Fair Value Accounting (Tables)

9 Months Ended

Sep. 30, 2014

Financial Instruments Measured at Fair Value on Recurring Basis

The following table presents all financial instruments measured at fair value on a recurring basis as of September 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.



	September 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	$	—	3,502	—	3,502
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	—		3,677	—	3,677
State and municipal securities	—		—	—	—
All other mortgage-backed securities	—		4,174	—	4,174
Other investments	97		1,255	—	1,352
Total trading securities	$	97	12,608	—	12,705
Mortgage loans held for sale	—		72,333	—	72,333
Investment securities available for sale:
U.S. Treasury securities	42,668		—	—	42,668
U.S. Government agency securities	—		27,469	—	27,469
Securities issued by U.S. Government sponsored enterprises	—		82,327	—	82,327
Mortgage-backed securities issued by U.S. Government agencies	—		177,395	—	177,395
Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		2,316,608	—	2,316,608
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		373,459	—	373,459
State and municipal securities	—		5,301	—	5,301
Equity securities	6,357		—	—	6,357
Other investments⁽¹⁾	2,006		14,882	1,785	18,673
Total investment securities available for sale	$	51,031	2,997,441	1,785	3,050,257
Private equity investments	—		1,094	27,232	28,326
Mutual funds held in Rabbi Trusts	10,817		—	—	10,817
Derivative assets:
Interest rate contracts	—		30,184	—	30,184
Mortgage derivatives⁽²⁾	—		1,138	—	1,138
Total derivative assets	$	—	31,322	—	31,322
Liabilities
Trading account liabilities	—		6,264	—	6,264
Salary stock units	728		—	—	728
Derivative liabilities:
Interest rate contracts	—		30,689	—	30,689
Mortgage derivatives⁽²⁾	—		320	—	320
Visa derivative	—		—	4,021	4,021
Total derivative liabilities	$	—	31,009	4,021	35,030



	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.

Changes in Fair Value Included in Consolidated Statements of Income

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 Nine Months Ended September 30,			For the Three Months Ended September 30,
(in thousands)	2014	2013		2014		2013
Mortgage loans held for sale	$969	(3,838	)	(813	)	4,092



Mortgage Loans Held for Sale
(in thousands)	As of September 30, 2014		As of December 31, 2013
Fair value	$	72,333	45,384
Unpaid principal balance	70,924		44,943
Fair value less aggregate unpaid principal balance	$	1,409	441

Changes in Level 3 Fair Value Measurements



	Nine Months Ended September 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		)	(513	)	(2,731	)	—	(856	)	(801	)
Unrealized gains (losses) included in other comprehensive income	63			—		—		401	—		—
Purchases	—					—		—	—		—
Sales	—			—		—		—	—		—
Issuances	—			—		—		—	—		—
Settlements	(540		)	—		1,416		—	—		1,252
Amortization of discount/premium	—			—		—		—	—		—
Transfers in and/or out of Level 3	—			—		—		—	—		—
Ending balance, September 30,	$	1,785		27,232		(4,021	)	3,579	29,852		(2,505	)
Total net gains (losses) for the nine months included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at September 30,	$	(88	)	(513	)	(2,731	)	—	(856	)	(801	)

^* Included in earnings as a component of non-interest income (expense).



	Three Months Ended September 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, July 1,	$	1,866		27,376		(2,438	)	3,454	29,568	(2,977	)
Total gains (losses) realized/unrealized:
Included in earnings^*	—			(144	)	(1,979	)	—	284	—
Unrealized gains (losses) included in other comprehensive income	(81		)	—		—		125	—	—
Purchases	—			—		—		—	—	—
Sales	—			—		—		—	—	—
Issuances	—			—		—		—	—	—
Settlements	—			—		396		—	—	472
Amortization of discount/premium	—			—		—		—	—	—
Transfers in and/or out of Level 3	—			—		—		—	—	—
Ending balance, September 30,	$	1,785		27,232		(4,021	)	3,579	29,852	(2,505	)
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 September 30,	$	—		(144	)	(1,979	)	—	284	—

^* Included in earnings as a component of non-interest income (expense).

