Note 5 - Loans and Allowance for Loan Losses

Loans outstanding, by classification, at December 31, 2015 and 2014 are summarized below.



	December 31,
(in thousands)	2015			2014
Investment properties	$	5,751,631		5,206,674
1-4 family properties	1,109,854			1,133,882
Land acquisition	513,981			586,046
Total commercial real estate	7,375,466			6,926,602
Commercial, financial and agricultural	6,472,482			6,182,312
Owner-occupied	4,318,950			4,085,407
Total commercial and industrial	10,791,432			10,267,719
Home equity lines	1,689,914			1,683,998
Consumer mortgages	1,938,683			1,694,061
Credit cards	240,851			253,649
Other retail loans	423,318			302,460
Total retail	4,292,766			3,934,168
Total loans	22,459,664			21,128,489
Deferred fees and costs, net	(30,099		)	(30,790	)
Total loans, net of deferred fees and costs	$	22,429,565		21,097,699

A substantial portion of the loan portfolio is secured by real estate in markets located throughout Georgia, Alabama, Tennessee, South Carolina, and Florida. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio is susceptible to changes in market conditions in these areas.

The following is a summary of current, accruing past due, and non-accrual loans by class as of December 31, 2015 and 2014.



Current, Accruing Past Due, and Non-accrual Loans
	December 31, 2015
( in thousands)	Current		Accruing 30-89 Days Past Due	Accruing 90 Days or Greater Past Due	Total Accruing Past Due	Non-accrual	Total
Investment properties	$	5,726,307	2,284	—	2,284	23,040	5,751,631
1-4 family properties	1,086,612		6,300	103	6,403	16,839	1,109,854
Land acquisition	495,542		639	32	671	17,768	513,981
Total commercial real estate	7,308,461		9,223	135	9,358	57,647	7,375,466
Commercial, financial and agricultural	6,410,338		12,222	785	13,007	49,137	6,472,482
Owner-occupied	4,293,308		5,254	95	5,349	20,293	4,318,950
Total commercial and industrial	10,703,646		17,476	880	18,356	69,430	10,791,432
Home equity lines	1,667,552		5,882	—	5,882	16,480	1,689,914
Consumer mortgages	1,907,644		8,657	134	8,791	22,248	1,938,683
Credit cards	237,742		1,663	1,446	3,109	—	240,851
Other retail loans	418,337		2,390	26	2,416	2,565	423,318
Total retail	4,231,275		18,592	1,606	20,198	41,293	4,292,766
Total loans	$	22,243,382	45,291	2,621	47,912	168,370	22,459,664	⁽¹⁾

	December 31, 2014
( in thousands)	Current		Accruing 30-89 Days Past Due	Accruing 90 Days or Greater Past Due	Total Accruing Past Due	Non-accrual	Total
Investment properties	$	5,184,103	1,851	—	1,851	20,720	5,206,674
1-4 family properties	1,105,186		4,067	432	4,499	24,197	1,133,882
Land acquisition	551,308		363	—	363	34,375	586,046
Total commercial real estate	6,840,597		6,281	432	6,713	79,292	6,926,602
Commercial, financial and agricultural	6,130,184		9,979	1,790	11,769	40,359	6,182,312
Owner-occupied	4,052,679		6,404	225	6,629	26,099	4,085,407
Total commercial and industrial	10,182,863		16,383	2,015	18,398	66,458	10,267,719
Home equity lines	1,659,869		6,992	703	7,695	16,434	1,683,998
Consumer mortgages	1,648,145		12,626	12	12,638	33,278	1,694,061
Credit cards	250,304		1,971	1,374	3,345	—	253,649
Other retail loans	297,703		2,361	101	2,462	2,295	302,460
Total retail	3,856,021		23,950	2,190	26,140	52,007	3,934,168
Total loans	$	20,879,481	46,614	4,637	51,251	197,757	21,128,489	⁽²⁾

⁽¹⁾Total before net deferred fees and costs of $30.1 million.

