Filed Pursuant to Rule 424(b)(5)

Registration No. 333-166300      

 

CALCULATION OF REGISTRATION FEE

 

 

(1)  The filing fee is calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended.

 

 

 

 

(To prospectus dated April 26, 2010)

 

12,000,000 tMEDS ^sm

 

 

8.25% tMEDS

 

Synovus is offering 12,000,000 of its Tangible Equity Units, or “tMEDS”. Each tMEDS has a stated amount of $25. Each tMEDS is a unit composed of a prepaid stock purchase contract and a junior subordinated amortizing note due May 15, 2013 issued by Synovus, which has an initial principal amount of $5.098197 per amortizing note and a scheduled final installment payment date of May 15, 2013.

 

On May 15, 2013, each purchase contract will automatically settle and we will deliver a number of shares of Synovus common stock, based on the applicable market value, which is the average of the daily volume weighted average prices, or VWAPs (as defined herein), of Synovus common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding May 15, 2013:

 

 

At any time prior to the third business day immediately preceding May 15, 2013, you may settle your purchase contract early and we will deliver you 7.5758 shares of our common stock. In addition, if a fundamental change (as defined herein) occurs and you elect to settle your purchase contracts early in connection with such fundamental change, you will receive a number of shares of our common stock based on the fundamental change early settlement rate, as described herein. The purchase contract holders will not receive any cash distributions.

 

The amortizing notes will pay you equal quarterly installments of $0.515625 per amortizing note, which in the aggregate will be equivalent to a 8.25% cash payment per year with respect to each $25 stated amount of tMEDS. We will have the right to defer installment payments at any time and from time to time under the circumstances, and subject to the conditions, described herein, so long as such deferral period does not extend beyond May 15, 2015. The amortizing notes will be junior subordinated obligations of Synovus, and will rank (i) junior both in liquidation and right of payment, to the extent set forth in the junior subordinated debt indenture, to all of Synovus’ “Senior Indebtedness” (as defined under “Description of the amortizing notes—Subordinated debt”) and (ii) equally with all of out unsecured and junior subordinated indebtedness, whether currently existing or hereinafter created, other than junior subordinated indebtedness that is designated as junior to the amortizing notes.

 

Each tMEDS may be separated into its constituent purchase contract and amortizing note after the initial issuance date of the tMEDS.

 

Synovus will apply to list the tMEDS on the New York Stock Exchange under the symbol “SNV PR T.” If approved for listing, Synovus expects that the tMEDS will begin trading on the New York Stock Exchange within 30 days after the tMEDS are first issued. However, Synovus will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter-dealer quotation system, but it may list such separate purchase contracts and separate amortizing notes in the future as described herein. Prior to this offering, there has been no public market for the tMEDS. Synovus common stock is listed on the New York Stock Exchange under the symbol “SNV.” The last reported sale price of Synovus common stock on the New York Stock Exchange on April 28, 2010 was $3.18 per share.

 

Concurrently with this offering, we are offering 255,000,000 shares of our common stock (or 293,250,000 shares if the underwriters exercise their option to purchase additional shares in full). The common stock is being offered by means of a separate prospectus supplement and not by means of this prospectus supplement. The common stock offering is not contingent upon the completion of this offering, and this offering is not contingent upon the completion of the common stock offering. In addition, on April 26, 2010 we announced an offer to exchange up to 97 million shares of our common stock for any and all of our outstanding 5.125% Subordinated Notes due 2017, or 2017 notes, which we originally issued in 2005 in aggregate principal amount of $450 million. We refer to the common stock offering and the exchange offer for our 2017 notes collectively as the “Concurrent Transactions.” See “Summary—Concurrent Transactions.”

 

We have granted the underwriter the right to purchase, within the 13 day period that begins on and includes the date of original issuance of the tMEDS, up to an additional 1,800,000 tMEDS solely to cover over-allotments, if any.

 

“tMEDS” is a service mark of J.P. Morgan Securities Inc.

 

Investing in the tMEDS involves a number of risks. See “Risk factors” beginning on page S-20 of this prospectus supplement to read about some of the factors that you should consider before buying the tMEDS.

 

None of the Securities and Exchange Commission, any state securities commission, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (“FDIC”), nor any other regulatory body has approved or disapproved of these securities or determined that this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

Neither the tMEDS, the purchase contracts nor the amortizing notes are deposits, savings accounts or other obligations of Synovus’ bank or nonbank subsidiaries. These securities are not insured or guaranteed by the FDIC or any other governmental agency.

 

 

The underwriter expects to deliver the tMEDS in book-entry form only, through the facilities of The Depository Trust Company, against payment on or about May 4, 2010.

 

 

 

J.P. Morgan

 

Sole Book-Running Manager

 

 

 

 

April 28, 2010

 

TABLE OF CONTENTS

 

 

 

This document is comprised of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering and certain other matters relating to us and our financial condition, and it adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part is the accompanying prospectus, dated April 26, 2010, which provides more general information about the securities that we may offer from time to time, some of which may not apply to this offering. You should read carefully both this prospectus supplement and the accompanying prospectus in their entirety, together with additional information described under the heading “Where you can find more information” before investing in our securities.

 

Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus supplement and the accompanying prospectus to “Synovus,” “we,” “us,” “our” or similar references mean Synovus Financial Corp. together with its subsidiaries.

 

If the information set forth in this prospectus supplement differs in any way from the information set forth in the accompanying prospectus, you should rely on the information set forth in this prospectus supplement. If the information conflicts with any statement in a document that we have incorporated by reference, then you should consider only the statement in the more recent document.

 

We are not, and the underwriter is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information appearing in this prospectus supplement, the accompanying prospectus or the documents incorporated by reference into those documents is accurate as of any date other than the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date. Neither this prospectus supplement nor the accompanying prospectus constitutes an offer, or an invitation on our behalf or on behalf of the underwriter, to subscribe for and purchase, any of the securities and may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

 

 

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or “SEC.” Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available at the offices of the New York Stock Exchange. For further information on obtaining copies of our public filings at the New York Stock Exchange, you should call 212-656-5060.

 

The SEC allows us to “incorporate by reference” into this prospectus supplement the information in other documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. Information incorporated by reference is considered to be part of this prospectus supplement. The following documents

filed with the SEC are incorporated by reference (other than, in each case, documents or information deemed to have been “furnished” and not “filed” in accordance with SEC rules):

 

 

All future filings that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” prior to the termination of this offering are incorporated by reference into this prospectus supplement (other than information in such future filings deemed, under SEC rules or otherwise, not to have been filed with the SEC). Information filed with the SEC after the date of this prospectus supplement will automatically update and supersede information contained in or previously incorporated by reference into this prospectus supplement.

 

You may request a copy of these filings at no cost, by writing to or telephoning us at the following address:

 

Director of Investor Relations
Synovus Financial Corp.
1111 Bay Avenue, Suite 501
Columbus, Georgia 31901
(706) 644-1930

 

We also have filed a registration statement (No. 333-166300) with the SEC relating to the securities offered by this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus are part of that registration statement. You may obtain from the SEC a copy of the registration statement and the related exhibits that we filed with the SEC when we registered the securities. The registration statement may contain additional information that may be important to you.

 

You should rely only on the information incorporated by reference into or provided in this prospectus supplement, any pricing supplement and the accompanying prospectus. We have not authorized anyone else to provide you with different information.

 

Certain statements made or incorporated by reference in this prospectus supplement and the accompanying prospectus 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 of 1933, as amended, or the “Securities Act,” and Section 21E of the Exchange Act. Forward-looking statements include statements with respect to Synovus’ beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, many of which are beyond Synovus’ control and which may cause Synovus’ actual results, performance or achievements or the commercial banking industry or economy generally, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

 

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,” “should,” “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 commercial banking 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. These factors include, but are not limited to:

 

(1) competitive pressures arising from aggressive competition from other financial service providers;

 

(2) further deteriorations in credit quality, particularly in residential construction and commercial development real estate loans, may continue to result in increased non-performing assets and credit losses, which could adversely impact our earnings and capital;

 

(3) declining values of residential and commercial real estate may result in further write-downs of assets and realized losses on disposition of non-performing assets, which may increase our credit losses and negatively affect our financial results;

 

(4) continuing weakness in the residential real estate environment, which may negatively impact our ability to liquidate non-performing assets;

 

(5) the impact on our borrowing costs, capital costs and our liquidity due to further adverse changes in our credit ratings;

 

(6) the risk that our allowance for loan losses may prove to be inadequate or may be negatively affected by credit risk exposures;

 

(7) our ability to manage fluctuations in the value of our assets and liabilities to maintain sufficient capital and liquidity to support our operations;

 

(8) the concentration of Synovus’ non-performing assets by loan type, in certain geographic regions and with affiliated borrowing groups;

(9) the risk of additional future losses if the proceeds we receive upon the liquidation of assets are less than the carrying value of such assets;

 

(10) changes in the interest rate environment which may increase funding costs or reduce earning assets yields, thus reducing margins;

 

(11) restrictions or limitations on access to funds from subsidiaries and potential obligations to contribute additional capital to our subsidiaries, which may restrict Synovus’ ability to make payments on its obligations or dividend payments;

 

(12) the availability and cost of capital and liquidity on favorable terms, if at all;

 

(13) changes in accounting standards or applications and determinations made thereunder;

 

(14) slower than anticipated rates of growth in non-interest income and increased non-interest expense;

 

(15) changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which Synovus is perceived in such markets, including a further reduction in our debt ratings;

 

(16) the risk that the recoverability of the deferred tax asset balance may extend beyond 2010;

 

(17) the strength of the U.S. economy in general and the strength of the local economies and financial markets in which operations are conducted may be different than expected;

 

(18) the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate policies of the Federal Reserve Board;

 

(19) inflation, interest rate, market and monetary fluctuations;

 

(20) the impact of proposed financial reform legislation and other recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation of banks and financial institutions, or the interpretation or application thereof, including restrictions, increased capital requirements, limitations and/or penalties arising from banking, securities and insurance laws, regulations and examinations;

 

(21) the risk that we will not be able to complete the proposed consolidation of our subsidiary banks or, if completed, realize the anticipated benefits of the proposed consolidation;

 

(22) the impact on Synovus’ financial results, reputation and business if Synovus is unable to comply with all applicable federal and state regulations and applicable memoranda of understanding, other supervisory actions and any necessary capital initiatives;

 

(23) the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;

 

(24) the volatility of our stock price;

 

(25) the impact on the valuation of our investments due to market volatility or counterparty payment risk;

 

(26) the risks that we may be required to seek additional capital to satisfy applicable regulatory capital standards and pressures or supervisory actions in addition to the capital realized through the execution of Synovus’ capital plan described in this document;

(27) the risk that, if economic conditions worsen or regulatory capital requirements for our subsidiary banks are modified, we may be required to seek additional liquidity at the holding company from external sources;

 

(28) the costs of services and products to us by third parties, whether as a result of our financial condition, credit ratings, the way we are perceived by such parties, the economy or otherwise;

 

(29) the risk that we could have an “ownership change” under Section 382 of the Internal Revenue Code, which could impair our ability to timely and fully utilize our net operating losses and built-in losses that may exist when such “ownership change” occurs; and

 

(30) other factors and other information contained in this document and in other reports and filings that Synovus makes with the SEC under the Exchange Act, including, without limitation, under the caption “Risk factors.”

 

For a discussion of these and other risks that may cause actual results to differ from expectations, you should refer to the risk factors and other information in this prospectus supplement and the accompanying prospectus, and our other periodic filings, including our 2009 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, that we file from time to time with the SEC. 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 to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.

 

Summary

•	Capital position—We announced and executed a number of capital initiatives to bolster our capital position against further credit deterioration and to provide additional capital as we pursued our aggressive asset disposition strategy. Through a combination of a public equity offering, liability management and strategic dispositions, we added approximately $644 million of Tier 1 capital during 2009. We also announced on April 20, 2010, that we were continuing to identify, consider, and pursue additional capital management strategies to bolster our capital position. Currently, this strategy is reflected in the capital actions described in this document, including this offering and the Concurrent Transactions described below under “— Concurrent Transactions.”
•	Risk management—We completed the centralization of a number of key functions, including credit and loan review, deposit operations, loan operations, procurement and facilities management. These changes emphasize a one-company view of our operating structure and reduce the risks of managing these complex internal functions.

•	Aggressive management of credit issues—We announced and executed an aggressive strategy to dispose of non-performing assets and manage our credit quality. In 2009, we disposed of an aggregate of $1.18 billion of non-performing assets. In the first quarter of 2010, we disposed of an additional $271 million of non-performing assets.
•	Deposit growth—We believe that our deposits remain a strength of our business. As of March 31, 2010, our total deposits were $27.2 billion. We continue to focus on improving the mix of our deposits. As of March 31, 2010, our non-interest-bearing deposits, or DDAs, were $4.4 billion, a 15.0% increase compared to March 31, 2009. In addition, our non-CD deposits, excluding national market brokered money market accounts, as of March 31, 2010 were $15.2 billion, an increase of 7.8% compared to March 31, 2009.
•	Focus on expense control—We have controlled our expenses and reduced our fundamental non-interest expense by over $50 million during 2009. We continually review our company’s operations to identify ways to enhance efficiency and create an enhanced banking experience for our customers. Total non-interest expenses for 2009 were $1.22 billion compared to $1.46 billion for 2008. Excluding discontinued operations, other credit costs, FDIC insurance expense, restructuring charges, net litigation contingency expense, and goodwill impairment expense, our non-interest expenses for 2009 were $743.7 million compared to $794.9 million for 2008. The total number of employees at December 31, 2009 was 6,385 compared to 6,876 at December 31, 2008.
•	Relationship banking—Our relationship-based approach to banking is built on creating long-term relationships with our customers. We utilize a decentralized customer delivery model and a commitment to being a great place to work to provide what we believe to be a superior customer experience. This relationship banking approach allows our bankers to serve their customers’ individual needs and demonstrates our commitment to the communities in which we operate.

•	would be issued through our wholly owned unconsolidated subsidiary trust, Synovus Capital Trust I, whose sole asset would be a like amount of related subordinated debentures ranking senior to the Series A Preferred Stock,
•	would pay distributions and become redeemable on the same dates and in the same amounts as the Series A Preferred Stock, and
•	would be perpetual, having no stated maturity.

•	in light of our concentration in commercial real estate, construction and land development, as well as several quarters of deteriorating asset quality, our regulators have urged us and our board to bolster our capital position promptly and have stated that additional capital is needed; and

•	a number of our peers have determined to consider and pursue strategies — including equity capital raising and asset and liability management — designed to improve their capital position to levels above those that previously have been considered appropriate and, given the public capital market’s recent patterns, this window of opportunity may be closed in the near future.

•	possess a capital structure, and related regulatory capital ratios, that will better align with evolving industry and regulatory standards;
•	possess a capital cushion that will improve our ability to absorb additional losses that we could face under worsening economic conditions;

•	enjoy greater operational and strategic flexibility, which could, among other things, better position us to take advantage of potential opportunities to improve and grow our business over time; and
•	be better positioned to possibly repay TARP as credit metrics improve.

•	simplify regulatory oversight;
•	improve capital efficiency;
•	enhance risk management;
•	increase opportunities for efficiency; and
•	better position Synovus to emerge stronger from the current economic downturn.

