Fair Value Accounting |
Note 10 - Fair Value Accounting Synovus carries various assets and liabilities at fair value based on the fair value accounting guidance under ASC 820 and ASC 825. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair Value Hierarchy Synovus determines the fair value of its financial instruments based on the fair value hierarchy established under ASC 820-10, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the financial instrument's fair value measurement in its entirety. There are three levels of inputs that may be used to measure fair value. The three levels of inputs of the valuation hierarchy are defined below: | | | Level 1 | Quoted prices (unadjusted) in active markets for identical assets and liabilities for the instrument or security to be valued. Level 1 assets include marketable equity securities as well as U.S. Treasury securities that are highly liquid and are actively traded in over-the-counter markets. | Level 2 | Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or model-based valuation techniques for which all significant assumptions are derived principally from or corroborated by observable market data. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined by using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. U.S. Government sponsored agency securities, mortgage-backed securities issued by U.S. Government sponsored enterprises and agencies, obligations of states and municipalities, CMOs issued by U.S. Government sponsored enterprises, and mortgage loans held-for-sale are generally included in this category. Certain private equity investments that invest in publicly traded companies are also considered Level 2 assets. | Level 3 | Unobservable inputs that are supported by little, if any, market activity for the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow models and similar techniques, and may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. These methods of valuation may result in a significant portion of the fair value being derived from unobservable assumptions that reflect Synovus' own estimates for assumptions that market participants would use in pricing the asset or liability. This category primarily includes collateral-dependent impaired loans, other real estate, certain equity investments, and certain private equity investments. |
See Note 16 "Fair Value Accounting" to the consolidated financial statements of Synovus' 2013 Form 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.
Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents all financial instruments measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013, according to the valuation hierarchy included in ASC 820-10. For equity and debt securities, class was determined based on the nature and risks of the investments. | | | | | | | | | | | | | | | June 30, 2014 | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total Assets and Liabilities at Fair Value | Assets | | | | | | | | Trading securities: | | | | | | | | Mortgage-backed securities issued by U.S. Government agencies | $ | — |
| | 6,305 |
| | — |
| | 6,305 |
| Collateralized mortgage obligations issued by U.S. Government sponsored enterprises | — |
| | 1,900 |
| | — |
| | 1,900 |
| State and municipal securities | — |
| | 744 |
| | — |
| | 744 |
| All other mortgage-backed securities | — |
| | 3,755 |
| | — |
| | 3,755 |
| Other investments | — |
| | 7,614 |
| | — |
| | 7,614 |
| Total trading securities | $ | — |
| | 20,318 |
| | — |
| | 20,318 |
| Mortgage loans held for sale | — |
| | 75,957 |
| | — |
| | 75,957 |
| Investment securities available for sale: | | | | | | | | U.S. Treasury securities | 17,793 |
| | — |
| | — |
| | 17,793 |
| U.S. Government agency securities | — |
| | 34,292 |
| | — |
| | 34,292 |
| Securities issued by U.S. Government sponsored enterprises | — |
| | 112,809 |
| | — |
| | 112,809 |
| Mortgage-backed securities issued by U.S. Government agencies | — |
| | 174,378 |
| | — |
| | 174,378 |
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | — |
| | 2,338,295 |
| | — |
| | 2,338,295 |
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises | — |
| | 386,473 |
| | — |
| | 386,473 |
| State and municipal securities | — |
| | 5,429 |
| | — |
| | 5,429 |
| Equity securities | 6,953 |
| | — |
| | — |
| | 6,953 |
| Other investments(1) | 1,897 |
| | — |
| | 1,866 |
| | 3,763 |
