SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended 1995 or
----
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________to___________
Commission file number 1-10312
SYNOVUS FINANCIAL CORP.
(Exact Name of Registrant as specified in its charter)
Georgia 58-1134883
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Arsenal Place, 901 Front Avenue
Suite 301, Columbus, Georgia 31901
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (706) 649-2387
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, $1.00 Par Value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section l2(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-------- --------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of February 23, 1996, 77,264,014 (which number will be 115,896,021
after adjustment to reflect the three-for-two stock split which will be effected
in the form of a 50% stock dividend to be issued on April 8, 1996) shares of the
$1.00 par value common stock of Synovus Financial Corp. were outstanding, and
the aggregate market value of the shares of $1.00 par value common stock of
Synovus Financial Corp. held by non-affiliates was approximately $1,544,000,000
(based upon the closing per share price of such stock on said date).
Portions of the 1995 Annual Report to Shareholders of Registrant are
incorporated in Parts I, II, III and IV of this report. Portions of the Proxy
Statement of Registrant dated March 8, 1996 are incorporated in Part III of this
report.
Registrant's Documents Incorporated by Reference
Part Number and Item
Document Incorporated Number of Form 10-K Into
by Reference Which Incorporated
- --------------------- -------------------------
Pages F-10, F-20 through Part I, Item 1, Business
F-25, and F-28 through F-48
of Registrant's 1995 Annual Report
to Shareholders
Pages F-16, F-17, F-20 and F-21 Part I, Item 2, Properties
of Registrant's 1995
Annual Report to Shareholders
Pages F-20 and F-21 of Part I, Item 3, Legal
Registrant's 1995 Annual Report Proceedings
to Shareholders
Pages F-43 through F-46 Part II, Item 5, Market
of Registrant's 1995 Annual for Registrant's Common
Report to Shareholders Equity and Related
Stockholder Matters
Page F-28 of Registrant's Part II, Item 6,
1995 Annual Report to Selected
Shareholders Financial Data
Pages F-28 through F-48 Part II, Item 7,
of Registrant's Management's Discussion
1995 Annual Report to and Analysis of Financial
Shareholders Condition and Results of
Operations
Pages F-2 through F-26, and F-48 Part II, Item 8,
of Registrant's 1995 Financial Statements and
Annual Report to Shareholders Supplementary Data
Pages 3 through 6, 8, Part III, Item 10,
9, and 26 of Registrant's Proxy Directors and Executive
Statement in connection with Officers of the Registrant
its Annual Shareholders' Meeting
to be held April 25, 1996
Pages 11 through 15, and Part III, Item 11,
19 and 20 of Registrant's Proxy Executive Compensation
Statement in connection with its
Annual Shareholders' Meeting
to be held April 25, 1996
Pages 6, 7, and 21 through Part III, Item 12,
24 of Registrant's Proxy Statement Security Ownership of
in connection with its Annual Certain Beneficial Owners
Shareholders' Meeting to be held and Management
April 25, 1996
Pages 19 through 26 of Registrant's Part III, Item 13,
Proxy Statement in connection with Certain Relationships
its Annual Shareholders' Meeting to and Related Transactions
be held April 25, 1996
Pages F-2 through F-26 Part IV, Item 14,
of Registrant's 1995 Exhibits, Financial Statement
Annual Report to Shareholders Schedules and Reports on
Form 8-K
Table of Contents
Item No. Caption Page No.
Part I
1. Business
2. Properties
3. Legal Proceedings
4. Submission of Matters to a Vote of
Security Holders
Part II
5. Market for Registrant's Common Equity
and Related Stockholder Matters
6. Selected Financial Data
7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
8. Financial Statements and Supplementary
Data
9. Changes In And Disagreements With
Accountants on Accounting and Financial Disclosure
Part III
10. Directors and Executive Officers of the Registrant
11. Executive Compensation
12. Security Ownership of Certain
Beneficial Owners and Management
13. Certain Relationships and Related
Transactions
Part IV
14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
Item 1. Business.
Business and Business Segments.
Synovus Financial Corp.(R) ("Synovus(R)") is a $7.9 billion asset
multi-financial services company which is a registered bank holding company as
defined under federal law in the Bank Holding Company Act of 1956, as amended
(the "BHCA"), and under the bank holding company laws of the State of Georgia
(the "Georgia Act"). As a bank holding company, Synovus is subject to
supervision and regulation by the Board of Governors of the Federal Reserve
System ("Board") and the Department of Banking and Finance of the State of
Georgia ("Georgia Banking Department"). Synovus conducts a broad range of
financial services through its banking and bank-related subsidiaries and
affiliates.
Synovus is engaged in two principal business segments: banking (which
encompasses commercial banking, trust services, mortgage banking, credit card
banking and certain securities brokerage operations), and bankcard data
processing. While each of these activities is directly related to the provision
of financial services, their separation for accounting purposes is appropriate
under Statement of Financial Accounting Standards No. 14 and the rules of the
Securities and Exchange Commission ("SEC"). See Note 11 of Notes to Consolidated
Financial Statements on page F-22 of Synovus' 1995 Annual Report to Shareholders
which is specifically incorporated herein by reference.
Banking and Bank-Related Subsidiaries and Services.
Synovus currently has thirty-four wholly-owned first and second tier
commercial banking subsidiaries located in four states. Of the 34 bank
subsidiaries, 21 are located in Georgia with approximately $4.6 billion in
assets, seven are located in Alabama with approximately $1.6 billion in assets,
five are located in Florida with approximately $550,000 in assets and one is
located in South Carolina with approximately $1.2 billion in assets. Synovus'
commercial banking subsidiaries are hereinafter sometimes collectively referred
to as the "Banks."
The Banks offer a broad range of commercial banking services, including
accepting customary types of demand and savings deposits, making individual,
consumer, commercial, installment, first mortgage and second mortgage loans,
offering money transfers, safe deposit services, trust, investment, IRA, Keogh
and corporate employee benefit and other fiduciary services, correspondent
banking services, automated banking and electronic switch services, automated
fund transfers and bank credit card services, including MasterCard and Visa
services. All of the Banks' commercial banking activities are conducted within
the United States.
- ------------------
Synovus Financial Corp., Synovus, Synovus Securities, Inc., Columbus
Bank and Trust Company and CB&T are federally registered service marks of
Synovus Financial Corp. TSYS and TS2 are federally registered service marks and
Total System Services, Inc. is a service mark of Total System Services, Inc.
1
Synovus owns the federally registered service marks of Synovus
Financial Corp., Synovus, the stylized S logo and Synovus Securities, Inc.
Synovus also owns other service marks. In the opinion of management of Synovus,
the loss of the right to use such marks would not materially affect Synovus'
business.
The bank-related subsidiaries of Synovus are: (1) Synovus Securities,
Inc.(R), Columbus, Georgia ("Synovus Securities"), which specializes in
professional portfolio management for fixed-income securities, the execution of
securities transactions as a broker/dealer and the provision of individual
investment advice on equity and other securities; (2) Synovus Trust Company,
Columbus, Georgia, one of the southeast's largest providers of trust services;
(3) Synovus Mortgage Corp., Birmingham, Alabama, which offers mortgage
servicing; and (4) Synovus Data Corp., Columbus, Georgia, which provides general
bank data processing services to Synovus and its banking subsidiaries.
Bankcard Data Processing and Other Affiliates and Services.
Business. Established in 1983 as an outgrowth of an on-line accounting
and bankcard data processing system developed for Synovus' wholly owned
subsidiary, Columbus Bank and Trust Company(R) ("CB&T(R)"), Total System
Services, Inc.(sm) ("TSYS(R)") is now one of the world's largest credit, debit
and private-label card processing companies. Based in Columbus, Georgia, and
traded on the New York Stock Exchange under the symbol "TSS," TSYS provides a
comprehensive on-line system of data processing services marketed as THE TOTAL
SYSTEM(sm), servicing issuing and acquiring institutions throughout the United
States, Puerto Rico, Canada and Mexico, representing more than 63 million
cardholder and over 600,000 merchant accounts. TSYS provides card production,
domestic and international clearing, statement preparation, customer service
support, merchant accounting, merchant services and management support. Synovus
owns 80.8 percent of TSYS.
TSYS has four wholly-owned subsidiaries: (1) Columbus Depot Equipment
Company(sm) ("CDEC(sm)"), which sells and leases computer related equipment
associated with TSYS' bankcard data processing services and bank data processing
services provided by an affiliate; (2) Mailtek, Inc.(sm) ("Mailtek"), which
provides full-service direct mail production services and offers data
processing, list management, laser printing, computer output microfiche, card
embossing, encoding and mailing services; (3) Lincoln Marketing, Inc.(sm)
("LMI"), which provides correspondence, fulfillment, telemarketing, data
processing and mailing services; and (4) Columbus Productions, Inc.(sm) ("CPI"),
which provides full-service commercial printing and related services. TSYS also
holds a 49% equity interest in a Mexican company named Total System Services de
Mexico, S.A. de C.V., which provides credit card related processing services to
Mexican banks.
Service Marks. TSYS owns a family of service marks containing the
name Total System, and the federally registered service marks TSYS and TS2, to
which TSYS believes strong customer identification attaches. TSYS also owns
service marks
2
associated with its subsidiaries. Management does not believe the loss of such
marks would have a material impact on the business of TSYS.
Major Customers. A significant amount of TSYS' revenues are derived
from certain major customers who are processed under long-term contracts. For
the year ended December 31, 1995, AT&T Universal Card Services Corp. and
NationsBank accounted for 21.4% and 12.4%, respectively, of TSYS' total
revenues. As a result, the loss of one of TSYS' major customers could have a
material adverse effect on
TSYS' results of operations.
See "Non-Interest Income" under the "Financial Review" Section on pages
F-32 and F-33, "Non-Interest Expense" under the "Financial Review" Section on
pages F-33 and F-34, and Note 9 of Notes to Consolidated Financial Statements on
pages F-20 and F-21 of Synovus' 1995 Annual Report to Shareholders which are
specifically incorporated herein by reference.
Acquisitions Consummated During 1995.
See Note 1 of Notes to Consolidated Financial Statements on page F-10
and "Acquisitions" under the "Financial Review" Section on page F-29 of Synovus'
1995 Annual Report to Shareholders which are specifically incorporated herein by
reference for a detailed description of the acquisitions consummated by Synovus
during 1995.
Supervision, Regulation and Other Factors.
Synovus is a registered multi-bank holding company, subject to
supervision and regulation by the Board under the BHCA, and by the Georgia
Banking Department under the Georgia Act. As a bank holding company, Synovus is
required to furnish the Board and the Georgia Banking Department with annual
reports of the financial condition, management and inter-company relationships
of Synovus and its subsidiaries and affiliates at the end of each fiscal year,
and such additional information as the Board and the Georgia Banking Department
may require from time to time. The Board and the Georgia Banking Department also
make examinations of Synovus and certain of its subsidiaries and affiliates.
The BHCA and the Georgia Act require each bank holding company to
obtain the prior approval of the Board and the Georgia Banking Department
before: (i) it may acquire direct or indirect ownership or control of any voting
shares of any bank, if, after such acquisition, such bank holding company will,
directly or indirectly, own or control more than 5% of the voting shares of such
bank; (ii) it or any of its subsidiaries, other than a bank, may acquire all or
substantially all of the assets of a bank; or (iii) it may merge or consolidate
with any other bank holding company. In addition, under the Georgia Act, it is
unlawful for any bank holding company to acquire, direct or indirect, ownership
or control of more than 5% of the voting shares of any presently operating bank,
unless such bank has been in existence and continuously operating as a bank for
a period of five years or more prior to the date
3
of making application to the Georgia Banking Department for approval of said
acquisition.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 ("Interstate Banking Act"), effective September 29, 1995, bank holding
companies were permitted to acquire banks in any state. Under the Interstate
Banking Act, effective June 1, 1997, banks may merge or consolidate across state
lines, unless both of the states involved either authorize such merger or
consolidation at an earlier date or either of the states involved elect to
prohibit such merger or consolidation prior to May 31, 1997. Finally, under the
Interstate Banking Act, states may authorize banks from other states to engage
in branching across state lines.
In addition, a bank holding company is, with certain exceptions,
prohibited by the BHCA from engaging in, or acquiring or retaining direct or
indirect control of the voting shares of any company engaged in non-banking
activities. One of the principal exceptions to this prohibition is for
activities found by the Board to be so closely related to banking, or managing
or controlling banks, as to be a proper incident thereto.
Federal law also imposes certain restrictions on extensions of credit
to bank holding companies by its Federal Deposit Insurance Corporation ("FDIC")
insured subsidiary banks, or, with certain exceptions, to other affiliates. In
addition, and with certain exceptions, Section 106 of the 1970 Amendments to the
BHCA and the Board's regulations, generally prohibit a bank holding company and
its banking and nonbanking subsidiaries from tying a product or service to
another product or service offered by the bank or any of its bank or nonbank
affiliates.
The Board has issued guidelines for the implementation of risk-based
capital requirements by U.S. banks and bank holding companies. See "Capital
Resources and Dividends" under the "Financial Review" Section on pages F-43
through F-46 of Synovus' 1995 Annual Report to Shareholders which is
specifically incorporated herein by reference.
Under the Board's current policy, Synovus is expected to act as a
source of financial strength to its subsidiary banks and to commit resources to
support its subsidiary banks in circumstances when it might not do so absent
such policy. In addition, any capital loans by Synovus to any of its subsidiary
banks would also be subordinate in right of payment to depositors and to certain
other indebtedness of such bank.
As a result of the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989 in connection with:
(i) the default of a commonly controlled FDIC insured depository institution; or
(ii) any assistance provided by the FDIC to a commonly controlled FDIC insured
depository institution in danger of default. "Default" is defined generally as
the appointment of a conservator or receiver and "in
4
danger of default" is defined generally as the existence of certain conditions
indicating that a "default" is likely to occur in the absence of regulatory
assistance. All of Synovus' subsidiary banks are FDIC insured depository
institutions within the meaning of FIRREA.
The principal source of funds for the payment of dividends by Synovus
is dividends paid to it by its subsidiary banks. Various federal and state
statutory provisions limit the assessment of dividends that may be paid to
Synovus by its subsidiary banks. See "Parent Company" under the "Financial
Review" Section on page F-47, and Note 12 of Notes to Consolidated Financial
Statements on pages F-23 through F-25 of Synovus' 1995 Annual Report to
Shareholders which are specifically incorporated herein by reference.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires the various banking regulatory agencies to issue regulations
on a broad range of issues including capital standards, non-capital standards
for safety and soundness relating generally to operations and management, asset
quality and executive compensation, additional disclosure regarding loans and
deposits to enhance consumer protection, limits on state bank powers, audit
requirements and examination requirements. The FDIC has adopted regulations
which, among other matters, implement provisions of FDICIA that require or
permit the FDIC to take specific supervisory actions when FDIC-insured
institutions come within one of five specific capital categories. The five
capital categories are designated as (1) well capitalized, (2) adequately
capitalized, (3) undercapitalized, (4) significantly undercapitalized and (5)
critically undercapitalized. FDICIA defines well capitalized banks or bank
holding companies as entities having a total risk-based capital ratio of 10% or
higher, a Tier 1 risk-based capital ratio of 6% or higher and a leverage ratio
of 5% or higher. At December 31, 1995 Synovus and its bank subsidiaries had
adequate capital to be classified as well capitalized institutions under the
FDICIA regulations. Synovus does not presently believe that FDICIA will have a
material effect on its business.
FIRREA and FDICIA provide the federal banking agencies with
significantly expanded powers to take enforcement action against institutions
which fail to comply with capital or other standards. Such action may include
the termination of deposit insurance by the FDIC.
Because Synovus is a registered multi-bank holding company, the Banks
are also subject to examination, supervision and regulation by the Board. The
Banks which are chartered under the banking laws of the States of Georgia,
Florida and Alabama are subject to examination, supervision and regulation by
the Georgia Banking Department, Florida Banking Department and the Alabama
Banking Department, respectively. The Banks which are chartered under the
banking laws of the United States are subject to examination, supervision and
regulation by the Office of the Comptroller of the Currency ("OCC"). In
addition, the deposits of the Banks are insured by the FDIC to the extent
provided by law, and are subject to examination, supervision and regulation by
the FDIC.
5
The Georgia Banking Department, Florida Banking Department, Alabama
Banking Department, OCC and the FDIC regulate all areas of the Banks' banking
and trust operations, including, where appropriate, reserves, investments,
loans, mergers, the issuance of securities, payment of dividends, interest
rates, extension of credit to officers and directors, establishment of branches,
maintenance of capital and other aspects of their operations.
Also, the payment of management fees by banking subsidiaries of a bank
holding company is subject to supervision and regulation by the Georgia Banking
Department, Florida Banking Department, Alabama Banking Department, the OCC, the
Board and the FDIC. The payment of management fees by non-banking subsidiaries
of a bank holding company is also subject to supervision and regulation by the
Board.
Numerous other federal and state laws, as well as regulations
promulgated by the Board, the Georgia Banking Department, Florida Banking
Department, Alabama Banking Department, the OCC and the FDIC govern almost all
aspects of the
operations of the Banks.
Employees.
As of December 31, 1995, Synovus had 6,727 full-time employees, 2,269
of whom are employees of TSYS.
Competition.
Banking. Synovus and the Banks encounter vigorous competition from
other commercial banks, savings and loan associations and other financial
institutions and intermediaries in their respective market areas. Certain of the
Banks are smaller than many of the financial institutions in their respective
market areas.
The Banks compete with other banks in their respective market areas in
obtaining new deposits and accounts, making loans, obtaining branch banking
locations and providing other banking services. The Banks also compete with
savings institutions and credit unions in their respective markets for savings
and transaction deposits, certificates of deposit and various types of loans.
Competition for loans is also offered by other financial
intermediaries, including savings institutions, mortgage banking firms and real
estate investment trusts, small loan and finance companies, insurance companies,
credit unions, leasing companies and certain government agencies. Competition
for time deposits and, to a more limited extent, demand and transaction deposits
is also offered by a number of other financial intermediaries and investment
alternatives, including "money-market" mutual funds, brokerage firms, government
and corporate bonds and other securities.
In the offering of fiduciary services, the Banks and Synovus Trust
Company, a wholly-owned subsidiary of CB&T, compete with commercial banks and
savings institutions having trust powers, trust companies, and investment
advisory and
6
brokerage firms and other individuals and firms that offer fiduciary, escrow, or
corporate trust services.
Synovus Securities competes with full-service brokerage firms. In the
offering of investment advisory and securities brokerage services, Synovus
Securities competes with banking and brokerage concerns which provide investment
advisory and broker-dealer services for fixed income portfolios.
Bankcard Data Processing Subsidiary. TSYS encounters vigorous
competition in providing bankcard data processing services from several
different sources. The national market in third party bankcard data processors
is presently being provided by approximately five vendors. TSYS believes that it
is the second largest third party bankcard processor in the United States. In
addition, TSYS competes against software vendors which provide their products to
institutions which process in-house. TSYS is presently encountering, and in the
future anticipates continuing to encounter, substantial competition from
bankcard associations, data processing and bankcard computer service firms and
other such third party vendors located throughout the United States.
TSYS' major competitor in the bankcard data processing industry is
First Data Resources, Inc., which is headquartered in Omaha, Nebraska, and
provides bankcard data processing services, including authorization and data
entry services. The principal methods of competition between TSYS and First Data
Resources are price and the type and quality of services provided. In addition,
there are a number of other companies which have the necessary financial
resources and the technological ability to develop or acquire products and, in
the future, to provide services similar to those being offered by TSYS.
Selected Statistical Information.
The "Financial Review" Section, which is set forth on pages F-28
through F-48 of Synovus' 1995 Annual Report to Shareholders, which includes the
information encompassed within "Selected Statistical Information", is
specifically incorporated herein by reference.
Item 2. Properties.
Synovus and its subsidiaries own, in some cases subject to mortgages or
other security interests, or lease all of the real property and/or buildings on
which it is located. All of such buildings are in a good state of repair and are
appropriately designed for the purposes for which they are used.
See Note 6 and Note 9 of Notes to Consolidated Financial Statements on
pages F-16 and F-17, and pages F-20 and F-21, of Synovus' 1995 Annual Report to
Shareholders which are specifically incorporated herein by reference.
7
CB&T occupies an approximately 225,000 square foot building known as the
Uptown Center in Columbus, Georgia which provides office space for most of its
operations.
TSYS occupies a 210,000 square foot production center which is located
on a 40.4 acre tract of land in north Columbus, Georgia. Primarily a production
center, this facility houses TSYS' primary data processing computer operations,
statement preparation, mail handling, microfiche production and purchasing, as
well as other related operations.
During 1995, TSYS purchased a 110,000 square foot building on a 23 acre
site in Columbus, Georgia to accommodate current and future space needs.
On March 7, 1996, TSYS announced its plans to purchase approximately 50
acres in downtown Columbus, Georgia on which it will begin building a
campus-like complex for its corporate headquarters in early 1997.
Item 3. Legal Proceedings.
See Note 9 of Notes to Consolidated Financial Statements on pages F-20
and F-21 of Synovus' 1995 Annual Report to Shareholders which is specifically
incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Shares of common stock of Synovus are traded on the New York Stock
Exchange under the symbol "SNV." See "Capital Resources and Dividends" under the
"Financial Review" Section which is set forth on pages F-43 through F-46 of
Synovus' 1995 Annual Report to Shareholders which is specifically incorporated
herein by reference.
Item 6. Selected Financial Data.
On March 11, 1996, Synovus' Board of Directors declared a three-for-two
stock split to be issued on April 8, 1996, to shareholders of record on March
21, 1996. The financial information included in Item 5, Item 6, Item 7, Item 8,
Item 11, Item 12, Item 13 and Item 14 has not been restated to reflect this
stock split. The table below reflects selected financial data on both a
pre-split and post-split basis.
8
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
----------------------------------------------------------------------------------------------------------
Pre-Split Post-Split Pre-Split Post-Split Pre-Split Post-Split
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Period end shares
outstanding 77,237,000 115,855,000 75,633,000 113,450,000 74,572,000 111,857,000
Weighted average shares
outstanding 76,636,000 114,954,000 75,167,000 112,750,000 74,009,000 111,013,000
Net income per share $ 1.50 1.00 1.19 .79 1.05 .70
Closing stock price $ 28.500 19.000 18.125 12.125 18.625 12.375
</TABLE>
See "Five Year Selected Financial Data" under the "Financial Review"
Section which is set forth on page F-28 of Synovus' 1995 Annual Report to
Shareholders which is specifically incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The "Financial Review" Section which is set forth on pages F-28 through
F-48 of Synovus' 1995 Annual Report to Shareholders, which includes the
information encompassed by "Management's Discussion and Analysis of Financial
Condition and Results of Operations", is specifically incorporated herein by
reference. Such information has not been restated to reflect the stock split
discussed in Item 6.
Item 8. Financial Statements and Supplementary Data.
The "Summary of Quarterly Financial Data" Section which is set forth on
page F-48, and the "Consolidated Statements of Condition, Consolidated
Statements of Income, Consolidated Statements of Shareholders' Equity,
Consolidated Statements of Cash Flows, Summary of Significant Accounting
Policies, Notes to Consolidated Financial Statements and Independent Auditors'
Report" Sections which are set forth on pages F-2 through F-26 of Synovus' 1995
Annual Report to Shareholders are specifically incorporated herein by reference.
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 10. Directors and Executive Officers of the Registrant.
The "ELECTION OF DIRECTORS - Information Concerning Directors and
Nominees" Section which is set forth on pages 3 and 4, the "ELECTION OF
DIRECTORS -Information Concerning Directors and Nominees for Class II Directors
General Information" Section which is set forth on pages 4 through 6, the
"ELECTION OF DIRECTORS - Executive Officers" Section which is set forth on pages
8 and 9, and the "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
SECTION" which is set forth on page 26 of Synovus' Proxy Statement in connection
9
with its Annual Shareholders' Meeting to be held on April 25, 1996 are
specifically incorporated herein by reference.
Item 11. Executive Compensation.
The "EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option
Exercises and Grants; Compensation of Directors; Employment Contracts and
Termination of Employment and Change in Control Arrangements; and Compensation
Committee Interlocks and Insider Participation" Sections which are set forth on
pages 11 through 15 and pages 19 and 20 of Synovus' Proxy Statement in
connection with its Annual Shareholders' Meeting to be held on April 25, 1996
are specifically incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The "ELECTION OF DIRECTORS - Information Concerning Directors and
Nominees for Class II Directors - Synovus Common Stock Ownership of Directors
and Management" Section which is set forth on pages 6 and 7, the "PRINCIPAL
SHAREHOLDERS" Section which is set forth on pages 21 and 22, and the
"RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS'
SUBSIDIARIES AND AFFILIATES - TSYS Common Stock Ownership of Directors and
Management" Section which is set forth on pages 23 and 24 of Synovus' Proxy
Statement in connection with its Annual Shareholders' Meeting to be held on
April 25, 1996 are specifically incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The "EXECUTIVE COMPENSATION - Compensation Committee Interlocks and
Insider Participation Section" which is set forth on pages 19 and 20 "EXECUTIVE
COMPENSATION" -Transactions with Management" Section which is set forth on pages
20 and 21, the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN
OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - Beneficial Ownership of TSYS Common
Stock by Columbus Bank" Section which is set forth on pages 22 and 23, the
"RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS'
SUBSIDIARIES AND AFFILIATES - Interlocking Directorates of Synovus, Columbus
Bank and TSYS" Section which is set forth on page 23, and the "RELATIONSHIPS
BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND
AFFILIATES - Transactions and Agreements Between Synovus, Columbus Bank, TSYS
and Certain of Synovus' Subsidiaries" Section which is set forth on pages 24
through 26 of Synovus' Proxy Statement in connection with its Annual
Shareholders' Meeting to be held on April 25, 1996 are specifically incorporated
herein by reference.
10
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
The following Consolidated Financial Statements of
Synovus Financial Corp. and its subsidiaries are
specifically incorporated by reference from pages F-2
through F-26 of Synovus' 1995 Annual Report to
Shareholders, in response to Item 8, Part II,
Financial Statements and Supplementary Data.
Consolidated Statements of Condition - December 31,
1995 and 1994
Consolidated Statements of Income - Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity -
Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -
Years Ended December 31, 1995, 1994 and 1993
Summary of Significant Accounting Policies -
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements -
December 31, 1995, 1994 and 1993
Independent Auditors' Report
2. Financial Statement Schedules
Financial Statement Schedules - None applicable
because the required information has been
incorporated in the Consolidated Financial Statements
of Synovus Financial Corp. and its subsidiaries
incorporated by reference herein.
3. Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation, as amended, of
Synovus Financial Corp. ("Synovus")
incorporated by reference to Exhibit 4(a)
of Synovus' Registration Statement on Form
S-8 filed with the Securities and
11
Exchange Commission on July 23, 1990 (File
No. 33-35926).
3.2 Bylaws, as amended, of Synovus.
4.1 Form of Rights Agreement incorporated by
reference to Exhibit 1 of Synovus'
Registration Statement on Form 8-A dated
May 3, 1989 pursuant to Section 12 of the
Securities Exchange Act of 1934, as
amended.
9.1 Voting Lease Agreement incorporated by
reference to Exhibit 9.1 of Synovus' Annual
Report on Form 10-K for the fiscal year
ended December 31, 1994, as filed with the
Commission on March 24, 1995.
10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10.1 Employment Agreements of James H. Blanchard
and James D. Yancey with Synovus
incorporated by reference to Exhibit 10.1
of Synovus' Registration Statement on Form
S-1 filed with the Commission on December
18, 1990 (File No. 33-38244).
10.2 Incentive Bonus Plan of Synovus
incorporated by reference to Exhibit 10.5
of Synovus' Registration Statement on Form
S-1 filed with the Commission on December
18, 1990 (File No. 33-38244).
10.3 Director Stock Purchase Plan of Synovus
incorporated by reference to Exhibit 10(a)
of Synovus' Registration Statement on Form
S-8 filed with the Commission on December
3, 1984 (File No. 2-94639).
10.4 Key Executive Restricted Stock Bonus Plan
of Synovus incorporated by reference to
Exhibit 10.6 of Synovus' Registration
Statement on Form S-1 filed with the
Commission on December 18, 1990 (File
No. 33-38244).
10.5 1989 Stock Option Plan of Synovus
incorporated by reference to Exhibit "A"
of Synovus' Registration Statement on Form
S-8 filed with the Commission on July 23,
1990 (File No.
12
33-35926), which Option Plan was amended on
March 16, 1992 to eliminate the stock
appreciation rights feature of the
outstanding options under the Plan and
reduce the exercise price from $16 5/8 per
share to $9.70 per share.
10.6 Employment Agreements of Joe E. Beverly,
John T. Oliver, Jr. and Richard E. Anthony
with Synovus and Consulting Agreement of H.
Lynn Page with Synovus incorporated by
reference to Exhibit 10.6 of Synovus'
Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, as filed with
the Commission on March 29, 1993.
10.7 Excess Benefit Agreement of Synovus
incorporated by reference to Exhibit 10.7
of Synovus' Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, as
filed with the Commission on March 24,
1995.
10.8 Wage Continuation Agreement of Synovus
incorporated by reference to Exhibit 10.8
of Synovus' Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, as
filed with the Commission on March 29,
1993.
10.9 1991 Stock Option Plan for Key Executives
of Synovus incorporated by reference to
Exhibit 10.9 of Synovus' Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, as filed with the
Commission on March 29, 1993.
10.10 Synovus Financial Corp. 1992 Long-Term
Incentive Plan incorporated by reference to
Exhibit 10.10 of Synovus' Annual Report on
Form 10-K for the fiscal year ended December
31, 1992, as filed with the Commission on
March 29, 1993.
10.11 Agreement in Connection with Use of Aircraft
incorporated by reference to Exhibit 10.11
of Synovus' Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, as
filed with the Commission on March 29, 1993.
10.12 Life Insurance Trusts incorporated by
reference to Exhibit 10.12 of Synovus'
Annual Report on Form
13
10-K for the fiscal year ended December 31,
1992, as filed with the Commission on March
29, 1993.
10.13 Supplemental Compensation Agreement,
Incentive Compensation Agreements and
Performance Compensation Agreement with
Richard E. Anthony; which Agreements were
assumed by Synovus on December 31, 1992 as a
result of its acquisition of First
Commercial Bancshares, Inc.; and which stock
awards made pursuant to the Agreements were
converted at a ratio of 1.5 to 1, the
exchange ratio applicable to the merger
incorporated by reference to Exhibit 10.13
of Synovus' Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, as
filed with the Commission on March 29, 1993.
10.14 1993 Split Dollar Insurance Agreement of
Synovus incorporated by reference to Exhibit
10.14 of Synovus' Annual Report on Form 10-K
for the fiscal year ended December 31, 1993,
as filed with the Commission on March 28,
1994.
10.15 1995 Split Dollar Insurance Agreement of
Synovus incorporated by reference to Exhibit
10.15 of Synovus' Annual Report on Form 10-K
for the fiscal year ended December 31, 1994,
as filed with the Commission on March 24,
1995.
10.16 Synovus Financial Corp. 1995 Long-Term
Incentive Plan incorporated by reference to
Exhibit 10.16 of Synovus' Annual Report on
Form 10-K for the fiscal year ended December
31, 1994, as filed with the Commission on
March 24, 1995.
10.17 Employment Agreement of Robert V. Royall,
Jr. and Employment and Retirement Agreements
of William L. Pherigo.
10.18 Synovus Financial Corp. Executive Bonus
Plan.
10.19 Change of Control Agreements.
11.1 Statement of Net Income Per Common Share
(reflects the three-for-two stock split to
be issued on April 8, 1996).
14
11.2 Statement of Net Income Per Common Share
(does not reflect the three-for-two stock
split to be issued on April 8, 1996).
13.1 Certain specified pages of Synovus' 1995
Annual Report to Shareholders which are
specifically incorporated herein by
reference.
20.1 Proxy Statement, for the Annual Meeting of
Shareholders of Synovus to be held on April
25, 1996, certain specified pages of which
are specifically incorporated herein by
reference.
21.1 Subsidiaries of Synovus Financial Corp.
23.1 Independent Auditors' Consents.
24.1 Powers of Attorney contained on the
signature pages of the 1995 Annual Report on
Form 10-K.
27.1 Financial Data Schedule (for SEC use only).
99.1 Annual Report on Form 11-K for the Synovus
Financial Corp. Employee Stock Purchase Plan
for the year ended December 31, 1995 (to be
filed as an amendment hereto within 120 days
of the end of the period covered by this
report).
99.2 Annual Report on Form 11-K for the Synovus
Financial Corp. Director Stock Purchase Plan
for the year ended December 31, 1995 (to be
filed as an amendment hereto within 120 days
of the end of the period covered by this
report).
Synovus agrees to furnish the Commission, upon request, a copy of each
instrument with respect to issues of long-term debt. The principal amount of any
individual instrument, which has not been previously filed, does not exceed ten
percent of the total assets of Synovus and its subsidiaries on a consolidated
basis.
(b) Reports on Form 8-K.
On October 26, 1995, Synovus filed a Form 8-K with the
Commission in connection with the October 25, 1995
announcement by Total System Services, Inc., an 80.8%
subsidiary of Synovus, of the renewal of a long-term credit
card processing contract with NationsBank.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Synovus Financial Corp. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SYNOVUS FINANCIAL CORP.
(Registrant)
March 22, 1996 By:/s/ James H. Blanchard
----------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, James D. Yancey and
Stephen L. Burts, Jr., and each of them, his or her true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this report and to file the
same, with all exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney(s)-in-fact and agent(s) full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney(s)-in-fact and
agent(s), or their substitute(s), may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, as amended, this report has been signed by the following
persons in the capacities and on the dates indicated.
/s/ William B. Turner Date: March 22, 1996
- ------------------------------------------
William B. Turner,
Director and Chairman of
the Executive Committee
/s/ James H. Blanchard Date: March 22, 1996
- -------------------------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
/s/ John T. Oliver, Jr. Date: March 22, 1996
- ------------------------------------------
John T. Oliver, Jr.,
Director and Vice Chairman
of the Executive Committee
/s/ James D. Yancey Date: March 22, 1996
- ------------------------------------------
James D. Yancey,
Vice Chairman of the Board
/s/ Joe E. Beverly Date: March 22, 1996
- -------------------------------------------
Joe E. Beverly,
Vice Chairman of the Board
/s/ Richard E. Anthony Date: March 22, 1996
- ------------------------------------------
Richard E. Anthony,
Vice Chairman of the Board
/s/ Stephen L. Burts, Jr. Date: March 22, 1996
- ------------------------------------------
Stephen L. Burts, Jr.,
President,
Principal Financial Officer and Director
/s/ G. Sanders Griffith, III Date: March 22, 1996
- ------------------------------------------
G. Sanders Griffith, III,
Senior Executive Vice President,
General Counsel and Secretary
/s/ Thomas J. Prescott Date: March 22, 1996
- ------------------------------------------
Thomas J. Prescott,
Executive Vice President, Treasurer and
Principal Accounting Officer
/s/ Jay C. McClung Date: March 22, 1996
- ------------------------------------------
Jay C. McClung,
Executive Vice President
/s/ Daniel P. Amos Date: March 22, 1996
- ------------------------------------------
Daniel P. Amos,
Director
/s/ Richard Y. Bradley Date: March 22, 1996
- ------------------------------------------
Richard Y. Bradley,
Director
/s/ Salvador Diaz-Verson, Jr. Date: March 22, 1996
- ------------------------------------------
Salvador Diaz-Verson, Jr.,
Director
/s/ C. Edward Floyd Date: March 22, 1996
- ------------------------------------------
C. Edward Floyd,
Director
/s/ Gardiner W. Garrard, Jr. Date: March 22, 1996
- ------------------------------------------
Gardiner W. Garrard, Jr.,
Director
/s/ V. Nathaniel Hansford Date: March 22, 1996
- ------------------------------------------
V. Nathaniel Hansford,
Director
/s/ Mason H. Lampton Date: March 22, 1996
- ------------------------------------------
Mason H. Lampton,
Director
/s/ John L. Moulton Date: March 22, 1996
- ------------------------------------------
John L. Moulton,
Director
/s/ Elizabeth C. Ogie Date: March 22, 1996
- ------------------------------------------
Elizabeth C. Ogie,
Director
/s/ William L. Pherigo Date: March 22, 1996
- ------------------------------------------
Wiliam L. Pherigo,
Director
/s/ Robert V. Royall, Jr. Date: March 22, 1996
- ------------------------------------------
Robert V. Royall, Jr.,
Director
/s/H. Lynn Page Date: March 22, 1996
- ------------------------------------------
H. Lynn Page,
Director
/s/ George C. Woodruff, Jr. Date: March 22, 1996
- ------------------------------------------
George C. Woodruff, Jr.,
Director
filings\snv\199610k.snv
As Amended
Effective December 20, 1995
BYLAWS
OF
SYNOVUS FINANCIAL CORP.
ARTICLE I.
OFFICES
Section 1. Principal Office.
The principal office for the transaction of the business of
the corporation shall be located in Muscogee County, Georgia, at such place
within said County as may be fixed from time to time by the Board of Directors.
Section 2. Other Offices.
Branch offices and places of business may be established at
any time by the Board of Directors at any place or places where the corporation
is qualified to do business, whether within or without the State of Georgia.
ARTICLE II.
SHAREHOLDERS' MEETINGS
Section 1. Meetings, Where Held.
Any meeting of the shareholders of the corporation, whether an
annual meeting or a special meeting, may be held either at the principal office
of the corporation or at any place in the United States within or without the
State of Georgia.
Section 2. Annual Meeting.
The annual meeting of the shareholders of the corporation
shall be held on such date as is determined by the Board of Directors of the
corporation each year. Provided, however, that if the Board of Directors shall
fail to set a date for the annual meeting of shareholders in any year, that the
annual meeting of the shareholders of the corporation shall be held on the
fourth Thursday in April of each year; provided, that if said day shall fall
upon a legal holiday, then such annual meeting shall be held on the next day
thereafter ensuing which is not a legal holiday.
Section 3. Special Meetings.
A special meeting of the shareholders of the corporation, for
any purpose or purposes whatsoever, may be called at any time by the Chairman of
the Board, any Vice Chairman of the Board, the President, any Vice President, a
majority of the Board of Directors, or one or more shareholders of the
corporation representing at least 66
1
2/3% of the votes entitled to be cast by the holders of all of the issued and
outstanding shares of common stock of the corporation. Such a call for a special
meeting must state the purpose of the meeting. This section, as it relates to
the call of a special meeting of the shareholders of the corporation by one or
more shareholders representing at least 66 2/3% of the votes entitled to be cast
by the holders of all of the issued and outstanding shares of common stock of
the corporation shall not be altered, deleted or rescinded except upon the
affirmative vote of the shareholders of the corporation representing at least 66
2/3% of the votes entitled to be cast by the holders of all of the issued and
outstanding shares of common stock of the corporation.
Section 4. Notice of Meetings.
Unless waived, written notice of each annual meeting and of
each special meeting of the shareholders of the corporation shall be given to
each shareholder of record entitled to vote, either personally or by first class
mail (postage prepaid) addressed to such shareholder at his last known address,
not less than ten (10) days nor more than seventy (70) days prior to said
meeting. Such written notice shall specify the place, day and hour of the
meeting; and in the case of a special meeting, it shall also specify the purpose
or purposes for which the meeting is called.
Section 5. Waiver of Notice.
Notice of an annual or special meeting of the shareholders of
the corporation may be waived by any shareholder, either before or after the
meeting; and the attendance of a shareholder at a meeting, either in person or
by proxy, shall of itself constitute waiver of notice and waiver of any and all
objections to the place or time of the meeting, or to the manner in which it has
been called or convened, except when a shareholder attends solely for the
purpose of stating, at the beginning of the meeting, an objection or objections
to the transaction of business at such meeting.
Section 6. Quorum, Voting and Proxy.
Shareholders representing a majority of the votes entitled to
be cast by the holders of all of the issued and outstanding shares of common
stock of the corporation shall constitute a quorum at a shareholders' meeting.