		March 31,								December 31,
(dollars in thousands)		2010				2009				2009				2008				2007				2006				2005
Tangible Common Equity Ratios:
Total risk-weighted assets		$	25,751,586				31,236,550				26,781,973				32,106,501				31,505,022				29,930,284				26,008,797
Total assets		$	32,439,438				34,547,432				32,831,418				35,786,269				33,064,481				30,496,950				26,401,125
Goodwill			(24,431	)			(39,521	)			(24,431	)			(39,521	)			(519,138	)			(515,719	)			(338,649	)
Other intangible assets, net			(15,556	)			(20,064	)			(16,649	)			(21,266	)			(28,007	)			(35,693	)			(29,263	)
Tangible assets		$	32,399,451				34,487,847				32,790,338				35,725,482				32,517,336				29,945,538				26,033,213
Total shareholders’ equity		$	2,616,743				3,637,979				2,851,041				3,787,158				3,441,590				3,708,650				2,949,329
Goodwill			(24,431	)			(39,521	)			(24,431	)			(39,521	)			(519,138	)			(515,719	)			(338,649	)
Other intangible assets, net			(15,556	)			(20,064	)			(16,649	)			(21,266	)			(28,007	)			(35,693	)			(29,263	)
Cumulative perpetual preferred stock			(930,433	)			(921,728	)			(928,207	)			(919,635	)			—				—				—
Tangible common equity		$	1,646,323				2,656,666				1,881,754				2,806,736				2,894,445				3,157,238				2,581,417
Total common shareholders’ equity to total assets(1)			5.20%				7.86				5.86%				8.01				10.41				12.16				11.17
Tangible common equity to tangible assets			5.08%				7.70				5.74%				7.86				8.90				10.54				9.92
Tangible common equity to risk-weighted assets			6.39%				8.50				7.03%				8.74				9.19				10.55				9.93

		March 31,								December 31,
(dollars in thousands)		2010				2009				2009				2008				2007				2006				2005
Net Interest Margin Excluding the Negative Impact of Non-performing Assets:
Average earning assets(2)		$	29,816,791				32,425,793				31,873,119				31,232,188
Net interest income (taxable equivalent)			249,978				244,420				1,015,156				1,082,802
Add: Negative impact of non-performing assets on net interest income(2)			27,863				26,371				119,163				74,506
Net interest income excluding the negative impact of non-performing assets		$	277,841				270,791				1,134,319				1,157,308
Net interest margin			3.39%				3.05				3.19%				3.47
Add: Negative impact of non-performing assets on net interest margin			0.38%				0.33				0.37				0.24
Net interest margin excluding the negative impact of non-performing assets			3.77%				3.38				3.56%				3.71

(1)		Total shareholders’ equity less preferred stock divided by total assets.
(2)		Quarterly average balance for periods ended March 31, 2010 and 2009.
(3)		Represents pro forma interest income on non-performing loans at current commercial loan portfolio yield, carrying cost of ORE, and net interest charge-offs on loans recognized during the quarter.

		Three months ended
		March 31,								Years ended December 31,
(dollars in thousands)		2010				2009				2009				2008				2007				2006				2005
Pre-Tax Pre-Credit Costs Income:
Income (loss) from continuing operations before income taxes		$	(275,180	)			(223,852	)			(1,605,908	)			(660,805	)			520,035				638,335				559,425
Add: Provision for losses on loans			340,948				290,437				1,805,599				699,883				170,208				75,148				82,532
Add: Other credit costs(4)			53,562				54,277				380,984				162,786				22,355				7,724				7,102
Add: Goodwill impairment			—				—				15,090				479,617				—				—				—
Add: Restructuring costs			—				6,358				5,995				16,125				—				—				—
Add: (Subtract) Net litigation contingency expense (recovery)			—				—				4,059				(17,473	)			36,800				—				—
Less: Gain on sale/redemption of Visa shares			—				—				(51,900	)			(38,542	)			—				—				—
Pre-tax pre-credit costs income		$	119,330				127,220				553,919				641,591				749,398				721,207				649,059
Fundamental Non-Interest Expense:
Total non-interest expense		$	252,797				261,039				1,221,289				1,456,056				830,343				756,747				642,521
Less: Other credit costs(4)			(53,562	)			(54,277	)			(380,984	)			(162,786	)			(22,355	)			(7,724	)			(7,102	)
Less: FDIC insurance expense			(16,555	)			(11,671	)			(71,452	)			(20,068	)			(4,322	)			(2,709	)			(2,519	)
Less: Restructuring charges			—				(6,358	)			(5,995	)			(16,125	)			—				—				—
Less: Net litigation contingency (expense) recovery			—				—				(4,059	)			17,473				(36,800	)			—				—
Less: Goodwill impairment expense			—				—				(15,090	)			(479,617	)			—				—				—
Fundamental non-interest expense		$	182,680				188,733				743,709				794,933				766,866				746,314				632,900

(4)		Other credit costs consist primarily of losses on ORE, reserve for unfunded commitments, and charges related to impaired loans held for sale.

Issuer		Synovus Financial Corp.
Number of tMEDS offered		12,000,000 tMEDS (or 13,800,000 tMEDS if the underwriter exercises its over-allotment option in full).
Stated amount and initial offering price of each tMEDS		$25 for each tMEDS.
Components of each tMEDS		Each tMEDS is a unit composed of two parts:
		• a prepaid stock purchase contract (a “purchase contract”); and
		• a junior subordinated amortizing note issued by Synovus (an “amortizing note”).
		Each purchase contract will automatically settle on May 15, 2013 (the “mandatory settlement date”), and Synovus will deliver not more than 9.0909 shares and not less than 7.5758 shares of its common stock, subject to adjustment, based upon the applicable settlement rate and applicable market value of its common stock, as described below under “Description of the purchase contracts — Delivery of common stock.”
		The purchase contract holders will not receive any cash distributions.
		Each amortizing note will have an initial principal amount of $5.098197, bear interest at the rate of 13.00% per annum and have a scheduled final installment payment date of May 15, 2013. On each February 15, May 15, August 15 and November 15, commencing on August 15, 2010, Synovus will pay equal quarterly installments of $0.515625 on each amortizing note. Each installment will constitute a payment of interest and a partial repayment of principal, allocated as set forth on the amortization schedule set forth under “Description of the amortizing notes — Amortization schedule.” Synovus will have the right to defer installment payments at any time and from time to time under the circumstances, and subject to the conditions, described herein, so long as such deferral period does not extend beyond May 15, 2015.
		The return to an investor on a tMEDS will depend upon the return provided by each component. The overall return will consist of the value of the shares of Synovus common stock delivered upon settlement of the purchase contracts and the cash installments paid on the amortizing notes.
Each tMEDS may be separated into its components		Each tMEDS may be separated into its constituent purchase contract and amortizing note on any business day during the period

		beginning on, and including, the business day immediately succeeding the date of initial issuance of the tMEDS to, but excluding, the third business day immediately preceding the mandatory settlement date. Prior to separation, the tMEDS may be purchased and transferred only as tMEDS.
A tMEDS may be recreated from its components		If you hold a separate purchase contract and a separate amortizing note, you may combine the two components to recreate a tMEDS.
Trading		Synovus will apply to list the tMEDS on the New York Stock Exchange under the symbol “SNV PR T.” If approved for listing, Synovus expects that the tMEDS will begin trading on the New York Stock Exchange within 30 days after the tMEDS are first issued. However, Synovus will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter-dealer quotation system, but Synovus may list such separate purchase contracts and separate amortizing notes in the future as described under “Description of the tMEDS — Listing of securities.” Prior to this offering, there has been no public market for the tMEDS. Synovus’ common stock is listed on the New York Stock Exchange under the symbol “SNV.”
Use of proceeds		Synovus intends to use the net proceeds of its offering of tMEDS, together with the net proceeds of its concurrent offering of common stock and existing funds, for working capital and general corporate purposes.
Symbol of Synovus common stock on the New York Stock Exchange		“SNV”
U.S. federal tax considerations		Although there is no authority directly on point and therefore the issue is not entirely free from doubt, each tMEDS will be treated as an investment unit composed of two separate instruments for U.S. federal income tax purposes, and the amortizing notes will be treated as indebtedness for U.S. federal income tax purposes. Under this treatment, a holder of tMEDS will be treated as if it held each component of tMEDS for U.S. federal income tax purposes. By acquiring a tMEDS, you will agree to treat (i) a tMEDS as an investment unit composed of two separate instruments in accordance with its form and (ii) the amortizing notes as indebtedness for U.S. tax purposes. If, however, the components of a tMEDS were treated as a single instrument, the U.S. federal income tax consequences could differ from the consequences described herein.
		Holders should consult their tax advisors regarding the tax treatment of an investment in tMEDS and whether a purchase of a tMEDS is

		advisable in light of the investor’s particular tax situation and the tax treatment described under “Certain U.S. federal tax considerations.”
Concurrent transactions		Concurrently with this offering, we are offering 255,000,000 shares of our common stock (or 293,250,000 shares if the underwriters exercise their option to purchase additional shares in full). The common stock is being offered by means of a separate prospectus supplement and not by means of this prospectus supplement. The common stock offering is not contingent upon the completion of this offering, and this offering is not contingent upon the completion of the common stock offering. In addition, on April 26, 2010 we announced an offer to exchange up to 97 million shares of our common stock for any and all of our outstanding 5.125% Subordinated Notes due 2017, or 2017 notes, which we originally issued in 2005 in aggregate principal amount of $450 million. See “Summary — Concurrent Transactions.”
The Purchase Contracts
Mandatory settlement		On the mandatory settlement date, May 15, 2013, each purchase contract will automatically settle and Synovus will deliver a number of shares of its common stock, based on the applicable settlement rate, unless such purchase contract has been previously settled at the holder’s option. The settlement of the purchase contracts on the mandatory settlement date cannot be deferred.
Settlement rate		The “settlement rate” for each purchase contract will be not more than 9.0909 shares and not less than 7.5758 shares of Synovus common stock, subject to adjustment as described herein, depending on the applicable market value of Synovus common stock, calculated as described below.
		• If the applicable market value equals or exceeds $3.30 (the “threshold appreciation price”), you will receive 7.5758 shares of common stock per purchase contract (the “minimum settlement rate”).
		• If the applicable market value is greater than $2.75 (the “reference price”), but is less than the threshold appreciation price, you will receive a number of shares per purchase contract equal to $25, divided by the applicable market value.
		• If the applicable market value is less than or equal to the reference price, you will receive 9.0909 shares of common stock per purchase contract (the “maximum settlement rate”).
		The reference price is the public offering price of Synovus common stock in the concurrent common stock offering.

		The settlement rate is subject to adjustment as described below under “Description of the purchase contracts — Adjustments to the fixed settlement rates.”
		The “applicable market value” means the average of the daily VWAPs of Synovus common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory settlement date. The threshold appreciation price represents a 20% appreciation over the reference price.

Applicable Market Value				Value of
of Synovus Common Stock		Settlement Rate		Common Stock
Less than or equal to $2.75		9.0909		Less than $25
Between $2.75 and $3.30		Number of shares equal to $25, divided by the applicable market value		$25
Greater than or equal to $3.30		7.5758		Greater than $25

Early settlement at your election		At any time prior to the third business day immediately preceding the mandatory settlement date, you may settle any or all of your purchase contracts early, in which case Synovus will deliver a number of shares of its common stock equal to the minimum settlement rate, which is subject to adjustment as described below under “Description of the purchase contracts — Adjustments to the fixed settlement rates.” That is, the market value of Synovus common stock on the early settlement date will not affect the early settlement rate. Your right to settle your purchase contract prior to the mandatory settlement date is subject to the delivery of your purchase contract.
		In addition, if a “fundamental change” (as defined herein) occurs and you elect to settle your purchase contracts early in connection with such fundamental change, you will receive a number of shares of Synovus common stock based on the “fundamental change early settlement rate” as described under “Description of the purchase contracts — Early settlement upon a fundamental change.”
The Amortizing Notes
Initial principal amount of each amortizing note		$5.098197.

Installment payments		Each quarterly installment payment of $0.515625 will be paid in cash and will constitute a partial repayment of principal and a payment of interest, computed at a rate of 13.00% per year. Payments will be applied first to the interest due and payable and then to the reduction of the unpaid principal amount, allocated as set forth on the amortization schedule set forth under “Description of the amortizing notes — Amortization schedule.”
Installment payment dates		Each February 15, May 15, August 15 and November 15, commencing on August 15, 2010.
Right to defer installment payments		Synovus will have the right to defer installment payments at any time and from time to time under the circumstances, and subject to the conditions, described under “Description of the amortizing notes — Option to extend installment payment period” so long as such deferral period does not extend beyond May 15, 2015.
Ranking of the amortizing notes		The amortizing notes will be junior subordinated obligations of Synovus and will rank junior both in liquidation and right of payment to all “Senior Indebtedness” (as defined under “Description of the amortizing notes — Subordination”). The amortizing notes will rank equally with all of Synovus’ unsecured and junior subordinated indebtedness, whether currently existing or hereinafter created, other than junior subordinated indebtedness that is designated as junior to the amortizing notes. Synovus may issue additional series of junior subordinated notes that rank pari passu with the amortizing notes.

		At or for three months
		ended March 31,								At or for years ended December 31,
(in thousands, except per share data)		2010				2009				2009				2008				2007				2006				2005
Income Statement:
Total revenues(a)		$	319,013				327,624				1,406,913				1,495,089				1,519,606				1,472,347				1,284,015
Net interest income			248,867				243,239				1,010,310				1,077,893				1,148,948				1,125,789				965,216
Provision for losses on loans			340,948				290,437				1,805,599				699,883				170,208				75,148				82,532
Non-interest income			69,698				84,385				410,670				417,241				371,638				344,440				319,262
Non-interest expense			252,797				261,039				1,221,289				1,456,057				830,343				756,746				642,521
(Loss) income from continuing operations, net of income taxes			(258,843	)			(137,944	)			(1,433,931	)			(580,376	)			337,969				410,431				365,517
Income from discontinued operations, net of income taxes and minority interest(b)			43,161				1,215				4,590				5,650				188,336				206,486				159,929
Net (loss) income			(215,682	)			(136,729	)			(1,429,341	)			(574,726	)			526,305				616,917				516,446
Net income attributable to non-controlling interest			(209	)			(57	)			2,364				7,712				—				—				—
Net income (loss) attributable to controlling interest			(215,473	)			(136,672	)			(1,431,705	)			(582,438	)			526,305				616,917				516,446
Dividends on and accretion of discount on preferred stock			14,325				14,192				56,966				2,057				—				—				—
Net (loss) income available to common shareholders			(229,798	)			(150,864	)			(1,488,671	)			(584,495	)			526,305				616,917				516,446
Per share data:
Basic earnings (loss) per common share:
(Loss) income from continuing operations		$	(0.56	)			(0.46	)			(4.00	)			(1.79	)			1.03				1.28				1.14
Net (loss) income			(0.47	)			(0.46	)			(3.99	)			(1.77	)			1.61				1.92				1.66
Diluted earnings (loss) per common share:
(Loss) income from continuing operations			(0.56	)			(0.46	)			(4.00	)			(1.79	)			1.02				1.27				1.13
Net (loss) income			(0.47	)			(0.46	)			(3.99	)			(1.77	)			1.60				1.90				1.64
Cash dividends declared on common stock			0.01				0.01				0.04				0.46				0.82				0.78				0.73
Book value per common share(e)			3.44				8.22				3.93				8.68				10.43				11.39				9.43
Balance Sheet:
Investment securities		$	3,237,519				3,778,473				3,188,735				3,770,022				3,554,878				3,263,483				2,852,075
Loans, net of unearned income			24,417,164				27,730,272				25,383,068				27,920,177				26,498,585				24,654,552				21,392,347
Deposits			27,180,048				27,947,986				27,433,534				28,617,179				24,959,816				24,528,463				20,806,979
Long-term debt			1,868,343				1,869,884				1,751,592				2,107,173				1,890,235				1,343,358				1,928,005
Shareholders’ equity			2,616,743				3,637,979				2,851,041				3,787,158				3,441,590				3,708,650				2,949,329
Average total shareholders’ equity			2,802,623				3,681,189				3,285,014				3,435,574				3,935,910				3,369,954				2,799,496
Average total assets			32,540,190				35,165,675				34,423,617				34,051,637				32,895,295				29,831,172				26,293,003

