Synovus Financial : 4Q23 Basel III Regulatory Capital Disclosure Report

Synovus Financial Corp.

Basel III Regulatory Capital Disclosures Report

December 31, 2023

TABLE OF CONTENTS

Defined Terms	1
Background and Overview	3
Scope of Application	3
Capital Structure	4
Capital Adequacy	5
Capital Ratios and Capital Conservation Buffer	6
Credit Risk: General Disclosures	7
General Disclosure for Counterparty Credit Risk-Related Exposures	13
Credit Risk Mitigation	15
Securitization	16
Equities Not Subject to the Market Risk Rule	17
Interest Rate Risk for Non-Trading Activities	18
Appendix 1: Basel III Regulatory Capital Disclosure Matrix	19

DEFINED TERMS

ACL	Allowance for credit losses (applies to debt securities, loans, and unfunded loan
	commitments)
ALCO	Synovus' Asset Liability Management Committee
ALL	Allowance for loan losses
AOCI	Accumulated other comprehensive income (loss)
ATM	Automatic teller machine
Basel III	The third Basel Accord developed by the Basel Committee on Banking Supervision to
	strengthen existing regulatory capital requirements
Basel III Rules	Final capital rules adopting the Basel III capital framework approved by U.S. federal
	regulators in 2013
BHC Act	Bank Holding Company Act of 1956, as amended
Board	The Company's Board of Directors
bp(s)	Basis point(s)
C&I	Commercial and industrial
CCB	Capital Conservation Buffer
CECL	Current expected credit losses
CET1	Common Equity Tier 1 Capital defined by Basel III capital rules
CME	Chicago Mercantile Exchange
Company	Synovus Financial Corp. and its wholly-owned subsidiaries, except where the context
	requires otherwise
CRE	Commercial real estate
CSA	Credit support annex
DTL	Deferred tax liability
EVE	Economic value of equity
Federal Reserve Bank	One of the 12 banks that are the operating arms of the U.S. central bank. They implement
	the policies of the Federal Reserve Board, supervise bank holding companies and certain
	banking institutions, and conduct economic research
Federal Reserve Board	The 7-member Board of Governors that oversees the Federal Reserve System, establishes
	monetary policy (interest rates, credit, etc.), and monitors the economic health of the
	country; Its members are appointed by the President subject to Senate confirmation and
	serve 14-year terms
Federal Reserve	The Federal Reserve Board, plus the 12 Federal Reserve Banks, with each one serving
System or Federal	member banks in its own district; The Federal Reserve has broad regulatory powers over
Reserve	the money supply and the credit structure of the economy
FHLB	Federal Home Loan Bank
FRB	Federal Reserve Bank
GA DBF	Georgia Department of Banking and Finance
GAAP	Generally Accepted Accounting Principles in the United States of America
HVCRE	High volatility commercial real estate

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ISDA	International Swaps and Derivatives Association, Inc.
NAICS	North American Industry Classification System
NRSRO	Nationally recognized statistical ratings organization
OTC	Over the counter (derivatives which are not centrally cleared)
Parent Company	Synovus Financial Corp.
PSE	Public sector entity
RPA	Risk participation agreement
RWA	Risk-weighted assets
SEC	U.S. Securities and Exchange Commission
SPE	Special purpose entity
SSFA	Simplified supervisory formula approach
Synovus	Synovus Financial Corp.
Synovus' 2023 Form	Synovus' Annual Report on Form 10-K for the year ended December 31, 2023, filed with
10-K	the Securities and Exchange Commission by Synovus Financial Corp.
Synovus Bank	A Georgia state-chartered bank and wholly-owned subsidiary of Synovus, through which
	Synovus conducts its banking operations
Synovus Securities	Synovus Securities, Inc., a wholly-owned subsidiary of Synovus
Synovus Trust	Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
U.S.	United States
Visa	The Visa U.S.A. Inc. card association or its affiliates, collectively
Visa Class A shares	Class A shares of common stock issued by Visa are publicly traded shares which are not
	subject to restrictions on sale
Visa Class B shares	Class B shares of common stock issued by Visa which are subject to restrictions with
	respect to sale until all the Covered Litigation has been settled; Class B shares will be
	convertible into Visa Class A shares using a then current conversion ratio upon the lifting
	of restrictions with respect to sale of Visa Class B shares
Visa Derivative	A derivative contract with the purchaser of Visa Class B shares which provides for
	settlements between the purchaser and Synovus based upon a change in the ratio for
	conversion of Visa Class B shares into Visa Class A shares

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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 contains 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, as well as the Consolidated Financial Statements for Holding Companies - FR Y-9C dated December 31, 2023. 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 December 31, 2023, Synovus had total consolidated assets of $59.81 billion and consolidated deposits of $50.74 billion with 246 branches and 354 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, is contained in "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Synovus' 2023 Form 10-K.

