, 2004.
10.11	Life Insurance Trusts, incorporated by reference to Exhibit 10.12 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the SEC on March 29, 1993.
10.12	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 SEC on March 29, 1993.

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10.13	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 SEC on March 28, 1994.
10.14	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 SEC on March 24, 1995.
10.15	Synovus Financial Corp. 1994 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 SEC on March 24, 1995.
10.16	Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.17 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC on March 21, 2002.
10.17	Synovus Financial Corp. Executive Bonus Plan, incorporated by reference to Exhibit 10.18 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the SEC on March 25, 1996.
10.18	Change of Control Agreements for executive officers, incorporated by reference to Exhibit 10.2 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 20, 2005.
10.19	Consulting Agreement of Joe E. Beverly, incorporated by reference to Exhibit 10.20 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as filed with the SEC on March 6, 1997.
10.20	Employment Agreement of James H. Blanchard, incorporated by reference to Exhibit 10 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, as filed with the SEC on November 15, 1999.
10.21	Synovus Financial Corp. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.22 of Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the SEC on March 22, 2000.

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10.22	Form of Stock Option Agreement for the: (i) Synovus Financial Corp. 1994 Long-Term Incentive Plan; (ii) Synovus Financial Corp. 2000 Long-Term Incentive Plan; and (iii) Synovus Financial Corp. 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, as filed with the SEC on November 9, 2004.
10.23	Summary of Board of Directors Compensation for 2005, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 20, 2005.
10.24	Form of Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 25, 2005.
10.25	Form of Performance-Based Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.2 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 25, 2005.
10.26	Form of Non-Employee Director Restricted Stock Award Agreement for the Synovus 2002 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated February 1, 2005, as filed with the SEC on February 3, 2005.
10.27	Base Salaries of Named Executive Officers of Synovus.
10.28	Consulting Agreement of James D. Yancey, incorporated by reference to Exhibit 10.1 of Synovus’ Current Report on Form 8-K dated January 19, 2005, as filed with the SEC on January 19, 2005.
21.1	Subsidiaries of Synovus Financial Corp.
23.1	Consents of Independent Registered Public Accounting Firm.
24.1	Powers of Attorney contained on the signature pages of the 2004 Annual Report on Form 10-K.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

22

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Financial Appendix to the Proxy Statement for the Annual Meeting of Shareholders of Synovus to be held on April 28, 2005.
99.2	Annual Report on Form 11-K for the Synovus Financial Corp. Employee Stock Purchase Plan for the year ended December 31, 2004 (to be filed as an amendment hereto within 120 days of the end of the period covered by this report).
99.3	Annual Report on Form 11-K for the Synovus Financial Corp. Director Stock Purchase Plan for the year ended December 31, 2004 (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 SEC, 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.

23

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 7, 2005	By:	/s/ James H. Blanchard
		James H. Blanchard,
		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 Richard E. Anthony, 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/ James H. Blanchard	Date: March 7, 2005
James H. Blanchard,
Principal Executive Officer and Director
/s/James D. Yancey	Date: March 7, 2005
James D. Yancey,
Chairman of the Board
/s/Richard E. Anthony	Date: March 7, 2005
Richard E. Anthony,
President and Director

/s/Thomas J. Prescott	Date: March 7, 2005
Thomas J. Prescott,
Executive Vice President,
Principal Accounting and Financial Officer
/s/ Daniel P. Amos	Date: March 7, 2005
Daniel P. Amos,
Director
/s/ Richard Y. Bradley	Date: March 7, 2005
Richard Y. Bradley,
Director
/s/ Frank W. Brumley	Date: March 7, 2005
Frank W. Brumley,
Director
/s/ Elizabeth W. Camp	Date: March 7, 2005
Elizabeth W. Camp,
Director
/s/ C. Edward Floyd	Date: March 7, 2005
C. Edward Floyd,
Director
/s/ Gardiner W. Garrard, Jr.	Date: March 7, 2005
Gardiner W. Garrard, Jr.,
Director
/s/ T. Michael Goodrich	Date: March 7, 2005
T. Michael Goodrich,
Director
/s/ V. Nathaniel Hansford	Date: March 7, 2005
V. Nathaniel Hansford,
Director

/s/ John P. Illges, III	Date: March 7, 2005
John P. Illges, III,
Director
/s/ Alfred W. Jones III	Date: March 7, 2005
Alfred W. Jones III,
Director
	Date: ___, 2005
Mason H. Lampton,
Director
/s/ Elizabeth C. Ogie	Date: March 7, 2005
Elizabeth C. Ogie,
Director
/s/ H. Lynn Page	Date: March 7, 2005
H. Lynn Page,
Director
/s/ J. Neal Purcell	Date: March 7, 2005
J. Neal Purcell,
Director
/s/ Melvin T. Stith	Date: March 7, 2005
Melvin T. Stith,
Director
/s/ William B. Turner, Jr.	Date: March 7, 2005
William B. Turner, Jr.,
Director

EX-10.27

Exhibit 10.27

Base Salaries of Named Executive Officers of Synovus

The following table sets forth the 2005 annual base salary levels of Synovus’ named executive officers for the 2005 proxy statement (as defined in Item 402(a)(3) of Regulation S-K):

Name	Position	Base Salary
James H. Blanchard	Chief Executive Officer	$	844,000
James D. Yancey	Chairman of the Board		(1	)
Richard E. Anthony	President and Chief Operating Officer	$	531,000
G. Sanders Griffith, III	Senior Executive Vice President, General Counsel and Secretary	$	397,500
Elizabeth R. James	Vice Chairman, Chief Information Officer and Chief People Officer	$	354,000

(1)   Mr. Yancey retired as an executive employee of Synovus effective December 31, 2004.

EX-21.1

Exhibit 21.1
SUBSIDIARIES OF SYNOVUS FINANCIAL CORP.

Ownership		Place of
Percentage	Name	Incorporation
100%	Columbus Bank and Trust Company	Georgia
	100% Synovus Trust Company, N.A.	National
	100% Synovus Insurance Services of Georgia, Inc.	Georgia
	81% Total System Services, Inc.	Georgia
	100% Columbus Depot Equipment Company	Georgia
	100% TSYS Canada, Inc.	Georgia
	100% TSYS Total Debt Management, Inc.	Georgia
	100% Columbus Productions, Inc.	Georgia
	100% Enhancement Services Corporation	Georgia
	100% TSYS Japan Co., Ltd.	Japan
	100% TSYS Technology Center, Inc.	Idaho
	100% ProCard, Inc.	Delaware
	100% TSYS Prepaid, Inc.	Delaware
	100% Vital Processing Services, LLC	Delaware
	100% Golden Retriever Systems, L.L.C.	Arizona
	100% Vital Merchant Services, L.L.C.	California
	51% Merlin Solutions, Inc.	Maryland
	51.46% GP Network Corporation	Japan
	49% Total System Services de Mexico, S.A. de C.V.	Mexico
	100% TSYS Servicios Corporativos	Mexico
	100% CB&T Housing Fund Investor, L.L.C.	Georgia
	100% CB&T State Tax Credit Fund, L.L.C.	Georgia
	100% CB&T Special Limited Partner, L.L.C.	Georgia
	100% CB&T 11th Street Loft Company, L.L.C.	Georgia
	100% Synovus Equity Investments, Inc.	Georgia
	100% Synovus Callier Partners, LLC	Georgia
	100% Synovus Special Limited Partner LLC	Georgia
	99.99% Tall Pines Apartments, L.L.C.	Alabama
100%	Commercial Bank	Georgia
100%	Commercial Bank & Trust Company of Troup County	Georgia
100%	Security Bank and Trust Company of Albany	Georgia
100%	Sumter Bank and Trust Company	Georgia
100%	The Coastal Bank of Georgia	Georgia
100%	First State Bank and Trust Company of Valdosta	Georgia
100%	The Cohutta Banking Company	Georgia
100%	Bank of Coweta	Georgia
100%	Citizens Bank and Trust of West Georgia	Georgia
	100% Synovus Insurance Services of West Georgia, Inc.	Georgia
100%	First Community Bank of Tifton	Georgia
100%	CB&T Bank of Middle Georgia	Georgia
100%	Sea Island Bank	Georgia
100%	Citizens First Bank	Georgia
100%	The Citizens Bank	Georgia
100%	Athens First Bank & Trust Company	Georgia
	100% Athena Service Corporation	Georgia
100%	Citizens & Merchants State Bank	Georgia
100%	Bank of North Georgia	Georgia
	100% Merit Leasing Corporation	Georgia
100%	Georgia Bank & Trust	Georgia
100%	First Nation Bank	Georgia

Ownership		Place of
Percentage	Name	Incorporation
60%	Total Technology Ventures, LLC	Georgia
100%	Creative Financial Group, LTD	Georgia
100%	Synovus Securities, Inc.	Georgia
100%	GLOBALT, Inc.	Georgia
100%	Synovus Investment Advisors, Inc.	Georgia
100%	Synovus Financial Corp. of Alabama	Alabama
	100% First Commercial Bank of Huntsville	Alabama
	100% The Bank of Tuscaloosa	Alabama
	100% Sterling Bank	Alabama
	100% First Commercial Bank	Alabama
	100% First Commercial Mortgage Corporation	Alabama
	100% First Commercial Credit Corporation	Alabama
	100% Synovus Mortgage Corp.	Alabama
	100% FCB Heritage 1901 Redevelopment LLC	Alabama
	100% First Holdings, Inc.	Alabama
	100% FCBDE Holdings, Inc.	Delaware
	100% FCBIM Corp.	Georgia
	100% The National Bank of Jasper (AL)	National
	100% Synovus Insurance Services of Alabama, Inc.	Alabama
	100% FNBJ Holdings, Inc.	Alabama
	100% FNBJDE Holdings, Inc.	Delaware
	100% FNBJIM Corp.	Georgia
100%	CB&T Bank of Russell County	Alabama
100%	Community Bank & Trust of Southeast Alabama	Alabama
100%	The Tallahassee State Bank	Florida
	100% Synovus Insurance Services of Florida, Inc.	Florida
100%	Bank of Pensacola	Florida
100%	Vanguard Bank & Trust Company	Florida
100%	First Coast Community Bank	Florida
100%	United Bank and Trust Company	Florida
	100% Giants Property, Inc.	Florida
	100% Imaginative Investments, Inc.	Florida
100%	United Bank of the Gulf Coast	Florida
100%	Peoples Bank	Florida
100%	Synovus Bank of Jacksonville	Florida
100%	The National Bank of Walton County(GA)	National
100%	Peachtree National Bank (GA)	National
100%	The National Bank of South Carolina (SC)	National
	100% Synovus Insurance Services of South Carolina, Inc.	South Carolina
	100% NBSC Holdings, Inc.	Delaware
	100% NBSCIM Corp.	Georgia
100%	The Bank of Nashville	Tennessee
	100% Machinery Leasing Company of North America, Inc.	Tennessee
	100% TBON Nevada Corporation	Nevada
	100% Western Securities Management, Inc.	Nevada
100%	Trust One Bank	Tennessee

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements (No. 33-56614, No. 2-93472, No. 2-94639, No. 33-79518, No. 33-89782, No. 33-90630, No. 33-90632, No. 33-91690, No. 33-60473, No. 33-60475, No. 333-30937, No. 333-62709, No. 333-88087, No. 333-38232, No. 333-40368, No. 333-55748, No. 333-74816, No. 333-89278, No. 333-97477, No. 333-103628, No. 333-103613, No 333-112454, and No. 333-116259) on Form S-8 of Synovus Financial Corp. of our reports dated March 4, 2005, with respect to the consolidated balance sheets of Synovus Financial Corp. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 and the effectiveness of internal control over financial reporting as of December 31, 2004, which reports are incorporated by reference in the December 31, 2004 annual report on Form 10-K of Synovus Financial Corp.

Our report dated March 4, 2005 on the consolidated financial statements referred to above refers to a change in the method of accounting for goodwill in 2002.

Our report dated March 4, 2005, on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2004, contains an explanatory paragraph that states that Synovus acquired both Trust One Bank and Peoples Florida Banking Corporation during 2004. Management excluded from its assessment of the effectiveness of Synovus Financial Corp.’s internal control over financial reporting as of December 31, 2004, Trust One Bank’s internal control over financial reporting and Peoples Florida Banking Corporation’s internal control over financial reporting. Our audit of internal control over financial reporting of Synovus Financial Corp. also excluded an evaluation of the internal control over financial reporting of Trust One Bank and Peoples Florida Banking Corporation.

Atlanta, Georgia
March 4, 2005

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements (No. 333-37403 and No. 333-104625) on Form S-3 of Synovus Financial Corp. of our reports dated March 4, 2005, with respect to the consolidated balance sheets of Synovus Financial Corp. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 and the effectiveness of internal control over financial reporting as of December 31, 2004, which reports are incorporated by reference in the December 31, 2004 annual report on Form 10-K of Synovus Financial Corp.

Our report dated March 4, 2005 on the consolidated financial statements referred to above refers to a change in the method of accounting for goodwill in 2002.

Our report dated March 4, 2005, on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2004, contains an explanatory paragraph that states that Synovus acquired both Trust One Bank and Peoples Florida Banking Corporation during 2004. Management excluded from its assessment of the effectiveness of Synovus Financial Corp.’s internal control over financial reporting as of December 31, 2004, Trust One Bank’s internal control over financial reporting and Peoples Florida Banking Corporation’s internal control over financial reporting. Our audit of internal control over financial reporting of Synovus Financial Corp. also excluded an evaluation of the internal control over financial reporting of Trust One Bank and Peoples Florida Banking Corporation.

Atlanta, Georgia
March 4, 2005

EX-24.1

Exhibit 24.1

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 7, 2005	By:	/s/James H. Blanchard
		James H. Blanchard, 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 Richard E. Anthony, 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/James H. Blanchard	Date: March 7, 2005
James H. Blanchard, Principal Executive Officer and Director
/s/James D. Yancey	Date: March 7, 2005
James D. Yancey, Chairman of the Board

/s/Richard E. Anthony	Date: March 7, 2005
Richard E. Anthony, President and Director
/s/Thomas J. Prescott	Date: March 7, 2005
Thomas J. Prescott, Executive Vice President, Principal Accounting and Financial Officer
/s/Daniel P. Amos	Date: March 7, 2005
Daniel P. Amos, Director
/s/Richard Y. Bradley	Date: March 7, 2005
Richard Y. Bradley, Director
/s/Frank W. Brumley	Date: March 7, 2005
Frank W. Brumley, Director
/s/Elizabeth W. Camp	Date: March 7, 2005
Elizabeth W. Camp, Director
/s/C. Edward Floyd	Date: March 7, 2005
C. Edward Floyd, Director
/s/Gardiner W. Garrard, Jr.	Date: March 7, 2005
Gardiner W. Garrard, Jr., Director
/s/T. Michael Goodrich	Date: March 7, 2005
T. Michael Goodrich, Director

/s/V. Nathaniel Hansford	Date: March 7, 2005
V. Nathaniel Hansford, Director
/s/John P. Illges, III	Date: March 7, 2005
John P. Illges, III, Director
/s/Alfred W. Jones III	Date: March 7, 2005
Alfred W. Jones III, Director
	Date: ___, 2005
Mason H. Lampton, Director
/s/Elizabeth C. Ogie	Date: March 7, 2005
Elizabeth C. Ogie, Director
/s/H. Lynn Page	Date: March 7, 2005
H. Lynn Page, Director
/s/J. Neal Purcell	Date: March 7, 2005
J. Neal Purcell, Director
/s/Melvin T. Stith	Date: March 7, 2005
Melvin T. Stith, Director
/s/William B. Turner, Jr.	Date: March 7, 2005
William B. Turner, Jr., Director

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

	I, James H. Blanchard, certify that:
1.	I have reviewed this annual report on Form 10-K of Synovus Financial Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2005	/s/James H. Blanchard
	James H. Blanchard Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

	I, Thomas J. Prescott, certify that:
1.	I have reviewed this annual report on Form 10-K of Synovus Financial Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2005	/s/ Thomas J. Prescott
	Thomas J. Prescott Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC REPORT

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, James H. Blanchard, the Chief Executive Officer of Synovus Financial Corp. (the “Company”), and Thomas J. Prescott, the Chief Financial Officer of the Company, hereby certify that, to the best of his knowledge:

(1) The Company’s Annual Report on Form 10-K for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 3, 2005	/s/James H. Blanchard
	James H. Blanchard Chief Executive Officer
March 3, 2005	/s/Thomas J. Prescott
	Thomas J. Prescott Chief Financial Officer

This certification “accompanies” the Form 10-K to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K, irrespective of any general incorporation language contained in such filing.)

EX-99.1

Exhibit 99.1

Financial Appendix
to Proxy

Financial Appendix 

Consolidated Balance Sheets as of December 31, 2004 and 2003	F-2
Consolidated Statements of Income for the Years ended December 31, 2004, 2003, and 2002	F-3
Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2004, 2003, and 2002	F-4
Consolidated Statements of Cash Flows for the Years ended December 31, 2004, 2003, and 2002	F-5
Notes to Consolidated Financial Statements	F-6
Report of Independent Registered Public Accounting Firm	F-36
Management’s Report on Internal Control Over Financial Reporting	F-37
Report of Independent Registered Public Accounting Firm	F-38
Selected Financial Data	F-40
Financial Review	F-41
Summary of Quarterly Financial Data, Unaudited	F-76

F-1

Consolidated Balance Sheets 

(In thousands, except share data)
				December 31,
				2004			2003
ASSETS
Cash and due from banks, including $36,977 and $10,720 in 2004 and 2003, respectively, on deposit to meet Federal Reserve requirements				$	683,035			696,030
Interest earning deposits with banks					4,153			4,423
Federal funds sold and securities purchased under resale agreements					135,471			172,922
Mortgage loans held for sale					120,186			133,306
Investment securities available for sale (note 3)					2,695,593			2,529,257
Loans, net of unearned income (note 4)					19,480,396			16,464,914
Allowance for loan losses (note 4)					(265,745	)		(226,059	)
			Loans, net		19,214,651			16,238,855
Premises and equipment, net					638,407			578,710
Contract acquisition costs and computer software, net (note 5)					401,074			383,562
Goodwill, net (notes 2 and 17)					416,283			248,868
Other intangible assets, net (notes 2 and 6)					41,628			33,970
Other assets (note 6)					699,697			612,726
			Total assets	$	25,050,178			21,632,629
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Deposits:
		Non-interest bearing		$	3,337,908			2,833,567
		Interest bearing (note 7)			15,239,560			13,108,042
			Total deposits		18,577,468			15,941,609
	Federal funds purchased and securities sold under repurchase agreements (note 8)				1,208,080			1,354,887
	Long-term debt (note 8)				1,879,583			1,575,777
	Billings in excess of costs and profits on uncompleted contracts				—			17,573
	Other liabilities (note 16)				576,474			355,906
			Total liabilities		22,241,605			19,245,752
Minority interest in consolidated subsidiaries					167,284			141,838
Shareholders’ equity (notes 2, 12, and 14):
	Common stock — $1.00 par value. Authorized 600,000,000 shares; issued 315,636,047 in 2004 and 307,748,133 in 2003; outstanding 309,974,509 in 2004 and 302,090,128 in 2003				315,636			307,748
	Surplus				628,396			442,931
	Treasury stock — 5,661,538 shares and 5,658,005 shares in 2004 and 2003, respectively				(113,944	)		(113,940	)
	Unearned compensation				(106	)		(266	)
	Accumulated other comprehensive income				8,903			29,509
	Retained earnings				1,802,404			1,579,057
			Total shareholders’ equity		2,641,289			2,245,039
Commitments and contingencies (note 11)
			Total liabilities and shareholders’ equity	$	25,050,178			21,632,629

See accompanying notes to consolidated financial statements.

F-2

Consolidated Statements of Income 

(In thousands, except per share data)
					Years ended December 31,
					2004		2003		2002
Interest income:
		Loans, including fees			$	1,051,117		951,584		923,628
		Investment securities:
			U.S. Treasury and U.S. Government agencies			45,184		50,959		56,944
			Mortgage-backed securities			38,731		29,345		42,519
			State and municipal			10,786		11,248		11,478
			Other investments			4,644		3,423		4,225
		Mortgage loans held for sale				6,581		13,361		14,657
		Federal funds sold and securities purchased under resale agreements				1,945		1,547		1,538
		Interest earning deposits with banks				32		25		51
				Total interest income		1,159,020		1,061,492		1,055,040
Interest expense:
		Deposits (note 7)				216,284		217,561		260,656
		Federal funds purchased and securities sold under repurchase agreements				19,286		11,830		18,639
		Long-term debt				62,771		69,037		58,241
				Total interest expense		298,341		298,428		337,536
				Net interest income		860,679		763,064		717,504
Provision for losses on loans (note 4)						75,319		71,777		65,327
				Net interest income after provision for losses on loans		785,360		691,287		652,177
Non-interest income:
		Electronic payment processing services				781,437		701,022		612,817
		Other transaction processing services revenue				170,905		120,485		106,086
		Service charges on deposit accounts				121,103		107,404		93,969
		Fiduciary and asset management fees				43,001		39,377		35,615
		Brokerage and investment banking revenue				21,748		20,461		18,840
		Mortgage banking income				26,300		58,633		41,323
		Credit card fees				30,025		26,044		22,469
		Securities gains, net (note 3)				75		2,491		2,638
		Other fee income				29,227		23,682		20,494
		Other operating income (note 19)				67,652		44,565		57,827
	Non-interest income before reimbursable items and impairment loss on private equity investment					1,291,473		1,144,164		1,012,078
		Reimbursable items				229,538		225,165		231,099
		Impairment loss on private equity investment				—		—		(8,355	)
			Total non-interest income			1,521,011		1,369,329		1,234,822
Non-interest expense:
		Salaries and other personnel expense (notes 13 and 14)				731,579		672,248		607,865
		Net occupancy and equipment expense (note 11)				321,689		281,688		244,176
		Other operating expenses (note 19)				305,560		243,042		216,330
	Non-interest expense before reimbursable items					1,358,828		1,196,978		1,068,371
		Reimbursable items				229,538		225,165		231,099
			Total non-interest expense			1,588,366		1,422,143		1,299,470
Minority interest in subsidiaries’ net income						28,724		26,972		23,649
				Income before income taxes		689,281		611,501		563,880
Income tax expense (note 16)						252,248		222,576		198,533
				Net income	$	437,033		388,925		365,347
Net income per share (notes 1 and 10):
		Basic			$	1.42		1.29		1.23
		Diluted				1.41		1.28		1.21
Weighted average shares outstanding (note 10):
		Basic				307,262		302,010		297,325
		Diluted				310,330		304,928		301,197

See accompanying notes to consolidated financial statements.

F-3

Consolidated Statements of Changes in Shareholders’ Equity 

															Accumulated
(In thousands, except per share data)															Other
		Shares		Common					Treasury			Unearned			Comprehensive			Retained
Years ended December 31, 2004, 2003, and 2002		Issued		Stock		Surplus			Stock			Compensation			Income (Loss)			Earnings			Total
Balance at December 31, 2001			294,849	$	294,849		171,257			(1,285	)		(82	)		29,338			1,200,869			1,694,946
Net income			—		—		—			—			—			—			365,347			365,347
Other comprehensive income, net of tax (note 9):
	Net unrealized loss on cash flow hedges		—		—		—			—			—			(991	)		—			(991	)
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			14,113			—			14,113
	Gain on foreign currency translation		—		—		—			—			—			3,653			—			3,653
	Other comprehensive income		—		—		—			—			—			16,775			—			16,775
Comprehensive income			—		—		—			—			—			—			—			382,122
Issuance of common stock for acquisitions (note 2)			3,768		3,768		102,140			—			—			—			—			105,908
Cash dividends declared - $.59 per share			—		—		—			—			—			—			(176,336	)		(176,336	)
Amortization of restricted stock (note 14)			—		—		—			—			114			—			—			114
Stock options exercised (note 14)			1,949		1,949		17,098			—			—			—			—			19,047
Issuance of restricted stock			7		7		171			—			(178	)		—			—			—
Stock option tax benefit			—		—		10,414			—			—			—			—			10,414
Ownership change at majority-owned subsidiary			—		—		261			—			—			—			—			261
Impact on minority interest for ProCard sale to TSYS			—		—		4,377			—			—			—			—			4,377
Balance at December 31, 2002			300,573	$	300,573		305,718			(1,285	)		(146	)		46,113			1,389,880			2,040,853
Net income			—		—		—			—			—			—			388,925			388,925
Other comprehensive loss, net of tax (note 9):
	Net unrealized loss on cash flow hedges		—		—		—			—			—			(2,773	)		—			(2,773	)
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			(19,724	)		—			(19,724	)
	Gain on foreign currency translation		—		—		—			—			—			5,893			—			5,893
	Other comprehensive loss		—		—		—			—			—			(16,604	)		—			(16,604	)
Comprehensive income			—		—		—			—			—			—			—			372,321
Issuance of common stock for acquisitions (note 2)			4,641		4,641		95,835			—			—			—			—			100,476
Cash dividends declared - $.66 per share			—		—		—			—			—			—			(199,748	)		(199,748	)
Amortization of unearned compensation (note 14)			—		—		—			—			105			—			—			105
Stock options exercised (note 14)			2,534		2,534		25,536			—			—			—			—			28,070
Stock option tax benefit			—		—		12,348			—			—			—			—			12,348
Ownership change at majority-owned subsidiary			—		—		3,494			—			—			—			—			3,494
Treasury stock purchases			—		—		—			(112,655	)		—			—			—			(112,655	)
Issuance of stock options in connection with acquisition			—		—		—			—			(225	)		—			—			(225	)
Balance at December 31, 2003			307,748	$	307,748		442,931			(113,940	)		(266	)		29,509			1,579,057			2,245,039
Net income			—		—		—			—			—			—			437,033			437,033
Other comprehensive loss, net of tax (note 9):
	Net unrealized loss on cash flow hedges		—		—		—			—			—			(5,753	)		—			(5,753	)
	Change in unrealized gains/losses on investment securities available for sale, net of reclassification adjustment		—		—		—			—			—			(20,577	)		—			(20,577	)
	Gain on foreign currency translation		—		—		—			—			—			5,724			—			5,724
	Other comprehensive loss		—		—		—			—			—			(20,606	)		—			(20,606	)
Comprehensive income			—		—		—			—			—			—			—			416,427
Issuance of common stock for acquisitions (note 2)			5,478		5,478		151,700			—			—			—			—			157,178
Cash dividends declared - $.69 per share			—		—		—			—			—			—			(213,686	)		(213,686	)
Amortization of unearned compensation (note 14)			—		—		—			—			160			—			—			160
Stock options exercised (note 14)			2,405		2,405		21,060			—			—			—			—			23,465
Stock option tax benefit			—		—		12,705			—			—			—			—			12,705
Ownership change at majority-owned subsidiary			—		—		5			—			—			—			—			5
Treasury stock purchase			—		—		—			(4	)		—			—			—			(4	)
Issuance of common stock under commitment to charitable foundation			5		5		(5	)		—			—			—			—			—
Balance at December 31, 2004			315,636	$	315,636		628,396			(113,944	)		(106	)		8,903			1,802,404			2,641,289

See accompanying notes to consolidated financial statements.