		At or for three months
		ended March 31,								At or for years ended December 31,
(in thousands, except per share data)		2010				2009				2009				2008				2007				2006				2005
Performance ratios and other data:
Return on average assets from continuing operations			(3.23	)%			(1.59	)			(4.17	)			(1.70	)			1.03				1.39				1.37
Return on average assets			(2.69	)			(1.58	)			(4.16	)			(1.72	)			1.60				2.07				1.96
Return on average equity from continuing operations			(37.46	)			(15.20	)			(43.65	)			(16.89	)			8.59				12.24				12.83
Return on average equity			(31.21	)			(15.06	)			(43.58	)			(16.95	)			13.37				18.19				18.45
Net interest margin			3.39				3.05				3.19				3.47				3.97				4.27				4.18
Dividend payout ratio(c)			nm				nm				nm				nm				51.25				40.99				44.51
Average shareholders’ equity to average assets			8.61				10.47				9.54				10.09				11.96				11.30				10.65
Tangible common equity to risk-adjusted assets(d)			6.39				8.50				7.03				8.74				9.19				10.55				9.93
Tangible common equity to tangible assets			5.08				7.70				5.74				7.86				8.90				10.54				9.92
Earnings to fixed charges ratio			(1.87	)x			(0.54	)x			(2.17	)x			0.16	x			1.47	x			1.71	x			2.04	x
Average common shares outstanding, basic			489,607				329,785				372,943				329,319				326,849				321,241				311,495
Average common shares outstanding, diluted			489,607				329,785				372,943				329,319				329,863				324,232				314,815

(a)		Consists of net interest income and non-interest income, excluding securities gains (losses).
(b)		On December 31, 2007, Synovus completed the tax-free spin-off of its shares of TSYS common stock to Synovus shareholders. In accordance with the provisions of ASC 360-10-35, Accounting for the Impairment or Disposal of Long-Lived Assets, and ASC 420-10-50, Exit or Disposal Cost Obligations, the historical consolidated results of operations and financial position of TSYS, as well as all costs recorded by Synovus associated with the spin-off of TSYS, are now presented as discontinued operations. Additionally, discontinued operations for the year ended December 31, 2007 include a $4.2 million after-tax gain related to the transfer of Synovus’ proprietary mutual funds to a non-affiliated third party. During 2009, Synovus committed to a plan to sell its merchant services business. As of December 31, 2009, the proposed sale transaction met the held for sale criteria under ASC 360-10-15-49, and accordingly, the revenues and expenses of the merchant services business have been reported as a component of discontinued operations.
(c)		Determined by dividing cash dividends declared per common share by diluted net income per share.
(d)		The tangible common equity to risk-weighted assets ratio is a non-GAAP measure which is calculated as follows: (total shareholders’ equity minus preferred stock minus goodwill minus other intangible assets) divided by total risk-adjusted assets (see “Reconciliation of non-GAAP financial measures”).
(e)		Total shareholders’ equity less cumulative perpetual preferred stock, divided by common stock outstanding.
(nm)		Not meaningful.

 

An investment in our securities involves a number of risks. You should carefully consider the risks described below and the risk factors concerning our business included in our 2009 10-K, in addition to the other information in this prospectus supplement and the accompanying prospectus, including our other filings, which are incorporated into this prospectus supplement by reference, before deciding whether an investment in our securities is suitable for you.

 

Business risks

 

The current and further deterioration in the residential construction and commercial development real estate markets may lead to increased non-performing assets in our loan portfolio and increased provision expense for losses on loans, which could have a material adverse effect on our capital, financial condition and results of operations.

 

Since the third quarter of 2007, the residential construction and commercial development real estate markets have experienced a variety of difficulties and challenging economic conditions. Our non-performing assets were $1.83 billion at December 31, 2009, compared to $1.17 billion at December 31, 2008. If market conditions remain poor or further deteriorate, they may lead to additional valuation adjustments on our loan portfolios and real estate owned as we continue to reassess the fair value of our non-performing assets, the loss severities of loans in default, and the fair value of real estate owned. We also may realize additional losses in connection with our disposition of non-performing assets. Poor economic conditions could result in decreased demand for residential housing, which, in turn, could adversely affect the development and construction efforts of residential real estate developers. Consequently, such economic downturns could adversely affect the ability of such residential real estate developer borrowers to repay these loans and the value of property used as collateral for such loans. A sustained weak economy could also result in higher levels of non-performing loans in other categories, such as commercial and industrial loans, which may result in additional losses. Management continually monitors market conditions and economic factors throughout our footprint for indications of change in other markets. If these economic conditions and market factors negatively and/or disproportionately affect some of our larger loans, then we could see a sharp increase in our total net-charge offs and also be required to significantly increase our allowance for loan losses. Any further increase in our non-performing assets and related increases in our provision expense for losses on loans could negatively affect our business and could have a material adverse effect on our capital, financial condition and results of operations.

 

We may experience increased delinquencies and credit losses, which could have a material adverse effect on our capital, financial condition and results of operations.

 

Like other lenders, we face the risk that our customers will not repay their loans. A customer’s failure to repay us is preceded generally by missed payments. In some instances, a customer may declare bankruptcy prior to missing payments, although this is not generally the case. Customers who declare bankruptcy frequently do not repay their loans. Where our loans are secured by collateral, we may attempt to seize the collateral when and if customers default on their loans. The value of the collateral may not equal the amount of the unpaid loan, and we may be unsuccessful in recovering the remaining balance from our customers. Rising delinquencies and rising rates of bankruptcy are often precursors of future charge-offs and may require us to increase our allowance for loan losses.

Higher charge-off rates and an increase in our allowance for loan losses may hurt our overall financial performance if we are unable to raise revenue to compensate for these losses and may increase our cost of funds.

 

Our allowance for loan losses may not be adequate to cover actual losses, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition and results of operations.

 

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expenses, which represents management’s best estimate of probable credit losses that have been incurred within the existing portfolio of loans, all as described under Note 7 of Notes to Consolidated Financial Statements in our 2009 10-K and under “Critical Accounting Policies Allowance for Loan Losses” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 10-K. The allowance, in the judgment of management, is established to reserve for estimated loan losses and risks inherent in the loan portfolio. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks using existing qualitative and quantitative information, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the allowance for loan losses.

 

We also apply a comprehensive loan classification methodology across each of our 30 bank subsidiaries. Using this methodology, each of our subsidiary banks makes objective and subjective determinations in concluding what they believe to be the appropriate classification of each of their outstanding loans. We carefully monitor, on a bank-by-bank basis, the volume of loans that migrate through each of the various levels of classification. During each quarter, we review a pool of what we believe to be a representative sample of loans from each of our subsidiary banks in an effort to monitor the level of reserves that are maintained in respect of those loans, and to work towards a uniform application of allowance principles across our enterprise.

 

Because the initial classification of the loans is inherently subjective and subject to evolving local market conditions and other changing factors, it can be difficult for us to predict the effects that those factors will have on the classifications assigned to the loan portfolio of any of our banks, and thus difficult to anticipate the velocity or volume of the migration of loans through the classification process and effect on the level of the allowance for loan losses. Accordingly, we monitor our credit quality and our reserves on a consolidated basis, and use that as a basis for capital planning and other purposes. See “Liquidity” and “Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 10-K.

 

In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of additional loan charge offs, based on judgments different than those of management. An increase in the allowance for loan losses results in a decrease in net income and capital, and may have a material adverse effect on our capital, financial condition and results of operations.

 

In light of current market conditions, we regularly reassess the creditworthiness of our borrowers and the sufficiency of our allowance for loan losses. Our allowance for loan losses

increased from 2.14% of total loans at December 31, 2008 to 3.72% at December 31, 2009. We made a provision for loan losses during the year ended December 31, 2009 of approximately $1.81 billion, which was significantly higher than in previous periods. We also charged-off approximately $1.46 billion in loans, net of recoveries, during the year ended December 31, 2009, which was significantly higher than in previous periods.

 

We will likely experience additional classified loans and non-performing assets in the foreseeable future as the deterioration in the credit and real estate markets causes borrowers to default. Further, the value of the collateral underlying a given loan, and the realizable value of such collateral in a foreclosure sale, likely will be negatively affected by the recent downturn in the real estate market, and therefore may result in an inability to realize a full recovery in the event that a borrower defaults on a loan. Any additional non-performing assets, loan charge-offs, increases in the provision for loan losses or the continuation of aggressive charge-off policies or any inability by us to realize the full value of underlying collateral in the event of a loan default, could negatively affect our business, financial condition, and results of operations and the price of our securities.

 

We will realize additional future losses if the proceeds we receive upon liquidation of assets are less than the carrying value of such assets.

 

We have announced a strategy to aggressively dispose of non-performing assets. For a significant portion of our non-performing assets, we have determined the asset categories to be disposed of but have not identified specific assets within those categories. Non-performing assets are recorded on our financial statements at the estimated fair value, which considers management’s plans for disposition. We may also sell assets in the future that are not currently identified as non-performing assets. We will realize additional future losses if the proceeds we receive upon dispositions of assets are less than the recorded carrying value of such assets. Furthermore, if market conditions continue to decline the magnitude of losses we may realize upon the disposition of assets may increase, which will materially adversely affect our business, financial condition and results of operations.

 

Turmoil in the real estate markets and the tightening of credit have adversely affected the financial services industry and may continue to adversely affect our business, financial condition and results of operations.

 

Turmoil in the housing and real estate markets, including falling real estate prices, increasing foreclosures, and rising unemployment, have negatively affected the credit performance of loans secured by real estate and resulted in significant write-downs of asset values by banks and other financial institutions. Over the last few years, these write-downs caused many banks and financial institutions to seek additional capital, to reduce or eliminate dividends, to merge with other financial institutions and, in some cases, to fail. As a result, many lenders and institutional investors reduced or ceased providing credit to borrowers, including other financial institutions, which, in turn, led to the global credit crisis.

 

This market turmoil and credit crisis have resulted in an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. While some areas of the United States have experienced a modest recovery, not all areas of our geographic footprint have improved, and most areas remain challenged. The degree and timing of economic recovery (or further recovery) remain uncertain. The resulting economic pressure on consumers and businesses and lack of confidence in the

financial markets have adversely affected our business, financial condition and results of operations and may continue to result in credit losses and write-downs in the future.

 

We may be unable to successfully implement the Charter Consolidation and we may not realize the expected benefits from the Charter Consolidation.

 

In January 2010, we announced our intention to change our legal structure by consolidating our 30 separately chartered banks into a single bank subsidiary (the “Charter Consolidation”). We believe that the Charter Consolidation will result in a number of benefits, including simplified regulatory oversight, improved capital efficiency and enhanced risk management. However, there is no guarantee that we will be able to successfully execute on all or any components of the Charter Consolidation or realize any of the expected benefits of the Charter Consolidation. The Charter Consolidation is subject to federal and state regulatory approval and there is no guarantee that we will be able to obtain such approval. Among other things, we believe that we will need to complete this offering and the Concurrent Transactions and may be required to complete other elements of our Capital Plan, in order to receive such approvals. Even if approved, federal and state regulatory agencies may impose conditions on our ability to implement the Charter Consolidation, including imposing operational restrictions on us or our subsidiary banks or requiring us to raise additional capital, which could prevent the successful implementation of, or reduce the benefits we realize from, the Charter Consolidation. In addition, we may be unable to successfully consolidate all of the regulatory initiatives our subsidiary banks are currently subject to into a global regulatory order applicable to the resulting bank(s) in the Charter Consolidation and such resulting bank(s) may be required to comply with all regulatory initiatives to which our subsidiary banks are currently subject. If we are not able to successfully complete the Charter Consolidation, we could be adversely impacted by negative perceptions regarding our inability to move to a more centralized structure.

 

Even if we are successful in implementing the Charter Consolidation, we may not realize the expected benefits from the Charter Consolidation. Furthermore, the Charter Consolidation could have an adverse impact on our business and results of operations if our customers and employees perceive the Charter Consolidation as a loss of our traditional community banking culture, which may result in higher than expected loss of deposits (particularly with respect to our Synovus^® Shared Deposit products), disruption of our business and adverse affects on our ability to maintain relationships with our customers and employees. We rely on the current officers of our subsidiary banks to manage our subsidiary banks in their respective market areas and we could be materially adversely affected if these officers depart as a result of the Charter Consolidation. Difficulty in consolidating our subsidiary banks could lead to higher than expected integration costs and could delay the timing of the Charter Consolidation.

 

If we are not able to execute on our Capital Plan in full, or even if we are, or if economic conditions worsen or regulatory capital rules are modified, we may be required to undertake one or more strategic initiatives to improve our capital position.

 

During 2009, Synovus announced and executed a number of strategic capital initiatives to bolster our capital position against credit deterioration and to provide additional capital as Synovus pursued its aggressive asset disposition strategy. As of December 31, 2009, Synovus’ Tier 1 capital ratio was 10.16%, and Synovus and each of its banking subsidiaries is considered “well capitalized” under current regulatory standards. See “Item 1 — Business, Supervision, Regulation and Other Factors — Prompt Corrective Action” in our 2009 10-K for a discussion of the definition of “well capitalized.” Nonetheless, our management presently believes that,

based upon an internal analysis of our capital position, we will need to execute on our Capital Plan in full in order to maintain sufficient capital to continue over time to satisfy our regulatory capital needs. Synovus continues to monitor economic conditions, actual performance against forecasted credit losses, peer capital levels, and regulatory capital standards and pressures. If economic conditions or other factors worsen to a materially greater degree than the assumptions underlying management’s internal assessment of our capital position or if minimum regulatory capital requirements for us or our subsidiary banks increase as the result of legislative changes or informal or formal regulatory directives, then we would be required to pursue one or more additional capital improvement strategies, including, among others, balance sheet optimization strategies, asset sales, and/or the sale of securities to one or more third parties. Given the current economic and market conditions and our recent financial performance and related credit ratings, there can be no assurance that any such transactions will be available to us on favorable terms, if at all, or that we would be able to realize the anticipated benefits of such transactions.

 

The regulators of our individual banks may require our individual banks to maintain a higher level of capital than we currently anticipate, which could adversely affect our liquidity at the holding company and require us to raise additional capital.

 

While we consider our capital position on a consolidated basis, the regulators of each of our individual banks may require that those individual banks maintain a higher level of capital than we currently anticipate, which would require that we maintain a consolidated capital position that is well beyond what we presently anticipate and could be in excess of the levels of capital used in the assumptions underlying our internal capital analysis. Several of our subsidiary banks are required to maintain regulatory capital levels in excess of minimum well-capitalized requirements primarily as a result of non-performing assets. Further, as a holding company with obligations and expenses separate from our bank subsidiaries, and because many of our banks will be unable to make dividend payments to us, we must maintain a level of liquidity at our holding company that is sufficient to address those obligations and expenses. The maintenance of adequate liquidity at our holding company may limit our ability to make further capital investments in our bank subsidiaries, which could adversely impact us and require us to raise additional capital. Even if we are successful in implementing the Charter Consolidation, there can be no guarantee that the resulting bank(s) would not be required by the regulators to have a higher level of capital than we may anticipate.

 

Issuance of additional shares of our common stock in the public markets and other capital management or business strategies that we may pursue could depress the market price of our common stock and result in the dilution of our existing shareholders.

 

Generally, we are not restricted from issuing additional equity securities, including our common stock. Synovus may choose or be required in the future to identify, consider and pursue additional capital management strategies to bolster its capital position. Future issuances of our equity securities, including common stock, in any transaction that we may pursue may dilute the interests of our existing shareholders and cause the market price of our common stock to decline. We may issue equity securities (including convertible securities, preferred securities, and options and warrants on our common or preferred stock) in the future for a number of reasons, including to finance our operations and business strategy, to adjust our ratios of debt to equity, to address regulatory capital concerns, to restructure currently outstanding debt or equity securities or to satisfy our obligations upon the exercise of outstanding options or warrants. In addition to the transactions contemplated in the Capital Plan, we may issue equity securities in transactions that generate cash proceeds, transactions that free up regulatory capital but do not

immediately generate or preserve substantial amounts of cash, and transactions that generate regulatory or balance sheet capital only and do not generate or preserve cash. We cannot predict the effect that these transactions would have on the market price of our common stock. In addition, if we issue additional equity securities, including options, warrants, preferred stock or convertible securities, such newly issued securities could cause significant dilution to the holders of our common stock, which could affect the market price of the tMEDS.

 

Further adverse changes in our credit rating could increase the cost of our funding from the capital markets.