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-ownednon-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.

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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.

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 Accumulated Other Comprehensive Income", and "Note 10 - Regulatory Capital" in "Part II - Item 8. Financial Statements and Supplementary Data" of our 2023 Form 10-K.

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The following table reflects Synovus' consolidated regulatory capital position as of December 31, 2023.

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 (1) 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 (1)(2)

Tier 2 Capital

Total Capital

December 31, 2023

$171,360 3,955,819 2,517,226 (1,117,073)

(944,484)

4,582,848

29,151

24,155

4,636,154

(1,117,073)

480,440

47,793

18,360

113

5,206,521

537,145

5,743,666

412,967

497,591

910,558

• 6,654,224

1. Reflects the CECL transition impact based on the Revised CECL Transition Rule.
2. 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 December 31, 2023, using the categorization based on the standardized definitions.

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Table 2 Standardized Approach Risk-Weighted Assets

(dollars in thousands)

		December 31, 2023
		Risk-Weighted Asset
		Amount
Exposures to U.S. Government sponsored enterprises and agencies	$	1,903,158
Exposures to PSEs		659,848
Corporate exposures		34,763,557
Residential mortgages exposures		4,507,060
HVCRE loans		51,858
Past due and non-accrual loans		346,848
Other loans		1,274,994
Allowance for loan losses		-
Other assets		1,764,052
Equity exposures		110,536
Trading assets		9,496
Securitization exposures		-
Total on-balance sheet assets		45,391,407
Letters of credit		121,768
Loan commitments with original maturity within 1 year		105,693
Loan commitments with original maturity over 1 year		5,185,097
Other off-balance sheet items		119,419
Total off-balance sheet items		5,531,977
Less: Excess of ACL		-
Total risk-weighted assets	$	50,923,384

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 December 31, 2023.

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 December 31, 2023, the CCB for Synovus and Synovus Bank was 5.07% and 4.29%, 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 December 31, 2023 was $285.4 million.

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The following table summarizes regulatory capital information at December 31, 2023, for Synovus and Synovus Bank.

Table 3 Regulatory Capital Ratios

		December 31, 2023
		Stated	Capital	Minimum
		Capital
	Actual	Minimum	Conservation	Conservation
	Ratios	Buffer	Buffer
Synovus Financial Corp.			5.72%
CET1 capital	10.22%	4.50%	2.50%
Tier 1 capital	11.28%	6.00%	5.28%	2.50%
Total capital	13.07%	8.00%	5.07%	2.50%
Synovus Bank
CET1 capital	10.93%	4.50%	6.43%	2.50%
Tier 1 capital	10.93%	6.00%	4.93%	2.50%
Total capital	12.29%	8.00%	4.29%	2.50%

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 December 31, 2023.

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Table 4 Credit Exposure by Geography

(dollars in thousands)

				December 31, 2023
		C&I		CRE		Consumer		Total	Percent of
					Total Funded
Florida	$	5,442,731	$	4,882,997	$	2,550,684	$	12,876,412	29.7 %
Georgia		4,318,092		2,751,552		2,874,463		9,944,107	22.9
South Carolina		1,520,637		1,228,003		805,814		3,554,454	8.2
Alabama		1,731,687		752,382		770,319		3,254,388	7.5
Tennessee		483,177		536,666		505,704		1,525,547	3.5
Other (1)		9,102,169		2,165,158		982,255		12,249,582	28.2
Total Funded	$	22,598,493	$	12,316,758	$	8,489,239	$	43,404,490	100.0 %
Total Unfunded		10,514,149		2,496,656		3,242,819		16,253,624
Total	$	33,112,642	$	14,813,414	$	11,732,058	$	59,658,114

1. 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.

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