F-4

Consolidated Statements of Cash Flows 

(In thousands)
				Years Ended December 31,
				2004			2003			2002
Operating Activities
	Net income			$	437,033			388,925			365,347
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for losses on loans			75,319			71,777			65,327
		Depreciation, amortization, and accretion, net			161,062			112,012			97,011
		Equity in income of joint ventures			(23,736	)		(17,810	)		(20,581	)
		Deferred income tax expense			22,401			26,779			7,863
		(Increase) decrease in interest receivable			(16,495	)		1,466			8,842
		Increase (decrease) in interest payable			3,007			(4,783	)		(15,657	)
		Minority interest in subsidiaries’ net income			28,724			26,972			23,649
		Decrease in mortgage loans held for sale			13,291			112,552			152,598
		(Decrease) increase in billings in excess of costs and profits on uncompleted contracts			(17,573	)		17,573			—
		Gain on sale of banking locations			(15,849	)		—			(15,388	)
		Impairment of developed software			10,059			—			—
		Other, net			122,988			(10,418	)		72,143
			Net cash provided by operating activities		800,231			725,045			741,154
Investing Activities
	Net cash (paid for) received in acquisitions				(37,172	)		(66,204	)		14,722
	Net decrease (increase) in interest earning deposits with banks				70			632			(1,171	)
	Net decrease (increase) in federal funds sold and securities purchased under resale agreements				34,456			(47,978	)		(56,439	)
	Proceeds from maturities and principal collections of investment securities available for sale				1,351,436			1,429,904			784,445
	Proceeds from sales of investment securities available for sale				33,332			207,124			137,137
	Purchases of investment securities available for sale				(1,491,355	)		(1,900,237	)		(973,246	)
	Net cash received on sale of banking locations				25,069			—			11,020
	Net increase in loans				(2,598,559	)		(1,426,471	)		(1,832,284	)
	Purchases of premises and equipment				(111,396	)		(184,226	)		(145,008	)
	Proceeds from disposals of premises and equipment				3,061			2,681			11,165
	Contract acquisition costs				(29,150	)		(18,129	)		(44,044	)
	Additions to licensed computer software from vendors				(57,302	)		(47,312	)		(37,020	)
	Additions to internally developed computer software				(5,224	)		(17,689	)		(29,451	)
			Net cash used in investing activities		(2,882,734	)		(2,067,905	)		(2,160,174	)
Financing Activities
	Net increase in demand and savings deposits				1,388,914			1,290,526			1,343,074
	Net increase in certificates of deposit				803,208			32,029			203,924
	Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements				(192,229	)		79,803			(70,192	)
	Principal repayments on long-term debt				(399,690	)		(337,160	)		(27,946	)
	Proceeds from issuance of long-term debt				655,727			511,362			213,133
	Treasury stock purchased				(4	)		(112,655	)		—
	Dividends paid to shareholders				(209,883	)		(194,177	)		(169,107	)
	Proceeds from issuance of common stock				23,465			28,070			19,047
			Net cash provided by financing activities		2,069,508			1,297,798			1,511,933
(Decrease) increase in cash and cash equivalents					(12,995	)		(45,062	)		92,913
Cash and due from banks at beginning of year					696,030			741,092			648,179
Cash and due from banks at end of year				$	683,035			696,030			741,092

See accompanying notes to consolidated financial statements.

F-5

Notes to Consolidated Financial Statements 

Note 1 Summary of Significant Accounting Policies

Business Operations

      The consolidated financial statements of Synovus include the accounts of Synovus Financial Corp. (Parent Company) and its consolidated subsidiaries, all but one of which were wholly-owned at December 31, 2004. Synovus provides integrated financial services including banking, financial management, insurance, mortgage, and leasing services through 40 wholly-owned affiliate banks and other Synovus offices in Georgia, Alabama, South Carolina, Florida, and Tennessee. TSYS, an 81% owned subsidiary, provides electronic payment processing and related services to banks and other card-issuing institutions located in the United States, Mexico, Canada, Honduras, Puerto Rico and Europe. TSYS offers merchant processing services to financial institutions and other organizations in Japan through its majority owned subsidiary, GP Network Corporation (GP Net). TSYS also provides back-end processing services for its joint venture, Vital Processing Services L.L.C. (Vital), to support merchant processing in the United States.

Basis of Presentation

      In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, 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 the reported amounts of 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 allowance for loan losses; the valuation of other real estate; the valuation of long-lived assets, goodwill, and other intangible assets; the determination of transaction processing provisions; and the disclosures for contingent assets and liabilities. In connection with the determination of the allowance 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 conform to accounting principles generally accepted in the United States of America and to general practices within the banking and electronic payment processing 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, 2004, 2003, and 2002, income taxes of $191 million, $235 million, and $207 million, and interest of $299 million, $298 million, and $352 million, respectively, were paid.

      Loans receivable of approximately $11 million, $23 million, and $17 million were transferred to other real estate during 2004, 2003, and 2002, respectively.

Federal Funds Sold, Federal Funds Purchased, Securities Purchased Under Resale Agreements, and Securities Sold Under Repurchase Agreements

      Federal funds sold, federal funds purchased, securities purchased under resale agreements, and securities sold under repurchase agreements generally mature in one day.

Mortgage Loans Held for Sale

      Mortgage loans held for sale are carried at the lower of aggregate cost or fair value and adjusted for changes in fair value when forward sales commitments hedging the loans qualify for hedge accounting. Fair values are based upon quoted prices from secondary market investors. No valuation allowances were required at December 31, 2004 or 2003.

      The cost of mortgage loans held for sale is the mortgage note amount less discounts.

Investment Securities

      Available for sale securities are recorded at fair value. Fair value is determined at a specific point in time, based on quoted market prices. Unrealized gains and losses on securities available for sale, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity, within accumulated other comprehensive income, until realized.

      A decline in the market value of any available for sale security below cost that is deemed other than temporary results in a charge to earnings and 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 are included in earnings and are derived using the specific identification method for determining the amortized cost of securities sold.

F-6

Notes to Consolidated Financial Statements 

      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 is immaterial.

Loans and Interest Income

      Loans are reported at principal amounts outstanding less unearned income, net deferred fees, and the allowance for loan losses.

      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.

      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 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 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 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. Interest is accrued on impaired loans as long as such loans do not meet the criteria for nonaccrual classification.

Allowance for Loan Losses

      The allowance for loan losses is established through provisions for loan losses charged to operations. Loans are charged against the allowance for loan losses when management believes that the collection of principal is unlikely. Subsequent recoveries are added to the allowance. Management’s evaluation of the adequacy of the allowance for loan losses is based on a formal analysis which assesses the risk within the loan portfolio. This analysis includes consideration of historical performance, current economic conditions, level of nonperforming loans, loan concentrations, and review of certain individual loans.

      Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance 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 the subsidiary banks’ allowances for loan losses. Such agencies may require the subsidiary banks to recognize adjustments to the allowance for loan losses based on their judgments about information available to them at the time of their examination.

      Management, considering current information and events regarding a borrowers’ ability to repay its 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 less estimated selling costs is used to determine the amount of impairment. Impairment losses are included in the allowance for loan losses through a charge to the provision for losses on loans.

      The accounting for impaired loans described above applies to all loans, except for large pools of smaller-balance, homogeneous loans that are collectively evaluated for impairment, and loans that are measured at fair value or at the lower of cost or fair value. The allowance for loan losses for loans not considered impaired and 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, individual risk ratings, adequacy of the underlying collateral, loan concentrations, historical charge-off trends, and economic conditions that may affect the borrowers’ ability to pay.

Premises and Equipment

      Premises and equipment, including leasehold improvements and purchased internal-use software, are reported at cost, less accumulated depreciation and amortization which are computed using the straight-line method over the estimated useful lives of the related assets.

Contract Acquisition Costs

      TSYS capitalizes contract acquisition costs related to signing or renewing long-term contracts. These costs, primarily consisting of cash payments for rights to provide processing services and internal conversion costs, are amortized using the straight line method over the contract term beginning when the client’s cardholder accounts are converted and producing revenues. All costs incurred prior to a signed agreement are expensed as incurred.

      The amortization of contract acquisition costs associated with cash payments is recorded as a reduction of electronic

F-7

Notes to Consolidated Financial Statements 

payment processing services revenues in the consolidated statements of income. The amortization of contract acquisition costs associated with conversion activity is recorded as other operating expenses in the consolidated statements of income. TSYS evaluates the carrying value of contract acquisition costs for impairment for each customer on the basis of whether these costs are fully recoverable from expected undiscounted net operating cash flows of the related contract. The determination of expected undiscounted net operating cash flows requires management to make estimates.

      These costs may become impaired with the loss of a contract, the financial decline of a client, termination of conversion efforts after a contract is signed, diminished prospects for current clients, or if TSYS’ actual results differ from its estimates of future cash flows.

Computer Software

Licensed Computer Software:

      TSYS licenses software that is used in providing electronic payment processing and other services to clients. Licensed software is obtained through perpetual licenses and site licenses, and through agreements based on processing capacity (called “MIPS agreements”). Perpetual and site licenses are amortized using the straight-line method over their estimated useful lives which range from three to five years. Software licensed under MIPS agreements is amortized using a units-of-production basis over the estimated useful life of the software, generally not to exceed ten years. TSYS evaluates impairment losses on long-lived assets used in operations in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

Software Development Costs:

      TSYS develops software that is used in providing electronic payment processing and other services to clients. Software development costs are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when TSYS has completed a detail program design and has determined that a product can be produced to meet its design specifications, including functions, features, and technical performance requirements. Capitalization of costs ceases when the product is generally available to clients. TSYS evaluates the unamortized capitalized costs of software development as compared to the net realizable value of the software product which is determined by future undiscounted net cash flows. The amount by which the unamortized software development costs exceed the net realizable value is written off in the period that such determination is made. Software development costs are amortized using the greater of (1) the straight-line method over its estimated useful life, which ranges from three to ten years, or (2) the ratio of current revenues to total anticipated revenue over its useful life.

      TSYS also develops software that is used internally. These software development costs are capitalized based upon the provisions of Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” Internal-use software development costs are capitalized once (a) the preliminary project stage is completed, (b) management authorizes and commits to funding a computer software project, and (c) it is probable that the project will be completed and the software will be used to perform the function intended. Costs incurred prior to meeting these qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Internal-use software development costs are amortized using an estimated useful life of three to five years.

      Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product.

Transaction Processing Provisions

      TSYS has recorded estimates to accrue for contract contingencies (performance penalties) and processing errors. A significant number of TSYS’ contracts with large clients contain service level agreements which can result in TSYS incurring performance penalties if contractually required service levels are not met. When providing these accruals, TSYS takes into consideration such factors as the prior history of performance penalties and processing errors incurred, actual contractual penalties inherent in its contracts, progress towards milestones, and known processing errors not covered by insurance.

      These accruals are included in other liabilities in the consolidated balance sheets. Increases and decreases in transaction processing provisions are charged to other operating expenses in the consolidated statements of income, and payments or credits for performance penalties and processing errors are charged against the accrual.

Goodwill and Other Intangible Assets

      Goodwill and identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be

F-8

Notes to Consolidated Financial Statements 

recoverable. With the exception of goodwill, recoverability of the intangible assets described below is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered impaired, the amount of impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets based on the discounted expected future cash flows to be generated by the assets. Assets to be disposed of are reported at the lower of the carrying value or fair value less costs to sell.

      Goodwill, which represents the excess of cost over the fair value of net assets acquired of purchased companies, was amortized using the straight-line method over periods of 5 to 40 years, until January 1, 2002. Synovus adopted SFAS No. 142, “Goodwill and Other Intangible Assets” on January 1, 2002. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually.

      To test for goodwill impairment, Synovus identifies its reporting units and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. Synovus then compares the carrying value of each unit to its fair value to determine whether impairment exists. No impairment losses have been recorded as a result of Synovus’ annual goodwill impairment analyses during the years ended December 31, 2004, 2003, and 2002.

      Identifiable intangible assets relate primarily to core deposit premiums, resulting from the valuation of core deposit intangibles acquired in business combinations or in the purchase of branch offices, and customer contract premiums resulting from the acquisition of investment advisory businesses. These identifiable intangible assets are amortized using accelerated methods over periods not exceeding the estimated average remaining life of the existing customer deposits or contracts acquired. Amortization periods range from 3 to 15 years. Amortization periods for intangible assets are monitored to determine if events and circumstances require such periods to be reduced.

Other Assets

      Other assets include interest receivable on loans, investment securities, and other interest-bearing balances. The accounting for other significant balances included in other assets is described below.

Investments in Company-Owned Life Insurance Programs:

      Premiums paid for company-owned life insurance programs are recorded at the net realizable value of the underlying insurance contracts. The change in contract value during the period is recorded as an adjustment of premiums paid in determining the expense or income to be recognized under the contract during the period. Income or expense from company-owned life insurance programs is included as a component of other operating income.

Investments in Joint Ventures:

      TSYS’ 49% investment in Total System Services de México, S.A. de C.V. (TSYS de México), an electronic payment processing support operation located in Mexico, is accounted for using the equity method of accounting, as is TSYS’ 50% investment in Vital, a merchant processing operation headquartered in Tempe, Arizona.

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. At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the allowance for loan losses. Gain or loss on sale and any subsequent adjustments to the value are recorded as a component of non-interest expense.

Derivative Instruments

      In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, all derivative instruments are recorded on the balance sheet at their respective fair values.

      The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and if so, on the reason for holding it. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair values, cash flows, or foreign currencies. If the hedged exposure is a fair value exposure, the gain or loss on the derivative instrument is recognized in earnings in the period of change, together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a

F-9

Notes to Consolidated Financial Statements 

component of accumulated other comprehensive income (outside earnings), and subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness, as well as the ineffective portion of the gain or loss, are reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change.

      As part of its overall interest rate risk management activities, Synovus utilizes interest rate related derivatives to manage its exposure to various types of interest rate risks. With the exception of commitments to fund and sell fixed-rate mortgage loans and derivatives utilized to meet the financing and interest rate management needs of its customers, all derivatives utilized by Synovus to manage its interest rate sensitivity are designed as either a hedge of a recognized fixed-rate asset or liability (a fair value hedge), or a hedge of a forecasted transaction or of the variability of future cash flows of a floating rate asset or liability (cash flow hedge). Synovus does not speculate using derivative instruments.

      Synovus’ risk management policies emphasize the management of interest rate risk within acceptable guidelines. Synovus’ objective in maintaining these policies is to achieve consistent growth in net interest income while limiting volatility arising from changes in interest rates. Risks to be managed include both fair value and cash flow risks. Utilization of derivative financial instruments provides a valuable tool to assist in the management of these risks.

      Synovus utilizes interest rate swap agreements to hedge the fair value risk of fixed-rate balance sheet liabilities, primarily deposit liabilities. Fair value risk is measured as the volatility in the value of these liabilities as interest rates change. Interest rate swaps entered into to manage this risk are designed to have the same notional value, as well as similar interest rates and interest calculation methods. These agreements entitle Synovus to receive fixed-rate interest payments and pay floating-rate interest payments based on the notional amount of the swap agreements. Swap agreements structured in this manner allow Synovus to effectively hedge the fair value risks of these fixed-rate liabilities.

      Synovus is potentially exposed to cash flow risk due to its holding of loans whose interest payments are based on floating rate indices. Synovus monitors changes in these exposures and their impact on its risk management activities and uses interest rate swap agreements to hedge the cash flow risk. These agreements, whose terms are for up to five years, entitle Synovus to receive fixed-rate interest payments and pay floating-rate interest payments. The maturity date of the last agreement is October 10, 2006. These agreements allow Synovus to offset the variability of floating rate loan interest with the variable interest payments due on the interest rate swaps.

      Synovus utilizes forward starting swaps to hedge the cash flow risk of future interest payments on forecasted debt issuances. Upon the determination to issue debt, Synovus is potentially exposed to cash flow risk due to changes in market interest rates prior to the placement of the debt. Forward starting swaps allow Synovus to hedge this exposure. Upon placement of the debt, these swaps are cash settled concurrent with the pricing of the debt. The effective portion of any resulting payment or receipt from the settlement is amortized over the life of the debt issue as an adjustment to interest expense.

      By using derivatives to hedge fair value and cash flow risks, Synovus exposes itself to potential credit risk. This potential credit risk is equal to the fair or replacement values of the swaps if the counterparty fails to perform on its obligations under the swap agreements. 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 other credit activities, by dealing with highly rated counterparties, and by obtaining collateral agreements for exposures above predetermined limits.

      Synovus also holds derivative instruments which consist of commitments to fund fixed-rate mortgage loans to customers (interest rate lock commitments) and forward commitments to sell mortgage-backed securities and individual fixed-rate mortgage loans. Synovus’ objective in obtaining the forward commitments is to mitigate the interest rate risk associated with the commitments to fund the fixed-rate mortgage loans and the mortgage loans that are held for sale. Both the interest rate lock commitments and the forward commitments are reported at fair value, with adjustments being recorded in current period earnings. Certain forward sales commitments are accounted for as hedges of mortgage loans held for sale.

      Synovus also enters into derivative financial instruments to meet the financing and interest rate risk management needs of its customers. Upon entering into these instruments to meet customer needs, Synovus enters into offsetting positions to minimize the risk to Synovus. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings.

Billings in Excess of Costs and Profits on Uncompleted Contracts

      When provisions for progress payments exist on long-term contracts accounted for under the percentage-of-com-

F-10

Notes to Consolidated Financial Statements 

pletion method, TSYS includes amounts for contract billings that exceed accumulated contract revenues in billings in excess of costs and profits on uncompleted contracts.

Electronic Payment Processing Revenues

      TSYS’ electronic payment processing revenues are derived from long-term processing contracts with financial and non-financial institutions and are generally recognized as the services are performed. Electronic payment processing revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, and other processing services for cardholder accounts on file. Most of these contracts have prescribed annual revenue minimums. The original terms of processing contracts generally range from three to ten years.

Reimbursable Items

      Reimbursable items consist of out-of-pocket expenses which are reimbursed by TSYS’ customers. Postage is the primary component of these expenses.

Foreign Currency Translation

      TSYS maintains several different foreign operations whose functional currency is their local currency. The foreign currency-based financial statements of these subsidiaries and branches are translated into U.S. dollars at current exchange rates, except for revenues, costs and expenses, and net income which are translated at the average exchange rates for each reporting period. Net gains or losses resulting from the currency translation of assets and liabilities of TSYS’ foreign operations, net of tax, are accumulated as a component of accumulated other comprehensive income (loss).

      Gains and losses on transactions denominated in currencies other than the functional currencies are included in determining net income for the period in which exchange rates change.

Income Taxes

      Synovus uses the asset and liability method to account for income taxes. Under the asset and liability method, 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. 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. Synovus files a consolidated federal income tax return with its wholly-owned and majority-owned subsidiaries.

Stock-Based Compensation

      Synovus accounts for its fixed stock-based compensation in accordance with the provisions set forth in Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. In accordance with APB Opinion No. 25, compensation expense is recorded on the grant date only to the extent that the current market price of the underlying stock exceeds the exercise price on the grant date.

      SFAS No. 123, “Accounting for Stock-Based Compensation,” established accounting and disclosures requirements using a fair value based method of accounting for stock-based compensation plans. As allowed by SFAS No. 123, Synovus has elected to apply the accounting method prescribed under APB Opinion No. 25, and has adopted the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.”

      Had Synovus determined compensation expense based on the fair value at the grant date for its stock options granted during the years 1997 through 2004 under SFAS No. 123, net income would have been reduced to the pro forma amounts indicated in the following table.

(In thousands, except		Years Ended December 31,
per share data)
		2004			2003			2002
Net income as reported		$	437,033			388,925			365,347
	Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects		(13,344	)		(13,856	)		(14,446	)
	Pro forma		423,689			375,069			350,901
Earnings per share:
	Basic-as reported	$	1.42			1.29			1.23
	Basic-pro forma		1.38			1.24			1.18
	Diluted-as reported		1.41			1.28			1.21
	Diluted-pro forma		1.36			1.23			1.17

      The per share weighted average fair value of stock options granted during 2004, 2003 and 2002 was $7.36, $4.93, and $8.37, respectively. The fair value for these options was estimated at the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions for 2004, 2003 and 2002, respectively: risk-free interest

F-11

Notes to Consolidated Financial Statements 

rates of 4.5%, 3.2%, and 5.0%; expected volatility of 29%, 34%, and 34%; expected life of 6.5 years, 6.0 years and 6.6 years; and dividend yield of 2.6%, 3.3% and 2.4%.

Postretirement Benefits

      Synovus sponsors a defined benefit health care plan for substantially all of its employees and early retirees. The expected costs of retiree health care and other postretirement benefits are being expensed over the period that employees provide service.

Fair Value of Financial Instruments

      Fair value estimates are made at a specific point in time, based on relevant market information and other information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale, at one time, the entire holdings of a particular financial instrument. Because no market exists for a portion of the financial instruments, fair value estimates are also 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.

      Fair value estimates are based on existing 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 income taxes, premises and equipment, capitalized contract acquisition costs, computer software, investments in joint ventures, goodwill and other intangible assets. In addition, the income 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.

Recently Issued Accounting Standards

      At the November 21, 2002 meeting of the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF), the EITF ratified as a consensus the tentative conclusions it reached at its October 25, 2002 meeting, regarding EITF Issue No. 00-21 (EITF No. 00-21), “Accounting for Revenue Arrangements with Multiple Deliverables.” EITF No. 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. Those activities may involve the delivery or performance of multiple products, services, and/or rights to use assets, and performance may occur at different points in time or over different periods of time. The arrangements are often accompanied by initial installation, initiation, or activation services, and generally involve either a fixed fee or a fixed fee coupled with a continuing payment stream. The continuing payment stream generally corresponds to the continuing performance, and may be fixed, variable based on future performance, or composed of a combination of fixed and variable payments. EITF No. 00-21 addresses how to account for those arrangements, and was effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. Entities may also elect to report the change in accounting as a cumulative effect adjustment, in which case disclosure should be made in periods subsequent to the date of initial application of the amount of recognized revenue that was previously included in the cumulative effect adjustment. The adoption of EITF No. 00-21 did not significantly impact Synovus’ financial condition or results of operations.

      In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” In December 2003, the FASB issued Interpretation No. 46R, a revision of Interpretation No. 46. Interpretation No. 46R addresses the consolidation by business enterprises of variable interest entities as defined in the interpretation. The interpretation applies to variable interests in variable interest entities that are special purpose entities for periods ended after December 15, 2003. For all other types of variable interest entities, application of Interpretation No. 46R is required for periods ended after March 15, 2004. For TSYS, which had a variable interest in a variable interest entity that was a special purpose entity, the interpretation would have applied in the first reporting period ended after December 15, 2003. On June 30, 2003, TSYS terminated the operating lease agreement and purchased the corporate campus for $93.5 million with a combination of $73.3 million in cash and funds from a long-term line of credit with a Synovus affiliate bank. Accordingly, the interpretation has not directly impacted Synovus’ financial statements to date.

      In April 2003, the FASB issued Statement No. 149 (SFAS No. 149), “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activity.” SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The

F-12

Notes to Consolidated Financial Statements 

adoption of SFAS No. 149 did not have a material impact on Synovus’ financial statements.

      On March 9, 2004, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 105 (SAB 105), “Application of Accounting Principles to Loan Commitments.” SAB 105 summarizes the views of the SEC staff regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. Synovus adopted the provisions of SAB 105 effective April 1, 2004 on a prospective basis. Upon adoption of SAB 105, Synovus modified the way in which it values its loan commitments to fund mortgage loans. The adoption of SAB 105 did not have a material impact on Synovus’ financial statements.

      On November 13, 2003, the Emerging Issues Task Force (EITF) issued EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” This guidance was to be applied in other-than-temporary impairment evaluations performed in reporting periods beginning after June 15, 2004. Disclosures are effective in annual financial statements for fiscal years ending after December 15, 2003, for investments accounted for under Financial Accounting Standards Board (FASB) Statements No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and No. 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations.” The disclosure requirements for all other investments are effective in annual financial statements for fiscal years ending after June 15, 2004. In September 2004, the FASB issued FASB Staff Position (FSP) EITF Issue 03-1-1 which delays the effective date for the measurement and recognition guidance set forth in paragraphs 10-20 of EITF Issue No. 03-1 until additional implementation guidance is issued by the FASB. Synovus expects that the full adoption of EITF 03-1 will not have a material impact on its financial statements.

      In December 2003, the Accounting Standards Executive Committee (AcSEC) issued Statement of Position No. 03-3 (SOP No. 03-3), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” SOP No. 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities (loans) acquired in a transfer or business combination if those differences are attributable, at least in part, to credit quality. SOP No. 03-3 is effective for loans acquired in years beginning after December 15, 2004, with early adoption encouraged. Synovus has not determined the impact that SOP No. 03-3 will have on its financial statements and believes that such determination will not be meaningful until Synovus enters into a business combination with a financial institution and/or acquires a future loan portfolio.

      In December 2004, the FASB issued Statement No. 123R (SFAS No. 123R), “Share-Based Payment.” SFAS No. 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award.

      SFAS No. 123R applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. Compensation cost will be recognized on or after the required effective date for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures. The statement is effective for the first interim or annual period that begins after June 15, 2005. Synovus estimates that the adoption of this statement will result in an additional expense of approximately $5.7 million, net of tax, related to the expensing of unvested stock options. This additional expense will be recognized during the second half of 2005, after the adoption of SFAS No. 123R. Additionally, Synovus estimates that it will incur an expense of approximately $3.2 million, net of tax, during 2005 in conjunction with new restricted stock awards that will be granted in 2005. While stock options have been the primary method of equity-based compensation historically, going forward, restricted stock awards are expected to be Synovus’ primary method of equity-based compensation.

Reclassifications

      Certain amounts in 2003 and 2002 have been reclassified to conform with the presentation adopted in 2004.

Note 2 Business Combinations

      On January 30, 2004, Synovus acquired all the issued and outstanding common shares of Peoples Florida Banking Corporation (Peoples Bank), the parent company of Peoples Bank, headquartered in Palm Harbor, Florida. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of Peoples Bank

F-13

Notes to Consolidated Financial Statements 

have been included in the consolidated financial statements beginning February 1, 2004.

      The aggregate purchase price was $78.4 million, consisting of 1,636,827 shares of Synovus common stock valued at $43.7 million, $32.1 million in cash, stock options valued at $2.6 million and $37 thousand in direct acquisition costs, (which consist primarily of external accounting fees). The value of the common stock issued was determined based on the average market price of Synovus’ common stock over the 2-day period before and after the terms of the acquisition were agreed to and announced. The fair value of the stock options was determined based on the Black-Scholes option pricing model.

      Of the $58.9 million of acquired intangible assets, $53.6 million was allocated to goodwill. The goodwill will not be deductible for tax purposes. The identifiable intangible asset consists of the core deposit premium, which has an estimated fair value of $5.3 million and a weighted average useful life of 10 years.

      Synovus has completed the purchase price allocation relating to the acquisition. The purchase price allocation is presented in the table below.

Peoples Florida Banking Corporation
(In thousands)
Cash and due from banks			$	15,449
Investments				47,844
Federal funds sold				3,454
Loans, net				185,931
Premises and equipment				8,274
Core deposit premium				5,349
Goodwill				53,563
Other assets				4,125
	Total assets acquired			323,989
Deposits				199,979
Federal funds purchased				28,765
Notes payable				15,237
Other liabilities				1,608
	Total liabilities assumed			245,589
		Net assets acquired	$	78,400

      On June 1, 2004, Synovus acquired all the issued and outstanding common shares of Trust One Bank (Trust One) in Memphis, Tennessee. Trust One has six branches serving east Shelby County, Tennessee, which includes Germantown, Cordova, Collierville and east Memphis. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of operations of Trust One have been included in the consolidated financial statements beginning June 1, 2004.

      The aggregate purchase price was $111.0 million, consisting of 3,841,302 shares of Synovus common stock valued at $107.7 million, approximately $3,000 in cash, stock options valued at $3.2 million and $126 thousand in direct acquisition costs (which consist primarily of external legal fees and accounting fees). The value of the common stock issued was determined based on the average market price of Synovus’ common stock over the 2-day period before and after the terms of the acquisition were agreed to and announced. The fair value of the stock options was determined based on the Black-Scholes option pricing model.

      Of the $80.8 million of acquired intangible assets, $72.9 million was allocated to goodwill. The goodwill will not be deductible for tax purposes. The identifiable intangible asset consists of the core deposit premium, which has an estimated fair value of $7.9 million and a weighted average useful life of 10 years.

      Synovus has completed the purchase price allocation relating to the acquisition. The purchase price allocation is presented in the table below.

Trust One Bank
(In thousands)
Cash and due from banks			$	13,877
Investments				79,867
Federal funds sold				500
Mortgage loans held for sale				171
Loans, net				314,103
Premises and equipment				6,026
Core deposit premium				7,869
Goodwill				72,917
Other assets				17,437
	Total assets acquired			512,767
Deposits				346,192
Federal funds purchased				16,657
Notes payable				30,017
Other liabilities				8,861
	Total liabilities assumed			401,727
		Net assets acquired	$	111,040

      On August 2, 2004, TSYS completed the acquisition of Clarity Payment Solutions, Inc. (Clarity). The aggregate purchase price was $53.0 million in cash and $515 thousand in direct acquisition costs. Clarity was renamed TSYS Prepaid, Inc. (TSYS Prepaid). TSYS is in the process of finalizing the

F-14

Notes to Consolidated Financial Statements 

purchase price allocation and has preliminarily allocated approximately $40.9 million to goodwill, approximately $10.9 million to other intangibles and the remaining amount to the assets and liabilities acquired. Of the $10.9 million in intangibles, $8.5 million consists of computer software and the remaining amount relates to customer relationships and non-competition agreements. TSYS Prepaid is a leading provider of prepaid card solutions that utilize the Visa, MasterCard, EFT and ATM networks for Fortune 500 companies as well as domestic and international financial institutions. TSYS believes the acquisition of TSYS Prepaid enhances TSYS’ processing services by adding enhanced functionality and distinct value differentiation for TSYS and its clients.