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis



	September 30, 2014					December 31, 2013
(in thousands)	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Impaired loans^*	$	—	—	37,790	37,790	—	—	170,693	170,693
Other loans held for sale	—		—	338	338	—	—	9,670	9,670
Other real estate	—		—	25,928	25,928	—	—	50,070	50,070
Other assets held for sale	$	—	—	7,744	7,744	—	—	4,945	4,945

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents fair value adjustments recognized for the nine and three months ended September 30, 2014 and 2013 for the assets measured at fair value on a non-recurring basis.



	Nine Months Ended September 30,			Three Months Ended September 30,
(in thousands)	2014		2013	2014		2013
Impaired loans^*	$	20,661	27,624	$	9,380	4,630
Other loans held for sale	285		2,844	285		2,833
Other real estate	7,343		5,919	4,114		1,406
Other assets held for sale	$	7,608	246	$	100	76

^*Impaired loans that are collateral-dependent.

Fair Value Inputs, Assets, Quantitative Information



September 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	1,785	Discounted cash flow analysis	Credit spread embedded in discount rate	450-550 bps (500 bps)

Private equity investments	27,232	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	N/A

Visa derivative liability	4,021	Internal valuation	Multiple factors, including but not limited to, 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.	N/A



September 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	$	37,790	Third party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽²⁾ Estimated selling costs	0% - 100% (48%) 0% - 10% (7%)

Other loans held for sale	338		Third party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽²⁾ Estimated selling costs	0% - 23% (23%) 0% - 10% (7%)

Other real estate	25,928		Third party appraised value of collateral less estimated selling costs	Discount to appraised value ⁽²⁾ Estimated selling costs	0% - 38% (16%) 0% - 10% (7%)

Other assets held for sale	7,744		Third party appraised value of collateral less estimated selling costs or BOV	Discount to appraised value ⁽²⁾ Estimated selling costs	0%-100% (69%) 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⁾ 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⁽³⁾

Other Investments:

Trust preferred securities	1,722		Discounted cash flow analysis	Credit spread embedded in discount rate	400-480 bps (441 bps)

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	N/A

Visa derivative liability	2,706		Internal valuation	Multiple factors, including but not limited to, 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.	N/A



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⁽²⁾ 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 ⁽²⁾ 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 ⁽²⁾ 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 ⁽²⁾ Estimated selling costs	5%-36% (20%) 0%-10% (7%)

⁽³⁾ The range has not been disclosed due to the wide range of possible values given the methodology used.

Carrying and Estimated Fair Values of Financial Instruments Carried on Balance Sheet

The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of September 30, 2014 and December 31, 2013 are as follows:



	September 30, 2014
(in thousands)	Carrying Value		Estimated Fair Value	Level 1	Level 2	Level 3
Financial assets
Cash and cash equivalents	$	386,402	386,402	386,402	—	—
Interest bearing funds with Federal Reserve Bank	750,446		750,446	750,446	—	—
Interest earning deposits with banks	13,612		13,612	13,612	—	—
Federal funds sold and securities purchased under resale agreements	70,918		70,918	70,918	—	—
Trading account assets	12,705		12,705	97	12,608	—
Mortgage loans held for sale	72,333		72,333	—	72,333	—
Other loans held for sale	338		338	—	—	338
Investment securities available for sale	3,050,257		3,050,257	51,031	2,997,441	1,785
Private equity investments	28,326		28,326	—	1,094	27,232
Mutual funds held in Rabbi Trusts	10,817		10,817	10,817	—	—
Loans, net of deferred fees and costs	20,588,566		20,334,382	—	—	20,334,382
Derivative assets	31,322		31,322	—	31,322	—
Financial liabilities
Trading account liabilities	6,264		6,264	—	6,264	—
Non-interest bearing deposits	5,813,809		5,813,809	—	5,813,809	—
Interest bearing deposits	15,175,972		15,177,126	—	15,177,126	—
Federal funds purchased and securities sold under repurchase agreements	107,160		107,160	107,160	—	—
Salary stock units	728		728	728	—	—
Long-term debt	2,130,934		2,185,455	—	2,185,455	—
Derivative liabilities	$	35,030	35,030	—	31,009	4,021



	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

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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