| Total investment securities available for sale | $ | 26,643 |
| | 3,051,676 |
| | 1,866 |
| | 3,080,185 |
| Private equity investments | — |
| | 1,258 |
| | 27,376 |
| | 28,634 |
| Mutual funds held in Rabbi Trusts | 11,349 |
| | — |
| | — |
| | 11,349 |
| Derivative assets: | | | | | | | | Interest rate contracts | — |
| | 34,476 |
| | — |
| | 34,476 |
| Mortgage derivatives(2) | — |
| | 1,889 |
| | — |
| | 1,889 |
| Total derivative assets | $ | — |
| | 36,365 |
| | — |
| | 36,365 |
| Liabilities | | | | | | | | Trading account liabilities | — |
| | 7,309 |
| | — |
| | 7,309 |
| Salary stock units | 465 |
| | — |
| | — |
| | 465 |
| Derivative liabilities: | | | | | | | | Interest rate contracts | — |
| | 35,046 |
| | — |
| | 35,046 |
| Mortgage derivatives(2) | — |
| | 1,122 |
| | — |
| | 1,122 |
| Visa derivative | — |
| | — |
| | 2,438 |
| | 2,438 |
| Total derivative liabilities | $ | — |
| | 36,168 |
| | 2,438 |
| | 38,606 |
| | | | | | | | |
| | | | | | | | | | | | | | | December 31, 2013 | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total Assets and Liabilities at Fair Value | Assets | | | | | | | | Trading securities: | | | | | | | | Collateralized mortgage obligations issued by U.S. Government sponsored enterprises | — |
| | 2,465 |
| | — |
| | 2,465 |
| State and municipal securities | — |
| | 429 |
| | — |
| | 429 |
| All other mortgage-backed securities | — |
| | 968 |
| | — |
| | 968 |
| Other investments | — |
| | 2,251 |
| | — |
| | 2,251 |
| Total trading securities | $ | — |
| | 6,113 |
| | — |
| | 6,113 |
| Mortgage loans held for sale | — |
| | 45,384 |
| | — |
| | 45,384 |
| Investment securities available for sale: | | | | | | | | U.S. Treasury securities | 17,791 |
| | — |
| | — |
| | 17,791 |
| U.S. Government agency securities | — |
| | 34,641 |
| | — |
| | 34,641 |
| Securities issued by U.S. Government sponsored enterprises | — |
| | 113,745 |
| | — |
| | 113,745 |
| Mortgage-backed securities issued by U.S. Government agencies | — |
| | 195,117 |
| | — |
| | 195,117 |
| Mortgage-backed securities issued by U.S. Government sponsored enterprises | — |
| | 2,421,360 |
| | — |
| | 2,421,360 |
| Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises | — |
| | 398,540 |
| | — |
| | 398,540 |
| State and municipal securities | — |
| | 6,889 |
| | — |
| | 6,889 |
| Equity securities | 6,956 |
| | — |
| | 628 |
| | 7,584 |
| Other investments(1) | 1,969 |
| | — |
| | 1,722 |
| | 3,691 |
| Total investment securities available for sale | $ | 26,716 |
| | 3,170,292 |
| | 2,350 |
| | 3,199,358 |
| Private equity investments | — |
| | 1,615 |
| | 27,745 |
| | 29,360 |
| Mutual funds held in Rabbi Trusts | 11,246 |
| | — |
| | — |
| | 11,246 |
| Derivative assets: | | | | | | | | Interest rate contracts | — |
| | 38,482 |
| | — |
| | 38,482 |
| Mortgage derivatives(2) | — |
| | 1,522 |
| | — |
| | 1,522 |
| Total derivative assets | $ | — |
| | 40,004 |
| | — |
| | 40,004 |
| Liabilities | | | | | | | | Trading account liabilities | — |
| | 1,763 |
| | — |
| | 1,763 |
| Salary stock units | 1,764 |
| | — |
| | — |
| | 1,764 |
| Derivative liabilities: | | | | | | | | Interest rate contracts | — |
| | 39,436 |
| | — |
| | 39,436 |
| Visa derivative | — |
| | — |
| | 2,706 |
| | 2,706 |
| Total derivative liabilities | $ | — |
| | 39,436 |
| | 2,706 |
| | 42,142 |
| | | | | | | | |
(1) Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate. (2) Mortgage derivatives consist of customer interest rate lock commitments that relate to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third party investors. Fair Value Option Synovus has elected the fair value option for mortgage loans held for sale primarily to ease the operational burdens required to maintain hedge accounting for these loans. Synovus is still able to achieve effective economic hedges on mortgage loans held for sale without the operational time and expense needed to manage a hedge accounting program. The following table summarizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. Mortgage loans held for sale are initially measured at fair value with subsequent changes in fair value recognized in earnings. Changes in fair value were recorded as a component of mortgage banking income in the consolidated statements of income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk. | | | | | | | | | | | | | | Changes in Fair Value Included in Net Income | | | | | | | | | For the Six Months Ended June 30, | | For the Three Months Ended June 30, | (in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Mortgage loans held for sale | $ | 1,781 |