      TSYS is in the process of completing the purchase price allocation relating to the acquisition. The preliminary purchase price allocation is presented below:

TSYS Prepaid, Inc.
(In thousands)
Cash and cash equivalents			$	19,094
Computer software				8,500
Other intangible assets				2,400
Goodwill				40,931
Other assets				4,817
	Total assets acquired			75,742
Other liabilities				22,227
	Total liabilities assumed			22,227
		Net assets acquired	$	53,515

      Proforma information relating to the impact of these three acquisitions on Synovus’ consolidated financial statements, assuming such acquisitions had occurred at the beginning of the periods reported, is not presented as such impact is not significant.

      On February 27, 2003, Synovus acquired all the issued and outstanding common shares of FNB Newton Bankshares, Inc. (FNB), the parent company of First Nation Bank, headquartered in Covington, Georgia. The aggregate purchase price was $96.0 million, consisting of 2,253,627 shares of Synovus common stock valued at $46.4 million, $46.4 million in cash, stock options valued at $3.2 million, and $35 thousand in direct acquisition costs, primarily consisting of external legal and accounting fees.

      On February 28, 2003 Synovus acquired all the issued and outstanding common shares of United Financial Holdings, Inc. (United Financial), the parent company of United Bank and Trust Company, in St. Petersburg, Florida and United Bank of the Gulf Coast, in Sarasota, Florida. The aggregate purchase price was $85.3 million, consisting of 2,388,087 shares of Synovus common stock valued at $47.6 million, $34.0 million in cash, stock options valued at $3.5 million, and $215 thousand in direct acquisition costs, primarily consisting of external legal and accounting fees.

      On April 28, 2003, TSYS completed the acquisition of Enhancement Services Corporation (ESC) for $36.0 million in cash. TSYS has allocated approximately $26.0 million to goodwill, approximately $8.2 million to intangibles and the remaining amount to the net assets acquired. ESC provides targeted loyalty consulting, as well as travel, gift card and merchandise reward programs to more than 40 national and regional financial institutions in the United States.

      On July 31, 2002, Synovus acquired all the issued and outstanding common shares of Community Financial Group, Inc. (Community Financial). Community Financial is the parent company of The Bank of Nashville, headquartered in Nashville, Tennessee. The aggregate purchase price was $87.0 million, consisting of 3,065,235 shares of Synovus common stock valued at $82.2 million, stock options valued at $4.7 million, and $49 thousand in direct acquisition costs, consisting primarily of external legal and accounting fees.

      On May 31, 2002, Synovus acquired all the issued and outstanding common shares of GLOBALT, Inc. (GLOBALT). GLOBALT is a provider of investment advisory services based in Atlanta, Georgia, offering a full line of distinct large cap and mid cap growth equity strategies and products. GLOBALT’s assets under management at June 1, 2002 were approximately $1.3 billion. GLOBALT now operates as a wholly-owned subsidiary of Synovus and as a part of the Synovus Financial Management Services unit. The aggregate purchase price was $20.0 million, consisting of 702,433 shares of Synovus common stock valued at $19.0 million, $0.9 million for forgiveness of debt, and $100 thousand in direct acquisition costs, consisting primarily of external legal and accounting fees. The terms of the merger agreement provide for contingent consideration based on a percentage of a multiple of earnings before interest, income taxes, depreciation, and other adjustments, as defined in the agreement (“EBT”) for each of the years ending December 31, 2004, 2005, and 2006. The contingent consideration is payable by February 15th of the year subsequent to the calendar year for which the EBT calculation is made. The fair value of the contingent consideration will be recorded as an addition to goodwill. On February 15, 2005, Synovus recorded additional consideration of $226 thousand, which was based on 4% of a multiple of GLOBALT’s EBT for the year ended December 31, 2004. The contingent consideration for the years ending December 31, 2005 and 2006 will be based on 7% and 14%, respectively, of a multiple of GLOBALT’s EBT for these periods.

F-15

Notes to Consolidated Financial Statements 

      On March 1, 2005, TSYS acquired the remaining 50% equity stake in Vital Processing Services (Vital) from Visa U.S.A. for $95 million in cash. Vital is now a wholly-owned subsidiary of TSYS. The purchase of the remaining 50% interest in Vital provides TSYS greater synergies for its clients that service merchants who accept cards as payments and issue credit to their customers. Vital is the second-largest processor of merchant accounts in the United States, serving more than one million merchant locations.

Note 3 Investment Securities Available for Sale

      The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at December 31, 2004 and 2003 are summarized as follows:

	December 31, 2004
			Gross		Gross			Estimated
(In thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Treasury and U.S. Government agencies	$	1,312,599		2,911		(10,039	)		1,305,471
Mortgage-backed securities		1,031,599		5,249		(10,124	)		1,026,724
State and municipal		226,982		11,170		(320	)		237,832
Equity securities		119,823		1,014		—			120,837
Other investments		4,814		28		(113	)		4,729
Total	$	2,695,817		20,372		(20,596	)		2,695,593

	December 31, 2003
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Treasury and U.S. Government agencies	$	1,343,535		13,794		(3,504	)		1,353,825
Mortgage-backed securities		839,793		10,367		(3,153	)		847,007
State and municipal		233,417		15,357		(36	)		248,738
Equity securities		73,899		167		(159	)		73,907
Other investments		5,774		123		(117	)		5,780
Total	$	2,496,418		39,808		(6,969	)		2,529,257

      Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2004, were as follows:

	December 31, 2004
	Less than 12 months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and U.S. Government agencies	$	948,246		(9,062	)		36,023		(977	)		984,269		(10,039	)
Mortgage-backed securities		579,017		(7,870	)		92,068		(2,254	)		671,085		(10,124	)
State and municipal		15,524		(316	)		690		(4	)		16,214		(320	)
Equity securities		—		—			—		—			—		—
Other investments		1,557		(12	)		507		(101	)		2,064		(113	)
Total	$	1,544,344		(17,260	)		129,288		(3,336	)		1,673,632		(20,596	)

      U.S. Treasury and U.S. Government agencies. The unrealized losses in this category consist primarily of unrealized losses in direct obligations of U.S. Government agencies and were caused by interest rate increases. Because Synovus has the ability and intent to hold these investments until a recovery of fair value, which may be at maturity, Synovus does not consider these investments to be other-than-temporarily impaired at December 31, 2004.

F-16

Notes to Consolidated Financial Statements 

      Mortgage-backed securities. The unrealized losses on Synovus’ investment in U.S. government agency mortgage-backed securities were caused by interest rate increases. The contractual cash flows of the securities are guaranteed by an agency of the U.S. government. Because the decline in market value is attributable to changes in interest rates and not credit quality and because Synovus has the ability and intent to hold these investments until a recovery of fair value, which may be at maturity, Synovus does not consider these investments to be other-than-temporarily impaired at December 31, 2004.

      The amortized cost and estimated fair value by contractual maturity of investment securities available for sale at December 31, 2004 are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands)		Amortized		Estimated
		Cost		Fair Value
U.S. Treasury and U.S. Government agencies:
	Within 1 year	$	129,786		130,009
	1 to 5 years		962,033		955,939
	5 to 10 years		174,569		173,949
	More than 10 years		46,211		45,574
		$	1,312,599		1,305,471
State and municipal
	Within 1 year	$	12,749		12,885
	1 to 5 years		87,070		90,703
	5 to 10 years		90,729		96,148
	More than 10 years		36,434		38,096
		$	226,982		237,832
Other investments:
	Within 1 year	$	3,335		3,252
	1 to 5 years		1,371		1,375
	5 to 10 years		—		—
	More than 10 years		108		102
		$	4,814		4,729
Equity securities		$	119,823		120,837
Mortgage backed securities		$	1,031,599		1,026,724
Total investment securities:
	Within 1 year	$	145,870		146,146
	1 to 5 years		1,050,474		1,048,017
	5 to 10 years		265,298		270,097
	More than 10 years		82,753		83,772
Equity securities			119,823		120,837
Mortgage backed securities			1,031,599		1,026,724
		$	2,695,817		2,695,593

      A summary of sales transactions in the investment securities available for sale portfolio for 2004, 2003, and 2002 is as follows:

			Gross		Gross
	Proceeds		Realized Gains		Realized Losses
(In thousands)
2004	$	33,332		620		(545	)
2003	$	207,124		2,960		(469	)
2002	$	137,137		3,339		(701	)

      At December 31, 2004 and 2003, investment securities with a carrying value of $2.1 billion and $2.0 billion, respectively, were pledged to secure certain deposits, securities sold under agreements to repurchase, and Federal Home Loan Bank advances, as required by law and contractual agreements.

Note 4 Loans

      Loans outstanding, by classification, are summarized as follows:

			December 31,
(In thousands)
			2004			2003
Commercial:
	Commercial, financial, and agricultural		$	5,050,713			4,632,507
	Real estate-construction			5,173,275			3,958,649
	Real estate-mortgage			6,116,308			5,095,247
		Total commercial		16,340,296			13,686,403
Retail:
	Real estate-mortgage			2,298,682			1,865,701
	Consumer loans-credit card			270,412			252,287
	Consumer loans-other			612,957			691,557
		Total retail		3,182,051			2,809,545
		Total loans		19,522,347			16,495,948
	Unearned income			(41,951	)		(31,034	)
		Total loans, net of unearned income	$	19,480,396			16,464,914

F-17

Notes to Consolidated Financial Statements 

      Activity in the allowance for loan losses is summarized as follows:

	December 31
	2004			2003			2002
	(In thousands)
Balance at beginning of year	$	226,059			199,841			170,769
Allowance for loan losses of acquired/divested subsidiaries		5,615			10,534			7,967
Provision for losses on loans		75,319			71,777			65,327
Recoveries of loans previously charged off		9,720			8,112			7,039
Loans charged off		(50,968	)		(64,205	)		(51,261	)
Balance at end of year	$	265,745			226,059			199,841

      At December 31, 2004, the recorded investment in loans that were considered to be impaired was $99.2 million. Included in this amount is $58.9 million of impaired loans for which the related allowance is $22.3 million, and $40.3 million of impaired loans for which there is no related allowance determined in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan.” At December 31, 2004, impaired loans in the amount of $53.0 million were on nonaccrual status.

      At December 31, 2003, the recorded investment in loans that were considered to be impaired was $101.8 million. Included in this amount was $44.3 million of impaired loans for which the related allowance was $12.0 million, and $57.5 million of impaired loans for which there was no related allowance determined in accordance with SFAS No. 114. At December 31, 2003, impaired loans in the amount of $36.1 million were on nonaccrual status.

      The allowance for loan losses on impaired loans was primarily determined using the fair value of the loans’ collateral, less estimated selling costs. The average recorded investment in impaired loans was approximately $107.0 million, $96.6 million, and $69.6 million for the years ended December 31, 2004, 2003, and 2002, respectively, and the related amount of interest income recognized during the period that such loans were impaired was approximately $2.9 million, $5.4 million, and $3.9 million for the years ended December 31, 2004, 2003, and 2002, respectively.

      Loans on nonaccrual status amount to $80.2 million, $67.2 million, and $66.3 million, at December 31, 2004, 2003, and 2002, respectively. If nonaccrual loans had been on a full accruing basis, interest income on these loans would have been increased by approximately $2.7 million, $2.7 million, and $2.5 million for the years ended December 31, 2004, 2003, and 2002, respectively.

      A substantial portion of the loans is secured by real estate in markets in which affiliate banks are located throughout Georgia, Alabama, Tennessee, South Carolina, and Florida. Accordingly, the ultimate collectibility of a substantial portion of the 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.

      In the ordinary course of business, Synovus’ affiliate banks have made loans to certain executive officers and directors (including their associates) of the Parent Company and its significant subsidiaries, as defined. Significant subsidiaries consist of Columbus Bank and Trust Company, Bank of North Georgia and The National Bank of South Carolina. 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 activity in these loans for the year ended December 31, 2004.

(In thousands)
Balance at December 31, 2003	$	194,475
Adjustment for executive officer and director changes		1,508
Adjusted balance at December 31, 2003		195,983
New loans		181,816
Repayments		(162,610	)
Balance at December 31, 2004	$	215,189

Note 5     Contract Acquisition Costs and Computer Software

      Capitalized contract acquisition costs, consisting of conversion costs and payments for processing rights at TSYS, net of accumulated amortization, were $132.4 million and $125.5 million at December 31, 2004 and 2003, respectively. Amortization expense related to contract acquisition costs was $24.9 million, $20.8 million, and $14.1 million, for the years ended December 31, 2004, 2003, and 2002, respectively. Aggregate estimated amortization expense of contract acquisition costs for the next five years is: $26.8 million in 2005, $23.6 million in 2006, $17.6 million in 2007, $16.4 million in 2008, and $15.4 million in 2009.

      The weighted average estimated useful lives of conversion costs was approximately 7.10 years as of December 31, 2004 with weighted average remaining useful lives of 4.78 years.

F-18

Notes to Consolidated Financial Statements 

      The weighted average estimated useful lives of payments for processing rights was approximately 11.83 years as of December 31, 2004 with weighted average remaining useful lives of 6.76 years.

      The following table summarizes TSYS’ computer software at December 31, 2004 and 2003:

	2004			2003
(In thousands)
Licensed computer software	$	383,371			324,117
TS2		33,049			33,049
Acquisition technology intangibles		12,200			3,700
Other capitalized software development costs		92,951			99,541
		521,571			460,407
Less accumulated amortization		(252,924	)		(202,317	)
Computer software, net	$	268,647			258,090

      Amortization expense related to licensed and capitalized software development costs at TSYS was $50.6 million, $53.2 million, and $37.1 million for the years ended December 31, 2004, 2003, and 2002, respectively. Aggregate estimated amortization expense of computer software over the next five years is: $51.9 million in 2005, $51.7 million in 2006, $47.9 million in 2007, $42.2 million in 2008 and $35.6 million in 2009.

      The weighted average estimated useful lives of licensed computer software was approximately 6.80 years as of December 31, 2004 with weighted average remaining useful lives of 2.90 years.

      The weighted average estimated useful lives of acquisition technology intangibles was approximately 6.39 years at December 31, 2004 with weighted average remaining useful lives of 5.82 years.

      The weighted average estimated useful lives of capitalized software development costs was approximately 7.30 years at December 31, 2004 with weighted average remaining useful lives of 2.67 years.

      During 2004, TSYS changed its approach for entry into the Asia-Pacific market. As a result, TSYS recognized a $10.1 million charge to net occupancy and equipment expense for the write-off of the double-byte software development project. Additionally, other capitalized software development costs reflect a $1.4 million decrease related to the retirement of an asset during 2004 which was no longer in use and expensing of certain capitalized costs that were capitalized in prior periods.

Note 6 Other Intangible Assets and Other Assets

      Other intangible assets (excluding goodwill) as of December 31, 2004 and 2003 are presented in the following table:

		2004							2003
(In thousands)
		Gross							Gross
		Carrying		Accumulated					Carrying		Accumulated
		Amount		Amortization			Net		Amount		Amortization			Net
Other intangible assets:
	Purchased trust revenues	$	4,210		(1,006	)		3,204		4,210		(725	)		3,485
	Acquired customer contracts		7,731		(2,536	)		5,195		7,731		(1,253	)		6,478
	Employment contracts/non-competition agreements		1,091		(308	)		783		491		(103	)		388
	Core deposit premiums		50,031		(21,915	)		28,116		39,903		(19,523	)		20,380
	Intangibles associated with the acquisition of minority interest in TSYS		2,846		(474	)		2,372		2,846		(190	)		2,656
	Customer relationships		1,800		(250	)		1,550		—		—			—
	Other		700		(292	)		408		700		(117	)		583
	Total carrying value	$	68,409		(26,781	)		41,628		55,881		(21,911	)		33,970

      Aggregate other intangible assets amortization expense (excluding goodwill) for the years ended December 31, 2004, 2003, and 2002 was $8.7 million, $6.2 million, and $2.2 million, respectively. Aggregate estimated amortization expense over the next five years is: $8.3 million in 2005, $7.3 million in 2006, $5.9 million in 2007, $4.3 million in 2008, and $3.9 million in 2009.

      Significant balances included in other assets are company-owned life insurance programs and TSYS’ investments in joint ventures.

F-19

Notes to Consolidated Financial Statements 

      At December 31, 2004 and 2003, Synovus maintained certain company-owned life insurance programs with a carrying value of approximately $169.7 million and $160.2 million, respectively.

      Investments in joint ventures consist of TSYS’ 49% investment in TSYS de México and TSYS’ 50% investment in Vital. Both investments are accounted for using the equity method. Other assets include $54.4 million and $66.7 million in recorded balances related to these investments at December 31, 2004 and 2003, respectively.

Note 7 Interest Bearing Deposits

      A summary of interest bearing deposits at December 31, 2004 and 2003 is as follows:

		2004		2003
(In thousands)
Interest bearing demand deposits		$	2,998,947		2,687,229
Money market accounts			4,869,200		4,057,545
Savings accounts			547,074		524,845
Time deposits under $100,000			2,180,245		2,269,679
Time deposits of $100,000 or more			4,644,094		3,568,744
	Total interest bearing deposits	$	15,239,560		13,108,042

      Interest expense on time deposits of $100,000 or more for the years ended December 31, 2004, 2003, and 2002 was $94.3 million, $94.2 million, and $102.1 million, respectively.

      The following table presents scheduled maturities of time deposits at December 31, 2004:

(In thousands)
Maturing within one year		$	4,188,546
	between 1 - 2 years		1,261,424
	2 - 3 years		700,683
	3 - 4 years		235,357
	4 - 5 years		193,851
	thereafter		244,478
		$	6,824,339

Note 8     Long-Term Debt and Short-Term Borrowings

      Long-term debt at December 31, 2004 and 2003 consists of the following:

		2004		2003
(In thousands)
Parent Company:
7.25% senior notes, due December 15, 2005, with semi-annual interest payments and principal to be paid at maturity		$	200,000		200,000
4.875% subordinated notes, due February 15, 2013, with semi-annual interest payments and principal to be paid at maturity			300,000		300,000
LIBOR + 3.60% debentures, due December 23, 2031 with quarterly interest payments and principal to be paid at maturity (rate of 6.1% at December 31, 2004)			10,297		10,453
Hedge-related basis adjustment			2,906		—
	Total long-term debt — Parent Company		513,203		510,453
Subsidiaries:
Federal Home Loan Bank advances with interest and principal payments due at various maturity dates through 2018 and interest rates ranging from 2.00% to 7.40% at December 31, 2004 (weighted average interest rate is 3.20% at December 31, 2004)			1,356,205		1,020,345
Other notes payable, capital leases and software obligations payable with interest and principal payments due at various maturity dates through 2008 and interest rates ranging from 2.6% to 18.0% at December 31, 2004			10,175		44,979
	Total long-term debt — subsidiaries		1,366,380		1,065,324
	Total long-term debt	$	1,879,583		1,575,777

      The provisions of the loan and security agreements associated with some of the promissory notes place certain restrictions, within specified limits, 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, 2004, Synovus and its subsidiaries were in compliance with the covenants of the loan and security agreements.

      The Federal Home Loan Bank advances are secured by certain loans receivable of approximately $2.5 billion, as well

F-20

Notes to Consolidated Financial Statements 

as investment securities of approximately $174.0 million at December 31, 2004.

      Synovus has an unsecured line of credit with an unaffiliated bank for $60 million with an interest rate of 50 basis points above the short-term index, as defined. The line of credit requires an annual commitment fee of .125% on the average daily available balance and draws can be made on demand (subject to compliance with certain restrictive covenants). There were no advances outstanding at December 31, 2004 and 2003.

      Required annual principal payments on long-term debt for the five years subsequent to December 31, 2004 are shown on the following table:

	Parent
	Company		Subsidiaries		Total
(In thousands)
2005	$	200,000		212,044		412,044
2006		—		576,135		576,135
2007		—		233,162		233,162
2008		—		59,539		59,539
2009		—		76,744		76,744

      The following table sets forth certain information regarding federal funds purchased and securities sold under repurchase agreements, the principal components of short-term borrowings.

	2004			2003			2002
(In thousands)
Balance at December 31,	$	1,208,080			1,354,887			1,275,084
Weighted average interest rate at December 31,		1.95	%		0.93	%		1.20	%
Maximum month end balance during the year	$	1,749,923			1,459,818			1,493,466
Average amount outstanding during the year	$	1,479,815			1,101,216			1,131,455
Weighted average interest rate during the year		1.30	%		1.07	%		1.65	%

Note 9 Other Comprehensive Income (Loss)

      The components of other comprehensive income (loss) for the years ended December 31, 2004, 2003, and 2002, are as follows:

	2004									2003									2002
(In thousands)	Before-			Tax			Net of			Before-			Tax			Net of			Before-			Tax			Net of
	Tax			(Expense)			Tax			Tax			(Expense)			Tax			Tax			(Expense)			Tax
	Amount			or Benefit			Amount			Amount			or Benefit			Amount			Amount			or Benefit			Amount
Net unrealized loss on cash flow hedges	$	(9,718	)		3,965			(5,753	)		(4,562	)		1,789			(2,773	)		(1,504	)		513			(991	)
Net unrealized gains (losses) on investment securities available for sale:
Unrealized gains (losses) arising during the year		(32,988	)		12,457			(20,531	)		(29,505	)		11,313			(18,192	)		25,412			(9,677	)		15,735
Reclassification adjustment for (gains) losses realized in net income		(75	)		29			(46	)		(2,491	)		959			(1,532	)		(2,638	)		1,016			(1,622	)
Net unrealized gains (losses)		(33,063	)		12,486			(20,577	)		(31,996	)		12,272			(19,724	)		22,774			(8,661	)		14,113
Foreign currency translation gains		8,893			(3,169	)		5,724			9,379			(3,486	)		5,893			5,728			(2,075	)		3,653
Other comprehensive income (loss)	$	(33,888	)		13,282			(20,606	)		(27,179	)		10,575			(16,604	)		26,998			(10,223	)		16,775

      Cash settlements were $5.8 million, $7.6 million, and $6.3 million for the years ended December 31, 2004, 2003 and 2002, respectively, all of which were included in earnings. During 2004 and 2001, Synovus recorded cash settlements on terminated hedges of $313 thousand and $3.3 million, respectively, which were deferred and are being amortized into earnings over the shorter of the remaining contract life or the maturity of the designated asset as an adjustment to interest

F-21

Notes to Consolidated Financial Statements 

income. There was one terminated cash flow hedge during 2004 and there were no terminated cash flow hedges during 2003 or 2002. The corresponding amortization on these settlements was approximately $456 thousand, $1.2 million and $1.0 million in 2004, 2003 and 2002, respectively. The change in unrealized gains (losses) on cash flow hedges was approximately ($9.3) million in 2004, ($3.4) million in 2003 and ($500) thousand in 2002.

Note 10 Earnings Per Share

      The following table displays a reconciliation of the information used in calculating basic and diluted earnings per share (EPS) for the years ended December 31, 2004, 2003, and 2002.

	2004							2003						2002
(In thousands,				Weighted						Weighted						Weighted
except per share data)	Net			Average		Net Income		Net		Average		Net Income		Net		Average		Net Income
	Income			Shares		Per Share		Income		Shares		Per Share		Income		Shares		Per Share
Basic EPS	$	437,033			307,262	$	1.42	$	388,925		302,010	$	1.29	$	365,347		297,325	$	1.23
Effect of dilutive options		(247	)*		3,068						2,918						3,872
Diluted EPS	$	436,786			310,330	$	1.41	$	388,925		304,928	$	1.28	$	365,347		301,197	$	1.21
(*) Represents dilution from outstanding TSYS stock options which enable their holders to obtain TSYS common stock.

      The following represents options to purchase shares of Synovus common stock that were outstanding during the periods noted below, but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares.

			Weighted Average
Quarter	Number		Exercise Price
Ended	of Shares		Per Share
December 31, 2004		2,637,150	$	28.98
September 30, 2004		7,002,758	$	27.34
June 30, 2004		7,046,977	$	27.33
March 31, 2004		6,905,462	$	27.37
December 31, 2003		2,609,500	$	28.99
September 30, 2003		6,475,443	$	27.13
June 30, 2003		11,401,281	$	25.05
March 31, 2003		11,577,418	$	25.02
December 31, 2002		11,687,175	$	25.02
September 30, 2002		6,612,434	$	27.45
June 30, 2002		2,637,500	$	28.98
March 31, 2002		2,607,500	$	28.99

Note 11 Derivative Instruments, Commitments and Contingencies

Derivative Instruments

      As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risks. These derivative instruments consist of commitments to sell fixed-rate mortgage loans, interest rate swaps, and interest rate collars. The interest rate lock commitments made to prospective mortgage loan customers also represent derivative instruments since it is intended that such loans will be sold.

      At December 31, 2004, Synovus had commitments to fund fixed-rate mortgage loans to customers in the amount of $94.1 million. The fair value of these commitments at December 31, 2004 was $30 thousand.

      At December 31, 2004, outstanding commitments to sell fixed-rate mortgage loans amounted to approximately $133.7 million. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding commitments to originate residential mortgage loans for resale.

      The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. The fair value of outstanding commitments to sell mortgage loans at December 31, 2004 was an unrealized gain of $434 thousand.

      Synovus has entered into forward starting cash settled swaps to hedge the future interest payments on debt forecasted to be issued in 2005. At December 31, 2004, Synovus had forward starting cash settled swaps outstanding with a total notional amount of $200 million. Upon issuance of the debt in 2005, the interest rate swap contracts will be cash settled concurrent with the pricing of the debt. The effective portion of any payment or receipt resulting from the cash settlement of the swaps will be amortized over the life of the debt issue as an adjustment to interest expense. As of December 31, 2004, the forward starting cash settled swaps have been designated and qualify as effective hedges.

F-22

Notes to Consolidated Financial Statements 

      Synovus also enters into derivative financial instruments to meet the financing and interest rate risk management needs of its customers. Upon entering into these instruments to meet customer needs, Synovus enters into offsetting positions in order to minimize the risk to Synovus. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings. As of December 31, 2004, the notional amount of customer related derivative financial instruments was $347.5 million.

      Interest rate swap transactions generally involve the exchange of fixed and floating rate interest rate payment obligations without the exchange of underlying principal amounts. Entering into interest rate contracts involves not only interest rate risk, but also the risk of counterparties’ failure to fulfill their legal obligations. Notional principal amounts often are used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller.

      The receive fixed interest rate swap contracts at December 31, 2004 are being utilized to hedge $500 million in floating rate loans, and $477.5 million in fixed-rate liabilities.

      A summary of interest rate contracts and their terms at December 31, 2004 and 2003 is shown below. In accordance with the provisions of SFAS No. 133, the fair value (net unrealized gains and losses) of these contracts has been recorded on the consolidated balance sheet.

      Synovus expects to reclassify from accumulated other comprehensive income approximately $1.9 million as net-of-tax expense during the next twelve months, as the related payments for interest rate swaps and amortization of deferred gains(losses) are recorded.

      During 2004, Synovus terminated certain cash flow hedges which resulted in a net pre-tax gain of $313 thousand. During 2001, Synovus terminated certain cash flow hedges which resulted in a net pre-tax gain of $3.3 million. These gains have been included as a component of accumulated other comprehensive income and are being amortized over the shorter of the remaining contract life or the maturity of the designated asset as an adjustment to interest income. The remaining unamortized deferred gain balances at December 31, 2004 and 2003 were $206 thousand and $383 thousand, respectively. There were no terminated cash flow hedges during 2003 or 2002.

			Weighted						Weighted							Net
			Average			Weighted			Average							Unrealized
	Notional		Receive			Average Pay			Maturity		Unrealized		Unrealized			Gains
	Amount		Rate			Rate(*)			In Months		Gains		Losses			(Losses)
December 31, 2004
Receive fixed swaps:
Fair value hedges	$	477,500		4.24	%		2.33	%		88	$	3,435		(5,214	)		(1,779	)
Cash flow hedges		500,000		5.12	%		5.25	%		12		—		(4,090	)		(4,090	)
Sub total:		977,500		4.69	%		3.83	%		49		3,435		(9,304	)		(5,869	)
Forward starting swaps:
Cash flow hedges		200,000		—			—			123		293		(2,109	)		(1,816	)
Total	$	1,177,500									$	3,728		(11,413	)		(7,685	)
December 31, 2003
Receive fixed swaps:
Fair value hedges	$	342,500		4.36	%		1.16	%		97	$	2,087		(2,703	)		(616	)
Cash flow hedges		570,000		5.43	%		4.00	%		23		4,637		(1,280	)		3,357
Total	$	912,500		5.03	%		2.94	%		51	$	6,724		(3,983	)		2,741

(*)  Variable pay rate based upon contract rates in effect at December 31, 2004 and 2003.