 

During the second quarter of 2009, Moody’s Investors Service, Standard and Poor’s Ratings Services and Fitch Ratings downgraded our long term debt to below investment grade. On April 23, 2010, Moody’s Investor Service issued a further downgrade and placed us on watch for further downgrade. The ratings agencies regularly evaluate us and certain of our subsidiary banks, and their ratings of our long-term debt are based on a number of factors, including our financial strength as well as factors not entirely within our control, including conditions affecting the financial services industry generally. In light of the continuing difficulties in the financial services industry and the housing and financial markets, there can be no assurance that we will not receive additional adverse changes in our ratings, which could adversely affect the cost and other terms upon which we are able to obtain funding and the way in which we are perceived in the capital markets.

 

Our net interest income could be negatively affected by the lower level of short-term interest rates, recent developments in the credit and real estate markets and competition in our primary market area.

 

Net interest income, which is the difference between the interest income that we earn on interest-earning assets and the interest expense that we pay on interest-bearing liabilities, is a major component of our income. Our net interest income is our primary source of funding for our operations, including extending credit and reserving for loan losses. The Federal Reserve reduced interest rates on three occasions in 2007 by a total of 100 basis points, to 4.25%, and by another 400 basis points, to a range of 0% to 0.25%, during 2008. Interest rates during 2009 have remained at the range of 0% to 0.25% as set by the Federal Reserve during 2008. A significant portion of our loans, including residential construction and development loans and other commercial loans, bear interest at variable rates. The interest rates on a significant portion of these loans decrease when the Federal Reserve reduces interest rates, which may reduce our net interest income. In addition, in order to compete for deposits in our primary market areas, we may offer more attractive interest rates to depositors, and we may increasingly rely upon out-of-market or brokered deposits as a source of liquidity.

 

A decrease in loans outstanding, increased non-performing loans and the decrease in interest rates reduced our net interest income during the year ended December 31, 2009 and could cause additional pressure on net interest income in future periods. This reduction in net interest income also may be exacerbated by the high level of competition that we face in our primary market area. Any significant reduction in our net interest income could negatively affect our business and could have a material adverse impact on our capital, financial condition and results of operations.

Diminished access to alternative sources of liquidity could adversely affect our net income, net interest margin and our overall liquidity.

 

We have historically had access to a number of alternative sources of liquidity, but given the recent and dramatic downturn in the credit and liquidity markets, there is no assurance that we will be able to obtain such liquidity on terms that are favorable to us, or at all. For example, the cost of out-of-market deposits could exceed the cost of deposits of similar maturity in our local market area, making them unattractive sources of funding; financial institutions may be unwilling to extend credit to banks because of concerns about the banking industry and the economy generally; and, given recent downturns in the economy, there may not be a viable market for raising equity capital. In addition, our planned Charter Consolidation may result in higher than expected loss of deposits (particularly with respect to our Synovus^® Shared Deposit products). If our access to these sources of liquidity is diminished, or only available on unfavorable terms, or if we experience higher than expected deposit losses following our planned Charter Consolidation, then our income, net interest margin and our overall liquidity likely would be adversely affected.

 

Recent levels of market volatility are unprecedented, and may result in disruptions in our ability to access sources of funds, which may negatively affect our capital resources and liquidity.

 

In managing our consolidated balance sheet, we depend on access to a variety of sources of funding to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, and to accommodate the transaction and cash management needs of our customers. Sources of funding available to us, and upon which we rely as regular components of our liquidity and funding management strategy, include borrowings from the Federal Home Loan Bank and brokered deposits. See “Liquidity” and “Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 10-K. We also have historically enjoyed a solid reputation in the capital markets and have been able to raise funds in the form of either short- or long-term borrowings or equity issuances. Recently, the volatility and disruption in the capital and credit markets has reached unprecedented levels. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. If current levels of market disruption and volatility continue or worsen, our ability to access certain of our sources of funding may be disrupted.

 

Changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which we are perceived in such markets, may adversely affect financial results.

 

In general, the amount, type and cost of our funding, including from other financial institutions, the capital markets and deposits, directly impacts our costs in operating our business and growing our assets and therefore, can positively or negatively affect our financial results. A number of factors could make funding more difficult, more expensive or unavailable on any terms, including, but not limited to, further reductions in our debt ratings, financial results and losses, changes within our organization, specific events that adversely impact our reputation, disruptions in the capital markets, specific events that adversely impact the financial services industry, counterparty availability, changes affecting our assets, the corporate and regulatory structure, interest rate fluctuations, general economic conditions and the legal, regulatory, accounting and tax environments governing our funding transactions. Also, we

compete for funding with other banks and similar companies, many of which are substantially larger, and have more capital and other resources than we do. In addition, as some of these competitors consolidate with other financial institutions, these advantages may increase. Competition from these institutions may increase the cost of funds.

 

As a financial services company, adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations.

 

Sustained weakness in business and economic conditions generally or specifically in the principal markets in which we do business could have one or more of the following adverse impacts on our business:

 

 

Any such increase in the number of delinquencies, bankruptcies or defaults could result in a higher level of non-performing assets, net charge-offs, provision for loan losses, and valuation adjustments on loans.

 

Future losses will result in an additional valuation allowance to our deferred tax assets and impair our ability to recover our deferred tax asset during 2010.

 

During the quarter ended June 30, 2009, Synovus reached a three-year pre-tax loss position. See Note 23 of Notes to Consolidated Financial Statements in our 2009 10-K. Under GAAP, a cumulative loss position is considered significant negative evidence which makes it very difficult for the company to rely on future earnings as a reliable source of future taxable income to realize deferred tax assets. Synovus incurred additional pre-tax losses in the quarters ended September 30, 2009 and December 31, 2009. Accordingly, Synovus was required to increase the valuation allowance against its deferred tax assets by approximately $173 million, $155 million and $110 million during the quarters ended June 30, 2009, September 30, 2009 and December 31, 2009, which adversely impacted Synovus’ results of operations for these periods.

 

In addition, while there are many factors that could impact the actual effective tax rate, a significant factor is management’s projection of pre-tax loss for the year. If the projected pre-tax losses vary significantly from current estimates, the actual effective tax rate could vary significantly.

 

Under GAAP, once a company that has recorded a valuation allowance against a deferred tax asset returns to profitability, it is possible to reduce or reverse the valuation allowance with a corresponding tax benefit recognized through current earnings. However, reductions in the valuation allowance are subject to considerable judgment and uncertainty. While Synovus expects to reverse the majority of the valuation allowance once it has demonstrated a consistent return to profitability, realizing additional operating losses will increase the valuation allowance. There can be no assurance that Synovus will be able to fully reverse the valuation

allowance against its deferred tax assets during 2010, which may negatively impact Synovus’ capital ratios and require Synovus to raise additional capital.

 

We face intense competition from other financial service providers.

 

We operate in a highly competitive environment in respect of the products and services we offer and the markets in which we serve. The competition among financial services providers to attract and retain customers is intense. Customer loyalty can be easily influenced by a competitor’s new products, especially offerings that could provide cost savings or additional interest income to the customer. Some of our competitors may be better able to provide a wider range of products and services over a greater geographic area. Moreover, this highly competitive industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge by creating a “financial holding company,” which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, a number of foreign banks have acquired financial services companies in the U.S., further increasing competition in the U.S. market. In addition, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and some have lower cost structures. We expect the consolidation of the banking and financial services industry to result in larger, better-capitalized companies offering a wide array of financial services and products.

 

Our financial condition and outlook may be adversely affected by damage to our reputation.

 

Our financial condition and outlook is highly dependent upon perceptions of our business practices and reputation. Our ability to attract and retain customers and employees could be adversely affected to the extent our reputation is damaged. Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance, regulatory compliance, mergers and acquisitions, disclosure, existing litigation, sharing or inadequate protection of customer information and from actions taken by government regulators and community organizations in response to that conduct. Damage to our reputation could give rise to legal risks, which, in turn, could increase the size and number of litigation claims and damages asserted or subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.

 

Maintaining or increasing market share depends on the timely development of and acceptance of new products and services and perceived overall value of these products and services by users.

 

Our success depends, in part, on our ability to adapt our products and services to evolving industry standards. We provide these products and services to our consumer and corporate customers through a decentralized network of banks and other of our businesses that operate autonomously within their respective communities. While our operating model provides us with a competitive advantage in maintaining a community focus and in providing customer service, our model is, in many respects, less efficient to operate. Moreover, there is increasing pressure to provide products and services at lower prices, which is difficult to do across a network like ours. This can reduce our overall net interest margin and revenues from our fee-based products and services. In addition, our success depends, in part, on our ability to generate significant levels of new business in our existing markets and in identifying and penetrating new markets.

Further, the widespread adoption of new technologies, including internet services, could require us to make substantial expenditures to modify or adapt our existing products and services. We may not be successful in introducing new products and services, achieving market acceptance of products and services or developing and maintaining loyal customers and/or breaking into targeted markets.

 

The trade, monetary and fiscal policies and laws of the federal government and its agencies, including interest rate policies of the Federal Reserve Board, significantly affect our earnings.

 

The Federal Reserve Board regulates the supply of money and credit in the U.S. Its policies determine in large part our cost of funds for lending and investing and the return we earn on those loans and investments, both of which affect our net interest margin. They can also materially affect the value of financial instruments we hold, such as debt securities. For example, decreases in interest rates could reduce our net interest income or cause additional pressure on net interest income in future periods. Alternatively, higher interest rates could cause our funding costs to increase more than our asset yields. Changes in Federal Reserve Board policies and laws are beyond our control and hard to predict. Its policies also can affect our borrowers, potentially increasing the risk that they may fail to repay their loans.

 

We are heavily regulated by federal and state agencies; changes in laws and regulations or failures to comply with such laws and regulations may adversely affect our operations and our financial results.

 

Synovus and our subsidiary banks, and many of our nonbank subsidiaries, are heavily regulated at the federal and state levels. This regulation is designed primarily to protect depositors, federal deposit insurance funds and the banking system as a whole, but not shareholders. Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including interpretation and implementation of statutes, regulations or policies, including currently proposed regulation in both the U.S. Senate and the House of Representatives, could affect us in substantial and unpredictable ways, including limiting the types of financial services and products we may offer and/or increasing the ability of nonbanks to offer competing financial services and products. Additionally, proposed legislation affecting the regulation of banking institutions may be enacted during 2010 and beyond, but the specific terms of such legislation are difficult to foresee. While we cannot predict the regulatory changes that may be borne out of the current financial and economic environment, and we cannot predict whether we will become subject to increased regulatory scrutiny by any of these regulatory agencies, any regulatory changes or scrutiny could be expensive for us to address and/or could result in our changing the way that we do business due to increased regulatory compliance burdens.

 

Furthermore, various federal and state bodies regulate and supervise our nonbank subsidiaries, including our brokerage, investment advisory, insurance agency and processing operations. These include, but are not limited to, the SEC, FINRA, federal and state banking regulators and various state regulators of insurance and brokerage activities. Federal and state regulators have the ability to impose substantial sanctions, restrictions and requirements on our banking and nonbanking subsidiaries if they determine, upon examination or otherwise, violations of laws with which Synovus or its subsidiaries must comply, or weaknesses or failures with respect to general standards of safety and soundness. Such enforcement may be formal or informal and can include directors’ resolutions, memoranda of understanding, consent orders, civil money

penalties, termination of deposit insurance and bank closures. Enforcement actions may be taken regardless of the capital level of the institution. In particular, institutions that are not sufficiently capitalized in accordance with regulatory standards may also face capital directives or prompt corrective action. Enforcement actions may require certain corrective steps, impose limits on activities, prescribe lending parameters and require additional capital to be raised, any of which could adversely affect our financial condition and results of operations. The imposition of regulatory sanctions, including monetary penalties, may have a material impact on our financial condition and results of operations, and damage to our reputation, and loss of our financial services holding company status. In addition, compliance with any such action could distract management’s attention from our operations, cause us to incur significant expenses, restrict us from engaging in potentially profitable activities, and limit our ability to raise capital.

 

We presently are subject to, and in the future may become subject to, additional supervisory actions and/or enhanced regulation that could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock.

 

Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions, various state regulators (for state chartered banks), the Federal Reserve (for bank holding companies), the Office of the Comptroller of the Currency (for national banks) and separately the FDIC as the insurer of bank deposits, have the authority to compel or restrict certain actions on our part if they determine that we have insufficient capital or are otherwise operating in a manner that may be deemed to be inconsistent with safe and sound banking practices. Under this authority, our bank regulators can require us to enter into informal or formal enforcement orders, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders, pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions.

 

As a result of losses that we have incurred to date and our high level of classified assets, we entered into a memorandum of understanding with the Federal Reserve Bank of Atlanta and the Banking Commissioner of the State of Georgia, or the “Georgia Commissioner,” pursuant to which we agreed to implement plans that are intended to, among other things, minimize credit losses and reduce the amount of our non-performing loans, limit and manage our concentrations in commercial loans, improve our credit risk management and related policies and procedures, address liquidity management and current and future capital requirements, strengthen enterprise risk management practices, and provide for succession planning for key corporate and regional management positions. The memorandum of understanding also requires that we obtain the prior approval of the Federal Reserve Bank of Atlanta and the Georgia Commissioner prior to increasing the cash dividend on our common stock above $0.01 per share.

 

In addition, many of our subsidiary banks presently are subject to memoranda of understanding and/or similar supervisory actions with the FDIC and/or their applicable state bank regulatory authorities and/or resolutions adopted by those banks’ boards of directors at the direction of their appropriate bank regulator. These supervisory actions are similar in substance and scope to the memorandum of understanding described above. See Note 13 of Notes to Consolidated Financial Statements in our 2009 10-K. In the future, all of our subsidiary banks may become subject to similar and/or heightened supervisory actions and enhanced regulation. Even if we are successful in implementing the Charter Consolidation, the resulting bank(s) may be required

to comply with all memoranda of understanding and similar supervisory actions our subsidiary banks are currently subject to or may become subject to.

 

If we are unable to comply with the terms of our current regulatory orders, or if we are unable to comply with the terms of any future regulatory actions or orders to which we may become subject, or if we are unable to execute our capital plan (including this offering) or otherwise achieve and maintain capital levels that are satisfactory to our regulators, then we could become subject to additional, heightened supervisory actions and orders, possibly including consent orders, prompt corrective action restrictions and/or other regulatory actions, including prohibitions on the payment of common stock dividends. If our regulators were to take such additional supervisory actions, then we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both. The terms of any such supervisory action could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock. See “Item 1—Business-Supervision, Regulation and Other Factors” in our 2009 10-K.

 

Recent legislative and regulatory initiatives applicable to TARP recipients could adversely impact our ability to attract and retain key employees and pursue business opportunities and put us at a competitive disadvantage vis-à-vis our competitors.

 

Until we repay the TARP funds, we are subject to additional regulatory scrutiny and restrictions regarding the compensation of certain executives and associates as established under TARP guidelines. The increased scrutiny and restrictions related to our compensation practices may adversely impact our ability to recruit, retain and motivate key employees, which in turn may impact our ability to pursue business opportunities and could otherwise materially adversely affect our businesses and results of operations. These restrictions may put us at a competitive disadvantage vis-à-vis our competitors that have repaid all TARP funds or did not receive TARP funds and may prove costly for us to comply with. See “Item 1—Business-Supervision, Regulation and Other Factors” in our 2009 10-K.

 

As a result of our participation in the Capital Purchase Program and the Temporary Liquidity Guarantee Program, we may become subject to additional regulation, and we cannot predict the cost or effects of compliance at this time.

 

In connection with our participation in the Capital Purchase Program administered under the TARP, we may face additional regulations and/or reporting requirements, including, but not limited to, the following:

 

 

 

As a result, we may face increased regulation, and compliance with such regulation may increase our costs and limit our ability to pursue certain business opportunities. We cannot predict the effect that participating in these programs may have on our business, financial condition, or results of operations in the future or what additional regulations and/or requirements we may become subject to as a result of our participation in these programs.

 

Regulation of the financial services industry is undergoing major changes, and future legislation could increase our cost of doing business or harm our competitive position.