Any shareholder may be represented and vote at any shareholders' meeting by
written proxy filed with the Secretary of the corporation on or before the date
of such meeting; provided, however, that no proxy shall be valid for more than
11 months after the date thereof unless otherwise specified in such proxy.
The common stock of the corporation shall have the following voting
rights:
(a) Except as otherwise provided in paragraph (b) below, every holder
of record of the common stock shall be entitled to one (1) vote in person or by
proxy on each matter submitted to a vote at a meeting of shareholders for each
share of the common stock held of record by such holder as of the record date of
such meeting.
2
(b) Notwithstanding paragraph (a) above, every holder of record of a
share of the common stock meeting any one of the following criteria, shall be
entitled to ten (10) votes in person or by proxy on each matter submitted to a
vote at a meeting of shareholders for each share of the common stock held of
record by such holder as of the record date of such meeting which:
(1) has had the same beneficial owner since April 24, 986; or
(2) has had the same beneficial owner for a continuous period
of greater than 48 months prior to the record date of such meeting; or
(3) is held by the same beneficial owner to whom it was issued
by the corporation in or as a part of an acquisition of a banking or
non-banking company by the corporation where the resolutions adopted by
the corporation's Board of Directors approving said acquisition
specifically reference and grant such rights; or
(4) is held by the same beneficial owner to whom it was issued
by the corporation, or to whom it transferred by the corporation from
treasury shares held by the corporation, and the resolutions adopted by
the corporation's Board of Directors approving such issuance and/or
transfer specifically reference and grant such rights; or
(5) was acquired under any employee, officer and/or director
benefit plan maintained for one or more employees, officers and/or
directors of the corporation, and/or its subsidiaries, and is held by
the same beneficial owner for whom it was acquired under the terms and
provisions of such plan; or
(6) was acquired by reason of participation in a dividend
reinvestment plan approved by the corporation and is held by the same
beneficial owner for whom it was acquired under the terms and
provisions of such plan; or
(7) is owned by a holder who, in addition to shares which are
beneficially owned under the provisions of paragraph (b) (1)-(6) above,
is the beneficial owner of less than 100,000 shares of common stock of
the corporation, with such amount to be appropriately adjusted to
properly reflect any change in the shares of common stock of the
corporation by means of a stock split, a stock dividend, a
recapitalization or otherwise occurring after April 24, 1986.
(c) For purposes of paragraphs (b) above and (e) below:
(1) any transferee of a share of the common stock receiving
such stock:
(i) by gift; or
(ii) by bequest, devise or otherwise through the law
of inheritance,
3
descent and distribution from a descendant's estate; or
(iii) by distribution from a trust holding such stock
for the benefit of such transferee; or
(2) any corporate transferee receiving such common stock
solely in exchange for the capital stock of such corporate transferee
prior to December 31, 1986, provided that the transferor(s) of such
common stock and their respective donees, legatees and devises own all
of the issued and outstanding shares of capital stock of such corporate
transferee;
shall be deemed in each case to be the same beneficial
owner as the transferor.
Any transfer of any share of the capital stock of a corporate
transferee described in subparagraph c(2) above, other than by means
described in subparagraph c(l) above shall disqualify all shares of the
common stock held by such corporate transferee from the operation of
this paragraph c.
(d) For purposes of paragraph (b) above, shares of the common stock
acquired pursuant to a stock option shall be deemed to have been acquired on the
date the option was granted, and any shares of common stock acquired by the
beneficial owner as a direct result of a stock split, stock dividend or other
type of distribution of shares with respect to existing shares ("Dividend
Shares") will be deemed to have been acquired and held continuously from the
date on which the shares with regard to which the Dividend Shares were issued
were acquired.
(e) For purposes of paragraph (b) above, any share of the common stock
held in "street" or "nominee" name shall be presumed to have been acquired by
the beneficial owner subsequent to April 24, 1986 and to have had the same
beneficial owner for a continuous period of less than 48 months prior to the
record date of the meeting in question. This presumption shall be rebuttable by
presentation to the corporation's Board of Directors by such beneficial owner of
evidence satisfactory to the corporation's Board of Directors that such share
has had the same beneficial owner continuously since April 24, 1986 or such
share has had the same beneficial owner for a period greater than 48 months
prior to the record date of the meeting in question.
(f) For purposes of this section, a beneficial owner of a share of
common stock is defined to include a person or group of persons who, directly or
indirectly, through any contract, arrangement, undertaking, relationship or
otherwise has or shares (1) voting power, which includes the power to vote, or
to direct the voting of such share of common stock, (2) investment power, which
includes the power to direct the sale or other disposition of such share of
common stock, (3) the right to receive, retain or direct the distribution of the
proceeds of any sale or other disposition of such share of common stock, or (4)
the right to receive or direct the disposition of any distributions, including
cash dividends, in respect of such share of common stock. For purposes of
paragraphs (a) through (e) above, all determinations concerning beneficial
ownership, changes
4
therein, or the absence of any such change, shall be made by the corporation's
Board of Directors. Written procedures designed to facilitate such
determinations shall be established by the corporation's Board of Directors and
refined from time to time. Such procedures shall provide, among other things,
the manner of proof of facts that will be accepted and the frequency with which
such proof may be required to be renewed. The corporation's Board of Directors
shall be entitled to rely on all information concerning beneficial ownership of
the common stock coming to its attention from any source and in any manner
reasonably deemed by it to be reliable, but the corporation shall not be charged
with any other knowledge concerning the beneficial ownership of the common
stock. Any disputes arising concerning beneficial ownership, changes therein, or
the absence of any such changes, pursuant to this paragraph (f), shall be
definitively resolved by a determination of the corporation's Board of Directors
made in good faith.
Section 7. Voting Rights.
The voting rights of shares of common stock of the corporation
shall not be altered, deleted or rescinded except upon the affirmative vote of
the shareholders of the corporation representing at least 66 2/3% of the votes
entitled to be cast by the holders of all of the issued and outstanding shares
of common stock of the corporation.
Section 8. No Meeting Necessary When.
Any action required by law or permitted to be taken at any
shareholders' meeting may be taken without a meeting if, and only if, written
consent, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders and shall be filed with the Secretary and recorded in the Minute
Book of the corporation.
ARTICLE III.
DIRECTORS
Section 1. Number.
The Board of Directors of the corporation shall consist of not
less than 8 nor more than 60 Directors. The number of Directors may vary between
said minimum and maximum, and within said limits, the shareholders representing
at least 66 2/3% of the votes entitled to be cast by the holders of all of the
issued and outstanding shares of common stock of the corporation may, from time
to time, by resolution fix the number of Directors to comprise said Board. This
section, as it relates to, from time to time, fixing the number of Directors of
the corporation by the shareholders of the corporation representing at least 66
2/3% of the votes entitled to be cast by the holders of all of the issued and
outstanding shares of common stock of the corporation, shall not be altered,
deleted or rescinded except upon the affirmative vote of the shareholders of the
corporation representing at least 66 2/3% of the votes entitled to be cast by
the holders of all of the issued and outstanding shares of common stock of the
corporation.
Section 2. Election and Tenure.
The Board of Directors of the corporation shall be divided
into three classes
5
serving staggered 3-year terms, with each class to be as nearly equal in number
as possible. At the first annual meeting of the shareholders of the corporation
on or after the date of adoption of this provision, all members of the Board of
Directors shall be elected with the terms of office of Directors comprising the
first class to expire at the first annual meeting of the shareholders of the
corporation after their election, the terms of office of Directors comprising
the second class to expire at the second annual meeting of the shareholders of
the corporation after their election and the terms of office of Directors
comprising the third class to expire at the third annual meeting of the
shareholders of the corporation after their election, and as their terms of
office expire, the Directors of each class will be elected to hold office until
the third succeeding annual meeting of the shareholders of the corporation after
their election. In such elections, the nominees receiving a plurality of votes
shall be elected. This section, as it relates to the division of the Board of
Directors into three classes serving staggered 3-year terms, shall not be
altered, deleted or rescinded except upon the affirmative vote of the
shareholders of the corporation representing at least 66 2/3% of the votes
entitled to be cast by the holders of all of the issued and outstanding shares
of common stock of the corporation.
Section 3. Powers.
The Board of Directors shall have authority to manage the
affairs and exercise the powers, privileges and franchises of the corporation as
they may deem expedient for the interests of the corporation, subject to the
terms of the Articles of Incorporation, bylaws, any valid Shareholders'
Agreement, and such policies and directions as may be prescribed from time to
time by the shareholders of the corporation.
Section 4. Meetings.
The annual meeting of the Board of Directors shall be held
without notice immediately following the annual meeting of the shareholders of
the corporation, on the same date and at the same place as said annual meeting
of the shareholders. The Board by resolution may provide for regular meetings,
which may be held without notice as and when scheduled in such resolution.
Special meetings of the Board may be called at any time by the Chairman of the
Board, any Vice Chairman of the Board, the President, or by any two or more
Directors.
Section 5. Notice and Waiver; Quorum.
Notice of any special meeting of the Board of Directors shall
be given to each Director personally or by mail, telegram or cablegram addressed
to him at his last known address, at least one day prior to the meeting. Such
notice may be waived, either before or after the meeting; and the attendance of
a Director at any special meeting shall of itself constitute a waiver of notice
of such meeting and of any and all objections to the place or time of the
meeting, or to the manner in which it has been called or convened, except where
a Director states, at the beginning of the meeting, any such objection or
objections to the transaction of business. A majority of the Board of Directors
shall constitute a quorum at any Directors' meeting.
Section 6. No Meeting Necessary, When.
Any action required by law or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if written
consent, setting forth the
6
action so taken, shall be signed by all the Directors. Such consent shall have
the same force and effect as a unanimous vote of the Board of Directors and
shall be filed with the Secretary and recorded in the Minute Book of the
corporation.
Section 7. Voting.
At all meetings of the Board of Directors each Director shall
have one vote and, except as otherwise provided herein or provided by law, all
questions shall be determined by a majority vote of the Directors present.
Section 8. Removal.
Any one or more Directors or the entire Board of Directors may
be removed from office, with or without cause, by the affirmative vote of the
shareholders of the corporation representing at least 66 2/3% of the votes
entitled to be cast by the holders of all of the issued and outstanding shares
of common stock of the corporation at any shareholders' meeting with respect to
which notice of such purpose has been given. This section, as it relates to the
removal of Directors of the corporation by the shareholders of the corporation
representing at least 66 2/3% of the votes entitled to be cast by the holders of
all of the issued and outstanding shares of common stock of the corporation,
shall not be altered, deleted or rescinded except upon the affirmative vote of
the shareholders of the corporation representing at least 66 2/3% of the votes
entitled to be cast by the holders of all of the issued and outstanding shares
of common stock of the corporation.
Section 9. Vacancies.
Any vacancy occurring in the Board of Directors caused by an
increase in the number of Directors may be filled by the shareholders of the
corporation for a full classified 3-year term, or such vacancy may be filled by
the Board of Directors until the next annual meeting of the shareholders. Any
vacancy occurring in the Board of Directors caused by the removal of a Director
shall be filled by the shareholders, or if authorized by the shareholders, by
the Board of Directors, for the unexpired term of the Director so removed. Any
vacancy occurring in the Board of Directors caused by a reason other than an
increase in the number of Directors or removal of a Director may be filled by
the Board of Directors, or the shareholders, for the unexpired term of the
Director whose position is vacated. Vacancies in the Board of Directors filled
by the Board of Directors may be filled by the affirmative vote of a majority of
the remaining Directors, though less than a quorum, or the sole remaining
Director, as the case may be.
Section 10. Dividends.
The Board of Directors may declare dividends payable in cash
or other property out of the unreserved and unrestricted net earnings of the
current fiscal year, computed to the date of declaration of the dividend, or the
preceding fiscal year, or out of the unreserved and unrestricted earned surplus
of the corporation, as they may deem expedient.
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Section 11. Committees.
In the discretion of the Board of Directors, said Board from
time to time may elect or appoint, from its own members, an Executive Committee,
an Audit Committee, a Nominating Committee, a Corporate Development Committee, a
Compensation Committee and such other committee or committees as said Board may
see fit to establish. Each such committee shall consist of two or more
Directors, and each shall possess such powers and be charged with such
responsibilities, subject to the limitations imposed herein these bylaws and by
applicable law, as the Board by resolution may from time to time prescribe.
Executive Committee
The Executive Committee shall, during the intervals between meetings of the
corporation's Board of Directors, possess and may exercise any and all powers of
the corporation's Board of Directors in the management and direction of the
business and affairs of the corporation in which specific direction has not been
given by the corporation's Board of Directors.
Nominating Committee
The Nominating Committee shall possess the power and be charged with the
responsibility of: (i) evaluating the performance of incumbent directors and
non-directors in determining whether or not they should be nominated for
re-election, or election in the first instance, by the shareholders to serve
upon the Board of Directors of the corporation; and (ii) recommending to the
Board of Directors of the corporation whether or not the Board should nominate
such individuals for re-election or election, as the case may be, by the
shareholders to serve upon the Board of Directors of the corporation.
Compensation Committee
The Compensation Committee shall possess the power and be charged with the
responsibility of: (i) evaluating the remuneration of senior management and
members of the Board of Directors of the corporation and the compensation and
fringe benefit plans in which officers, employees and directors of the
corporation are eligible to participate; and (ii) recommending to the Board of
Directors of the corporation whether or not it should modify or approve such
remuneration, compensation or fringe benefit plans.
Corporate Development Committee
The Corporate Development Committee shall possess the power and be charged with
the responsibility of reviewing with and assisting the management of the
corporation in the formalization of plans and strategies with regard to the
future expansion and growth of, and the overall operation of, the market areas
served by, and the services provided by the corporation and its subsidiaries,
including, but not limited to, plans and strategies in connection with
acquisitions by the corporation of control of organizations and firms
8
engaged in banking activities and activities determined by the Board of
Governors of the Federal Reserve System to be closely related to banking, the
provision by the corporation and its subsidiaries of additional services to the
customers in the market areas served by the corporation and its subsidiaries and
the expansion of the market areas served by the corporation and its
subsidiaries.
Audit Committee
The Audit Committee shall possess the power and be charged with the
responsibility of: (i) reviewing and determining the independence of the
independent auditors to be engaged by the corporation to perform the annual
audit and interim reviews of the financial condition of the corporation and its
subsidiaries (hereinafter referred to as the "corporation's independent
auditors"); (ii) reviewing, determining and maintaining the independence of the
corporation's internal auditors by assisting management of the corporation in
the formulation of the job description of the head of the corporation's internal
audit division and providing for direct reporting by the corporation's internal
auditors to it in all matters relating to the audit function; (iii) instituting,
directing and supervising investigations in matters relating to the audit
function to be made by the corporation's internal auditors of the corporation
and/or its subsidiaries; (iv) reviewing and approving each professional service
to be provided by the corporation's independent auditors for the corporation
and/or its subsidiaries prior to the performance of such services; (v) reviewing
and approving the range of management advisory services provided by the
corporation's independent auditors; (vi) reviewing the adequacy by the
corporation's and its subsidiaries' systems of internal accounting controls;
(vii) reviewing the scope and results of the corporation's procedures for
internal auditing of the corporation and its subsidiaries; (viii) reviewing the
results of regulatory examination of the corporation and its subsidiaries; (ix)
reviewing the corporation's independent auditor's plan and results of its audit
engagement; (x) periodically reviewing with the corporation's independent
auditors with the assistance of management of the corporation the financial
statement of the corporation and consolidated financial statements of the
corporation and its subsidiaries with the primary goal of such review being to
insure that such financial statements fairly present the financial results of
the corporation in conformity with generally accepted accounting principles;
(xi) reviewing and recommending to the Board of Directors of the corporation any
engagement or termination of the corporation's independent auditors; and (xii)
considering such other matters with regard to the internal and independent audit
of the corporation and its subsidiaries as, in its discretion, it deems to be
desirable, periodically reporting to the Board of Directors of the corporation
as to the exercise of its duties and responsibilities and, where appropriate,
recommending to the Board of Directors matters in connection with the audit
function upon which it should consider taking action.
Section 12. Officers, Salaries and Bonds.
The Board of Directors shall elect all officers of the
corporation and fix their compensation. The fact that any officer is a Director
shall not preclude him from receiving a salary or from voting upon the
resolution providing the same. The Board of Directors may or may not, in their
discretion, require bonds from either or all of the
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officers and employees of the corporation for the faithful performance of their
duties and good conduct while in office.
Section 13. Compensation of Directors.
Directors, as such shall be entitled to receive compensation
for their service as Directors and such fees and expenses, if any, for
attendance at each regular or special meeting of the Board and any adjournments
thereof, as may be fixed from time to time by resolution of the Board, and such
fees and expenses shall be payable even though an adjournment be had because of
the absence of a quorum; provided, however, that nothing herein contained shall
be construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of either standing or
special committees may be allowed such compensation as may be provided from time
to time by resolution of the Board for serving upon and attending meetings of
such committees.
Section 14. Advisory Directors.
The Board of Directors of the corporation may at its annual
meeting, or from time to time thereafter, appoint any individual to serve as a
member of an Advisory Board of Directors of the corporation. Any individual
appointed to serve as a member of an Advisory Board of Directors of the
corporation shall be entitled to attend all meetings of the Board of Directors
and may participate in any discussion thereat, but such individual may not vote
at any meeting of the Board of Directors or be counted in determining a quorum
for such meeting. It shall be the duty of members of the Advisory Board of
Directors of the corporation to advise and provide general policy advice to the
Board of Directors of the corporation at such times and places and in such
groups and committees as may be determined from time to time by the Board of
Directors, but such individuals shall not have any responsibility or be subject
to any liability imposed upon a director or in any manner otherwise deemed a
director. The same compensation paid to directors for their services as
directors shall be paid to members of an Advisory Board of Directors of the
corporation for their services as advisory directors. Each member of the
Advisory Board of Directors except in the case of his earlier death,
resignation, retirement, disqualification or removal, shall serve until the next
succeeding annual meeting of the Board of Directors and thereafter until his
successor shall have been appointed.
Section 15. Emeritus Directors.
When a member of the Board of Directors or the Advisory Board
of Directors of the corporation, as the case may be: (a) attains seventy (70)
years of age or, (b) prior to his attainment of seventy (70) years of age,
retires from his principal occupation, under the retirement policy and criteria
established from time to time by the Board of Directors of the corporation
(except for a member of the Board of Directors or the Advisory Board of
Directors of the corporation: (1) who is, upon the attainment of age seventy
(70), then serving as an executive officer of the corporation; or (2) who was
sixty (60) years of age on June 14, 1973), such director shall automatically, at
his option, either (i) retire from the Board of Directors or the Advisory Board
of Directors of the corporation, as the case may be; or (ii) be appointed as a
member of the Emeritus Board of Directors of the corporation. A member of the
Board of Directors or the Advisory
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Board of Directors of the corporation: (1) who is, upon the attainment of age
seventy (70), then serving as an executive officer of the corporation; or (2)
who was sixty (60) years of age on June 14, 1973, may, at his option, either:
(a) continue his service as a member of the Board of Directors or the Advisory
Board of Directors of the corporation, as the case may be; or (b) be appointed
as a member of the Emeritus Board of Directors of the corporation. Members of
the Emeritus Board of Directors of the corporation shall be appointed annually
by the Chairman of the Board of Directors of the corporation at the Annual
Meeting of the Board of Directors of the corporation, or from time to time
thereafter. Each member of the Emeritus Board of Directors of the corporation,
except in the case of his earlier death, resignation, retirement,
disqualification or removal, shall serve until the next succeeding Annual
Meeting of the Board of Directors of the corporation. Any individual appointed
as a member of the Emeritus Board of Directors of the corporation may, but shall
not be required to, attend meetings of the Board of Directors of the corporation
and may participate in any discussions thereat, but such individual may not vote
at any meeting of the Board of Directors of the corporation or be counted in
determining a quorum at any meeting of the Board of Directors of the
corporation, as provided in Section 5 of Article III of the bylaws of the
corporation. It shall be the duty of the members of the Emeritus Board of
Directors of the corporation to serve as goodwill ambassadors of the
corporation, but such individuals shall not have any responsibility or be
subject to any liability imposed upon a member of the Board of Directors of the
corporation or in any manner otherwise be deemed to be a member of the Board of
Directors of the corporation. Each member of the Emeritus Board of Directors of
the corporation shall be paid such compensation as may be set from time to time
by the Chairman of the Board of Directors of the corporation and shall remain
eligible to participate in any Director Stock Purchase Plan maintained by, or
participated in, from time to time by the corporation according to the terms and
conditions thereof.
ARTICLE IV.
OFFICERS
Section 1. Selection.
The Board of Directors at each annual meeting shall elect or
appoint a President (who shall be a Director), a Secretary and a Treasurer, each
to serve for the ensuing year and until his successor is elected and qualified,
or until his earlier resignation, removal from office, or death. The Board of
Directors, at such meeting, may or may not, in the discretion of the Board,
elect a Chairman of the Board, one or more Vice Chairmen of the Board, one or
more Chairmen of the Board-Emeritus and/or one or more Vice Presidents and, also
may elect or appoint one or more Assistant Vice Presidents and/or one or more
Assistant Secretaries and/or one or more Assistant Treasurers. When more than
one Vice President is elected, they may, in the discretion of the Board, be
designated Executive Vice President, First Vice President, Second Vice
President, etc., according to seniority or rank, and any person may hold two or
more offices, except that the President shall not also serve as the Secretary.
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Section 2. Removal, Vacancies.
Any officers of the corporation may be removed from office at
any time by the Board of Directors, with or without cause. Any vacancy occurring
in any office of the corporation may be filled by the Board of Directors.
Section 3. Chairman of the Board.
The Chairman of the Board of Directors, when and if elected,
shall, whenever present, preside at all meetings of the Board of Directors and
at all meetings of the shareholders. The Chairman of the Board of Directors
shall have all the powers of the President in the event of his absence or
inability to act, or in the event of a vacancy in the office of the President.
The Chairman of the Board of Directors shall confer with the President on
matters of general policy affecting the business of the corporation and shall
have, in his discretion, power and authority to generally supervise all the
affairs of the corporation and the acts and conduct of all the officers of the
corporation, and shall have such other duties as may be conferred upon the
Chairman of the Board by the Board of Directors.
Section 4. President.
If there be no Chairman of the Board or Vice Chairman of the
Board elected, or in their absence, the President shall preside at all meetings
of the Board of Directors and at all meetings of the shareholders. The immediate
supervision of the affairs of the corporation shall be vested in the President.
It shall be his duty to attend constantly to the business of the corporation and
maintain strict supervision over all of its affairs and interests. He shall keep
the Board of Directors fully advised of the affairs and condition of the
corporation, and shall manage and operate the business of the corporation
pursuant to such policies as may be prescribed from time to time by the Board of
Directors. The President shall, subject to approval of the Board, hire and fix
the compensation of all employees and agents of the corporation, other than
officers, and any person thus hired shall be removable at his pleasure.
Section 5. Vice President.
Any Vice President of the corporation may be designated by the
Board of Directors to act for and in the place of the President in the event of
sickness, disability or absence of said President or the failure of said
President to act for any reason, and when so designated, such Vice President
shall exercise all the powers of the President in accordance with such
designation. The Vice Presidents shall have such duties as may be required of,
or assigned to, them by the Board of Directors, the Chairman of the Board or the
President.
Section 6. Secretary.
It shall be the duty of the Secretary to keep a record of the
proceedings of all meetings of the shareholders and Board of Directors; to keep
the stock records of the corporation; to notify the shareholders and Directors
of meetings as provided by these bylaws; and to perform such other duties as may
be prescribed by the Chairman of the Board, President or Board of Directors. Any
Assistant Secretary, if elected, shall perform the duties of the Secretary
during the absence or disability of the Secretary and shall perform such other
duties as may be prescribed by the Chairman of the Board,
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President, Secretary or Board of Directors.
Section 7. Treasurer.
The Treasurer shall keep, or cause to be kept, the financial
books and records of the corporation, and shall faithfully account for its
funds. He shall make such reports as may be necessary to keep the Chairman of
the Board, the President and Board of Directors fully informed at all times as
to the financial condition of the corporation, and shall perform such other
duties as may be prescribed by the Chairman of the Board, President or Board of
Directors. Any Assistant Treasurer, if elected, shall perform the duties of the
Treasurer during the absence or disability of the Treasurer, and shall perform
such other duties as may be prescribed by the Chairman of the Board, President,
Treasurer or Board of Directors.
ARTICLE V.
CONTRACTS, ETC.
Section 1. Contracts, Deeds and Loans.
All contracts, deeds, mortgages, pledges, promissory notes,
transfers and other written instruments binding upon the corporation shall be
executed on behalf of the corporation by the Chairman of the Board, if elected,
the President, or by such other officers or agents as the Board of Directors may
designate from time to time. Any such instrument required to be given under the
seal of the corporation may be attested by the Secretary or Assistant Secretary
of the corporation.
Section 2. Proxies.
The Chairman of the Board, any Vice Chairman of the Board, the
President, any Executive Vice President, Secretary or Treasurer of the
corporation shall have full power and authority, on behalf of the corporation,
to attend and to act and to vote at any meetings of the shareholders, bond
holders or other security holders of any corporation, trust or association in
which the corporation may hold securities, and at and in connection with any
such meeting shall possess and may exercise any and all of the rights and powers
incident to the ownership of such securities and which as owner thereof the
corporation might have possessed and exercised if present, including the power
to execute proxies and written waivers and consents in relation thereto. In the
case of conflicting representation at any such meeting, the corporation shall be
represented by its highest ranking officer, in the order first above stated.
Notwithstanding the foregoing, the Board of Directors may, by resolution, from
time to time, confer like powers upon any other person or persons.
ARTICLE VI.
CHECKS AND DRAFTS
Checks and drafts of the corporation shall be signed by such officer or officers
or such other employees or persons as the Board of Directors may from time to
time designate.
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ARTICLE VII.
STOCK
Section 1. Certificates of Stock.
The certificates for shares of capital stock of the
corporation shall be in such form as shall be determined by the Board of
Directors. They shall be numbered consecutively and entered into the stock book
of the corporation as they are issued. Each certificate shall state on its face
the fact that the corporation is a Georgia corporation, the name of the person
to whom the shares are issued, the number and class of shares (and series, if
any) represented by the certificate and their par value, or a statement that
they are without par value. In addition, when and if more than one class of
shares shall be outstanding, all share certificates of whatever class shall
state that the corporation will furnish to any shareholder upon request and
without charge a full statement of the designations, relative rights,
preferences and limitations of the shares of each class authorized to be issued
by the corporation.
Section 2. Signature; Transfer Agent; Registrar.
Share certificates shall be signed by the President or Vice
President and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, and shall bear the seal of the
corporation or a facsimile thereof. The Board of Directors may from time to time
appoint transfer agents and registrars for the shares of capital stock of the
corporation or any class thereof, and when any share certificate is
countersigned by a transfer agent or registered by a registrar, the signature of
any officer of the corporation appearing thereon may be a facsimile signature.
In case any officer who signed, or whose facsimile signature was placed upon,
any such certificate shall have died or ceased to be such officer before such
certificate is issued, it may nevertheless be issued with the same effect as if
he continued to be such officer on the date of issue.
Section 3. Stock Book.
The corporation shall keep at its principal office, or at the
office of its transfer agent, wherever located, with a copy at the principal
office of the corporation, a book, to be known as the stock book of the
corporation, containing in alphabetical order the name of each shareholder of
record, together with his address, the number of shares of each kind, class or
series of stock held by him and his social security number. The stock book shall
be maintained in current condition. The stock book, including the share
register, or the duplicate copy thereof maintained at the principal office of
the corporation, shall be available for inspection by any shareholder at any
meeting of the shareholders upon request and shall also be made available for
inspection and copying upon the request of any shareholder owning in excess of
2% of the corporation's common stock, which request must be made in accordance
with the provisions of ss. 14-2- 1602 of the Official Code of Georgia Annotated,
as amended. The information contained in the stock book and share register may
be stored on punch cards, magnetic tape, or any other approved information
storage devices related to electronic data processing equipment, provided that
any such method, device, or system employed shall first be approved by the Board
of Directors, and provided further that the same is capable of
14
reproducing all information contained therein, in legible and understandable
form, for inspection by shareholders or for any other proper corporate purpose.
Section 4. Transfer of Stock; Registration of Transfer.
The stock of the corporation shall be transferred only by
surrender of the certificate and transfer upon the stock book of the
corporation. Upon surrender to the corporation, or to any transfer agent or
registrar for the class of shares represented by the certificate surrendered, of
a certificate properly endorsed for transfer, accompanied by such assurances as
the corporation, or such transfer agent or registrar, may require as to the
genuineness and effectiveness of each necessary endorsement and satisfactory
evidence of compliance with all applicable laws relating to securities transfers
and the collection of taxes, it shall be the duty of the corporation, or such
transfer agent or registrar, to issue a new certificate, cancel the old
certificate and record the transactions upon the stock book of the corporation.
Section 5. Registered Shareholders.
Except as otherwise required by law, the corporation shall be
entitled to treat the person registered on its stock book as the owner of the
shares of the capital stock of the corporation as the person exclusively
entitled to receive notification, dividends or other distributions, to vote and
to otherwise exercise all the rights and powers of ownership and shall not be
bound to recognize any adverse claim.
Section 6. Record Date.
For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or the allotment of any rights, or for the purpose of any other action affecting
the interests of shareholders, the Board of Directors may fix, in advance, a
record date. Such date shall not be more than fifty (50) nor less than ten (10)
days before the date of any such meeting nor more than fifty (50) days prior to
any other action. In each case, except as otherwise provided by law, only such
persons as shall be shareholders of record on the date so fixed shall be
entitled to notice of and to vote at such meeting and any adjournment thereof,
to express such consent or dissent, or to receive payment of such dividend or
such allotment of rights, or otherwise be recognized as shareholders for any
other related purpose, notwithstanding any registration of a transfer of shares
on the stock book of the corporation after any such record date so fixed.
Section 7. Lost Certificates.
When a person to whom a certificate of stock has been issued
alleges it to have been lost, destroyed or wrongfully taken, and if the
corporation, transfer agent or registrar is not on notice that such certificate
has been acquired by a bona fide purchaser, a new certificate may be issued upon
such owner's compliance with all of the following conditions, to-wit: (a) He
shall file with the Secretary of the corporation, and the transfer agent or the
registrar, his request for the issuance of a new certificate, with an affidavit
setting forth the time, place and circumstances of the loss; (b) He shall also
file with the Secretary, and the transfer agent or the registrar, a bond with
good and
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sufficient security acceptable to the corporation and the transfer agent or the
registrar, or other agreement of indemnity acceptable to the corporation and the
transfer agent or the registrar, conditioned to indemnify and save harmless the
corporation and the transfer agent or the registrar from any and all damage,
liability and expense of every nature whatsoever resulting from the
corporation's or the transfer agent's or the registrar's issuing a new
certificate in place of the one alleged to have been lost; and (c) He shall
comply with such other reasonable requirements as the Chairman of the Board, the
President or the Board of Directors of the corporation, and the transfer agent
or the registrar shall deem appropriate under the circumstances.
Section 8. Replacement of Mutilated Certificates.
A new certificate may be issued in lieu of any certificate
previously issued that may be defaced or mutilated upon surrender for
cancellation of a part of the old certificate sufficient in the opinion of the
Secretary and the transfer agent or the registrar to duly identify the defaced
or mutilated certificate and to protect the corporation and the transfer agent
or the registrar against loss or liability. Where sufficient identification is
lacking, a new certificate may be issued upon compliance with the conditions set
forth in Section 7 of this Article VII.
ARTICLE VIII.
INDEMNIFICATION AND REIMBURSEMENT
Subject to any express limitations imposed by applicable law, every
person now or hereafter serving as a director, officer, employee or agent of the
corporation and all former directors and officers, employees or agents shall be
indemnified and held harmless by the corporation from and against the obligation
to pay a judgement, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan), and reasonable expenses (including
attorneys' fees and disbursements) that may be imposed upon or incurred by him
or her in connection with or resulting from any threatened, pending, or
completed, action, suit, or proceeding, whether civil, criminal, administrative,
investigative, formal or informal, in which he or she is, or is threatened to be
made, a named defendant or respondent: (a) because he or she is or was a
director, officer, employee, or agent of the corporation; (b) because he or she
is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise; or (c) because he or
she is or was serving as an employee of the corporation who was employed to
render professional services as a lawyer or an accountant to the corporation;
regardless of whether such person is acting in such a capacity at the time such
obligation shall have been imposed or incurred, if (i) such person acted in a
manner he or she believed in good faith to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, if
such person had no reasonable cause to believe his or her conduct was unlawful
or (ii), with respect to an employee benefit plan, such person believed in good
faith that his or her conduct was in the interests of the participants in and
beneficiaries of the plan.
Reasonable expenses incurred in any proceeding shall be paid by the
corporation
16
in advance of the final disposition of such proceeding if authorized by the
Board of Directors in the specific case, or if authorized in accordance with
procedures adopted by the Board of Directors, upon receipt of a written
undertaking executed personally by or on behalf of the director, officer,
employee, or agent to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the corporation, and a
written affirmation of his or her good faith belief that he or she has met the
standard of conduct required for indemnification.
The foregoing rights of indemnification and advancement of expenses
shall not be deemed exclusive of any other right to which those indemnified may
be entitled, and the corporation may provide additional indemnity and rights to
its directors, officers, employees or agents to the extent they are consistent
with law.
The provisions of this Article VIII shall cover proceedings whether now
pending or hereafter commenced and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place. In the
event of death of any person having a right of indemnification or advancement of
expenses under the provisions of this Article VIII, such right shall inure to
the benefit of his or her heirs, executors, administrators and personal
representatives. If any part of this Article VIII should be found to be invalid
or ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
ARTICLE IX.
MERGERS, CONSOLIDATIONS AND
OTHER DISPOSITIONS OF ASSETS
The affirmative vote of the shareholders of the corporation representing at
least 66 2/3% of the votes entitled to be cast by the holders of all of the
issued and outstanding shares of common stock of the corporation shall be
required to approve any merger or consolidation of the corporation with or into
any corporation, and the sale, lease, exchange or other disposition of all, or
substantially all, of the assets of the corporation to or with any other
corporation, person or entity, with respect to which the approval of the
corporation's shareholders is required by the provisions of the corporate laws
of the State of Georgia. This Article shall not be altered, deleted or rescinded
except upon the affirmative vote of the shareholders representing at least 66
2/3% of the votes entitled to be cast by the holders of all of the issued and
outstanding shares of common stock of the corporation.
ARTICLE X.
CRITERIA FOR CONSIDERATION
OF TENDER OR OTHER OFFERS
Section 1. Factors to Consider.
The Board of Directors of the corporation may, if it deems it
advisable, oppose a tender or other offer for the corporation's securities,
whether the offer is in
17
cash or in the securities of a corporation or otherwise. When considering
whether to oppose an offer, the Board of Directors may, but is not legally
obligated to, consider any pertinent issues; by way of illustration, but not of
limitation, the Board of Directors may, but shall not be legally obligated to,
consider any or all of the following:
(i) whether the offer price is acceptable based on the
historical and present operating results or financial condition of the
corporation;
(ii) whether a more favorable price could be obtained for the
corporation's securities in the future;
(iii) the impact which an acquisition of the corporation would
have on the employees, depositors and customers of the corporation and
its subsidiaries and the communities which they serve;
(iv) the reputation and business practices of the offeror and
its management and affiliates as they would affect the employees,
depositors and customers of the corporation and its subsidiaries and
the future value of the corporation's stock;
(v) the value of the securities, if any, that the offeror is
offering in exchange for the corporation's securities, based on an
analysis of the worth of the corporation as compared to the offeror or
any other entity whose securities are being offered; and
(vi) any antitrust or other legal or regulatory issues that
are raised by the offer.
Section 2. Appropriate Actions.
If the Board of Directors determines that an offer should be
rejected, it may take any lawful action to accomplish its purpose including, but
not limited to, any or all of the following: (i) advising shareholders not to
accept the offer; (ii) litigation against the offeror; (iii) filing complaints
with governmental and regulatory authorities; (iv) acquiring the corporation's
securities; (v) selling or otherwise issuing authorized but unissued securities
of the corporation or treasury stock or granting options or rights with respect
thereto; (vi) acquiring a company to create an antitrust or other regulatory
problem for the offeror; and (vii) soliciting a more favorable offer from
another individual or entity.
ARTICLE XI.
AMENDMENT
Except as otherwise specifically provided herein, the bylaws of the corporation
may be altered, amended or added to by the affirmative vote of the shareholders
of the corporation representing 66 2/3% of the votes entitled to be cast by the
holders of all of the issued and outstanding shares of common stock of the
corporation present and voting therefor at a shareholders' meeting or, subject
to such limitations as the
18
shareholders may from time to time prescribe, by a majority vote of all the
Directors then holding office at any meeting of the Board of Directors.
files\bylaws.snv
19
EMPLOYMENT AGREEMENT, AS AMENDED
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into by and
among Synovus Financial Corp., a Georgia business corporation ("Synovus"), and
National Bank of South Carolina, a national banking association ("Bank"),
Synovus and Bank being sometimes hereinafter collectively referred to as
"Employer", and Robert V. Royall, Jr., an individual resident of South Carolina
("Employee"), Employer and Employee being sometimes hereinafter collectively
referred to as the "Parties", pursuant to the terms of an Agreement and Plan of
Merger by and between Synovus and NBSC Corporation ("Merger Agreement") and is
intended to amend and restate in its entirety that certain Employment Agreement
dated February 25, 1991, as amended on February 17, 1994, by and among Bank,
NBSC Corporation and Employee.
W I T N E S S E T H T H A T:
The Parties, for and in consideration of the mutual and reciprocal
covenants and agreements hereinafter contained, and other good and valuable
consideration, the receipt of which is acknowledged, and intending to be legally
bound, do contract and agree as follows, to-wit:
I.
Employment
The purpose of this Agreement is to define the relationship between
Employer, as an employer, and Employee, as an employee. Employer hereby employs
Employee and agrees to cause Employee to be elected as Chairman of the Board and
Chief Executive Officer of Bank and to use its best efforts to cause Employee to
be elected as a member of the Board of Directors of Synovus, and Employee hereby
accepts employment by Employer in the above-referenced capacities, upon all of
the terms and conditions as hereinafter set forth.
II.
Duties
Employee shall have the responsibilities, powers and duties which he
exercised prior to the acquisition of Bank by Synovus and which are customarily
associated with the office specified in Article I above. Employee agrees to
perform such other duties as may be mutually agreed from time to time by him, on
the one hand, and by the Boards of Directors of Synovus or the Bank, on the
other. Employee shall faithfully and diligently discharge his duties and
responsibilities under this Agreement, and shall, subject to the provisions of
Article XV hereof, use his full-time best efforts to discharge such duties and
responsibilities.
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III.
Term
The term of Employee's employment under this Agreement shall begin on
the date the merger contemplated by the Merger Agreement is consummated
("Effective Date of this Agreement") and shall end on the fifth anniversary date
hereof ("Agreement Termination Date"), unless otherwise terminated pursuant to
the terms of this Agreement; provided, however, the term of this Agreement may
be extended pursuant to the terms and conditions of a written amendment to this
Agreement executed by Employer and Employee according to the procedure set forth
in Article XVI hereof.
IV.
Base Salary
In consideration of all services to be rendered by Employee in any
capacity hereunder for Employer during the term of this Agreement, and in
consideration of the covenants and agreements of Employee herein contained,
Employer shall pay Employee a base salary of $268,000 per calendar year while
Employee is employed on a full-time basis. Employee may thereafter receive an
annual cost of living increase in the base salary payable to him during the term
of his employment hereunder; provided, however, that Employee shall be entitled
to an annual cost of living increase in base salary if other senior executive
officers of Synovus receive such an increase.
V.