Loan Commitments and Letters of Credit

      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. These financial instruments include commitments to extend credit and standby and commercial letters of credit. These instruments involve, to

F-23

Notes to Consolidated Financial Statements 

varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated financial statements.

      The carrying amount of loan commitments and letters of credit closely approximates the fair value of such financial instruments. Carrying amounts include unamortized fee income and, in some instances, allowances for any estimated credit losses from these financial instruments. These amounts are not material to Synovus’ consolidated balance sheet.

      As of December 31, 2004, Synovus had standby and commercial letters of credit in the amount of $2.3 billion. The standby letters of credit are conditional commitments issued by Synovus to guarantee the performance of a customer to a third party. The approximate terms of these commitments range from one to five years. Collateral is required to support letters of credit in accordance with management’s evaluation of the creditworthiness of each customer.

      The 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.

      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, 2004 include the following:

(In thousands)
Standby and commercial letters of credit		$	2,318,394
Undisbursed construction loans			1,698,403
Unused credit card lines			1,200,934
Other loan commitments			3,482,486
	Total	$	8,700,217

Lease Commitments

      Synovus and its subsidiaries have entered into long-term operating leases for various facilities and computer equipment. Management expects that as these leases expire they will be renewed or replaced by similar leases.

      At December 31, 2004, minimum rental commitments under all such noncancelable leases for the next five years and thereafter are as follows:

(In thousands)
	2005		$	115,449
	2006			110,308
	2007			84,169
	2008			46,095
	2009			16,953
	Thereafter			44,011
		Total	$	416,985

      Rental expense on computer equipment, including cancelable leases, was $97.1 million, $93.6 million, and $81.8 million for the years ended December 31, 2004, 2003, and 2002, respectively. Rental expense on facilities was $21.4 million, $18.3 million, and $15.3 million for the years ended December 31, 2004, 2003, and 2002, respectively.

Contractual Commitments

      In the normal course of its business, TSYS maintains long-term processing contracts with its clients. These processing contracts contain commitments, including but not limited to, minimum standards and time frames against which its performance is measured. In the event that TSYS does not meet its contractual commitments with its clients, TSYS may incur penalties and/or certain clients may have the right to terminate their contracts 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 position, results of operations or cash flows.

Legal Proceedings

      Synovus and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, based in part upon the advice of legal counsel, all matters are not quantifiable, are believed to be adequately covered by insurance, or if not covered, are believed to be without merit or are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of Synovus if disposed of unfavorably.

      TSYS has received notification from the United States Attorneys’ Office for the Northern District of California that the United States Department of Justice is investigating whether TSYS and/or one of its large credit card processing clients violated the False Claims Act, 31 U.S.C. §§3729-33, in connection with mailings made on behalf of the client from July 1997 through November 2001. The subject matter of the investigation relates to the U.S. Postal Service’s Move Update

F-24

Notes to Consolidated Financial Statements 

Requirements. In general, the Postal Service’s Move Update Requirements are designed to reduce the volume of mail that is returned to sender as undeliverable as addressed. In effect, these requirements provide, among other things, various procedures that may be utilized to maintain the accuracy of mailing lists in exchange for discounts on postal rates. TSYS has received a subpoena from the Office of the Inspector General of the U.S. Postal Service, and has produced documents responsive to the subpoena. TSYS continues to cooperate with the Department of Justice in the investigation and there can be no assurance as to the timing or outcome of the investigation, including whether the investigation will result in any criminal or civil fines, penalties, judgments or treble damages or other claims against TSYS. TSYS is not in a position to estimate whether or not any loss may arise out of this investigation. As a result, no reserve or accrual has been recorded in TSYS’ or Synovus’ financial statements relating to this matter.

Note 12 Regulatory Requirements and Restrictions

      The amount of dividends paid to the Parent Company from each of the subsidiary banks is limited by various banking regulatory agencies. The amount of cash dividends available from subsidiary banks for payment in 2005, in the aggregate, without prior approval from the banking regulatory agencies, is approximately $295 million. In prior years, certain Synovus banks have received permission and have paid cash dividends to the Parent Company in excess of these regulatory limitations.

      Synovus is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Synovus must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

      Quantitative measures established by regulation to ensure capital adequacy require Synovus on a consolidated basis, and the Parent Company and subsidiary banks individually, to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets as defined, and of Tier I capital to average assets, as defined. Management believes that as of December 31, 2004, Synovus meets all capital adequacy requirements to which it is subject.

      As of December 31, 2004, the most recent notification from the Federal Reserve Bank of Atlanta categorized all of the subsidiary banks as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, Synovus and its subsidiaries must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table shown below. Management is not currently aware of the existence of any conditions or events occurring subsequent to December 31, 2004 which would affect the well-capitalized classification.

F-25

Notes to Consolidated Financial Statements 

      The following table summarizes regulatory capital information at December 31, 2004 and 2003 on a consolidated basis and for each significant subsidiary, as defined.

										To be Well
										Capitalized Under
						For Capital Adequacy				Prompt Corrective
	Actual					Purposes				Action Provisions
(Dollars in thousands)
	2004			2003		2004		2003		2004		2003
Synovus Financial Corp.
Tier I capital	$	2,369,332			2,091,755		943,991		802,052		n/a		n/a
Total risk-based capital		2,935,077			2,617,814		1,887,982		1,604,105		n/a		n/a
Tier I capital ratio		10.04	%		10.43		4.00		4.00		n/a		n/a
Total risk-based capital ratio		12.44			13.06		8.00		8.00		n/a		n/a
Leverage ratio		9.78			10.09		4.00		4.00		n/a		n/a
Columbus Bank and Trust Company
Tier I capital	$	1,014,308			916,246		196,739		181,847		295,108		272,770
Total risk-based capital		1,047,399			947,554		393,477		363,694		491,847		454,617
Tier I capital ratio		20.62	%		20.15		4.00		4.00		6.00		6.00
Total risk-based capital ratio		21.30			21.84		8.00		8.00		10.00		10.00
Leverage ratio		20.70			21.83		4.00		4.00		5.00		5.00
The National Bank of South Carolina
Tier I capital	$	276,365			229,302		116,854		101,378		175,281		152,067
Total risk-based capital		310,383			258,943		233,708		202,756		292,135		253,445
Tier I capital ratio		9.46	%		9.05		4.00		4.00		6.00		6.00
Total risk-based capital ratio		10.62			10.22		8.00		8.00		10.00		10.00
Leverage ratio		8.70			8.32		4.00		4.00		5.00		5.00
Bank of North Georgia
Tier I capital	$	243,906			156,642		107,778		66,405		161,667		99,608
Total risk-based capital		274,580			175,202		215,556		132,810		269,445		166,013
Tier I capital ratio		9.05	%		9.44		4.00		4.00		6.00		6.00
Total risk-based capital ratio		10.19			10.55		8.00		8.00		10.00		10.00
Leverage ratio		9.55			9.72		4.00		4.00		5.00		5.00

Note 13 Employment Expenses and Benefit Plans

      Synovus generally provides noncontributory money purchase, profit sharing, and 401(k) plans, which cover all eligible employees. Annual discretionary contributions to these plans are set each year by the respective Boards of Directors of each subsidiary, 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 for the years ended December 31, 2004, 2003, and 2002 were approximately $57.8 million, $38.4 million, and $45.8 million, 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 $10.3 million, $9.5 million, and $9.0 million, to these plans in 2004, 2003, and 2002, respectively.

      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 aggregate cost of these salary continuation plans and employment agreements is not material to the consolidated financial statements.

F-26

Notes to Consolidated Financial Statements 

      Synovus provides certain medical benefits to qualified retirees through a postretirement medical benefits plan. The benefit expense and accrued benefit cost is not material to the consolidated financial statements.

Note 14 Stock-Based Compensation

      Synovus has various stock option plans under which the Compensation Committee of the Board of Directors has the authority to grant stock options to Synovus employees. At December 31, 2004, Synovus had 8,243,097 shares of its authorized but unissued common stock reserved for future grants under the stock option plans. The general terms of the existing stock option plans include vesting periods ranging from two to three years and exercise periods ranging from five to ten years. Such stock options are granted at exercise prices which equal the fair market value of a share of common stock on the grant date.

      Synovus has granted performance-accelerated stock options to certain key executives. The exercise price per share is equal to the fair market value at the date of grant. The options are exercisable in equal installments when the per share market price of Synovus common stock exceeds $40, $45, and $50. However, all options may be exercised after seven years from the grant date.

      Summary information regarding these performance-accelerated stock options is presented below. There were no performance-accelerated stock options granted during 2004, 2003, or 2002.

						Options
Year Options		Number of		Exercise Price		Outstanding
Granted		Stock Options		Per Share		at December 31, 2004
	2000		4,100,000	$17.69 - $18.06			4,100,000
	2001		2,600,000		28.99		2,600,000

     A summary of stock options outstanding as of December 31, 2004, 2003, and 2002 and changes during the years then ended is presented below:

		2004					2003					2002
					Weighted					Weighted					Weighted
					Average					Average					Average
					Exercise					Exercise					Exercise
		Shares			Price		Shares			Price		Shares			Price
Options outstanding at beginning of period			25,473,518		$	20.23		25,874,237		$	19.59		25,578,818		$	19.44
Options granted			2,724,306			26.03		2,242,276			19.21		2,336,548			25.46
Options assumed in connection with acquisitions			288,884			7.49		590,622			9.02		366,991			14.54
Options exercised			(2,495,858	)		11.62		(2,730,176	)		10.93		(1,989,814	)		10.03
Options cancelled			(220,942	)		23.25		(503,441	)		19.94		(418,306	)		20.72
	Options outstanding at end of period		25,769,908		$	21.51		25,473,518		$	20.23		25,874,237		$	19.59
	Options exercisable at end of period		12,452,702		$	19.88		12,722,235		$	17.54		13,646,001		$	16.47

      The following is a summary of stock options outstanding at December 31, 2004:

	Options Outstanding						Options Exercisable
	Number of		Weighted Avg.		Weighted Average		Number of		Weighted Avg.
Range of Exercise Prices	Options		Remaining Term		Exercise Price		Options		Exercise Price
$ 1.75 - $ 4.71		76,220		2.8 years	$	3.11		76,220	$	3.11
$ 4.89 - $ 7.50		124,069		1.5 years	$	6.21		124,069	$	6.21
$ 7.83 - $11.51		397,725		4.0 years	$	9.70		397,725	$	9.70
$12.26 - $18.38		8,315,473		4.4 years	$	17.17		4,215,473	$	16.59
$18.69 - $27.98		14,245,921		6.3 years	$	23.23		7,631,715	$	22.61
$28.82 - $32.57		2,610,500		6.3 years	$	28.99		7,500	$	30.07

      In addition to the stock options described above, non-transferable, restricted shares of Synovus common stock have been awarded to certain key executives under key executive restricted stock bonus plans. The market value of the common stock at the date of issuance is included as a reduction of shareholders’ equity in the consolidated balance sheet 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 Synovus restricted stock awards was approximately $55 thousand, $55 thousand, and $114 thousand for the years ended December 31, 2004, 2003, and 2002, respectively. Summary informa-

F-27

Notes to Consolidated Financial Statements 

tion regarding outstanding restricted stock bonus plans at December 31, 2004 is presented below:

Year Awards	Market Value		Vesting
Granted	at Award Date		Period
2000	$	97,646		5 years
2002		177,786		5 years

     The following table provides aggregate information regarding grants under all Synovus equity compensation plans through December 31, 2004.

					(c)
	(a)		(b)		Number of shares
	Number of securities		Weighted-average		remaining available for
	to be issued		exercise price of		issuance excluding
	upon exercise of		outstanding		shares reflected
Plan Category(1)	outstanding options		options		in column (a)
Shareholder approved equity compensation plans(2)		25,073,417	$	21.82		8,243,097	(3)
Non-shareholder approved equity compensation plans		—		—		—
Total		25,073,417	$	21.82		8,243,097

(1) Does not include information for equity compensation plans assumed by Synovus in mergers. A total of 696,491 shares of common stock was issuable upon exercise of options granted under plans assumed in mergers and outstanding at December 31, 2004. The weighted average exercise price of all options granted under plans assumed in mergers and outstanding at December 31, 2004 was $10.28. Synovus cannot grant additional awards under these assumed plans.

(2) Does not include an aggregate of 1,339 shares of restricted stock which will vest over the remaining years through 2007.

(3) Includes 8,243,097 shares available for future grants as restricted stock awards under the 2002 Plan.

Note 15 Fair Value of Financial Instruments

      The following table presents the carrying and estimated fair values of on-balance sheet financial instruments at December 31, 2004 and 2003. The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

      The carrying and estimated fair values relating to derivative instruments and off-balance sheet financial instruments are discussed in Note 11.

      Cash and due from banks, interest earning deposits with banks, and federal funds sold are repriced on a short-term basis; as such, the carrying value closely approximates fair value.

      The fair value of mortgage loans held for sale is based on quoted prices from secondary market investors.

      The 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. Mortgage loans are further segmented into fixed and adjustable-rate interest terms. Commercial, mortgage, and other consumer loans with adjustable interest rates are assumed to be at fair value. Home equity loans have adjustable interest rates and are, therefore, assumed to be at fair value. The fair value of fixed-rate 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.

      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 estimated to be 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.

      Short-term debt that matures within ten days is assumed to be at fair value. The fair value of other short-term and long-term debt with fixed interest rates is calculated by discounting contractual cash flows using estimated market discount rates.

F-28

Notes to Consolidated Financial Statements 

		2004				2003
(In thousands)		Carrying		Estimated		Carrying		Estimated
		Value		Fair Value		Value		Fair Value
Financial assets:
	Cash and due from banks	$	683,035		683,035		696,030		696,030
	Interest earning deposits with banks		4,153		4,153		4,423		4,423
	Federal funds sold and securities purchased under resale agreements		135,471		135,471		172,922		172,922
	Mortgage loans held for sale		120,186		120,301		133,306		133,408
	Investment securities available for sale		2,695,593		2,695,593		2,529,257		2,529,257
	Loans, net		19,214,651		19,187,678		16,238,855		16,322,005
Financial liabilities:
	Non-interest bearing deposits		3,337,908		3,337,908		2,833,567		2,833,567
	Interest bearing deposits		15,239,560		15,236,498		13,108,042		13,243,424
	Federal funds purchased and securities sold under repurchase agreements		1,208,080		1,208,080		1,354,887		1,354,887
	Long-term debt		1,879,583		1,876,806		1,575,777		1,636,893

Note 16 Income Taxes

      For the years ended December 31, 2004, 2003, and 2002, income tax expense (benefit) consists of:

			2004		2003		2002
(In thousands)
Current:
	Federal		$	215,633		189,901		180,418
	State			12,767		5,896		10,252
	Foreign			1,447		—		—
				229,847		195,797		190,670
Deferred:
	Federal			19,120		19,137		14,277
	State			1,491		7,642		(6,414	)
	Foreign			1,790		—		—
				22,401		26,779		7,863
		Total income tax expense	$	252,248		222,576		198,533

F-29

Notes to Consolidated Financial Statements 

      Income tax expense as shown in the consolidated statements of income differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to pretax income as a result of the following:

		2004			2003			2002
(Dollars in thousands)
Taxes at statutory federal income tax rate		$	241,248			214,025			197,358
Tax-exempt income			(4,124	)		(4,553	)		(4,420	)
State income taxes, net of federal income tax benefit			9,268			8,800			2,495
Minority interest			10,053			9,440			8,277
Tax credits			(1,980	)		(2,403	)		(4,042	)
Other, net			(2,217	)		(2,733	)		(1,135	)
	Total income tax expense	$	252,248			222,576			198,533
	Effective income tax rate		36.60	%		36.40			35.21

      At December 31, 2004 and 2003, Synovus had state income tax credit carryforwards of $7.7 million and $7.4 million, respectively. The credits will begin to expire in the year 2008. 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 income tax assets become deductible, management believes that it is more likely than not that Synovus will realize the benefits of these deductible differences, net of existing valuation allowances, at December 31, 2004. The valuation allowance for deferred tax assets was $1.9 million and $1.4 million at December 31, 2004 and 2003, respectively.

      For the year ended December 31, 2004, net deferred tax liabilities increased by $2.7 million as a result of the acquisitions of Peoples Bank, Trust One, and TSYS’ acquisition of Clarity. For the year ended December 31, 2003, net deferred tax liabilities increased by $6.4 million as a result of the acquisitions of FNB, United Financial and ESC. As discussed in Note 2, Synovus has accounted for these acquisitions under the purchase method of accounting.

F-30

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, 2004 and 2003 are presented below:

			2004			2003
(In thousands)
Deferred income tax assets:
Provision for losses on loans			$	107,808			93,930
Net operating loss and income tax credit carryforwards				20,485			8,096
Deferred compensation				5,299			2,423
Net unrealized loss on cash flow hedges				2,527			—
Net unrealized loss on investment securities available for sale				83			—
Other				15,209			18,492
	Total gross deferred income tax assets			151,411			122,941
Less valuation allowance				(1,853	)		(1,415	)
	Total net deferred income tax assets		$	149,558			121,526
Deferred income tax liabilities:
Finance lease transactions				(29,250	)		(17,697	)
Differences in depreciation				(79,891	)		(51,385	)
Computer software development costs				(38,154	)		(45,270	)
Purchase accounting adjustments				(17,229	)		(11,627	)
Differences in revenue recognition				(11,374	)		(7,738	)
Foreign currency translation				(8,754	)		(4,846	)
Ownership interest in partnership				(6,062	)		(4,071	)
Net unrealized gain on cash flow hedges				—			(1,438	)
Net unrealized gain on investment securities available for sale				—			(12,403	)
Other				(17,439	)		(10,016	)
	Total gross deferred income tax liabilities			(208,153	)		(166,491	)
		Net deferred income tax liability	$	(58,595	)		(44,965	)

Note 17     Operating Segments

      Synovus has two reportable segments: Financial Services and TSYS. The Financial Services segment provides financial services including banking, financial management, insurance, mortgage and leasing services through 40 wholly-owned affiliate banks and other Synovus offices in Georgia, Alabama, South Carolina, Florida, and Tennessee. Through online accounting and electronic payment processing systems, TSYS provides electronic payment processing services and other related services to banks and other card-issuing institutions in the United States, Mexico, Canada, Honduras, Puerto Rico and Europe. The significant accounting policies of the segments are described in the summary of significant accounting policies. All inter-segment services provided are charged at the same rates as those charged to unaffiliated customers. Such services are included in the results of operations of the respective segments and are eliminated to arrive at consolidated totals.

F-31

Notes to Consolidated Financial Statements 

     Segment information for the years ended December 31, 2004, 2003, and 2002, is presented in the following table.

				Financial
		Year		Services		TSYS(a)		Eliminations			Consolidated
(In thousands)
Interest income			2004	$	1,159,020		1,348		(1,348	)(b)		1,159,020
			2003		1,061,522		747		(777	)(b)		1,061,492
			2002		1,054,307		1,958		(1,225	)(b)		1,055,040
Interest expense			2004		299,489		200		(1,348	)(b)		298,341
			2003		299,066		139		(777	)(b)		298,428
			2002		338,725		36		(1,225	)(b)		337,536
Net interest income			2004		859,531		1,148		—			860,679
			2003		762,456		608		—			763,064
			2002		715,582		1,922		—			717,504
Provision for losses on loans			2004		75,319		—		—			75,319
			2003		71,777		—		—			71,777
			2002		65,327		—		—			65,327
Net interest income after provision			2004		784,212		1,148		—			785,360
	for losses on loans		2003		690,679		608		—			691,287
			2002		650,255		1,922		—			652,177
Total non-interest income			2004		327,441		1,212,414		(18,844	)(c)		1,521,011
			2003		311,023		1,074,457		(16,151	)(c)		1,369,329
			2002		269,194		979,900		(14,272	)(c)		1,234,822
Total non-interest expense			2004		621,674		985,535		(18,844	)(c)		1,588,365
			2003		575,407		862,887		(16,151	)(c)		1,422,143
			2002		515,518		798,224		(14,272	)(c)		1,299,470
Income before taxes			2004		489,979		228,026		(28,724	)(d)		689,281
			2003		426,295		212,178		(26,972	)(d)		611,501
			2002		403,931		183,598		(23,649	)(d)		563,880
Income tax expense			2004		175,039		77,209		—			252,248
			2003		151,709		70,867		—			222,576
			2002		140,625		57,908		—			198,533
Net income			2004		314,940		150,817		(28,724	)(d)		437,033
			2003		274,586		141,311		(26,972	)(d)		388,925
			2002		263,306		125,690		(23,649	)(d)		365,347
Total assets			2004		23,966,347		1,241,797		(157,966	)(e)		25,050,178
			2003		20,715,606		1,000,836		(83,813	)(e)		21,632,629
			2002		18,350,869		774,082		(88,705	)(e)		19,036,246

(a)	Includes equity in income of joint ventures which is included in non-interest income.
(b)	Primarily interest on TSYS’ cash deposits with the Financial Services segment.
(c)	Principally, electronic payment processing services and other provided by TSYS to the Financial Services segment.
(d)	Minority interest in TSYS and GP Network Corporation (a TSYS subsidiary).
(e)	Primarily, TSYS’ cash deposits with the Financial Services segment.

F-32

Notes to Consolidated Financial Statements 

     Segment information for the changes in the carrying amount of goodwill for the years ended December 31, 2004 and 2003 are shown in the following table. There were no impairment losses for the years ended December 31, 2004 and 2003.

	Financial
	Services		TSYS		Consolidated
(In thousands)
Balance as of December 31, 2002	$	95,489		3,619		99,108
Goodwill acquired		123,753		25,992		149,745
Other (*)		—		15		15
Balance as of December 31, 2003	$	219,242		29,626		248,868
Goodwill acquired		126,480		40,931		167,411
Other (*)		—		4		4
Balance as of December 31, 2004	$	345,722		70,561		416,283

(*)  Consists of foreign currency translation adjustments for GP Network Corporation.

Note 18 Condensed Financial Information of Synovus Financial Corp. (Parent Company only)

Condensed Balance Sheets				December 31,
(In thousands)
				2004			2003
Assets
	Cash			$	4,911			579
	Investment in consolidated bank subsidiaries, at equity (including TSYS)				3,018,729			2,539,644
	Investment in consolidated nonbank subsidiaries, at equity				29,698			30,707
	Notes receivable from bank subsidiaries				27,278			108,837
	Notes receivable from nonbank subsidiaries				1,630			731
	Other assets				143,916			125,724
			Total assets	$	3,226,162			2,806,222
Liabilities and Shareholders’ Equity
	Liabilities:
		Long-term debt		$	513,216			510,453
		Other liabilities			71,657			50,730
			Total liabilities		584,873			561,183
	Shareholders’ equity:
		Common stock			315,636			307,748
		Surplus			628,396			442,931
		Treasury stock			(113,944	)		(113,940	)
		Unearned compensation			(106	)		(266	)
		Accumulated other comprehensive income			8,903			29,509
		Retained earnings			1,802,404			1,579,057
			Total shareholders’ equity		2,641,289			2,245,039
			Total liabilities and shareholders’ equity	$	3,226,162			2,806,222

F-33

Notes to Consolidated Financial Statements 

Condensed Statements of Income			Years ended December 31,
(In thousands)
			2004			2003			2002
Income:
	Dividends received from bank subsidiaries (including TSYS)		$	228,586			230,580			224,375
	Information technology fees from affiliates			63,205			62,301			61,784
	Securities gains (losses), net			—			(209	)		3
	Interest income			7,308			10,591			9,219
	Other income			45,035			21,873			24,646
		Total income		344,134			325,136			320,027
Expenses:
	Interest expense			27,200			31,807			19,594
	Other expenses			141,603			125,964			119,293
		Total expenses		168,803			157,771			138,887
		Income before income taxes and equity in undistributed income of subsidiaries		175,331			167,365			181,140
Allocated income tax benefit				(20,513	)		(23,832	)		(17,376	)
		Income before equity in undistributed income of subsidiaries		195,844			191,197			198,516
Equity in undistributed income of subsidiaries				241,189			197,728			166,831
	Net income		$	437,033			388,925			365,347

F-34

Notes to Consolidated Financial Statements 

Condensed Statements of Cash Flows						Years ended December 31,
(In thousands)
						2004			2003			2002
Operating Activities
		Net income				$	437,033			388,925			365,347
		Adjustments to reconcile net income to net cash provided by operating activities:
				Equity in undistributed income of subsidiaries			(241,189	)		(197,728	)		(166,831	)
				Depreciation, amortization, and accretion, net			17,365			16,428			17,124
				Net increase (decrease) in other liabilities			20,784			5,469			(8,027	)
				Net increase in other assets			(15,522	)		(23,762	)		(16,969	)
				Other, net			(10,180	)		2,871			11,563
					Net cash provided by operating activities		208,291			192,203			202,207
Investing Activities
		Net investment in subsidiaries					(73,920	)		(52,864	)		(71,176	)
		Purchase of treasury stock					(4	)		(112,655	)		—
		Cash paid for acquisitions					(32,077	)		(80,400	)		—
		Cash proceeds from sales of subsidiaries					26,164			5,181			19,258
		Purchases of premises & equipment					(18,364	)		(14,201	)		(19,174	)
		Net decrease in short-term notes receivable from bank subsidiaries					81,559			9,212			20,789
		Net (increase) decrease in short-term notes receivable from nonbank subsidiaries					(899	)		1,634			(1,865	)
					Net cash used in investing activities		(17,541	)		(244,093	)		(52,168	)
Financing Activities
	Dividends paid to shareholders						(209,883	)		(194,177	)		(169,107	)
	Principal repayments on long-term debt						—			(81,959	)		—
	Proceeds from issuance of long-term debt						—			300,000			—
	Proceeds from issuance of common stock						23,465			28,070			19,047
			Net cash provided by (used in) financing activities				(186,418	)		51,934			(150,060	)
Increase (decrease) in cash							4,332			44			(21	)
Cash at beginning of period							579			535			556
Cash at end of period						$	4,911			579			535

      For the years ended December 31, 2004, 2003, and 2002, the Parent Company paid income taxes(net of refunds received) of $181 million, $175 million, and $168 million, and interest in the amount of $29 million, $26 million, and $19 million, respectively, each year.

      On April 14, 2003, the Synovus board of directors approved a two-year $200 million share repurchase plan. Through December 31, 2004, 5.5 million shares have been purchased under this plan at a total cost of $112.7 million.

Note 19     Supplemental Financial Data

      Components of other operating income and expenses in excess of 1% of total revenues for any of the respective years are as follows:

		Years ended December 31,
		2004		2003		2002
(In thousands)
Income:
	Equity in income of joint ventures	$	23,736		17,810		20,581
Expenses:
	Stationery, printing, and supplies		33,273		34,128		33,476
	Third-party processing services		30,057		27,518		26,805
	Telephone and communications		22,791		20,811		21,839
	Attorney commissions and court costs		33,930		12,433		—

F-35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Synovus Financial Corp.:

       We have audited the accompanying consolidated balance sheets of Synovus Financial Corp. and subsidiaries (Synovus) as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

       As discussed in Note 1 to the consolidated financial statements, Synovus changed its method of accounting for goodwill in 2002.

       We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Synovus’ internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 4, 2005 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

Atlanta, Georgia

March 4, 2005

F-36

MANAGEMENT’S REPORT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

       The management of Synovus Financial Corp. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.

       The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.

       In conducting the Company’s evaluation of the effectiveness of its internal control over financial reporting, the Company has excluded the following acquisitions completed by the Company in 2004: Peoples Florida Banking Corporation and Trust One Bank. Combined, these two acquisitions constituted 3.5% of consolidated assets as of December 31, 2004 and less than 1.5% of total revenues and net income for the year then ended. Please refer to Note 2 to the consolidated financial statements for further discussion of these acquisitions and their impact on Synovus’ consolidated financial statements.

       Based on our assessment, we believe that, as of December 31, 2004, the Company’s internal control over financial reporting is effective based on the criteria set forth in Internal Control – Integrated Framework.

       Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 has been audited by KPMG LLP, the independent registered public accounting firm which also audited the Company’s consolidated financial statements. KPMG LLP’s attestation report on management’s assessment of the Company’s internal control over financial reporting appears on page F-38 hereof.