 

In 2009, many emergency government programs enacted in 2008 in response to the financial crisis and the recession slowed or wound down, and global regulatory and legislative focus has generally moved to a second phase of broader reform and a restructuring of financial institution regulation. Legislators and regulators in the United States are currently considering a wide range of proposals that, if enacted, could result in major changes to the way banking operations are regulated. Some of these major changes may take effect as early as 2010, and could materially impact the profitability of our business, the value of assets we hold or the collateral available for our loans, require changes to business practices or force us to discontinue businesses and expose us to additional costs, taxes, liabilities, enforcement actions and reputational risk.

 

Certain reform proposals under consideration could result in Synovus becoming subject to stricter capital requirements and leverage limits, and could also affect the scope, coverage, or calculation of capital, all of which could require us to reduce business levels or to raise capital, including in ways that may adversely impact our shareholders or creditors. In addition, we anticipate the enactment of certain reform proposals under consideration that would introduce stricter substantive standards, oversight and enforcement of rules governing consumer financial products and services, with particular emphasis on retail extensions of credit and other consumer-directed financial products or services. We cannot predict whether new legislation will be enacted and, if enacted, the effect that it, or any regulations, would have on our business, financial condition, or results of operations.

 

We may be required to pay significantly higher FDIC premiums in the future.

 

The FDIC has recently been considering different methodologies by which it may increase premium amounts, because the costs associated with bank resolutions or failures have substantially depleted the Deposit Insurance Fund. In November 2009, the FDIC voted to require insured depository institutions to prepay slightly over three years of estimated insurance

assessments. Additionally, the FDIC has proposed using executive compensation as a factor in assessing the premiums paid by insured depository institutions to the Deposit Insurance Fund.

 

We rely on our systems and employees, and any failures or departures could materially adversely affect our operations.

 

We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical and record-keeping errors, and computer/telecommunications systems malfunctions. Our businesses are dependent on our ability to process a large number of increasingly complex transactions. If any of our financial, accounting, or other data processing systems fail or have other significant shortcomings, we could be materially adversely affected. We are similarly dependent on our employees. We could be materially adversely affected if one of our employees departs or causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our operations or systems. Third parties with which we do business also could be sources of operational risk to us, including relating to break-downs or failures of such parties’ own systems or employees. Any of these occurrences could result in a diminished ability of us to operate one or more of our businesses, potential liability to clients, reputational damage and regulatory intervention, which could materially adversely affect us.

 

We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses or electrical or telecommunications outages or natural disasters. Such disruptions may give rise to losses in service to customers and loss or liability to us. In addition, there is a risk that our business continuity and data security systems prove to be inadequate. Any such failure could affect our operations and could materially adversely affect our results of operations by requiring us to expend significant resources to correct the defect, as well as by exposing us to litigation or losses not covered by insurance.

 

We must respond to rapid technological changes, and these changes may be more difficult or expensive than anticipated.

 

If competitors introduce new products and services embodying new technologies, or if new industry standards and practices emerge, our existing product and service offerings, technology and systems may become obsolete. Further, if we fail to adopt or develop new technologies or to adapt our products and services to emerging industry standards, we may lose current and future customers, which could have a material adverse effect on our business, financial condition and results of operations. The financial services industry is changing rapidly and in order to remain competitive, we must continue to enhance and improve the functionality and features of our products, services and technologies. These changes may be more difficult or expensive than we anticipate.

 

Fluctuations in our expenses and other costs could adversely affect our financial results.

 

Our personnel, occupancy and other operating expenses directly affect our earnings results. In light of the extremely competitive environment in which we operate, and because the size and scale of many of our competitors provides them with increased operational efficiencies, it is important that we are able to successfully manage such expenses. We are aggressively managing our expenses in the current economic environment, but as our business develops, changes or expands, additional expenses can arise. Other factors that can affect the amount of our expenses include legal and administrative cases and proceedings, which can be expensive to

pursue or defend. In addition, changes in accounting policies can significantly affect how we calculate expenses and earnings.

 

Increases in the costs of services and products provided to us by third parties could adversely affect our financial results.

 

The costs of services and products provided to us by third parties could increase in the future, whether as a result of our financial condition, credit ratings, the way we are perceived by such parties, the economy or otherwise. Such increases could have an adverse affect on our financial results.

 

Changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies, could materially impact our financial statements.

 

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the regulatory agencies, the Financial Accounting Standards Board, and other authoritative bodies change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.

 

The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition.

 

We may be involved from time to time in a variety of litigation, investigations, inquiries or similar matters arising out of our business. Our insurance may not cover all claims that may be asserted against it and indemnification rights to which we are entitled may not be honored, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations. In addition, premiums for insurance covering the financial and banking sectors are rising. We may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms or at historic rates, if at all. We have exposure to many different industries and counterparties, and we routinely execute transactions with a variety of counterparties in the financial services industry. As a result, defaults by, or even rumors or concerns about, one or more financial institutions with which we do business, or the financial services industry generally, have led to market-wide liquidity problems in the past and could do so in the future and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral we hold cannot be sold at prices that are sufficient for us to recover the full amount of our exposure. Any such losses could materially and adversely affect our financial condition and results of operations.

We are named in a purported federal securities class action lawsuit and several related suits and inquiries, and if we are unable to resolve these matters favorably, then our business, operating results and financial condition would suffer.

 

On July 7, 2009, the City of Pompano Beach General Employees’ Retirement System filed suit in the United States District Court, Northern District of Georgia (the “Securities Class Action”) against us and certain current and former executive officers alleging, among other things, that we and the named defendants misrepresented or failed to disclose material facts, including purported exposure to our Sea Island lending relationship and the impact of real estate values as a threat to our credit, capital position, and business, and failed to adequately and timely record losses for impaired loans. The plaintiffs in the suit claim that the alleged misrepresentations or omissions artificially inflated our stock price in violation of the federal securities laws and seek damages in an unspecified amount.

 

On November 4, 2009, a shareholder filed a putative derivative action purportedly on behalf of Synovus in the United States District Court, Northern District of Georgia (the “Federal Shareholder Derivative Lawsuit”), against certain current and/or former directors and executive officers of the Company. The Federal Shareholder Derivative Lawsuit asserts that the individual defendants violated their fiduciary duties based upon substantially the same facts as alleged in the Securities Class Action described above. The plaintiff is seeking to recover damages in an unspecified amount and equitable and/or injunctive relief.

 

On December 21, 2009, a shareholder filed a putative derivative action purportedly on behalf of Synovus in the Superior Court of Fulton County, Georgia (the “State Shareholder Derivative Lawsuit”), against certain current and/or former directors and executive officers of the Company. The State Shareholder Derivative Lawsuit asserts that the individual defendants violated their fiduciary duties based upon substantially the same facts as alleged in the Federal Shareholder Derivative Lawsuit described above. The plaintiff is seeking to recover damages in an unspecified amount and equitable and/or injunctive relief.

 

Synovus received a letter from the SEC, Atlanta regional office, dated December 15, 2009, informing Synovus that it is conducting an informal inquiry “to determine whether any person or entity has violated the federal securities laws.” The SEC has not asserted that Synovus or any person or entity has committed any securities violations. The Company intends to cooperate fully with the SEC’s informal inquiry.

 

We cannot at this time predict the outcome of these matters or reasonably determine the probability of a material adverse result or reasonably estimate range of potential exposure, if any, that these matters might have on us, our business, our financial condition or our results of operations, although such effects could be materially adverse. In addition, in the future, we may need to record litigation reserves with respect to these matters. Further, regardless of how these matters proceed, it could divert our management’s attention and other resources away from our business.

 

Offering risks

 

You assume the risk that the market value of Synovus common stock may decline.

 

The purchase contracts, pursuant to which Synovus will deliver to you shares of its common stock, are components of the tMEDS. The number of shares of common stock that you will receive upon settlement of a purchase contract on the mandatory settlement date, whether as a component of a

tMEDS or a separate purchase contract, will depend upon the average of the daily volume weighted average prices, or VWAPs, of Synovus common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory settlement date (the “applicable market value”). Because the price of Synovus common stock fluctuates, there can be no assurance that the market value of the common stock received by you will be equal to or greater than the reference price of $2.75. If the applicable market value of Synovus common stock is less than the reference price, then the market value of the common stock issued to you on the mandatory settlement date (assuming that the market value is the same as the applicable market value of the common stock) will be less than the effective price per share paid by you for such common stock on the date of issuance of the tMEDS. Therefore, you assume the entire risk that the market value of Synovus common stock may decline before the mandatory settlement date. Any decline in the market value of Synovus common stock may be substantial.

 

You will receive only a portion of any appreciation in the market price of Synovus common stock.

 

The aggregate market value of Synovus common stock delivered to you upon settlement of a purchase contract generally will exceed the $25 stated amount of each tMEDS only if the applicable market value of Synovus common stock equals or exceeds the threshold appreciation price. Therefore, during the period prior to the mandatory settlement date, an investment in a tMEDS affords less opportunity for equity appreciation than a direct investment in Synovus common stock. If the applicable market value exceeds the reference price but is less than the threshold appreciation price, you will realize no equity appreciation on Synovus common stock above the reference price. Furthermore, if the applicable market price equals or exceeds the threshold appreciation price, you would receive on the mandatory settlement date only approximately 83.3% of the value of the shares of Synovus common stock you would have received had you purchased shares of common stock with $25 at the public offering price in the concurrent public offering. See “Description of the purchase contracts — Delivery of common stock” for a table showing the number of shares of common stock that you would receive at various applicable market values.

 

Synovus may not be able to settle your purchase contracts and deliver shares of its common stock, or make payments on the amortizing notes, in the event that Synovus files for bankruptcy.

 

If Synovus files for bankruptcy protection prior to settlement of the purchase contracts, it may be unable to deliver Synovus common stock to you and, in such circumstances, Synovus expects that your claim will be relegated to a claim in bankruptcy that ranks equally with the claims of Synovus common stockholders, in which case you will only be able to recover damages to the extent holders of Synovus common stock receive any recovery. See “Description of the purchase contracts — Consequences of bankruptcy.”

 

In addition, bankruptcy law generally prohibits the payment of pre-bankruptcy debt by a company that has commenced a bankruptcy case while the case is pending. If Synovus becomes a debtor in a bankruptcy case, so long as the case were pending you would likely not receive payments of principal or interest due under the amortizing note component of the tMEDS.

The trading prices for the tMEDS, the purchase contracts and the amortizing notes will be directly affected by the trading prices for Synovus common stock, the general level of interest rates and Synovus’ credit quality, each of which is impossible to predict.

 

It is impossible to predict whether the prices of Synovus common stock, interest rates or Synovus’ credit quality will rise or fall. Trading prices of the common stock will be influenced by Synovus’ operating results and prospects and by economic, financial, industry and other factors. In addition, general market conditions, including the level of, and fluctuations in, the trading prices of stocks generally, can affect the price of Synovus common stock, as can sales by Synovus or its stockholders of substantial amounts of common stock in the market after the offering of the tMEDS or the perception that those sales could occur. The market for Synovus common stock likely will influence, and be influenced by, any market that develops for the tMEDS or the separate purchase contracts. For example, investors’ anticipation of the distribution into the market of the additional shares of common stock issuable upon settlement of the purchase contracts could depress the price of Synovus common stock and increase the volatility of the common stock price, which could in turn depress the price of the tMEDS or the purchase contracts. The price of Synovus common stock also could be affected by possible sales of such common stock by investors who view the tMEDS as a more attractive means of equity participation in Synovus and by hedging or arbitrage trading activity that is likely to develop involving the tMEDS, separate purchase contracts and the common stock. The arbitrage activity could, in turn, affect the trading prices of the tMEDS, the separate purchase contracts and the common stock.

 

Recent developments in the equity-linked and convertible securities markets may adversely affect the market value of the tMEDS.

 

Governmental actions that interfere with the ability of equity-linked and convertible securities investors to effect short sales of the underlying shares of common stock could significantly affect the market value of the tMEDS. Such government actions could make the convertible arbitrage strategy that many equity-linked and convertible securities investors employ difficult to execute for outstanding equity-linked or convertible securities of any company whose shares of common stock are subject to such actions. At an open meeting on February 24, 2010 the SEC adopted a new short sale price test. The new rule will restrict short selling only when a stock price has triggered a circuit breaker by falling at least 10 percent from the prior day’s closing price, at which point short sale orders can be displayed or executed only if the order price is above the current national best bid for the remainder of the day and the next trading day, subject to certain limited exceptions. If such new price test precludes, or is perceived to preclude, equity-linked and convertible securities investors from executing the convertible arbitrage strategy that they employ or other limitations are instituted by the SEC or any other regulatory agencies, the market value of the tMEDS could be adversely affected.

 

You may receive shares of common stock upon settlement of the purchase contracts that are lower in value than the price of the common stock just prior to the mandatory settlement date.

 

Because the applicable market value of the common stock is determined over the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory settlement date, the number of shares of common stock delivered for each purchase contract may on the mandatory settlement date be less than the number that would have been delivered based on the VWAP of the common stock on the last trading day in such period. In addition, you will bear the risk of fluctuations in the market price of the shares of common stock deliverable upon

settlement of the purchase contracts between the end of such period and the date such shares are delivered.

 

If you elect to settle your purchase contracts prior to the mandatory settlement date, you may not receive the same return on your investment as purchasers whose purchase contracts are settled on the mandatory settlement date.

 

Holders of the tMEDS or separate purchase contracts have the option to settle their purchase contracts at any time during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the tMEDS and ending on, but excluding, the third business day immediately preceding the mandatory settlement date. However, if you settle your purchase contracts prior to the third business day immediately preceding the mandatory settlement date, you will receive for each purchase contract a number of shares of common stock equal to the minimum settlement rate, regardless of the current market value of Synovus common stock, unless you elect to settle your purchase contracts early in connection with a fundamental change, in which case you will be entitled to settle your purchase contracts at the fundamental change early settlement rate, which may be greater than the minimum settlement rate. In either case, you may not receive the same return on your investment as purchasers whose purchase contracts are settled on the mandatory settlement date.

 

Synovus may issue additional shares of its common stock, which may dilute the value of Synovus common stock but may not trigger an anti-dilution adjustment under the terms of the purchase contracts.

 

The trading price of Synovus common stock may be adversely affected if Synovus issues additional shares of its common stock. The number of shares of common stock issuable upon settlement of the purchase contracts is subject to adjustment only for stock splits and combinations, stock dividends and certain other specified transactions. The number of shares of common stock deliverable upon settlement is not subject to adjustment for other events that may adversely affect the value of Synovus common stock, such as employee stock options grants, offerings of Synovus common stock for cash (including the offering of common stock made concurrently with this offering), certain exchanges of Synovus common stock for other Synovus securities or in connection with acquisitions and other transactions. The terms of the tMEDS do not restrict Synovus’ ability to offer its common stock in the future or to engage in other transactions that could dilute its common stock, which may adversely affect the value of the purchase contracts.

 

If Synovus exercises its right to defer installment payments on the amortizing notes, the market price of the tMEDS and separate amortizing notes is likely to be adversely affected.

 

Synovus will have the right to defer installment payments at any time and from time to time under the circumstances, and subject to the conditions, described under “Description of the amortizing notes — Option to extend installment payment period” so long as such deferral period does not extend beyond May 15, 2015. During any such deferral period, holders of the tMEDS and separate amortizing notes will have no remedies against Synovus for nonpayment unless Synovus fails to pay all previously deferred installment payments (including interest thereon) in cash within 30 days of the last day of such deferral period. If Synovus exercises its right to defer installment payments, the market price of the tMEDS and separate amortizing notes may be more volatile than the market prices of other securities that are not subject to optional payment deferral features.

The secondary market for the tMEDS, the purchase contracts and the amortizing notes may be illiquid.

 

Synovus will apply to list the tMEDS on the New York Stock Exchange. If approved for listing, Synovus expects that the tMEDS will begin trading on the New York Stock Exchange within 30 days after the tMEDS are first issued. In addition, Synovus has been informed by the underwriter that it intends to make a market in the tMEDS after the offering is completed. However, listing the tMEDS on the New York Stock Exchange does not guarantee that a trading market will develop and the underwriter may cease its market-making activity at any time. Even if a trading market does develop, the depth or duration of that market or the ability of holders to sell their tMEDS.