Adjustments to Base Salary
In addition to the annual cost of living increase in Employee's base
salary referenced in Article IV above, Employer and Employee may, from time to
time, reflect increases in Employee's base salary as may be mutually agreed upon
by entering any such change upon the "Schedule of Compensation," attached hereto
as Exhibit "A" and made a part hereof. If a change in the base salary of
Employee is entered on said Schedule and duly signed by Employee and the proper
officers of Employer, such entry shall constitute an amendment to this Agreement
as of the date of said entry and shall supersede the base salary provided for in
Article IV of this Agreement and any other change in such base salary previously
entered on said Schedule.
VI.
Executive Compensation Plans
Employee shall be eligible to participate in the various executive
benefit plans as are made available to other senior executives of Synovus
including, but not limited to, incentive cash bonuses, stock options and
restricted stock awards.
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VII.
Benefit and Retirement Plans
Employee shall be entitled to participate in the various welfare and
fringe benefit plans and the tax qualified retirement plans which may be
authorized and adopted from time to time by the Board of Directors of Bank, with
Employee's participation in such plans to be governed and controlled by the
terms and provisions of such plans.
VIII.
Board of Directors
Employer shall cause Employee, during the term of this Agreement, to be
elected as Chairman of the Board of Bank and use its best efforts to cause
Employee to be elected as a director of Synovus, and Employee shall be entitled
to receive, in addition to the base salary described in Article IV above, the
usual director and/or committee fees associated therewith.
IX.
Club Dues
During the term of this Agreement, Employer will pay (i) Employee's
reasonable expenses for dues and capital assessments for country club
memberships and if Employee is not already a member of such clubs, any
initiation fees and required bond purchases; provided, that if Employee ceases
to be a member of such clubs and any bonds or other capital payments paid by
Employer are redeemed and repaid to Employee, Employee shall pay over such
payments to Employer, and (ii) such reasonable civic and community club dues
requested by Employee upon the approval of such dues by the Board of Directors
of Bank. Any expenditures made in the use of such clubs in connection with
Employee's duties will be reimbursed in accordance with the last sentence of
Article XI of this Agreement.
X.
Stock Purchase Plans
Employee shall be allowed to participate in the Synovus Financial Corp.
Employee and Director Stock Purchase Plans if adopted by the Board of Directors
of Bank, and such participation shall be effective upon the effective date of
their adoption by the Board of Directors of Bank.
XI.
Automobile and Other Expenses
During the term of this Agreement, Employer shall provide Employee with
an automobile owned or leased by Employer, such automobile to be a make and
model appropriate to Employee's status (and at least commensurate with the
automobile provided to Employee by the Bank immediately preceding the
consummation of the merger contemplated by the Merger Agreement) and shall pay
all reasonable expenses associated with the use thereof, including, but not
limited to, maintenance and insurance. Alternatively,
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Employee shall be entitled to an automobile allowance of at least $4,000.00 per
year. Additionally, Employee shall be reimbursed by Employer for reasonable
travel and other reasonable expenses relating to Employee's duties, which
expenses are incurred and accounted for in accordance with Employer's normal
practices.
XII.
Termination and Change In Control
A. Termination by Employer and Termination by Employee for Good
Reason; Other Rights Upon Change in Control.
(1) This Agreement may be terminated by Employee for Good
Reason upon delivery of a Notice of Termination to Employer at
any time beginning 60 days after the occurrence of a Change in
Control. If Employee's employment shall be terminated by
Employer in violation of this Agreement or if Employee's
employment shall be terminated by Employee for Good Reason,
Employee shall be released from the terms of the Covenant Not
to Compete contained in Section XIII hereof, and in addition
to other rights and remedies available in law or equity,
Employee shall be entitled to the following:
(i) Employer shall pay Employee in cash within fifteen days of
the Termination Date an amount equal to all Accrued
Compensation and the Pro Rata Bonus;
(ii) Employer shall pay to Employee in cash at the end of each
of the thirty-six consecutive 30 day periods following the
Termination Date the following amounts:
(a) at the end of the first through twelfth 30-day
periods an amount equal to one-twelfth of the product
of (1) the sum of the Base Amount and the Bonus
Amount, multiplied by (2) one;
(b) at the end of the thirteenth through
twenty-fourth 30-day periods an amount equal to
one-twelfth of the product of (1) the sum of the Base
Amount and the Bonus Amount, multiplied by (2)
two-thirds; and
(c) at the end of the twenty-fifth through the
thirty-sixth 30-day periods an amount equal to
one-twelfth of the product of (1) the sum of the Base
Amount and the Bonus Amount, multiplied by (2)
one-third; and
(iii) for the period from the Termination Date through the
date that Employee attains the age of 65 (the "Continuation
Period"), Employer shall at its expense, less standard
employee contributions in effect as of the Termination Date
for such benefits for which Employee shall remain
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responsible, continue on behalf of Employee and his dependents
and beneficiaries the life insurance, disability, medical,
dental and hospitalization benefits provided (x) to Employee
at any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of Bank during
the Continuation Period. Notwithstanding the foregoing, the
coverage and benefits (including deductibles and employee
contributions to costs) provided in this Section
XII(A)(1)(iii) during the Continuation Period shall be no less
favorable to Employee and his dependents and beneficiaries
than the most favorable of such coverages and benefits for
employees of Bank during any of the periods referred to in
clauses (x) and (y) above. Employer's obligation hereunder
with respect to the foregoing benefits shall be limited to the
extent that Employee obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case Employer
may reduce the coverage of any benefits it is required to
provide Employee hereunder as long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Employee than the coverages and benefits required
to be provided hereunder. This subsection (iii) shall not be
interpreted so as to limit any benefits to which Employee or
his dependents or beneficiaries may be entitled under any of
Bank's employee benefit plans, programs or practices following
Employee's termination of employment, including without
limitation, retiree medical and life insurance benefits.
(2) In the event of a Change of Control (regardless of whether
Employee's employment is terminated hereunder), the
restrictions on any outstanding incentive awards (including
restricted stock) granted to Employee shall lapse and such
incentive award shall become 100% vested, all stock options
and stock appreciation rights granted to Employee shall become
immediately exercisable and shall become 100% vested, and all
performance units granted to Employee shall become 100%
vested.
(3) Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided
to Employee in any subsequent employment except as provided in
Section XII(A)(1)(iii).
(4) The severance pay and benefits provided for in this
Section XII(A) shall be in lieu of any other severance or
termination pay to which Employee may be entitled under any
Employer severance or termination plan, program, practice or
arrangement. Employee's entitlement to any other compensation
or benefits shall be determined in accordance with Employer's
employee benefit plans and other applicable programs, policies
and practices then in effect.
B. Termination By Employee Other Than For Good Reason.If Employee
voluntarily terminates his employment hereunder, other than for Good Reason, by
5
delivering a Notice of Termination to Employer, Employee shall: (i) receive
within 30 days after the Termination Date a lump sum cash payment equal to the
Accrued Compensation and the Pro Rata Bonus; (ii) immediately forfeit any rights
to any compensation and employee benefits, to the extent not vested, including
options and restricted stock, which would have become vested after the
Termination Date; and (iii) continue to be subject to the Covenant Not to
Compete contained in Section XIII hereof.
C. Termination For Cause. Employee's employment with Employer may be
terminated by Employer For Cause, as defined in Section XVI(d) hereof. In such
event Employee shall: (i) receive within 30 days after the Termination Date a
lump sum cash payment equal to the Accrued Compensation; (ii) immediately
forfeit any rights to any further compensation and employee benefits, including
the Pro Rata Bonus, to the extent not vested, including options and restricted
stock, which would have become vested after the Termination Date; and (iii)
continue to be subject to the Covenant Not to Compete contained in Section XIII
hereof.
D. Death or Permanent Disability of Employee. Upon Employee's death or
upon notice of Employee's permanent disability during the term hereof, this
Agreement shall terminate, and Employee or his legal or personal representative,
as the case may be, shall receive within 30 days after the Termination Date a
lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus.
No further compensation or employee benefits shall be due and payable to
Employee under this Agreement, from and after said date; provided, however,
Employee shall be entitled to receive life insurance and/or disability benefits
and/or vested retirement or other benefits made available to him by Employer
outside the terms of this Agreement, including the Stock Option Agreement to be
entered into pursuant to Article XIV hereof. For purposes of this Agreement,
Employee shall be deemed "permanently disabled" by bodily or mental illness,
disease or injury, to the extent that, in the reasonable judgment of Employers'
boards of directors he is prevented from performing the material and substantial
duties of his Employment and such disability has continued substantially for six
months. If requested by Employer, Employee shall submit to an examination by a
physician mutually acceptable to Employer and Employee for the purpose of
determining or confirming the existence or extent of any disability.
XIII.
Covenant Not to Compete and Confidentiality
For and in consideration of: (i) Employers' employment of Employee
pursuant to Article I of this Agreement; (ii) the acquisition of all of the
shares of common stock of NBSC Corporation held by Employee by Synovus; (iii)
Employers' entering into this Agreement; and (iv) the issuance under this
Agreement of options to purchase shares of common stock of Synovus pursuant to
the terms hereof, Employee hereby agrees to the following:
A. Employee agrees that for the five-year period prior to the Agreement
Termination Date, and for a period of 18 months subsequent to the Agreement
Termination Date if Employee is employed by Employer on the Agreement
Termination Date, and in no event for less than 18 months after any Termination
Date, he will not form, organize or
6
acquire more than 5% of the capital stock of, or cause his affiliates or other
persons or entities under his control to form, organize or acquire more than 5%
of the capital stock of, or serve as an executive officer or director of a
depository financial institution (i) which is not an affiliate of Synovus
(including any holding company thereof) and (ii) which is located or has offices
in the State of South Carolina.
B.(1) Employee agrees that, both during the term of this Agreement and
after the termination of this Agreement, Employee will hold in a fiduciary
capacity for the benefit of Employer, and shall not directly or indirectly use
or disclose, except as authorized by Employer in connection with the performance
of Employee's duties, any Trade Secret, as defined hereinafter, that Employee
may have or acquire during the term of this Agreement for so long as such
information remains a Trade Secret. The term "Trade Secret" as used in this
Agreement shall mean information including, but not limited to, technical or
nontechnical data, a formula, a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial plans, loan
portfolios, marketing plans, product plans, or a list of actual or potential
customers or suppliers, including without limitation, information received by
Employer or Employee from any client or potential client of Employer, which:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of reasonable efforts by Employer or the
client from which the information was received to maintain its secrecy.
These rights of Employer are in addition to those rights
Employer has under the common law or applicable statute for protection of trade
secrets.
(2) In addition to the foregoing and not in limitation
thereof, Employee agrees that, during the term of this Agreement and for a term
of two (2) years after any Termination Date, Employee will hold in a fiduciary
capacity for the benefit of Employer and shall not directly or indirectly use or
disclose, except as authorized by Employer in connection with the performance of
Employee's duties, any confidential or proprietary information, as defined
hereinafter, that Employee may have or acquire (whether or not developed or
compiled by Employee and whether or not Employee has been authorized to have
access to such confidential or proprietary information) during the term of this
Agreement. The term "Confidential or Proprietary Information" as used in this
Agreement means any secret, confidential or proprietary information of Employer,
including information received by Employer or Employee from any client or
potential client of Employer, not otherwise included in the definition of "Trade
Secret" in Paragraph B.1 above. The term "Confidential or Proprietary
Information" does not include information that has become generally available to
the public by any means other than a violation of the restrictions contained in
this paragraph.
(3) Employee agrees and acknowledges that, if a violation of
any covenant contained in this paragraph occurs or is threatened, such violation
or threatened violation
7
will cause irreparable injury to Employer, that the remedy at law for any such
violation or threatened violation will be inadequate and that Employer shall be
entitled to appropriate equitable relief.
(4) Employee hereby agrees that the restrictions contained in
this paragraph are fair and reasonable and necessary for the protection of the
legitimate business interest of Employer.
XIV.
Stock Options
In consideration of Employee's entering into this Agreement, Synovus
hereby agrees to cause to be granted Employee an option to purchase 20,000
shares of common stock of Synovus at an exercise price of $19.75 per share on
the Effective Date of this Agreement, pursuant to the terms of the Synovus
Financial Corp. 1994 Long-Term Incentive Plan, to become exercisable as to one
hundred percent (100%) of such shares on the fifth anniversary date of the date
of Synovus' grant of such shares if Employee is employed on a full-time or
limited basis on such date. The option may be exercised at any time during the
five year period following the date that such option first becomes exercisable.
In the event of Employee's termination of employment by death (other than by
suicide) or termination of employment by reason of permanent disability, the
option shall thereafter become immediately exercisable. In addition, Employee
shall be entitled to exercise his options with respect to NBSC stock for which
provision is made in Section 1(d) of his Employment Agreement with NBSC as
amended prior to this amendment and restatement and to receive the additional
payments for which provision is made therein.
XV.
Change in Status
Notwithstanding any other provision of this Agreement, Employee shall
determine the date upon which Employee shall begin to discharge his duties and
responsibilities under this Agreement on a limited basis and on such date
Employee's title with Employer shall change and Employee will be entitled to
receive one-half of the current base salary which Employee was then receiving
pursuant to Article IV above.
XVI.
Amendments
This Agreement may be amended at any time and from time to time by an
agreement in writing signed by Employer and Employee and approved by the Boards
of Directors of Employer. The Parties shall be deemed to have consented to any
amendment by accepting any benefits thereunder after having received from the
other Party written notice of such amendment.
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XVII.
Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as
of the Termination Date including (i) base salary, (ii) reimbursement
for reasonable and necessary expenses incurred by Employee on behalf of
Employer during the period ending on the Termination Date, and (iii)
bonuses and incentive compensation (other than the Pro Rata Bonus),
less applicable withholdings of federal, state and local taxes.
(b) "Base Amount" shall mean the greater of Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the
highest rate in effect at any time during the 90 day period prior to
the Change in Control, and shall include all amounts of his base salary
that are deferred under the qualified and non-qualified employee
benefit plans of Employer or any other agreement or arrangement.
(c) "Bonus Amount" shall mean the greater of (i) the most recent annual
cash bonus paid or payable to Employee or, if greater, the annual bonus
paid or payable for the most recent full fiscal year ended prior to the
fiscal year during which a Change in Control occurred or (ii) the
average of the annual cash bonuses paid or payable during the three
full fiscal years ended prior to the Termination Date or, if greater,
the three most recent full fiscal years ended prior to the Change in
Control (or, in each case, such lesser period for which annual cash
bonuses were paid or payable to Employee.
(d) The termination of Employee's employment shall be "For Cause"
if it is a result of:
(i) any act that (A) constitutes, on the part of Employee,
fraud, dishonesty, gross malfeasance of duty, or conduct
grossly inappropriate to Employee's office, and (B) is
demonstrably likely to lead to material injury to Employer or
resulted or was intended to result in direct or indirect gain
to or personal enrichment of Employee; or
(ii) the conviction (from which no appeal may be or is timely
taken) of Employee of a felony; or
(iii) the suspension or removal of Employee by federal or
state banking regulatory authorities acting under lawful
authority pursuant to provisions of federal or state law or
regulation which may be in effect from time to time; or
(iv) the breach of the covenants in Section XIII hereof;
9
provided, however, that in the case of clause (i) above, such
conduct shall not constitute Cause unless (A) there shall have
been delivered to Employee a written notice setting forth with
specificity the reasons that the Boards of Employer believe
Employee's conduct constitutes the criteria set forth in
clause (i), (B) Employee shall have been provided the
opportunity to be heard in person by the Boards of Employer
(with the assistance of Employee's counsel if Employee so
desires), and (C) after such hearing, the termination is
evidenced by a resolution adopted in good faith by two-thirds
of all the members of each of the Boards of Directors of
Synovus and Bank not counting Employee for purposes of
determining the number of members on each such Board.
(e) A "Change in Control" shall mean the occurrence during the term of
this Agreement of any of the following events; provided, however, that
Employee hereby agrees that the acquisition of NBSC Corporation by
Synovus shall not be deemed to be a change in control for purposes of
this Agreement other than Section XII of this Agreement and the
definition of Good Reason in which case such acquisition shall be
deemed a "Change in Control":
(i) An acquisition (other than directly from Employer) of any
voting securities of Employer (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934 (the
"1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of the combined
voting power of Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired in
a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (1) an employee benefit plan (or a trust forming a part
thereof) maintained by (x) Employer or (y) any corporation or
other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or
indirectly by Employer (a "Subsidiary"), (2) Employer or any
Subsidiary, or (3) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Agreement,
are members of the Board (the "Incumbent Board") cease for any
reason, other than death, resignation or retirement pursuant
to the bylaws of Employer, to constitute at least two-thirds
of the Board; provided, however, that if the election or
nomination for election by the Corporation's shareholders, of
any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes
of this Agreement, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934
10
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by shareholders of Employer of:
(a) A merger, consolidation or reorganization
involving Employer, unless
(1) the shareholders of Employer,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least two-thirds of the
combined voting power of the outstanding
voting securities of the corporation
resulting from such merger or consolidation
or reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for
such merger, consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of the
Surviving Corporation.
(A transaction described in clauses (1) and
(2) shall herein be referred to as a
"Non-Control Transaction.")
(b) A complete liquidation or dissolution of
Employer; or
(c) An agreement for the sale or other
disposition of all or substantially all of the assets
of Employer to any Person (other than a transfer to a
subsidiary).
(iv) Notwithstanding anything contained in this Agreement to
the contrary, if Employee's employment is terminated prior to
a Change in Control and Employee reasonably demonstrates that
such termination (A) was at the request of a third party who
has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party") or (B) otherwise occurred
in connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to
Employee shall mean the date immediately prior to the date of
such termination of Employee's employment.
(f) "Good Reason" shall mean the occurrence after a Change in Control
of any of the events or conditions described in subsections (i) through
(viii) hereof:
11
(i) a change in Employee's status, title, position or
responsibilities (including reporting responsibilities) which,
in Employee's reasonable judgment, represents an adverse
change from his status, title, position or responsibilities as
in effect at any time within ninety days preceding the date of
a Change in Control or at any time thereafter; the assignment
to Employee of any duties or responsibilities which, in
Employee's reasonable judgment, are inconsistent with his
status, title, position or responsibilities as in effect at
any time within ninety days preceding the date of a Change in
Control or at any time thereafter; any removal of Employee
from or failure to reappoint or reelect him to any of such
offices or positions, except in connection with the
termination of his employment by Employer For Cause or by
Employee other than for Good Reason; or any other change in
condition or circumstances that in Employee's reasonable
judgment makes it materially more difficult for Employee to
carry out the duties and responsibilities of his office than
was the case at any time within ninety days preceding the date
of Change in Control or at any time thereafter;
(ii) a reduction in Employee's base salary or any failure
to pay Employee any compensation or benefits to which he is
entitled within five days of the date due;
(iii) Employer's requiring Employee to be based at any place
outside a 50- mile radius from the executive offices occupied
by Employee immediately prior to the Change in Control, except
for reasonably required travel on Employer's business which is
not materially greater than such travel requirements prior to
the Change in Control;
(iv) the failure by Employer to (A) continue in effect
(without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit
plan in which Employee was participating at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter, unless such plan is replaced with a plan
that provides substantially equivalent compensation or
benefits to Employee or (B) provide Employee with compensation
and benefits, in the aggregate, at least equal (in terms of
benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and
practice in which Employee was participating at any time
within ninety days preceding the date of a Change in Control
or at any time thereafter;
(v) the insolvency or the filing (by any party, including
Employer) of a petition for bankruptcy of Employer, which
petition is not dismissed within sixty days;
(vi) any material breach by Employer of any provision of
this Agreement;
(vii) any purported termination of Employee's employment
For Cause by Employer which does not comply with the terms of
this Agreement; or
12
(viii) the failure of Employer to obtain an agreement,
satisfactory to Employer, from any successors and assigns to
assume and agree to perform this Agreement, as contemplated in
Section XVIII hereof.
Any event or condition described in clause (i) through (viii)
above which occurs prior to a Change in Control but which
Employee reasonably demonstrates (A) was at the request of a
Third Party, or (B) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs,
shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the change in
Control. Employee's right to terminate his employment for Good
Reason shall not be affected by his incapacity due to physical
or mental illness. Notwithstanding anything to the contrary
contained above in this paragraph (f), changes agreed to by
Employee in this Agreement, or otherwise agreed to between
Employer and Employee, from the facts and circumstances in
existence prior to the consummation of the merger contemplated
by the Merger Agreement in respect of clauses (i) or (iv)
above shall not constitute "Good Reason."
(g) "Notice of Termination" shall mean a written notice of termination
from Employer or Employee which specifies an effective date of
termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
(h) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days
in the fiscal year through the Termination Date and the denominator of
which is 365, less applicable withholdings of federal, state and local
taxes.
(i) "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of Employer
(including this Agreement), whether by operation of law or otherwise.
(j) "Termination Date" shall mean in the case of Employee's death, his
date of death, or in the case of permanent disability, the date
described in Section XII(E) hereof, and in all other cases, the date
specified in the Notice of Termination.
XVIII.
Parties Bound
This Agreement shall be binding upon and shall inure to the benefit of
Employer, its Successors and Assigns, and Employer shall require any Successors
and Assigns to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to perform it if
no such succession or assignment had taken place. Neither this Agreement nor any
right or interest hereunder shall be assignable or transferable by Employee, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
13
enforceable by Employee's legal personal representative against Employer, its
Successors and Assigns.
IX.
Entire Agreement
This Agreement contains the entire agreement of the Parties and shall
supersede all prior oral understandings related to the subject matter of this
Agreement.
XX.
Waiver of Breach or Violations Not Deemed Continuing
The waiver by any Party of a breach or violation of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
XXI.
Notices
Any and all notices required or permitted to be given under this
Agreement will be sufficient if furnished in writing and sent by registered or
certified mail or personally delivered to Employer or Employee at the following
addresses or such other addresses designated in writing by Employer or Employee
in a written notice to the other Party:
A. If to Employer: Mr. James H. Blanchard
Chairman and CEO
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
B. If to Employee: Mr. Robert V. Royall, Jr.
National Bank of South Carolina
1241 Main Street
Columbia, South Carolina 29201
XXII.
Governing Law
This Agreement shall be interpreted, construed and governed according
to the laws of the State of Georgia.
XXIII.
Paragraph Headings
Paragraph headings contained in this Agreement are for convenience only
and shall in no manner be construed as part of this Agreement.
14
XXIV.
Counterparts
This Agreement is executed in multiple counterparts, each of which
shall be deemed an original and together shall constitute one and the same
agreement, with at least one complete counterpart being delivered to Employee
and to Employer.
XXV.
Invalidity of Provisions
Should any part of this Agreement for any reason be declared by a court
of competent jurisdiction to be invalid, such decision shall not effect the
validity of any remaining parts, which remaining parts shall continue in full
force and effect as if this Agreement had been executed with the invalid part or
parts thereof eliminated, it being the intent of the Parties that they would
have executed the remaining parts of the Agreement without including any such
part or parts which may for any reason be hereinafter declared invalid.
XXVI.
Construction
When used herein, the masculine gender shall be used to include the
feminine gender, and the singular shall be deemed to include the plural, unless
the context clearly indicates to the contrary.
15
IN WITNESS WHEREOF, Synovus and the Bank have each hereunto caused its
corporate name to be signed and its corporate seal to be affixed by its duly
authorized corporate officers, and Employee has hereunto set his hand and seal,
all being done in triplicate originals, with one original being delivered to
each Party hereto, all as of the respective dates set forth below.
Synovus Financial Corp.
By:/s/Stephen L. Burts
Title: President & CFO
Attest: G.S. Griffith, III
Title: Secretary
(Corporate Seal)
November 18, 1994
Date "Synovus"
National Bank of South Carolina
By:/s/Charl Butler
Title: EVP, CFO & Secretary
Attest:Miriam M. Hutto
Title:Assistant Vice President
November 18, 1994 (Corporate Seal)
Date "Bank"
November 18, 1994 /s/Robert V. Royall, Jr.(L.S.)
Date Robert V. Royall, Jr.
"Employee"
emp\Royall.agr
16
EXHIBIT "A"
SCHEDULE OF COMPENSATION
The undersigned hereby agree that Employee's base salary under Article
IV of the foregoing Employment Agreement shall be $__________ per calendar year
beginning_______________________, 19____ and for such period thereafter until
hereafter changed by mutual agreement.
This _____________________day of_______________________, 19________.
NATIONAL BANK OF
SOUTH CAROLINA SYNOVUS FINANCIAL CORP.
By:______________________________________ By:____________________________
Title:__________________________ Tile:_____________________
Attest:__________________________________ Attest:_______________________
Title:__________________________ Title:__________________
(Corporate Seal) (Corporate Seal)
"Bank" "Synovus"
____________________________(L.S.)
Robert V. Royall, Jr.
"Employee"
emp\Royall.agr
EMPLOYMENT AGREEMENT, AS AMENDED
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made and entered into by
and among Synovus Financial Corp., a Georgia business corporation ("Synovus"),
and National Bank of South Carolina, a national banking association ("Bank"),
Synovus and Bank being sometimes hereinafter collectively referred to as
"Employer", and William L. Pherigo, an individual resident of South Carolina
("Employee"), Employer and Employee being sometimes hereinafter collectively
referred to as the "Parties" and is intended to amend and restate in its
entirety that certain Employment Agreement dated February 25, 1991, as amended
on February 17, 1994, by and among Bank, NBSC Corporation and Employee.
W I T N E S S E T H T H A T:
The Parties, for and in consideration of the mutual and reciprocal
covenants and agreements hereinafter contained, and other good and valuable
consideration, the receipt of which is acknowledged, and intending to be legally
bound, do contract and agree as follows, to-wit:
I.
Employment
The purpose of this Agreement is to define the relationship between
Employer, as an employer, and Employee, as an employee. Employer hereby employs
Employee and agrees to cause Employee to be elected as President and Chief
Operating Officer of Bank until January 1, 1996, at which time Employee shall be
elected as President and Chief Executive Officer of Bank. In addition, Employer
agrees to cause Employee to be elected as a director of Bank, designated as a
member of Synovus' Executive Management Team and to use its best efforts to
cause Employee to be elected as a member of the Board of Directors of Synovus,
and Employee hereby accepts employment by Employer in the above-referenced
capacities, upon all of the terms and conditions as hereinafter set forth.
II.
Duties
Employee shall have the responsibilities, powers and duties which he
exercised prior to the acquisition of Bank by Synovus and which are customarily
associated with the offices specified in Article I above, including the
responsibilities, powers and duties associated with the office of Chief
Executive Officer commencing January 1, 1996. Employee agrees to perform such
other duties as may be mutually agreed from time to time by him, on the one
hand, and by the Boards of Directors of Synovus or the Bank, on the other.
Employee shall faithfully and diligently discharge his duties and
responsibilities under this Agreement, and shall use his full-time best efforts
to discharge such duties and responsibilities.
III.
Term
The term of Employee's employment under this Agreement shall begin on
September 11, 1995 ("Effective Date of this Agreement") and shall end on
December 31, 1997 ("Agreement
1
Termination Date"), unless otherwise terminated pursuant to the terms of this
Agreement; provided, however, the term of this Agreement may be extended
pursuant to the terms and conditions of a written amendment to this Agreement
executed by Employer and Employee according to the procedure set forth in
Article XVI hereof, in which event the Agreement Termination Date shall be the
last day of such extended term of this Agreement.
IV.
Base Salary
In consideration of all services to be rendered by Employee in any
capacity hereunder for Employer during the term of this Agreement, and in
consideration of the covenants and agreements of Employee herein contained,
Employer shall pay Employee a base salary of $230,000 per calendar year while
Employee is employed on a full-time basis. Employee may thereafter receive an
annual cost of living increase in the base salary payable to him during the term
of his employment hereunder; provided, however, that Employee shall be entitled
to an annual cost of living increase in base salary if other senior executive
officers of Synovus receive such an increase.
V.
Adjustments to Base Salary
In addition to the annual cost of living increase in Employee's base
salary referenced in Article IV above, Employer and Employee may, from time to
time, reflect increases in Employee's base salary as may be mutually agreed upon
by entering any such change upon the "Schedule of Compensation," attached hereto
as Exhibit "A" and made a part hereof. If a change in the base salary of
Employee is entered on said Schedule and duly signed by Employee and the proper
officers of Employer, such entry shall constitute an amendment to this Agreement
as of the date of said entry and shall supersede the base salary provided for in
Article IV of this Agreement and any other change in such base salary previously
entered on said Schedule.
VI.
Executive Compensation Plans
Employee shall be eligible to participate in the various executive
benefit plans as are made available to other senior executives of Synovus
including, but not limited to, incentive cash bonuses, stock options and
restricted stock awards.
VII.
Benefit and Retirement Plans
Employee shall be entitled to participate in the various welfare and
fringe benefit plans and the tax qualified retirement plans which may be
authorized and adopted from time to time by the Board of Directors of Bank, with
Employee's participation in such plans to be governed and controlled by the
terms and provisions of such plans.
2
VIII.
Board of Directors
Employer shall cause Employee, during the term of this Agreement, to be
elected as President and Chief Operating Officer (with Employee to be elected as
Chief Executive Officer of Bank effective January 1, 1996) and a director of
Bank and use its best efforts to cause Employee to be elected as a director of
Synovus, and Employee shall be entitled to receive, in addition to the base
salary described in Article IV above, the usual director and/or committee fees
associated therewith.
IX.
Club Dues
During the term of this Agreement, Employer will pay (i) Employee's
reasonable expenses for dues and capital assessments for country club
memberships and if Employee is not already a member of such clubs, any
initiation fees and required bond purchases; provided, that if Employee ceases
to be a member of such clubs and any bonds or other capital payments paid by
Employer are redeemed and repaid to Employee, Employee shall pay over such
payments to Employer; and (ii) such reasonable civic and community club dues
requested by Employee upon the approval of such dues by the Board of Directors
of Bank. Any expenditures made in the use of such clubs in connection with
Employee's duties will be reimbursed in accordance with the last sentence of
Article XI of this Agreement.
X.
Stock Purchase Plans
Employee shall be allowed to participate in the Synovus Financial Corp.
Employee and Director Stock Purchase Plans if adopted by the Board of Directors
of Bank, and such participation shall be effective upon the effective date of
their adoption by the Board of Directors of Bank.
XI.
Automobile and Other Expenses
During the term of this Agreement, Employer shall provide Employee with
an automobile owned or leased by Employer, such automobile to be a make and
model appropriate to Employee's status (and at least commensurate with the
automobile provided to Employee by the Bank on September 11, 1995) and shall pay
all reasonable expenses associated with the use thereof, including, but not
limited to, maintenance and insurance. Alternatively, Employee shall be entitled
to an automobile allowance of at least $4,000.00 per year. Additionally,
Employee shall be reimbursed by Employer for reasonable travel and other
reasonable expenses relating to Employee's duties, which expenses are incurred
and accounted for in accordance with Employer's normal practices.
XII.
Termination and Change In Control
A. Termination by Employer and Termination by Employee for Good Reason;
Other Rights Upon Change in Control.
3
(1) This Agreement may be terminated by Employee for Good
Reason upon delivery of a Notice of Termination to Employer at
any time beginning 60 days after the occurrence of a Change in
Control. If Employee's employment shall be terminated by
Employer in violation of this Agreement or if Employee's
employment shall be terminated by Employee for Good Reason,
Employee shall be released from the terms of the Covenant Not
to Compete contained in Section XIII hereof, and in addition
to other rights and remedies available in law or equity,
Employee shall be entitled to the following:
(i)Employer shall pay Employee in cash within fifteen days of
the Termination Date an amount equal to all Accrued
Compensation and the Pro Rata Bonus;
(ii) Employer shall pay to Employee in cash at the end of each
of the thirty-six consecutive 30 day periods following the
Termination Date the following amounts:
(a) at the end of the first through twelfth 30-day
periods an amount equal to one-twelfth of the product
of (1) the sum of the Base Amount and the Bonus
Amount, multiplied by (2) one;
(b) at the end of the thirteenth through
twenty-fourth 30-day periods an amount equal to
one-twelfth of the product of (1) the sum of the Base
Amount and the Bonus Amount, multiplied by (2)
two-thirds; and
(c) at the end of the twenty-fifth through the
thirty-sixth 30-day periods an amount equal to
one-twelfth of the product of (1) the sum of the Base
Amount and the Bonus Amount, multiplied by (2)
one-third; and
(iii) for the period from the Termination Date through the
date that Employee attains the age of 65 (the "Continuation
Period"), Employer shall at its expense, less standard
employee contributions in effect as of the Termination Date
for such benefits for which Employee shall remain responsible,
continue on behalf of Employee and his dependents and
beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits provided (x) to Employee at any
time during the 90-day period prior to the Change in Control
or at any time thereafter or (y) to other similarly situated
executives who continue in the employ of Bank during the
Continuation Period, or comparable benefits. Notwithstanding
the foregoing, the coverage and benefits (including
deductibles and employee contributions to costs) provided in
this Section XII(A)(1)(iii) during the Continuation Period
shall be no less favorable to Employee and his dependents and
beneficiaries than the most favorable of such coverages and
benefits for employees of Bank during any of the periods
referred to in clauses (x) and (y) above. Employer's
obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that Employee obtains any such
benefits pursuant to a subsequent employer's benefit plans, in
which case Employer may reduce the coverage of any benefits it
is required to provide Employee hereunder as long as the
aggregate coverages and benefits of the combined benefit plans
is no less favorable to Employee than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits to
which Employee or his dependents or beneficiaries may be
entitled under any of
4
Bank's employee benefit plans, programs or practices following
Employee's termination of employment, including without
limitation, retiree medical and life insurance benefits.
(2) In the event of a Change of Control (regardless of whether
Employee's employment is terminated hereunder), the
restrictions on any outstanding incentive awards (including
restricted stock) granted to Employee shall lapse and such
incentive award shall become 100% vested, all stock options
and stock appreciation rights granted to Employee shall become
immediately exercisable and shall become 100% vested, and all
performance units granted to Employee shall become 100%
vested.
(3) Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided
to Employee in any subsequent employment except as provided in
Section XII(A)(1)(iii).
(4) The severance pay and benefits provided for in this
Section XII(A) shall be in lieu of any other severance or
termination pay to which Employee may be entitled under any
Employer severance or termination plan, program, practice or
arrangement. Employee's entitlement to any other compensation
or benefits shall be determined in accordance with Employer's
employee benefit plans and other applicable programs, policies
and practices then in effect.
B. Termination By Employee Other Than For Good Reason. If Employee
voluntarily terminates his employment hereunder, other than for Good Reason, by
delivering a Notice of Termination to Employer, Employee shall: (i) receive
within 30 days after the Termination Date a lump sum cash payment equal to the
Accrued Compensation and the Pro Rata Bonus; (ii) immediately forfeit any rights
to any compensation and employee benefits, to the extent not vested, including
options and restricted stock, which would have become vested after the
Termination Date; and (iii) continue to be subject to the Covenant Not to
Compete contained in Section XIII hereof.
C. Termination For Cause. Employee's employment with Employer may be
terminated by Employer For Cause, as defined in Section XVI(d) hereof. In such
event Employee shall: (i) receive within 30 days after the Termination Date a
lump sum cash payment equal to the Accrued Compensation; (ii) immediately
forfeit any rights to any further compensation and employee benefits, including
the Pro Rata Bonus, to the extent not vested, including options and restricted
stock, which would have become vested after the Termination Date; and (iii)
continue to be subject to the Covenant Not to Compete contained in Section XIII
hereof.
D. Death or Permanent Disability of Employee. Upon Employee's death or
upon notice of Employee's permanent disability during the term hereof, this
Agreement shall terminate, and Employee or his legal or personal representative,
as the case may be, shall receive within 30 days after the Termination Date a
lump sum cash payment equal to the Accrued Compensation and the Pro Rata Bonus.
No further compensation or employee benefits shall be due and payable to
Employee under this Agreement, from and after said date; provided, however,
Employee shall be entitled to receive life insurance and/or disability benefits
and/or vested retirement or other benefits made available to him by Employer
outside the terms of this Agreement, including the Stock Option
5
Agreement to be entered into pursuant to Article XIV hereof. For purposes of
this Agreement, Employee shall be deemed "permanently disabled" by bodily or
mental illness, disease or injury, to the extent that, in the reasonable
judgment of Employers' boards of directors he is prevented from performing the
material and substantial duties of his Employment and such disability has
continued substantially for six months. If requested by Employer, Employee shall
submit to an examination by a physician mutually acceptable to Employer and
Employee for the purpose of determining or confirming the existence or extent of
any disability.
XIII.
Covenant Not to Compete and Confidentiality
For and in consideration of: (i) Employers' employment of Employee
pursuant to Article I of this Agreement; (ii) Employers' entering into this
Agreement; and (iii) the issuance under this Agreement of options to purchase
shares of common stock of Synovus pursuant to the terms hereof, Employee hereby
agrees to the following:
A. Employee agrees that at all times prior to the Agreement Termination
Date, and for a period of 18 months subsequent to the Agreement Termination Date
if Employee is employed by Employer on the Agreement Termination Date, and in no
event for less than 18 months after any Termination Date, he will not form,
organize or acquire more than 5% of the capital stock of, or cause his
affiliates or other persons or entities under his control to form, organize or
acquire more than 5% of the capital stock of, or serve as an executive officer
or director of a depository financial institution (i) which is not an affiliate
of Synovus (including any holding company thereof) and (ii) which is located or
has offices in the State of South Carolina.
B.(1) Employee agrees that, both during the term of this Agreement and
after the termination of this Agreement, Employee will hold in a fiduciary
capacity for the benefit of Employer, and shall not directly or indirectly use
or disclose, except as authorized by Employer in connection with the performance
of Employee's duties, any Trade Secret, as defined hereinafter, that Employee
may have or acquire during the term of this Agreement for so long as such
information remains a Trade Secret. The term "Trade Secret" as used in this
Agreement shall mean information including, but not limited to, technical or
non-technical data, a formula, a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial plans, loan
portfolios, marketing plans, product plans, or a list of actual or potential
customers or suppliers, including without limitation, information received by
Employer or Employee from any client or potential client of Employer, which:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of reasonable efforts by Employer or the
client from which the information was received to maintain its secrecy.
These rights of Employer are in addition to those rights
Employer has under the common law or applicable statute for protection of trade
secrets.
6
(2) In addition to the foregoing and not in limitation
thereof, Employee agrees that, during the term of this Agreement and for a term
of two (2) years after any Termination Date, Employee will hold in a fiduciary
capacity for the benefit of Employer and shall not directly or indirectly use or
disclose, except as authorized by Employer in connection with the performance of
Employee's duties, any confidential or proprietary information, as defined
hereinafter, that Employee may have or acquire (whether or not developed or
compiled by Employee and whether or not Employee has been authorized to have
access to such confidential or proprietary information) during the term of this
Agreement. The term "Confidential or Proprietary Information" as used in this
Agreement means any secret, confidential or proprietary information of Employer,
including information received by Employer or Employee from any client or
potential client of Employer, not otherwise included in the definition of "Trade
Secret" in Paragraph B.1 above. The term "Confidential or Proprietary
Information" does not include information that has become generally available to
the public by any means other than a violation of the restrictions contained in
this paragraph.
(3) Employee agrees and acknowledges that, if a violation of
any covenant contained in this paragraph occurs or is threatened, such violation
or threatened violation will cause irreparable injury to Employer, that the
remedy at law for any such violation or threatened violation will be inadequate
and that Employer shall be entitled to appropriate equitable relief.
(4) Employee hereby agrees that the restrictions contained in
this paragraph are fair and reasonable and necessary for the protection of the
legitimate business interest of Employer.
XIV.
Stock Options
In consideration of Employee's entering into this Agreement, Synovus
hereby agrees to cause to be granted Employee an option to purchase 15,000
shares of common stock of Synovus at an exercise price of $22.75 per share on
the Effective Date of this Agreement, pursuant to the terms of the Synovus
Financial Corp. 1994 Long-Term Incentive Plan, to become exercisable as to one
hundred percent (100%) of such shares on the fifth anniversary date of the date
of Synovus' grant of such shares if Employee is employed on a full-time basis on
such date or if Employee is providing services to Employer pursuant to the
Retirement Agreement referenced in Article XV below. The option may be exercised
at any time during the five year period following the date that such option
first becomes exercisable. In the event of Employee's termination of employment
by death (other than by suicide) or termination of employment by reason of
permanent disability, the option shall thereafter become immediately
exercisable. In addition, Employee shall be entitled to exercise his options
with respect to NBSC stock for which provision is made in Section 1(d) of his
Employment Agreement with NBSC as amended prior to this amendment and
restatement and to receive the additional payments for which provision is made
therein.