| | (7,930 | ) | | 1,057 |
| | (5,171 | ) | | | | | | | | |
| | | | | | | | Mortgage Loans Held for Sale | | (in thousands) | As of June 30, 2014 | | As of December 31, 2013 | Fair value | $ | 75,957 |
| | 45,384 |
| Unpaid principal balance | 73,735 |
| | 44,943 |
| Fair value less aggregate unpaid principal balance | $ | 2,222 |
| | 441 |
| | | | |
Changes in Level 3 Fair Value Measurements As noted above, Synovus uses significant unobservable inputs (Level 3) in determining the fair value of assets and liabilities classified as Level 3 in the fair value hierarchy. The table below includes a roll-forward of the amounts on the consolidated balance sheet for the six and three months ended June 30, 2014 and 2013 (including the change in fair value), for financial instruments of a material nature that are classified by Synovus within Level 3 of the fair value hierarchy and are measured at fair value on a recurring basis. Transfers between fair value levels are recognized at the end of the reporting period in which the associated changes in inputs occur. During the first and second quarters of 2014 and 2013, Synovus did not have any material transfers between levels in the fair value hierarchy. | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, | | 2014 | | 2013 | (in thousands) | Investment Securities Available for Sale | | Private Equity Investments | | Other Derivative Contracts, Net | | Investment Securities Available for Sale | | Private Equity Investments | | Other Derivative Contracts, Net | Beginning balance, January 1, | $ | 2,350 |
| | 27,745 |
| | (2,706 | ) | | $3,178 | | 30,708 |
| | (2,956 | ) | Total gains (losses) realized/unrealized: | | | | | | | | | | | | Included in earnings* | (88 | ) | | (369 | ) | | (752 | ) | | — |
| | (1,140 | ) | | (801 | ) | Unrealized gains (losses) included in other comprehensive income | 144 |
| | — |
| | — |
| | 276 |
| | — |
| | — |
| Purchases | — |
| |
|
|
| — |
| | — |
| | — |
| | — |
| Sales | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Issuances | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Settlements | (540 | ) | | — |
| | 1,020 |
| | — |
| | — |
| | 780 |
| Amortization of discount/premium | — |
| | — |
| | — |
| | — |
| | — |
| |
|
| Transfers in and/or out of Level 3 | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Ending balance, June 30, | $ | 1,866 |
| | 27,376 |
| | (2,438 | ) | | 3,454 |
| | 29,568 |
| | (2,977 | ) | Total net gains (losses) for the six months included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30, | $ | (88 | ) | | (369 | ) | | (752 | ) | | — |
| | (1,140 | ) | | (801 | ) | | | | | | | | | | | | |
* Included in earnings as a component of non-interest income (expense).
| | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | 2014 | | 2013 | (in thousands) | Investment Securities Available for Sale | | Private Equity Investments | | Other Derivative Contracts, Net | | Investment Securities Available for Sale | | Private Equity Investments | | Other Derivative Contracts, Net | Beginning balance, April 1, | $ | 2,399 |
| | 27,495 |
| | (2,525 | ) | | 3,312 |
| | 30,451 |
| | (2,610 | ) | Total gains (losses) realized/unrealized: | | | | | | | | | | | | Included in earnings* | — |
| | (119 | ) | | (356 | ) | | — |
| | (883 | ) | | (764 | ) | Unrealized gains (losses) included in other comprehensive income | 7 |
| | — |
| | — |
| | 142 |
| | — |
| | — |
| Purchases | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Sales | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Issuances | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Settlements | (540 | ) | | — |
| | 443 |
| | — |
| | — |
| | 397 |
| Amortization of discount/premium | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Transfers in and/or out of Level 3 | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Ending balance, June 30, | $ | 1,866 |
| | 27,376 |
| | (2,438 | ) | | 3,454 |
| | 29,568 |
| | (2,977 | ) | Total net gains (losses) for the three months included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at June 30, | $ | — |
| | (119 | ) | | (356 | ) | | — |
| | (883 | ) | | (764 | ) | | | | | | | | | | | | |
* Included in earnings as a component of non-interest income (expense).