⁽²⁾Total before net deferred fees and costs of $30.8 million.

Non-accrual loans as of December 31, 2015 and 2014 were $168.4 million and $197.8 million, respectively. Interest income on non-accrual loans outstanding at December 31, 2015 and 2014 that would have been recorded if the loans had been current and performed in accordance with their original terms was $10.5 million and $12.6 million, respectively. Interest income recorded on these loans for the years ended December 31, 2015 and 2014 was $4.3 million and $4.1 million, respectively.

The credit quality of the loan portfolio is summarized no less frequently than quarterly using the standard asset classification system utilized by the federal banking agencies. These classifications are divided into three groups – Not Classified (Pass), Special Mention, and Classified or Adverse rating (Substandard, Doubtful, and Loss) and are defined as follows:

Pass - loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.

Special Mention - loans which have potential weaknesses that deserve management's close attention. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

Substandard - loans which are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.

Loss - loans which are considered by management to be uncollectible and of such little value that its continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off is not warranted.

In the following tables, retail loans are classified as Pass except when they reach 90 days past due or are downgraded to substandard, and upon reaching 120 days past due, they are downgraded to loss and charged off, in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy. The risk grade classifications of retail loans secured by junior liens on 1-4 family residential properties also consider available information on the payment status of the associated senior lien with other financial institutions.



Loan Portfolio Credit Exposure by Risk Grade
	December 31, 2015
(in thousands)	Pass		Special Mention	Substandard⁽¹⁾	Doubtful⁽²⁾	Loss		Total
Investment properties	$	5,560,595	114,705	76,331	—	—		5,751,631
1-4 family properties	976,601		64,325	61,726	7,202	—		1,109,854
Land acquisition	436,835		46,208	30,574	364	—		513,981
Total commercial real estate	6,974,031		225,238	168,631	7,566	—		7,375,466
Commercial, financial and agricultural	6,203,481		152,189	100,658	13,330	2,824	⁽³⁾	6,472,482
Owner-occupied	4,118,631		78,490	121,272	98	459	⁽³⁾	4,318,950
Total commercial and industrial	10,322,112		230,679	221,930	13,428	3,283		10,791,432
Home equity lines	1,666,586		—	20,456	1,206	1,666	⁽³⁾	1,689,914
Consumer mortgages	1,910,649		—	26,041	1,700	293	⁽³⁾	1,938,683
Credit cards	239,405		—	480	—	966	⁽⁴⁾	240,851
Other retail loans	418,929		—	4,315	—	74	⁽³⁾	423,318
Total retail	4,235,569		—	51,292	2,906	2,999		4,292,766
Total loans	$	21,531,712	455,917	441,853	23,900	6,282		22,459,664	⁽⁵⁾

	December 31, 2014
(in thousands)	Pass		Special Mention	Substandard⁽¹⁾	Doubtful⁽²⁾	Loss		Total
Investment properties	$	4,936,319	167,490	102,865	—	—		5,206,674
1-4 family properties	943,721		86,072	96,392	7,697	—	⁽³⁾	1,133,882
Land acquisition	462,313		60,902	62,101	730	—		586,046
Total commercial real estate	6,342,353		314,464	261,358	8,427	—		6,926,602
Commercial, financial and agricultural	5,905,589		143,879	123,225	9,539	80	⁽³⁾	6,182,312
Owner-occupied	3,827,943		95,647	161,045	327	445		4,085,407
Total commercial and industrial	9,733,532		239,526	284,270	9,866	525		10,267,719
Home equity lines	1,659,794		—	20,043	2,009	2,152	⁽³⁾	1,683,998
Consumer mortgages	1,653,491		—	37,656	2,654	260	⁽³⁾	1,694,061
Credit cards	252,275		—	495	—	879	⁽⁴⁾	253,649
Other retail loans	298,991		—	3,339	32	98	⁽³⁾	302,460
Total retail	3,864,551		—	61,533	4,695	3,389		3,934,168
Total loans	$	19,940,436	553,990	607,161	22,988	3,914		21,128,489	⁽⁶⁾


⁽¹⁾	Includes $138.2 million and $170.9 million of non-accrual substandard loans at December 31, 2015 and December 31, 2014, respectively.