 

Beginning on the business day immediately succeeding the date of initial issuance of the tMEDS, purchasers of tMEDS will be able to separate each tMEDS into a purchase contract and an amortizing note. Synovus is unable to predict how the separate purchase contracts or the separate amortizing notes will trade in the secondary market, or whether that market will be liquid or illiquid. Synovus will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter-dealer quotation system. If (i) a sufficient number of tMEDS are separated into separate purchase contracts and separate amortizing notes and traded separately such that applicable listing requirements are met and (ii) the holders of such separate purchase contracts and separate amortizing notes request that Synovus list such separate purchase contracts and separate amortizing notes, Synovus will endeavor to list such separate purchase contracts and separate amortizing notes on an exchange of Synovus’ choosing (which may or may not be the New York Stock Exchange) subject to applicable listing requirements.

 

The purchase contract agreement will not be qualified under the Trust Indenture Act, and the obligations of the purchase contract agent are limited.

 

The purchase contract agreement among Synovus, the purchase contract agent and the trustee will not be qualified as an indenture under the Trust Indenture Act of 1939, and the purchase contract agent will not be required to qualify as a trustee under the Trust Indenture Act. Thus, you will not have the benefit of the protection of the Trust Indenture Act with respect to the purchase contract agreement or the purchase contract agent. The amortizing notes constituting a part of the tMEDS will be issued pursuant to an indenture, which has been qualified under the Trust Indenture Act. Accordingly, if you hold tMEDS, you will have the benefit of the protections of the Trust Indenture Act only to the extent applicable to the amortizing notes. The protections generally afforded the holder of a security issued under an indenture that has been qualified under the Trust Indenture Act include:

 

 

Synovus’ obligations to make payments on the amortizing notes are subordinate to its payment obligations under Synovus’ Senior Indebtedness. Synovus will depend upon dividends or other intercompany transfers from its subsidiaries to meet its obligations under the amortizing notes. Claims of creditors of these subsidiaries may have priority over claims by Synovus with respect to the assets and earnings of these subsidiaries.

 

Synovus’ obligations under the amortizing notes rank junior in right of payment to all of its existing and future Senior Indebtedness, as defined under the caption “Description of the amortizing notes — Subordination,” which includes, without limitation, Synovus’ 4.875% Subordinated Notes Due 2013 and Synovus’ 5.125%  Subordinated Notes Due 2017. In addition, the amortizing notes will not be guaranteed by any of Synovus’ subsidiaries, which are separate legal entities that have no obligation to pay, or make funds available to pay, any amounts due on the amortizing notes. The amortizing notes will therefore be effectively subordinated to all indebtedness and other obligations, including trade payables and preferred stock, if any, of Synovus’ subsidiaries. This means that, unless all Senior Indebtedness is repaid in full, Synovus cannot make any payments on the amortizing notes if its unsecured indebtedness for borrowed money is accelerated, in the event of Synovus’ bankruptcy, insolvency or liquidation or if the amortizing notes are accelerated.

 

The terms of the junior subordinated indenture do not limit Synovus’ ability to incur additional debt, including secured or unsecured debt that will rank senior to the amortizing notes and purchase contracts.

 

The fundamental change early settlement rate may not adequately compensate you.

 

If a “fundamental change” occurs and you elect to exercise your fundamental change early settlement right, you will be entitled to settle your purchase contracts at the fundamental change early settlement rate. Although the fundamental change early settlement rate is designed to compensate you for the lost value of your purchase contracts as a result of the early settlement of the purchase contracts, this feature may not adequately compensate you for such loss. In addition, if the stock price in the fundamental change is greater than $5.00 per share (subject to adjustment as described herein), this feature of the purchase contracts will not compensate you for any additional loss suffered in connection with a fundamental change. See “Description of the purchase contracts — Early settlement upon a fundamental change.”

 

Synovus’ obligation to settle the purchase contracts at the fundamental change early settlement rate could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness of economic remedies.

 

You have limited remedies for defaults under the indenture.

 

Although various events may constitute “events of default” under the indenture, only an event of default as a result of specified events of bankruptcy, insolvency or reorganization of Synovus will trigger the right of not less than 25% of holders in aggregate principal amount of the amortizing notes then outstanding to accelerate all amounts due and payable under the amortizing notes. See “Description of the amortizing notes — Events of default.”

 

You will have no rights as a Synovus common shareholder until you acquire its common stock.

 

Until you acquire shares of Synovus common stock upon settlement on the mandatory settlement date or any early settlement, you will have no rights with respect to its common stock, including voting rights, rights to respond to tender offers and rights to receive any

dividends or other distributions on the common stock, but you will be subject to all changes affecting the common stock. You will be entitled to rights with respect to Synovus common stock only when Synovus delivers shares of common stock upon settlement of your purchase contracts. For example, if an amendment is proposed to Synovus’ certificate of incorporation and the record date for determining the shareowners of record entitled to vote on that amendment occurs prior to the delivery date for common stock under the purchase contracts, then you will not be entitled to vote on that amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of such common stock.

 

Issuances or sales of common stock or other equity securities could result in an “ownership change” as defined for U.S. federal income tax purposes. In the event an “ownership change” were to occur, Synovus’ ability to fully utilize a significant portion of its U.S. federal and state tax net operating losses and certain built-in losses that have not been recognized for tax purposes could be impaired as a result of the operation of Section 382 of the Internal Revenue Code of 1986, as amended.

 

Synovus’ ability to use certain realized net operating losses and unrealized built-in losses to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). An ownership change under Section 382 generally occurs when a change in the aggregate percentage ownership of the stock of the corporation held by “five percent shareholders” increases by more than fifty percentage points over a rolling three year period. A corporation experiencing an ownership change generally is subject to an annual limitation on its utilization of pre-change losses and certain post-change recognized built-in losses equal to the value of the stock of the corporation immediately before the “ownership change,” multiplied by the long-term tax exempt rate (subject to certain adjustments). The annual limitation is increased each year to the extent that there is an unused limitation in a prior year. Since U.S. federal net operating losses generally may be carried forward for up to 20 years, the annual limitation also effectively provides a cap on the cumulative amount of pre-change losses and certain post-change recognized built-in losses that may be utilized. Pre-change losses and certain post-change recognized built in losses in excess of the cap are effectively unable to be used to reduce future taxable income. In some circumstances, issuances or sales of Synovus stock (including any common stock or other equity issuances or debt-for-equity exchanges and certain transactions involving Synovus stock that are outside of Synovus’ control) could result in an “ownership change” under Section 382.

 

While Synovus has adopted the Rights Plan (see “Summary — Adoption of Rights Plan”) to reduce the likelihood that future transactions in Synovus stock will result in an ownership change, there can be no assurance that the Rights Plan will be effective to deter a stockholder from increasing its ownership interests beyond the limits set by the Rights Plan or that an ownership change will not occur in the future. If an “ownership change” under Section 382 were to occur, the value of Synovus’ net operating losses and a portion of the net unrealized built-in losses will be impaired. Because a valuation allowance currently exists for substantially the full amount of Synovus’ deferred tax assets, no additional charge to earnings would result. However, an “ownership change”, as defined above, could adversely impact Synovus’ ability to recognize Tier 1 capital from the potential future release of its valuation allowance.

 

It is possible that the ownership of an interest in a purchase contract would be treated, for purposes of Section 382 and, accordingly, for purposes of the Rights Plan, as the ownership of all or a portion of the Synovus common stock subject thereto. Accordingly, Synovus intends, for

purposes of interpreting and applying the Rights Plan, to treat the ownership of an interest in a purchase contract as the ownership of a number of shares of Synovus common stock equal to the maximum settlement rate.

 

Prospective investors should consider the possible consequences of the Rights Plan before making an investment in the tMEDS.

 

The U.S. federal income tax consequences relating to the tMEDS are uncertain.

 

No statutory, judicial or administrative authority directly addresses the characterization of the tMEDS or instruments similar to the tMEDS for U.S. federal income tax purposes. As a result, some aspects of the U.S. federal income tax consequences of an investment in the tMEDS are not certain. Specifically, the amortizing notes and the purchase contracts could potentially be recharacterized as a single instrument for U.S. federal income tax purposes, in which case (i) holders could be required to recognize as income the entire amount of each payment on the amortizing notes (rather than treating a portion as a tax-free return of principal) and (ii) payments made to Non-U.S. Holders (as defined below under “Certain U.S. federal tax considerations”) on the amortizing notes, including payments denominated as principal, could potentially be subject to U.S. withholding tax. No ruling is being requested from the Internal Revenue Service with respect to the tMEDS, and no assurance can be given that the Internal Revenue Service will agree with the conclusions expressed below under “Certain U.S. federal tax considerations.” Holders should consult their tax advisors regarding potential alternative tax characterizations of the tMEDS.

 

You may be subject to tax upon an adjustment to the settlement rate of the purchase contracts even though you do not receive a corresponding cash distribution.

 

The settlement rate of the purchase contracts is subject to adjustment in certain circumstances, including upon the payment of certain cash dividends or upon a fundamental change. If the settlement rate is adjusted as a result of a distribution that is taxable to Synovus common stockholders, such as a cash dividend, you will be deemed to have received for U.S. federal income tax purposes a taxable dividend to the extent of Synovus’ earnings and profits without the receipt of any cash. If you are a Non-U.S. Holder (as defined in “Certain U.S. federal tax considerations”), such deemed dividend may be subject to U.S. federal withholding tax (currently at a 30% rate, or such lower rate as may be specified by an applicable treaty), which may be withheld from shares of common stock or sales proceeds subsequently paid or credited to you. See “Certain U.S. federal tax considerations.”

 

The shares of common stock underlying the tMEDS will only be entitled to one vote per share on each matter submitted to a vote at a meeting of shareholders, whereas holders of a substantial amount of our common stock are entitled to ten votes on each such matter.

 

Although we only have one class of common stock, certain shares of our common stock are entitled to ten votes per share on each matter submitted to a vote at a meeting of shareholders, including common stock that has been beneficially owned continuously by the same shareholder for a period of forty-eight consecutive months before the record date of any meeting of shareholders at which the share is eligible to be voted. See “Description of capital stock — Common stock — Voting rights” in the accompanying prospectus. Each share of common stock underlying the tMEDS offered in this offering will only be entitled to one vote per share on each matter submitted to a vote at a meeting of shareholders. Therefore, while a purchaser in this offering may ultimately have an economic interest in us that is identical to or

even greater than another shareholder, that other shareholder may be entitled to ten times as many votes per share as such a purchaser. As a result, some groups of shareholders will be able to approve strategic transactions or increases in authorized capital stock, among other matters submitted to the shareholders, even over the objections of shareholders, including purchasers in this offering, who hold equivalent or greater economic stakes in our company.

 

Sales of a significant number of shares of our common stock in the public markets, and other transactions that we may pursue, could depress the market price of our common stock, and therefore the market price of our tMEDS.

 

Sales of a substantial number of shares of our common stock in the public markets and the perception that those sales may occur could adversely affect the market price of our common stock, and therefore the market price of our tMEDS. In addition, future issuances of equity securities, including pursuant to the Concurrent Transactions and other transactions that we may pursue, may dilute the interests of our existing shareholders, including you, and cause the market price of our common stock to decline, and therefore adversely affect the market price of the tMEDS. We may issue equity securities (including convertible securities, preferred securities, and options and warrants on our common or preferred stock) in the future for a number of reasons, including to finance our operations and business strategy, to adjust our ratio of debt to equity, to address regulatory capital concerns, or to satisfy our obligations upon the exercise of outstanding options or warrants. We may issue equity securities in transactions that generate cash proceeds, such as this offering, transactions that free up regulatory capital but do not immediately generate or preserve substantial amounts of cash, and transactions that generate regulatory or balance sheet capital only and do not generate or preserve cash. We cannot predict the effect that these transactions would have on the market price of our common stock or the tMEDS.

 

Our stock price has been and is likely to be volatile and the value of your investment may decline.

 

The trading price of our common stock has been and is likely to be highly volatile and subject to wide fluctuations in price. The stock market in general, and the market for commercial banks and other financial services companies in particular, has experienced significant price and volume fluctuations that sometimes have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our common stock, and therefore the market price of our tMEDS, regardless of our operating performance. Furthermore, the value of your investment may decline, and you may be unable to sell your tMEDS at or above the offering price.

 

We may invest or spend the proceeds in this offering in ways with which you may not agree and in ways that may not earn a profit, including contributing capital to our subsidiary banks.

 

We intend to use the net proceeds of this offering for working capital and general corporate purposes. Therefore, we will retain broad discretion over the use of the proceeds from this offering and may use them for purposes other than those contemplated at the time of this offering. You may not agree with the ways we decide to use these proceeds, and our use of the proceeds may not yield any profits. Furthermore, it is the longstanding policy of the Federal Reserve Board, that a bank holding company is expected to act as a source of financial strength for its subsidiary banks and to commit resources to support these banks. As a result of this policy, we may be required to commit resources, including proceeds from this offering, to our

subsidiary banks in circumstances where we might not otherwise choose to do so and that may not yield any profits.

 

If you purchase tMEDS in this offering, you will effectively incur immediate and substantial dilution in the book value of the underlying shares of common stock.

 

If you purchase tMEDS in this offering, the value of the underlying shares based on our actual book value will immediately be less than the effective offering price you paid. This reduction in value is known as dilution. As a result of this dilution, investors purchasing tMEDS in this offering may receive significantly less than the purchase price paid in this offering in the event of liquidation. Investors will incur additional dilution upon the exercise of stock options or other equity-based awards under our equity incentive plans and the warrant issued to the Treasury under the TARP Capital Purchase Program and the issuance of equity securities in connection with transactions that we may pursue. In addition, if we issue additional equity securities, including options, warrants, preferred stock or convertible securities, in the future to acquired entities and their equity holders, our business associates, or other strategic partners or in follow-on public and private offerings, the newly issued equity securities will further dilute your percentage ownership of our company.

 

The common stock underlying the tMEDS is equity and is subordinate to our existing and future indebtedness and preferred stock.

 

Shares of common stock are equity interests in us and do not constitute indebtedness. As such, shares of common stock will rank junior to all of our indebtedness and to other non-equity claims against us and our assets available to satisfy claims against us, including in our liquidation. Additionally, holders of our common stock are subject to the prior dividend and liquidation rights of holders of our outstanding preferred stock. The issued and outstanding shares of our Series A Preferred Stock, all of which are held by the Treasury, have an aggregate liquidation preference of $967,870,000. Our board of directors is authorized to issue additional classes or series of preferred stock without any action on the part of the holders of our common stock and we are permitted to incur additional debt. Upon liquidation, lenders and holders of our debt securities and preferred stock would receive distributions of our available assets prior to holders of our common stock.

 

We will issue up to 390,250,000 shares of our common stock if we complete the Concurrent Transactions (not including the shares issued pursuant to this offering), and may issue additional equity securities in connection with other transactions we may pursue, either of which will result in dilution to the holders of our common stock.

 

We could issue up to 390,250,000 shares of our common stock in the Concurrent Transactions, including up to 293,250,000 shares in connection with the common stock offering, and up to 97,000,000 shares if all holders of our outstanding 2017 notes exercise their exchange option. The issuance of common stock in the Concurrent Transactions and the issuance of additional equity securities in connection with other transactions we may pursue could cause significant dilution to the holders of our common stock, and therefore will adversely affect holders who purchase tMEDS in this offering.

We may be unable to receive dividends from our subsidiary banks, and we may be required to contribute capital to those banks, which could adversely affect our liquidity and cause us to raise capital on terms that are unfavorable to us.