XV.
Retirement Agreement
Upon the original Agreement Termination Date, or upon any other
Agreement Termination Date which may be mutually agreed to by Employer and
Employee according to the procedure set forth in Article XVI hereof, the
Retirement Agreement attached hereto as Exhibit "B" shall become effective.
7
XVI.
Amendments
This Agreement may be amended or extended at any time and from time to
time by an agreement in writing signed by Employer and Employee and approved by
the Boards of Directors of Employer. The Parties shall be deemed to have
consented to any amendment by accepting any benefits thereunder after having
received from the other Party written notice of such amendment.
XVII.
Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as
of the Termination Date including (i) base salary, (ii) reimbursement
for reasonable and necessary expenses incurred by Employee on behalf of
Employer during the period ending on the Termination Date, and (iii)
bonuses and incentive compensation (other than the Pro Rata Bonus),
less applicable withholdings of federal, state and local taxes.
(b) "Base Amount" shall mean the greater of Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the
highest rate in effect at any time during the 90 day period prior to
the Change in Control, and shall include all amounts of his base salary
that are deferred under the qualified and non-qualified employee
benefit plans of Employer or any other agreement or arrangement.
(c) "Bonus Amount" shall mean the greater of (i) the most recent annual
cash bonus paid or payable to Employee or, if greater, the annual bonus
paid or payable for the most recent full fiscal year ended prior to the
fiscal year during which a Change in Control occurred or (ii) the
average of the annual cash bonuses paid or payable during the three
full fiscal years ended prior to the Termination Date or, if greater,
the three most recent full fiscal years ended prior to the Change in
Control (or, in each case, such lesser period for which annual cash
bonuses were paid or payable to Employee.
(d) The termination of Employee's employment shall be "For Cause" if it
is a result of:
(i) any act that (A) constitutes, on the part of Employee,
fraud, dishonesty, gross malfeasance of duty, or conduct
grossly inappropriate to Employee's office, and (B) is
demonstrably likely to lead to material injury to Employer or
resulted or was intended to result in direct or indirect gain
to or personal enrichment of Employee; or
(ii) the conviction (from which no appeal may be or is timely
taken) of Employee of a felony; or
(iii) the suspension or removal of Employee by federal or
state banking regulatory authorities acting under lawful
authority pursuant to provisions of federal or state law or
regulation which may be in effect from time to time; or
8
(iv) the breach of the covenants in Section XIII hereof;
provided, however, that in the case of clause (i) above, such
conduct shall not constitute Cause unless (A) there shall have
been delivered to Employee a written notice setting forth with
specificity the reasons that the Boards of Employer believe
Employee's conduct constitutes the criteria set forth in
clause (i), (B) Employee shall have been provided the
opportunity to be heard in person by the Boards of Employer
(with the assistance of Employee's counsel if Employee so
desires), and (C) after such hearing, the termination is
evidenced by a resolution adopted in good faith by two-thirds
of all the members of each of the Boards of Directors of
Synovus and Bank not counting Employee for purposes of
determining the number of members on each such Board.
(e) A "Change in Control" shall mean the occurrence during the term of
this Agreement of any of the following events; provided, however, that
Employee hereby agrees that the acquisition of NBSC Corporation by
Synovus shall not be deemed to be a change in control for purposes of
this Agreement other than Section XII of this Agreement and the
definition of Good Reason in which case such acquisition shall be
deemed a "Change in Control":
(i) An acquisition (other than directly from Employer) of any
voting securities of Employer (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934 (the
"1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of the combined
voting power of Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired in
a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non- Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) Employer or (y) any
corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned
directly or indirectly by Employer (a "Subsidiary"), (2)
Employer or any Subsidiary, or (3) any Person in connection
with a "Non-Control Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Agreement,
are members of the Board (the "Incumbent Board") cease for any
reason, other than death, resignation or retirement pursuant
to the bylaws of Employer, to constitute at least two-thirds
of the Board; provided, however, that if the election or
nomination for election by the Corporation's shareholders, of
any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes
of this Agreement, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
9
(iii) Approval by shareholders of Employer of:
(a) A merger, consolidation or
reorganization involving Employer,
unless (1) the shareholders of Employer,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly, immediately
following such merger, consolidation or
reorganization, at least two-thirds of
the combined voting power of the
outstanding voting securities of the
corporation resulting from such merger
or consolidation or reorganization (the
"Surviving Corporation") in
substantially the same proportion as
their ownership of the Voting Securities
immediately before such merger
consolidation or reorganization, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for
such merger, consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of the
Surviving Corporation.
(A transaction described in clauses (1) and (2)
shall herein be referred to as a "Non-Control
Transaction.")
(b) A complete liquidation or dissolution of Employer; or
(c) An agreement for the sale or other disposition of
all or substantially all of the assets of Employer to
any Person (other than a transfer to a subsidiary).
(iv) Notwithstanding anything contained in this Agreement to
the contrary, if Employee's employment is terminated prior to
a Change in Control and Employee reasonably demonstrates that
such termination (A) was at the request of a third party who
has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a
Change in Control (a "Third Party") or (B) otherwise occurred
in connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to
Employee shall mean the date immediately prior to the date of
such termination of Employee's employment.
(f) "Good Reason" shall mean the occurrence after a Change in Control
of any of the events or conditions described in subsections (i) through
(viii) hereof:
(i) a change in Employee's status, title, position or
responsibilities (including reporting responsibilities) which,
in Employee's reasonable judgment, represents an adverse
change from his status, title, position or responsibilities as
in effect at any time within ninety days preceding the date of
a Change in Control or at any time thereafter; the assignment
to Employee of any duties or responsibilities which, in
Employee's reasonable judgment, are inconsistent with his
status, title, position or responsibilities as in effect at
any time within ninety days preceding the date of a
10
Change in Control or at any time thereafter; any removal of
Employee from or failure to reappoint or reelect him to any of
such offices or positions, except in connection with the
termination of his employment by Employer For Cause or by
Employee other than for Good Reason; or any other change in
condition or circumstances that in Employee's reasonable
judgment makes it materially more difficult for Employee to
carry out the duties and responsibilities of his office than
was the case at any time within ninety days preceding the date
of Change in Control or at any time thereafter;
(ii) a reduction in Employee's base salary or any failure to
pay Employee any compensation or benefits to which he is
entitled within five days of the date due;
(iii) Employer's requiring Employee to be based at any place
outside a 50-mile radius from the executive offices occupied
by Employee immediately prior to the Change in Control, except
for reasonably required travel on Employer's business which is
not materially greater than such travel requirements prior to
the Change in Control;
(iv) the failure by Employer to (A) continue in effect
(without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit
plan in which Employee was participating at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter, unless such plan is replaced with a plan
that provides substantially equivalent compensation or
benefits to Employee or (B) provide Employee with compensation
and benefits, in the aggregate, at least equal (in terms of
benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and
practice in which Employee was participating at any time
within ninety days preceding the date of a Change in Control
or at any time thereafter;
(v) the insolvency or the filing (by any party, including
Employer) of a petition for bankruptcy of Employer, which
petition is not dismissed within sixty days;
(vi) any material breach by Employer of any provision of this
Agreement;
(vii) any purported termination of Employee's employment For
Cause by Employer which does not comply with the terms of this
Agreement; or
(viii) the failure of Employer to obtain an agreement,
satisfactory to Employer, from any successors and assigns to
assume and agree to perform this Agreement, as contemplated in
Section XVIII hereof.
Any event or condition described in clause (i) through (viii)
above which occurs prior to a Change in Control but which
Employee reasonably demonstrates (A) was at the request of a
Third Party, or (B) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs,
shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the change in
Control. Employee's right to terminate his employment for Good
Reason shall not be affected by his incapacity due to physical
or mental illness. Notwithstanding anything to the contrary
contained above in this paragraph (f), changes agreed to by
Employee
11
in this Agreement, or otherwise agreed to between Employer and
Employee, from the facts and circumstances in existence prior
to the consummation of the merger of NBSC Corporation into
Synovus in respect of clauses (i) or (iv) above shall not
constitute "Good Reason."
(g) "Notice of Termination" shall mean a written notice of termination
from Employer or Employee which specifies an effective date of
termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
(h) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days
in the fiscal year through the Termination Date and the denominator of
which is 365, less applicable withholdings of federal, state and local
taxes.
(i) "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of Employer
(including this Agreement), whether by operation of law or otherwise.
(j) "Termination Date" shall mean in the case of Employee's death, his
date of death, or in the case of permanent disability, the date
described in Section XII(E) hereof, and in all other cases, the date
specified in the Notice of Termination.
XVIII.
Parties Bound
This Agreement shall be binding upon and shall inure to the benefit of
Employer, its Successors and Assigns, and Employer shall require any Successors
and Assigns to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to perform it if
no such succession or assignment had taken place. Neither this Agreement nor any
right or interest hereunder shall be assignable or transferable by Employee, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by Employee's legal personal representative against Employer, its
Successors and Assigns.
XIX.
Entire Agreement
This Agreement contains the entire agreement of the Parties and shall
supersede all prior oral understandings related to the subject matter of this
Agreement.
XX.
Waiver of Breach or Violations Not Deemed Continuing
The waiver by any Party of a breach or violation of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
12
XXI.
Notices
Any and all notices required or permitted to be given under this
Agreement will be sufficient if furnished in writing and sent by registered or
certified mail or personally delivered to Employer or Employee at the following
addresses or such other addresses designated in writing by Employer or Employee
in a written notice to the other Party:
A. If to Employer: Mr. James H. Blanchard
Chairman and CEO
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
B. If to Employee: Mr. William L. Pherigo
National Bank of South Carolina
1241 Main Street
Columbia, South Carolina 29201
XXII.
Governing Law
This Agreement shall be interpreted, construed and governed according
to the laws of the State of Georgia.
XXIII.
Paragraph Headings
Paragraph headings contained in this Agreement are for convenience only
and shall in no manner be construed as part of this Agreement.
XXIV.
Counterparts
This Agreement is executed in multiple counterparts, each of which
shall be deemed an original and together shall constitute one and the same
agreement, with at least one complete counterpart being delivered to Employee
and to Employer.
XXV.
Invalidity of Provisions
Should any part of this Agreement for any reason be declared by a court
of competent jurisdiction to be invalid, such decision shall not effect the
validity of any remaining parts, which remaining parts shall continue in full
force and effect as if this Agreement had been executed with the invalid part or
parts thereof eliminated, it being the intent of the Parties that they would
have executed the remaining parts of the Agreement without including any such
part or parts which may for any reason be hereinafter declared invalid.
13
XXVI.
Construction
When used herein, the masculine gender shall be used to include the
feminine gender, and the singular shall be deemed to include the plural, unless
the context clearly indicates to the contrary.
c:\emp\Pherigo.adm
14
IN WITNESS WHEREOF, Synovus and the Bank have each hereunto caused its
corporate name to be signed and its corporate seal to be affixed by its duly
authorized corporate officers, and Employee has hereunto set his hand and seal,
all being done in triplicate originals, with one original being delivered to
each Party hereto, all as of the respective dates set forth below.
Synovus Financial Corp.
By: /s/James D. Yancey
Title: Vice Chairman
Attest:/s/Kathleen Moates
Title: Assistant Secretary
(Corporate Seal)
September 11, 1995
Date "Synovus"
National Bank of South Carolina
By:/s/Robert V. Royall, Jr.
Title:Chairman
Attest:/s/Miriam M. Hutto
Title: Assistant Vice President
September 11, 1995 (Corporate Seal)
Date "Bank"
September 11, 1995 /s/William L. Pherigo (L.S.)
Date William L. Pherigo
"Employee"
emp\pherigo.adm
15
EXHIBIT "A"
SCHEDULE OF COMPENSATION
The undersigned hereby agree that Employee's base salary under Article
IV of the foregoing Employment Agreement shall be $ per calendar year beginning
, 19 and for such period thereafter until hereafter changed by mutual agreement.
This day of , 19 .
NATIONAL BANK OF
SOUTH CAROLINA SYNOVUS FINANCIAL CORP.
By:________________________________________ By:_______________________
Title:_________________________________ Tile:__________________
Attest:____________________________________ Attest:___________________
Title:_________________________________ Title:_________________
(Corporate Seal) (Corporate Seal)
"Bank" "Synovus"
________________________________________(L.S.)
William L. Pherigo
"Employee"
emp\Pherigo.adm
RETIREMENT AGREEMENT
THIS RETIREMENT AGREEMENT ("Agreement") is made and entered into by and
between WILLIAM L. PHERIGO, an individual resident of the state of South
Carolina ("Pherigo"), SYNOVUS FINANCIAL CORP., a business corporation organized
and existing under the laws of the State of Georgia ("Synovus"), and NATIONAL
BANK OF SOUTH CAROLINA, a national banking association ("NBSC");
WITNESSETH THAT:
WHEREAS, Pherigo has agreed to retire from his offices as the President
and Chief Executive Officer of NBSC upon the Agreement Termination Date as
defined in that certain Employment Agreement dated September 11, 1995 by and
between Synovus, NBSC and Pherigo ("Agreement Termination Date");
WHEREAS, Synovus and NBSC desire to provide for the retention by
Synovus and NBSC of Pherigo's services as a consultant and business developer
after his retirement;
WHEREAS, Pherigo desires to serve Synovus and NBSC as a consultant and
business developer under the terms and conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
Agreements set forth herein, Pherigo, Synovus and NBSC intending to be legally
bound, do hereby agree as follows:
Section I.
RELATIONSHIP
Synovus and NBSC hereby engage Pherigo, and Pherigo accepts such
engagement, to perform such consulting and advisory services as may be requested
from time to time by the Chief Executive Officers of Synovus and NBSC. In
providing such services, Pherigo shall not be required to adhere to a fixed
schedule or to work for a certain number of hours. Pherigo shall not be required
to devote a major or substantial part of his time to such services. The Chief
Executive Officers of Synovus and NBSC may establish the results to be
accomplished in connection with consulting and advisory services requested from
Pherigo, but Pherigo shall control the means and methods of accomplishing the
results. Pherigo may establish his own work schedule and shall be free at all
times to arrange the time and manner of performance of consulting and advisory
services requested from him. During the term of his engagement hereunder,
Pherigo will not provide services of any sort to, or assist in any way, with or
without compensation, any financial institution or intermediary (including, but
not limited to, a bank or bank holding company, a savings and loan association
or a brokerage concern) or any enterprise engaged in the business of bankcard
account processing, other than Synovus and its affiliates.
In addition, during the term of engagement hereunder, Pherigo agrees to
engage in business development activities on behalf of Synovus and NBSC and to
serve as a goodwill ambassador for Synovus and NBSC in various social and civic
activities.
Section II.
TERM OF ENGAGEMENT
Subject to early termination under Section VI hereof, Pherigo's
engagement under this Agreement shall commence as of the Agreement Termination
Date ("Effective Date") and shall end three years thereafter.
Section III.
COMPENSATION
3.1 In consideration of all services to be rendered by Pherigo
hereunder, and in consideration of the covenants and Agreements of Pherigo
herein contained, Synovus and NBSC agree to pay to Pherigo each year during the
three year term of this Agreement an amount equal to the sum of one-half of the
current base salary Pherigo is receiving on the Effective Date of this Agreement
plus one-half of the average of the incentive cash bonus which Pherigo received
for the two years preceding the Effective Date of this Agreement.
3.2 Pherigo acknowledges that he is an independent contractor for all
purposes. Pherigo agrees to treat all payments made to him hereunder as payments
received by an independent contractor for all tax purposes and to pay any and
all taxes payable in connection with his engagement hereunder, including,
without limitation, all applicable income and self employment taxes.
3.3 The obligations of Synovus and NBSC under Section 3.1 hereof shall
terminate if, during Pherigo's engagement hereunder or during the two years
after the termination of such engagement, Pherigo, unless acting with the prior
written consent of the Boards of Directors of Synovus and NBSC, provides
services of any sort to, or assists in any way, with or without compensation,
any financial institution or intermediary (including, but not limited to, a bank
or bank holding company, a savings and loan association or a brokerage concern)
or any enterprise engaged in the business of bankcard account processing, other
than Synovus and its affiliates.
Section IV.
TERMINATION OF EMPLOYMENT
The parties acknowledge and agree that for no purpose (including,
without limitation, any employee benefit or pension plan) shall Pherigo be
considered an employee of NBSC or Synovus after the Agreement Termination Date.
Effective on the Agreement Termination Date, Pherigo will resign as
President and Chief Executive Officer of NBSC and as a director of Synovus.
Section V.
INSURANCE
Notwithstanding any other provision in this Agreement to the contrary, from the
Agreement Termination Date through the date that Pherigo attains the age of 65
(the "Coverage
Period"), Synovus and NBSC shall at their expense, less standard employee
contributions in effect from time to time during the Coverage Period for such
benefits for which Pherigo shall remain responsible, continue on behalf of
Pherigo and his dependents and beneficiaries life insurance, disability,
medical, dental and hospitalization benefits provided (x) to Pherigo at any time
during the ninety day period prior to the Agreement Termination Date or at any
time thereafter or (y) to other similarly situated executives who continue under
the employ of NBSC during the coverage period, or comparable benefits.
Notwithstanding the foregoing, the coverage and benefits (including
deductibles and employee contributions to costs) provided in this Section V
during the Coverage Period shall be no less favorable to Pherigo and his
dependents and beneficiaries than the most favorable of such coverages and
benefits for employees of NBSC during any of the periods referred to in clauses
(x) and (y) above. Synovus and NBSC's obligations hereunder with respect to the
foregoing benefits shall be limited to the extent that Pherigo obtains any such
benefits pursuant to a subsequent employer's benefit plans, in which case,
Synovus and NBSC may reduce the coverage of any benefits they are required to
provide Pherigo hereunder as long as the aggregate coverages and benefits of the
combined benefit plans is no less favorable to Pherigo than the coverages and
the benefits required to be provided for hereunder. This Section shall not be
interpreted so as to limit any benefits to which Pherigo or his dependents or
beneficiaries may be entitled under any of NBSC's employee benefit plans,
programs or practices following Pherigo's termination of employment, including,
without limitation, retiree medical and life insurance benefits.
Section VI.
TERMINATION
Pherigo's engagement under this Agreement and his receipt of
compensation hereunder shall terminate upon Pherigo's death or total and
permanent disability. For purposes of this Agreement, Pherigo shall be deemed
"permanently disabled" by bodily or mental illness, disease or injury, to the
extent that, in the reasonable judgment of Synovus' and NBSC's boards of
directors he is prevented from performing the material and substantial duties
under this Agreement and such disability has continued substantially for six
months. If requested by Synovus and NBSC, Pherigo shall submit to an examination
by a physician mutually acceptable to Synovus and NBSC and Pherigo for the
purpose of determining or confirming the existence or extent of any disability.
Section VII.
CONFIDENTIALITY
(1) Pherigo agrees that, both during the term of this Agreement and
after the termination of this Agreement, Pherigo will hold in a fiduciary
capacity for the benefit of Synovus and NBSC, and shall not directly or
indirectly use or disclose, except as authorized by Synovus and NBSC in
connection with the performance of Pherigo's duties, any Trade Secret, as
defined hereinafter, that Pherigo may have or acquire during the term of this
Agreement for so long as such information remains a Trade Secret. The term
"Trade Secret" as used in this Agreement shall mean information including, but
not limited to, technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, loan portfolios, marketing plans, product
plans, or a list of actual or potential
customers or suppliers, including without limitation, information received by
Synovus and NBSC or Pherigo from any client or potential client of Synovus and
NBSC, which:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of reasonable efforts by Synovus and NBSC or the
client from which the information was received to maintain its secrecy.
These rights of Synovus and NBSC are in addition to those rights
Synovus and NBSC has under the common law or applicable statute for protection
of trade secrets.
(2) In addition to the foregoing and not in limitation thereof, Pherigo
agrees that, during the term of this Agreement and for a term of two (2) years
after the termination hereof, Pherigo will hold in a fiduciary capacity for the
benefit of Synovus and NBSC and shall not directly or indirectly use or
disclose, except as authorized by Synovus and NBSC in connection with the
performance of Pherigo's duties, any confidential or proprietary information, as
defined hereinafter, that Pherigo may have or acquire (whether or not developed
or compiled by Pherigo and whether or not Pherigo has been authorized to have
access to such confidential or proprietary information) during the term of this
Agreement. The term "Confidential or Proprietary Information" as used in this
Agreement means any secret, confidential or proprietary information of Synovus
and NBSC, including information received by Synovus and NBSC or Pherigo from any
client or potential client of Synovus and NBSC, not otherwise included in the
definition of "Trade Secret" in Paragraph 1 above. The term "Confidential or
Proprietary Information" does not include information that has become generally
available to the public by any means other than a violation of the restrictions
contained in this paragraph.
(3) Pherigo agrees and acknowledges that, if a violation of any
covenant contained in this paragraph occurs or is threatened, such violation or
threatened violation will cause irreparable injury to Synovus and NBSC, that the
remedy at law for any such violation or threatened violation will be inadequate
and that Synovus and NBSC shall be entitled to appropriate equitable relief
(4) Pherigo hereby agrees that the restrictions contained in this
paragraph are fair and reasonable and necessary for the protection of the
legitimate business interest of Synovus and NBSC.
Section VIII.
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of Georgia without regard to its
conflict or choice of law provisions.
8.2. Notices. All notices or other communications required or
permitted hereunder or necessary and convenient in connection herewith shall be
in writing and delivered in person or by express delivery service or postage
prepaid first-class mail, return receipt requested, to the
following addresses:
If to Pherigo:
Mr. William L. Pherigo
1235 Bookman Loop
Winnsboro, S.C. 29180
If to Synovus or NBSC:
Synovus Financial Corp.
P.O. Box 120
Columbus, Georgia 31902
or to such other addresses as Pherigo, Synovus or NBSC may designate by notice
to the other parties hereto in the manner set forth in this Section VIII.
8.3 Entire Agreement. This Agreement sets forth the entire Agreement of
the parties hereto with respect to the subject matter hereof and may not be
changed or amended except upon written amendment executed by the parties hereto.
8.4 Assignment. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of Pherigo hereunder shall not be
assignable in whole or in part by Pherigo.
8.5 Counterparts. This Agreement may be executed in counterparts,
each of which, when executed, shall be deemed an original instrument.
IN WITNESS WHEREOF, Synovus and NBSC have caused this Agreement to be
executed on their behalf and Pherigo has hereunto set his hand and seal, as of
the respective dates set forth below.
SYNOVUS FINANCIAL CORP.
By:/s/James D. Yancey
Title: Vice Chairman
Attest:/s/Kathleen Moates
Date: September 11, 1995 Title:Assistant Secretary
[CORPORATE SEAL]
NATIONAL BANK OF SOUTH CAROLINA
By:/s/Robert V. Royall, Jr.
Title: Chairman
Attest:/s/Miram M. Hutto
Date: September 11, 1995 Title: Assistant Vice President
[BANK SEAL]
Date: September 11, 1995 /s/William L. Pherigo (L.S.)
William L. Pherigo
APPENDIX B
SYNOVUS FINANCIAL CORP.
EXECUTIVE BONUS PLAN
ARTICLE I
OBJECTIVE OF THE PLAN
The purposes of this Synovus Financial Corp. Executive Bonus Plan
("Plan") to reward selected officers of Synovus Financial Corp. (the "Company")
and certain of its subsidiaries ("Subsidiaries") for superior corporate
performance measured by achievement of financial performance and strategic
corporate objectives and to attract and retain top quality officers.
ARTICLE II
PLAN ADMINISTRATION
This Plan is administered by the Compensation Committee (the
"Committee") of the Company's Board of Directors (the "Board"), with the
approval, as to matters involving employees of any publicly-traded Subsidiary of
the Company, of the compensation committee of such publicly-traded Subsidiary.
The Committee (and the compensation committee of any publicly-traded Subsidiary
of the Company) shall be composed of two or more outside directors as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code").
ARTICLE III
PARTICIPANTS
Participation is limited to the Chief Executive Officer and the four
highest compensated officers of the Company and any publicly-traded Subsidiary
of the Company as selected from year-to-year by the members of the Committee
("Participants").
ARTICLE IV
PERFORMANCE OBJECTIVES
Each fiscal year, the Committee shall establish
(i) performance objectives for such and/or the succeeding
fiscal year for the Company, any Subsidiary, or any
business segment or business unit of the Company or
any Subsidiary, based upon such criteria as may be
from time to time considered by the Committee, which
criteria may include, not to the exclusion of other
criteria, criteria that has been approved by the
shareholders of the Company or the shareholders of
any publicly-traded Subsidiary of the Company; and
(ii) a system which equates the attainment of various
performance objectives by the Company and
Subsidiaries for such and/or the succeeding fiscal
year into various percentages of the base salaries of
eligible officers of the Company and Subsidiaries for
such and/or the succeeding fiscal year which may be
awarded to such Employees who are selected to be
Participants in the Plan as bonuses.
The maximum award under this Plan to any participant shall be 150% of
base salary, provided, however, that no participant may receive an award for any
performance period in excess of $1,500,000.
ARTICLE V
AWARD OF BONUSES
As soon as practicable after each fiscal year for which performance
objectives have, pursuant to Article IV, been established, the Committee shall
determine whether the Company and each Subsidiary attained the
previously-established performance objectives. Assuming such performance
objectives shall be attained, the Committee shall determine, in its sole and
exclusive discretion, whether any bonuses shall be awarded for such fiscal year.
Such bonuses shall be awarded as soon as practicable thereafter and the officers
who are determined to be entitled to receive such bonuses shall be promptly
notified of the award thereof.
ARTICLE VI
PAYMENT OF BONUSES
Any bonus or any portion of any bonus awarded to a Participant shall,
at the election of such Participant, be deferred and made subsequently payable
to such Participant and/or his beneficiary, as provided in Article VIII hereof.
In order to properly provide for timely elections as to the deferral of
receipt of bonuses, each eligible officer of the Company or Subsidiary eligible
to become a Participant in the Plan may elect by an instrument in writing, the
form for said written election being attached hereto and marked Exhibit "A" and
entitled "Election Regarding Deferral of Executive Bonus Awarded Pursuant to
Synovus Financial Corp. Executive Bonus Plan" on or before the 31st day of
December of the year preceding the fiscal year for which such bonus is to be
awarded, to have any percentage of any bonus which may be awarded to him for
such fiscal year paid to him in cash on the distribution date for such fiscal
year, with the balance being deferred and payable to him as provided in Article
VIII hereof. Said written forms of election shall be filed with the Committee.
ARTICLE VII
DEFERRED EXECUTIVE BONUS ACCOUNTS
There shall be established for each Participant who elects to defer
receipt of any portion of any bonus awarded to him an account to be designated
as such Participant's Deferred Executive Bonus Account to which amounts so
elected to be deferred shall be allocated. Interest, at a rate equal to the
average annual short-term prime rate as established by Columbus Bank and Trust
Company for each fiscal year and applied to the average balance in said Account
for said fiscal year, shall be credited to such Participants' Deferred Executive
Bonus Accounts on December 31st of each fiscal year until all amounts allocated
thereto have been distributed to such Participants or their beneficiaries as
provided in Article VIII hereof.
ARTICLE VIII
DISTRIBUTION AFTER PARTICIPANT'S DEFERRAL TERMINATION DATE
When a Participant's employment termination date shall occur, the
balance in such Participant's Deferred Executive Bonus Account shall be
distributed to such Participant or his beneficiary as provided hereinbelow:
(A) Distribution shall be made in one lump sum or in up
to 120 approximately equal and consecutive monthly
installments. The method of payment, lump sum or
installment, and, in the event the distribution is
determined to be made by installments, the number of
installments in which such distribution is to be
made, for each Participant shall be determined solely
and exclusively by the Committee.
(B) If a Participant's termination of employment occurs
by reason of his death (except by suicide) or total
disability, the lump sum payment or the first monthly
installment, provided for in paragraph (A)
hereinabove, shall be paid within 30 days after the
last day of the month in which the Participant's
termination of employment occurs.
(C) If a Participant's termination of employment with the
Company and/or Subsidiary is for a reason other than
death (except by suicide) or disability, the
distributions made pursuant to paragraph (A)
hereinabove shall commence at such time as shall be
determined by the Committee; PROVIDED, HOWEVER, that
in no event shall such distributions begin later than
the date upon which such Participant attains age
70 1/2, and PROVIDED FURTHER, HOWEVER, that if such
Participant dies or becomes totally disabled prior to
his attaining age 70 1/2, the distributions
to which such Participant would have been entitled to
receive under this paragraph shall commence to be
made within thirty (30) days after the last day of
the month in which such Participant's death or total
disability occurred.
(D) If a Participant shall cease to be an Employee of the
Company by reason of his death or if he shall die
after his employment termination date but prior to
his receipt of all distributions provided for herein,
all cash distributable hereunder, or the
undistributed balance thereof, shall be distributed
to such beneficiary or beneficiaries as he shall have
designated by an instrument in writing, the form for
said written designation being attached hereto and
marked Exhibit "B" and entitled "Beneficiary
Designation," filed with the Committee in the same
manner and at the same intervals as they would have
been made to the Participant had he continued to
live, or, in the absence of an effective Beneficiary
Designation, in a lump sum to the Participant's
estate.
ARTICLE IX
DISTRIBUTION IN THE EVENT OF SEVERE FINANCIAL HARDSHIP
In the event a Participant or any beneficiary of a Participant incurs
"severe financial hardship," the Committee may authorize the acceleration of the
payment of benefits hereunder to, and only to, the extent reasonably necessary
to eliminate such "severe financial hardship." The Committee possesses the sole
discretion as to the determination of the existence, in a particular factual
setting, of "severe financial hardship;" PROVIDED, HOWEVER, in the exercise of
such discretion, the Committee is charged with the responsibility of exercising
its discretion in a fair, reasonable and nondiscriminatory manner and
determinations of "severe financial hardship" shall be limited solely to factual
situations caused by accident, illness or other event beyond the control of the
Participant or his beneficiary, which shall not have been an event that such
Participant or his beneficiary would voluntarily incur.
ARTICLE X
NO ENTITLEMENT TO BONUS
Participants are entitled to a distribution under this Plan only upon
the approval of the award by the Committee and no Participant shall be entitled
to a bonus under the Plan due to the attainment of performance objectives. In
addition, any Participant not employed by the Company or a Subsidiary on
December 31 of any fiscal year will not be entitled to a bonus unless otherwise
---
determined by the Committee.
ARTICLE XI
TERMINATION OF PLAN
The Company Board of Directors may amend or terminate the Plan at any
time. Upon termination of the Plan, distributions in respect of credits to
Participants' Deferred Executive Bonus Accounts as of the date of termination
shall be made in the manner and at the time prescribed in Article VIII hereof.
ARTICLE XII
PARTICIPANT'S RIGHT OF ASSIGNABILITY
Except as provided in subsection (D) of Article VIII hereof, regarding
beneficiary designation, amounts credited to Deferred Executive Bonus Accounts
of Participants shall not be subject to assignment, pledge or other disposition,
nor shall such amounts be subject to garnishment, attachment, transfer by
operation of law, or any legal process.
ARTICLE XIII
GOVERNING LAW
The validity, construction, performance and effect of the Plan shall be
governed by Georgia law.
EXHIBIT "A"
ELECTION REGARDING DEFERRAL OF
BONUS AWARDED PURSUANT TO THE
SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN
__________________("Employee"), in the event Employee is awarded a bonus
under the Synovus Financial Corp. Executive Bonus Plan (the "Plan") for the
period commencing January 1, 199_____, and ending December 31, 199_____, hereby
makes the following elections.
I. Employee elects to have____________percent of the bonus awarded to
him for the above elected period of participation in the Plan paid
in cash to him on the distribution date provided for under the
Plan.
II. Employee further elects to defer receipt of the balance of the
bonus awarded to him for the above elected period of
participation in the Plan, said balance to be payable to
Employee or his Beneficiary pursuant to the terms of Article
VIII of this Plan.
IN WITNESS WHEREOF, Employee has affixed his hand and seal, all as of
the_______day of ______________ , 199____ .
_________________________________(L.S.)
"EMPLOYEE"
Received and accepted as of the ________day of________ , 199_____ .
COMPENSATION COMMITTEE
By:________________________________
Secretary
EXHIBIT "B"
BENEFICIARY DESIGNATION
________________________("Participant") hereby designates the following
persons as beneficiaries entitled, upon the death of Participant, to any
payments in accordance with the terms and provisions of the Synovus Financial
Corp. Executive Bonus Plan ("Plan"), this beneficiary designation being made by
Participant pursuant to Article VIII of the Plan:
Primary Beneficiary:
Name:__________________________________________________________________
Address:_______________________________________________________________
It is understood and agreed that in the event of the death of the
above-named Primary Beneficiary, the Contingent Beneficiary (or Beneficiaries)
shall be entitled to receive the payments under the Plan the Primary Beneficiary
was receiving or would have received. In the event more than one Contingent
Beneficiary is designated, said Contingent Beneficiaries shall be entitled to
receive payments made pursuant to the Plan per capita:
Names: ____________________________________________________________
____________________________________________________________
Addresses: ____________________________________________________________
____________________________________________________________
This beneficiary designation supersedes all beneficiary designations,
if any, previously made by Participant and may be amended at any time by filing
another such beneficiary designation with the Compensation Committee.
IN WITNESS WHEREOF, Participant has affixed his hand and seal,
this _______ day of_________, 199______ .
____________________________(L.S.)
"PARTICIPANT"
Received this day of ___________day of__________ , 199________.
COMPENSATION COMMITTEE
By:_______________________________
Secretary
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT ("Agreement"), by and between SYNOVUS FINANCIAL CORP., a
Georgia corporation (the "Company") and __________________________ (the
"Employee") is entered into as of the 1st day of January, 1996 (the "Effective
Date");
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company;
WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with appropriate compensation and benefits arrangements upon a Change
of Control which are competitive with those of other corporations; and
WHEREAS, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Change of Control Date" shall mean the
first date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Employee's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by
Employee that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or in anticipation of a Change of
Control, then for all purposes of this Agreement the "Change of Control Date"
shall mean the date immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" shall mean the period
commencing on the Effective Date and ending on the day after the date of
Employee's termination of employment from the Company or, if earlier, the date
which is 396 days after the Change of Control Date.
(c) "Cause" shall mean:
(1) the willful and continued failure of the
Employee to perform substantially the Employee's duties with the Company or one
of its affiliates after a written demand for substantial performance is
delivered to the Employee by the Executive Committee of the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Executive Committee of the Board or Chief Executive Officer believes
that the Employee has
1
not substantially performed the Employee's duties, after which Employee shall
have a reasonable amount of time to remedy such failure to substantially perform
his or her duties; or
(2) the willful engaging by the Employee in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act, or failure to act, on
the part of the Employee shall be considered "willful" unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee's action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board, or the Executive Committee of the Board, or upon the
instructions of the Chief Executive Officer, or an Executive Vice President (or
higher ranking officer), of the Company, or based upon the advice of counsel for
the Company, shall be conclusively presumed to be done, or omitted to be done,
by the Employee in good faith and in the best interests of the Company. The
cessation of employment of the Employee shall not be deemed to be for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Executive Committee of the Board at a
meeting of the Executive Committee of the Board called and held for such purpose
(after reasonable notice is provided to the Employee and the Employee is given
an opportunity, together with counsel, to be heard before the Executive
Committee of the Board), finding that, in the good faith opinion of the
Executive Committee of the Board, the Employee is guilty of the conduct
described in subparagraph (1) or (2) above, and specifying the particulars
thereof in detail.
(d) "Good Reason" shall mean:
(1) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as in effect on either the Change of Control Date or the date
which is 120 days prior to the Change of Control Date (if such earlier date is
selected by Employee) or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Employee;
(2) the Company's requiring the Employee to be
based at any office or location more than 35 miles from the location where
Employee was employed on the Change of Control Date or the date which is 120
days prior to the Change of Control Date (if such earlier date is selected by
Employee);
(3) a reduction in Employee's annual base
salary, maximum annual bonus opportunity (including, without limitation, the use
of bonus goals that are not reasonable and consistent with the bonus goals
established for the preceding year), or participation in employee benefit plans,
as such salary, bonus and plans were in effect on either the Change of Control
Date or the date which is 120 days prior to the Change of Control Date (if such
earlier date is selected by Employee) provided, however, that a reduction in the
level of retirement or welfare benefits shall not be considered "Good Reason" so
long as Employee is participating in retirement and welfare
2
plans that are substantially equivalent to those provided to peer employees of
Company and its affiliated companies; or
(4) any failure by the Company to comply with
and satisfy Section 8(c) of this Agreement.
For purposes of this Section 1(d), any good faith
determination of "Good Reason" made by the Employee shall be conclusive.
(e) "Disability" shall be defined the same as such term is
defined in either, at the selection of the Employee, (a) the group long-term
disability insurance plan sponsored or maintained by Company on the Change of
Control Date in which Employee participates or (b) any individual long-term
disability insurance arrangement in effect on the Change of Control Date, the
premiums of which are paid by Company for the benefit of Employee.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) the acquisition by any "person" ("Person"), as such term
is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company or a subsidiary or any
Company employee benefit plan (including its trustee) or an "Exempt Person" as
defined below), of "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the total number of shares of the Company's then outstanding
securities;
(b) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3) of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;
(c) consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets or stock
of the Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the total number of
shares of the Company's outstanding securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
two-thirds (2/3) of, respectively, the total number of shares of the then
outstanding securities of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination, of the total number of shares of the Company's outstanding
securities, (ii) no Person (excluding any corporation resulting from such
Business Combination, or any
3
employee benefit plan (including its trustee) of the Company or such corporation
resulting from such Business Combination, or an "Exempt Person" as defined
below) beneficially owns, directly or indirectly, 20% or more of, respectively,
the total number of shares of the then outstanding securities of the corporation
resulting from such Business Combination except to the extent that such
ownership existed prior to the Business Combination and (iii) at least
two-thirds (2/3) of the members of the board of directors of the Corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) the occurrence of a "Triggering Event" as such term is
defined in the Rights Agreement dated April 20, 1989, by and between the Company
and Trust Company Bank ("Rights Agreement"), the provisions of which, as such
provisions and Rights Agreement may be amended from time to time, are
incorporated herein by this reference, but only so long as the Rights Agreement
is in effect.
For purposes of this Section 2, an "Exempt Person" shall mean (1) any
shareholder who (i) is a descendent of D. Abbott Turner (the "Turner Family"),
(ii) any shareholder who is affiliated or associated, as defined in the Rights
Agreement, with the Turner Family, or (iii) any person who would otherwise
become a "beneficial owner" of 20% of the total number of shares of the
Company's then outstanding securities as a result of the receipt of the
Company's securities or a beneficial interest in the Company's securities from
one or more members of the Turner Family by way of gift, devise, descent or
distribution (but not by way of sale) unless any such person, together with his
or her affiliates and associates, becomes the "beneficial owner" of more than
30% of the total number of shares of the Company's then outstanding securities;
and (2) any person who is not otherwise an Exempt Person and who as of April 20,
1989 was the beneficial owner of 10% or more of the total number of shares of
the Company's then outstanding securities unless and until such person shall
become the beneficial owner of any additional outstanding Company securities.
For purposes of this Section 2, a "Change of Control" shall not result from any
transaction precipitated by the Company's insolvency, appointment of a
conservator, or determination by a regulatory agency that the Company is
insolvent, nor from any transaction initiated by the Company in regard to
converting from a publicly traded company to a privately held company.