⁽²⁾ These loans are on non-accrual status. Commercial loans generally have an allowance for loan losses in accordance with ASC 310 and retail loans generally have an allowance for loan losses equal to 50% of the loan amount.

⁽³⁾ These loans are on non-accrual status and have an allowance for loan losses equal to the full loan amount.

⁽⁴⁾Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan losses equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy.

⁽⁵⁾Total before net deferred fees and costs of $30.1 million.

⁽⁶⁾Total before net deferred fees and costs of $30.8 million.

The following table details the change in the allowance for loan losses by loan segment for the years ended December 31, 2015, 2014 and 2013.



Allowance for Loan Losses and Recorded Investment in Loans
	As Of and For The Year Ended December 31, 2015
(in thousands)	Commercial Real Estate			Commercial & Industrial			Retail			Unallocated			Total
Allowance for loan losses
Beginning balance	$	101,471		118,110			41,736			—			261,317
Charge-offs	(13,998		)	(22,583		)	(20,758		)	—			(57,339	)
Recoveries	13,644			8,611			7,253			—			29,508
Provision for loan losses	(13,984		)	18,851			14,143			—			19,010
Ending balance	$	87,133		122,989			42,374			—			252,496
Ending balance: individually evaluated for impairment	18,969			10,477			989			—			30,435
Ending balance: collectively evaluated for impairment	$	68,164		112,512			41,385			—			222,061
Loans
Ending balance: total loans⁽¹⁾	$	7,375,466		10,791,432			4,292,766			—			22,459,664
Ending balance: individually evaluated for impairment	157,958			105,599			38,243			—			301,800
Ending balance: collectively evaluated for impairment	$	7,217,508		10,685,833			4,254,523			—			22,157,864

	As Of and For The Year Ended December 31, 2014
(in thousands)	Commercial Real Estate			Commercial & Industrial			Retail			Unallocated			Total
Allowance for loan losses
Beginning balance	$	127,646		115,435			41,479			23,000			307,560
Allowance for loan losses of sold loans	(281		)	(398		)	(340		)	—			(1,019	)
Charge-offs	(49,716		)	(38,941		)	(24,881		)	—			(113,538	)
Recoveries	11,787			14,628			8,068			—			34,483
Provision for loan losses	12,035			27,386			17,410			(23,000		)	33,831
Ending balance	$	101,471		118,110			41,736			—			261,317
Ending balance: individually evaluated for impairment	21,755			10,451			1,270			—			33,476
Ending balance: collectively evaluated for impairment	$	79,716		$	107,659		$	40,466		$	—		227,841
Loans
Ending balance: total loans⁽²⁾	$	6,926,602		10,267,719			3,934,168			—			21,128,489
Ending balance: individually evaluated for impairment	251,536			146,026			44,586			—			442,148
Ending balance: collectively evaluated for impairment	$	6,675,066		10,121,693			3,889,582			—			20,686,341

	As Of and For The Year Ended December 31, 2013
(in thousands)	Commercial Real Estate			Commercial & Industrial			Retail			Unallocated			Total
Allowance for loan losses
Beginning balance	$167,926			138,495			38,984			28,000			373,405
Charge-offs	(87,031		)	(58,936		)	(33,986		)	—			(179,953	)
Recoveries	17,068			19,918			7,524			—			44,510
Provision for loan losses	29,683			15,958			28,957			(5,000		)	69,598
Ending balance	$	127,646		115,435			41,479			23,000			307,560
Ending balance: individually evaluated for impairment	46,787			20,018			1,192			—			67,997
Ending balance: collectively evaluated for impairment	$	80,859		95,417			40,287			23,000			239,563
Loans
Ending balance: total loans⁽³⁾	$	6,506,976		9,931,451			3,648,233			—			20,086,660
Ending balance: individually evaluated for impairment	538,730			242,862			54,962			—			836,554
Ending balance: collectively evaluated for impairment	$	5,968,246		9,688,589			3,593,271			—			19,250,106