Assets Measured at Fair Value on a Non-recurring Basis From time to time, certain assets may be recorded at fair value on a non-recurring basis. These non-recurring fair value adjustments typically are a result of the application of lower of cost or fair value accounting or a write-down occurring during the period. For example, if the fair value of an asset in these categories falls below its cost basis, it is considered to be at fair value at the end of the period of the adjustment. The following table presents assets measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment during the period, according to the valuation hierarchy included in ASC 820-10. | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2014 | | December 31, 2013 | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Impaired loans* | $ | — |
| | — |
| | 11,190 |
| | 11,190 |
| | — |
| | — |
| | 170,693 |
| | 170,693 |
| Other loans held for sale | — |
| | — |
| | 2,045 |
| | 2,045 |
| | — |
| | — |
| | 9,670 |
| | 9,670 |
| Other real estate | — |
|
| — |
|
| 18,746 |
|
| 18,746 |
| | — |
| | — |
| | 50,070 |
| | 50,070 |
| Other assets held for sale | $ | — |
| | — |
| | 5,394 |
| | 5,394 |
| | — |
| | — |
| | 4,945 |
| | 4,945 |
| | | | | | | | | | | | | | | | |
The following table presents fair value adjustments recognized for the six and three months ended June 30, 2014 and 2013 for the assets measured at fair value on a non-recurring basis. | | | | | | | | | | | | | | | | Six Months Ended June 30, | | Three Months Ended June 30, | (in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Impaired loans* | $ | 8,144 |
| | 30,152 |
| | $ | 5,542 |
| | 10,184 |
| Other loans held for sale | 1,631 |
| | 3,546 |
| | 1,631 |
| | 3,315 |
| Other real estate | 3,229 |
| | 4,513 |
| | 654 |
| | 363 |
| Other assets held for sale | $ | 7,508 |
| | 170 |
| | $ | 7,508 |
| | — |
| | | | | | | | |
* Impaired loans that are collateral-dependent.
Quantitative Information about Level 3 Fair Value Measurements The tables below provide an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments. The tables below present both the total balance as of the dates indicated for assets measured at fair value on a recurring basis and the assets measured at fair value on a non-recurring basis for which there was a fair value adjustment during the period, according to the valuation hierarchy included in ASC 820-10. | | | | | | | | | June 30, 2014 | (dollars in thousands) | | Level 3 Fair Value | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | Assets measured at fair value on a recurring basis | | | | | | | | | | | | | | Investment Securities Available for Sale: | | | | | | | Other Investments: | | | | | | | | | | | | | | Trust preferred securities | | 1,866 |
| | Discounted cash flow analysis | Credit spread embedded in discount rate | 400-490 bps (445 bps) | | | | | | Discount for lack of marketability(2) | 0%-10% (0%) | | | | | | | | Private equity investments | | 27,376 |
| | Individual analysis of each investee company | Multiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies (2) | N/A | | | | | | | | Visa derivative liability | | 2,438 |
| | Internal valuation | Management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. | $400 thousand to $2.4 million ($2.4 million) | | | | | | | |
| | | | | | | | | | June 30, 2014 | (dollars in thousands) | | Level 3 Fair Value | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | Assets measured at fair value on a non-recurring basis | | | | | | | Collateral dependent impaired loans | | $ | 11,190 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0% - 79% (42%) 0% - 10% (7%) | | | | | | | | Other loans held for sale | | 2,045 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0% - 19% (19%) 0% - 10% (7%) | | | | | | | | Other real estate | | 18,746 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0% - 4% (2%) 0% - 10% (7%) | | | | | | | | Other assets held for sale | | 5,394 |
| | Third party appraised value of collateral less estimated selling costs or BOV | Discount to appraised value (3) Estimated selling costs | 9%-80% (55%) 0%-10% (10%) | | | | | | | |
(1) The range represents management's best estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability. (2) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity. (3) Synovus also makes adjustments to the values of the assets listed above for various reasons, including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical conditions of the property, and other factors.
| | | | | | | | | | December 31, 2013 | (dollars in thousands) | | Level 3 Fair Value | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | Assets measured at fair value on a recurring basis | | | | | | | | | | | | | | Investment Securities Available for Sale: | | | | | | | Equity securities | | $ | 628 |
| | Individual analysis of each investment | Multiple data points, including, but not limited to evaluation of past and projected business performance | N/A(4) | | | | | | | | Other Investments: | | | | | | | | | | | | | | Trust preferred securities | | 1,722 |
| | Discounted cash flow analysis | Credit spread embedded in discount rate | 400-480 bps (441 bps) | | | | | | Discount for lack of marketability(2) | 0%-10% (0%) | | | | | | | | Private equity investments | | 27,745 |
| | Individual analysis of each investee company | Multiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed company transactions related to the investee companies (2) | N/A | | | | | | | | Visa derivative liability | | 2,706 |
| | Internal valuation | Management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract.