3. Obligations of Company Upon Termination. In the event Employee's
employment by Company (a) is terminated before the one-year anniversary date of
the Change of Control Date either (i) by the Company for any reason other than
Cause or Employee's death or Disability or (ii) by Employee for Good Reason; or
(b) is terminated on, or within the 30-day period following, the one-year
anniversary date of the Change of Control Date by Employee for any reason or no
reason, or by the Company for any reason other than Cause or Employee's death or
Disability, then
(a) The Company shall pay to Employee in a lump sum in cash
within 30 days after the date of termination the aggregate of the following
amounts:
(1) three times the sum of: (a) Employee's
annual base salary as in effect immediately prior to Employee's termination;
plus (b) the product of (i) Employee's annual base salary as in effect
immediately prior to Employee's termination of employment multiplied by (ii) a
percentage equal to the average percentage of Employee's annual bonus earned
with respect to the
4
three calendar years ended prior to Employee's termination, measured as a
percentage of Employee's annual base salary for the year the bonus was earned;
(2) the product of (a) a fraction, the numerator
of which is the greater of (i) six, or (ii) number of full months Employee
worked in the calendar year of Employee's termination (e.g., an October 1
termination date results in a numerator of 9) and the denominator of which is
12; multiplied by (b) the maximum annual bonus for which Employee was eligible
immediately prior to Employee's termination; and
(3) the product of (a) Employee's long-term
market grant (equal to Employee's annual base salary as in effect immediately
prior to Employee's termination multiplied by the market multiple for long-term
incentive grants for Employee's position on the Change of Control Date as set
forth in the market survey being used by Company in making long-term incentive
grants); multiplied by (b) either (i) 150%, if Employee has received a long-term
incentive award in the calendar year of Employee's termination of employment, or
(ii) 250%, if Employee has not received a long-term incentive award in the
calendar year of Employee's termination.
For purposes of this Agreement, "annual base salary" means Employee's annual
rate of pay excluding all other elements of compensation such as, without
limitation, bonuses, perquisites, restricted stock awards, stock options, and
retirement and welfare benefits.
(b) For three years after Employee's termination of
employment, the Company shall continue to provide medical and welfare benefits
(including, without limitation, medical, prescription, dental, disability (both
individual and group arrangements), life (both individual and group
arrangements), and accidental death and dismemberment plans and programs) to
Employee and Employee's dependents at the level of coverage elected by Employee
during the open enrollment period immediately preceding Employee's termination
of employment date under benefit plans that are generally equivalent to those
provided generally at any time after the Effective Date to other peer employees
of the Company and its affiliated companies (excluding individual disability and
individual life insurance arrangements, which must continue to be provided
regardless of whether provided to peer employees); provided, however, that if
Employee becomes reemployed with another employer (specifically excluding
self-employment) and is eligible to receive medical or other welfare benefits
under another employer provided plan, Company shall terminate all medical and
other welfare benefits being provided hereunder; and provided further, however,
that, at the election of Employee, or at the election of Company if Employee is
not eligible to participate under the terms of such medical and welfare benefit
plans (including COBRA continuation coverage for which Executive is eligible),
Company shall pay Employee an agreed upon lump sum amount in cash in lieu of the
benefits described in this Section 3(b), not to exceed 25% of the lump sum
amount payable to Employee pursuant to Section 3(a) of this Agreement.
(c) The Company shall not be obligated under this Agreement to
provide outplacement assistance or any other benefits and perquisites not
covered above, such as a Company-provided automobile, country club and dining
club dues, health club dues, retirement benefits, etc.
4. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Employee may qualify, nor,
5
subject to Section 9(f), shall anything herein limit or otherwise affect such
rights as the Employee may have under any contract or agreement with the Company
or any of its affiliated companies. Amounts which are vested benefits or which
the Employee is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the date of termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
5. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement and, except as
otherwise provided in this Agreement, such amounts shall not be reduced whether
or not the Employee obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Employee may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Employee about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
6. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
(6) (a "Payment")) would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Employee with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes on
the Gross-Up Payment including, without limitation, any income taxes, employment
taxes, excise taxes, and interest and penalties imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6(c), all
determinations required to be made under this Section 6, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by KPMG Peat Marwick or such other nationally recognized certified public
accounting firm as may be designated by the Employee (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Employee within 15 business days of the receipt of notice from the Employee that
there has been a Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change of Control, the Employee
may appoint another nationally recognized certified public accounting firm to
make the determinations
6
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 6, shall be paid by the Company to the Employee within five days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 6(c) and the Employee thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 10 business days after the Employee is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Employee in writing prior to the expiration
of such period that it desires to contest such claim, the Employee shall:
(1) give the Company any information reasonably
requested by the Company relating to such claim,
(2) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in
order effectively to contest such claim, and
(4) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
the Employee harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Employee
7
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 6(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 6(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 6(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
7. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Employee
during the Employee's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Employee or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.
8. Successors. (a) This Agreement is personal to the Employee
and without the prior written consent of the Company shall not be assignable by
the Employee otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
8
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
9. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid
If to the Employee:
To the Employee's most recent home address as filed
with the Company
If to the Company:
Synovus Financial Corp.
P. O. Box 120
Columbus, GA 31902
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Company may have hereunder, including, without
limitation, the right of the Employee to terminate employment for Good Reason
pursuant to Section 3 of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.
(f) The Employee and the Company acknowledge that, except
as may otherwise be provided under any other written agreement between the
Employee and the Company, the
9
employment of the Employee by the Company is "at will" and, subject to Section
1(a) hereof, prior to the Change of Control Date, the Employee's employment may
be terminated by either the Employee or the Company at any time prior to the
Change of Control Date, in which case the Employee shall have no further rights
under this Agreement. In addition, in the event Employee's employment is
terminated as a result of Employee's death or Disability, Employee shall have no
further rights under this Agreement. From and after the Effective Date this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof.
(g) This Agreement is executed in two counterparts, each of
which shall be deemed an original and together shall constitute one and the same
agreement, with one counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all being done
in duplicate originals, with one original being delivered to each party hereto,
all as of the day and year first above written.
---------------------------------
[Employee]
SYNOVUS FINANCIAL CORP.
By: _________________________________
Title: _________________________________
10
EXHIBIT 11.1
SYNOVUS FINANCIAL CORP.
COMPUTATION OF NET INCOME
PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months Ended Three Months Ended
December 31, December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary
Net income $114,582,630 89,452,498 33,633,732 21,752,597
====================================================================================================================================
Average common shares outstanding 114,954,483 112,750,294 115,823,254 113,315,210
Average common shares added, assuming
exercise of dilutive stock options 1,163,926 1,246,003 1,517,108 1,307,018
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares, as adjusted 116,118,409 113,996,297 117,340,362 114,622,228
====================================================================================================================================
Net income per common share $ 0.99 0.78 0.29 0.19
====================================================================================================================================
Assuming Full Dilution
Net income $114,582,630 89,452,498 33,633,732 21,752,597
Adjustments:
Interest expense on subordinated debentures -- 136,474 -- 34,118
Income tax effect on such interest expense -- (47,766) -- (11,941)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income, as adjusted $114,582,630 89,541,206 33,633,732 21,774,774
====================================================================================================================================
Average common shares outstanding 114,954,483 112,750,294 115,823,254 113,315,210
Average common shares added, assuming
exercise of dilutive stock options 1,582,660 1,260,370 1,582,660 1,307,018
Average common shares to be issued, assuming
conversion of subordinated debentures -- 452,921 -- 452,921
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares, as adjusted 116,537,143 114,463,585 117,405,914 115,075,149
====================================================================================================================================
Net income per common share, assuming
full dilution $ 0.98 0.78 0.29 0.19
====================================================================================================================================
</TABLE>
Share and per share data presented in Exhibit 11.1 has been retroactively
restated to reflect the three-for-two stock split declared by the Synovus Board
of Directors on March 11, 1996, effective April 8, 1996, to shareholders of
record as of March 21, 1996.
EXHIBIT 11.2
SYNOVUS FINANCIAL CORP.
COMPUTATION OF NET INCOME
PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months Ended Three Months Ended
December 31, December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary
Net income $114,582,630 89,452,498 33,633,732 21,752,597
====================================================================================================================================
Average common shares outstanding 76,636,322 75,166,862 77,215,502 75,543,473
Average common shares added, assuming
exercise of dilutive stock options 778,092 829,448 1,011,881 871,346
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares, as adjusted 77,414,414 75,996,310 78,227,383 76,414,819
====================================================================================================================================
Net income per common share $ 1.48 1.18 0.43 0.28
====================================================================================================================================
Assuming Full Dilution
Net income $114,582,630 89,452,498 33,633,732 21,752,597
Adjustments:
Interest expense on subordinated debentures -- 136,474 -- 34,118
Income tax effect on such interest expense -- (47,766) -- (11,941)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income, as adjusted $114,582,630 89,541,206 33,633,732 21,774,774
====================================================================================================================================
Average common shares outstanding 76,636,322 75,166,862 77,215,502 75,543,473
Average common shares added, assuming
exercise of dilutive stock options 1,055,107 836,672 1,055,107 871,346
Average common shares to be issued, assuming
conversion of subordinated debentures -- 301,947 -- 301,947
- ------------------------------------------------------------------------------------------------------------------------------------
Average common shares, as adjusted 77,691,429 76,305,481 78,270,609 76,716,766
====================================================================================================================================
Net income per common share, assuming
full dilution $ 1.47 1.17 0.43 0.28
====================================================================================================================================
</TABLE>
Share and per share data presented in Exhibit 11.2 has not been
retroactively restated to reflect the three-for-two stock split declared by the
Synovus Board of Directors on March 11, 1996, effective April 8, 1996, to
shareholders of record as of March 21, 1996.
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
LOGO(R)
SYNOVUS(R)
FINANCIAL CORP.
FINANCIAL APPENDIX
<TABLE>
<S> <C>
Consolidated Statements of Condition as of December 31, 1995 and 1994 ................................. F-2
Consolidated Statements of Income for the Years ended December 31, 1995, 1994, and 1993 ............... F-3
Consolidated Statements of Shareholders' Equity for the Years ended December 31, 1995, 1994, and 1993.. F-4
Consolidated Statements of Cash Flows for the Years ended December 31, 1995, 1994, and 1993 ........... F-5
Summary of Significant Accounting Policies ............................................................ F-6
Notes to Consolidated Financial Statements ............................................................ F-10
Independent Auditors' Report .......................................................................... F-26
Financial Highlights .................................................................................. F-27
Financial Review ...................................................................................... F-28
Summary of Quarterly Financial Data, Unaudited ........................................................ F-48
</TABLE>
F-1
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data)
December 31, 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks, including cash deposits of $31,144 and $33,693 for 1995 and 1994, respectively,
on deposit to meet Federal Reserve requirements ...................................................... $ 382,696 344,637
Interest earning deposits with banks ...................................................................... 1,093 1,172
Federal funds sold ........................................................................................ 123,832 43,907
Investment securities available for sale (note 2) ......................................................... 1,106,298 804,769
Investment securities held to maturity (approximate market value of $386,579
and $510,504 for 1995 and 1994, respectively) (notes 2 and 6) ........................................ 380,918 532,933
Loans (notes 3 and 6) ..................................................................................... 5,526,842 5,089,567
Less:
Unearned income ...................................................................................... (14,812) (14,691)
Reserve for loan losses (note 3) ..................................................................... (81,384) (75,018)
- ------------------------------------------------------------------------------------------------------------------------------------
Loans, net ................................................................................. 5,430,646 4,999,858
- ------------------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net (note 6) ...................................................................... 220,197 203,106
Other assets (notes 4 and 8) .............................................................................. 281,915 245,697
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets ............................................................................... $7,927,595 7,176,079
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits (note 5):
Non-interest bearing ............................................................................ $1,141,716 983,056
Interest bearing ................................................................................ 5,586,163 4,941,547
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits ............................................................................. 6,727,879 5,924,603
Federal funds purchased and securities sold under agreement to repurchase ............................ 229,477 412,082
Long-term debt (note 6) .............................................................................. 106,815 139,811
Other liabilities (notes 7 and 8) .................................................................... 142,079 97,220
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities........................................................................... 7,206,250 6,573,716
- ------------------------------------------------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiary .............................................................. 27,790 22,483
Shareholders'equity (notes 1, 2, 6, 8, and 12):
Common stock - $1.00 par value. Authorized 600,000,000 shares; issued 77,280,695 in 1995 and 76,134,451
in 1994; outstanding 77,236,765 in 1995 and 75,633,387 in 1994 .................................. 77,281 76,134
Surplus .............................................................................................. 127,021 118,782
Less treasury stock - 43,930 and 501,064 shares in 1995 and 1994, respectively ....................... (1,022) (7,680)
Less unamortized restricted stock .................................................................... (2,663) (1,538)
Net unrealized gain (loss) on investment securities available for sale ............................... 5,774 (20,744)
Retained earnings .................................................................................... 487,164 414,926
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .................................................................. 693,555 579,880
Commitments (note 9) --- ---
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity ..................................................$7,927,595 7,176,079
====================================================================================================================================
</TABLE>
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-2
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Years ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Loans, including fees ........................................................................ $ 525,080 415,242 361,744
Investment securities:
U.S. Treasury and U.S. Government agencies .............................................. 59,866 53,479 48,948
Mortgage-backed securities .............................................................. 15,975 17,456 17,671
State and municipal ..................................................................... 7,397 7,772 9,307
Other investments ....................................................................... 1,357 1,611 2,875
Federal funds sold ........................................................................... 6,006 2,787 3,200
Interest earning deposits with banks ......................................................... 107 35 127
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest income ......................................................... 615,788 498,382 443,872
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense
Deposits (note 5) ............................................................................ 253,761 176,919 164,644
Federal funds purchased and securities sold under agreement to repurchase .................... 12,092 10,021 5,045
Long-term debt ............................................................................... 8,060 10,211 10,970
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense ........................................................ 273,913 197,151 180,659
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ........................................................... 341,875 301,231 263,213
Provision for losses on loans (note 3) ............................................................ 25,787 25,387 24,924
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for losses on loans ....................... 316,088 275,844 238,289
- ------------------------------------------------------------------------------------------------------------------------------------
Non-interest income
Data processing services ..................................................................... 236,125 178,122 148,364
Service charges on deposit accounts .......................................................... 46,657 41,447 39,160
Fees for trust services ...................................................................... 9,649 8,796 8,923
Credit card fees ............................................................................. 7,288 7,703 7,493
Securities gains (losses), net (note 2) ...................................................... 368 (721) 1,108
Other operating income ....................................................................... 40,747 38,985 31,214
- -----------------------------------------------------------------------------------------------------------------------------------
Total non-interest income ..................................................... 340,834 274,332 236,262
- ------------------------------------------------------------------------------------------------------------------------------------
Non-interest expense:
Salaries and other personnel expense (note 8) ................................................ 252,479 211,531 180,414
Net occupancy and equipment expense (notes 4 and 9) .......................................... 99,629 83,419 72,679
Other operating expenses (note 10) ........................................................... 120,012 111,975 94,258
Minority interest in subsidiary's net income .................................................. 5,333 4,325 3,896
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense .................................................... 477,453 411,250 351,247
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and extraordinary item ............................. 179,469 138,926 123,304
Income tax expense (note 7) ....................................................................... 64,886 49,474 42,925
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item .............................................. 114,583 89,452 80,379
- ------------------------------------------------------------------------------------------------------------------------------------
Extraordinary item-loss related to early extinguishment of debt (net of income tax benefit of $1,568) --- --- 2,912
- ------------------------------------------------------------------------------------------------------------------------------------
Net income .................................................................... $ 114,583 89,452 77,467
====================================================================================================================================
Net income per share:
Income before extraordinary item ............................................................. $ 1.50 1.19 1.09
Extraordinary item ........................................................................... --- --- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income .................................................................... $ 1.50 1.19 1.05
====================================================================================================================================
Weighted average shares outstanding ............................................................... 76,636 75,167 74,009
====================================================================================================================================
</TABLE>
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-3
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION> Net
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Unreal-
(In thousands, except per share data) ized
Gain/
Unamort- (Loss)on
ized Securities
Shares Common Treasury Restric- Avail. Retained
Years ended December 31, 1995, 1994, and 1993 Issued Stock Surplus Stock ted Stock for Sale Earnings Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 .............................66,842 $ 66,842 75,696 (2,974) (1,792) -- 278,235 416,007
Issuance of common stock for acquisition ................. 6,593 6,593 23,484 -- (750) -- 23,964 53,291
Issuance of common stock by pooled subsidiary prior to
acquisition ............................................ 1,269 1,269 11,724 -- -- -- -- 12,993
Net income ............................................... -- -- -- -- -- -- 77,467 77,467
Cash dividends declared - $.373 per share ................ -- -- -- -- -- -- (24,880) (24,880)
Cash dividends of pooled subsidiary prior to acquisition . -- -- -- -- -- -- (2,311) (2,311)
Issuance of restricted stock ............................. 3 3 23 -- (26) -- -- --
Amortization of restricted stock issued under restricted
stock bonus plan (note 8) .............................. -- -- -- -- 746 -- -- 746
Amortization of subsidiary restricted stock bonus plan.... -- -- 497 -- -- -- -- 497
Stock options exercised................................... 196 196 1,258 -- -- -- -- 1,454
Repayment of obligation of employee stock ownership
plan at subsidiary...................................... -- -- -- -- 150 -- -- 150
Net unrealized gain on investment securities available
for sale................................................ -- -- -- -- -- 11,643 -- 11,643
Purchase of fractional shares upon acquisition............ (2) (2) (58) -- -- -- -- (60)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 .............................74,901 74,901 112,624 (2,974) (1,672) 11,643 352,475 546,997
Issuance of common stock for acquisitions ................ 1,097 1,097 3,656 -- -- -- 5,802 10,555
Net income ............................................... -- -- -- -- -- -- 89,452 89,452
Cash dividends declared - $.450 per share ................ -- -- -- -- -- -- (30,298) (30,298)
Cash dividends of pooled subsidiary prior to acquisition . -- -- -- -- -- -- (2,708) (2,708)
Treasury shares purchased ................................ -- -- -- (6,013) -- -- -- (6,013)
Issuance of restricted stock ............................. 65 65 1,156 455 (1,676) -- -- --
Amortization of restricted stock issued under restricted
stock bonus plan (note 8) .............................. -- -- -- -- 1,421 -- -- 1,421
Amortization of subsidiary restricted stock bonus plan ... -- -- 499 -- -- -- -- 499
Stock options exercised .................................. 71 71 347 852 -- -- -- 1,270
Stock option tax benefit ................................. -- -- 692 -- -- -- -- 692
Repayment of obligation of employee stock ownership
plans at subsidiaries .................................. -- -- -- -- 389 -- (26) 363
Net unrealized gain (loss) on investment securities
available for sale ..................................... -- -- -- -- -- (32,387) 229 (32,158)
Ownership change at majority-owned subsidiary ............ -- -- (192) -- -- -- -- (192)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 .............................76,134 76,134 118,782 (7,680) (1,538) (20,744) 414,926 579,880
Issuance of common stock for acquisitions ................ 529 529 4,492 6,078 -- 183 547 11,829
Net income ............................................... -- -- -- -- -- -- 114,583 114,583
Cash dividends declared - $.540 per share................. -- -- -- -- -- -- (42,042) (42,042)
Treasury shares purchased ................................ -- -- -- (1,303) -- -- -- (1,303)
Issuance of restricted stock............................. 90 90 1,964 -- (2,054) -- -- --
Amortization of restricted stock issued under restricted
stock bonus plan (note 8) .............................. -- -- 493 -- 779 -- -- 1,272
Stock options exercised .................................. 226 226 459 1,883 -- -- -- 2,568
Repayment of obligation of employee stock ownership
plan at subsidiary ..................................... -- -- -- -- 150 -- -- 150
Net unrealized gain on investment securities available
for sale ............................................... -- -- -- -- -- 26,335 -- 26,335
Ownership change at majority-owned subsidiary ............ -- -- (4) -- -- -- -- (4)
Loss on foreign currency translation ..................... -- -- -- -- -- -- (850) (850)
Conversion of subordinated debentures into common stock
(note 6) ............................................... 302 302 835 -- -- -- -- 1,137
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 .............................77,281 $ 77,281 127,021 (1,022) (2,663) 5,774 487,164 693,555
====================================================================================================================================
</TABLE>
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-4
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income ................................................................. $ 114,583 89,452 77,467
Adjustments to reconcile net income to net cash provided by operating
activities:
Extraordinary item - loss related to early extinguishment of debt, net .... -- -- 2,912
Provision for losses on loans ............................................. 25,787 25,387 24,924
Depreciation, amortization, and accretion, net ............................ 38,617 38,409 32,843
Deferred income tax benefit ............................................... (4,171) (1,097) (1,062)
(Increase) decrease in interest receivable ................................ (9,973) (6,701) 2,775
Increase (decrease) in interest payable ................................... 14,680 7,316 (1,868)
Minority interest in subsidiary's net income .............................. 5,333 4,325 3,896
(Increase) decrease in mortgage loans held for sale ....................... (15,398) 13,944 (11,665)
Other, net ................................................................ (17,009) (3,122) (191)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ............................... 152,449 167,913 130,031
- ------------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Cash acquired from acquisitions ............................................ 4,431 9,056 30,362
Net business aquisitions by subsidiary ..................................... -- -- 88,997
Net decrease in interest earning deposits with banks ....................... 1,956 553 100
Net (increase) decrease in federal funds sold .............................. (70,770) 137,464 67,734
Proceeds from maturities of investment securities available for sale ....... 173,109 192,186 24,182
Proceeds from sales of investment securities available for sale ............ 136,502 182,972 43,613
Purchases of investment securities available for sale ...................... (394,406) (347,177) (78,544)
Proceeds from maturities of investment securities held to maturity ......... 82,837 87,943 343,760
Proceeds from sales of investment securities held to maturity .............. -- -- 33,803
Purchases of investment securities held to maturity ........................ (92,966) (141,153) (566,335)
Net increase in loans ...................................................... (385,228) (566,101) (431,564)
Purchases of premises and equipment ........................................ (48,212) (41,938) (52,885)
Disposals of premises and equipment ........................................ 1,888 1,007 9,645
Proceeds from sale of other real estate .................................... 12,032 9,078 13,622
Additions to internally developed computer software ........................ (2,617) (10,624) (11,688)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ................................... (581,444) (486,734) (485,198)
- ------------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Net increase in demand and savings deposits ................................ 193,870 87,229 279,355
Net increase in certificates of deposit .................................... 528,690 135,539 43,001
Net (decrease) increase in federal funds purchased and securities
sold under agreement to repurchase ....................................... (182,870) 142,125 122,457
Principal repayments on long-term debt ..................................... (33,682) (36,204) (86,446)
Extraordinary item - loss related to early extinguishment of debt, net ..... -- -- (2,912)
Proceeds from issuance of long-term debt ................................... 1,823 17,006 92,260
Purchase of treasury stock ................................................. (1,303) (6,013) --
Dividends paid to shareholders ............................................. (42,042) (33,006) (27,191)
Proceeds from issuance of common stock ..................................... 2,568 1,270 14,447
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities ............................... 467,054 307,946 434,971
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ............................. 38,059 (10,875) 79,804
Cash and cash equivalents at beginning of period ............................. 344,637 355,512 275,708
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period ................................... $ 382,696 344,637 355,512
====================================================================================================================================
</TABLE>
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-5
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Operations
The consolidated financial statements include the accounts of Synovus
Financial Corp. (Parent Company) and its subsidiaries, all but one of which were
wholly-owned at December 31, 1995. Synovus has 34 wholly-owned bank affiliates
predominantly involved in commercial banking activities and a wholly-owned
broker/dealer company. Total System Services, Inc. (TSYS), an 80.8% owned
subsidiary, is a bankcard data processing company.
The consolidated revenues are primarily contributed from the banking
operations, with TSYS' revenues contributing approximately one quarter of
consolidated revenues. The banking operations revenues are earned in four
southeastern states: Georgia (61%), Alabama (20%), South Carolina (11%), and
Florida (8%). TSYS has two major customers which account for approximately 34%
of their revenues. The remainder of TSYS' revenues are generated from customer
institutions located in North America.
Basis of Presentation
In preparing the financial statements in accordance with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities as of the date of the balance sheet and
revenues and expenses for the period. Actual results could differ significantly
from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the reserve for loan losses; the valuation of
real estate acquired in connection with foreclosures or in satisfaction of
loans; and the disclosures for contingent assets and liabilities. In connection
with the determination of the reserve for loan losses and the valuation of other
real estate, management obtains independent appraisals for significant
properties and properties collateralizing impaired loans.
The accounting and reporting policies of Synovus Financial Corp. and
subsidiaries (Synovus) conform to generally accepted accounting principles and
to general practices within the banking and technology industries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The following is a description of the more significant of those
policies.
Cash Flow Information
For the years ended December 31, 1995, 1994, and 1993, income taxes of $68
million, $48 million, and $42 million, and interest of $259 million, $190
million, and $183 million, respectively, were paid.
Loans receivable of approximately $9 million, $8 million, and $16 million
were transferred to real estate acquired in settlement of loans during 1995,
1994, and 1993, respectively.
Investment securities held to maturity with an amortized cost of
approximately $161 million, $5 million, and $791 million were transferred during
1995, 1994, and 1993, respectively, to investment securities available for sale.
Federal Funds Sold, Federal Funds Purchased, and Securities Sold Under Agreement
to Repurchase
Federal funds sold, federal funds purchased, and securities sold under
agreement to repurchase generally mature in one day.
Investment Securities
Synovus classifies its securities into three categories: trading, available
for sale, or held to maturity. Trading securities are bought and held
principally for the purpose of selling them in the near term. Held to maturity
securities are those securities for which Synovus has the ability and intent to
hold until maturity. All other securities not included in trading or held to
maturity are classified as available for sale.
Trading and available for sale securities are recorded at fair value. Held
to maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized gains and losses
on trading securities are included in earnings. Unrealized gains and losses, net
of the related tax effect, on securities available for sale are excluded from
earnings and are reported as a separate component of shareholders' equity until
realized. Transfers of securities between categories are recorded at fair value
at the date of transfer. Unrealized gains and losses are recognized in earnings
for transfers into trading securities. Unrealized gains or losses associated
with transfers of securities from held to maturity to available for sale are
recorded as a separate component of shareholders' equity. The unrealized gains
or losses included in the separate component of shareholders' equity for a
security transferred from available for sale to held to maturity are maintained
and amortized into earnings over the remaining life of the security as an
adjustment to yield in a manner consistent with the amortization or accretion of
premium or discount on the associated security.
A decline in the market value of any available for sale or held to maturity
security below cost that is deemed other than temporary results in a charge to
earnings resulting in the establishment of a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to the yield using the effective interest
method and prepayment assumptions. Dividend and interest income are recognized
when earned. Realized gains and losses for securities classified as available
for sale and held to maturity are included in earnings and are derived using the
specific identification method for determining the amortized cost of securities
sold.
Gains and losses on sales of investment securities are recognized on the
settlement date, based on the amortized cost of the specific security. The
financial statement impact of settlement date accounting versus trade date
accounting was immaterial.
F-6
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Loans and Interest Income
Loans are reported at principal amounts outstanding, less unearned income
and the reserve for loan losses.
First mortgage loans held for sale are reported at the lower of aggregate
cost or market. No valuation allowances were required at December 31, 1995 or
1994.
Interest income on consumer loans, made on a discount basis, is recognized
in a manner which approximates the level yield method. Interest income on
substantially all other loans is recognized on a level yield basis.
Loan fees, net of certain direct origination costs, are deferred and
amortized over the terms of the loans using a method which approximates a level
yield. Annual fees, net of costs, collected for credit cards are recognized on a
straight-line basis over the period the fee entitles the cardholder to use the
card.
Loans on which the accrual of interest has been discontinued are designated
as nonaccrual loans. Accrual of interest on loans is discontinued when
reasonable doubt exists as to the full, timely collection of interest or
principal or when they become contractually in default for 90 days or more as to
either interest or principal, unless they are both well-secured and in the
process of collection. When a loan is placed on nonaccrual status, previously
accrued and uncollected interest for the fiscal year in which the loan is placed
on nonaccrual status is charged to interest income on loans, unless management
believes that the accrued interest is recoverable through the liquidation of
collateral. Interest payments received on nonaccrual loans are applied as a
reduction of principal. Loans are returned to accruing status only when they are
brought fully current with respect to interest and principal and when, in the
judgment of management, the loans are estimated to be fully collectible as to
both principal and interest. Such interest, when ultimately collected, is
recorded as interest income in the period received. Interest on accruing
impaired loans is recognized as long as such loans do not meet the criteria for
nonaccrual classification.
Reserve for Loan Losses
Synovus adopted the provisions of Statement of Financial Accounting
Standard (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan" as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures", on January 1, 1995. Management, considering
current information and events regarding the borrowers' ability to repay their
obligations, considers a loan to be impaired when the ultimate collectibility of
all amounts due, according to the contractual terms of the loan agreement, is in
doubt. When a loan is considered to be impaired, the amount of impairment is
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate. If the loan is collateral-dependent, the
fair value of the collateral is used to determine the amount of impairment.
Impairment losses are included in the reserve for loan losses through a charge
to the provision for losses on loans. Subsequent recoveries are added to the
reserve for loan losses. Prior periods have not been restated.
SFAS No. 114 applies to all loans, except for large pools of smaller
balance homogeneous loans that are collectively evaluated for impairment, loans
that are measured at fair value or at the lower of cost or fair value, and debt
securities. The reserve for loan losses for large pools of smaller balance
homogeneous loans is established through consideration of such factors as
changes in the nature and volume of the portfolio, overall portfolio quality,
adequacy of the underlying collateral, loan concentrations, historical
charge-off trends, and economic conditions that may affect the borrowers'
ability to pay. Loans are charged against the reserve for loan losses when
management believes that the collection of principal is unlikely.
Management believes that the reserve for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the reserve for loan losses may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review Synovus' affiliate banks'
reserve for loan losses. Such agencies may require Synovus' affiliate banks to
recognize additions to the reserve for loan losses based on their judgments
about information available to them at the time of their examination.
Premises and Equipment
Premises and equipment, including leasehold improvements, are reported at
cost, less accumulated depreciation and amortization, which are computed using
straight-line or accelerated methods over the estimated useful life of the
related asset.
Other Assets
Included in other assets are other real estate, originated and purchased
mortgage servicing rights, intangibles, and computer software as described in
the paragraphs below.
Other Real Estate:
Other real estate, consisting of properties obtained through foreclosure or
in satisfaction of loans, is reported at the lower of cost or fair value,
determined on the basis of current appraisals, comparable sales, and other
estimates of value obtained principally from independent sources, adjusted for
estimated selling costs. Any excess of the loan balance at the time of
foreclosure over the fair value of the real estate held as collateral is treated
as a loan charge-off. Gain or loss on sale and any subsequent adjustment to the
value are recorded as a component of non-interest expense.
Originated and Purchased Mortgage Servicing Rights:
Effective July 1, 1995, Synovus adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights", as an amendment to SFAS No. 65, "Accounting for
Certain Mortgage Banking Activities". SFAS No. 122 requires that a mortgage
banking enterprise recognize as separate assets, rights to service mortgage
loans for others regardless of whether the servicing rights are acquired through
either the purchase or origination of mortgage loans. SFAS No. 122 also requires
that capitalized mortgage servicing rights be evaluated for impairment based
upon the fair value of those rights, including those rights purchased
F-7
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
before adoption of SFAS No. 122. Fair value is estimated by determining the
present value of the estimated future cash flows using discount rates
commensurate with the risks involved. In determining the present value, Synovus
stratifies its mortgage servicing rights based on risk characteristics including
loan types, note rates, and note terms.
Capitalized mortgage servicing rights are amortized in proportion to and
over the period of estimated net servicing income, using a method that
approximates level yield and taking into consideration prepayment of the
underlying loans. Management re-evaluates the terms used for amortization based
upon prepayment history and adjusts the terms as necessary.
Intangibles:
Goodwill, which represents the excess of cost over the fair value of net
assets acquired of purchased companies, is being amortized using the
straight-line method over periods of 15 to 40 years.
Core deposit premiums resulting from the valuation of core deposit
intangibles acquired in business combinations or in the purchase of branch
offices are amortized using accelerated methods over periods not exceeding the
estimated average remaining life of the existing customer deposit bases
acquired. Amortization periods range from 10 to 18 years.
Intangible amortization periods are monitored to determine if events and
circumstances require such periods to be reduced. Goodwill and core deposit
premiums are reviewed for impairment on the basis of whether these assets are
fully recoverable from expected undiscounted cash flows of the related business
units.
Computer Software:
Software development costs are capitalized from the time technological
feasibility of the software product or enhancement is established until the
software is ready for use in providing processing services to customers.
Research and development costs and other computer software maintenance costs
related to software development are expensed as incurred. Software development
costs related to providing processing services to customers are amortized using
the greater of the straight-line method over the estimated useful life or the
ratio of current revenues to current and anticipated revenues.
The carrying value of computer software costs is reviewed for impairment,
and impairment is recognized when the expected undiscounted future cash flows
derived from such intangible assets are less than their carrying value.
Data Processing Services
TSYS' bankcard data processing revenues are derived from long-term
processing agreements with banks and nonbank institutions and are recognized as
revenues at the time the services are performed. TSYS' processing agreements
generally contain terms ranging from three to ten years.
Income Taxes
Synovus accounts for income taxes in accordance with the provisions of SFAS
No. 109, "Accounting for Income Taxes". Under the asset and liability method of
SFAS No. 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Postretirement Benefits
Synovus sponsors a defined benefit health care plan for substantially all
employees and early retirees. Effective January 1, 1993, Synovus adopted SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions", which established a new accounting principle for the cost of retiree
health care and other postretirement benefits. Effective in 1993, the expected
costs of such postretirement benefits are being expensed over the period that
employees provide service. Prior to 1993, Synovus recognized these benefits on
the pay-as-you-go method (i.e., cash basis).
Net Income per Share
Net income per common share is based on the weighted average number of
shares outstanding. The effect of dilutive stock options on net income per share
is insignificant. All share and per share data has been restated to reflect the
March 1993 three-for-two stock split, which was effective on April 1, 1993, in
the form of a 50% stock dividend.
Disclosure About the Fair Value of Financial Instruments
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires all entities to disclose the fair value of financial instruments, both
assets and liabilities (on- and off-balance sheet), for which it is practicable
to estimate fair value.
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale, at one time, Synovus' entire holdings of a particular
financial instrument. Because no market exists for a portion of Synovus'
financial instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
F-8
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. Significant assets and liabilities that are not
considered financial instruments include deferred tax accounts, premises and
equipment, and goodwill. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in any of the estimates.
The following summarizes the fair value of financial instruments at
December 31, 1995 and 1994.
<TABLE>
<CAPTION> December 31, 1995 December 31, 1994
------------------- -----------------
Carrying Fair Carrying Fair
(In thousands) Note Value Value Value Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federal funds sold ...................................................... -- $123,832 123,832 43,907 43,907
Investment securities available for sale ................................ 2 1,106,298 1,106,298 804,769 804,769
Investment securities held to maturity .................................. 2 380,918 386,579 532,933 510,504
Loans, net unearned income .............................................. 3 5,512,030 5,475,170 5,074,876 4,993,463
Deposits ................................................................ 5 6,727,879 6,732,584 5,924,603 5,915,483
Federal funds purchased and securities sold under agreement to repurchase 6 229,477 229,477 412,082 412,082
Long-term debt .......................................................... 6 106,815 105,874 139,811 129,658
Commitments ............................................................. 9 1,860,427 1,860,427 1,656,510 1,656,510
Interest rate swaps ..................................................... 9 -- 1,776 -- --
</TABLE>
Other
Certain amounts in 1994 and 1993 have been reclassified to conform with
presentation adopted in 1995.
Recent Accounting Pronouncements
On October 23, 1995, SFAS No. 123, "Accounting for Stock-Based
Compensation" was issued. SFAS No. 123 allows companies to retain the current
approach set forth in Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", for recognizing stock-based compensation expense
in the basic financial statements; however, companies are encouraged to adopt a
new accounting method based on the estimated fair value of employee stock
options. Companies that do not follow the new fair value based method will be
required to provide expanded disclosures in the footnotes. SFAS No. 123 is
effective for fiscal years ended December 31, 1996, and Synovus intends to
provide such information in expanded disclosures in the footnotes.
F-9
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1 Business Combinations
On April 28, 1995, Synovus completed the acquisition of Citizens &
Merchants Corporation (CMC), the parent company of the $52 million asset,
Citizens & Merchants State Bank, Douglasville, Georgia. Synovus issued 626,469
shares of common stock for all the issued and outstanding shares of CMC. This
transaction has been accounted for as a pooling of interests, except that the
financial statements for periods prior to the acquisition were not restated
since the effect was not material.
On February 28, 1995, Synovus completed the acquisition of NBSC Corporation
(NBSC), the parent company of the $1.1 billion asset, The National Bank of South
Carolina, Columbia, South Carolina. Synovus issued 7,929,348 shares of common
stock for all the issued and outstanding shares of NBSC. This acquisition has
been accounted for as a pooling of interests and, accordingly, the financial
statements for all periods presented have been restated to include the financial
condition and results of operations of this entity. Synovus' financial
statements for the years ended December 31, 1994 and 1993 have been restated for
the NBSC acquisition as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
Before Before
(In thousands, except per share data) Acquisition Restated Acquisition Restated
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income .................................................. $ 259,502 301,231 229,063 263,213
=========================================================================================================================
Income before extraordinary item ..................................... $ 86,448 89,452 74,058 80,379
Extraordinary item - loss related to early extinguishment of debt (net
of income tax benefit of $1,568) ................................... -- -- 2,912 2,912
- -----------------------------------------------------------------------------------------------------------------------
Net income ........................................................... $ 86,448 89,452 71,146 77,467
========================================================================================================================
Net income per share:
Income before extraordinary item ..................................... $ 1.29 1.19 1.11 1.09
Extraordinary item ................................................... -- -- (.04) (.04)
- ------------------------------------------------------------------------------------------------------------------------
Net income ........................................................... $ 1.29 1.19 1.07 1.05
=======================================================================================================================
</TABLE>
On January 31, 1995, Synovus completed the acquisition of the $43 million
asset Peach State Bank (PSB), Riverdale, Georgia. Synovus issued 266,498
treasury shares for all of the issued and outstanding shares of PSB. This
acquisition was accounted for as a purchase.
Effective October 31, 1994, Synovus completed the acquisition of State
Banchares, Inc. (SBI), the parent company of the $62 million asset, Coffee
County Bank, Enterprise, Alabama. Synovus issued 548,879 shares of common stock
for all of the issued and outstanding shares of SBI. This acquisition has been
accounted for as a pooling of interests, except that financial statements for
periods prior to the acquisition were not restated since the effect was not
material.
Effective May 31, 1994, Synovus completed the acquisition of PNB
Bankshares, Inc. (PNB), the parent company of the $78 million asset, Peachtree
National Bank, Peachtree City, Georgia. Synovus issued 548,213 shares of common
stock for all of the issued and outstanding shares of PNB. This acquisition has
been accounted for as a pooling of interests, except that the financial
statements for periods prior to the acquisition were not restated since the
effect was not material.