James H. Blanchard	Thomas J. Prescott
Chief Executive Officer	Executive Vice President &
	Chief Financial Officer

F-37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Synovus Financial Corp.:

       We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Synovus Financial Corp. and subsidiaries (Synovus) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Synovus’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of Synovus’ internal control over financial reporting based on our audit.

       We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

       A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

       Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

       In our opinion, management’s assessment that Synovus maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Synovus maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

F-38

       Synovus acquired both Trust One Bank and Peoples Florida Banking Corporation during 2004. Management excluded from its assessment of the effectiveness of Synovus’ internal control over financial reporting as of December 31, 2004, Trust One Bank’s internal control over financial reporting and Peoples Florida Banking Corporation’s internal control over financial reporting associated with combined total assets of 3.5% of consolidated total assets of Synovus as of December 31, 2004 and combined total revenues and combined net income of less than 1.5% of consolidated total revenues and consolidated net income of Synovus for the year then ended. Our audit of internal control over financial reporting of Synovus also excluded an evaluation of the internal control over financial reporting of Trust One Bank and Peoples Florida Banking Corporation.

       We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Synovus as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2004, and our report dated March 4, 2005 expressed an unqualified opinion on those consolidated financial statements.

Atlanta, Georgia

March 4, 2005

F-39

Selected Financial Data 

		Years Ended December 31,
		2004			2003		2002		2001		2000
(Amounts in thousands, except per share data)
Income Statement:
	Total revenues (a)	$	2,381,615			2,129,902		1,949,688		1,792,286		1,626,966
	Net interest income		860,679			763,064		717,504		629,791		562,332
	Provision for losses on loans		75,319			71,777		65,327		51,673		44,341
	Non-interest income		1,521,011			1,369,329		1,234,822		1,164,217		1,065,415
	Non-interest expense		1,588,366			1,422,143		1,299,470		1,232,483		1,155,176
	Net income		437,033			388,925		365,347		311,616		262,557
Per share data:
	Net income - basic		1.42			1.29		1.23		1.07		0.93
	Net income - diluted		1.41			1.28		1.21		1.05		0.92
	Cash dividends declared		0.69			0.66		0.59		0.51		0.44
	Book Value		8.52			7.43		6.79		5.75		4.98
Balance Sheet:
	Investment securities		2,695,593			2,529,257		2,237,725		2,088,287		2,077,928
	Loans, net of unearned income		19,480,396			16,464,914		14,463,909		12,417,917		10,751,887
	Deposits		18,577,468			15,941,609		13,928,834		12,146,198		11,161,710
	Long-term debt		1,879,583			1,575,777		1,336,200		1,052,943		840,859
	Shareholders’ equity		2,641,289			2,245,039		2,040,853		1,694,946		1,417,171
	Average total shareholders’ equity		2,479,404			2,166,777		1,855,492		1,548,030		1,303,634
	Average total assets		23,275,001			20,412,853		17,414,654		15,375,004		13,466,385
Performance ratios and other data:
	Return on average assets		1.88	%		1.91		2.10		2.03		1.95
	Return on average equity		17.63			17.95		19.69		20.13		20.14
	Net interest margin, before fees (b)		3.92			3.90		4.27		4.28		4.36
	Net interest margin, after fees (c)		4.22			4.26		4.65		4.65		4.70
	Efficiency ratio (d)		52.06			53.34		52.07		53.80		55.35
	Dividend payout ratio (e)		48.94			51.56		48.76		48.57		47.83
	Average shareholders’ equity to average assets		10.65			10.61		10.65		10.07		9.68
	Average shares outstanding, basic		307,262			302,010		297,325		290,304		283,552
	Average shares outstanding, diluted		310,330			304,928		301,197		295,850		286,882

(a)	Consists of net interest income and non-interest income, excluding securities gains (losses).
(b)	Net interest margin before amortization of loan origination fees (net of amortization of loan origination costs).
(c)	Net interest margin including amortization of loan origination fees (net of amortization of loan origination costs).
(d)	For the Financial Services segment
(e)	Determined by dividing dividends declared per share (excluding pooled subsidiaries) by diluted net income per share.

F-40

Financial Review 

Executive Summary

      The following financial review provides a discussion of Synovus’ financial condition, changes in financial condition, and results of operations as well as a summary of Synovus’ critical accounting policies. This section should be read in conjunction with the preceding audited consolidated financial statements and accompanying notes.

About Our Business

      Synovus is a diversified financial services holding company, based in Columbus, Georgia, with more than $25 billion in assets. Synovus operates two business segments: the Financial Services and the Transaction Processing Services (TSYS) segments. The Financial Services segment provides integrated financial services including banking, financial management, insurance, mortgage and leasing services through 40 affiliate banks and other Synovus offices in five southeastern states. At December 31, 2004, our affiliate banks ranged in size from $57 million to $4.5 billion in total assets. The Transaction Processing Services segment provides electronic payment processing services through our 81% owned subsidiary Total System Services, Inc. (TSYS), the world’s largest third party processor of international payments. Our ownership in TSYS gives us a unique mix: for 2004, 50% of our consolidated revenues and 28% of our net income came from TSYS.

Our Key Financial Performance Indicators

      In terms of how we measure success in our business, the following are our key financial performance indicators:

Financial Services

• Net Interest Margin	• Fee Income Growth
• Loan Growth	• Expense Management
• Credit Quality	• Deposit Growth

TSYS

• Revenue Growth • Expense Management

2004 Financial Performance vs. 2003

Consolidated

•  Net income $437.0 million, up 12.4%

•  Diluted EPS $1.41, up 10.4%

Financial Services

•  Net interest margin before fees: 3.92%, up 2 basis points from 3.90% in 2003 (this measure is referred to below as “core net interest margin”)

•  Net interest margin after fees: 4.22%, down 4 basis points from 4.26% in 2003

•  Loan growth: 18% (15% excluding acquisitions and divestitures; this measure is referred to below as “organic loan growth”)

•  Credit quality: Ended the year in a very positive fashion:

•  Nonperforming assets (NPA) ratio of .52%, down from .58% at year-end 2003, and

•  Past dues over 90 days as a percentage of total loans of .09% compared to .13% at year-end 2003, and

•  Net charge-off ratio of .23%, compared to .36% for 2003.

•  Deposit growth: 17% (14% excluding acquisitions and divestitures)

•  Fee income growth: 5.3%

•  Net overhead ratio: Improved to 1.32% from 1.36% in 2003.

•  Net income growth: 14.7%

TSYS

•  Revenue growth before reimbursable items: 15.4%

•  Net income growth: 6.8%

      2004 was one of our strongest years, with successes on many fronts. We achieved a diluted earnings per share (EPS) growth of 10.4%, which was in the upper end of our initial earnings guidance of 8%-10% EPS growth. The key drivers were exceptionally strong organic loan growth of 15.4% for the year (compared to a target of 10%-12%) and outstanding credit quality with a net charge-off ratio of only .23% (compared to .36% last year and a goal of .30%), an NPA ratio of .52% at year-end (down from .58% a year ago and within our target of 0.45%-0.55%), and past dues greater than 90 days of only .09% at year-end (the lowest level in our history). Additionally, our asset-sensitive balance sheet began to experience some benefit from rising short-term rates, and we believe that we will continue to experience some benefit in this area in 2005. As we achieved our earnings targets, we funded our “at-risk” performance-based incentive compensation, which included a retirement plan contribution of 14% of eligible salaries for all team members. This resulted in an additional incentive compensation expense of approximately $19 million over the amount expensed in 2003.

F-41

Financial Review 

      Reported total deposits increased by 16.5% over last year. Excluding the impact of acquisitions and divestitures, total deposits grew by 13.7%, while core deposits (total deposits excluding time deposits over $100,000) grew by 9.7% over 2003. While we experienced good deposit growth in 2004, one of our key areas of focus in 2005 will be to grow core deposits faster than loans. We believe that we have the opportunity to accelerate our retail deposit growth through a new approach — which will be a component of our Retail Strategy in 2005.

      Additionally, our Financial Services segment moved forward strategically by entering four new banking markets: the Memphis and Tampa Bay areas through acquisitions and Jacksonville and Savannah through the opening of a start-up bank and branch, respectively.

TSYS’ significant highlights for 2004 include:

•  Signing of a definitive agreement with JPMorgan Chase & Co. to service the combined card portfolios of Chase Card Services, the second-largest card issuer in the world

•  Completion of the conversion of the Bank One portfolio,

•  Bank of America selected TSYS to process the 11 million accounts acquired with its acquisition of FleetBoston Financial Corp.

•  Accounts on file processed on TSYS’ systems increased 30.5% to 357.6 million at December 31, 2004, compared to 273.9 million at December 31, 2003.

Critical Accounting Policies

      The accounting and financial reporting policies of Synovus conform to accounting principles generally accepted in the United States of America and to general practices within the banking and electronic payment processing industries. Following is a description of the accounting policies applied by Synovus which are deemed “critical.” In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. The application of these policies has a significant impact on Synovus’ financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are applied in the application of these policies.

Allowance for Loan Losses

      The allowance for loan losses is determined based on an analysis which assesses the risk within the loan portfolio. The two most significant judgments or estimates made in the determination of the allowance for loan losses are the risk ratings for loans in the commercial loan portfolio and the valuation of the collateral for loans that are classified as impaired loans.

Commercial Loans – Risk Ratings

      Commercial loans are assigned a risk rating on a 9 point scale. For commercial loans that are not considered impaired, the allocated allowance for loan losses is determined based upon the loss percentage factors that correspond to each risk rating. Commercial loans that are not impaired represent 83.2% of total loans at December 31, 2004. The corresponding allowance for these loans was $176.9 million. The rating process is subject to certain subjective factors and estimates. Synovus uses a well-defined risk rating methodology, and has established policies that require “checks and balances” to manage the risks inherent in estimating loan losses.

      The risk ratings are based on the borrowers’ credit risk profile, considering factors such as debt service history and capacity, inherent risk in the credit (e.g., based on industry type and source of repayment), and collateral position. Ratings 6 through 9 are modeled after the bank regulatory classifications of special mention, substandard, doubtful, and loss. Loss percentage factors are based on historical loss rates, bank regulatory guidance, and Synovus’ assessment of losses within each risk rating. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified as necessary.

      Each loan is assigned a risk rating during the approval process. This process begins with a rating recommendation from the loan officer responsible for originating the loan. The rating recommendation is subject to approvals from other members of management and/or loan committees depending on the size and type of credit. Ratings are re-evaluated at least every twelve months in connection with the loan review process at each affiliate bank. Additionally, an independent holding company credit review function evaluates each affiliate bank’s risk rating process at least every twelve to eighteen months.

Collateral Valuation

      A majority of our impaired loans are collateral dependent. The allowance for loan losses on these loans is determined based upon fair value estimates (net of selling costs) of the respective collateral. The actual losses on these loans could differ significantly if the fair value of the collateral is different from the estimates used by Synovus in determining the allocated allowance. Most of our collateral-dependent impaired loans are secured by real estate. The fair value of these real estate properties is generally determined based

F-42

Financial Review 

upon appraisals performed by a certified or licensed appraiser. Management also considers other factors or recent developments which could result in adjustments to the collateral value estimates indicated in the appraisals.

Loss Factors

      The allocated allowance for retail loans is generally determined by segregating the retail loan portfolio into pools of homogeneous loan categories. Loss factors applied to these pools are generally based on average historical losses for the previous two years and current delinquency trends. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified as necessary.

Other

      Certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses and corresponding credit costs. The depth, duration, and dispersion of any economic recession all have an impact on the credit risk profile of the loan portfolio. Additionally, a rapidly rising interest rate environment could as well have a material impact on certain borrowers’ ability to pay.

Revenue Recognition

      TSYS’ electronic payment processing revenues are derived from long-term processing contracts with financial institutions and nonfinancial customers and are generally recognized as the services are performed. Electronic payment processing revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, and other processing services for cardholder accounts on file. Most of these contracts have prescribed annual revenue minimums. The original terms of processing contracts generally range from three to ten years in length.

      On March 3, 2003, TSYS announced that Bank One had selected TSYS to upgrade its credit card processing. Under the long-term software licensing and services agreement, TSYS is to provide electronic payment processing services to Bank One’s credit card accounts for at least two years starting in 2004 (excluding statement and card production services). Following the provision of processing services, TSYS is to license a modified version of its TS2 consumer and commercial software to Bank One through a perpetual license with a six-year payment term. TSYS used the percentage-of-completion accounting method for its agreement with Bank One and recognized revenues in proportion to costs incurred. This agreement has been superseded by the agreement with Chase described below. TSYS’ revenues from Bank One were approximately 4.6% of total revenues for the year ended December 31, 2004.

      On October 13, 2004, TSYS finalized a definitive agreement with JP Morgan Chase & Co. (Chase) to service the combined card portfolios of Chase Card Services and to upgrade its card-processing technology. The agreement extends a relationship that started with TSYS and the former Bank One Corp. in March 2003. Pursuant to the revised agreement, the first phase of the project was executed successfully and Bank One’s remaining accounts were converted to the TS2 processing platform during the fourth quarter of 2004, according to the project’s original schedule. Chase is expected to convert its consumer and commercial accounts to TS2 in the second half of 2005, after which TSYS expects to maintain the card-processing functions of Chase Card Services for at least two years. Chase Card Services then has the option to migrate the portfolio in-house, under a perpetual license of TS2 with a six-year payment term.

      As a result of the revised agreement with Chase, TSYS discontinued its use of the percentage of completion accounting method for the original agreement with Bank One. The revised agreement will be accounted for in accordance with the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF) 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables,” and other applicable guidance.

      TSYS recognizes software license revenue in accordance with Statement of Position No. (SOP)97-2, “Software Revenue Recognition,” and SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition With Respect to Certain Transactions.” For software licenses for which any services rendered are not considered essential to the functionality of the software, revenue is recognized upon delivery of the software, provided (1) there is evidence of an arrangement, (2) collection of the fee is considered probable, (3) the fee is fixed or determinable, and (4) vendor specific objective evidence (VSOE) exists to allocate revenue to the undelivered elements of the arrangement.

      When services are considered essential to the functionality of the software licensed, revenues are recognized over the period that such services will be performed using the percentage-of-completion method in accordance with SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts.” Progress during the period services are performed is measured by the percentage of costs incurred to date to estimated total costs for each arrangement. Provisions for estimated losses on incomplete contracts are made in the period in which such losses are determined.

F-43

Financial Review 

For license arrangements in which the fee is not fixed or determinable, the license revenue is recognized as payments become due.

      TSYS’ other service revenues are derived from recovery collections work, bankruptcy process management, legal account management, skip tracing, commercial printing activities, targeted loyalty programs, and customer relationship management services, such as call center activities for card activation, balance transfer requests, customer service and collection. The contract terms for these services are generally shorter in nature as compared with TSYS’ long-term processing contracts. Revenue is recognized on these other services as the services are performed either on a per unit or a fixed price basis. TSYS uses the percentage-of-completion method of accounting for its fixed price contracts, and progress is measured by the percentage of costs incurred to date to estimated total costs for each arrangement. Provisions for estimated losses on incomplete contracts are made in the period in which such losses are determined.

Contract Acquisition Costs

      TSYS capitalizes contract acquisition costs related to signing or renewing long-term contracts. These costs, primarily consisting of cash payments for rights to provide processing services and internal conversion costs are amortized using the straight-line method over the contract term beginning when the client’s cardholder accounts are converted and producing revenues. All costs incurred prior to a signed agreement are expensed as incurred.

      The amortization of contract acquisition costs associated with cash payments is recorded as a reduction of electronic payment processing services revenues in the consolidated statements of income. The amortization of contract acquisition costs associated with conversion activity is recorded as other operating expenses in the consolidated statements of income. TSYS evaluates the carrying value of contract acquisition costs for impairment for each customer on the basis of whether these costs are fully recoverable from expected undiscounted net operating cash flows of the related contract. The determination of expected undiscounted net operating cash flows requires management to make estimates.

      These costs may become impaired with the loss of a contract, the financial decline of a client, termination of conversion efforts after a contract is signed, diminished prospects for current clients, or if TSYS’ actual results differ from its estimates of future cash flows.

Software Development Costs

      In accordance with Financial Accounting Standards Board (FASB) Statement No. 86, “Computer Software to be Sold, Leased or Otherwise Marketed,” software development costs are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when TSYS has completed a detailed program design and has determined that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is generally available to clients. TSYS evaluates the unamortized capitalized costs of software development as compared to the net realizable value of the software product which is determined by expected undiscounted net operating cash flows. The amount by which the unamortized software development costs exceed the net realizable value is written off in the period that such determination is made. Software development costs are amortized using the greater of (1) the straight-line method over its estimated useful life, which ranges from three to ten years or (2) the ratio of current revenues to total anticipated revenues over its useful life.

      TSYS also develops software that is used internally. These software development costs are capitalized based upon Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” Internal-use software development costs are capitalized once (a) preliminary project stage is completed, (b) management authorizes and commits to funding a computer software project, and (c) it is probable that the project will be completed, and the software will be used to perform the function intended. Costs incurred prior to meeting these qualifications are expensed as incurred. Capitalization of costs ceases when the project is substantially complete and ready for its intended use. Internal-use software development costs are amortized using an estimated useful life of three to seven years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of the planned project becoming doubtful or due to technological obsolescence of the planned software product.

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Transaction Processing Provisions

      TSYS has recorded estimates to accrue for contract contingencies (performance penalties) and processing errors. A significant number of TSYS’ contracts with large clients contain service level agreements, which can result in TSYS incurring performance penalties if contractually required service levels are not met. When providing these accruals, TSYS takes into consideration such factors as the prior history of performance penalties and processing errors incurred, actual contractual penalties inherent in its contracts, progress towards milestones, and known processing errors not covered by insurance.

      These accruals are included in other liabilities in the accompanying consolidated balance sheets. Increases and decreases in transaction processing provisions are charged to other non-interest expense in the consolidated statements of income, and payments or credits for performance penalties and processing errors are charged against the accrual.

Acquisitions

      Table 1 summarizes the acquisitions completed during the past three years.

Table 1 Acquisitions
(Dollars in thousands)				Total		Shares
Company and Location		Date		Assets		Issued		Cash
Clarity Payment Solutions, Inc. (TSYS Prepaid, Inc.)			August 2, 2004	$	76,000		—	$	53,000
	New York, New York
Trust One Bank			June 1, 2004	$	513,000		3,841,302	$	—
	Memphis, Tennessee
Peoples Florida Banking Corporation			January 30, 2004	$	324,000		1,636,827	$	32,100
	Palm Harbor, Florida
Enhancement Services Corporation			April 28, 2003	$	43,230		—	$	36,000
	Roswell, Georgia
United Financial Holdings, Inc.			February 28, 2003	$	490,000		2,388,087	$	34,000
	St. Petersburg, Florida
FNB Newton Bancshares, Inc.			February 27, 2003	$	445,000		2,253,627	$	46,408
	Covington, Georgia
Community Financial Group, Inc.			July 31, 2002	$	557,000		3,065,235	$	—
	Nashville, Tennessee
GLOBALT, Inc.			May 31, 2002	$	23,000		702,433	$	—
	Atlanta, Georgia

This information is discussed in further detail in Note 2 of the consolidated financial statements.

      On March 1, 2005 TSYS acquired the remaining 50% equity stake in Vital Processing Services (Vital) from VISA U.S.A. Vital is now wholly-owned by TSYS. The purchase of the remaining 50% interest in Vital provides TSYS with greater synergies for its clients that service merchants who accept cards as payments and issue credit to their customers. It is expected that Vital will contribute approximately $0.03-$0.04 incrementally to TSYS’ earnings per share for 2005.

Earning Assets, Sources of Funds, and Net Interest Income

Earning Assets and Sources of Funds

      Average total assets for 2004 were $23.3 billion or 14.0% over 2003 average total assets of $20.4 billion. Average earning assets for 2004 were $20.6 billion, which represented 88.4% of average total assets. Average earning assets increased $2.5 billion, or 13.8%, over 2003. The $2.5 billion increase consisted primarily of a $2.3 billion increase in average net loans and a $296 million increase in average investment securities balances. The primary funding sources for this earning asset growth were a $2.0 billion increase in average deposits, a $380 million increase in federal funds purchased and securities sold under repurchase agreements, and an $80 million increase in other borrowed funds. Average shareholders’ equity for 2004 was $2.5 billion.

      For 2003, average total assets increased $3.0 billion, or 17.2% from 2002. Average earning assets for 2003 were $18.1 billion, which represented 88.6% of average total assets. For more detailed information on the average balance sheets

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for the years ended December 31, 2004, 2003, and 2002, refer to Table 3.

Net Interest Income

      Net interest income (interest income less interest expense) is a major component of net income, representing the earnings of the primary business of gathering funds from deposit and other sources and investing those funds in loans and investment securities. Our long-term objective is to manage those assets and liabilities to maximize net interest 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 liability costs (spread rate), and by the percentage of interest earning assets funded by non-interest bearing liabilities.

      Net interest income for 2004 was a record $860.7 million, up $97.6 million, or 12.8%, from 2003. On a taxable-equivalent basis, net interest income was $867.6 million, up $97.2 million, or 12.6%, over 2003. During 2004, average interest earning assets increased $2.5 billion, or 13.8%, with the majority of this increase attributable to loan growth. Increases in the level of deposits and federal funds purchased were the primary funding sources for the increase in earning assets.

Net Interest Margin

      The net interest margin was 4.22% for 2004, down 4 basis points from 2003. This decrease resulted from a 24 basis point decrease in the yield on earning assets, which was partially offset by a 20 basis point decrease in the effective cost of funds, which includes non-interest bearing demand deposits.

      The primary earning assets of the Company, loans and investment securities, experienced declines in yields during 2004. Loan yields decreased 25 basis points, primarily due to the continued impact of the historically low interest rate environment on fixed rate loan yields and the continuation of a customer-driven shift in the loan portfolio to a higher percentage of variable rate loans. Due to customer demand, essentially all of the Company’s loan growth was in the form of variable rate loans, primarily indexed to the prime rate. Due to historically low rates and the steep yield curve that prevailed for most of 2004, these loans were generally lower yielding than fixed rate loans. Increases in the prime rate, which started in the middle of 2004, have begun to have a positive impact on the realized yields from the variable rate loan portfolio. Investment security yields declined 33 basis points, primarily due to the continued maturity and runoff of older, higher yielding securities. Reinvestment of these cash flows at lower yields has continued to have a negative impact on realized securities yields.

      The primary factors driving the 20 basis point decrease in the effective cost of funds were a 37 basis point decrease in the cost of time deposits and a 56 basis point decrease in the cost of other borrowed funds. Time deposits costs decreased as older, higher rate deposits matured and were renewed at lower yield levels. Other borrowed funds costs decreased due to the maturity of higher rate fixed rate borrowings and an increase in the utilization of variable rate borrowings. These variable rate borrowings have been utilized to better match the strong growth of our variable rate loan portfolio. Other borrowed funds costs were also favorably impacted by Synovus’ entering into a $100 million receive fixed pay floating interest rate swap to hedge a portion of its long-term debt. This transaction was completed in December 2003. In addition to these factors, the continued improvement in our deposit mix had a positive impact on the effective cost of funds. This improvement is primarily reflected in the strong growth of money market and demand deposit accounts.

      During the third quarter of 2004, Synovus reassessed the standard loan origination costs and methodology used in conjunction with its accounting for loan origination fees and costs. As part of this assessment, Synovus changed its methodology and now recognizes these costs netted against origination fees over the life of the respective loans as an adjustment of yield (interest income). Synovus had previously recognized fee income over the life of its loans after recognizing a portion of fee income upon loan origination to offset origination costs. The new methodology was implemented on a prospective basis during the fourth quarter of 2004. The change was not material to Synovus’ financial position, results of operations, or cash flows. The new methodology did however result in a decrease in general and administrative expenses of $9.2 million with a corresponding decrease (of approximately the same amount) in interest income and the net interest margin. This change in accounting methodology will continue to impact net interest income and the net interest margin in 2005.

      The net interest margin was 4.26% for 2003, down 39 basis points from 2002. This decrease resulted from a 91 basis point decrease in the yield on earning assets, which was partially offset by a 52 basis point decrease in the effective cost of funds, which includes non-interest bearing demand

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deposits. The primary earning assets of the Company, loans and investment securities, experienced declines in yields during 2003. Loan yields decreased 82 basis points, primarily due to a 55 basis point decrease in the average prime rate and a customer-driven shift in the loan portfolio to a higher level of variable rate loans. Investment security yields declined 149 basis points, primarily due to lower reinvestment yields and a higher level of prepayments. High levels of prepayment activity resulted in accelerated premium amortization and a greater volume of funds to reinvest at lower yields, both of which had a negative impact on realized securities yields.

Table 2     Net Interest Income

		Years Ended December 31,
(In thousands)
		2004		2003		2002
Interest income		$	1,159,020		1,061,492		1,055,040
Taxable-equivalent adjustment			6,960		7,388		7,265
	Interest income, taxable-equivalent		1,165,980		1,068,880		1,062,305
Interest expense			298,341		298,428		337,536
	Net interest income, taxable-equivalent	$	867,639		770,452		724,769

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Financial Review 

Table 3 Consolidated Average Balances, Interest, and Yields

			2004									2003									2002
			Average						Yield/			Average						Yield/			Average						Yield/
(Dollars in thousands)			Balance			Interest			Rate			Balance			Interest			Rate			Balance			Interest			Rate
Assets
Interest earning assets:
	Taxable loans, net(a)(b)		$	17,881,572			1,048,337			5.86	%	$	15,556,295			948,351			6.10	%	$	13,312,986			920,595			6.92	%
	Tax-exempt loans, net(a)(b)(c)			71,394			4,257			5.96			69,924			4,950			7.08			67,759			4,609			6.80
	Allowance for loan losses			(247,054	)		—			—			(220,004	)		—			—			(184,253	)		—			—
		Loans, net		17,705,912			1,052,594			5.94			15,406,215			953,301			6.19			13,196,492			925,204			7.01
	Taxable investment securities			2,366,631			88,560			3.74			2,065,924			83,727			4.05			1,829,301			103,688			5.67
	Tax-exempt investment securities(c)			230,815			16,268			7.05			235,401			16,920			7.19			233,537			17,167			7.35
		Total investment securities		2,597,446			104,828			4.04			2,301,325			100,647			4.37			2,062,838			120,855			5.86
	Interest earning deposits with banks			4,197			32			0.76			4,515			25			0.55			3,857			51			1.31
	Federal funds sold and securities purchased under resale agreements			148,685			1,945			1.31			111,893			1,546			1.38			71,389			1,538			2.12
	Mortgage loans held for sale			117,479			6,581			5.60			254,240			13,361			5.26			229,073			14,657			6.40
		Total interest earning assets		20,573,719			1,165,980			5.67			18,078,188			1,068,880			5.91			15,563,649			1,062,305			6.82
	Cash and due from banks			655,069									594,097									489,389
	Premises and equipment, net			855,197									714,255									596,527
	Other real estate			26,420									28,273									22,147
	Other assets(d)			1,164,596									998,040									742,942
		Total assets	$	23,275,001								$	20,412,853								$	17,414,654
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
	Interest bearing demand deposits		$	2,762,104			16,764			0.61		$	2,515,161			17,779			0.71		$	2,035,917			19,532			0.96
	Money market accounts			4,481,042			54,387			1.21			3,695,601			41,086			1.11			3,058,174			50,594			1.65
	Savings deposits			548,736			1,002			0.18			502,246			1,243			0.25			446,205			2,431			0.54
	Time deposits			6,212,872			144,131			2.32			5,848,271			157,453			2.69			5,346,391			188,099			3.52
	Federal funds purchased and securities sold under repurchase agreements			1,479,815			19,286			1.30			1,101,216			11,829			1.07			1,131,455			18,639			1.65
	Other borrowed funds			1,718,556			62,771			3.65			1,639,487			69,038			4.21			1,185,200			58,241			4.85
		Total interest bearing liabilities		17,203,125			298,341			1.73			15,301,982			298,428			1.95			13,203,342			337,536			2.55
		Spread rate								3.94	%								3.96	%								4.27	%
Non-interest bearing demand deposits				3,048,465									2,501,539									1,983,131
Other liabilities				544,007									442,555									372,689
Shareholders’ equity				2,479,404									2,166,777									1,855,492
		Total liabilities and shareholders’ equity	$	23,275,001								$	20,412,853								$	17,414,654
Net interest income/margin							867,639			4.22	%					770,452			4.26	%					724,769			4.65	%
Taxable-equivalent adjustment							(6,960	)								(7,388	)								(7,265	)
Net interest income, actual						$	860,679								$	763,064								$	717,504

(a)	Average loans are shown net of unearned income. Nonperforming loans are included.
(b)	Interest income includes amortization of loan origination fees (and net of amortization of loan origination costs beginning in the fourth quarter of 2004) as follows: 2004 - $60.4 million, 2003 - $65.7 million, 2002 - $59.7 million.
(c)	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.
(d)	Includes average net unrealized gains (losses) on investment securities available for sale of $12.6 million, $48.8 million, and $53.6 million for the years ended December 31, 2004, 2003, and 2002, respectively.