| $400 thousand to $2.7 million ($2.7 million) | | | | | | | |
| | | | | | | | | | December 31, 2013 | (dollars in thousands) | | Level 3 Fair Value | | Valuation Technique | Significant Unobservable Input | Range (Weighted Average)(1) | Assets measured at fair value on a non-recurring basis | | | | | | | Collateral dependent impaired loans | | $ | 170,693 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0%-65% (25%) 0%-10% (7%) | | | | | | | | Other loans held for sale | | 9,670 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0%-12% (4%) 0%-10% (7%) | | | | | | | | Other real estate | | 50,070 |
| | Third party appraised value of collateral less estimated selling costs | Discount to appraised value (3) Estimated selling costs | 0%-7% (2%) 0%-10% (7%) | | | | | | | | Other assets held for sale | | 4,945 |
| | Third party appraised value of collateral less estimated selling costs or BOV | Discount to appraised value (3) Estimated selling costs | 5%-36% (20%) 0%-10% (7%) | | | | | | | |
(1) The range represents management's best estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability. (2) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity. (3) Synovus also makes adjustments to the values of the assets listed above for various reasons, including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical conditions of the property, and other factors. (4) The range has not been disclosed due to the wide range of possible values given the methodology used.
Sensitivity Analysis of Level 3 Unobservable Inputs Measured on a Recurring Basis Included in the fair value estimates of financial instruments carried at fair value on the consolidated balance sheet are those estimated in full or in part using valuation techniques based on assumptions that are not supported by observable market prices, rates, or other inputs. Unobservable inputs are assessed carefully, considering the current economic environment and market conditions. However, by their very nature, unobservable inputs imply a degree of uncertainty in their determination, because they are supported by little, if any, market activity for the related asset or liability. Investment Securities Available for Sale For the trust preferred securities in Level 3 assets, raising the credit spread, and raising the discount for lack of liquidity assumptions will result in a lower fair value measurement. Private Equity Investments In the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of private equity investments, significant judgment is required to value these investments. The significant unobservable inputs used in the fair value measurement of private equity investments include current operations, financial condition, and cash flows, comparables and private sales, when available; and recently executed financing transactions related to investee companies. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement. Visa Derivative Liability The fair value of the Visa derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. Significant increases (decreases) in any of these inputs in isolation would result in a significantly higher (lower) valuation of the Visa derivative liability. Fair Value of Financial Instruments The following table presents the carrying and fair values of financial instruments at June 30, 2014 and December 31, 2013. The fair value represents management’s best estimates based on a range of methodologies and assumptions. For financial instruments that are not recorded at fair value on the balance sheet, such as loans, interest bearing deposits (including brokered deposits), and long-term debt, the amounts disclosed in the notes should not be considered an estimate of the amount that would be realized if all such financial instruments were to be settled immediately. See Note 16 "Fair Value Accounting" to the consolidated financial statements of Synovus' 2013 Form 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis and financial instruments that are not recorded at fair value on the balance sheet. The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of June 30, 2014 and December 31, 2013 are as follows: | | | | | | | | | | | | | | | | | | June 30, 2014 |