- --------------------------------------------------------------------------------
F-10
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 2 Investment Securities
The carrying and approximate market values of investment securities are
summarized as follows:
<TABLE>
<CAPTION> December 31, 1995
-----------------------------------------------
Investment Securities Available for Sale: Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury and U. S. Government agencies $ 996,129 10,466 (2,309) 1,004,286
Mortgage-backed securities ................. 87,741 758 (303) 88,196
State and municipal ........................ 1,251 72 (1) 1,322
Other investments .......................... 12,254 678 (438) 12,494
- ---------------------------------------------------------------------------------------------
Total .................................... $1,097,375 11,974 (3,051) 1,106,298
============================================================================================
December 31, 1994
-----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------
U. S. Treasury and U. S. Government agencies $ 798,990 286 (31,732) 767,544
Mortgage-backed securities ................. 24,819 160 (566) 24,413
State and municipal ........................ 1,523 -- (32) 1,491
Other investments .......................... 11,355 741 (775) 11,321
- ----------------------------------------------------------------------------------------------
Total .................................... $ 836,687 1,187 (33,105) 804,769
==============================================================================================
December 31, 1995
-------------------------------------------------
Investment Securities Held to Maturity Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------
U. S. Treasury and U. S. Government agencies $ 81,772 1,415 (607) 82,580
Mortgage-backed securities ................. 171,275 1,629 (1,477) 171,427
State and municipal ........................ 121,761 4,779 (115) 126,425
Other investments .......................... 6,110 37 -- 6,147
- ---------------------------------------------------------------------------------------------
Total .................................... $ 380,918 7,860 (2,199) 386,579
=============================================================================================
December 31, 1994
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------
U. S. Treasury and U. S. Government agencies $ 159,354 24 (9,326) 150,052
Mortgage-backed securities ................. 243,220 152 (13,725) 229,647
State and municipal ........................ 121,834 1,893 (1,531) 122,196
Other investments .......................... 8,525 84 -- 8,609
- -----------------------------------------------------------------------------------------------
Total .................................... $ 532,933 2,153 (24,582) 510,504
===============================================================================================
</TABLE>
Prior to January 1, 1994, unrealized losses on mutual funds were included
in retained earnings. However, these amounts, $229,000, have been reclassified
and included in the net unrealized gain (loss) component of shareholders' equity
effective December 31, 1994.
On December 21, 1995, Synovus exercised an option permitted by the "Special
Report - a Guide to Implementation of FASB No. 115, Accounting for Certain
Investments in Debt and Equity Securities - Questions and Answers" to make a one
time transfer of securities held to maturity to securities available for sale.
This transfer was made to add further liquidity and flexibility to the portfolio
that will enable Synovus to more effectively manage its interest rate risk
position. The amortized cost and estimated fair value of the securities
transferred was $133.7 million and $133.9 million, respectively.
On February 28, 1995, immediately following the acquisition, Synovus
transferred certain held to maturity securities of NBSC to the available for
sale portfolio to adhere to Synovus' existing asset-liability management policy
and interest rate risk strategy. Such transfers consisted of investment
securities with an estimated fair value of $27.1 million and an amortized cost
of $27.4 million.
F-11
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and estimated fair value of investment securities at
December 31, 1995 and 1994, are shown below by contractual maturity. Expected
maturities will differ from contractual maturities because borrowers have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Investment Securities Investment Securities
Held to Maturity Available for Sale
December 31, 1995 December 31, 1995
----------------------- ---------------------
Amortized Estimated Amortized Estimated
(In thousands) Cost Fair Value Cost Fair Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury and U. S. Government Agencies:
Within 1 year ............................. $ 14,924 14,994 241,142 241,688
1 to 5 years .............................. 44,615 44,708 553,647 557,958
5 to 10 years ............................. 22,233 22,878 200,840 204,131
More than 10 years ........................ -- -- 500 509
- ---------------------------------------------------------------------------------------------
$ 81,772 82,580 996,129 1,004,286
=============================================================================================
Mortgage-backed securities:
Within 1 year ............................. $ 1,692 1,710 1,237 1,239
1 to 5 years .............................. 73,793 72,846 34,702 34,612
5 to 10 years ............................. 22,174 22,465 11,577 11,644
More than 10 years ........................ 73,616 74,406 40,225 40,701
- ---------------------------------------------------------------------------------------------
$ 171,275 171,427 87,741 88,196
=============================================================================================
State and municipal:
Within 1 year ............................. $ 17,986 18,265 299 298
1 to 5 years .............................. 52,596 54,225 594 668
5 to 10 years ............................. 35,218 36,717 100 98
More than 10 years ........................ 15,961 17,218 258 258
- ---------------------------------------------------------------------------------------------
$ 121,761 126,425 1,251 1,322
=============================================================================================
Other investments:
Within 1 year ............................. $ 98 99 3,329 3,382
1 to 5 years .............................. 1,832 1,869 3,005 3,325
5 to 10 years ............................. 265 265 2,082 2,251
More than 10 years ........................ 3,915 3,914 3,838 3,536
- ---------------------------------------------------------------------------------------------
$ 6,110 6,147 12,254 12,494
=============================================================================================
Total investment securities:
Within 1 year ............................. $ 34,700 35,068 246,007 246,607
1 to 5 years .............................. 172,836 173,648 591,948 596,563
5 to 10 years ............................. 79,890 82,325 214,599 218,124
More than 10 years ........................ 93,492 95,538 44,821 45,004
- ---------------------------------------------------------------------------------------------
$ 380,918 386,579 1,097,375 1,106,298
=============================================================================================
</TABLE>
A summary of investment security sales transactions for 1995, 1994, and 1993 is
as follows:
<TABLE>
<CAPTION>
Investment Securities Held to Maturity Investment Securities Available for Sale
-------------------------------------- ---------------------------------------
Gross Gross Gross Gross
Realized Realized Realized Realized
(In thousands) Proceeds Gains Losses Proceeds Gains Losses
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995....................$ -- -- -- 136,502 1,164 (796)
1994.................... -- -- -- 182,972 957 (1,678)
1993.................... 33,803 333 (69) 43,613 844 --
</TABLE>
Securities with a carrying value of $879,232,000 and $879,038,000 at December
31, 1995 and 1994, respectively, were pledged to secure certain deposits as
required by law.
- --------------------------------------------------------------------------------
F-12
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3 Loans
Loans outstanding, by classification, are summarized as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1995 1994
--------------------------
<S> <C> <C>
Commercial:
Commercial, financial, and agricultural ... $ 1,931,004 1,783,928
Real estate-construction .................. 578,712 472,131
Real estate-mortgage ...................... 1,160,089 1,030,524
- --------------------------------------------------------------------------------
Total commercial ........................ 3,669,805 3,286,583
- --------------------------------------------------------------------------------
Retail:
Real estate-mortgage ...................... 824,998 865,642
Installment loans-credit card ............. 222,204 171,475
Installment loans-other ................... 784,972 756,402
Mortgage loans held for sale .............. 24,863 9,465
- --------------------------------------------------------------------------------
Total retail ............................ 1,857,037 1,802,984
- --------------------------------------------------------------------------------
Total loans ............................. $ 5,526,842 5,089,567
================================================================================
</TABLE>
Activity in the reserve for loan losses is summarized as follows:
<TABLE>
(In thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year .............. $ 75,018 67,270 61,336
Loan loss reserves of acquired subsidiaries 1,001 1,535 --
Provision for losses on loans ............. 25,787 25,387 24,924
Recoveries of loans previously charged off 4,510 5,874 4,767
Loans charged off ......................... (24,932) (25,048) (23,757)
- --------------------------------------------------------------------------------
Balance at end of year .................... $ 81,384 75,018 67,270
================================================================================
</TABLE>
As discussed in the Summary of Significant Accounting Policies, Synovus
adopted SFAS No. 114 and SFAS No. 118 effective January 1, 1995. No adjustment
to the loan loss reserve was needed upon adoption of SFAS No. 114 and SFAS No.
118. The table below illustrates the impaired loans and related amounts included
in the reserve for loan losses at December 31, 1995.
<TABLE>
Allocated
Loan Loan Loss
(In thousands) Balance Reserve
- --------------------------------------------------------------------------------
<S> <C> <C>
Impaired loans, nonaccruing, with loan loss reserve .... $13,083 5,619
Impaired loans, nonaccruing, with no loan loss reserve . 7,151 --
Impaired loans, accruing, with loan loss reserve ....... 35,833 13,255
Impaired loans, accruing, with no loan loss reserve .... 23,735 --
Impaired loans, accruing, partially charged off ........ 329 62
- --------------------------------------------------------------------------------
Total .............................................. $80,131 18,936
================================================================================
</TABLE>
F-13
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
These loan loss reserve amounts were primarily determined using the fair
value of the loans' collateral. The average recorded investment in impaired
loans was approximately $87,000,000 for the year ended December 31, 1995 and the
related amount of interest income recognized during the period that such loans
were impaired was approximately $5,695,000.
Loans on nonaccrual status amounted to approximately $21,469,000,
$26,497,000, and 30,296,000 at December 31, 1995, 1994, and 1993, respectively.
If nonaccruing loans had been on a full accruing basis, interest income on these
loans would have been increased by approximately $2,606,000, $2,931,000, and
$2,632,000 in 1995, 1994, and 1993, respectively.
A substantial portion of Synovus' loans are secured by real estate in
markets in which affiliate banks are located throughout Georgia, Alabama, South
Carolina, and Northwest Florida. Accordingly, the ultimate collectibility of a
substantial portion of Synovus' loan portfolio and the recovery of a substantial
portion of the carrying amount of real estate owned are susceptible to changes
in market conditions in these areas.
At December 31, 1995, an affiliate company serviced mortgage loans for
unaffiliated investors in the amount of $664,931,000. This company carries error
and omissions insurance in the amount of $1,000,000. Synovus records servicing
fee income on these loans based upon the outstanding balance of the loans
serviced.
The following table presents information for mortgage loans held for sale
as of December 31, 1995 and 1994:
<TABLE>
December 31,
<CAPTION> ---------------------
(In thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Beginning balance ..................................... $ 9,465 23,409
Loans originated during the year ...................... 213,645 210,056
Loans sold during the year ............................ (198,247) (224,000)
- --------------------------------------------------------------------------------
Ending balance ........................................ $ 24,863 9,465
================================================================================
</TABLE>
Fair value of loans is estimated for portfolios of loans with similar
financial characteristics. Loans are segregated by type, such as commercial,
mortgage, home equity, credit card, and other consumer loans. Fixed rate
commercial loans are further segmented into certain collateral code groupings.
Commercial and other consumer loans with adjustable interest rates are assumed
to be at fair value. Mortgage loans are further segmented into fixed and
adjustable rate interest terms. Home equity and credit card loans have
adjustable interest rates and are, therefore, assumed to be at fair value. The
fair value of loans, except mortgage loans, is calculated by discounting
contractual cash flows using estimated market discount rates which reflect the
credit and interest rate risk inherent in the loan. For mortgage loans, fair
value is estimated by discounting contractual cash flows adjusted for certain
prepayment assumptions, estimated using discount rates based on secondary market
sources adjusted to reflect differences in servicing and credit costs.
The following table presents information for the fair value of loans as of
December 31, 1995 and 1994:
<TABLE>
1995 1994
---------------------- -----------------------
<CAPTION> Carrying Estimated Carrying Estimated
(In thousands) Amount Fair Value Amount Fair Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Adjustable rate loans, net of unearned income ................... $ 3,197,420 3,239,448 2,730,818 2,727,760
Fixed rate loans, net of unearned income ........................ 2,314,610 2,235,722 2,344,058 2,265,703
</TABLE>
In the ordinary course of business, Synovus has direct and indirect loans
outstanding to certain executive officers, directors, and principal holders of
equity securities (including their associates). Management believes that such
loans are made substantially on the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with
other customers. The following is a summary of such loans outstanding and the
activities in these loans for the year ended December 31, 1995 (in thousands).
<TABLE>
<S> <C>
Balance at December 31, 1994 .......................................................................... $ 135,645
Adjustment for executive officer and director changes ................................................. (9,399)
- -----------------------------------------------------------------------------------------------------------------------
Adjusted balance at December 31, 1994 ................................................................. 126,246
New loans ............................................................................................. 66,482
Repayments ............................................................................................ (65,310)
- -----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 .......................................................................... $ 127,418
========================================================================================================================
- --------------------------------------------------------------------------------
</TABLE>
F-14
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 4 Other Assets
Included in other assets are two significant balances; purchased and
originated mortgage servicing rights, and computer software costs.
Synovus adopted SFAS No. 122 as of July 1, 1995 and has capitalized all
mortgage servicing rights since the adoption date. As of December 31, 1995,
Synovus had approximately $8,569,000 in capitalized mortgage servicing rights,
the fair value of which was approximately $9,844,000 and, at year end 1995,
there was no valuation allowance.
The following table summarizes TSYS computer software at December 31, 1995
and 1994:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TS2 ......................................................................................... $33,049 33,049
Other internally developed software, including enhancements to TS2 .......................... 5,346 3,804
Purchased computer software ................................................................. 17,138 11,781
- ------------------------------------------------------------------------------------------------------------------------------------
55,533 48,634
Less accumulated amortization ............................................................... 16,317 9,394
- ------------------------------------------------------------------------------------------------------------------------------------
Computer software, net ...................................................................... $39,216 39,240
====================================================================================================================================
</TABLE>
Capitalized software development costs, related to the bankcard data
processing, for the years ended December 31, 1995, 1994, and 1993 were
$2,617,000, $10,624,000, and $11,688,000, respectively. Amortization expense
related to computer software costs was $7,358,000, $3,669,000 and $2,175,000 for
the years ended December 31, 1995, 1994, and 1993, respectively.
- --------------------------------------------------------------------------------
Note 5 Deposits
In accordance with SFAS No. 107, the fair value of deposits with no stated
maturity, such as non-interest bearing demand accounts, interest bearing demand
deposits, money market accounts, and savings accounts, is equal to the amount
payable on demand as of that respective date. The fair value of time deposits is
based on the discounted value of contractual cash flows. The discount rate is
estimated using the rates currently offered for deposits of similar remaining
maturities. The following table presents fair value information on deposits as
of December 31, 1995 and 1994:
<TABLE>
1995 1994
<CAPTION> ------------------------------ ---------------------------
Carrying Estimated Carrying Estimated
(In thousands) Value Fair Value Value Fair Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-interest bearing demand deposits ....................... $1,141,716 1,141,716 983,056 983,056
Interest bearing demand deposits ........................... 932,351 932,351 911,869 911,869
Money market accounts ...................................... 925,861 925,861 843,619 843,619
Savings accounts ........................................... 465,491 465,491 485,989 485,989
Time deposits .............................................. 3,262,460 3,267,165 2,700,070 2,690,950
- ------------------------------------------------------------------------------------------------------------------------------------
$6,727,879 6,732,584 5,924,603 5,915,483
====================================================================================================================================
</TABLE>
Time deposits over $100,000 at December 31, 1995, 1994, and 1993, were
$1,023,900,000, $804,936,000, and $688,332,000, respectively. Interest expense
for the years ended December 31, 1995, 1994, and 1993 on these large
denomination deposits was $57,259,000, $31,865,000, and $27,605,000,
respectively.
- --------------------------------------------------------------------------------
F-15
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6 Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of the following:
December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Parent Company:
6.125% senior notes, due October 15, 2003, with semi-annual interest payments and principal to be paid at maturity..$75,000 75,000
9.50% promissory notes, due October 31, 1995, with interest due monthly............................................. -- 13,000
Unsecured revolving credit agreement, due May 1, 1995, with interest due quarterly at .50% below the prime rate..... -- 12,500
8.75% Debenture, due May 15, 2004, with annual principal payments of $120,000 and $1,600,000 at maturity............ 2,440 2,560
- ------------------------------------------------------------------------------------------------------------------------------------
Total Parent Company Debt ..................................................................................... 77,440 103,060
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Subsidiaries:
<S> <C> <C>
Federal Home Loan Bank advances with monthly interest payments and principal payments due at various
maturity dates through 2004 and interest rates ranging from 5.03% to 5.90% at December 31, 1995............... 26,300 34,140
12.00% mandatory convertible subordinated debentures, due August 19, 1995, with interest payments
due semi-annually. (See details below regarding conversion)................................................... -- 1,137
9.23% note payable, due October 31, 2003, with annual principal and interest payments.............................. 348 376
8.00% capital lease obligation payable, due in monthly principal and interest payments through 2002................ 274 301
Other notes payable and capital lease obligations payable, with a weighted average interest
rate of 5.44%, maturing at various dates through 2000......................................................... 2,453 797
- ------------------------------------------------------------------------------------------------------------------------------------
Total Subsidiaries Debt.................................................................................. 29,375 36,751
- ------------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Debt.....................................................................................$106,815 139,811
====================================================================================================================================
</TABLE>
The more significant debt agreements held by the Parent Company provide for
certain limitations on: payments of cash dividends, issuance of additional debt,
creation of liens upon property, disposition of common stock or assets, and
investments in subsidiaries. As of December 31, 1995, the most restrictive of
these allow for the payment of cash dividends up to a maximum of $114,583,000.
The Federal Home Loan Bank advances are secured by certain mortgage loans
receivable as well as all of the stock of the Federal Home Loan Bank owned by
Synovus.
Mandatory convertible subordinated debentures of $1,137,280 matured on
August 19, 1995. In accordance with the terms of these debentures, Synovus
issued 301,886 shares of common stock to extinguish the debentures.
The capital lease obligations payable and certain notes payable are secured
by land, buildings, and equipment with a net carrying value at December 31,
1995, of approximately $829,000.
Synovus has an unsecured line of credit, with an unaffiliated bank, for $20
million with an interest rate of 50 basis points above the "short-term index",
as defined. There were no advances on this line of credit outstanding at any
time in the years ended December 31, 1995 or 1994.
Required annual principal payments on long-term debt for the five years
subsequent to December 31, 1995, are as follows:
<TABLE>
<CAPTION> Parent
(In thousands) Company Subsidiaries Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1996....................$120 12,503 12,623
1997.................... 120 8,104 8,224
1998.................... 120 7,079 7,199
1999.................... 120 382 502
2000.................... 120 307 427
</TABLE>
F-16
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Short-term and long-term debt with adjustable interest rates are assumed to
be at fair value. Short-term debt that matures within ten days is also assumed
to be at fair value. The fair value of short-term and long-term debt with fixed
interest rates is calculated by discounting contractual cash flows using
estimated market discount rates. The following table presents fair value
information on short-term and long-term debt as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------------------- --------------------------
Carrying Estimated Carrying Estimated
(In thousands) Amount Fair Value Amount Fair Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term debt with adjustable interest rates.......... $ -- -- 12,500 12,500
Long-term debt with fixed interest rates............... 106,815 105,874 127,311 117,158
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 7 Income Taxes
Income tax expense (benefit) attributable to income before extraordinary item
consists of:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal .......... $ 65,009 46,304 39,634
State ............ 4,048 4,267 4,353
- --------------------------------------------------------------------------------
69,057 50,571 43,987
- --------------------------------------------------------------------------------
Deferred:
Federal .......... (3,792) (997) (989)
State ............ (379) (100) (73)
- --------------------------------------------------------------------------------
(4,171) (1,097) (1,062)
- --------------------------------------------------------------------------------
Total income taxes $ 64,886 49,474 42,925
================================================================================
</TABLE>
Income tax expense attributable to income before extraordinary item differed
from the amounts computed by applying the U.S. Federal income tax rate of 35%
to pretax income before extraordinary item as a result of the following:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes at statutory federal income tax rate .......... $ 62,814 48,624 43,156
Tax-exempt income ................................... (2,956) (3,654) (4,287)
State income taxes, net of federal income tax benefit 2,385 2,709 2,782
Minority interest ................................... 1,867 1,514 1,364
Other, net .......................................... 776 281 (90)
- ----------------------------------------------------------------------------------------
Total income tax expense .......................... $ 64,886 49,474 42,925
========================================================================================
Effective tax rate ................................ 36.15% 35.61 34.81
=========================================================================================
</TABLE>
The significant components of deferred income tax expense for the years
ended December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Decrease) increase in net tax benefit (exclusive of the components listed below) .............. $ (9,065) 17,339 208
Adjustments to deferred income tax assets and liabilities for enacted tax rate change .......... -- 240 786
Change in valuation allowance .................................................................. (418) 406 95
Change in deferred income tax assets and liabilities related to net unrealized gain (loss)
on securities available for sale ............................................................. 13,788 (16,555) (27)
Deferred tax assets of acquired companies ...................................................... (134) (333) --
- ------------------------------------------------------------------------------------------------------------------------------------
$ 4,171 1,097 1,062
====================================================================================================================================
</TABLE>
F-17
SYNOVUS FINANCIAL CORP.
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The tax effects of temporary differences that gave rise to significant
portions of the deferred income tax assets and liabilities at December 31, 1995
and 1994 are presented below:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Provision for losses on loans ........................................................... $ 32,244 28,406
Net unrealized loss on investment securities available for sale ......................... -- 10,638
Other ................................................................................... 11,610 8,857
- ------------------------------------------------------------------------------------------------------------------------------------
Total gross deferred income tax assets ................................................ 43,854 47,901
Less valuation allowance .............................................................. (383) (801)
- ------------------------------------------------------------------------------------------------------------------------------------
Net deferred income tax assets ..................................................... 43,471 47,100
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred income tax liabilities:
Differences in depreciation ............................................................. (6,220) (5,134)
Restricted stock awards ................................................................. (1,206) (1,163)
Computer software development costs ..................................................... (14,958) (13,050)
Net unrealized gain on investment securities available for sale ......................... (3,150) --
Pension ................................................................................. (241) (2,111)
Purchase accounting adjustments ......................................................... (1,338) (1,593)
Other, net .............................................................................. (7,791) (6,417)
- ------------------------------------------------------------------------------------------------------------------------------------
Total gross deferred income tax liabilities .......................................... (34,904) (29,468)
- ------------------------------------------------------------------------------------------------------------------------------------
Net deferred income tax assets .................................................... $ 8,567 17,632
====================================================================================================================================
</TABLE>
The valuation allowance for deferred tax assets as of December 31, 1995 and
1994 was $383,000, and $801,000, respectively. The net change in the total
valuation allowance for the years ended December 31, 1995 and 1994 was a
decrease of $418,000 and an increase of $406,000, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable
income and projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely than
not that Synovus will realize the benefits of these deductible differences, net
of the existing valuation allowances, at December 31, 1995.
- --------------------------------------------------------------------------------
Note 8 Employee Benefit Plans
In 1994 and 1993, Synovus had noncontributory, trusteed pension plans
(collectively referred to as "Plan") covering substantially all employees over
201/2 years of age. Total pension expense recorded in the accompanying financial
statements was approximately $1,516,000 and $1,182,000, in 1994 and 1993,
respectively.
In 1995, Synovus terminated the Plan and began to settle the benefit
obligations. During the year ended December 31, 1995, approximately $15,849,000
of the accumulated benefit obligation was settled with a loss on settlement of
$3,195,000. The remaining obligations will be settled in 1996 with an expected
loss on settlement of approximately $600,000.
In 1995, Synovus adopted a 7% defined-contribution, money purchase plan to
replace the terminated pension plan above. In addition, Synovus generally
provides noncontributory, trusteed, profit sharing and 401(k) plans which cover
all eligible employees. Annual discretionary contributions to these profit
sharing and 401(k) plans are set each year by the respective Boards of Directors
of each affiliate, but cannot exceed amounts allowable as a deduction for
federal income tax purposes. Aggregate contributions to these money purchase,
profit sharing, and 401(k) plans were $23,238,000, $12,853,000, and $12,107,000,
in 1995, 1994, and 1993, respectively.
Synovus has stock purchase plans for directors and employees whereby
Synovus makes contributions equal to one-half of employee and director voluntary
contributions. The funds are used to purchase outstanding shares of Synovus
common stock. TSYS has established director and employee stock purchase plans,
modeled after Synovus' plans, except that the funds are used to purchase
outstanding shares of TSYS common stock. Synovus and TSYS contributed
$2,623,000, $1,949,000, and $1,552,000 to these plans in 1995, 1994, and 1993,
respectively.
F-18
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Synovus has entered into employment agreements with certain executive
officers for past and future services which provide for current compensation in
addition to salary in the form of deferred compensation payable at retirement or
in the event of death, total disability, or termination of employment. The
estimated present value of the deferred compensation is being accrued over the
remaining expected term of active employment. Aggregate compensation expense
under the foregoing employment agreements, together with the cost of salary
continuation plans for certain other officers, was approximately $260,000,
$460,000, and $377,000 in 1995, 1994, and 1993, respectively.
Synovus provides certain medical benefits to qualified retirees through a
postretirement medical benefits plan. The benefit expense and accrued benefit
cost are not material to Synovus' consolidated financial statements.
Under key executive restricted stock bonus plans, Synovus has awarded an
aggregate of 232,732 non-transferable, restricted shares of Synovus common stock
to various key executives. The market value of the common stock at the date of
issuance is included as a reduction of shareholders' equity in the consolidated
statements of condition and is amortized as compensation expense using the
straight-line method over the vesting period of the awards. Aggregate
compensation expense with respect to the foregoing restricted stock awards was
approximately $779,000, $1,421,000, and $746,000 in 1995, 1994, and 1993,
respectively.
<TABLE>
<CAPTION>
Year plan Market value
adopted at award date Vesting period
- --------------------------------------------------------------------------------
<S> <C> <C>
1990 $ 185,000 5 years
1992 1,576,000 4 years
1994 870,000 5 years
1995 2,054,000 5 years
</TABLE>
TSYS has awarded 653,400 non-transferable, restricted shares of its common
stock to various key executives under restricted stock bonus plans. The
aggregate market value of the shares is being amortized on a straight-line basis
over the vesting period of the awards. The amounts and terms of common stock
issued under restricted stock bonus awards are summarized as follows:
<TABLE>
<CAPTION>
Year plan Market value
adopted at award date Vesting period
- --------------------------------------------------------------------------------
<S> <C> <C>
1985 $ 228,125 10 years
1990 165,886 70 months
1992 1,801,250 6 years
1992 1,332,800 5 years
</TABLE>
Under the various stock option plans, Synovus has granted options for
2,256,264 shares of common stock to officers of Synovus and its affiliates.
Synovus has expensed $1,016,000, $1,129,000, and $1,074,000 in 1995, 1994, and
1993, respectively, related to the compensation element of these plans. At
December 31, 1995, unamortized deferred compensation expense of $2,239,000
related to these options remained and will be amortized over the vesting period
through 1997. The options outstanding at December 31, 1995, had an average price
of $15.17.
Additional information relating to these stock options is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of period .............. 1,876,888 1,584,344 1,462,687
Options granted ......................................... 825,124 542,177 334,279
Options exercised ....................................... (436,410) (177,409) (212,622)
Options cancelled ....................................... (9,338) (72,224) --
- -------------------------------------------------------------------------------------------------------------------
Options outstanding at end of period .................. 2,256,264 1,876,888 1,584,344
===================================================================================================================
Options exercisable at end of period .................. 741,356 589,142 491,291
===================================================================================================================
Options' prices per share:
Options granted during the period ..................... $ 9.74 to 22.75 7.14 to 19.12 9.72 to 10.67
Options exercised during the period ................... $ 4.55 to 11.70 4.12 to 10.83 3.93 to 15.23
Options outstanding at end of period .................. $ 4.55 to 22.75 4.55 to 19.12 3.93 to 15.23
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
F-19
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 9 Commitments
Off-Balance Sheet Financial Instruments
Synovus is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers,
reduce its own exposure to fluctuations in interest rates, and to conduct
lending activities. These financial instruments include commitments to extend
credit, standby and commercial letters of credit, and interest rate swaps. These
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amounts recognized in the consolidated financial
statements.
Synovus' exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby and commercial letters of credit is represented by the contract amount
of those instruments. Synovus uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments. For interest rate swap agreements held at year end, Synovus had
insignificant credit risk.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, total commitment amounts do not necessarily
represent future cash requirements.
Loan commitments and letters of credit at December 31, 1995 and 1994
include the following:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Standby letters of credit .................................................. $ 255,230 192,162
Undisbursed construction loans ............................................ 316,139 269,549
Unused credit card lines .................................................. 552,831 557,270
Other loan commitments ..................................................... 700,227 624,029
Commitments to sell mortgage loans.......................................... 36,000 13,500
- ------------------------------------------------------------------------------------------------------
Total .................................................................... $1,860,427 1,656,510
======================================================================================================
</TABLE>
Interest rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amounts. Entering into interest rate swap agreements
involves not only the risk of dealing with counterparties and their ability to
meet the terms of the contracts, but also the interest rate risk associated with
hedged positions. Notional principal amounts often are used to express the
volume of these transactions, but the amounts potentially subject to credit risk
are much smaller.
In October of 1995, Synovus and its subsidiary bank, Columbus Bank and
Trust Company, entered the interest rate swap market for interest rate risk
management purposes. The consolidated notional amount of interest rate swap
contracts is $125,000,000 with no carrying amount and an estimated fair value of
$1,776,000 at December 31, 1995.
These interest rate swaps have been entered into to convert floating rate
assets to fixed rate assets. The weighted average fixed rate is 5.98% and the
variable rate, based on three month LIBOR, was 5.88% at December 31, 1995, with
contract maturities in October 1999.
Lease Commitments
Synovus has entered into long-term operating leases for various branch
locations, data processing equipment, and furniture. Management expects that, as
these leases expire, they will be renewed or replaced by other leases. At
December 31, 1995, minimum rental commitments under all such noncancellable
leases aggregated $84,296,000 of which the following approximate amounts are due
for the next five years:
<TABLE>
<CAPTION>
Equipment
Real and
(In thousands) Property Furniture Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1996....................... $5,136 26,253 31,389
1997....................... 4,253 22,484 26,737
1998....................... 3,650 5,203 8,853
1999....................... 2,999 3,919 6,918
2000....................... 2,632 1,453 4,085
</TABLE>
Rental expense on equipment, including cancellable leases, was $33,445,000,
$25,111,000, and $21,716,000 in 1995, 1994, and 1993, respectively. Rental
expense on facilities was $6,144,000, $5,586,000, and $4,659,000 in 1995, 1994,
and 1993, respectively.
F-20
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Contract Commitments
In the normal course of its business, TSYS maintains processing agreements
with its customers. These processing agreements contain contractual commitments,
including, but not limited to, minimum standards and time frames against which
TSYS' performance is measured. In the event TSYS does not meet its contractual
commitments with its customers, TSYS may incur penalties and/or certain
customers may have the right to terminate their agreements with TSYS. TSYS does
not believe that it will fail to meet its contractual commitments to an extent
that will result in a material adverse effect on its financial condition or
results of operations.
Legal Proceedings
Synovus is subject to various legal proceedings and claims which arise in
the ordinary course of its business. Any litigation is vigorously defended by
Synovus and, in the opinion of management, based on consultation with external
legal counsel, any outcome of such litigation would not materially affect
Synovus' consolidated financial position.
Currently, multiple lawsuits, some seeking class action treatment, are
pending against one of Synovus' Alabama banking subsidiaries that involve: (1)
the sale of credit life insurance made in connection with consumer credit
transactions; (2) payments of service fees or interest rebates to automobile
dealers in connection with the assignment of automobile credit sales contracts
to that Synovus subsidiary; and (3) the forced placement of insurance to protect
that Synovus subsidiary's interest in collateral for which consumer credit
customers have failed to obtain or maintain insurance. These lawsuits seek
unspecified damages, including punitive damages, and some purport to be class
actions which, if certified, may involve many of such subsidiary's consumer
credit transactions in Alabama for a number of years. Synovus intends to
vigorously contest these lawsuits and all other litigation to which Synovus and
its subsidiaries are parties. Based on information presently available, and in
light of legal and other defenses available to Synovus and its subsidiaries,
contingent liabilities arising from the threatened and pending litigation are
not considered material. It should be noted, however, that large punitive damage
awards, bearing little relation to the actual damages sustained by plantiffs,
have been awarded in Alabama.
- --------------------------------------------------------------------------------
Note 10 Supplemental Financial Data
Components of other operating expenses in excess of 1% of total revenues for any
of the respective periods are as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Stationery, printing, and supplies............. $23,692 19,552 16,240
FDIC insurance ................................ 7,849 12,742 11,450
- --------------------------------------------------------------------------------
</TABLE>
F-21
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 11 Industry Segments
Synovus operates principally in the banking industry through its affiliate
banks and broker/dealer company. Synovus also operates in the computerized data
processing industry through its majority-owned subsidiary, TSYS, which provides
bankcard data processing for unaffiliated financial institutions and for
Synovus. All inter-segment services provided are charged at the same rates as
unaffiliated customers, are included in the revenues and net income of the
respective segments, and are eliminated to arrive at consolidated totals.
Industry segment information for the years ended December 31, 1995, 1994,
and 1993 is presented below.
<TABLE>
<CAPTION> Data General
(In thousands) Banking Processing Corporate Eliminations Consolidated
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues.......................... 1995 $ 709,774 249,708 -- (2,860)<F1> 956,622
1994 586,917 187,571 -- (1,774)<F1> 772,714
1993 529,722 152,074 -- (1,662)<F1> 680,134
Net income........................ 1995 105,692 27,730 (13,506) (5,333)<F2> 114,583
1994 83,983 22,490 (12,696) (4,325)<F2> 89,452
1993 76,364 20,223 (15,224) (3,896)<F2> 77,467
Identifiable assets............... 1995 7,719,615 199,000 51,478 (42,498) 7,927,595
1994 6,989,998 165,042 55,111 (34,072) 7,176,079
1993 6,508,231 133,339 34,267 (19,663) 6,656,174
Capital expenditures<F3>......... 1995 22,835 25,108 269 -- 48,212
1994 19,117 22,501 320 -- 41,938
1993 30,786 21,630 469 -- 52,885
Depreciation and
amortization on premises,
equipment, and purchased
software ....................... 1995 13,999 17,126 332 -- 31,457
1994 12,871 13,472 365 -- 26,708
1993 11,834 12,556 280 -- 24,670
- ---------------------
<FN>
<F1> Principally, data processing service revenues provided to the banking segment.
<F2> Minority interest in the data processing segment.
<F3> Excludes expenditures related to data processing subsidiary's capitalization
of internal software development costs.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
F-22
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 12 Condensed Financial Information of Synovus Financial Corp.
(Parent Company only)
Condensed Statements of Condition
(In thousands)
<TABLE>
December 31, 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash .......................................................................................... $ 47 239
Investment in consolidated bank subsidiaries, at equity ....................................... 736,379 639,801
Investment in consolidated nonbank subsidiaries, at equity .................................... 6,775 4,874
Notes receivable from subsidiaries ............................................................ 27,853 24,288
Other assets .................................................................................. 24,040 33,069
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets ........................................................................ $ 795,094 702,271
====================================================================================================================================
Liabilities and Shareholders' Equity
Long-term debt ................................................................................ $ 77,440 103,060
Other liabilities ............................................................................. 24,099 19,331
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities ................................................................... 101,539 122,391
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock ............................................................................. 77,281 76,134
Surplus .................................................................................. 127,021 118,782
Less treasury stock ...................................................................... (1,022) (7,680)
Less unamortized restricted stock ........................................................ (2,663) (1,538)
Net unrealized gain (loss) on investment securities available for sale ................... 5,774 (20,744)
Retained earnings ........................................................................ 487,164 414,926
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity .......................................................... 693,555 579,880
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity .......................................... $ 795,094 702,271
====================================================================================================================================
</TABLE>
F-23
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Condensed Statements of Income
(In thousands)
Years ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends received from bank subsidiaries .............................................. $ 76,464 72,800 46,407
Dividends received from nonbank subsidiaries ........................................... -- 300 733
Management fees ........................................................................ 2,511 3,586 3,273
Interest income ........................................................................ 2,149 1,425 546
Other income ........................................................................... 2,616 2,330 1,851
- ------------------------------------------------------------------------------------------------------------------------------------
Total income ...................................................................... 83,740 80,441 52,810
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Interest expense ....................................................................... 6,046 6,874 6,983
Other expenses ......................................................................... 23,904 19,758 17,103
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses .................................................................... 29,950 26,632 24,086
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed income of subsidiaries ..... 53,790 53,809 28,724
Allocated income tax benefit ................................................................ (9,246) (6,931) (3,585)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before equity in undistributed income of subsidiaries ...................... 63,036 60,740 32,309
Equity in undistributed income of subsidiaries .............................................. 51,547 28,712 48,070
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item .................................................. 114,583 89,452 80,379
Extraordinary item - loss related to early extinguishment of debt (net of income tax
benefit of $1,568)..................................................................... -- -- 2,912
- ------------------------------------------------------------------------------------------------------------------------------------
Net income ........................................................................ $ 114,583 89,452 77,467
====================================================================================================================================
</TABLE>
F-24
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
(In thousands)
Years ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income ..................................................................... $ 114,583 89,452 77,467
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries ..................... (51,547) (28,712) (48,070)
Net income of equity method investment ............................... (78) (337) (329)
Extraordinary item - loss related to early extinguishment of debt, net -- -- 2,912
Depreciation, amortization, and accretion, net ....................... 739 1,312 1,326
Net increase in other liabilities .................................... 5,723 5,474 5,383
Net decrease (increase) in other assets .............................. 8,799 (10,632) (1,047)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ....................... 78,219 56,557 37,642
- ------------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Net investment in subsidiaries ................................................. (9,835) (11,005) (22,180)
Cash from merged parent company operations ..................................... 515 -- --
Net decrease (increase) in notes receivable from subsidiaries .................. 1,200 1,700 (400)
Net increase in short-term notes receivable from subsidiaries .................. (4,765) (6,907) (11,481)
Purchase of premises and equipment, net ........................................ (266) (301) (913)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ........................... (13,151) (16,513) (34,974)
- ------------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Dividends paid to shareholders ................................................. (42,042) (33,006) (27,191)
Net decrease in short-term borrowings .......................................... -- (5,404) (620)
Principal repayments on long-term debt ......................................... (25,620) (2,166) (69,065)
Extraordinary item - loss related to early extinguishment of debt, net ......... -- -- (2,912)
Proceeds from issuance of long-term debt ....................................... -- 5,000 82,500
Purchase of treasury stock ..................................................... (1,303) (6,013) --
Proceeds from issuance of common stock ......................................... 3,705 1,270 14,447
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities ........................... (65,260) (40,319) (2,841)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in cash .................................................................... (192) (275) (173)
Cash at beginning of period ......................................................... 239 514 687
- ------------------------------------------------------------------------------------------------------------------------------------
Cash at end of period ............................................................... $ 47 239 514
====================================================================================================================================
</TABLE>
Supplemental Information: For the years ended December 31, 1995, 1994, and
1993, the Parent Company paid income taxes of $68 million, $48 million, and $42
million, and interest in the amounts of $6 million, $7 million, and $7 million,
respectively.
The amount of dividends paid to the Parent Company from the affiliate banks
is limited by various banking regulatory agencies. The amount of cash dividends
available from subsidiary banks for payment in 1996, without prior approval from
the banking regulatory agencies, is approximately $98,375,000. In prior years,
Synovus' banks have received permission and have paid cash dividends to the
Parent Company in excess of these regulatory limitations.
As a result of the regulatory limitations, at December 31, 1995,
approximately $644,779,000 of the Parent Company's investment in net assets of
subsidiary banks of $743,154,000, as shown in the accompanying condensed
statements of condition, was restricted from transfer by subsidiary banks to the
Parent Company in the form of cash dividends.
The Federal Reserve Board issues guidelines for insured banks' minimum
capital requirements. The capital requirements are based upon the perceived risk
inherent in the assets of the company. The minimum risk-based capital required
is 8% of which 4% must be Tier 1 Capital. Synovus exceeded minimum levels of
required regulatory capital at December 31, 1995.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
established five capital categories for banks and bank holding companies. The
bank regulators adopted regulations defining these five capital categories in
September 1992. Under the regulations, each bank is classified into one of the
five categories (well-capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized) based on its
level of risk-based capital as measured by the bank's Tier 1 capital ratio,
total risk-based capital ratio, leverage ratio, and supervisory rating. FDICIA
defines "well-capitalized" banks or bank holding companies as entities having a
total risk-based capital ratio of 10% or higher, a Tier I risk-based capital
ratio of 6% or higher, and a leverage ratio of 5% or higher. At December 31,
1995, Synovus and its bank subsidiaries have adequate capital to be classified
as well-capitalized institutions under the FDICIA regulations.
- --------------------------------------------------------------------------------
F-25
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
[LOGO]KPMG Peat Marwick LLP
303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Synovus Financial Corp.:
We have audited the accompanying consolidated statements of condition of
Synovus Financial Corp. and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1995.
These consolidated financial statements are the responsibility of Synovus'
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Synovus
Financial Corp. and subsidiaries at December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in the summary of significant accounting policies and note 2,
Synovus changed its method of accounting for investments to adopt the provisions
of Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", at December 31, 1993.