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Financial Review 

Table 4     Rate/Volume Analysis

			2004 Compared to 2003									2003 Compared to 2002
(In thousands)
			Change Due to (a)									Change Due to (a)
						Yield/			Net						Yield/			Net
			Volume			Rate			Change			Volume			Rate			Change
Interest earned on:
	Taxable loans, net		$	141,842			(41,856	)		99,986			155,237			(127,481	)		27,756
	Tax-exempt loans, net (b)			104			(797	)		(693	)		147			194			341
	Taxable investment securities			12,179			(7,346	)		4,833			13,417			(33,378	)		(19,961	)
	Tax-exempt investment securities (b)			(330	)		(322	)		(652	)		137			(384	)		(247	)
	Interest earning deposits with banks			(2	)		9			7			9			(35	)		(26	)
	Federal funds sold and securities purchased under resale agreements			508			(109	)		399			859			(851	)		8
	Mortgage loans held for sale			(7,194	)		414			(6,780	)		1,611			(2,907	)		(1,296	)
		Total interest income		147,107			(50,007	)		97,100			171,417			(164,842	)		6,575
Interest paid on:
	Interest bearing demand deposits			1,753			(2,768	)		(1,015	)		4,601			(6,354	)		(1,753	)
	Money market accounts			8,718			4,583			13,301			10,518			(20,026	)		(9,508	)
	Savings deposits			116			(357	)		(241	)		303			(1,491	)		(1,188	)
	Time deposits			9,808			(23,130	)		(13,322	)		17,666			(48,312	)		(30,646	)
	Federal funds purchased and securities sold under repurchase agreements			4,051			3,406			7,457			(499	)		(6,311	)		(6,810	)
	Other borrowed funds			3,329			(9,596	)		(6,267	)		21,354			(10,557	)		10,797
		Total interest expense		27,775			(27,862	)		(87	)		53,943			(93,051	)		(39,108	)
		Net interest income	$	119,332			(22,145	)		97,187			117,474			(71,791	)		45,683

(a)	The change in interest due to both rate and volume has been allocated to the rate component.
(b)	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.

Non-Interest Income

      Non-interest income consists of TSYS revenues as well as a wide variety of fee generating services from the Financial Services segment. Consolidated non-interest income was $1.52 billion, $1.37 billion, and $1.23 billion for the years ended December 31, 2004, 2003 and 2002, respectively. TSYS’ combined revenues represented 78.5% of consolidated non-interest income in 2004 compared to 77.3% in 2003.

      Non-interest income excluding reimbursable items totaled $1.3 billion in 2004, an increase of 12.9% from 2003. For 2003, non-interest income excluding reimbursable items was $1.1 billion, an increase of 14.0% from 2002. Revenues from electronic payment processing and other transaction processing services offered by TSYS were the largest contributors, increasing $130.8 million, or 15.9% in 2004, and increasing $102.6 million, or 14.3% in 2003 over the previous year. Financial Services’ non-interest income increased $16.4 million, or 5.3% in 2004, and $41.8 million or 15.5% in 2003. The increase in Financial Services’ non-interest income in 2004 was led by an increase in service charges on deposits.

Transaction Processing Services:

      TSYS’ revenues are derived from providing electronic payment processing and related services to financial and nonfinancial institutions, generally under long-term processing contracts. TSYS’ services are provided through TSYS’ cardholder systems, TS2 and TS1, to financial institutions and other organizations throughout the United States, Mexico, Canada, Honduras, Puerto Rico and Europe. TSYS currently offers merchant services to financial institutions and other organizations in Japan through its majority owned subsidiary, GP Network Corporation (GP Net). TSYS also provides back-

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Financial Review 

end processing services for its joint venture, Vital, to support merchant processing in the United States.

      The following table summarizes TSYS’ accounts on file at December 31, 2004, 2003, and 2002.

Accounts on File (AOF) Information							Percent Change
(in millions)
	2004		2003		2002		2004 vs. 2003			2003 vs. 2002
At December 31		357.6		273.9		245.9		30.5	%		11.4	%
YTD Average		303.1		262.6		232.1		15.4			13.1

Major Customers

      A significant amount of TSYS revenues is derived from long-term contracts with large clients, including certain major customers. On January 25, 2005 TSYS announced that it had extended its agreement with one of its major customers, Bank of America, for an additional five years through 2014. The expanded relationship covers all Visa and Mastercard consumer and commercial card accounts issued by Bank of America as well as the recently acquired portfolio of FleetBoston. Bank of America accounted for approximately 18.5%, 18.2% and 18.6% of TSYS’ total revenues for the years ended December 31, 2004, 2003 and 2002, respectively. The loss of Bank of America, or any other major or significant client, could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

      TSYS has a long-term processing relationship with Providian Financial Corporation (Providian), one of the largest bankcard issuers in the nation, until 2011. Providian accounted for approximately 8.0%, 10.4% and 13.3% of TSYS’ total revenues for the years ended December 31, 2004, 2003 and 2002, respectively. The decrease in revenues from Providian is the result of a change in the types of services TSYS offers to Providian, such as statements and card personalization, as well as the decrease in the number of accounts TSYS processed. The loss of Providian, or any other major or significant client, could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

      TSYS works to maintain a large and diverse customer base across various industries. In addition to its two major customers, TSYS has other large clients representing a significant portion of its total revenues. The loss of any one of TSYS’ large clients could have a material adverse effect on TSYS’ financial position, results of operations and cash flows.

International Revenue

      Total revenues from clients based in Europe were $101.6 million for 2004, a 48.1% increase over the $68.6 million in 2003, which was a 25.6% increase over the $54.6 million in 2002. The growth in revenues in 2004 from clients based in Europe was a result of the growth of existing clients, the conversion of new accounts, the effect of currency translation and the increased use of value added products and services by clients in Europe.

      Total revenues from clients based in Mexico were $11.2 million for 2004, a 64.2% decrease from the $31.4 million for 2003, which was a 7.5% increase from the $29.2 million in 2002. During 2003, TSYS’ largest client in Mexico notified TSYS that the client would be utilizing its internal global platform and deconverted in the fourth quarter of 2003. This client represented approximately 70% of TSYS’ revenues from Mexico. Another Mexican client notified TSYS of its intentions to utilize its internal global platform and deconverted in mid-2004. This client represented approximately 21% of TSYS’ revenues from Mexico prior to the deconversions. As a result, management expects electronic payment processing revenues for 2005 from Mexico will decrease when compared to electronic payment processing revenues from Mexico for 2004.

Value Added Products and Services

      TSYS’ electronic payment processing services revenues are also impacted by the use of optional value added products and services of TSYS’ processing systems. Value added products and services are optional features to which each client can choose to subscribe in order to potentially increase the financial performance of its portfolio. Value added products and services are included mainly in electronic payment processing services revenue.

      For the years ended December 31, 2004, 2003 and 2002, value added products and services represented 13.8%, 14.1% and 12.7% of total revenues, respectively. Revenues from these products and services, which include some reimbursable items paid to third-party vendors, increased 10.8%, or $16.0 million, for 2004 compared to 2003 and increased 22.1%, or $26.8 million, for 2003 compared to 2002.

Electronic Payment Processing Revenues

      Electronic payment processing revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, credit cards embossed and mailed, and other processing services for cardholder accounts on file. Cardholder accounts on file include active and inactive consumer credit, retail, debit, stored value and commercial card accounts. Due to the number of cardholder accounts processed by TSYS and the expanding use of cards, as well as increases in the scope of services offered to clients, revenues relating to electronic payment processing services have continued to grow.

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Financial Review 

      Electronic payment processing services revenues increased 11.5%, or $80.4 million, for the year ended December 31, 2004, compared to the year ended December 31, 2003, which increased 14.4%, or $88.2 million, compared to the year ended December 31, 2002.

      On March 3, 2003, TSYS announced that Bank One had selected TSYS to upgrade its credit card processing. Under the long-term software licensing and services agreement, TSYS is to provide electronic payment processing services to Bank One’s credit card accounts for at least two years starting in 2004 (excluding statement and card production services). Following the provisions of processing service, TSYS is to license a modified version of its TS2 consumer and commercial software to Bank One under a perpetual license with a six-year payment term. This agreement has been superseded by the agreement with Chase described below. TSYS used the percentage-of-completion accounting method for its agreement with Bank One and recognized revenues in proportion to costs incurred. TSYS’ revenues from Bank One were less than 10% of TSYS’ total revenues in 2004 and 2003, respectively.

      On January 20, 2004, Circuit City Stores, Inc. (Circuit City) announced an agreement to sell its private-label credit card business to Bank One. TSYS has a long-term agreement with Circuit City until April 2006. On July 1, 2004, Bank One and Chase merged under the name Chase.

      On October 13, 2004, TSYS finalized a definitive agreement with Chase to service the combined card portfolios of Chase Card Services and to upgrade its card-processing technology. The agreement extends a relationship that started with TSYS and the former Bank One Corp. in March 2003. Pursuant to the revised agreement, the first phase of the project was executed successfully and Bank One’s remaining accounts were converted to the modified TS2 processing platform during the fourth quarter of 2004, according to the project’s original schedule. Chase is expected to convert its consumer and commercial accounts to modified TS2 in the second half of 2005, after which TSYS expects to maintain the card-processing functions of Chase Card Services for at least two years. Chase Card Services then has the option to either extend the processing agreement for up to five additional two-year periods or migrate the portfolio in-house, under a perpetual license of a modified version TS2 with a six-year payment term.

      As a result of the new agreement with Chase, TSYS discontinued its use of the percentage-of-completion accounting method for the original agreement with Bank One. The revised agreement is accounted for in accordance with Emerging Issues Task Force (EITF) Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables,” and other applicable guidance.

      TSYS expects that the 2005 impact of the agreement on TSYS’ earnings per share will be $0.05-$0.06 and the 2006 impact will be $0.06-$0.07. Beyond 2006, the annual EPS impact of the agreement will depend upon Chase Card Services’ decision to continue the processing agreement or to exercise its option to license the software.

      In October 2003, Circuit City announced that it had sold its Visa and MasterCard portfolio, which includes credit card receivables and related cash reserves to FleetBoston. On March 31, 2004 Bank of America acquired FleetBoston.

      In July 2003, Sears and Citigroup announced an agreement for the sale by Sears to Citigroup of the Sears credit card and financial services businesses. Sears and Citigroup are both clients of TSYS, and TSYS considers its relationships with both companies to be very positive. TSYS and Sears are parties to a 10-year agreement, which was renewed in January of 2000, under which TSYS provides transaction processing for more than 86.0 million Sears accounts. During the year ended December 31, 2004, TSYS’ revenues from the agreement with Sears represented less than 10% of TSYS’ consolidated revenues. The agreement includes provisions for termination for convenience prior to its expiration upon the payment of a termination fee. The agreement with Sears also grants to Sears the one-time right to market test TSYS’ pricing and functionality after May 1, 2004. Potential results of such market test, in which TSYS would be a participant, include continuation of the processing agreement under its existing terms, continuation of the processing agreement under mutually agreed modified terms, or termination of the processing agreement after May 1, 2006 without a termination fee. The impact of the transaction between Sears and Citigroup on the financial position, results of operations and cash flows of TSYS cannot be determined at this time.

      Revenues associated with ProCard are included in electronic payment processing services. These services include providing customized, Internet, Intranet and client/server software solutions for commercial card management programs. Revenues from these services increased 11.3% to $24.7 million in 2004, compared to $22.2 million in 2003, which increased 23.0% compared to $18.0 million in 2002.

      On August 2, 2004, TSYS completed the acquisition of Clarity Payment Solutions, Inc. (Clarity). Clarity was renamed TSYS Prepaid, Inc. (TSYS Prepaid). TSYS Prepaid is a leading provider of prepaid card solutions that utilize the Visa, MasterCard, EFT and ATM networks for Fortune 500 companies as well as domestic and international financial institutions. For the year ended December 31, 2004, TSYS revenues in-

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clude $8.2 million related to revenues from TSYS Prepaid and are included in electronic payment processing services.

Other Transaction Processing Services Revenue

      Revenues associated with TSYS’ wholly owned subsidiaries, Columbus Depot Equipment Company (CDEC), Columbus Productions, Inc. (CPI), TSYS Total Debt Management, Inc. (TDM) and Enhancement Services Corporation (ESC) are included in other transaction processing services revenue.

      On April 28, 2003 TSYS completed the acquisition of ESC. For the year ended December 31, 2004, other transaction processing services revenue included $21.5 million related to ESC’s revenues compared to $11.9 million for 2003.

      Other transaction processing services revenue increased $50.4 million, or 41.8%, in 2004, compared to 2003. In 2003, other transaction processing services revenue increased $14.4 million, or 13.6%, compared to 2002. Other transaction processing services revenue increased primarily as a result of increased debt collection services performed by TDM and the revenues associated with ESC.

Equity in Income of Joint Ventures

      TSYS’ share of income from its equity in joint ventures was $23.7 million, $17.8 million, and $20.6 million for 2004, 2003, and 2002, respectively. The increase in 2004 was primarily the result of improvements in Vital’s operating results from increased volumes. The decrease in 2003 is primarily attributable to the decrease in Vital’s operating results as a result of pricing concessions and charges associated with an executive’s retirement and termination of Vital’s stock-based compensation plans. These amounts are reflected as a component of other operating income in the consolidated statements of income.

Financial Services:

      Financial Services’ total non-interest income was $327.4 million, $311.0 million, and $269.2 million for the years ended December 31, 2004, 2003, and 2002, respectively. Table 5 shows the principal components of Financial Services’ non-interest income.

      Service charges on deposits represent the single largest fee income component for Financial Services. Service charges on deposits totaled $121.1 million in 2004, an increase of 12.8% from the previous year, and $107.4 million in 2003, an increase of 14.3% from 2002. The main factors that contributed to the increase in service charges over the last two years were increases in the number of individual and commercial accounts, transaction volume growth, growth related to the new addition of new products, and the effect of pricing increases in certain service charges.

      Fiduciary and asset management fees are derived from providing estate administration, employee benefit plan administration, personal trust, corporate trust, investment management and financial planning services. At December 31, 2004 and 2003, the market value of assets under management was approximately $10.1 billion and $9.7 billion, respectively. Assets under management increased 3.7% due to appreciation in the equity markets as well as net new business. Assets under management consist of all assets where Synovus has investment authority as well as our proprietary mutual funds. Assets under advisement were approximately $2.6 billion and $2.0 billion at December 31, 2004 and 2003, respectively. Assets under advisement consist of non-managed assets as well as non-custody assets where Synovus earns a consulting fee. Assets under advisement increased 33.0% over 2003. Total assets under management and advisement by Synovus grew to $12.7 billion in 2004 from $11.7 billion in 2003 or 8.7%. The increase in fiduciary and asset management fees is primarily due to higher market values of equity securities for 2004 compared to a year ago, as well as the addition of $1.7 billion in new assets during 2004. This increase in fees was partially offset by a $1.2 million decrease in fees for 2004 related to certain divestitures completed in the second half of 2003 and first quarter of 2004.

      At December 31, 2003 and 2002, the market value of total assets under management and advisement was approximately $11.7 billion and $8.9 billion, respectively. These assets increased 30.7% due to appreciation in the equity markets as well as net new business. Fiduciary and asset management fees were impacted by lower average market values of equity securities during 2003 compared to 2002. Most of the impact of the lower market values of managed assets was offset by the addition of $1.5 billion in new assets during 2003. Additionally, these fees increased by $1.9 million compared to 2002 due to the acquisition of GLOBALT, Inc. in the second quarter of 2002.

      Brokerage and investment banking revenue was $21.7 million in 2004, a 6.3% increase over the $20.5 million in 2003. Brokerage assets were $3.1 billion and $2.8 billion as of December 31, 2004 and 2003, respectively. The increase in revenue was mainly driven by an increase in the amount of fee-based assets held versus assets in traditional brokerage accounts.

      Brokerage revenue for 2003 benefited from growth in equity and fixed income sales along with increased advisory fees on fee-based assets. Total brokerage and investment banking revenue for 2003 was $20.5 million, up 8.6% over 2002.

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      Mortgage banking income was $26.3 million in 2004, a 55.1% or $32.3 million decrease from 2003 levels. Mortgage production volume was $1.4 billion in 2004, compared to $2.7 billion in 2003. The decrease was expected and consistent with industry averages as mortgage refinancing activity declined significantly during 2004.

      Total mortgage banking income for 2003 benefited from record-low interest rates, which generated substantial mortgage refinancing activity. Total mortgage banking income for 2003 was $58.6 million, up 41.9% over 2002 levels. Total mortgage production volume was $2.7 billion, up from $2.2 billion in 2002. Secondary marketing gains were $24.9 million in 2003, compared to $13.2 million in 2002. The increase in secondary marketing gains was primarily due to the increase in demand which resulted in more favorable pricing.

      Other fee income includes fees for letters of credit, safe deposit box fees, access fees for automatic teller machine use, official check issuance fees, and other miscellaneous fee-related income. For the years ended December 31, 2004 and 2003, $3.1 million and $2.8 million of the total increase, respectively, was due to increases in letter of credit fees.

      Other operating income was $55.2 million in 2004, compared to $32.4 million in 2003. The main components of other operating income are income from company-owned life insurance policies, insurance commissions, and other items discussed below.

      Other operating income includes pre-tax gains from the sales of banking locations of $15.8 million in 2004 and $15.4 million in 2002. These sales have resulted from Synovus’ strategic market repositioning by exiting certain low growth markets and reinvesting these resources into higher growth markets. In 2002, other operating income included a $10.0 million pre-tax gain from the sale of the Star System ATM network, which represented our ownership interest in the network.

Table 5 Non-Interest Income - Financial Services Segment

		2004		2003		2002
(In thousands)
Service charges on deposits		$	121,103		107,404		93,969
Fiduciary and asset management fees			43,757		39,922		36,131
Brokerage and investment banking revenue			21,748		20,461		18,840
Mortgage banking income			26,300		58,633		41,323
Credit card fees			30,025		26,044		22,469
Securities gains, net			75		2,491		2,638
Other fee income			29,227		23,682		20,494
Other operating income			55,206		32,386		41,685
	Total non-interest income before impairment loss on private equity investment		327,441		311,023		277,549
Impairment loss on private equity investment			—		—		(8,355	)
	Total non-interest income	$	327,441		311,023		269,194

Non-Interest Expense

      Management analyzes non-interest expense in two separate components: Financial Services and Transaction Processing Services. Table 6 summarizes this data for the years ended December 31, 2004, 2003, and 2002.

Financial Services:

2004 vs. 2003

      Reported total non-interest expense for the Financial Services segment increased $46.3 million or 8.0% over 2003. The single largest factor impacting the year-over-year growth relates to acquisitions and divestitures completed during the years of 2004 and 2003. Total non-interest expense, excluding the amounts related to acquisitions and divestitures completed in 2004 and 2003, increased by $32.4 million or 5.7% compared to 2003. The core infrastructure expenses within the support units (primarily human resources, technology, and corporate overhead) increased by approximately 4.6% over the prior year. The remainder of the increase was primarily in the sales and production areas of the highest growth banking markets.

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      Total employees were 6,450 at December 31, 2004, up 48 from 6,402 employees at December 31, 2003. Excluding the impact of new markets and divestitures, total employees decreased from the prior year by 89.

      Total salaries and other personnel expense increased $24.3 million or 7.1% in 2004 compared to 2003. This category is impacted by certain items as follows:

•  Total performance-based incentive compensation was approximately $27.1 million in 2004, an $18.8 million increase from 2003 levels;

•  Total mortgage banking unit salaries and other personnel expenses (excluding performance-based incentive compensation) were $23.1 million in 2004, a $10.1 million decrease from 2003;

•  The total increase related to the net effect of acquisitions and divestitures completed in 2004 and 2003 was $5.1 million;

•  The change in methodology for recording loan origination fees and costs (described in the section titled “Earning Assets, Sources of Funds, and Net Interest Income”) resulted in a decrease in salaries and other personnel expense of $9.2 million. This amount consists of the total deferred loan origination costs for 2004.

      Net occupancy and equipment expense increased $6.3 million or 8.3% during 2004. Approximately $1.2 million of the total increase was related to the net effect of acquisitions and divestitures completed in 2004 and 2003. Additionally, rent expense increased by approximately $2.1 million during 2004.

      Other operating expenses increased $15.7 million or 9.8% over 2003. Approximately $3.0 million of the total increase was related to the net effect of acquisitions and divestitures completed in 2004 and 2003. The 2004 amounts also reflect an estimated loss in the amount of $8.1 million related to credit card charge-backs that have not been recovered.

      The efficiency ratio (non-interest expense divided by the sum of federal taxable equivalent net interest income and non-interest income excluding net securities gains) was 52.06% for 2004 compared to 53.34% in 2003. The net overhead ratio (non-interest expense less non-interest income - excluding net securities gains divided by total average assets) improved to 1.32% for the year compared to 1.36% for 2003.

      During 2005, Synovus will incur incremental expenses related to its Retail Strategy of approximately $3 million. This amount represents a partial year cost as the expenses will be incurred gradually beginning in 2005. The total incremental annual expense related to our Retail Strategy is estimated at $7 million. These costs consist primarily of training, advertising, promotions, sales incentives, as well as depreciation and maintenance expense related to new capital expenditures. Synovus will also invest approximately $6 million in 2005 in the form of additional capital expenditures at our retail locations. A majority of these expenditures will be related to renovations, redesign, and new equipment for our 281 existing bank branches. These capital expenditures are in addition to our new technology platform, S-Link. Through December 31, 2004, the total capital expenditures related to S-Link are approximately $10 million.

2003 vs. 2002

      Non-interest expense increased $59.9 million, or 11.6% in 2003 over 2002. Salaries and other personnel expenses increased $35.8 million or 11.8%. Approximately $13.7 million of the total increase was related to net effect of acquisitions and divestitures completed in 2003 and 2002. The remaining increase related primarily to normal merit and promotional salary adjustments.

      Net occupancy and equipment expense increased $6.6 million or 9.6% during 2003. Approximately $3.9 million of the total increase was related to the net effect of acquisitions and divestitures completed in 2003 and 2002. Additionally, software maintenance contracts expense increased by approximately $1.0 million during 2003.

      Other operating expenses increased $17.5 million or 12.3% during 2003. The increase was impacted by approximately $10.0 million in incremental costs related to acquisitions and divestitures completed in 2003 and 2002, as well as expenses and net loss associated with foreclosed real estate properties in 2003.

Transaction Processing Services:

      During 2004, TSYS’ operating expenses as a percentage of revenues increased to 76.9%, compared to 75.1% and 75.7% for 2003 and 2002, respectively. Operating expenses increased in 2004 as compared to 2003 primarily due to the increase in costs associated with TSYS Total Debt Management Inc.’s (TDM) debt collection arrangement, increased performance-based incentive benefit accruals and the write-off of TSYS’s double-byte software development project.

      Salaries and other personnel expense increased 10.6% in 2004 over 2003, compared to 9.4% in 2003 over 2002. A significant portion of TSYS’ operating expenses relates to salaries and other personnel costs. During 2004, the average number of employees increased to 5,594 compared to 5,494 in 2003 and 5,267 in 2002. The majority of the increase in the

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number of employees in 2004 as compared to 2003 is a result of the acquisition of TSYS Prepaid offset by the workforce reduction announced in February 2004. The majority of the increase in the number of employees for 2003 compared to 2002 related to the acquisition of ESC and the opening of a programming center in Boise, Idaho. The change in total employment costs consists of increases of $16.3 million, $16.1 million and $53.1 million in 2004, 2003 and 2002, respectively, associated with the growth in the number of employees, normal salary increases and related employee benefits. These increases were net of $14.0 million, $32.6 million and $42.9 million in 2004, 2003 and 2002, respectively, invested in software development and contract acquisition costs. The growth in employment expenses is also impacted by the accrual for performance-based incentives. For the years ended December 31, 2004, 2003 and 2002, TSYS had accrued $22.5 million, $8.4 million and $17.4 million, respectively, of performance-based incentives.

      Net occupancy and equipment expense increased 16.4% in 2004 over 2003, compared to 17.6% in 2003 over 2002. Depreciation and amortization expense increased $3.9 million, or 5.2%, to $80.0 million for the year ended December 31, 2004, compared to $76.1 million for the year ended December 31, 2003, which increased $17.8 million, or 30.6%, from $58.3 million for the year ended December 31, 2002. Amortization expense of licensed computer software decreased by $3.4 million or 8.4% in 2004 over 2003. Amortization expense of licensed computer software increased by $10.9 million in 2003 as TSYS expanded it processing capacity. TSYS has certain license agreements requiring increased license fees based upon achieving certain thresholds of processing capacity. Amortization expense of developed software increased $815,000 for the year ended December 31, 2004, as compared to the prior period in 2003, as a result of developed software placed in service in 2003. The increase was offset by some of TSYS’ developed software becoming fully amortized in 2004. Amortization expense of developed software in 2003 increased $5.3 million as a result of developed software placed in service during 2002.

      During 2004, TSYS decided to change its approach for entry into the Asia-Pacific market. As a result, TSYS recognized a $10.1 million charge to net occupancy and equipment expense for the write-off of the double-byte software development project.

      Due to rapidly changing technology in computer equipment and software, TSYS’ equipment and software needs are fulfilled primarily through operating leases and software licensing arrangements. Equipment and software rental expense was $88.7 million for the year ended December 31, 2004, an increase of $2.8 million, or 3.5%, compared to $85.9 million for the year ended December 31, 2003, an increase of $11.0 million, or 14.6%, compared to $74.8 million for the year ended December 31, 2002. TSYS’ equipment and software rentals increased in 2004 due to expanding processing capacity and transition costs associated with the opening of its new data centre in Europe. TSYS’ equipment and software rentals increased in 2003 as a result of expanding processing capacity and converting clients to TS2.

      In July 2003, TSYS announced plans to build a state-of-the-art data centre in Knaresborough, England to accommodate future client growth and to prepare for its corporate expansion throughout Europe. In October 2004, TSYS announced the completion of its 53,000 square-foot data centre. The centre replaced TSYS’ leased data centre in Harrogate, England.

      Other operating expenses increased 48.8% in 2004 compared to 2003, and increased 12.6% in 2003 compared to 2002. Other operating expenses were impacted by the court costs associated with a new debt collection arrangement entered into by TDM, amortization of contract acquisition costs, the provision for bad debt expense, and the provision for transaction processing accruals. As a result of a new debt-collection agreement with an existing client in 2003, TSYS recognized approximately $33.9 million and $12.4 million of court costs and attorney commissions in operating expense for the years ended December 31, 2004 and 2003, respectively, that it expects to recover in future periods. Amortization of contract acquisition costs associated with conversions was $11.2 million, $7.7 million and $3.5 million in 2004, 2003 and 2002, respectively.

      Other operating expenses also include charges for processing errors, contractual commitments and bad debt expense. Management’s evaluation of the adequacy of its transaction processing reserves and allowance for doubtful accounts is based on a formal analysis which assesses the probability of losses related to contractual contingencies, processing errors and uncollectible accounts. Increases and decreases in transaction processing provisions and charges for bad debt expense are reflected in other operating expenses.

      For 2004, 2003 and 2002, transaction processing provisions were $9.9 million, $3.4 million and $6.5 million, respectively. For the years ended December 31, 2004 and 2003, TSYS had recoveries of bad debt expense of $1.1 million and $1.0 million, respectively, and for the year ended December 31, 2002, TSYS had provisions for bad debt expense of $2.7 million.

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Table 6     Non-Interest Expense

		2004 (*)				2003 (*)				2002 (*)
				Transaction				Transaction				Transaction
(In thousands)		Financial		Processing		Financial		Processing		Financial		Processing
		Services		Services		Services		Services		Services		Services
Salaries and other personnel expense		$	364,514		367,881		340,219		332,616		304,422		303,972
Net occupancy and equipment expense			82,156		239,534		75,841		205,845		69,214		174,967
Other operating expenses			175,004		147,732		159,347		99,261		141,882		88,186
	Total non-interest expense before reimbursable items	$	621,674		755,147		575,407		637,722		515,518		567,125

(*)  The added totals are greater than the consolidated totals due to inter-segment balances which are eliminated in consolidation.