 

Our primary source of liquidity is dividends from our subsidiary banks, which are governed by certain rules and regulations of various state and federal banking regulatory agencies. Dividends from our subsidiaries in 2009 were significantly lower than those received in previous years and we expect dividends from our subsidiaries to continue to be lower than previous years in 2010. This may be the result of those banks’ financial condition and/or regulatory limitations they may face. During 2009, we have been required to provide capital to certain subsidiaries and expect to continue to do so in 2010. There is an increasing possibility that additional Synovus subsidiary banks may be directed by their regulators to increase their capital levels as a result of weakened financial condition, which may require that we contribute additional capital to these banks at a time when Synovus is not receiving a meaningful amount of dividend payments from its banks to offset those capital infusions. See Note 13 of Notes to Consolidated Financial Statements in our 2009 10-K. This could require that Synovus maintain a consolidated capital position that is beyond what we presently anticipate and in excess of the levels of capital used in the assumptions underlying our internal capital analysis. Further, as a holding company with obligations and expenses separate from our bank subsidiaries, and because many of our banks will be unable to make dividend payments to us, we must maintain a level of liquidity at our holding company that is sufficient to address those obligations and expenses. The maintenance of adequate liquidity at our holding company could limit our ability to make further capital investments in our bank subsidiaries, and which could adversely impact us. Even if we are successful in implementing the Charter Consolidation, we may not receive dividends from the resulting bank(s) in 2010 and may be required to provide additional capital to the resulting bank(s).

 

Our access to funds from our subsidiaries may become limited, thereby restricting our ability to make payments on our obligations or dividend payments on our capital stock.

 

Synovus is a separate and distinct legal entity from our banking and nonbanking subsidiaries. We therefore depend on dividends, distributions and other payments from our banking and nonbanking subsidiaries to fund dividend payments on our common stock and to fund all payments on our other obligations, including debt obligations. Our banking subsidiaries and certain other of our subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to us, and certain of our subsidiaries also are, or may become, subject to regulatory orders that would further limit their ability to pay dividends to us. See “— We presently are subject to, and in the future may become subject to additional, supervisory actions and/or enhanced regulation that could have a material adverse effect on our business, operations, flexibility, financial condition, and the value of our common stock.” Regulations on bank and financial holding companies may also restrict our ability to pay dividends on our capital stock. Regulatory action of that kind could impede access to funds we need to make payments on our obligations or dividend payments.

 

We may be unable to pay dividends on our common stock and other securities.

 

Although we have historically paid a quarterly cash dividend to the holders of our common stock, we currently pay dividends of only $0.01 per common share, and holders of our common stock are not legally entitled to receive dividends. The elimination of dividends paid on our

common stock could adversely affect the market price of our common stock. In addition, as a result of the memorandum of understanding described above, we are required to inform the Federal Reserve in advance of declaring or paying any future dividends on any of our securities, including our common stock and the TARP preferred stock and the Federal Reserve could decide at any time that paying any such dividends could be an unsafe or unsound banking practice. Any of these decisions could adversely affect the market price of our common stock and have adverse impacts on our business, reputation and ability to access the capital markets. For a discussion of current regulatory limits on our ability to pay dividends above $0.01 per common share, see “Part I — Item 1 — Business — Supervision, Regulation and Other Factors— Dividends” in our 2009 10-K and “We presently are subject to, and in the future may become subject to additional, supervisory actions and/or enhanced regulation that could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock” in this prospectus supplement and “Dividends” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2009 10-K.

 

Our articles of incorporation, our Rights Plan, and certain banking laws and regulations, may have an anti-takeover effect.

 

Provisions of our articles of incorporation, our Rights Plan and certain banking laws and regulations, including regulatory approval requirements, could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders. The combination of these provisions may inhibit a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of the tMEDS. See “Summary — Adoption of Rights Plan.”

 

The following table sets forth our consolidated capitalization as of March 31, 2010:

 

 

These “As adjusted” and “As further adjusted” amounts do not reflect the use of proceeds contemplated hereby. See “Use of proceeds”. This information should be read together with the selected consolidated financial and other data in this prospectus supplement as well as the audited and unaudited consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our 2009 10-K, which is incorporated by reference into this prospectus supplement.

 

The common stock offering is not contingent upon the completion of this offering, and this offering is not contingent upon the completion of the common stock offering, and there can be no assurance as to the actual aggregate principal amount of tMEDS that will be offered in this offering or as to the actual number of shares of common stock that will be issued in the common stock offering or as to the actual number of shares of common stock to be issued in the exchange offer for our 2017 notes.

 

 

 

We estimate that the net proceeds of this offering, after deducting underwriting discounts and commissions and the estimated expenses of this offering payable by us, will be approximately $290.1 million (or approximately $333.8 million if the underwriter exercises its over-allotment option in full). We intend to use the net proceeds of this offering, together with the net proceeds of its concurrent offering of common stock, for working capital and general corporate purposes.

 

Our common stock trades on the NYSE under the symbol “SNV.” On April 28, 2010, the last reported sale price of our common stock on the NYSE was $3.18 per share. The following table provides the high and low closing sales price per share during the periods indicated, as reported on the NYSE.

 

 

As of March 31, 2010, there were 489,843,709 shares of common stock issued and outstanding. As of March 31, 2010, there were approximately 22,251 shareholders of record.

 

The table below presents information regarding dividends on Synovus common stock declared during the years ended December 31, 2009 and 2008 and the quarter ended March 31, 2010.

 

 

Under the laws of the State of Georgia, we, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in our Articles of Incorporation, or unless, after payment of the dividend, we would not be able to pay our debts when they become due in the usual course of our business or our total assets would be less than the sum of our total liabilities. In addition, we are also subject to federal regulatory capital requirements that effectively limit the amount of cash dividends, if any that we may pay.

 

Under the Federal Reserve Board guidance reissued on February 24, 2009 the Federal Reserve may restrict our ability to pay dividends on any class of capital stock or any other Tier 1 capital instrument if we are not deemed to have a strong capital position. In addition, we may have to reduce or eliminate dividends if:

 

 

As a result of the memorandum of understanding described in “Risk Factors—Business risks—We presently are subject to, and in the future may become subject to additional, supervisory actions and/or enhanced regulation that could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock” in this prospectus supplement, we are required to inform the Federal Reserve Board in advance of declaring or paying any future dividends, and the Federal Reserve Board could decide at any time that

paying any common stock dividends could be an unsafe or unsound banking practice. In the current financial and economic environment, the Federal Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has in some cases discouraged payment unless both asset quality and capital are very strong.

 

Additionally, we are subject to contractual restrictions that limit our ability to pay dividends if there is an event of default under such contract. Finally, so long as any of our debt or equity securities issued to the Treasury under the TARP Capital Purchase Program are held by the Treasury, Synovus will not be permitted to increase the dividend rate on our common stock without approval from the Treasury.

 

The primary sources of funds for our payment of dividends to our shareholders are dividends and fees to us from our bank and nonbank affiliates. Various federal and state statutory provisions and regulations limit the amount of dividends that our subsidiary banks may pay. Under the regulations of the Georgia Department of Banking and Finance, a Georgia bank must have approval of the Georgia Department of Banking and Finance to pay cash dividends if, at the time of such payment:

 

 

For those of our subsidiary banks chartered in Alabama, Florida or Tennessee, the approval of the appropriate state banking department is generally required if the total of all dividends declared in any year would exceed the total of its net income for that year combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank’s retained net income for the current year plus retained net income for the preceding two years. The OCC and many other regulators have a policy, but not a requirement, that a dividend payment should not exceed net income to date in the current year.

 

The Federal Deposit Insurance Corporation Improvement Act generally prohibits a depository institution from making any capital distribution, including payment of a dividend, or paying any management fee to its holding company if the institution would thereafter be undercapitalized. In addition, federal and state banking regulations applicable to us and our bank subsidiaries require minimum levels of capital that limit the amounts available for payment of dividends.

 

Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management closely monitors trends and developments in credit quality, liquidity, financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends, all of which impact our capital position, and will continue to periodically review dividend levels to determine if they are appropriate in light of these factors. In the current environment, regulatory restrictions may limit Synovus’ ability to continue to pay dividends. Synovus must inform and consult with the Federal Reserve Board prior to declaring and paying

any future dividends, and the Federal Reserve Board could decide at any time that paying any common stock dividends could be an unsafe or unsound banking practice. See “Part I—Business—Supervision, Regulation and Other Factors—Dividends” in our 2009 10-K, “Risk Factors—Business risks—We presently are subject to, and in the future may become subject to, additional supervisory actions and/or enhanced regulation that could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock” and “Risk factors—Business risks—We may be unable to pay dividends on our common stock and other securities” in this prospectus supplement.

 

Synovus’ ability to pay dividends is partially dependent upon dividends and distributions that it receives from its banking and non-banking subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities. Dividends from subsidiaries in 2009 were, and Synovus expects that dividends from subsidiaries in 2010 will be, significantly lower than those received in previous years.

 

In addition to dividends paid on Synovus’ common stock, Synovus paid dividends of $43.8 million to the Treasury on its Series A Preferred Stock during 2009. There were no dividends paid during 2008 on the Series A Preferred Stock, which was issued on December 19, 2008.

 

Synovus’ participation in the Capital Purchase Program limits its ability to increase the dividend on Synovus’ common stock (without the consent of the Treasury) until the earlier of December 19, 2011 or until the Series A Preferred Stock has been redeemed in whole or until the Treasury has transferred all of the Series A Preferred Stock to a third party. In addition, Synovus must seek the Federal Reserve’s permission to increase the quarterly dividend on its common stock above $0.01 per common share. Synovus is presently subject to, and in the future may become subject to, additional supervisory actions and/or enhanced regulation that could have a material negative effect on business, operating flexibility, financial condition, and the value of Synovus common stock. See “Part I—Business—Supervision, Regulation and Other Factors—Dividends” in our 2009 10-K, “Risk factors—Business risks—We presently are subject to, and in the future may become subject to, additional supervisory actions and/or enhanced regulation that could have a material negative effect on our business, operating flexibility, financial condition and the value of our common stock” and “Risk factors—Business risks—We may be unable to pay dividends on our common stock and other securities” in this prospectus supplement.

 

Synovus is offering 12,000,000 tMEDS (or 13,800,000 tMEDS if the underwriter exercises its over-allotment option in full), each with a stated amount of $25. Each tMEDS is a unit composed of a prepaid stock purchase contract (a “purchase contract”) and a junior subordinated amortizing note issued by Synovus (“amortizing note”). The following summary of the terms of the tMEDS, the summary of the terms of the purchase contracts set forth under the caption “Description of the purchase contracts” and the summary of the terms of the amortizing notes set forth under the caption “Description of the amortizing notes” in this prospectus supplement contain a description of all of the material terms of the tMEDS and their components but are not complete. Synovus refers you to:

 

 

This form of junior subordinated debt indenture has been, and the related supplemental indenture for the amortizing notes and the form of purchase contract agreement will be, filed as exhibits to the registration statement of which this prospectus forms a part. Whenever particular sections or defined terms are referred to, such sections or defined terms are incorporated herein by reference.

 

Components of the tMEDS

 

Each tMEDS offered is a unit composed of:

 

 

Unless previously settled at your option as described in “Description of the purchase contracts — early settlement” or “Description of the purchase contracts — Early settlement upon a fundamental change,” Synovus will deliver to you not more than 9.0909 shares and not less than 7.5758 shares of Synovus common stock, par value $1.00 per share (the “common stock”) on the mandatory settlement date, based upon the applicable settlement rate (as defined below), which is subject to adjustment as described herein, and the applicable market value (as defined below) of Synovus common stock, as described below under “Description of the purchase contracts — Delivery of common stock.”

Each amortizing note will have an initial principal amount of $5.098197. On each February 15, May 15, August 15, and November 15, commencing on August 15, 2010, Synovus will pay equal quarterly installments of $0.515625 on each amortizing note. Each installment will constitute a payment of interest (at a rate of 13.00% per annum) and a partial repayment of principal on the amortizing note, allocated as set forth on the amortization schedule set forth under “Description of the amortizing notes — Amortization schedule.” Synovus will have the right to defer installment payments at any time and from time to time under the circumstances, and subject to the conditions, described under “Description of the amortizing notes — Option to extend installment payment period” so long as such deferral period does not extend beyond May 15, 2015.

 

The stated amount of each tMEDS must be allocated between the amortizing note and the purchase contract based upon their relative fair market values. Synovus has determined that the fair market value of each amortizing note is $5.098197 and the fair market value of each purchase contract is $19.901803. This position will be binding upon each holder (but not on the Internal Revenue Service) unless such holder explicitly discloses a contrary position on a statement attached to such holder’s timely filed U.S. federal income tax return for the taxable year in which it acquires a tMEDS.

 

Separating and recreating tMEDS

 

Upon the conditions and under the circumstances described below, a holder of a tMEDS will have the right to separate a tMEDS into its component parts, and a holder of a separate purchase contract and a separate amortizing note will have the right to recreate a tMEDS.

 

Separating tMEDS

 

At initial issuance, the purchase contracts and amortizing notes may be purchased and transferred only as tMEDS and will trade under the CUSIP number for the tMEDS.

 

On any business day during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the tMEDS to, but excluding, the third business day immediately preceding the mandatory settlement date, you will have the right to separate your tMEDS into its constituent purchase contract and amortizing note (which Synovus refers to as a “separate purchase contract” and a “separate amortizing note,” respectively, and which will thereafter trade under their respective CUSIP numbers), in which case that tMEDS will cease to exist.

 

Your tMEDS, purchase contract and amortizing note will be represented by global securities registered in the name of a nominee of The Depository Trust Company (“DTC”). You will not be entitled to receive definitive physical certificates for your tMEDS, purchase contracts or amortizing notes, except under the limited circumstances described under “Book-entry procedures and settlement — Definitive securities and paying agent.” Beneficial interests in a tMEDS and, after separation, the separate purchase contract and separate amortizing note will be shown on and transfers will be effected through direct or indirect participants in DTC. In order to separate your tMEDS into its component parts, you must deliver written instruction to the broker or other direct or indirect participant through which you hold an interest in your tMEDS (your “participant”) to notify DTC through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) System of your election to separate the tMEDS.

Separate purchase contracts and separate amortizing notes will be transferable independently from each other.

 

Recreating tMEDS

 

If you beneficially own a separate purchase contract and a separate amortizing note, you may recreate a tMEDS by delivering written instruction to your participant to notify DTC through its DWAC System of your desire to recreate the tMEDS.

 

Listing of securities

 

Synovus will apply to list the tMEDS on the New York Stock Exchange under the symbol “SNV PR T.” If approved for listing, Synovus expects that the tMEDS will begin trading on the New York Stock Exchange within 30 days after the tMEDS are first issued. In addition, we have been informed by the underwriter that it intends to make a market in the tMEDS after the offering is completed. However, listing the tMEDS on the New York Stock Exchange does not guarantee that a trading market will develop and the underwriter may cease its market-making at any time without notice. Even if a trading market does develop, the depth or duration of that market or the ability of holders to sell their tMEDS.

 

Synovus will not initially apply to list the separate purchase contracts or the separate amortizing notes on any securities exchange or automated inter-dealer quotation system. If (i) a sufficient number of tMEDS are separated into separate purchase contracts and separate amortizing notes and traded separately such that applicable listing requirements are met and (ii) the holders of such separate purchase contracts and separate amortizing notes request that Synovus list such separate purchase contracts and separate amortizing notes, Synovus will endeavor to list such separate purchase contracts and separate amortizing notes on an exchange of Synovus’ choosing (which may or may not be the New York Stock Exchange) subject to applicable listing requirements.

 

Synovus’ common stock is listed on the New York Stock Exchange under the symbol “SNV.” Synovus will apply to have the shares of Synovus common stock deliverable upon settlement of all purchase contracts approved for listing on the New York Stock Exchange.

 

Title

 

Synovus and the purchase contract agent may treat the registered owner of any tMEDS or separate purchase contract as the absolute owner of the tMEDS or separate purchase contract for the purpose of settling the related purchase contracts and for all other purposes.