/s/KPMG Peat Marwick LLP
January 26, 1996
Member Firm of
Klynveld Peat Marwick Goerdeler
F-26
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Percent
Years ended December 31, 1995 1994 Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statements of Condition
Assets ................................................ $7,927,595 7,176,079 10.5%
Loans, net ............................................ 5,430,646 4,999,858 8.6
Deposits .............................................. 6,727,879 5,924,603 13.6
Shareholders' equity .................................. 693,555 579,880 19.6
Book value per share .................................. 8.98 7.67 17.1
Cash dividends declared per share ..................... .54 .45 20.0
Equity to assets ...................................... 8.75% 8.08
Reserve for loan losses to loans ...................... 1.48 1.48
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Income
Net income ............................................ $ 114,583 89,452 28.1%
Net income per share .................................. 1.50 1.19 25.6
- ------------------------------------------------------------------------------------------------------------------------------------
Performance Ratios
Return on assets ...................................... 1.53% 1.32
Return on equity ...................................... 17.92 15.79
Net interest margin ................................... 5.15 5.05
Net overhead ratio .................................... 1.75 1.95
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-27
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
Summary
Synovus Financial Corp. (Synovus) has continued to improve performance with
the most successful year in its history. Net income for 1995 was $114.6 million,
increasing 28.1% over the $89.5 million earned in 1994. Net income per share
increased to $1.50 in 1995, up 25.6% from the $1.19 earned in 1994. Return on
assets continued to improve in 1995 increasing 21 basis points to 1.53%,
compared to 1.32% in 1994. Return on equity also improved to 17.92% in 1995,
compared to 15.79% in 1994.
These record results are attributable to significant improvements in
Synovus' banking operations and at Total System Services, Inc.(TSYS), Synovus'
majority owned bankcard processing subsidiary. During 1995, net interest income
and non-interest income grew 13.5% and 24.2%, respectively, over 1994 while
non-interest expense increased 16.0% and the provision for loan losses increased
only 1.6%.
Synovus' banking operations results, which exclude TSYS, also continued to
improve during 1995. Net income for Synovus' banking operations increased 29.3%
to $92.2 million from $71.3 million in 1994. Return on assets for Synovus'
banking operations improved in 1995 increasing 19 basis points to 1.26%,
compared to 1.07% in 1994. Return on equity allocated to Synovus' banking
operations also improved to 17.31% in 1995, compared to 15.01% in 1994.
Synovus' total assets ended the year at $7.9 billion, a growth rate of
10.5% over 1994. This growth resulted from an $803.3 million increase, or 13.6%,
in total deposits. Net loans grew $430.8 million, or 8.6%. The increases in both
loans and deposits reflect a strong Southeastern economic environment as well as
market share gains. Shareholders' equity grew 19.6% to $693.6 million, which
represented 8.75% of total assets.
The following discussion reviews the results of operations and assesses the
financial condition of Synovus. This discussion should be read in conjunction
with the preceding consolidated financial statements and accompanying notes.
On March 8, 1993, Synovus declared a three-for-two stock split effective
April 1, 1993, to shareholders of record on March 18, 1993. Share and per share
data for all periods presented have been retroactively restated to reflect the
additional shares outstanding resulting from the stock split.
- --------------------------------------------------------------------------------
Table 1
<TABLE>
<CAPTION>
Five Year Selected Financial Data
(In thousands, except per share data)
Years Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net interest income ........................................ $341,875 301,231 263,213 241,203 203,728
Provision for losses on loans .............................. 25,787 25,387 24,924 33,302 29,161
Income before extraordinary item ........................... 114,583 89,452 80,379 66,685 51,959
Net income ................................................. 114,583 89,452 77,467 66,685 51,959
Per share data:
Income before extraordinary item ...................... 1.50 1.19 1.09 .92 .74
Net income ............................................ 1.50 1.19 1.05 .92 .74
Cash dividends declared ............................... .540 .450 .373 .310 .267
Long-term debt ............................................. 106,815 139,811 143,481 143,215 109,794
Average total equity ....................................... 639,426 566,562 505,027 444,565 383,352
Average total assets ....................................... 7,498,299 6,782,659 6,141,794 5,702,968 4,966,446
Ratios:
Return on assets before extraordinary item ............ 1.53% 1.32 1.31 1.17 1.05
Return on assets after extraordinary item ............. 1.53 1.32 1.26 1.17 1.05
Return on equity before extraordinary item ............ 17.92 15.79 15.92 15.00 13.55
Return on equity after extraordinary item ............. 17.92 15.79 15.34 15.00 13.55
Dividend payout ratio (a) ............................. 36.69 36.90 35.10 28.59 30.79
Average equity to average assets ...................... 8.53 8.35 8.22 7.80 7.72
(a) Determined by dividing dividends declared by net income, including pooled subsidiaries.
</TABLE>
- --------------------------------------------------------------------------------
F-28
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Acquisitions
The 1995 merger activity resulted in Synovus' entry into South Carolina and
an expanded presence in Georgia. The merger with NBSC Corporation of Columbia,
South Carolina, represents the largest in our history. NBSC brings a veteran
management team and an opportunity to provide products and services to the
growing markets in South Carolina.
In addition, the mergers with Douglasville, Georgia, based Citizens &
Merchants Corporation and Riverdale, Georgia, based Peach State Bank continue to
provide Synovus with access to the growth in the Atlanta suburbs.
A list of the bank acquisitions completed during the past two years follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Acquired Shares Financial
Company and Location Date Assets Issued Statement Presentation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Citizens & Merchants Corporation April 28, 1995 $ 52,000 626,469 Pooling (Non-restated)
Douglasville, Georgia
NBSC Corporation February 28, 1995 $1,100,000 7,929,348 Restated Pooling
Columbia, South Carolina
Peach State Bank January 31, 1995 $ 43,000 266,498 Purchase
Riverdale, Georgia
State Bancshares, Inc. October 31, 1994 $ 62,000 548,879 Pooling (Non-restated)
Enterprise, Alabama
PNB Bankshares, Inc. May 31, 1994 $ 78,000 548,213 Pooling (Non-restated)
Peachtree City, Georgia
</TABLE>
This information is discussed in further detail in Note 1 of the financial
statements.
- --------------------------------------------------------------------------------
Table 2
<TABLE>
Net Interest Income
(In thousands)
Years Ended December 31,
<CAPTION> ----------------------------------------------------
1995 1994 1993
----------------------------------------------------
<S>
Interest income .......................................................... $615,788 498,382 443,872
Taxable-equivalent adjustment ............................................ 5,107 5,599 6,830
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income, taxable-equivalent ............................ 620,895 503,981 450,702
Interest expense ......................................................... 273,913 197,151 180,659
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income, taxable-equivalent ........................ $346,982 306,830 270,043
====================================================================================================================================
- --------------------------------------------------------------------------------
Earning Assets, Sources of Funds, and Net Interest Income
Average total assets for 1995 were $7.5 billion, or 10.6% over 1994 average
total assets of $6.8 billion. Average earning assets for 1995 were $6.7 billion,
which represented 90% of average total assets. A $664.6 million, or 11.6%,
increase in average deposits for 1995 provided the funding for a $628.3 million,
or 13.6%, increase in average net loans. Average shareholders' equity for 1995
ended the year at $639.4 million.
For 1994, average total assets increased $640.9 million, or 10.4%. Average
earning assets for 1994 were $6.1 billion, which represented 90% of average
total assets. For more detailed information on Synovus average statement of
condition for the years ended 1995, 1994, and 1993, refer to Table 3.
Net interest income (interest income less interest expense) is the largest
component of Synovus' net income. This major source of income represents the
earnings of Synovus' primary business of gathering funds from deposit sources
and investing those funds in loans and securities. Synovus' long term objective
is to manage those assets and liabilities to provide the largest possible amount
of income while balancing interest rate, credit, liquidity, and capital risks.
Net interest income is presented in this discussion on a tax-equivalent
basis, so that the income from assets exempt from federal income taxes is
adjusted based on a statutory marginal federal tax rate of 35% in all years (See
Table 2). The net interest margin is defined as taxable-equivalent net interest
income divided by average total interest earning assets and provides an
indication of the efficiency of the earnings from balance sheet activities. The
net interest margin is affected by changes in the spread between interest
earning asset yields and interest bearing costs (spread rate), and by the
percentage of interest earning assets funded by interest bearing liabilities.
F-29
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
Net interest income for 1995 was a record $341.9 million, up $40.6 million,
or 13.5%, from 1994. On a taxable-equivalent basis, net interest income was
$347.0 million, up $40.2 million, or 13.1%, over 1994. During 1995, average
interest earning assets increased $658.3 million, or 10.8%, with the majority of
this growth being in loans. Increases in the level of time deposits were the
main contributor to the $516.7 million, or 9.9%, growth in average interest
bearing liabilities.
The 5.15% net interest margin achieved in 1995 is a 10 basis point increase
over the 5.05% reported for 1994. This increase was primarily due to a 92 basis
point increase in interest earning asset yields and a greater contribution from
non-interest bearing funding sources. In 1995, the earning asset mix shifted
more toward loans versus investment securities. This mix change had a favorable
impact on the overall earning asset yield. Increases in the rate paid on
interest bearing liabilities are primarily attributable to two factors. One
factor is the continued repricing of deposits upward during 1995 with a general
lag in deposit repricing as compared to interest earning assets. The other
factor is the change in the mix of interest bearing liabilities as customers
began moving their deposits back to higher paying time deposits from lower
paying transaction accounts, as their expectations of the market rates changed
in 1995. Another influence impacting the net interest margin is the percentage
of earning assets funded by interest bearing liabilities. Funding for Synovus'
earning assets comes from interest bearing liabilities, non-interest bearing
liabilities, and shareholders' equity. Earning assets funded by non-interest
bearing liabilities continue to provide a positive impact on the net interest
margin.
During 1994, net interest income and tax-equivalent net interest income
increased 14.4% and 13.6%, respectively. Average interest earning assets grew
10.0% while interest bearing liabilities increased 8.6%. This growth, along with
a 16 basis point improvement in the net interest margin to 5.05% from 4.89%,
contributed to Synovus' earnings. The increase in the spread rate of 11 basis
points was the result of a 13 basis point increase in the yield on earning
assets offset by a 2 basis point increase in the rate paid on interest bearing
liabilities. The net interest margin also increased as a result of a 14.8%
increase in average non-interest bearing demand deposits. The increasing market
rates experienced during 1994 resulted in the repricing of interest earning
assets upward, while depositors reinvested funds from maturing time deposits
into savings accounts, interest bearing demand accounts, and money market
accounts on a temporary basis, as their expectations were for further increases
in market rates.
Despite the growth in net interest income and the strong net interest
margin, the margin declined from a first quarter high of 5.25% to 5.10% in the
fourth quarter of 1995. This decline during 1995 primarily resulted from a shift
of transaction oriented deposit accounts to time deposits. Synovus sought to
manage this decline through the use of product and pricing management as well as
hedging opportunities using off-balance sheet derivatives. These activities are
discussed further in the "Off-Balance Sheet Derivatives for Interest Rate Risk
Management" section of this report.
F-30
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 3
Consolidated Average Balances, Interest, and Yields
(In thousands)
1995 1994 1993
----------------------------------------------------------------------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets:
Taxable loans, net <F1><F2>........ $5,288,863 522,258 9.87% $4,643,731 412,086 8.87% $4,175,384 358,366 8.58%
Tax-exempt loans, net <F2><F3>..... 38,044 4,230 11.12 45,755 4,747 10.37 54,048 5,197 9.62
Reserve for loan losses ........... (80,034) -- (70,893) -- (66,057) --
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net ................... 5,246,873 526,488 10.03 4,618,593 416,833 9.03 4,163,375 363,563 8.73
- -----------------------------------------------------------------------------------------------------------------------------------
Taxable investment securities <F4> . 1,270,063 77,198 6.08 1,270,976 72,546 5.71 1,115,237 69,494 6.23
Tax-exempt investment securities<F3><F4>120,064 11,096 9.24 123,437 11,780 9.54 137,744 14,318 10.39
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment securities .. 1,390,127 88,294 6.35 1,394,413 84,326 6.05 1,252,981 83,812 6.69
- -----------------------------------------------------------------------------------------------------------------------------------
Interest earning deposits with banks 1,828 107 5.85 641 35 5.46 2,324 127 5.46
Federal funds sold ................ 101,334 6,006 5.93 68,196 2,787 4.09 107,850 3,200 2.97
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest earning assets 6,740,162 620,895 9.21 6,081,843 503,981 8.29 5,526,530 450,702 8.16
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks ................ 298,328 284,651 273,921
Premises and equipment, net ............ 209,415 197,313 183,665
Other real estate ...................... 13,582 15,182 19,045
Other assets <F5>....................... 236,812 203,670 138,633
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets ................. $7,498,299 $6,782,659 $6,141,794
===================================================================================================================================
Liabilities and Shareholders' Equity
Interest bearing liabilities:
Interest bearing demand deposits .. $ 887,694 23,947 2.70% $ 873,992 22,614 2.59% $ 780,292 20,512 2.63%
Money market accounts ............. 915,710 36,817 4.02 863,081 26,126 3.03 829,275 23,529 2.84
Savings deposits .................. 475,962 13,746 2.89 510,380 14,226 2.79 434,037 12,643 2.91
Time deposits ..................... 3,113,375 179,251 5.76 2,574,468 113,953 4.43 2,443,877 107,960 4.42
Federal funds purchased and
securities sold under agreement
to repurchase ................ 216,342 12,092 5.59 235,858 10,021 4.25 158,050 5,045 3.19
Other borrowed funds .............. 125,317 8,060 6.43 159,900 10,211 6.39 157,181 10,970 6.98
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest bearing
liabilities................. 5,734,400 273,913 4.78 5,217,679 197,151 3.78 4,802,712 180,659 3.76
- -----------------------------------------------------------------------------------------------------------------------------------
Spread rate .................. 4.43% 4.51% 4.40%
===================================================================================================================================
Non-interest bearing demand deposits ... 986,582 892,800 777,973
Other liabilities ...................... 137,891 105,618 56,082
Shareholders' equity ................... 639,426 566,562 505,027
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity .... $7,498,299 $6,782,659 $6,141,794
===================================================================================================================================
Net interest income/margin ............ 346,982 5.15% 306,830 5.05% 270,043 4.89%
===================================================================================================================================
Taxable-equivalent adjustment ......... (5,107) (5,599) (6,830)
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income, actual ........... $341,875 $301,231 $263,213
===================================================================================================================================
- ----------------
<FN>
<F1> Average loans are shown net of unearned income. Nonperforming loans are included.
<F2> Interest income includes loan fees as follows: 1995 - $20,825, 1994 - $19,140, 1993 - $19,176.
<F3> Reflects taxable-equivalent adjustments, using the statutory federal income
tax rate of 35%, in adjusting interest on tax-exempt loans and investment
securities to a taxable-equivalent basis.
<F4> Includes certain investment securities available for sale, at their respective average amortized cost. For the years ended
December 31, 1995, 1994, and 1993, the average amortized cost of these securities amounted to $881,063, $863,655, and $55,781,
respectively.
<F5> In 1995 and 1994 there were $7,674 and $8,293, respectively, of average net unrealized losses on investment securities
available for sale. Synovus adopted SFAS No. 115 on December 31, 1993. Prior to that date, the average recorded balance of net
unrealized gains or losses was insignificant.
</TABLE>
- --------------------------------------------------------------------------------
F-31
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 4
<TABLE>
<CAPTION>
Rate/Volume Analysis
(In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 Compared to 1994 1994 Compared to 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Change Due to <F1> Change Due to <F1>
- ------------------------------------------------------------------------------------------------------------------------------------
Yield/ Net Yield/ Net
Volume Rate Change Volume Rate Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Taxable loans, net .............................. $ 57,249 52,923 110,172 40,197 13,523 53,720
Tax-exempt loans, net <F2>....................... (800) 283 (517) (797) 347 (450)
Taxable investment securities ................... (52) 4,704 4,652 9,705 (6,653) 3,052
Tax-exempt investment securities <F2>............ (322) (362) (684) (1,487) (1,051) (2,538)
Interest earning deposits with banks ............ 65 7 72 (92) -- (92)
Federal funds sold .............................. 1,354 1,865 3,219 (1,177) 764 (413)
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income ...................... 57,494 59,420 116,914 46,349 6,930 53,279
- ------------------------------------------------------------------------------------------------------------------------------------
Interest paid on:
Interest bearing demand deposits ................ 355 978 1,333 2,463 (361) 2,102
Money market accounts ........................... 1,593 9,098 10,691 959 1,638 2,597
Savings deposits ................................ (959) 479 (480) 2,224 (641) 1,583
Time deposits ................................... 23,853 41,445 65,298 5,769 224 5,993
Federal funds purchased and securities sold under
agreement to repurchase .................... (829) 2,900 2,071 2,482 2,494 4,976
Other borrowed funds ............................ (2,210) 59 (2,151) 190 (949) (759)
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense ..................... 21,803 54,959 76,762 14,087 2,405 16,492
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income ........................ $ 35,691 4,461 40,152 32,262 4,525 36,787
====================================================================================================================================
- ---------
<FN>
<F1>The change in interest due to both rate and volume has been allocated to the
rate component.
<F2>Reflects taxable-equivalent adjustments using the statutory federal income
tax rate of 35% in 1995 and 1994 in adjusting interest on tax-exempt loans
and investment securities to a taxable-equivalent basis.
</TABLE>
- --------------------------------------------------------------------------------
Non-Interest Income
Non-interest income consists of a wide variety of fee generating services
viewed as traditional banking services along with revenues earned by TSYS,
Synovus' bankcard data processing company. During 1995, total non-interest
income increased $66.5 million, or 24.2%. The majority of this increase was due
to growth at TSYS.
TSYS contributed approximately 70% of Synovus' total non-interest income in
1995 with the majority of this reported as data processing services income. Data
processing services income is derived principally from the servicing of
individual bankcard accounts for the card issuing customers of TSYS. The growth
in TSYS is evidenced by the average number of total cardholder accounts
processed by TSYS, which was approximately 53.1 million in 1995, compared to
39.3 million in 1994, and 32.5 million in 1993. TSYS currently processes 63
million cardholder accounts across the United States, Puerto Rico, Canada, and
Mexico.
A significant amount of TSYS' revenues are derived from certain major
customers. For the years ended December 31, 1995, 1994, and 1993, two customers
accounted for approximately 34%, 36%, and 37% of revenues, respectively. As a
result, the loss of one of these major customers could have a material adverse
effect on TSYS' results of operations.
In January of 1996, TSYS successfully completed the conversion of
approximately 20,000 Bank of America cardholder accounts to TS2, and in early
February of 1996, Bank of America began opening new cardholder accounts on TS2.
TSYS' conversion schedule with Bank of America contemplated completion of the
conversion of the balance of Bank of America's cardholder accounts by the end of
1996; however, there have been delays and this conversion schedule may be
changed and portions of Bank of America's cardholder accounts may be converted
in 1997. While delays in Bank of America's conversion schedule allow Bank of
America certain remedies, including the receipt of financial penalties and the
right to terminate its relationship with TSYS, TSYS' management believes all of
Bank of America's cardholder accounts will be successfully converted. The
conversion and processing of Bank of America's cardholder accounts is not
expected to have a material impact on TSYS' 1996 financial condition or results
of operations.
Revenues derived from the processing of TSYS' merchant account customers
who accept certain private label cards, as well as bankcards, are included in
data processing services income. Due to a significantly higher volume of
transactions and item charges per individual account than consumer cardholder
accounts, merchant accounts generally provide more revenue per account
processed. At year-end 1995, TSYS was processing over 600,000
F-32
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
merchant accounts, a 57.9% increase over the 380,000 accounts being processed at
year-end 1994; 269,000 merchant accounts were being processed at year-end 1993.
The majority of the increase in merchant accounts being processed is
attributable to the over 100,000 merchant accounts converted in connection with
TSYS joint venture with a number of banks in Mexico, Total System Services de
Mexico, S.A. de C.V., (TSYS de Mexico). Additionally 40,000 merchant accounts of
an existing customer previously processed by another processor contributed to
the increase. Revenues from merchant accounts processing were approximately
$12.9 million, $9.2 million, and $7.0 million in 1995, 1994, and 1993,
respectively.
Synovus continues to emphasize the importance of growth in non-interest
related sources of income in its banking operations. Synovus looks to develop
new sources of non-interest related income and to reprice services and products
to reflect their related costs and value to customers. Non-interest income
reported by Synovus banking operations increased $5.1 million, or 5.7%, in 1995.
Excluding the $2.9 million gain on the sale of certain credit card accounts
recorded in 1994, banking operations non-interest income increased $7.8 million,
or 9.1%.
Service charges on deposit accounts have historically been one of the
primary sources of other income for Synovus' banking operations. In 1995,
service charges on deposit accounts increased $5.2 million, or 13.0%, as a
result of increases in the number of accounts serviced and increased fee
structures.
On January 1, 1995, Synovus formed Synovus Trust Company, a new affiliate
in which to consolidate all Synovus' Georgia trust operations. This new
affiliate is expected to bring continued efficiencies and expertise to this
banking service. Trust fees for 1995 increased $.9 million, or 9.7%, over 1994.
Fees for trust services are derived from performing estate administration,
personal trust, corporate trust, and employee benefit plan administration. At
December 31, 1995 and 1994, total market value of assets administered by Synovus
Trust Company and affiliate bank trust operations was approximately $3.5 billion
and $2.6 billion, respectively.
Non-interest income in 1995 has also been positively impacted by increases
in revenues from mortgage banking and related servicing. In June of 1994,
Synovus Mortgage Corp. was formed to enhance the mortgage products offered by
the banking affiliates and to generate additional fee income through mortgage
servicing. Synovus Mortgage Corp. provides expertise in the areas of products
and pricing to the affiliate banks and serves as an outlet for placing these
mortgage loans into the secondary market while retaining the related servicing
rights. The adoption of SFAS No. 122, in July of 1995, had a small favorable
impact on non-interest income.
In 1994, total non-interest income increased $38.1 million, or 16.1%.
Revenues from bankcard data processing services offered by TSYS were the largest
contributor increasing $29.8 million, or 20.1%, over 1993. Service charges on
banking operations deposit accounts increased $2.3 million, or 5.8%, primarily
as a result of continued growth in the number of accounts serviced. Fees for
trust services fell slightly, less than 2%, in 1994 from an extremely strong
1993. Other operating income increased $7.8 million, or 24.9%, in 1994 primarily
due to two acquisitions in 1994, increases in gains on sales of other real
estate, merchant fees on credit cards, and a $2.9 million gain on the sale of
certain credit card accounts.
Non-Interest Expense
Non-interest expense increased $66.2 million, or 16.1%, in 1995 over 1994.
Management analyzes non-interest expense in two separate components: banking
operations and TSYS. The table below summarizes this data for 1995, 1994, and
1993:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands) Banking TSYS Banking TSYS Banking TSYS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries and other personnel expense ................ $157,533 94,946 138,480 73,051 125,897 54,517
Net occupancy and equipment expense ................. 35,080 64,549 32,136 51,283 29,258 43,421
Other operating expenses ............................ 72,721 47,291 83,836 28,139 72,737 21,521
Minority Interest ................................... 5,333 -- 4,325 -- 3,896 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense ..................... $270,667 206,786 258,777 152,473 231,788 119,459
====================================================================================================================================
</TABLE>
Non-interest expense related to TSYS increased $54.3 million, or 35.6%, in
1995 over 1994 with a significant portion of this increase being employment
expenses. The average number of employees increased from 1,874 in 1994 to 2,087
in 1995. This growth in employees along with salary increases and a new employee
retirement plan resulted in a $21.9 million, or 30.0%, increase in employment
expenses.
As TSYS expanded its fee-generating services, equipment rental,
depreciation, and amortization expense related to the acquisition of facilities,
equipment, and computer software increased. Total occupancy and equipment
expenses increased $13.3 million, or 25.9%, in 1995. A significant portion of
this increase can be attributed to the amortization of TS2, which commenced in
October 1994 and amounted to $3.3 million in 1995 compared to $.8 million in
1994. TSYS continues to monitor and assess its building and equipment needs as
it positions itself for future growth and expansion.
Other operating expenses at TSYS increased $19.2 million, or 68.1%, in 1995
over 1994. A number of factors contributed to this increase. The volume of
supplies related to the processing of accounts increased due to the growth in
number of accounts serviced, coupled with an increase in the costs of supplies,
especially paper. Travel expenses were up significantly in 1995 due to travel
necessitated by the startup of TSYS de Mexico, which required a significant
amount of on-site training. Other operating expenses also increased in 1995 as a
result of certain provisions made for contractual or negotiated processing
commitments. These provisions were deemed necessary in view of the increased
risks associated with the significant growth in the number of accounts
processed. Also contributing to the growth in other operating expenses are costs
related to the conversion of clients to TS2.
In 1995, non-interest expense for Synovus banking operations increased
$11.9 million, or 4.6%. The majority of increased expenses were in employment
expense and related primarily to additional employees hired in 1995. The average
number of employees in banking operations increased from 4,025 in 1994 to 4,272
in 1995. This growth was primarily due to growth within the banking affiliates,
with a portion of this increase related to acquisitions. Other factors causing
an increase in non-interest expense include salary increases, a new employee
retirement plan, and a $3.2 million expense related to the termination of the
previous employee retirement plan. The banking operations efficiency ratio
improved from 64.76% in 1994 to 60.95% in 1995. These improvements were
primarily the result of increased revenues, expense control, and a decrease in
the FDIC insurance rate.
F-33
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
Increases in non-interest expense were partially offset by a $4.9 million
decrease in FDIC premium expense in 1995 over 1994 due to the lowering, in 1995,
of the FDIC assessment rate on deposits. Synovus believes that the current
banking legislation will result in additional 1996 reductions in FDIC insurance
paid by the well-capitalized banks. Additionally, deposits of approximately $600
million, guaranteed by the Savings Association Insurance Fund, may be subject to
a one-time assessment which would result in a $4 million to $6 million pre-tax
charge to 1996 earnings.
Quality service for Synovus' customers, provided in the most efficient
manner, continues to be a priority. During 1994, Synovus embarked upon a
"modernization" effort, under which all banking support functions are being
reviewed for potential improvements. Synovus is investing in improved
technology, such as platform automation, and is standardizing certain support
processes. Synovus believes that this effort will provide a greatly improved
product delivery mechanism and will increase the productivity of the support
functions.
Efforts are also directed toward the development of new banking services as
well as enhancements to existing banking services. Recent developments are in
the areas of touchtone banking, on-line capabilities, and new investment
management services. Synovus continues to reorganize and refocus its resources
whenever it can more effectively and efficiently deliver products and services
to its customers. Some of these efforts are being accomplished through a new
non-bank subsidiary, Synovus Administrative Services Corp. (SASC). SASC will
provide future efficiency by eliminating some of the duplicative functions that
exist among Synovus affiliates.
In 1994, total non-interest expense increased $60.0 million, or 17.1%, over
1993. Expenses incurred at TSYS increased $33.0 million, or 27.6%, in 1994 over
1993 as TSYS prepared for expansion of its fee-generating services. In 1994, the
average number of employees at TSYS increased from 1,504 in 1993 to 1,874 in
1994. The Quickstart programmer class which began in the second quarter of 1994
added 100 analyst trainees upon enrollment. Employee additions were also
necessary to serve the growing cardholder base. Remaining increases in
employment expenses were due to normal salary increases and related benefits.
Increases in equipment and occupancy expenses were also required in 1994, as
compared to 1993, as TSYS obtained substantial new, technologically-advanced
equipment in order to meet its business needs.
Non-interest expense for Synovus' banking operations increased $27.0
million, or 11.6%, in 1994 over 1993. New hires, salary increases, and related
benefits account for most of this increase. Other factors include FDIC insurance
increases related to deposit growth, professional fee increases, and general
increases related to two acquisitions completed in 1994.
In October of 1993, Synovus issued ten year, non-callable Senior notes
totaling $75 million at a rate of 6.125%. A portion of the proceeds were used to
prepay $45 million in long-term debt that carried a higher rate than the new
issue. This prepayment resulted in a one-time after-tax charge of $2.9 million
that was expensed in the third quarter of 1993 and has reduced interest costs in
subsequent years.
Investment Securities
Synovus' investment securities portfolio consists of debt and equity
securities which are categorized as either available for sale or held to
maturity. Synovus has an insignificant balance of trading investment securities
used to facilitate business at Synovus Securities, Inc., Synovus' wholly-owned
broker/dealer company. Investment securities provide Synovus with a source of
liquidity and a relatively stable source of income. The investment securities
portfolio also provides management with a tool to balance interest rate risk and
credit risk related to the loans on the balance sheet. At December 31, 1995,
approximately $879.2 million of these investment securities were pledged as
required collateral for certain deposits. See Table 14 for maturity and average
yield information for the available for sale and held to maturity investment
securities.
Synovus' investment strategy focuses on the use of the investment
securities portfolio to manage the interest rate risk created by the natural
mismatch inherent in the loan and deposit portfolios. With the strong loan
demand at Synovus' affiliate banks, there is little need for investment
securities solely to augment income or utilize uninvested deposits. Therefore,
Synovus maintains a fairly conservative posture with respect to the types of
investment securities in which it invests. As such, Synovus' investment
securities are primarily U.S. Treasuries, U.S. Government agencies, and
Government agency sponsored mortgage-backed securities, all of which have a high
degree of liquidity. A mortgage-backed security depends on the underlying pool
of mortgage loans to provide a cash flow "pass-through" of principal and
interest. At December 31, 1995, substantially all of the collateralized mortgage
obligations and mortgage-backed pass-through securities held by Synovus were
issued or backed by Federal agencies.
As of December 31, 1995 and 1994, the estimated fair value of investment
securities as a percentage of their amortized cost was 101.0% and 96.0%,
respectively. During 1995, the bond market performance was strong due to
expectations of future interest rate declines. This strong performance had a
positive impact on the market value of Synovus' investment securities portfolio.
The investment securities portfolio had gross unrealized gains of $19.8 million
and gross unrealized losses of $5.2 million, for a net unrealized gain of $14.6
million as of December 31, 1995. As of December 31, 1994, the investment
securities portfolio had a net unrealized loss of $54.3 million. In accordance
with SFAS No. 115, shareholders' equity contained a net unrealized gain of $5.8
million and a net unrealized loss of $20.7 million recorded on the available for
sale portfolio as of December 31, 1995 and 1994, respectively. Table 5 presents
the carrying value of investment securities held to maturity and investment
securities available for sale at December 31, 1995, 1994, and 1993.
During 1995, the average balance of investment securities remained flat at
$1.4 billion as compared to 1994. Synovus earned a taxable-equivalent rate of
6.35% and 6.05% for 1995 and 1994, respectively, on its investment securities
portfolio. As of December 31, 1995 and 1994, average investment securities
represented 20.6% and 22.9%, respectively, of average interest earning assets.
This decrease in the percentage of average investment securities to average
interest earning assets is due to strong growth in the loan portfolio. Refer to
Table 3 for more information on average investment securities.
On December 21, 1995, Synovus exercised an option allowed by "Special
Report - a Guide to Implementation of FASB No. 115, Accounting for Certain
Investments in Debt and Equity Securities - Questions and Answers" to make a one
time transfer of investment securities held to maturity to investment securities
available for sale. This transfer was made to add further liquidity and
flexibility to the portfolio that will enable Synovus to more effectively manage
its interest rate risk position. The amortized cost and estimated fair value of
the investment securities transferred was $133.7 million and $133.9 million,
respectively.
F-34
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 5
<TABLE>
Investment Securities
(In thousands)
<CAPTION> December 31,
----------------------------------------------------
1995 1994 1993
----------------------------------------------------
<S> <C> <C> <C>
Investment Securities Held to Maturity:
U.S. Treasury and U.S. Government agencies .......................... $ 81,772 159,354 89,111
Mortgage-backed securities .......................................... 171,275 243,220 244,586
State and municipal ................................................. 121,761 121,834 135,041
Other investments ................................................... 6,110 8,525 7,243
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities held to maturity .............................. $ 380,918 532,933 475,981
====================================================================================================================================
Investment Securities Available for Sale:
U.S. Treasury and U.S. Government agencies .......................... $1,004,286 767,544 807,353
Mortgage-backed securities .......................................... 88,196 24,413 49,092
State and municipal ................................................. 1,322 1,491 939
Other investments ................................................... 12,494 11,321 14,984
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities available for sale ............................ $1,106,298 804,769 872,368
====================================================================================================================================
Total Investment Securities:
U.S. Treasury and U.S. Government agencies .......................... $1,086,058 926,898 896,464
Mortgage-backed securities .......................................... 259,471 267,633 293,678
State and municipal ................................................. 123,083 123,325 135,980
Other investments ................................................... 18,604 19,846 22,227
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment securities .................................... $1,487,216 1,337,702 1,348,349
====================================================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
Loans
Loans are the primary interest earning asset for Synovus. When analyzing
prospective loans, management assesses both interest rate objectives and credit
quality objectives in determining whether to extend a given loan and the
appropriate pricing for that loan. Operating under a decentralized structure,
management emphasizes lending in affiliates respective communities. As
illustrated in Table 6, Synovus strives toward maintaining a diversified loan
portfolio to spread risk and reduce exposure to economic downturns that may
occur in different segments of the economy, geographic locations, or in
particular industries. Demonstration of that strategy results in the fact that
Synovus does not have any concentration of loans to any single industry or
borrower, no foreign loans, and only $1.5 million in highly leveraged
transaction credits as of the end of 1995.
Representing 78% of average earning assets and 70% of average total assets,
net loans increased $430.8 million, or 8.6%, during 1995. Continued market share
gains through successful business development and additional products and
services offered to the current customer base has afforded Synovus this loan
growth. In addition, the acquisitions of Citizens & Merchants Corporation and
Peach State Bank contributed approximately $60.0 million in loan growth.
Synovus has enjoyed a relatively strong average loan-to-deposit ratio over
the past three years. The average loan-to-deposit ratio for 1995, 1994, and 1993
was 83.5%, 82.1%, and 80.3%, respectively.
The loan growth during 1995 was primarily internally generated through an
ever increasing focus on affiliate bank customers. The growth in commercial
loans was primarily centered in the larger markets in Alabama, South Carolina,
and Georgia. These markets have experienced economic growth in 1995, especially
with respect to real estate and working capital loans. Real estate construction
and commercial real estate mortgage loans increased in 1995 due to economic
growth in many of the Southeastern communities Synovus affiliate banks serve.
Credit card loan growth has been most dramatically impacted by the increased
number of customer accounts in several affiliate banks. Other installment loans
have increased with targeted consumer loan products offered at selected
affiliate banks. The growth in mortgage loans held for sale is mostly
attributable to underwriting mortgage loans that are sold to third party
investors, while retaining the servicing of those loans at Synovus Mortgage
Corp. Synovus mortgage loans held for sale are pre-commited extensions and are
generally held less than thirty days, after which the loans are sold in the
market to an unaffiliated investor. The slight decrease in retail real estate
mortgage loans from 1994 to 1995 results primarily from the fact that Synovus
has generated more mortgage loans for sale versus loans retained as interest
earning assets. In addition, the decrease in mortgage loan interest rates during
1995 encouraged refinancings, which also reduced retail real estate mortgage
loans.
Synovus has reduced nonperforming assets during 1995 as a result of
constant attention and focus on loan quality while at the same time meeting the
customers' needs. Loan officers work with each customer to determine which loan
products will optimally meet their individual and specific lending needs. This
focus on underwriting loans that benefit the customer, while maintaining credit
quality standards, causes Synovus to be optimistic about the future growth and
quality of the loan portfolio.
The composition of the loan portfolio at the end of the past five years, as
shown in Table 6 and Table 7, presents the maturity distribution of selected
categories within the loan portfolio.
F-35
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 6
<TABLE>
<CAPTION>
Loans by Type
(In thousands)
December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial:
Commercial, financial, and agricultural ............ $1,931,004 1,783,928 1,567,310 1,423,124 1,358,425
Real estate-construction ........................... 578,712 472,131 414,801 376,641 359,518
Real estate-mortgage ............................... 1,160,089 1,030,524 890,297 817,905 779,765
- ------------------------------------------------------------------------------------------------------------------------------------
Total commercial .............................. 3,669,805 3,286,583 2,872,408 2,617,670 2,497,708
- ------------------------------------------------------------------------------------------------------------------------------------
Retail:
Real estate-mortgage ............................... 824,998 865,642 760,530 690,563 659,170
Installment loans-credit card ...................... 222,204 171,475 150,653 136,794 130,575
Installment loans-other ............................ 784,972 756,402 664,554 603,418 575,985
Mortgage loans held for sale ....................... 24,863 9,465 23,409 11,744 12,165
- ------------------------------------------------------------------------------------------------------------------------------------
Total retail .................................. 1,857,037 1,802,984 1,599,146 1,442,519 1,377,895
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans ................................... 5,526,842 5,089,567 4,471,554 4,060,189 3,875,603
Unearned income .................................... (14,812) (14,691) (18,148) (25,371) (31,214)
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned .................. $5,512,030 5,074,876 4,453,406 4,034,818 3,844,389
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Table 7
<TABLE>
<CAPTION>
Loan Maturity Distribution and Interest Sensitivity
(In thousands)
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
One Over One Year Over
Year Through Five Five
Or Less Years Years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selected loan categories:
Commercial, financial, and agricultural ................ $1,015,108 680,264 235,632 1,931,004
Real estate-construction ............................... 439,671 93,886 45,155 578,712
- ------------------------------------------------------------------------------------------------------------------------------------
Total ............................................. $1,454,779 774,150 280,787 2,509,716
====================================================================================================================================
Loans due after one year:
Having predetermined interest rates ...................................................................... $ 510,175
Having floating interest rates ........................................................................... 544,762
- ------------------------------------------------------------------------------------------------------------------------------------
Total ............................................................................................... $1,054,937
===================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Commercial, financial, and agricultural loans include industrial revenue
bonds and other loans that are granted primarily on the strength of the
borrower's ability to generate repayment cash flows from income sources as well
as the borrower's general credit standing, even though such loans and bonds may
be secured by real estate or other assets. Real estate construction and mortgage
loans represent extensions of credit used as interim or permanent financing of
commercial properties that are secured by real estate as well as 1-4 family
first mortgage loans.
Generally, retail lending decisions are made based upon the cash flow or
earning power of the borrower which represents the primary source of repayment.
However, in many lending transactions collateral is taken to provide an
additional measure of security. Transactions secured by collateral result in a
secondary source of repayment in that the collateral may be liquidated. Synovus
determines the need for collateral on a case-by-case basis. Factors considered
include the current and prospective credit-worthiness of the customer, terms of
the loan, and economic conditions.
F-36
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Provision for Losses on Loans and Net Charge-Offs
Despite Synovus' credit standards, internal controls, and continuous loan
review process, the inherent risk in the nature of lending results in periodic
charge-offs. The provision for loan losses is the charge to operating earnings
necessary to maintain an adequate reserve for loan losses. Through the provision
for loan losses, Synovus maintains a reserve for loan losses that management
believes is adequate to absorb losses within the loan portfolio. However, future
additions to the reserve may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination procedures, periodically review Synovus' affiliate banks'
reserve for loan losses. Based on their judgments about information available to
them at the time of their examination, such agencies may require Synovus'
affiliate banks to recognize additions to their reserve for loan losses.