(in thousands) | Carrying Value | | Estimated Fair Value | | Level 1 | | Level 2 | | Level 3 | Financial assets | | | | | | | | | | Cash and cash equivalents | $ | 596,425 |
| | 596,425 |
| | 596,425 |
| | — |
| | — |
| Interest bearing funds with Federal Reserve Bank | 689,284 |
| | 689,284 |
| | 689,284 |
| | — |
| | — |
| Interest earning deposits with banks | 7,661 |
| | 7,661 |
| | 7,661 |
| | — |
| | — |
| Federal funds sold and securities purchased under resale agreements | 79,553 |
| | 79,553 |
| | 79,553 |
| | — |
| | — |
| Trading account assets | 20,318 |
| | 20,318 |
| | — |
| | 20,318 |
| | — |
| Mortgage loans held for sale | 75,957 |
| | 75,957 |
| | — |
| | 75,957 |
| | — |
| Other loans held for sale | 2,764 |
| | 2,764 |
| | — |
| | — |
| | 2,764 |
| Investment securities available for sale | 3,080,185 |
| | 3,080,185 |
| | 26,643 |
| | 3,051,676 |
| | 1,866 |
| Private equity investments | 28,634 |
| | 28,634 |
| | — |
| | 1,258 |
| | 27,376 |
| Mutual funds held in Rabbi Trusts | 11,349 |
| | 11,349 |
| | 11,349 |
| | — |
| | — |
| Loans, net of deferred fees and costs | 20,455,763 |
| | 20,188,381 |
| | — |
| | — |
| | 20,188,381 |
| Derivative assets | 36,365 |
| | 36,365 |
| | — |
| | 36,365 |
| | — |
| Financial liabilities | | | | | | | | | | Trading account liabilities | 7,309 |
| | 7,309 |
| | — |
| | 7,309 |
| | — |
| Non-interest bearing deposits | 5,875,301 |
| | 5,875,301 |
| | — |
| | 5,875,301 |
| | — |
| Interest bearing deposits | 15,118,166 |
| | 15,123,417 |
| | — |
| | 15,123,417 |
| | — |
| Federal funds purchased and securities sold under repurchase agreements | 127,840 |
| | 127,840 |
| | 127,840 |
| | — |
| | — |
| Salary stock units | 465 |
| | 465 |
| | 465 |
| | — |
| | — |
| Long-term debt | 2,256,418 |
| | 2,329,660 |
| | — |
| | 2,329,660 |
| | — |
| Derivative liabilities | $ | 38,606 |
| | 38,606 |
| | — |
| | 36,168 |
| | 2,438 |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | December 31, 2013 |
(in thousands) | Carrying Value | | Estimated Fair Value | | Level 1 | | Level 2 | | Level 3 | Financial assets | | | | | | | | | | Cash and cash equivalents | $ | 469,630 |
| | 469,630 |
| | 469,630 |
| | — |
| | — |
| Interest bearing funds with Federal Reserve Bank | 644,528 |
| | 644,528 |
| | 644,528 |
| | — |
| | — |
| Interest earning deposits with banks | 24,325 |
| | 24,325 |
| | 24,325 |
| | — |
| | — |
| Federal funds sold and securities purchased under resale agreements | 80,975 |
| | 80,975 |
| | 80,975 |
| | — |
| | — |
| Trading account assets | 6,113 |
| | 6,113 |
| | — |
| | 6,113 |
| | — |
| Mortgage loans held for sale | 45,384 |
| | 45,384 |
| | — |
| | 45,384 |
| | — |
| Other loans held for sale | 10,685 |
| | 10,685 |
| | — |
| | — |
| | 10,685 |
| Investment securities available for sale | 3,199,358 |
| | 3,199,358 |
| | 26,716 |
| | 3,170,292 |
| | 2,350 |
| Private equity investments | 29,360 |
| | 29,360 |
| | — |
| | 1,615 |
| | 27,745 |
| Mutual funds held in Rabbi Trusts | 11,246 |
| | 11,246 |
| | 11,246 |
| | — |
| | — |
| Loans, net of deferred fees and costs | 20,057,798 |
| | 19,763,708 |
| | — |
| | — |
| | 19,763,708 |
| Derivative assets | 40,004 |
| | 40,004 |
| | — |
| | 40,004 |
| | — |
| Financial liabilities | | | | | | | | | | Trading account liabilities | 1,763 |
| | 1,763 |
| | — |
| | 1,763 |
| | — |
| Non-interest bearing deposits | 5,642,751 |
| | 5,642,751 |
| | — |
| | 5,642,751 |
| | — |
| Interest bearing deposits | 15,234,039 |
| | 15,244,020 |
| | — |
| | 15,244,020 |
| | — |
| Federal funds purchased and securities sold under repurchase agreements | 148,132 |
| | 148,132 |
| | 148,132 |
| | — |
| | — |
| Salary stock units | 1,764 |
| | 1,764 |
| | 1,764 |
| | — |
| | — |
| Long-term debt | 2,033,141 |
| | 2,095,720 |
| | — |
| | 2,095,720 |
| | — |
| Derivative liabilities | $ | 42,142 |
| | 42,142 |
| | — |
| | 39,436 |
| | 2,706 |
| | | | | | | | | | |
|