Investment Securities Available for Sale

      The investment securities portfolio consists of debt and equity securities classified as available for sale. 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 the interest rate risk of its loan and deposit portfolios. At December 31, 2004, approximately $2.1 billion of these investment securities were pledged as required collateral for certain deposits, FHLB advances, and repurchase agreements. See Table 8 for maturity and average yield information of the investment securities portfolio.

      The investment strategy focuses on the use of the investment securities portfolio to manage the interest rate risk created by the inherent mismatch between the loan and deposit portfolios. Due to strong loan demand at subsidiary banks, there is little need for investment securities to augment income or utilize unpledged deposits. As such, the investment securities are primarily U.S. Government agencies and Government agency sponsored mortgage-backed securities, both of which have a high degree of liquidity and limited credit risk. 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, 2004, 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, 2004 and 2003, the estimated fair value of investment securities as a percentage of their amortized cost was 100.0% and 101.3%, respectively. The investment securities portfolio had gross unrealized gains of $20.4 million and gross unrealized losses of $20.6 million, for a net unrealized loss of $224 thousand as of December 31, 2004. As of December 31, 2003, the investment securities portfolio had a net unrealized gain of $32.8 million. Shareholders’ equity included a net unrealized gain of $141 thousand and $20.4 million on the available for sale portfolio as of December 31, 2004 and 2003, respectively.

      During 2004, the average balance of investment securities increased to $2.60 billion, compared to $2.30 billion in 2003. Synovus earned a taxable-equivalent rate of 4.04% and 4.37% for 2004 and 2003, respectively, on its investment securities portfolio. For the years ended December 31, 2004 and 2003, average investment securities represented 12.6% and 12.7%, respectively, of average interest earning assets.

      The calculation of weighted average yields for investment securities in Table 8 is based on the amortized cost and effective yields 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%. Maturity information is presented based upon contractual maturity. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

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Table 7     Investment Securities Available for Sale

(In thousands)

		December 31,
		2004		2003		2002
U.S. Treasury and U.S. Government agencies		$	1,305,471		1,353,825		1,202,320
Mortgage-backed securities			1,026,724		847,007		707,946
State and municipal			237,832		248,738		252,522
Other investments			125,566		79,687		74,937
	Total	$	2,695,593		2,529,257		2,237,725

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Table 8 Maturities and Average Yields of Investment Securities

			December 31, 2004
			Investment Securities
			Available for Sale
			Estimated		Average
			Fair Value		Yield
(Dollars in thousands)
U.S. Treasury and U.S. Government agencies:
	Within 1 year		$	130,009		3.37	%
	1 to 5 years			955,939		3.26
	5 to 10 years			173,949		4.91
	More than 10 years			45,574		5.66
		Total	$	1,305,471		3.57
State and municipal:
	Within 1 year		$	12,885		6.48
	1 to 5 years			90,703		6.74
	5 to 10 years			96,148		7.40
	More than 10 years			38,096		7.68
		Total	$	237,832		7.14
Other investments:
	Within 1 year		$	3,252		4.90
	1 to 5 years			1,375		3.88
	5 to 10 years			—		—
	More than 10 years			102		8.35
		Total	$	4,729		4.68
Equity securities			$	120,837		3.91
Mortgage-backed securities			$	1,026,724		4.11
Total investment securities:
	Within 1 year		$	146,146		3.67
	1 to 5 years			1,048,017		3.56
	5 to 10 years			270,097		5.80
	More than 10 years			83,772		6.58
	Equity securities			120,837		3.91
	Mortgage backed securities			1,026,724		4.11
		Total	$	2,695,593		4.11	%

Loans

      Since lending activities are a significant source of revenue, our main objective is to adhere to sound lending practices. When analyzing prospective loans, management considers both interest rate 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 the local markets we serve. Synovus strives to maintain 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. Table 9 illustrates that a significant portion of the loan portfolio is in the real estate sector. However, as discussed further herein, these loans are diversified by geography, industry and loan type. The loan policy discourages loans to highly speculative real estate developments, highly leveraged transactions, and other industries known for excessive risk.

Portfolio Composition

      Synovus continues to maintain a strong local market presence in each of its markets, with a focus on relationship banking. The loan portfolio spreads across five southeastern states with diverse economies. The Georgia affiliates represent a majority with 54% of the consolidated portfolio. The Alabama affiliates represent 16%, followed by South Carolina with 14%, Florida with 12%, and Tennessee with 4%.

      The commercial loan portfolio consists of commercial, financial, agricultural, and real estate loans. These loans are granted primarily on the borrower’s general credit standing and on the strength of the borrower’s ability to generate repayment cash flows from income sources. Real estate construction and mortgage loans are secured by commercial real estate as well as 1-4 family residences, and represent extensions of credit used as interim or permanent financing of real estate properties.

      Total commercial real estate loans at December 31, 2004 were $11.3 billion or 58.0% of the total loan portfolio. As shown on Table 14, the commercial real estate loan portfolio is diversified among various property types: investment properties, 1-4 family properties, land acquisition, owner-occupied, and other property.

      Included in the commercial real estate category are $3.4 billion in loans for the purpose of financing owner-occupied properties and other properties such as churches and other charitable properties, healthcare facilities, restaurants, and recreational properties. The primary source of repayment on these loans is revenue generated from products

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or services offered by the business or organization. The secondary source of repayment on these loans is the real estate.

      The commercial real estate loan portfolio includes loans in the Atlanta market totaling $2.4 billion, of which $583 million are investment property loans.

      Retail loans consist of residential mortgages, equity lines, credit card loans, installment loans and other credit line loans. Retail lending decisions are made based upon the cash flow or earning power of the borrower that represents the primary source of repayment. However, in many lending transactions collateral is taken to provide an additional measure of security. Collateral securing these loans provides 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 purpose of the loan, current and prospective credit-worthiness of the customer, terms of the loan, and economic conditions.

Portfolio Growth

      At December 31, 2004, total loans outstanding were $19.5 billion, an increase of 18.3% over 2003. Excluding the impact of acquisitions and divestitures completed in 2004, total loans increased by 15.4% over year-end 2003. Average loans increased 14.9% or $2.3 billion compared to 2003, representing 87.3% of average earning assets and 77.1% of average total assets. The commercial real estate portfolio continues to be the primary driver of the continued growth.

      Total commercial real estate loans increased by $2.2 billion, or 24.7% from year-end 2003. This growth includes $289.4 million in net loans added to our portfolio as a result of the acquisitions and divestitures completed in 2004. Excluding the impact of these acquisitions and divestitures, the commercial real estate portfolio grew by $1.9 billion or 21.6% over year-end 2003. The growth in our commercial real estate portfolio was led by robust growth in commercial development loans, as well as continued growth in residential development and 1-4 family construction. The entry-level to mid-market price range housing market remains strong, particularly in the Atlanta and coastal markets. Underwriting has been tightened in the residential development sector. Management continues to monitor absorption rates, as well as the homebuilders in each of our markets.

      Retail loans increased by $372.5 million or 13.3% from year-end 2003. This growth includes $115.1 million in net loans added to our portfolio as a result of acquisitions and divestitures completed in 2004. Excluding the impact of these acquisitions and divestitures, the retail loan portfolio grew by $257.4 million or 9.2%. The retail strategy has driven the growth in retail loans, particularly with home equity lines of credit, which increased by $310.2 million or 44.2% over year-end 2003.

      Management has increased the focus on growth in non-commercial real estate segments of the portfolio. The fourth quarter of 2004 showed a shift in the growth by category. Excluding the impact of acquisitions and divestitures, commercial real estate loans grew 15.0% annualized, commercial, financial and agricultural loans increased 9.3% annualized, and consumer loans increased 10.9% annualized, compared to annual growth by category of 21.6%, 7.2%, and 9.2%, respectively.

      Table 10 shows the maturity of selected loan categories as of December 31, 2004. Also provided are the amounts due after one year, classified according to the sensitivity in interest rates.

      Actual repayments of loans may differ from the contractual maturities reflected in Table 10 because borrowers have the right to prepay obligations with and without prepayment penalties. Additionally, the refinancing of such loans or the potential delinquency of such loans could create differences between the contractual maturities and the actual repayment of such loans.

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Table 9 Loans by Type
(Dollars in thousands)			December 31,
			2004						2003						2002						2001						2000
			Amount			% (*)			Amount			% (*)			Amount			% (*)			Amount			% (*)			Amount			% (*)
Commercial:
	Commercial, financial, and agricultural		$	5,050,713			25.9	%		4,632,507			28.1	%		4,367,779			30.2			4,004,042			32.2			3,747,047			34.9
	Real estate - construction			5,173,275			26.6			3,958,649			24.1			3,119,508			21.6			2,665,877			21.5			2,411,489			22.4
	Real estate - mortgage			6,116,308			31.4			5,095,247			30.9			4,304,024			29.8			3,138,748			25.3			2,336,234			21.7
		Total commercial		16,340,296			83.9			13,686,403			83.1			11,791,311			81.6			9,808,667			79.0			8,494,770			79.0
Retail:
	Real estate - mortgage			2,298,682			11.8			1,865,701			11.3			1,701,332			11.8			1,553,154			12.5			1,184,437			11.0
	Consumer loans - credit card			270,412			1.4			252,287			1.5			238,392			1.6			234,651			1.9			233,137			2.2
	Consumer loans - other			612,957			3.1			691,557			4.3			757,626			5.2			843,169			6.8			855,933			8.0
		Total retail		3,182,051			16.3			2,809,545			17.1			2,697,350			18.6			2,630,974			21.2			2,273,507			21.2
		Total loans		19,522,347						16,495,948						14,488,661						12,439,641						10,768,277
	Unearned income			(41,951	)		(0.2	)		(31,034	)		(0.2	)		(24,752	)		(0.2	)		(21,724	)		(0.2	)		(16,390	)		(0.2	)
		Total loans, net of unearned income		19,480,396			100.0			16,464,914			100.0			14,463,909			100.0			12,417,917			100.0			10,751,887			100.0

(*)  Loan balance in each category, expressed as a percentage of total loans, net of unearned income.

Table 10     Loan Maturity and Interest Rate Sensitivity

(in thousands)			December 31, 2004
			One		Over One Year		Over
			Year		Through Five		Five
			Or Less		Years		Years		Total
Selected loan categories:
	Commercial, financial, and agricultural		$	2,657,772		1,965,732		427,209		5,050,713
	Real estate-construction			3,479,940		1,563,603		129,732		5,173,275
		Total	$	6,137,712		3,529,335		556,941		10,223,988
Loans due after one year:
Having predetermined interest rates									$	1,500,486
Having floating interest rates										2,585,790
Total									$	4,086,276

Provision and Allowance for Loan Losses

      Despite credit standards, internal controls, and a continuous loan review process, the inherent risk in the lending process results in periodic charge-offs. The provision for loan losses is the charge to operating earnings necessary to maintain an adequate allowance for loan losses. Through the provision for loan losses, Synovus maintains an allowance for loan losses that management believes is adequate to absorb losses within the loan portfolio. However, future additions to the allowance may be necessary based on changes in economic conditions, as well as changes in assumptions regarding a borrower’s ability to pay and/or collateral values. In addition, various regulatory agencies, as an integral part of their examination procedures, periodically review the affiliate banks’ allowance for loan losses. Based on their judgments about information available to them at the time of their examination, such agencies may require the affiliate banks to recognize adjustments to their allowance for loan losses.

Allowance for Loan Losses Methodology

      To determine the adequacy of the allowance for loan losses, a formal analysis is completed quarterly to assess the risk within the loan portfolio. This assessment, conducted by lending officers and each bank’s loan administration depart-

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ment, as well as an independent holding company credit review function, includes analyses of historical performance, past due trends, the level of nonperforming loans, reviews of certain impaired loans, loan activity since the previous quarter, consideration of current economic conditions, and other pertinent information. Each loan is assigned a rating, either individually or as part of a homogeneous pool, based on an internally developed risk rating system. The resulting conclusions are reviewed and approved by senior management.

      The allowance for loan losses consists of two main components: the allocated and unallocated allowances. Both components of the allowance are available to cover inherent losses in the portfolio. The allocated component of the allowance is determined by type of loan within the commercial and retail portfolios. The allocated allowance for commercial loans includes an allowance for impaired loans which is determined as described in the following paragraph. Additionally, the allowance for commercial loans includes an allowance for non-impaired loans which is based on application of loss reserve factors to the components of the portfolio based on the assigned loan grades. The allocated allowance for retail loans is generally determined on pools of homogeneous loan categories. Loss factors applied to these pools are generally based on average historical losses for the past two years, current delinquency trends, and other factors. The unallocated component of the allowance is established for losses that specifically exist in the remainder of the portfolio, but have yet to be identified. This also compensates for the uncertainty in estimating loan losses. The unallocated component of the allowance is based upon management’s evaluation of various conditions, the effects of which are not directly considered in the allocated allowance. These include credit concentrations, recent levels and trends in delinquencies and nonaccrual loans, new credit products, changes in lending policies and procedures, changes in personnel, and regional and local economic conditions.

      Considering current information and events regarding the borrowers’ ability to repay their obligations, management considers a loan to be impaired when the ultimate collectibility of all principal and interest 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 allowance for loan losses. When management considers a loan, or a portion thereof, as uncollectible, it is charged against the allowance for loan losses. A majority of Synovus’ impaired loans are collateral dependent. Accordingly, Synovus has determined the required allowance on these loans based upon fair value estimates (net of selling costs) of the respective collateral. The required allowance (or the actual losses) on these impaired loans could differ significantly if the ultimate fair value of the collateral is significantly different from the fair value estimates used by Synovus in estimating such potential losses.

      A summary by loan category of loans charged off, recoveries of loans previously charged off, and additions to the allowance through provision expense is presented in Table 11.

Allocation of the Allowance for Loan Losses

at December 31, 2004

      Table 12 shows a five year comparison of the allocation of the allowance for loan losses. The allocation of the allowance for loan losses is based on historical data, subjective judgment, and estimates, and therefore is not necessarily indicative of the specific amounts or loan categories in which charge-offs may ultimately occur.

      Commercial, financial and agricultural loans had an allocated allowance of $77.3 million or 1.53% of loans in the respective category at December 31, 2004, compared to $66.4 million or 1.43% at December 31, 2003. While a portion of the increase in the allocated allowance is due to a 9.0% increase in loan balances, the primary factor is the increase in the overall risk ratings assigned to credits within this category.

      At December 31, 2004, the allocated component of the allowance for loan losses related to commercial real estate construction loans was $50.2 million, up 25.8% from $39.9 million in 2003. The increase is primarily due to a 30.7% increase in the related loan balances. As a percentage of commercial real estate construction loans, the allocated allowance in this category was .97% at December 31, 2004, compared to 1.01% at the previous year-end.

      The allowance allocated to commercial real estate mortgage loans was $67.0 million at December 31, 2004, up 30.9% from a year ago. As a percentage of loans outstanding in the respective category, the allocated allowance was 1.09% at December 31, 2004 up from 1.0% at year-end 2003. The increase in the allowance is related to a 20.0% increase in loans outstanding as well as an increase in the overall risk ratings assigned to credits within this category.

      The unallocated component of the allowance for loan losses was ..26% of total loans and 19.1% of the total allowance at December 31, 2004. This represents a decline from .30% of total loans and 21.7% of the total allowance at December 31, 2003. Management believes that this level of unallocated al-

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lowance is adequate to provide for probable losses that are inherent in the loan portfolio and that have not been fully provided for through the allocated allowance. Factors considered in determining the adequacy of the unallocated allowance include the concentration in commercial real estate loans, and the continued strong loan growth in our larger markets. These factors are tempered by the positive credit quality indicators, the improving economic environment, diversification within the commercial real estate portfolio, the continuing positive performance within the commercial real estate portfolio, the knowledge and experience of our commercial lending staff, and the relationship banking philosophy maintained through our community bank structure.

Table 11     Allowance for Loan Losses

				December 31,
(Dollars in thousands)
				2004			2003		2002		2001		2000
Allowance for loan losses at beginning of year				$	226,059			199,841		170,769		147,867		127,558
Allowance for loan losses of acquired/divested subsidiaries, net					5,615			10,534		7,967		6,217		—
Loans charged off:
	Commercial:
		Commercial, financial, and agricultural			30,697			37,535		28,338		17,806		11,825
		Real estate - construction			383			2,918		444		307		482
		Real estate - mortgage			3,145			2,533		1,745		1,294		1,336
			Total commercial		34,225			42,986		30,527		19,407		13,643
	Retail:
		Real estate - mortgage			2,327			2,972		1,375		1,750		2,052
		Consumer loans - credit card			7,728			7,631		10,408		11,579		9,961
		Consumer loans - other			6,688			10,616		8,951		9,069		6,504
			Total retail		16,743			21,219		20,734		22,398		18,517
			Total loans charged off		50,968			64,205		51,261		41,805		32,160
Recoveries on loans previously charged off:
	Commercial:
		Commercial, financial, and agricultural			5,334			3,454		2,512		2,448		2,990
		Real estate - construction			172			189		50		38		258
		Real estate - mortgage			826			325		284		132		357
			Total commercial		6,332			3,968		2,846		2,618		3,605
	Retail:
		Real estate - mortgage			521			330		346		680		945
		Consumer loans - credit card			1,612			1,467		1,554		1,166		895
		Consumer loans - other			1,255			2,347		2,293		2,353		2,683
			Total retail		3,388			4,144		4,193		4,199		4,523
			Total loans recovered		9,720			8,112		7,039		6,817		8,128
Net loans charged off					41,248			56,093		44,222		34,988		24,032
Provision expense					75,319			71,777		65,327		51,673		44,341
Allowance for loan losses at end of year				$	265,745			226,059		199,841		170,769		147,867
Allowance for loan losses to loans, net of unearned income					1.36	%		1.37		1.38		1.38		1.38
Ratio of net loans charged off to average loans outstanding, net of unearned income					0.23	%		0.36		0.33		0.30		0.24

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Table 12     Allocation of Allowance for Loan Losses

			December 31,
			2004					2003					2002					2001					2000
(Dollars in thousands)
			Amount		% (*)			Amount		% (*)			Amount		% (*)			Amount		% (*)			Amount		% (*)
Commercial:
	Commercial, financial, and agricultural		$	77,293		25.9	%		66,418		28.1	%		67,365		30.2			70,166		32.2			58,034		34.9
	Real estate - construction			50,224		26.6			39,921		24.1			26,476		21.6			23,368		21.5			13,410		22.4
	Real estate - mortgage			66,954		31.4			51,140		30.9			40,334		29.8			25,754		25.3			18,488		21.7
		Total commercial		194,471		83.9			157,479		83.1			134,175		81.6			119,288		79.0			89,932		79.0
Retail:
	Real estate - mortgage			5,335		11.8			4,032		11.3			3,951		11.8			1,503		12.5			2,160		11.0
	Consumer loans - credit card			8,054		1.4			7,602		1.5			8,800		1.6			9,803		1.9			11,320		2.2
	Consumer loans - other			7,086		3.1			8,006		4.3			9,590		5.2			15,268		6.8			14,613		8.0
		Total retail		20,475		16.3			19,640		17.1			22,341		18.6			26,574		21.2			28,093		21.2
	Unearned Income					(0.2	)				(0.2	)				(0.2	)				(0.2	)				(0.2	)
	Unallocated			50,799					48,940					43,325					24,907					29,842
		Total allowance for loan losses	$	265,745		100.0	%		226,059		100.0	%		199,841		100.0			170,769		100.0			147,867		100.0

(*)  Loan balance in each category expressed as a percentage of total loans, net of unearned income.

Nonperforming Assets and Past Due Loans

      Nonperforming assets consist of loans classified as nonaccrual or restructured, and real estate acquired through foreclosure. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full 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. 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/or interest is unlikely. Loans past due 90 days or more, which based on a determination of collectibility are accruing interest, are classified as past due loans. Nonaccrual loans are reduced by the direct application of interest and principal payments to loan principal, for accounting purposes only. Table 13 presents the amount of interest income that would have been recorded on non-performing loans if those loans had been current and performing in accordance with their original terms.

      Nonperforming assets increased $6.1 million to $101.9 million at December 31, 2004. The nonperforming asset ratio decreased to .52% as of December 31, 2004 compared to .58% as of year-end 2003. Nonperforming assets over $5 million at December 31, 2004 include a $6.5 million nonperforming loan to a waste management company and a $5.2 million other real estate property consisting of a golf course in Florida. The largest reduction in nonperforming loans in 2004 was a $7.9 million hotel loan which returned to performing status. This decrease was offset by various additions to nonperforming loans all of which were in amounts lower than $4.0 million.

      As a percentage of total loans outstanding, loans 90 days past due and still accruing interest declined to a historical low of .09% at December 31, 2004. This compares to .13% at year-end 2003 and .21% at year-end 2002. These loans are in the process of collection, and management believes that sufficient collateral value securing these loans exists to cover contractual interest and principal payments on the loans. Management further believes that the resolution of these delinquencies will not cause a material increase in nonperforming assets.

      Impaired loans at December 31, 2004 and 2003 are $99.2 million and $101.8 million, respectively.

      Management continuously monitors nonperforming, impaired, and past due loans, 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 all material loans in which doubts exist

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Financial Review 

as to the collectibility of amounts due according to the contractual terms of the loan agreement.

Table 13     Nonperforming Assets and Past Due Loans

		December 31,
(Dollars in thousands)
		2004			2003		2002		2001		2000
Nonperforming loans (a)		$	80,456			67,442		66,736		51,586		41,709
Other real estate			21,492			28,422		26,517		15,867		13,898
	Nonperforming assets	$	101,948			95,864		93,253		67,453		55,607
Loans 90 days past due and still accruing
	Total outstanding	$	18,138			21,138		30,192		27,134		33,587
	As a % of loans		0.09	%		0.13		0.21		0.22		0.31
Allowance for loan losses		$	265,745			226,059		199,841		170,769		147,867
Allowance for loan losses as a % of loans			1.36	%		1.37		1.38		1.38		1.38
As a % of loans and other real estate:
	Nonperforming loans		0.41	%		0.41		0.46		0.41		0.39
	Other real estate		0.11	%		0.17		0.18		0.13		0.13
	Nonperforming assets		0.52	%		0.58		0.64		0.54		0.52
Allowance for loan losses to nonperforming loans			330.30	%		335.19		299.45		331.04		354.52

      Interest income on nonperforming loans that would have been reported for the years ended December 31, 2004, 2003, and 2002 is summarized as follows:

		2004		2003		2002
Interest at contractual rates (b)		$	4,197		4,547		3,921
Less interest recorded as income			1,537		1,884		1,455
	Reduction of interest income	$	2,660		2,663		2,466

(a)	Nonperforming assets exclude loans 90 days past due and still accruing interest.
(b)	Interest income that would have been recorded if the loans had been current and performing in accordance with their original terms.

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Table 14

		December 31, 2004					December 31, 2003
					Nonperforming					Nonperforming
					Loans as a					Loans as a
		Loans as			Percentage		Loans as			Percentage
		a Percentage			of Total		a Percentage			of Total
		of Total Loans			Nonperforming		of Total Loans			Nonperforming
Loan Type		Outstanding			Loans		Outstanding			Loans
Commercial Real Estate
	Multi-Family		2.8	%		1.0		2.7			0.5
	Hotels		4.2			3.6		4.5			12.6
	Office Buildings		4.0			0.0		4.0			1.6
	Shopping Centers		3.0			0.2		2.8			1.2
	Commercial Development		3.5			0.1		2.7			1.8
	Other Investment Property		1.4			0.1		1.3			0.4
	Total Investment Properties		18.9			5.0		18.0			18.1
1-4 Family Construction			6.2			1.1		5.4			2.1
1-4 Family Perm / Mini-Perm			5.1			8.2		4.7			5.2
Residential Development			5.6			0.2		4.5			3.1
	Total 1-4 Family Properties		16.9			9.5		14.6			10.4
Land Acquisition			4.8			0.2		4.6			0.2
	Total Investment-Related Real Estate		40.6			14.7		37.2			28.7
Owner-Occupied			11.6			8.8		11.6			8.5
Other Property			5.8			9.8		6.2			2.2
	Total Commercial Real Estate		58.0			33.3		55.0			39.4
Commercial & Industrial			25.9			58.1		28.1			49.6
Consumer			16.3			8.6		17.1			11.0
Unearned Income			(0.2	)		—		(0.2	)
	Total		100.0	%		100.0		100.0			100.0

      Table 14 shows the composition of the loan portfolio and nonperforming loans classified by loan type as of December 31, 2004 and 2003. The commercial real estate category is further segmented into the various property types determined in accordance with the purpose of the loan.

      At December 31, 2004, commercial real estate (CRE) loans represent 58.0% of the total portfolio, while CRE nonperforming loans represent 33.3% or $26.8 million of total nonperforming loans. None of these loans exceeds $3 million.

      Commercial and industrial nonperforming loans represent 58.1% or $46.8 million of total nonperforming loans at December 31, 2004. The largest loans in this category are a $6.5 million loan to an Atlanta waste management company, a $3.7 million working capital loan to a company in South Carolina, and $3.4 million in working capital and equipment loans to a mining company in Alabama. No other nonperforming commercial and industrial loans exceed $3 million.

Deposits

      Deposits provide the most significant funding source for interest earning assets. Table 15 shows the relative composition of average deposits for 2004, 2003, and 2002. Refer to Table 16 for the maturity distribution of time deposits of $100,000 or more. These larger deposits represented 25.0% and 22.4% of total deposits at December 31, 2004 and 2003, respectively. Synovus continues to maintain a strong base of large denomination time deposits from customers within the local market areas of subsidiary banks. Synovus also utilizes national market brokered deposits as a funding source while continuing to maintain and grow its local market large denomination time deposit base. Time deposits over $100,000 at December 31, 2004, 2003, and 2002 were $4.6 billion, $3.6 billion, and $3.2 billion, respectively. Interest expense for the years ended December 31, 2004, 2003, and 2002, on these large denomination deposits was $94.3 million, $94.2 million, and $102.1 million, respectively.

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      In 2004, Synovus continued to focus on growing in-market core deposits, particularly money market, NOW, and non-interest bearing demand deposits with the objective of reducing the overall cost of funds. During 2004, average deposits increased $2.0 billion or 13.2%, to $17.1 billion from $15.1 billion in 2003. Average interest bearing deposits for 2004, which include interest bearing demand deposits, money market accounts, savings deposits, and time deposits, increased $1.4 billion or 11.5% from 2003. Average non-interest bearing demand deposits increased $546.9 million or 21.9% during 2004. Average interest bearing deposits increased $1.7 billion or 15.4% from 2002 to 2003, while average non-interest bearing demand deposits increased $518.4 million, or 26.1%. See Table 3 for further information on average deposits, including the average rates paid in 2004, 2003, and 2002.

Table 15     Average Deposits

		2004		% (*)		2003		% (*)		2002		% (*)
(Dollars in thousands)
Non-interest bearing demand deposits		$	3,048,465		17.9		2,501,539		16.6		1,983,131		15.4
Interest bearing demand deposits			2,762,104		16.2		2,515,161		16.7		2,035,917		15.8
Money market accounts			4,481,042		26.3		3,695,601		24.6		3,058,174		23.7
Savings deposits			548,736		3.2		502,246		3.3		446,205		3.5
Time deposits under $100,000			2,223,854		13.0		2,399,371		15.9		2,415,506		18.8
Time deposits $100,000 and over			3,989,018		23.4		3,448,900		22.9		2,930,885		22.8
	Total average deposits	$	17,053,219		100.0		15,062,818		100.0		12,869,818		100.0

(*) Average deposits balance in each category expressed as percentage of total average deposits.

Table 16 Maturity Distribution of Time Deposits of $100,000 or More

(In thousands)

		December 31, 2004
3 months or less		$	1,072,571
Over 3 months through 6 months			625,405
Over 6 months through 12 months			956,775
Over 12 months			1,989,343
	Total outstanding	$	4,644,094

Market Risk and Interest Rate Sensitivity

      Market risk reflects the risk of economic loss resulting from adverse changes in market prices and interest rates. This risk of loss can be reflected in either diminished current market values or reduced current and potential net income. Synovus’ primary market risk is interest rate risk.