⁽¹⁾Total before net deferred fees and costs of $30.1 million.

⁽²⁾Total before net deferred fees and costs of $30.8 million.

⁽³⁾Total before net deferred fees and costs of $28.9 million.

Below is a detailed summary of impaired loans (including accruing TDRs) by class as of December 31, 2015 and 2014.



Impaired Loans (including accruing TDRs)	December 31, 2015
(in thousands)	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
With no related allowance recorded
Investment properties	$	10,051	12,946	—	11,625	—
1-4 family properties	1,507		5,526	—	2,546	—
Land acquisition	8,551		39,053	—	13,897	—
Total commercial real estate	20,109		57,525	—	28,068	—
Commercial, financial and agricultural	4,393		7,606	—	5,737	—
Owner-occupied	8,762		11,210	—	14,657	—
Total commercial and industrial	13,155		18,816	—	20,394	—
Home equity lines	1,030		1,030	—	573	—
Consumer mortgages	814		941	—	995	—
Credit cards	—		—	—	—	—
Other retail loans	—		—	—	—	—
Total retail	1,844		1,971	—	1,568	—
Total	35,108		78,312	—	50,030	—
With allowance recorded
Investment properties	62,305		62,305	10,070	73,211	2,131
1-4 family properties	51,376		51,376	6,184	61,690	1,618
Land acquisition	24,168		24,738	2,715	34,793	936
Total commercial real estate	137,849		138,419	18,969	169,694	4,685
Commercial, financial and agricultural	42,914		44,374	8,339	43,740	1,125
Owner-occupied	49,530		49,688	2,138	55,323	1,814
Total commercial and industrial	92,444		94,062	10,477	99,063	2,939
Home equity lines	9,575		9,575	206	8,318	346
Consumer mortgages	22,173		23,297	651	26,044	1,229
Credit cards	—		—	—	—	—
Other retail loans	4,651		4,651	132	5,105	323
Total retail	36,399		37,523	989	39,467	1,898
Total	266,692		270,004	30,435	308,224	9,522
Total
Investment properties	72,356		75,251	10,070	84,836	2,131
1-4 family properties	52,883		56,902	6,184	64,236	1,618
Land acquisition	32,719		63,791	2,715	48,690	936
Total commercial real estate	157,958		195,944	18,969	197,762	4,685
Commercial, financial and agricultural	47,307		51,980	8,339	49,477	1,125
Owner-occupied	58,292		60,898	2,138	69,980	1,814
Total commercial and industrial	105,599		112,878	10,477	119,457	2,939
Home equity lines	10,605		10,605	206	8,891	346
Consumer mortgages	22,987		24,238	651	27,039	1,229
Credit cards	—		—	—	—	—
Other retail loans	4,651		4,651	132	5,105	323
Total retail	38,243		39,494	989	41,035	1,898
Total impaired loans	$	301,800	348,316	30,435	358,254	9,522



