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  Title	Synovus Financial : 3Q24 Basel III Regulatory Capital Disclosure Report
  ID	4410910
  External ID	7322341937
  Author	Unknown
  Published Date	Nov. 21, 2024, 4:40 p.m.
  Summary	November 21, 2024 at 05:35 pm EST Synovus Financial Corp. Basel III Regulatory Capital Disclosures Report September 30, 2024 TABLE OF CONTENTS DEFINED TERMS BACKGROUND AND OVERVIEW Basel I
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  Content	November 21, 2024 at 05:35 pm EST Synovus Financial Corp. Basel III Regulatory Capital Disclosures Report September 30, 2024 TABLE OF CONTENTS DEFINED TERMS BACKGROUND AND OVERVIEW Basel III is a set of international banking measures that established a framework to strengthen the regulation, supervision, and risk management of banks. Under the Basel III Rules, Synovus is designated as a standardized approach bank. With respect to capital adequacy, Basel III Rules include a standardized approach for components of capital ratios including risk-weightings of assets and off-balance sheet exposures, as well as other adjustments, to derive the regulatory capital ratios. Synovus is currently not subject to the U.S. market risk capital rule, which applies only to banking institutions with significant trading activity. This document and certain of the Company's public filings present the Regulatory Capital Disclosures in compliance with Basel III as described in Section 63 of the final rule. Synovus' 2023 Form 10-K and September 30, 2024 Form 10-Q contain management's discussion and analysis of the overall risk profile of the Company and related management strategies. The information presented herein should be read in conjunction with our 2023 Form 10-K, September 30, 2024 Form 10-Q, as well as the Consolidated Financial Statements for Holding Companies - FR Y-9C dated September 30, 2024. A disclosure index is provided in Appendix 1 of this report, which specifies where all disclosures required by Basel III Rules are located. SCOPE OF APPLICATION General Synovus Financial Corp. is a financial services company and a registered bank holding company headquartered in Columbus, Georgia. We provide commercial and consumer banking in addition to a full suite of specialized financial products and services including private banking, treasury management, wealth management, mortgage services, premium finance, asset-based lending, structured lending, capital markets, and international banking. At September 30, 2024, Synovus had total consolidated assets of $59.59 billion and consolidated deposits of $50.19 billion with 247 branches and 360 ATMs across our five state footprint in Alabama, Florida, Georgia, South Carolina, and Tennessee. Throughout this report, references to "Synovus," "we," "our," "us," "the Company," and similar terms refer to the consolidated entity consisting of Synovus Financial Corp. and its subsidiaries unless the context indicates that we refer only to the Parent Company, Synovus Financial Corp. When referenced herein, "Bank" or "Synovus Bank" refers to our wholly-owned bank subsidiary, Synovus Bank. Additional information relating to our business and our subsidiaries, including a detailed description of our financial results for the years ended December 31, 2023, and 2022, and quarter ended September 30, 2024 is contained in "Part - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Synovus' 2023 Form 10-K and "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our September 30, 2024 Form 10-Q, respectively. Non-bank Subsidiaries In addition to our banking operations, we also provide various other financial services to our clients through the following direct and indirect wholly-owned non-bank subsidiaries: Synovus Securities, headquartered in Columbus, Georgia, which specializes in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer, asset management and financial planning services, and the provision of individual investment advice on equity and other securities; and Synovus Trust, headquartered in Columbus, Georgia, which provides trust, asset management, and financial planning services. Basis of Consolidation The consolidated financial statements of Synovus include the accounts of the Parent Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounting and financial reporting policies of Synovus are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. For additional information, refer to "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2023 Form 10-K and "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation and Accounting Policies" in Synovus' September 30, 2024 Form 10-Q. Regulation of the Company We are registered as a bank holding company with the Federal Reserve under the BHC Act and have elected to be treated as a financial holding company. As such, we are subject to comprehensive supervision and regulation by the Federal Reserve and are subject to its regulatory reporting requirements. Federal regulations subject bank holding companies, such as Synovus, to restrictions on the types of activities in which they may engage, and to a range of supervisory requirements. In addition, the GA DBF regulates the banking activities of Georgia-chartered banks, such as us, under certain bank statutes of the State of Georgia. Various federal and state agencies regulate and supervise other of Synovus' activities including our brokerage, investment advisory, and insurance agency activities. Such agencies include, but are not limited to, the SEC, the Financial Industry Regulatory Authority, other federal and state banking regulators, and various state regulators of insurance and brokerage activities. Forward-Looking Statements Certain statements made or incorporated by reference in this Report, which are not statements of historical fact, constitute forward-looking statements within the meaning of, and subject to the protections of, Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus' use of words such as "believes," "anticipates," "expects," "may," "will," "assumes," "predicts," "could," "should," "would," "intends," "targets," "estimates," "projects," "plans," "potential," and other similar words and expressions of the future or otherwise regarding the outlook for Synovus' future business and financial performance and/or the performance of the financial services industry and economy in general. Forward-looking 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. For a discussion of these and other risks that may cause actual results to differ from expectations, refer to "Part I - Forward-Looking Statements" and "Item 1A. Risk Factors" of our 2023 Form 10-K and "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" of our September 30, 2024 Form 10-Q. All written or oral forward-looking statements that are made by or are attributable to Synovus are expressly qualified by this cautionary notice. You should not place undue reliance on any forward-looking statements since those statements speak only as of the date on which the statements are made. Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law. CAPITAL STRUCTURE Summary of Capital Synovus and Synovus Bank have issued a variety of capital instruments to maintain a robust and efficient capital position while also meeting various regulatory capital requirements. Currently, Synovus' capital structure primarily consists of the following elements: CET1 capital, which includes primarily common shareholders' equity, subject to certain regulatory adjustments and deductions; Additional Tier 1 capital, which includes perpetual preferred stock and certain qualifying capital instruments; and Tier 2 capital, which primarily includes qualifying subordinated and junior subordinated debt as well as qualifying ACL. For further information on the Company's capital instruments and regulatory requirements, please refer to "Note 8 - Other Short-term Borrowings and Long-term Debt," "Note 9 - Shareholders' Equity and Other Comprehensive Income," and "Note 10 - Regulatory Capital" in "Part II - Item 8. Financial Statements and Supplementary Data" of our 2023 Form 10-K, and "Note 4 - Shareholders' Equity and Other Comprehensive Income (Loss)" in "Part I - Item 1. Financial Statements and Supplementary Data" and "Table 10 - Capital Ratios" in "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Synovus' September 30, 2024 Form 10-Q. The following table reflects Synovus' consolidated regulatory capital position as of September 30, 2024. Table 1 Regulatory Capital Tiers (dollars in thousands) CET1 Capital Common stock, $1.00 par value Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss), net Treasury stock Total common shareholders' equity Effect of CECL transition impact on retained earnings Noncontrolling interest in subsidiary Common equity tier 1 before adjustments and deductions Less: Effect of certain items in AOCI excluded from CET1 Capital Less: Goodwill, net of associated DTLs Less: Intangible assets, net of associated DTLs Less: Deferred tax assets arising from net operating loss and tax credit carryforwards, net of any related valuation allowances and net of DTLs Less: All other deductions CET1 Capital Preferred stock Tier 1 Capital Qualifying Tier 2 Capital instruments Qualifying adjusted allowance for credit losses Tier 2 Capital Total Capital September 30, 2024 Reflects the CECL transition impact based on the Revised CECL Transition Rule. ACL included in Tier 2 Capital is limited to 1.25% of risk-weighted assets and includes the ALL and the allowance for credit losses on off- balance sheet credit exposures (i.e., unfunded lending commitments) recorded in other liabilities. CAPITAL ADEQUACY Synovus believes that prudent capital management is at the center of ensuring that we can sustainably fulfill our corporate objectives and mission, which includes bettering our clients, our communities, and our broader set of stakeholders. Capital management at Synovus is facilitated by a multi-faceted approach that leverages our Board approved risk appetite framework along with baseline and stressed scenario modeling which, collectively, informs the on-going assessment and management of our capital position. This framework is effectuated and governed at a management-level within our ALCO process and is further reported and governed within Board-level committees. Synovus' capital position and risk appetite are reviewed on an on-going basis through that framework to ensure that the Company appropriately considers a range of potential risks and factors in developing its strategic approach to capital management. The following table outlines Synovus' standardized approach risk-weighted assets as of September 30, 2024 using the categorization based on the standardized definitions. Table 2 Standardized Approach Risk-Weighted Assets (dollars in thousands) For further details about the Company's risk-weighted assets, refer to the Schedule HC-R in the Consolidated Financial Statements for Holding Companies - Form FR Y-9C for September 30, 2024. During April 2024, Synovus commenced risk-weighted asset optimization efforts that included analyzing and documenting eligibility of certain loans for reduced risk weighting. See Synovus' Form 8-K filed May 6, 2024 for additional information. CAPITAL RATIOS AND CAPITAL CONSERVATION BUFFER Regulatory Capital Ratios Under the Basel III standardized approach, Synovus and Synovus Bank are subject to minimum capital ratios for CET1 capital, Tier 1 capital, and Total Risk-Based capital of 4.5%, 6.0%, and 8.0%, respectively. The Basel III Rules also provide for a minimum CCB of 2.5% in addition to the minimum capital to RWA ratios. The CCB is designed to provide an additional buffer against losses during periods of economic stress, thereby guarding against banks falling below the minimum regulatory capital levels. The CCB of a given institution is calculated as the lowest of the: (i) CET1 ratio less the CET1 stated minimum requirement, (ii) Tier 1 ratio less the Tier 1 stated minimum requirement, and (iii) Total Capital ratio less the Total Capital stated minimum requirement. At September 30, 2024, the CCB for Synovus and Synovus Bank were 5.60% and 5.08%, respectively, which were in excess of the mandatory 2.5% minimum CCB. As such, Synovus is not currently subject to any limitations as a result of failing to maintain capital levels above the CCB minimum threshold. Basel III requires a calculation of eligible retained income. Eligible retained income is the greater of (i) the banking organization's net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (ii) the average of the banking organization's net income over the preceding four quarters. Synovus' eligible retained earnings at September 30, 2024 was $101.3 million. The following table summarizes regulatory capital information at September 30, 2024, for Synovus and Synovus Bank. Table 3 Regulatory Capital Ratios CREDIT RISK: GENERAL DISCLOSURES Credit Risk Credit risk is the risk of losses if our borrowers do not fully repay their loans or if our counterparties fail to perform according to the terms of their contracts. Synovus takes a comprehensive approach to credit risk management that includes multiple lines of defense, a robust centralized credit process, strong underwriting standards, a credit risk appetite framework, a closely monitored concentration policy, and the use of market and portfolio analysis to continuously monitor the credit portfolio by industry, property type, and geography. Additionally, our risk grading process is well-defined and is subject to independent review. Credit Risk Exposures The following table provides the distribution of credit exposure by geography as of September 30, 2024. Table 4 Credit Exposure by Geography (dollars in thousands) Includes states outside our footprint and no single state is over 5%. For purposes of the following table, "industry" is defined as two-digit NAICS industry code for the C&I loan portfolio, property type for the commercial real estate portfolio, and product type for the consumer portfolio. Attachments Original document Permalink Disclaimer Synovus Financial Corporation published this content on November 21, 2024 , and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 21, 2024 at
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