      Managing interest rate risk is a primary goal of the 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 assets and liabilities along with the selective use of derivative instruments. Synovus manages its exposure to fluctuations in interest rates through policies established by its Asset Liability Management Committee (ALCO) and approved by the Board of Directors. The ALCO committee meets periodically and has responsibility for developing asset liability management policies, reviewing the interest rate sensitivity of the Company, and developing and implementing strategies to improve balance sheet structure and interest rate risk positioning.

      Simulation modeling is the primary tool used by Synovus to measure its interest rate sensitivity. On at least a quarterly basis, the following twenty-four month time period is simulated to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. The baseline forecast assumes an unchanged or flat interest rate environment. These simulations include all of the Company’s earning assets, liabilities and derivative instruments. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts prepared by each banking affiliate, are included in the periods modeled. Projected rates for new loans and deposits are also provided by each banking affiliate and are primarily based on management outlook and local market conditions.

      The magnitude and velocity of rate changes among the various asset and liability groups exhibit different characteristics for each possible interest rate scenario; additionally, customer loan and deposit preferences can vary in response to changing interest rates. Simulation modeling enables Synovus to capture the effect of these differences. Synovus is also able to model expected changes in the shape of interest rate yield curves for each rate scenario. Simulation also enables Synovus to capture the effect of expected prepayment level changes on selected assets and liabilities subject to prepayment.

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      As of December 31, 2004, Synovus maintained an asset sensitive interest rate risk position. This positioning would be expected to result in an increase in net interest income in a rising interest rate environment and a decrease in net interest income in a declining rate environment. This is generally due to a greater proportion of interest earning assets repricing on a variable rate basis as compared to variable rate funding sources. This asset sensitivity is indicated by selected results of Synovus’ net interest income simulations. In these simulations, Synovus has modeled the impact of a gradual increase and decrease in short-term interest rates of 100 basis points to determine the sensitivity of net interest income for the next twelve months. In the gradual 100 basis point increase scenario, net interest income is expected to increase 3.2% as compared to an unchanged interest rate environment. In the gradual 100 basis point decrease scenario, net interest income is expected to decline 2.7% as compared to an unchanged interest rate environment. The actual realized change in net interest income would depend on several factors. These factors include, but are not limited to, actual realized growth in asset and liability volumes, as well as the mix experienced over these time horizons. Market conditions and their resulting impact on loan, deposit, and wholesale funding pricing would also be a primary determinant in the realized level of net interest income.

      Another tool utilized by 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 18 reflects the gap positions of the consolidated balance sheets at December 31, 2004 and 2003, 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 the interest rate risk position. The projected repricing of investment securities reflects expected prepayments on mortgage-backed securities and expected cash flows on securities subject to accelerated redemption options. These assumptions are made based on the interest rate environment as of each balance sheet date, and are subject to change as the general level of interest rates change. While these potential changes are not depicted in the static gap analysis, simulation modeling allows for the proper analysis of these and other relevant potential changes. This analysis would indicate an asset sensitive positioning over both short and longer term time horizons. Management believes that adjusted gap analysis is a useful tool for measuring interest rate risk only when used in conjunction with its simulation model.

      Synovus is also subject to market risk in certain of its fee income business lines. TSYS’ income and equity can be affected by movement in foreign currency exchange rates. TSYS maintains several different foreign operations whose resulting foreign currency translations into U.S. dollars could result in a negative impact to Synovus’ shareholders’ equity and/or net income. Financial management services revenues can be affected by risk in the securities markets, primarily the equity securities market. A significant portion of the fees in this unit are determined based upon a percentage of asset values. Weaker securities markets and lower equity values could have an adverse impact on the fees generated by these operations. Mortgage banking income is also subject to market risk. Mortgage loan originations are sensitive to levels of mortgage interest rates and therefore, mortgage revenue could be negatively impacted during a period of rising interest rates. The extension of commitments to customers to fund mortgage loans also subjects Synovus to market risk. This risk is primarily created by the time period between making the commitment and closing and delivering the loan. Synovus seeks to minimize this exposure by utilizing various risk management tools, the primary of which are best efforts commitments and forward sales commitments.

Table 17 Twelve Month Net Interest Income Sensitivity

Change in		Estimated
Short-Term		Change in
Interest Rates		Net Interest
(In basis points)		Income
	+ 100		3.2	%
	Flat		—
	- 100		(2.7	)%

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Table 18 Interest Rate Sensitivity

			December 31, 2004
(Dollars in millions)
			0-3			4-12			1-5		Over 5
			Months			Months			Years		Years
Investment securities available for sale (*)			$	287.7			249.6			1,659.8		498.7
Loans, net of unearned income				13,800.4			1,965.9			3,337.3		376.9
Mortgage loans held for sale				120.2			—			—		—
Other				139.5			—			—		—
	Interest sensitive assets			14,347.8			2,215.5			4,997.1		875.6
Deposits				7,326.8			2,693.3			4,640.7		578.8
Other borrowings				1,870.0			329.6			390.8		497.3
	Interest sensitive liabilities			9,196.8			3,022.9			5,031.5		1,076.1
	Interest rate swaps			(977.5	)		300.0			330.0		347.5
		Interest sensitivity gap	$	4,173.5			(507.4	)		295.6		147.0
		Cumulative interest sensitivity gap	$	4,173.5			3,666.1			3,961.7		4,108.7
		Cumulative interest sensitivity gap as a percentage of total interest sensitive assets		18.6	%		16.3			17.7		18.3

				December 31, 2003
				0-3			4-12			1-5		Over 5
				Months			Months			Years		Years
Investment securities available for sale (*)				$	465.5			708.1			970.0		352.8
Loans, net of unearned income					9,460.3			2,320.3			4,066.5		617.8
Mortgage loans held for sale					133.3			—			—		—
Other					177.3			—			—		—
	Interest sensitive assets				10,236.4			3,028.4			5,036.5		970.6
Deposits					4,509.8			3,144.3			4,856.1		597.9
Other borrowings					1,686.1			31.9			667.2		504.0
		Interest sensitive liabilities			6,195.9			3,176.2			5,523.3		1,101.9
		Interest rate swaps			(887.5	)		45.0			570.0		272.5
			Interest sensitivity gap	$	3,153.0			(102.8	)		83.2		141.2
			Cumulative interest sensitivity gap	$	3,153.0			3,050.2			3,133.4		3,274.6
			Cumulative interest sensitivity gap as a percentage of total interest sensitive assets		16.4	%		15.8			16.3		17.0

(*)  Excludes net unrealized losses of $224 thousand and net unrealized gains of $32.8 million at December 31, 2004 and 2003, respectively.

Derivative Instruments for Interest Rate Risk Management

      As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risks. The primary instruments utilized by Synovus are interest rate swaps where Synovus receives a fixed rate of interest and pays a floating rate tied to either the prime rate or LIBOR. These swaps are utilized to hedge the variability of cash flows or fair values of on-balance sheet assets and liabilities.

      Interest rate contracts utilized by Synovus include end-user activities designed as hedges, all of which are linked to

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specific assets or liabilities as part of overall interest rate risk management practices. Management believes that the utilization of these instruments provides greater financial flexibility and is a very efficient tool for managing interest rate risk.

      Synovus has entered into forward starting cash settled swaps with a notional amount of $200 million to hedge the future interest payments on debt forecast to be issued in 2005. Upon issuance of the debt in 2005, the interest rate swap contracts will be cash settled concurrent with the pricing of the debt.

      The notional amount of interest rate swap and floor contracts utilized by Synovus as part of its overall interest rate risk management activities as of December 31, 2004 and 2003, was $1.2 billion and $912.5 million, respectively. 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.

      A summary of these interest rate contracts and their terms at December 31, 2004 and 2003 is shown in Table 19. The fair value (net unrealized gains/ losses) of these contracts has been recorded on the consolidated balance sheets.

      During 2004, there were four maturities and one termination of an interest rate contract. There were three maturities and five terminations in 2003. Interest rate contracts contributed additional net interest income of $16.9 million and an eight basis point increase in the net interest margin for 2004. For 2003, interest rate contracts contributed to an increase in net interest income of $13.9 million and an eight basis point increase to the net interest margin.

Table 19 Interest Rate Contracts

				Weighted						Weighted							Net
(Dollars in thousands)				Average			Weighted			Average							Unrealized
		Notional		Receive			Average Pay			Maturity		Unrealized		Unrealized			Gains
		Amount		Rate			Rate (*)			In Months		Gains		Losses			(Losses)
December 31, 2004
Receive fixed swaps:
	Fair value hedges	$	477,500		4.24	%		2.33	%		88	$	3,435		(5,214	)		(1,779	)
	Cash flow hedges		500,000		5.12	%		5.25	%		12		—		(4,090	)		(4,090	)
	Sub Total:		977,500		4.69	%		3.83	%		49		3,435		(9,304	)		(5,869	)
Forward starting swaps - Cash flow hedges			200,000		—			—			123		293		(2,109	)		(1,816	)
Total		$	1,177,500									$	3,728		(11,413	)		(7,685	)
December 31, 2003
Receive fixed swaps:
Fair value hedges		$	342,500		4.36	%		1.16	%		97	$	2,087		(2,703	)		(616	)
Cash flow hedges			570,000		5.43	%		4.00	%		23		4,637		(1,280	)		3,357
Total		$	912,500		5.03	%		2.94	%		51	$	6,724		(3,983	)		2,741

(*)  Variable pay rate based upon contract rates in effect at December 31, 2004 and 2003.

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. Synovus’ strong capital position, solid core deposit base, and excellent credit ratings are the cornerstones of its liquidity management activities.

      The Synovus Asset/Liability Management Committee actively analyzes and manages the liquidity position in coordination with its subsidiary banks. These subsidiaries maintain liquidity in the form of cash on deposit, investment securities, and cash derived from prepayments and maturities of both their investment and loan portfolios. Liquidity is also enhanced by the acquisition of new deposits. The subsidiary banks monitor deposit flow and evaluate alternate pricing

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structures to retain and grow deposits. Liquidity is also enhanced by the subsidiary banks’ strong reputation in the national deposit markets. This reputation allows subsidiary banks to issue longer-term certificates of deposit across a broad geographic base to enhance their liquidity and funding positions.

      Certain Synovus subsidiary banks maintain correspondent banking relationships with various national and regional financial organizations. These relationships provide access to short-term borrowings through federal funds lines, which allows Synovus to meet immediate liquidity needs if required. These lines total approximately $3.2 billion and are extended at the ongoing discretion of the correspondent financial institutions. Synovus’ strong credit rating is a primary determinant in the continued availability of these lines. Should Synovus’ credit rating decline to a level below investment grade, these lines’ availability would be significantly diminished. For this reason, Synovus affiliate banks maintain additional sources of liquidity including collateralized borrowing accounts with the Federal Reserve Bank.

      Synovus serves diverse markets. Some of these are rapidly growing areas where loan demand outpaces the generation of deposits. However, through loan participations and federal funds sold among affiliate banks, these loans can be effectively 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.

      Selected Synovus subsidiary banks maintain an additional liquidity source through their membership in the Federal Home Loan Bank. At year-end 2004, these banks had access to additional funding of approximately $2.4 billion, subject to available collateral and Federal Home Loan Bank credit policies, through utilization of Federal Home Loan Bank advances.

      The Parent Company requires cash for various operating needs including dividends to shareholders, business combinations, capital infusions into subsidiaries, the servicing of debt, and the payment of general corporate expenses. The primary source of liquidity for the Parent Company is dividends and management fees from the subsidiary banks. As a short-term liquidity source, the Parent Company has access to a $60 million line of credit with an unaffiliated banking organization. The Parent Company also enjoys an excellent reputation and credit standing in the capital markets and has the ability to raise substantial amounts of funds in the form of either short or long-term borrowings. Maintaining adequate credit ratings is essential to Synovus’ continued cost effective access to these capital market funding sources.

      The consolidated statements of cash flows detail cash flows from operating, investing, and financing activities. Net cash provided by operating activities was $800 million for the year ended December 31, 2004, while financing activities provided $2.1 billion. Investing activities used $2.9 billion of these amounts, resulting in a net decrease in cash and cash equivalents of $13 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 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. Table 20 sets forth certain information about contractual cash obligations at December 31, 2004.

Table 20 Contractual Cash Obligations

	Payments Due After December 31, 2004
	1 Year or Less		Over 1 - 3 Years		4 - 5 Years		After 5 Years		Total
(In thousands)
Long-term debt	$	410,000		804,950		135,162		509,658		1,859,770
Capital lease obligations		2,044		4,347		1,121		2,663		10,175
Operating leases		115,449		194,477		63,048		44,011		416,985
Total contractual cash obligations	$	527,493		1,003,774		199,331		556,332		2,286,930

Capital Resources

      Synovus has always placed great emphasis on maintaining a strong capital base and continues to exceed 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 growth sufficient to support the asset growth it has experienced. Total shareholders’ equity of $2.6 billion represented 10.54% of total assets at December 31, 2004.

      The regulatory banking agencies use a risk-adjusted calculation to aid them in their determination of capital ade-

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quacy by weighting assets based on the credit risk associated with on- and off-balance sheet assets. The majority of these risk-weighted assets for Synovus are on-balance sheet assets in the form of loans. Approximately 12% of risk-weighted assets are considered off-balance sheet assets and primarily consist of letters of credit and loan commitments that Synovus enters into in the normal course of business. Capital is categorized into two types: Tier I and Tier II. As a financial holding company, Synovus and its subsidiary banks are required to maintain capital levels required for a well-capitalized institution, as defined in the regulations. The regulatory agencies define a well-capitalized bank as one that has a leverage ratio of at least 5%, a Tier I capital ratio of at least 6%, and a total risk-based capital ratio of at least 10%. At December 31, 2004, Synovus and all subsidiary banks were in excess of the minimum capital requirements with a consolidated Tier I capital ratio of 10.04% and a total risk-based capital ratio of 12.44%, compared to Tier I and total risk-based capital ratios of 10.43% and 13.06%, respectively, in 2003 as shown in Table 21.

      In addition to the risk-based capital standards, a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that 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. Synovus had a leverage ratio of 9.78% at December 31, 2004 and 10.09% at December 31, 2003, significantly exceeding regulatory requirements.

      The 81% 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 services companies. As of February 17, 2005, there were approximately 24,631 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 22 displays high and low stock price quotations of Synovus common stock which are based on actual transactions.

Table 21 Capital Ratios

				December 31,
				2004			2003
(Dollars in thousands)
Tier I capital:
	Shareholders’ equity			$	2,641,289			2,245,039
	Net unrealized (gain)/loss on investment securities available for sale				142			(20,436	)
	Net unrealized (gain)/loss on cash flow hedges				3,434			(2,319	)
	Disallowed intangibles				(457,976	)		(286,205	)
	Disallowed deferred tax asset				(6,075	)		(3,918	)
	Deferred tax liability on core deposit premium related to acquisitions				10,937			7,303
	Minority interest				167,284			141,838
	Qualifying trust preferred securities				10,297			10,453
			Total Tier I capital		2,369,332			2,091,755
Tier II capital:
	Qualifying subordinated debt				300,000			300,000
	Eligible portion of the allowance for loan losses				265,745			226,059
	Eligible portion of unrealized gain on equity securities				—			—
			Total Tier II capital		565,745			526,059
Total risk-based capital				$	2,935,077			2,617,814
Total risk-adjusted assets				$	23,590,520			20,051,309
Tier I capital ratio					10.04	%		10.43
Total risk-based capital ratio					12.44			13.06
Leverage ratio					9.78			10.09
Regulatory minimums (for well-capitalized status):
		Tier I capital ratio			6.00	%		6.00
		Total risk-based capital ratio			10.00			10.00
		Leverage ratio			5.00			5.00

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Table 22 Market and Stock Price Information

		High		Low
2004
	Quarter ended December 31, 2004	$	28.89		26.50
	Quarter ended September 30, 2004		26.50		24.49
	Quarter ended June 30, 2004		25.75		23.31
	Quarter ended March 31, 2004		28.82		22.67
2003
	Quarter ended December 31, 2003	$	29.04		25.99
	Quarter ended September 30, 2003		26.69		21.35
	Quarter ended June 30, 2003		23.62		17.31
	Quarter ended March 31, 2003		20.88		17.89

Dividends

      Synovus (and its predecessor companies) has paid cash dividends on its common stock in every year since 1891. Synovus’ dividend payout ratio was 48.94%, 51.56%, and 48.76%, in 2004, 2003, and 2002, respectively. It is the present intention of the Synovus Board of Directors to continue to pay cash dividends on its common stock in an amount that results in a dividend payout ratio of at least 40%. In addition to the Company’s general financial condition, Synovus considers other factors in determining the amount of dividends to be paid each year. These factors include consideration of capital and liquidity needs based on projected balance sheet growth, acquisition activity, earnings growth, as well as the capital position of the individual business segments (Financial Services and TSYS).

      Table 23 presents information regarding dividends declared during the years ended December 31, 2004 and 2003.

Table 23 Dividends

				Per Share
Date Declared		Date Paid		Amount
2004
	November 16, 2004		January 3, 2005	$	.1733
	August 19, 2004		October 1, 2004		.1733
	May 19, 2004		July 1, 2004		.1733
	February 26, 2004		April 1, 2004		.1733
2003
	November 20, 2003		January 2, 2004	$	.1650
	August 20, 2003		October 1, 2003		.1650
	June 10, 2003		July 1, 2003		.1650
	March 4, 2003		April 1, 2003		.1650

Commitments and Contingencies

      Synovus believes it has sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year. Table 24 and Note 8, to the consolidated financial statements provide additional information on short-term and long-term borrowings.

      In the normal course of its business, TSYS maintains processing contracts with its clients. These processing contracts contain commitments, including, but not limited to, minimum standards and time frames against which its performance is measured. In the event TSYS does not meet its contractual commitments with its clients, TSYS may incur penalties and/or certain customers may have the right to terminate their contracts 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 and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, based in part upon the advice of legal counsel, all matters are not quantifiable, are believed to be adequately covered by insurance, or if not covered, are believed to be without merit or are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of Synovus if disposed of unfavorably.

      TSYS has received notification from the United States Attorneys’ Office for the Northern District of California that the United States Department of Justice is investigating whether TSYS and/or one of its large credit card processing clients violated the False Claims Act, 31 U.S.C. §§3729-33, in connection with mailings made on behalf of the client from July 1997 through November 2001. The subject matter of the investigation relates to the U.S. Postal Service’s Move Update Requirements. In general, the Postal Service’s Move Update Requirements are designed to reduce the volume of mail that is returned to sender as undeliverable as addressed. In effect, these requirements provide, among other things, various procedures that may be utilized to maintain the accuracy of mailing lists in exchange for discounts on postal rates. TSYS has received a subpoena from the Office of the Inspector General of the U.S. Postal Service, and has produced documents responsive to the subpoena. TSYS continues to cooperate with the Department of Justice in the investigation, and there can be no assurance as to the timing or outcome of the investigation, including whether the investigation will result in any criminal or civil fines, penalties, judgments or treble damages or other claims against TSYS. TSYS is not in a position to estimate whether or not any loss may arise out of this investigation. As a result, no reserve or accrual has been recorded in TSYS’ or Synovus’ financial statements relating to this matter.

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Short-Term Borrowings

      The following table sets forth certain information regarding federal funds purchased and securities sold under repurchase agreements, the principal components of short-term borrowings.

Table 24 Short-Term Borrowings

(Dollars in thousands)	2004			2003			2002
Balance at December 31	$	1,208,080			1,354,887			1,275,084
Weighted average interest rate at December 31		1.95	%		0.93	%		1.20	%
Maximum month end balance during the year	$	1,749,923			1,459,818			1,493,466
Average amount outstanding during the year	$	1,479,815			1,101,216			1,131,455
Weighted average interest rate during the year		1.30	%		1.07	%		1.65	%

Income Tax Expense

      Income tax expense was $252.2 million in 2004, up from $222.6 million in 2003, and $198.5 million in 2002. The effective income tax rate was 36.6%, 36.4%, and 35.2%, in 2004, 2003, and 2002, respectively. See Note 16 to the 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 net income. Synovus deals with the effects of inflation by managing its interest rate sensitivity 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 subsidiaries, 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 subsidiaries, acquire new businesses, fund internal growth, pay corporate operating expenses, and pay dividends to its shareholders. These operations are funded by dividends and fees received from subsidiaries, and borrowings from outside sources.

      In connection with dividend payments to the Parent Company from its subsidiary banks, certain rules and regulations of the various state and federal banking regulatory agencies limit the amount of dividends which may be paid. Approximately $294.7 million in dividends could be paid in 2005 to the Parent Company from its subsidiary banks without prior regulatory approval. Synovus expects to receive regulatory approval to allow certain subsidiaries to pay dividends in excess of their respective regulatory limits.

Share Repurchase Plan

      On April 14, 2003, the Synovus board of directors approved a $200 million share repurchase plan. Through December 31, 2004, 5.5 million shares have been purchased under this plan at a total cost of $112.7 million. Consistent with the expectation at the inception of the plan, Synovus repurchased one-half of the total authorization during the first 90 days after the plan was approved. The pace of future repurchases under this two-year plan will depend on various factors including price, market conditions, acquisitions, and the general financial position of Synovus.

      The following table sets forth information regarding Synovus’ purchases of its common stock on a monthly basis during the three months ended December 31, 2004:

									Maximum
									Number of
							Total Number of		Shares That
							Shares Purchased		May Yet Be
		Total Number					as Part of Publicly		Purchased
		of Shares			Average Price		Announced Plans		Under the Plans
Period		Purchased			Paid per Share		or Programs		or Programs
October 2004			—		$	—		—		3,056,144(2	)
November 2004			—			—		—		3,056,144(2	)
December 2004			6,068	(1)		27.36		—		3,056,144(2	)
	Total		6,068	(1)	$	27.36		—		3,056,144(2	)

(1)	Consists of delivery of previously owned shares to Synovus in payment of the exercise price of stock options.
(2)	Based on Synovus stock price of $28.55 at December 31, 2004.

Recently Issued Accounting Standards

      In December 2004, the Financial Accounting Standards Board issued Statement No. 123R (SFAS No. 123R), “Share-Based Payment.” SFAS No. 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This statement requires a public entity to measure the cost of employee services

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received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award.

      SFAS No. 123R applies to all awards granted after the required effective date and to awards modified, repurchased or cancelled after that date. Compensation cost will be recognized on or after the required effective date for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under SFAS No. 123 for either recognition or pro forma disclosures. The statement is effective beginning July 1, 2005. Synovus estimates that the adoption of this statement will result in an additional expense of approximately $5.7 million, net of tax, related to the expensing of unvested stock options. This additional expense will be recognized during the second half of 2005, after the adoption of SFAS No. 123R. Additionally, Synovus estimates that it will incur an expense of approximately $3.2 million, net of tax, during 2005 in conjunction with new restricted stock awards that will be granted in 2005. While stock options have been the primary method of equity-based compensation historically, going forward, restricted stock awards are expected to be Synovus’ primary method of equity-based compensation.

      In December 2003, the AcSEC issued Statement of Position No. 03-3 (SOP No. 03-3), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” SOP No. 03-3 provides guidance on accounting for loans and associated loss reserves acquired in a transfer or business combination. Certain loans may be required to be transferred net of reserves where there are differences between contractual and expected cash flows which are attributable, at least in part, to credit quality. SOP No. 03-3 will be effective for loans acquired after December 31, 2004. Synovus has not determined the impact that SOP No. 03-3 will have on its financial statements and believes that such determination will not be meaningful until Synovus enters into a business combination with a financial institution and/or acquires a future loan portfolio.

2005 Earnings Outlook

      Synovus expects its earnings per share growth for 2005 to be within the 12-15% range, based in part upon the following assumptions:

•  An expanding economy.

•  Modest increases in short-term interest rates.

•  A favorable credit environment.

•  TSYS’ net income growth in the 19% to 22% range.

•  Equity-based compensation expense of approximately $9.0 million (net of tax).

Forward-Looking Statements

      Certain statements contained in this document which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the “Act”). These forward-looking statements include, among others, statements regarding: (i) management’s belief with respect to the adequacy of the allowance for loan losses; (ii) the expected financial impact of recent accounting pronouncements; (iii) the expected issuance of debt in 2005; (iv) TSYS’ belief with respect to its ability to meet its contractual commitments; (v) management’s belief with respect to legal proceedings and other claims; (vi) any matter that might arise out of the United States Department of Justice’s investigation of TSYS; (vii) management’s belief with respect to the benefit of rising short-term rates; (viii) TSYS’ expectation that it will convert Chase Card Services’ portfolios in the second half of 2005 and maintain the card-processing functions of Chase for at least two years; (ix) the expected earnings per share impact on TSYS of the Vital acquisition; (x) TSYS’ expectation with respect to the impact of the Chase contract on its earnings per share growth for 2005 and 2006; (xi) management’s belief with respect to the resolution of certain loan delinquencies and the inclusion of all material loans in which doubt exists as to collectibility in nonperforming assets and impaired loans; (xii) management’s belief with respect to the use of derivatives to manage interest rate risk; (xiii) the Board of Directors’ present intent to continue to pay cash dividends; (xiv) management’s belief with respect to having sufficient capital, liquidity, and future cash flows from operations to meet operating needs over the next year; (xv) the expected expenses and investments associated with the Retail Strategy; (xvi) Synovus’ expected growth in earnings per share for 2005 and the assumptions underlying such statements, including, with respect to Synovus’ expected increase in earnings per share for 2005, the economy will continue to expand; short-term interest rates will increase modestly; the credit environment will remain favorable; TSYS’ net income growth will be in the 19% – 22% range; and the expense of equity-based compensation will be approximately $9.0 million (net of tax). In addition, certain statements in future filings by Synovus with the Securities and Exchange Commission, in press releases, and in oral and written statements made by or with the approval of Synovus which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements

F-74

Financial Review 

include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure, efficiency ratios and other financial terms; (ii) statements of plans and objectives of Synovus or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “estimates,” “projects,” “plans,” “may,” “could,” “should,” “would,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

      These statements are based on the current beliefs and expectations of Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of these factors are beyond Synovus’ ability to control or predict. These factors include, but are not limited to: (i) competitive pressures arising from aggressive competition from other financial service providers; (ii) factors that affect the delinquency rate of Synovus’ loans and the rate at which Synovus’ loans are charged off; (iii) changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which Synovus is perceived in such markets; (iv) TSYS’ inability to achieve its net income goals for 2005; (v) the strength of the U.S. economy in general and the strength of the local economies in which operations are conducted may be different than expected; (vi) the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate policies of the Federal Reserve Board; (vii) inflation, interest rate, market and monetary fluctuations; (viii) the timely development of and acceptance of new products and services and perceived overall value of these products and services by users; (vix) changes in consumer spending, borrowing, and saving habits; (x) technological changes are more difficult or expensive than anticipated; (xi) acquisitions are more difficult to integrate than anticipated; (xii) the ability to increase market share and control expenses; (xiii) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which Synovus and its subsidiaries must comply; (xiv) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies; (xv) changes in Synovus’ organization, compensation, and benefit plans; (xvi) the costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto; (xvii) a deterioration in credit quality or a reduced demand for credit; (xviii) Synovus’ inability to successfully manage any impact from slowing economic conditions or consumer spending; (xix) TSYS does not convert the Chase portfolio as expected and maintain the card-processing functions of Chase for at least two years as expected; (xx) the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; (xxi) successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection; (xxii) the impact on Synovus’ business, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (xxiii) the success of Synovus at managing the risks involved in the foregoing.

      These forward-looking statements speak only as of the date on which the statements are made, and Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect the occurrence of unanticipated events.

F-75

Summary of Quarterly Financial Data 

Presented below is a summary of the unaudited consolidated quarterly financial data for the years ended December 31, 2004 and 2003.

(In thousands, except per share data)		Fourth		Third		Second		First
		Quarter		Quarter		Quarter		Quarter
2004
	Interest income	$	312,316		299,747		277,266		269,691
	Net interest income		224,036		223,434		210,462		202,747
	Provision for losses on loans		20,855		21,192		17,548		15,724
	Income before income taxes		185,289		173,349		166,102		164,541
	Net income		118,722		109,008		105,141		104,162
	Net income per share, basic		.38		.35		.34		.34
	Net income per share, diluted		.38		.35		.34		.34
2003
	Interest income	$	264,745		266,248		270,742		259,757
	Net interest income		197,431		193,113		190,937		181,583
	Provision for losses on loans		19,800		15,108		16,565		20,304
	Income before income taxes		160,912		157,722		152,468		140,399
	Net income		102,639		100,000		96,367		89,919
	Net income per share, basic		.34		.33		.32		.30
	Net income per share, diluted		.34		.33		.32		.30

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