	December 31, 2014
(in thousands)	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
With no related allowance recorded
Investment properties	$	15,368	20,237	—	25,311	—
1-4 family properties	2,981		10,520	—	5,441	—
Land acquisition	21,504		61,843	—	29,954	—
Total commercial real estate	39,853		92,600	—	60,706	—
Commercial, financial and agricultural	7,391		11,193	—	8,984	—
Owner-occupied	17,017		19,612	—	19,548	—
Total commercial and industrial	24,408		30,805	—	28,532	—
Home equity lines	—		—	—	—	—
Consumer mortgages	995		2,065	—	1,352	—
Credit cards	—		—	—	—	—
Other retail loans	—		—	—	—	—
Total retail	995		2,065	—	1,352	—
Total	65,256		125,470	—	90,590	—
With allowance recorded
Investment properties	81,758		83,963	5,413	129,289	3,690
1-4 family properties	80,625		81,357	11,442	94,773	2,645
Land acquisition	49,300		49,483	4,900	89,195	1,689
Total commercial real estate	211,683		214,803	21,755	313,257	8,024
Commercial, financial and agricultural	59,035		59,041	7,597	91,221	2,392
Owner-occupied	62,583		62,601	2,854	78,950	2,610
Total commercial and industrial	121,618		121,642	10,451	170,171	5,002
Home equity lines	4,848		4,848	129	3,604	1405
Consumer mortgages	33,450		33,450	1,040	39,427	115
Credit cards	—		—	—	—	—
Other retail loans	5,293		5,293	101	4,997	315
Total retail	43,591		43,591	1,270	48,028	1,835
Total	376,892		380,036	33,476	531,456	14,861
Total
Investment properties	97,126		104,200	5,413	154,600	3,690
1-4 family properties	83,606		91,877	11,442	100,214	2,645
Land acquisition	70,804		111,326	4,900	119,149	1,689
Total commercial real estate	251,536		307,403	21,755	373,963	8,024
Commercial, financial and agricultural	66,426		70,234	7,597	100,205	2,392
Owner-occupied	79,600		82,213	2,854	98,498	2,610
Total commercial and industrial	146,026		152,447	10,451	198,703	5,002
Home equity lines	4,848		4,848	129	3,604	1,405
Consumer mortgages	34,445		35,515	1,040	40,779	115
Credit cards	—		—	—	—	—
Other retail loans	5,293		5,293	101	4,997	315
Total retail	44,586		45,656	1,270	49,380	1,835
Total impaired loans	$	442,148	505,506	33,476	622,046	14,861

The average recorded investment in impaired loans was $952.3 million for the year ended December 31, 2013. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the years ended December 31, 2015 , 2014, and 2013. Interest income recognized for accruing TDRs was $21.1 million for the year ended December 31, 2013. At December 31, 2015, 2014, and 2013, all impaired loans, other than $223.9 million, $348.4 million, and $556.4 million, respectively, of accruing TDRs, were on nonaccrual status.

Concessions provided in a TDR are primarily in the form of providing a below market interest rate given the borrower's credit risk, a period of time generally less than one year with a reduction of required principal and/or interest payments (e.g., interest only for a period of time), or extension of the maturity of the loan generally for less than one year. Insignificant periods of reduction of principal and/or interest payments, or one time deferrals of three months or less, are generally not considered to be financial concessions.

The following tables represent the post-modification balance, shown by type of concession, for loans modified or renewed during the years ended December 31, 2015 and 2014 that were reported as accruing or non-accruing TDRs.



TDRs by Concession Type
	Year Ended December 31, 2015
(in thousands, except contract data)	Number of Contracts	Principal Forgiveness		Below Market Interest Rate	Term Extensions and/or Other Concessions	Total
Investment properties	11	$	—	25,052	6,973	32,025
1-4 family properties	43	14,823		4,667	2,763	22,253
Land acquisition	12	—		614	1,532	2,146
Total commercial real estate	66	14,823		30,333	11,268	56,424
Commercial, financial and agricultural	91	29		3,191	6,477	9,697
Owner-occupied	10	—		3,417	2,064	5,481
Total commercial and industrial	101	29		6,608	8,541	15,178
Home equity lines	53	—		2,826	2,905	5,731
Consumer mortgages	15	—		1,011	895	1,906
Credit cards	—	—		—	—	—
Other retail loans	27	—		444	703	1,147
Total retail	95	—		4,281	4,503	8,784
Total loans	262	$	14,852	41,222	24,312	80,386	⁽¹⁾

⁽¹⁾As a result of these loans being reported as TDRs, there were net charge-offs of $4.0 million recorded during 2015.