 

Replacement of tMEDS certificates

 

In the event that physical certificates evidencing the tMEDS have been issued, any mutilated tMEDS certificate will be replaced by Synovus at the expense of the holder upon surrender of the certificate to the purchase contract agent. tMEDS certificates that become destroyed, lost or stolen will be replaced by Synovus at the expense of the holder upon delivery to Synovus and the purchase contract agent of evidence of their destruction, loss or theft satisfactory to Synovus and the purchase contract agent. In the case of a destroyed, lost or stolen tMEDS certificate, an indemnity satisfactory to the purchase contract agent and Synovus may be

required at the expense of the registered holder of the tMEDS before a replacement will be issued.

 

Notwithstanding the foregoing, Synovus will not be obligated to replace any tMEDS certificates on or after the business day immediately preceding the mandatory settlement date or any early settlement date. In those circumstances, the purchase contract agreement will provide that, in lieu of the delivery of a replacement tMEDS certificate, the purchase contract agent, upon delivery of the evidence and indemnity described above, will deliver the shares of common stock issuable pursuant to the purchase contracts included in the tMEDS evidenced by the certificate.

 

Miscellaneous

 

The purchase contract agreement will provide that Synovus will pay all fees and expenses related to the offering of the tMEDS and the enforcement by the purchase contract agent of the rights of the holders of the tMEDS or the separate purchase contracts, other than expenses (including legal fees) of the underwriter.

 

Should you elect to separate or recreate tMEDS, you will be responsible for any fees or expenses payable in connection with that separation or recreation and Synovus will have no liability therefor.

 

Each purchase contract, which initially forms a part of a tMEDS and which, at the holder’s option after the date of initial issuance of the tMEDS, can be transferred separately from the amortizing note also forming a part of a tMEDS, will be issued pursuant to the terms and provisions of the purchase contract agreement. The following summary of the terms of the purchase contracts contains a description of all of the material terms of the purchase contracts but is not complete and is subject to, and is qualified in its entirety reference to, all of the provisions of the purchase contract agreement, including the definitions in the purchase contract agreement of certain terms.

 

As used in this section, the term “Synovus” means Synovus Financial Corp. and does not include any of its subsidiaries.

 

Delivery of common stock

 

Unless previously settled early at your option, for each purchase contract Synovus will deliver to you on May 15, 2013 (the “mandatory settlement date”) a number of shares of its common stock calculated as described below. The settlement of the purchase contracts on the mandatory settlement date is not deferrable. The number of shares of Synovus common stock issuable upon settlement of each purchase contract (the “settlement rate”) will be determined as follows:

 

 

The maximum settlement rate, minimum settlement rate and the applicable market value are each subject to adjustment as described under “— Adjustments to the fixed settlement rates” below. Each of the minimum settlement rate and the maximum settlement rate is referred to as a “fixed settlement rate.”

 

For illustrative purposes only, the following table shows the number of shares of common stock issuable upon settlement of a purchase contract at the assumed applicable market values, based on the reference price of $2.75 and the threshold appreciation price of $3.30. The threshold appreciation price represents an appreciation of 20% above the reference price of $2.75. The table assumes that there will be no adjustments to the settlement rate described under “— Adjustments to the fixed settlement rates” below and that the holders do not elect to settle early as described under “— Early settlement” or “— Early settlement upon a fundamental change” below. Synovus cannot assure you that the actual applicable market value will be

within the assumed range set forth below. The reference price is the public offering price of Synovus common stock in the concurrent common stock offering.

 

A holder of a tMEDS or a separate purchase contract, as applicable, will receive on the mandatory settlement date the following numbers of shares of common stock at the following assumed applicable market values:

 

 

As the above table illustrates, if, on the mandatory settlement date, the applicable market value is greater than or equal to the threshold appreciation price of $3.30, Synovus would be obligated to deliver 7.5758 shares of common stock for each purchase contract. As a result, you would receive only approximately 83.3% of the value of the shares of Synovus common stock that you would have received had you purchased $25 worth of shares of Synovus common stock at the public offering price in the concurrent public offering.

 

If, on the mandatory settlement date, the applicable market value is less than the threshold appreciation price of $3.30 but greater than the reference price of $2.75, Synovus would be obligated to deliver a number of shares of its common stock on the mandatory settlement date equal to $25, divided by the applicable market value. As a result, Synovus would retain all appreciation in the market value of its common stock underlying each purchase contract.

 

If, on the mandatory settlement date, the applicable market value is less than or equal to the reference price of $2.75, Synovus would be obligated to deliver upon settlement of the purchase contract 9.0909 shares of common stock for each purchase contract, regardless of the market price of Synovus common stock. As a result, the holder would realize the entire loss on the decline in market value of the common stock underlying each purchase contract since the initial issuance date of the tMEDS.

Because the applicable market value of the common stock is determined over the 20 trading days (as defined below) ending on the third trading day immediately preceding the mandatory settlement date, the number of shares of common stock delivered for each purchase contract may be greater than or less than the number that would have been delivered based on the closing price of the common stock on the last trading day in such period. In addition, you will bear the risk of fluctuations in the market price of the shares of common stock deliverable upon settlement of the purchase contracts between the end of such period and the date such shares are delivered.

 

The term “applicable market value” means the average of the daily VWAPs of Synovus common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory settlement date.

 

The term “daily VWAP” of Synovus common stock means, on any date of determination, the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page SNV US <equity> AQR (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading on the relevant trading day until the scheduled close of trading on the relevant trading day (or if such volume-weighted average price is unavailable, the market price of one share of Synovus common stock on such trading day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by Synovus.

 

The term “trading day” means a day on which:

 

 

If Synovus’ common stock (or other security for which a daily VWAP must be determined) is not listed or admitted for trading as described in the immediately preceding bullet, “trading day” means a “business day.”

 

A “market disruption event” means (i) a failure by the primary United States national or regional securities exchange or market on which Synovus common stock is listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any scheduled trading day for Synovus common stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in Synovus common stock or in any options, contracts or future contracts relating to Synovus common stock.

 

On the mandatory settlement date, Synovus common stock will be issued and delivered to you or your designee, upon (i) surrender of certificates representing the purchase contracts, if such purchase contracts are held in certificated form, and (ii) payment by you of any transfer or similar taxes payable in connection with the issuance of Synovus common stock to any person other than you. As long as the purchase contracts are evidenced by one or more global

purchase contract certificates deposited with DTC, procedures for settlement will be governed by standing arrangements between DTC and the purchase contract agent.

 

Prior to the settlement of any purchase contract, the shares of common stock underlying each purchase contract will not be outstanding, and the holder of such purchase contract will not have any voting rights, rights to dividends or other distributions or other rights of a holder of Synovus common stock by virtue of holding such purchase contract.

 

Early settlement

 

On any trading day prior to the third business day immediately preceding the mandatory settlement date, you, as a holder of tMEDS or a holder of a separate purchase contract, may elect to settle your purchase contracts early, in whole or in part, and receive shares of common stock, at the “early settlement rate,” subject to adjustment as described below under “— Adjustments to the fixed settlement rates.” The early settlement rate is equal to the minimum settlement rate, unless you elect to settle your purchase contracts early in connection with a fundamental change, in which case you will receive upon settlement of your purchase contracts a number of shares of Synovus common stock based on the “fundamental change early settlement rate” as described under “— Early settlement upon a fundamental change.”

 

Your right to receive common stock upon early settlement of your purchase contract is subject to (i) delivery of a written and signed notice of election (an “early settlement notice”) to the purchase contract agent electing early settlement of your purchase contract, (ii) surrendering the certificates representing the purchase contract, if such purchase contract or the tMEDS that includes such purchase contract is held in certificated form and (iii) payment by you of any transfer or similar taxes payable in connection with the issuance of Synovus common stock to any person other than you. As long as the purchase contracts or the tMEDS are evidenced by one or more global certificates deposited with DTC, procedures for early settlement will be governed by standing arrangements between DTC and the purchase contract agent. Upon surrender of the purchase contract or the related tMEDS, you will receive the applicable number of shares of common stock (and cash in lieu of any fractional share) as promptly as practicable, but no later than the third business day following the early settlement date. Upon early settlement of the purchase contract component of a tMEDS, the corresponding amortizing note will remain outstanding and, beneficially owned by, or registered in the name of, the holder thereof.

 

If you comply with the requirements for effecting early settlement of your purchase contracts earlier than 5:00 p.m., New York City time, on any business day, then that day will be considered the “early settlement date.” If you comply with such requirements on or after 5:00 p.m., New York City time, on any business day or at any time on a day that is not a business day, then the next business day will be considered the “early settlement date.”

 

Early settlement upon a fundamental change

 

If a “fundamental change” occurs and you elect to settle your purchase contracts early in connection with such fundamental change, you will receive a number of shares of Synovus common stock (or cash, securities or other property) based on the “fundamental change early settlement rate,” as described below. An early settlement will be deemed for these purposes to be “in connection with” such fundamental change if you deliver your early settlement notice to the purchase contract agent, and otherwise satisfy the requirements for effecting early

settlement of your purchase contracts, during the period beginning on, and including, the effective date of the fundamental change and ending on, and including, the 30th business day thereafter (or, if earlier, the third business day immediately preceding the mandatory settlement date) (the “fundamental change early settlement date”). Synovus refers to this right as the “fundamental change early settlement right.”

 

Synovus will provide the purchase contract agent and the holders of tMEDS and separate purchase contracts with a notice of a fundamental change within five business days after its occurrence, issue a press release announcing such effective date and post such press release on its website. The notice will also set forth, among other things, (i) the applicable fundamental change early settlement rate, (ii) the kind and amount of the cash, securities and other consideration receivable by the holder upon settlement and (iii) the deadline by which each holder’s fundamental change early settlement right must be exercised.

 

A “fundamental change” will be deemed to occur if any of the following occurs:

 

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Synovus common equity representing more than 50% of the voting power of Synovus common stock; or

 

(b) consummation of any consolidation or merger of Synovus or similar transaction with, or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the property and assets of Synovus to, any person other than one of Synovus’ subsidiaries, in each case pursuant to which Synovus’ common stock will be converted into cash, securities or other property;

 

provided, however, that a fundamental change will not be deemed to have occurred if at least 90% of the consideration received by holders of Synovus common stock, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights, in the transaction or transactions consists of shares of common stock or depositary receipts in respect of common stock that are traded on a U.S. national securities exchange or that will be so traded when issued or exchanged in connection with such transaction or transactions.

 

The “fundamental change early settlement rate” will be determined by reference to the table below, based on the date on which the fundamental change occurs or becomes effective (the “effective date”) and the “stock price” in the fundamental change, which will be:

 

 

The stock prices set forth in the first column of the table below will be adjusted as of any date on which any fixed settlement rate is otherwise adjusted. The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the minimum settlement rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of which is the minimum settlement rate as so adjusted. The number of shares in the table below will be adjusted in the same

manner as the fixed settlement rates as set forth under “— Adjustments to the fixed settlement rates.”

 

The following table sets forth the fundamental change early settlement rate per purchase contract for each stock price and effective date set forth below:

 

 

The exact stock prices and effective dates may not be set forth in the table above, in which case:

 

 

The maximum number of shares of Synovus common stock deliverable under a purchase contract is 9.0909, subject to adjustment in the same manner as the fixed settlement rates as set forth under “— Adjustments to the fixed settlement rates.”

 

Synovus’ obligation to settle the purchase contracts at the fundamental change early settlement rate could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness of economic remedies.

 

If you exercise the fundamental change early settlement right following the effective date of a fundamental change described in clause (b) of the definition thereof, Synovus will deliver to you, for each purchase contract being settled early, the kind and amount of securities, cash or other property that you would have been entitled to receive in such fundamental change transaction as a holder of a number of shares of Synovus common stock equal to the fundamental change settlement rate. If such fundamental change causes Synovus common stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of shareholder election) and you exercise the fundamental change early settlement right, Synovus will deliver to you the types and amounts of consideration as are proportional to the types and amounts of consideration received by the holders of Synovus common stock that affirmatively make such an election. Synovus will deliver the shares of Synovus common stock, securities, cash or other property payable as a result of your exercise of the fundamental change early settlement right on the third business day following the fundamental change early settlement date.

 

If you do not elect to exercise your fundamental change early settlement right, your purchase contracts will remain outstanding and will be subject to normal settlement on any subsequent early settlement date or the mandatory settlement date, including, if applicable, the provisions set forth under “— Adjustments to the fixed settlement rates” regarding the occurrence of a business combination.

 

Adjustments to the fixed settlement rates

 

Each fixed settlement rate will be adjusted, without duplication, if certain events occur:

 

(1) the issuance of Synovus common stock as a dividend or distribution to all holders of Synovus common stock, or a subdivision or combination of Synovus common stock, in which event each fixed settlement rate will be adjusted based on the following formula:

 

SR₁ = SR₀ × (OS₁ ¸ OS₀)

 

where,

 

 

 

 

Any adjustment made under this clause (1) shall become effective immediately after the close of business on the record date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as the case may be. If any dividend or distribution of the type described in this clause (1) is declared but not so paid or made, each fixed settlement rate shall be immediately readjusted, effective as of the date the Synovus board of directors determines not to pay such dividend or distribution, to the fixed settlement rate that would then be in effect if such dividend or distribution had not been declared.

 

(2) the issuance to all holders of Synovus common stock of rights, options or warrants entitling them for a period expiring 60 days or less from the date of issuance of such rights, options or warrants to subscribe for or purchase shares of Synovus common stock at less than the “current market price” (as defined below) per share of Synovus common stock as of the announcement date for such issuance, in which event each fixed settlement rate will be adjusted based on the following formula:

 

SR₁ = SR₀ × (OS₀ + X) ¸ (OS₀ + Y)

 

where,

 

SR₀ = the fixed settlement rate in effect immediately prior to the close of business on the record date for such issuance;

 

SR₁ = the fixed settlement rate in effect immediately after the close of business on such record date;

 

OS₀ = the number of shares of Synovus common stock outstanding immediately prior to the close of business on such record date;

 

X = the total number of shares of Synovus common stock issuable pursuant to such rights, options or warrants; and

 

Y = the aggregate price payable to exercise such rights, options or warrants, divided by the current market price per share of Synovus common stock as of the announcement date for such issuance.

 

Any increase made under this clause (2) will be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the close of business on the record date for such issuance. To the extent that shares of common stock are not delivered after the expiration of such rights, options or warrants, each fixed settlement rate shall be decreased, effective as of the date of such expiration, to the fixed settlement rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of common stock actually delivered. If such rights, options or warrants are not so issued, each fixed settlement rate shall be decreased, effective as of the date the Synovus board of directors determines not

to make such issuance, to the fixed settlement rate that would then be in effect if such record date for such issuance had not occurred.

 

In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the common stock at less than such current market price per share of Synovus common stock as of the announcement date for such issuance, and in determining the aggregate price payable to exercise such rights, options or warrants, there shall be taken into account any consideration received by Synovus for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Synovus board of directors.

 

(3) the dividend or other distribution to all holders of Synovus common stock of shares of Synovus capital stock (other than common stock), evidences of Synovus indebtedness, Synovus assets or rights to acquire Synovus capital stock, Synovus indebtedness or Synovus assets (excluding any dividend, distribution or issuance as to which an adjustment was made pursuant to clauses (1) or (2) above, (4) below or the provisions of this clause (3) relating to spin-offs), in which event each fixed settlement rate will be adjusted based on the following formula:

 

SR₁ = SR₀ × SP₀ ¸ (SP₀ — FMV)

 

where,

 

 

 

 

Any increase made under the portion of this clause (3) above will become effective immediately after the close of business on the record date for such dividend or distribution. If such distribution is not so paid or made, each fixed settlement rate shall be decreased, effective as of the date the Synovus board of directors determines not to pay the dividend or distribution, to the fixed settlement rate that would then be in effect if such dividend or distribution had not been declared.

 

Notwithstanding the foregoing, if the transaction that gives rise to an adjustment pursuant to this clause (3) is one pursuant to which the payment of a dividend or other distribution on Synovus common stock consists of shares of capital stock of, or similar equity interests in, a subsidiary or other business unit of ours, (i.e., a spin-off) that are, or, when issued, will be, traded on a U.S. national securities exchange, then each fixed settlement rate will instead be adjusted based on the following formula:

 

SR₁ = SR₀ × (FMV₀ + MP₀) ¸ MP₀

 

where,