TDRs by Concession Type
	Year Ended December 31, 2014
(in thousands, except contract data)	Number of Contracts	Principal Forgiveness		Below Market Interest Rate	Term Extensions and/or Other Concessions	Total
Investment properties	15	$	—	8,423	5,813	14,236
1-4 family properties	68	—		6,611	6,492	13,103
Land acquisition	16	2,338		4,783	2,688	9,809
Total commercial real estate	99	2,338		19,817	14,993	37,148
Commercial, financial and agricultural	89	60		10,066	21,141	31,267
Owner-occupied	18	—		23,404	14,862	38,266
Total commercial and industrial	107	60		33,470	36,003	69,533
Home equity lines	20	—		2,335	451	2,786
Consumer mortgages	19	—		2,735	867	3,602
Credit cards	—	—		—	—	—
Other retail loans	27	—		663	566	1,229
Total retail	66	—		5,733	1,884	7,617
Total loans	272	$	2,398	59,020	52,880	114,298	⁽¹⁾

⁽¹⁾As a result of these loans being reported as TDRs, there were net charge-offs of approximately $163 thousand recorded during 2014.

The following table presents TDRs that defaulted in the years indicated and which were modified or renewed in a TDR within 12 months of the default date:



Troubled Debt Restructurings Entered Into That Subsequently Defaulted⁽¹⁾During
	Year Ended December 31, 2015			Year Ended December 31, 2014
(in thousands, except contract data)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Investment properties	1	$	10,944	1	$	186
1-4 family properties	—	—		3	1,018
Land acquisition	—	—		1	428
Total commercial real estate	1	10,944		5	1,632
Commercial, financial and agricultural	1	112		6	1,779
Owner-occupied	2	1,319		—	—
Total commercial and industrial	3	1,431		6	1,779
Home equity lines	2	74		—	—
Consumer mortgages	—	—		3	206
Credit cards	—	—		—	—
Other retail loans	1	81		1	6
Total retail	3	155		4	212
Total loans	7	$	12,530	15	$	3,623

⁽¹⁾ Defaulted is defined as the earlier of the troubled debt restructuring being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments.

If at the time that a loan was designated as a TDR the loan was not already impaired, the measurement of impairment resulting from the TDR designation changes from a general pool-level reserve to a specific loan measurement of impairment in accordance with ASC 310-10-35, Accounting By Creditors for Impairment of a Loan—an amendment of FASB Statements No. 5, ASC 450-20, and No. 15, ASC 310-40. Generally, the change in the allowance for loan losses resulting from such a TDR is not significant. At December 31, 2015, the allowance for loan losses allocated to accruing TDRs totaling $223.9 million was $12.6 million compared to accruing TDR's of $348.4 million with a related allowance for loan losses of $21.0 million at December 31, 2014. Nonaccrual non-homogeneous loans (commercial-type impaired loan relationships greater than $1 million) that are designated as TDRs are individually measured for the amount of impairment, if any, both before and after the TDR designation.

In the ordinary course of business, Synovus Bank has made loans to certain Synovus and Synovus Bank executive officers and directors (including their associates and affiliates). Management believes that such loans are made on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with unaffiliated customers.

The following is a summary of such loans and the activity in these loans for the year ended December 31, 2015.



(in thousands)
Balance at December 31, 2014	$	38,482
New loans	13,577
Repayments	(10,506		)
Loans charged-off	—
Balance at December 31, 2015	$	41,553

At December 31, 2015, there were no loans to executive officers and directors that were classified as nonaccrual, greater than 90 days past due and still accruing, or potential problem loans.