- --------------------------------------------------------------------------------
Table 8
<TABLE>
<CAPTION>
Reserve for Loan Losses
(In thousands)
Years Ended December 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for loan losses at beginning of year ......................... $75,018 67,270 61,336 55,279 45,512
Reserve for loan losses of acquired affiliates ....................... 1,001 1,535 -- 8 7,135
Loans charged off during year:
Commercial:
Commercial, financial, and agricultural .................... 13,746 13,809 13,097 17,761 16,731
Real estate-construction ................................... 239 240 228 309 291
Real estate-mortgage ....................................... 1,840 1,849 1,753 2,378 2,240
- ------------------------------------------------------------------------------------------------------------------------------------
Total commercial ...................................... 15,825 15,898 15,078 20,448 19,262
- ------------------------------------------------------------------------------------------------------------------------------------
Retail:
Real estate-mortgage ....................................... 209 210 200 271 255
Installment loans-credit card .............................. 6,627 6,658 6,315 8,563 8,066
Installment loans-other .................................... 2,271 2,282 2,164 2,935 2,765
Mortgage loans head for sale ............................... -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total retail .......................................... 9,107 9,150 8,679 11,769 11,086
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans charged off ............................... 24,932 25,048 23,757 32,217 30,348
- ------------------------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged off during the year:
Commercial:
Commercial, financial, and agricultural .................... 1,217 1,585 1,287 1,339 1,030
Real estate-construction ................................... 50 65 52 55 42
Real estate-mortgage ....................................... 92 120 97 101 78
- ------------------------------------------------------------------------------------------------------------------------------------
Total commercial ...................................... 1,359 1,770 1,436 1,495 1,150
- ------------------------------------------------------------------------------------------------------------------------------------
Retail:
Real estate-mortgage ....................................... 115 149 121 126 97
Installment loans-credit card .............................. 1,237 1,611 1,308 1,362 1,048
Installment loans-other .................................... 1,799 2,344 1,902 1,981 1,524
Mortgage loans held for sale ............................... -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total retail .......................................... 3,151 4,104 3,331 3,469 2,669
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans recovered ................................. 4,510 5,874 4,767 4,964 3,819
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans charged off during year .................................... 20,422 19,174 18,990 27,253 26,529
- ------------------------------------------------------------------------------------------------------------------------------------
Additions to reserve through provision expense ....................... 25,787 25,387 24,924 33,302 29,161
- ------------------------------------------------------------------------------------------------------------------------------------
Reserve for loan losses at end of year ............................... $81,384 75,018 67,270 61,336 55,279
====================================================================================================================================
Reserve for loan losses to loans ..................................... 1.48% 1.48 1.51 1.52 1.44
====================================================================================================================================
Ratio of net loans charged off during the year to average
net loans outstanding during the year ........................... .38% .41 .45 .68 .78
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
In order to determine the adequacy of the reserve for loan losses and to
determine the need for potential charges to the reserve, a formal review is
prepared, quarterly, to assess the risk within the loan portfolio. This review,
conducted by lending officers, as well as an independent loan administration
department, includes analyses of historical performance, the level of
nonperforming loans, specific analyses of certain problem loans, loan activity
since the last quarter, consideration of current economic conditions, and other
pertinent information. The resulting conclusions are reviewed and approved by
senior management.
F-37
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
In accordance with SFAS No. 114, management, considering current information and
events regarding the borrowers' ability to repay their obligations, considers a
loan to be impaired when the ultimate collectibility of all amounts due,
according to the contractual terms of the loan agreement, is in doubt. When a
loan becomes impaired, management calculates the impairment based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, if the loan is collateral dependent, the fair value of the collateral is
used to measure the amount of impairment. The amount of impairment and any
subsequent changes are recorded, through a charge to earnings, as an adjustment
to the reserve for loan losses. When management considers a loan, or a portion
thereof, as uncollectible, it is charged against the reserve for loan losses.
Through improved underwriting standards and the resolution of certain
identified problem assets, Synovus' asset quality continued to improve during
1995 as measured by asset quality indicators.
Synovus' provision for loan losses during 1995 was $25.8 million, up 1.6%,
compared to $25.4 in 1994. Nonperforming assets are at their lowest level in
more than ten years and the reserve is 350.8% of nonperforming loans. The slight
increase in the provision for loan losses is primarily a result of management's
ongoing assessment of the loan portfolio and the potential for increased loan
weaknesses in light of the slowing economy. Synovus was able to reduce the
nonperforming asset ratio to its lowest level in over ten years to .64% as of
December 31, 1995. Net charge-offs of $20.4 million were 6.5% higher in 1995
compared to $19.2 million in 1994. However, as a percent of average net loans,
the net charge-off ratio improved from .41% in 1994 to .38% in 1995. A summary,
by loan category, of loans charged off, recoveries of loans previously charged
off, and additions to the reserve through provision expense is presented in
Table 8.
An allocation of the reserve for loan losses has been made according to the
respective amounts deemed necessary to provide for the possibility of incurred
losses within the various loan categories. Although other relevant factors are
considered, the allocation is primarily based on previous charge-off experience
adjusted for risk characteristic changes among each category. Additional reserve
amounts are allocated by evaluating the loss potential of individual loans that
management has considered impaired. The reserve for loan loss allocation is
based on subjective judgment and estimates, and therefore is not necessarily
indicative of the specific amounts or loan categories in which charge-offs may
ultimately occur. In 1995, Synovus adopted SFAS No. 114, and prior years have
not been restated to reflect this accounting change. Refer to Table 9 for a five
year comparison of the allocation of the reserve for loan losses.
- --------------------------------------------------------------------------------
Table 9
<TABLE>
<CAPTION>
Allocation of Reserve for Loan Losses
(In thousands)
December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------------------
Reserve %* Reserve %* Reserve %* Reserve %* Reserve %*
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial, financial and
agricultural ...................................... $32,810 35% $32,343 36% $28,539 35% $28,427 35% $27,214 35%
Real estate-construction ............................... 570 10 562 9 496 9 494 9 473 9
Real estate-mortgage ................................... 4,392 21 4,329 20 3,820 20 3,805 20 3,643 20
- ------------------------------------------------------------------------------------------------------------------------------------
Total commercial .................................. 37,772 66 37,234 65 32,855 64 32,726 64 31,330 64
- ------------------------------------------------------------------------------------------------------------------------------------
Retail:
Real estate-mortgage ................................... 499 15 492 17 434 17 432 17 414 17
Installment loans-credit card .......................... 6,627 4 6,658 3 6,315 3 8,563 3 8,066 3
Installment loans-other ................................ 14,610 14 14,277 15 12,159 15 9,838 15 9,550 15
Mortgage loans held for sale ........................... -- 1 -- -- -- 1 -- 1 -- 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total retail for loan losses ...................... 21,736 34 21,427 35 18,908 36 18,833 36 18,030 36
- ------------------------------------------------------------------------------------------------------------------------------------
Unallocated ............................................ 21,876 -- 16,357 -- 15,507 -- 9,777 -- 5,919 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total reserve for loan losses ..................... $81,384 100% $75,018 100% $67,270 100% $61,336 100% $55,279 100%
====================================================================================================================================
* Loan amount in each category expressed as a percentage of total loans.
</TABLE>
- --------------------------------------------------------------------------------
Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, loans restructured due to
debtors' financial difficulties, and real estate acquired through foreclosure
and repossession. Nonaccrual loans consist of those loans on which recognition
of interest income has been discontinued. Loans may be restructured as to rate,
maturity, or other terms as determined on an individual credit basis. Demand and
time loans, whether secured or unsecured, are generally placed on nonaccrual
status when principal and/or interest is 90 days or more past due, or earlier if
it is known or expected that the collection of all principal and interest is
unlikely. Any loan past due 90 days or more, and based on a determination of
collectibility not classified as nonaccrual, is classified as a past due loan.
Nonaccrual loans are reduced by the direct application of interest receipts to
loan principal, for accounting purposes only. Any payments in excess of the
F-38
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
interest that would have been earned had the loan been an accruing loan, is
applied to the principal balance. If the principal amount of the loan is well
collateralized, interest income on such loans will be recognized as interest
income in the period in which payments are received. In all circumstances, the
determination of when to place loans on nonaccrual status is also based on
evaluation of the individual characteristics of each particular loan, which may
result in policy deviations in some circumstances. Table 10 presents the amount
of interest income that would have been received on nonaccrual loans if the
loans had been current and performing in accordance with their original terms.
Synovus' nonperforming assets declined $5.5 million to $35.3 million, with
a corresponding nonperforming asset ratio improving to .64% as of December 31,
1995 compared to .80% as of year end 1994. Synovus was able to reduce
nonperforming assets while increasing loans $437.2 million, or 8.6%, during
1995. During 1995, the reserve for loan losses increased $6.4 million, or 8.5%,
to $81.4 million. Based on management's analysis of potential risk within the
loan portfolio, additions are periodically made to maintain the reserve for loan
losses at an appropriate level. Loans 90 days past due and still accruing
increased $4.0 million during 1995. Management believes that sufficient
collateral value securing these loans exists to cover contractual interest and
principal payments on the loans and management further believes the resolution
of these delinquencies will not cause a material increase in nonperforming
assets.
- --------------------------------------------------------------------------------
Table 10
<TABLE>
<CAPTION>
Nonperforming Assets
(In thousands)
December 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ..................................................... $21,469 26,497 30,296 45,812 43,246
Restructured loans ................................................... 1,733 1,900 224 135 819
- ------------------------------------------------------------------------------------------------------------------------------------
Nonperforming loans ........................................ 23,202 28,397 30,520 45,947 44,065
90 days past due and still accruing loans ............................ 11,417 7,383 9,870 11,106 14,224
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................................................... $34,619 35,780 40,390 57,053 58,289
====================================================================================================================================
Nonperforming assets:
Nonperforming loans <F1>......................................... $23,202 28,397 30,520 45,947 44,065
Other real estate ............................................... 12,071 12,355 15,838 18,986 19,246
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................................................... $35,273 40,752 46,358 64,933 63,311
====================================================================================================================================
Nonperforming assets to total loans and other real estate ............ .64% .80 1.04 1.60 1.64
====================================================================================================================================
Reserve for loan losses to nonperforming loans ....................... 350.76% 264.18 220.41 133.49 125.45
====================================================================================================================================
Non- Rest-
accrual tructured Total
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1995:
Interest at contracted rates <F2>............................... $3,670 200 3,870
Interest recorded as income .................................... 1,064 197 1,261
- -----------------------------------------------------------------------------------------------------------------------------------
Reduction of interest income during 1995 ............................ $2,606 3 2,609
====================================================================================================================================
- -------
<FN>
<F1>Nonperforming assets exclude loans 90 days past due and still accruing.
<F2>Interest income that would have been recorded, if the loans had been current
and in accordance with their original terms.
</TABLE>
- --------------------------------------------------------------------------------
Each one of Synovus' loans is assigned a rating, either individually or as
part of a homogeneous pool, based on an internally developed grading system. An
organizationally independent department also reviews grade assignments on an
ongoing basis. Management continuously monitors nonperforming, impaired, and
past due loans, in order to prevent further deterioration regarding the
condition of these loans. Management is not aware of any material loans
classified for regulatory purposes as loss, doubtful, substandard, or special
mention, that have been excluded from nonperforming assets or impaired loans.
Management further believes nonperforming assets and impaired loans include any
material loans in which doubts exist as to the collectibility of amounts due
according to the contractual terms of the loan agreement.
Deposits
Deposits provide the most significant funding source for Synovus' interest
earning assets. Table 11 shows the relative composition of average deposits for
1995, 1994, and 1993. Refer to Table 12 for the maturity distribution of time
deposits of $100,000 or more. These larger deposits represented 15.2%
F-39
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
and 13.6% of total deposits at December 31, 1995 and 1994, respectively.
Synovus' large denomination time deposits are generally from customers within
the local market area, therefore, providing a greater degree of stability than
is typically associated with this source of funds.
For 1995, Synovus' average deposits increased $664.6 million, or 11.6%, to
$6.4 billion from $5.7 billion in 1994. Average interest bearing deposits for
1995, which include interest bearing demand deposits, money market accounts,
saving deposits, and time deposits, increased $570.8 million, or 11.8%, from
1994. This strong deposit growth occurred throughout several of the Synovus
affiliate banks who used targeted time deposit programs to increase their
deposits during 1995. Average non-interest bearing demand deposits increased
$93.8 million, or 10.5%, during 1995. Average interest bearing deposits
increased $334.4 million, or 7.5%, from 1993 to 1994, while non-interest bearing
demand deposits increased $114.8 million, or 14.8%. See Table 3 for further
information on average deposits, including the average rates paid for 1995,
1994, and 1993.
- --------------------------------------------------------------------------------
Table 11
<TABLE>
<CAPTION>
Average Deposits
(In thousands)
Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-interest bearing demand deposits .................................. $986,582 892,800 777,973
Interest bearing demand deposits ...................................... 887,694 873,992 780,292
Money market accounts ................................................. 915,710 863,081 829,275
Savings deposits ...................................................... 475,962 510,380 434,037
Time deposits ......................................................... 3,113,375 2,574,468 2,443,877
- ------------------------------------------------------------------------------------------------------------------------------------
Total average deposits ........................................... $6,379,323 5,714,721 5,265,454
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Table 12
<TABLE>
<CAPTION>
Maturity Distribution of Time Deposits of $100,000 or More
(In thousands)
Time Deposits at
December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
3 months or less................................................................................... $ 422,176
Over 3 months through 6 months .................................................................... 185,451
Over 6 months through 12 months ................................................................... 213,497
Over 12 months .................................................................................... 202,776
- ---------------------------------------------------------------------------------------------------------------------------
Total outstanding ............................................................................. $1,023,900
===========================================================================================================================
- --------------------------------------------------------------------------------
Interest Rate Risk Management
Managing interest rate risk is the primary goal of Synovus' asset/liability
management function. Synovus attempts to achieve consistent growth in net
interest income while limiting volatility arising from changes in interest
rates. Synovus seeks to accomplish this goal by balancing the maturity and
repricing characteristics of balance sheet assets and liabilities along with the
selective use of off-balance sheet financial instruments. Synovus'
asset/liability mix is sufficiently balanced so that the effect of interest
rates moving in either direction is not expected to be significant over time.
Simulation modeling is the primary tool used by Synovus to measure its
interest rate sensitivity. On at least a quarterly basis, the remainder of the
current year and the next full fiscal year are simulated to determine the
sensitivity of net interest income to changes in interest rates. The magnitude
and velocity of rate changes among the various asset and liability groups
exhibit different characteristics for each possible interest rate scenario.
Simulation modeling enables Synovus to capture the effect of these differences
as well as the effect of changes in asset and liability volumes. This modeling,
combined with historical experience, indicates that Synovus is positioned such
that its net interest income will generally increase slightly in the near term
during a rising rate environment and decrease slightly in a declining rate
environment.
Another tool utilized by Synovus' management is cumulative gap analysis,
which seeks to measure the repricing differentials, or gap, between rate
sensitive assets and liabilities over various time periods. Table 13 reflects
the gap positions of Synovus' consolidated balance sheet on December 31, 1995
and 1994, at various repricing intervals. The projected deposit repricing
volumes reflect adjustments based on management's assumptions of the expected
rate sensitivity relative to the prime rate for core deposits without
contractual maturity (i.e., interest bearing checking, savings, and money market
accounts). Management believes that these adjustments allow for a more accurate
profile of Synovus' interest rate risk position. This gap analysis indicates
that Synovus was moderately asset sensitive at December 31, 1995, with a
cumulative one-year gap of 3.2%. Management believes that adjusted gap analysis
is a useful tool for measuring interest rate risk only when used in conjunction
with its simulation model.
F-40
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 13
</TABLE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity
(In millions)
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
0-3 4-12 1-5 Over 5
Months Months Years Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment securities <F1>............................................... $ 48.5 232.2 764.8 432.8
Loans, net of unearned income ........................................... 2,861.9 789.1 1,434.7 426.3
Other ................................................................... 124.9 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitive assets .......................................... 3,035.3 1,021.3 2,199.5 859.1
- ------------------------------------------------------------------------------------------------------------------------------------
Deposits ................................................................ 2,012.2 1,450.3 801.8 1,321.9
Other borrowings ........................................................ 229.5 12.6 21.3 72.9
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitive liabilities ..................................... 2,241.7 1,462.9 823.1 1,394.8
- ------------------------------------------------------------------------------------------------------------------------------------
Interest rate swaps ................................................ (125.0) -- 125.0 --
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitivity gap ...................................... $ 668.6 (441.6) 1,501.4 (535.7)
====================================================================================================================================
Cumulative interest sensitivity gap ........................... $ 668.6 227.0 1,728.4 1,192.7
====================================================================================================================================
Cumulative interest sensitivity gap as a percentage
of total interest sensitive assets........................... 9.4% 3.2 24.3 16.8
====================================================================================================================================
December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
0-3 4-12 1-5 Over 5
Months Months Years Years
- ------------------------------------------------------------------------------------------------------------------------------------
Investment securities <F1>.............................................. $ 55.5 153.9 836.0 324.2
Loans, net of unearned income .......................................... 2,597.8 784.7 1,388.0 304.4
Other .................................................................. 45.1 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitive assets ......................................... 2,698.4 938.6 2,224.0 628.6
- ------------------------------------------------------------------------------------------------------------------------------------
Deposits ............................................................... 1,905.4 1,062.0 699.4 1,274.7
Other borrowings ....................................................... 412.1 29.3 31.5 79.0
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitive liabilities .................................... 2,317.5 1,091.3 730.9 1,353.7
- ------------------------------------------------------------------------------------------------------------------------------------
Interest sensitivity gap ...................................... $ 380.9 (152.7) 1,493.1 (725.1)
====================================================================================================================================
Cumulative interest sensitivity gap ........................... $ 380.9 228.2 1,721.3 996.2
====================================================================================================================================
Cumulative interest sensitivity gap as a percentage
of total interest sensitive assets ........................ 5.9% 3.5 26.5 15.4
====================================================================================================================================
- -----------
<FN>
<F1> Excludes the effect of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities", consisting of net
unrealized gains in the amount of $8.9 million in 1995 and net unrealized losses of $31.9 million in 1994.
</TABLE>
- --------------------------------------------------------------------------------
F-41
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 14
<TABLE>
<CAPTION>
Maturities of Investment Securities and Average Yields
(In thousands)
Investment Securities Investment Securities
Held to Maturity Available for Sale
December 31, 1995 December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Amortized Average Estimated Average
Cost Yield Fair Value Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Government agencies:
Within 1 year ........................ $ 14,924 6.80% $ 241,688 5.81%
1 to 5 years ......................... 44,615 6.55 557,958 6.03
5 to 10 years ........................ 22,233 7.44 204,131 7.02
More than 10 years ................... -- -- 509 7.75
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................... $ 81,772 6.84% $ 1,004,286 6.18%
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
Within 1 year ........................ $ 1,692 7.43% $ 1,239 7.41%
1 to 5 years ......................... 73,793 5.93 34,612 6.46
5 to 10 years ........................ 22,174 7.24 11,644 6.96
More than 10 years ................... 73,616 7.15 40,701 6.63
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................... $171,275 6.64% $ 88,196 6.62%
- ------------------------------------------------------------------------------------------------------------------------------------
State and municipal:
Within 1 year ........................ $ 17,986 9.63% $ 298 10.51%
1 to 5 years ......................... 52,596 8.70 668 11.77
5 to 10 years ........................ 35,218 8.68 98 6.62
More than 10 years ................... 15,961 10.60 258 8.64
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................... $121,761 9.08% $ 1,322 10.41%
- ------------------------------------------------------------------------------------------------------------------------------------
Other investments:
Within 1 year ........................ $ 98 4.04% $ 3,382 9.03%
1 to 5 years ......................... 1,832 7.09 3,325 8.15
5 to 10 years ........................ 265 7.92 2,251 7.64
More than 10 years ................... 3,915 5.82 3,536 5.76
- ------------------------------------------------------------------------------------------------------------------------------------
Total ...................... $ 6,110 6.27% $ 12,494 7.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities:
Within 1 year ........................ $ 34,700 8.29% $ 246,607 5.87%
1 to 5 years ......................... 172,836 6.95 596,563 6.08
5 to 10 years ........................ 79,890 7.93 218,124 7.03
More than 10 years ................... 93,492 7.69 45,004 6.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total ....................... $380,918 7.46% $ 1,106,298 6.24%
====================================================================================================================================
</TABLE>
The calculation of weighted average yields for securities is based on the
amortized cost and effective yields of each security weighted for the scheduled
maturity of each security. The yield on state and municipal securities is
computed on a taxable-equivalent basis using the statutory federal income tax
rate of 35% for 1995.
- --------------------------------------------------------------------------------
F-42
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Off-Balance Sheet Derivatives for Interest Rate Risk Management
As part of our overall interest rate risk management activities, Synovus
utilizes off-balance sheet derivatives to modify the repricing characteristics
of on-balance sheet assets and liabilities. As of December 31, 1995, all
off-balance sheet derivatives were interest rate swaps where Synovus receives a
fixed rate of interest and pays a floating rate. These swaps have the effect of
converting on-balance sheet floating rate assets to fixed rate assets, thereby
reducing the natural asset sensitivity of Synovus' core banking business.
The nature of these transactions is essentially the same as purchasing a
fixed-rate security funded with a floating-rate liability. All swaps utilized by
Synovus represent end-user activities designed as hedges, all of which are
linked to specific assets as part of overall interest rate risk management
practices. Management feels that the utilization of these instruments provides
greater financial flexibility and is a very efficient tool for managing interest
rate risk position.
The notional amount of interest swaps utilized by Synovus as of December
31, 1995, was $125 million. The notional amounts represent the amount on which
calculations of interest payments to be exchanged are based. Although Synovus is
not exposed to credit risk equal to the notional amounts, there is exposure to
potential credit risks equal to the fair or replacement values of the swaps if
the counterparty fails to perform. This credit risk is normally a very small
percentage of the notional amount and fluctuates as interest rates change.
Synovus minimizes this risk by subjecting the transaction to the same approval
process as on-balance sheet credit activities, by dealing with only highly-rated
counterparties, and by obtaining collateral agreements for exposure above
certain predetermined limits.
<TABLE>
Weighted Weighted Average
December 31, 1995 Notional Average Average Maturity Unrealized Unrealized Net
(In thousands) Amount Receive Rate Pay Rate In Months Gains Losses Fair Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Receive Fixed Swaps $125,000 5.98% 5.88% 46 1,776 -- 1,776
</TABLE>
The above table represents the December 31, 1995 status of all off-balance
sheet derivative positions at Synovus and its affiliate bank, Columbus Bank and
Trust Company. There were no maturities, offsets, or terminations in 1995.
Liquidity
Liquidity represents the availability of funding to meet the needs of
depositors, borrowers, and creditors at a reasonable cost, on a timely basis,
and without adverse consequences. Management actively analyzes and manages
Synovus' liquidity position in coordination with similar committees at each
affiliate bank. These affiliates, with the help of management, maintain
liquidity in the form of cash on deposit, federal funds, securities available
for sale, and cash derived from prepayments and maturities of both their
investment and loan portfolios. Liquidity is also enhanced by the acquisition of
new deposits and the well established core deposits of Synovus' 211 banking
offices in four states. The affiliate banks monitor deposit flow and evaluate
alternate pricing structures to retain and grow deposits. Certain Synovus
affiliate banks maintain correspondent banking relationships with various
national and regional financial organizations. These relationships provide
access to short-term borrowings through federal funds which allows Synovus to
meet immediate liquidity needs if required.
Synovus serves a diversity of markets. Some of these are rapidly growing
areas where loan demand outpaces the generation of deposits. However, through
the loan participations between Synovus' affiliate banks, these loans can be
funded by affiliates having lower local loan demand. Additionally, lending is
focused within the local markets served by Synovus, enabling the development of
comprehensive banking relationships.
Additionally, the Parent Company requires cash for various operating needs
including dividends to shareholders, business combinations, capital infusions
into affiliates, the servicing of debt, and the payment of general corporate
expenses. The primary source of liquidity for the Parent Company is dividends
from the affiliate banks. In addition, the Parent Company has access to a $20
million line of credit. The Parent Company enjoys an excellent reputation and
credit standing in the market place and has the ability to raise substantial
amounts of funds in the form of either short or long-term borrowings. The Parent
Company's current principal debt, senior notes totaling $75 million at a rate of
6.125%, has been rated "A" by Standard and Poors Corp., "A3" by Moody's Investor
Service and "AA-" by Thomson Bankwatch. For a complete description of these
borrowings and other borrowings by other Synovus affiliates, see Note 6 to
Synovus' consolidated financial statements.
The consolidated statements of cash flows detail Synovus' cash flows from
operating, investing, and financing activities. Net cash provided by operating
activities was $152.4 million for the year ended December 31, 1995, while
financing activities provided $467.1 million. Investing activities used $581.4
million of this amount, resulting in a net increase in cash and cash equivalents
of $38.1 million.
Management is not aware of any trends, events, or uncertainties that will
have, or that are reasonably likely to have a material impact on Synovus'
liquidity, capital resources, or operations. Further, management is not aware of
any current recommendations by regulatory agencies which, if they were to be
implemented, would have such effect.
Capital Resources and Dividends
Synovus has always placed great emphasis on maintaining a strong capital
base and continues to exceed all minimum regulatory capital requirements.
Management is committed to maintaining a capital level sufficient to assure
shareholders, customers, and regulators that Synovus is financially sound, and
to enable Synovus to sustain an appropriate degree of leverage to provide a
desirable level of profitability. Synovus has the ability to generate internal
capital
F-43
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
growth sufficient to support the asset growth it has experienced. Total
shareholders' equity of $693.6 million represented 8.75% of total assets at
December 31, 1995.
Regulators use a risk-adjusted calculation to aid them in their
determination of capital adequacy by weighting assets based on the credit risk
associated with on- and off-balance sheet assets. The majority of these
risk-weighted assets are on-balance sheet assets for Synovus in the form of
loans. A small portion of risk-weighted assets are considered off-balance sheet
assets and are primarily made up of letters of credit, loan commitments, and to
a lesser extent interest rate swaps, that Synovus makes in the normal course of
business. Capital is categorized into two types: Tier I and Tier II. The capital
guidelines used by regulators require an 8% total risk-based capital ratio of
which 4% must be Tier I capital. Additionally, the regulatory agencies define a
well-capitalized bank as one which has a leverage ratio of at least 5%, a Tier 1
capital ratio of at least 6%, and a total risk-based capital ratio of at least
10%. At the end of 1995, Synovus and all affiliate banks were in excess of the
minimum capital requirements with a consolidated Tier 1 capital ratio of 11.28%
and a total risk-based capital ratio of 12.57%, compared to Tier I and total
risk-based capital ratios of 11.04% and 12.36%, respectively, in 1994 as shown
in Table 15.
In addition to the risk-based capital standards, a minimum leverage ratio
of 4% is required for the highest-rated bank holding companies which are not
undertaking significant expansion programs. An additional 1% to 2% may be
required for other companies, depending upon their regulatory ratings and
expansion plans. The leverage ratio is defined as Tier I capital divided by
quarterly average assets, net of certain intangibles. As of December 31, 1995,
Synovus had a leverage ratio of 8.71%, which significantly exceeds the
regulatory requirements.
Synovus' capital level also exceeds all requirements under the Federal
Reserve Board's guidelines. The Federal Reserve Board requires a minimum primary
capital ratio of 5.50% and a total capital ratio of 6.00% for bank holding
companies and banks. At December 31, 1995, Synovus' primary and total capital
ratios as defined by the Federal Reserve Board were 9.49% and 9.52%,
respectively, compared to 9.18% and 9.23%, respectively, at year end 1994.
During the third quarter of 1994, Synovus announced its plan to acquire up
to 750,000 shares of Synovus common stock in the open market. Through December
31, 1995, 362,600 shares of Synovus common stock have been purchased under this
plan at an average price of $23.51. Of these shares, 266,498 shares were used in
1995 to acquire Peach State Bank. Approximately 52,000 shares were issued to
employees for vested stock option exercises. The remaining shares under this
plan along with other treasury shares acquired before this plan amount to 43,930
as of December 31, 1995. These shares will be used to fund incentive stock award
plans and other employee benefit plans. The remaining shares to be purchased
under the stock repurchase plan will be purchased based on market conditions
over the next two years.
Synovus' 80.8% ownership of TSYS is an important aspect of the market price
of Synovus common stock and should be considered in a comparison of the relative
market price of Synovus common stock to other financial service companies. As of
December 31, 1995, there were approximately 17,000 shareholders of record of
Synovus common stock, some of which are holders in nominee name for the benefit
of a number of different shareholders. Table 16 displays high and low quotations
of Synovus common stock which are based on actual transactions.
F-44
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 15
<TABLE>
<CAPTION>
Capital Ratios <F1>
(In thousands)
December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier I capital:
Shareholders' equity ............................................................ $ 693,555 579,880
Adjustment for SFAS No. 115 ..................................................... (5,774) 20,744
Plus: Minority interest ......................................................... 27,790 22,483
Less: Disallowed intangibles .................................................... (41,406) (32,890)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Tier I capital ....................................................... 674,165 590,217
- ------------------------------------------------------------------------------------------------------------------------------------
Tier II capital:
Eligible portion of the reserve for loan losses ................................. 74,818 66,947
Subordinated and other qualifying debt .......................................... 2,440 3,697
- ------------------------------------------------------------------------------------------------------------------------------------
Total Tier II capital ...................................................... 77,258 70,644
- ------------------------------------------------------------------------------------------------------------------------------------
Total risk-based capital ............................................................. $ 751,423 660,861
====================================================================================================================================
Total risk-adjusted assets ........................................................... $5,978,913 5,347,687
====================================================================================================================================
Tier I capital ratio ................................................................. 11.28% 11.04
Total risk-based capital ratio ....................................................... 12.57 12.36
Leverage ratio ....................................................................... 8.71 8.45
Regulatory Minimums:
Tier I capital ratio ............................................................ 4.00%
Total risk-based capital ratio .................................................. 8.00
Leverage ratio .................................................................. 4.00
- -----------
<FN>
<F1> Risk-based capital ratios, for both years presented, were prepared using risked-based capital rules finalized in November,
1994, which exclude the impact of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
</TABLE>
- --------------------------------------------------------------------------------
Table 16
<TABLE>
Market and Stock Price Information
High Low
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1995
Quarter ended December 31, 1995 ............................................. $30 1/4 25
Quarter ended September 30, 1995 ............................................ 27 1/4 22 1/2
Quarter ended June 30, 1995 ................................................. 22 7/8 19 1/4
Quarter ended March 31, 1995 ................................................ 19 3/4 17 3/4
1994
Quarter ended December 31, 1994 ............................................. $19 7/8 18
Quarter ended September 30, 1994 ............................................ 19 3/8 16 5/8
Quarter ended June 30, 1994 ................................................. 18 1/2 16 3/4
Quarter ended March 31, 1994 ................................................ 19 1/4 16 3/4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Dividends
It is Synovus' objective to pay out approximately one-third of earnings to
shareholders in cash dividends. Synovus' dividend payout ratio in 1995, 1994,
and 1993 was 36.69%, 36.90%, and 35.10%, respectively. The total dollar amount
of dividends declared increased 28.5% in 1995 to $42.0 million, from $33.0
million in 1994. Cash dividends have been paid on the common stock of Synovus
(including its predecessor companies) in every year since 1891. It is the
present intention of the Synovus Board of Directors to continue to pay cash
dividends on its common stock in accordance with the previously mentioned
objective. Table 17 presents the declared and paid dates from recent dividends,
as well as per share dividend amounts.
F-45
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table 17
Dividends
<TABLE>
<CAPTION>
Per Share
Date Declared Date Paid Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
November 13, 1995 January 2, 1996 $ .1350
September 11, 1995 October 2, 1995 .1350
May 8, 1995 July 3, 1995 .1350
February 14, 1995 April 3, 1995 .1350
November 14, 1994 January 3, 1995 .1125
September 12, 1994 October 1, 1994 .1125
May 9, 1994 July 1, 1994 .1125
February 23, 1994 April 1, 1994 .1125
</TABLE>
- --------------------------------------------------------------------------------
Commitments
Synovus believes it has sufficient capital, liquidity, and future cash
flows from operations to meet operating needs over the next year. Table 18, Note
6, and Note 9 to Synovus' consolidated financial statements provide additional
information on Synovus' short-term and long-term borrowings.
In the normal course of its business, TSYS maintains processing agreements
with its customers. These processing agreements contain contractual commitments,
including, but not limited to, minimum standards and time frames against which
TSYS' performance is measured. In the event TSYS does not meet its contractual
commitments with its customers, TSYS may incur penalties and/or certain
customers may have the right to terminate their agreements with TSYS. TSYS does
not believe that it will fail to meet its contractual commitments to an extent
that will result in a material adverse effect on its financial condition or
results of operations.
Synovus is subject to various legal proceedings and claims which arise in
the ordinary course of its business. Any litigation is vigorously defended by
Synovus and, in the opinion of management, based on consultation with external
legal counsel, any outcome of such litigation would not materially affect
Synovus' consolidated financial position.
Currently, multiple lawsuits, some seeking class action treatment, are
pending against one of Synovus' Alabama banking subsidiaries that involve: (1)
the sale of credit life insurance made in connection with consumer credit
transactions; (2) payments of service fees or interest rebates to automobile
dealers in connection with the assignment of automobile credit sales contracts
to that Synovus subsidiary; and (3) the forced placement of insurance to protect
that Synovus subsidiary's interest in collateral for which consumer credit
customers have failed to obtain or maintain insurance. These lawsuits seek
unspecified damages, including punitive damages, and some purport to be class
actions which, if certified, may involve many of such subsidiary's consumer
credit transactions in Alabama for a number of years. Synovus intends to
vigorously contest these lawsuits and all other litigation to which Synovus and
its subsidiaries are parties. Based on information presently available, and in
light of legal and other defenses available to Synovus and its subsidiaries,
contingent liabilities arising from the threatened and pending litigation are
not considered material. It should be noted, however, that large punitive damage
awards, bearing little relation to the actual damages sustained by plantiffs,
have been awarded in Alabama.
- --------------------------------------------------------------------------------
Table 18
Short-Term Borrowings
(In thousands)
The following table sets forth certain information regarding federal funds
purchased and securities sold under agreement to repurchase, one of the
principal components of short-term borrowings.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Month end balance for year ended December 31, ........................... $229,477 412,082 260,619
Weighted average interest rate at December 31, .......................... 5.65% 5.40 2.81
Maximum month end balance during the year ............................... $362,035 412,082 260,619
Average amount outstanding during the year .............................. $216,342 235,858 158,050
Weighted average interest rate during the year .......................... 5.59% 4.18 3.01
- --------------------------------------------------------------------------------
F-46
ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
Income Tax Expense
As reported in the consolidated statements of income, Synovus' income tax
expense increased to $64.9 million in 1995, up from $49.5 million in 1994, and
$42.9 million in 1993. The effective tax rate was 36.2%, 35.6%, and 34.8% in
1995, 1994, and 1993 , respectively. The increases in both 1995 and 1994 were
primarily the result of increases in pre-tax income and in the relative
percentage of taxable income to total income. The increase in 1995 was also
affected by a decrease in certain research and experimentation credits. Factors
affecting 1994 were fewer state tax credits and loss carryovers in 1994 as
compared to 1993. See Note 7 to Synovus' consolidated financial statements for a
detailed analysis of income taxes.
Inflation
Inflation has an important impact on the growth of total assets in the
banking industry and may create a need to increase equity capital at higher than
normal rates in order to maintain an appropriate equity to assets ratio. Synovus
has been able to maintain a high level of equity through retention of an
appropriate percentage of its earnings. Synovus copes with the effects of
inflation by managing its interest rate sensitivity gap position through its
asset/liability management program and by periodically adjusting its pricing of
services and banking products to take into consideration current costs.
Parent Company
The Parent Company's assets, primarily its investment in affiliates, are
funded, for the most part, by shareholders' equity. It also utilizes short-term
and long-term debt. The Parent Company is responsible for providing the
necessary funds to strengthen the capital of its affiliates if necessary,
acquire new affiliates, pay corporate operating expenses, and pay dividends to
its shareholders. These operations are funded by dividends and fees received
from affiliates, and borrowings from outside sources.
In connection with dividend payments to the Parent Company from its
affiliate banks, certain rules and regulations of the various state and federal
banking regulatory agencies limit the amount of dividends which may be paid. As
of December 31, 1995, $98.4 million in dividends could be paid in 1996 to the
Parent Company from its affiliates without prior regulatory approval. Synovus
anticipates receiving regulatory approval to allow affiliates to pay dividends
in excess of these regulatory limits.
F-47
SYNOVUS FINANCIAL CORP.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Summary of Quarterly Financial Data (Unaudited)
(In thousands, except per share data)
Presented below is a summary of the unaudited consolidated quarterly financial
data for the years ended December 31, 1995 and 1994.
Fourth Third Second First
Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Interest income ....................................... $160,683 157,443 153,318 144,344
====================================================================================================================================
Net interest income ................................... 88,274 86,262 84,509 82,830
====================================================================================================================================
Provision for losses on loans ......................... 8,589 6,214 5,739 5,245
====================================================================================================================================
Income before income taxes ............................ 52,966 47,197 41,788 37,518
====================================================================================================================================
Net income ............................................ 33,634 30,279 26,600 24,070
====================================================================================================================================
Net income per share .................................. .44 .39 .35 .32
====================================================================================================================================
1994
Interest income ....................................... $135,736 127,675 122,354 112,617
====================================================================================================================================
Net interest income ................................... 81,100 77,469 74,789 67,873
====================================================================================================================================
Provision for losses on loans ......................... 8,358 5,463 5,566 6,000
====================================================================================================================================
Income before income taxes ............................ 33,613 37,853 35,163 32,297
====================================================================================================================================
Net income ............................................ 21,752 24,683 22,598 20,419
====================================================================================================================================
Net income per share .................................. .29 .33 .30 .27
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
F-48
[LOGO](R)
SYNOVUS(Registration Mark)
FINANCIAL CORP.
JAMES H. BLANCHARD
CHAIRMAN OF THE BOARD
March 8, 1996
Dear Shareholder:
The Annual Meeting of the Shareholders of Synovus Financial Corp. will be
held on April 25, 1996 in the North Hall of the Columbus, Georgia Convention &
Trade Center, beginning at 10:00 o'clock A.M., E.T., for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement.
We encourage you to attend the Annual Meeting of Shareholders and let us
give you a review of 1995. Whether you own a few or many shares of stock and
whether or not you plan to attend in person, it is important that your shares be
voted on matters that come before the meeting. To make sure your shares are
represented, we urge you to complete the enclosed Proxy Card, including the
Certificate of Beneficial Owner on the reverse side of the Proxy, and mail it to
us promptly.
Thank you for helping us make 1995 a good year. We look forward to your
continued support in 1996 and another good year.
Sincerely yours,
/s/James H. Blanchard
JAMES H. BLANCHARD
Synovus Financial Corp. Post Office Box 120 Columbus, Georgia 31902-0120
SYNOVUS(R)
FINANCIAL CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Synovus Financial Corp. ("Synovus") will be held in the North Hall of the
Columbus, Georgia Convention & Trade Center, on April 25, 1996, at 10:00 o'clock
A.M., E.T., for:
(1) The election of seven nominees as Class II directors of Synovus to serve
until the 1999 Annual Meeting of Shareholders;
(2) To approve the Synovus Financial Corp. Executive Bonus Plan; and
(3) The transaction of such other business as may properly come before the
Annual Meeting.
Information relating to the above matters is set forth in the accompanying
Proxy Statement.
Only shareholders of record at the close of business on February 23, 1996
will be entitled to notice of and to vote at the Annual Meeting.
/s/G. S. Griffith, III
G. SANDERS GRIFFITH, III
Secretary
Columbus, Georgia
March 8, 1996
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING IN PERSON, PLEASE
VOTE, DATE AND SIGN THE ENCLOSED PROXY, COMPLETE AND SIGN THE CERTIFICATE OF
BENEFICIAL OWNER ON THE REVERSE SIDE OF THE ENCLOSED PROXY, AND RETURN THEM
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH DOES NOT REQUIRE ANY POSTAGE IF
MAILED IN THE UNITED STATES.
SYNOVUS(R)
FINANCIAL CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 1996
I. INTRODUCTION
A. Purposes of Solicitation -- Terms of Proxies.
The Annual Meeting of the Shareholders ("Annual Meeting") of Synovus
Financial Corp. ("Synovus") will be held on April 25, 1996 for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders and in this
Proxy Statement. The enclosed Proxy is solicited BY AND ON BEHALF OF SYNOVUS'
BOARD OF DIRECTORS in connection with such Annual Meeting, or any adjournment
thereof. The costs of the solicitation of Proxies by Synovus' Board of Directors
will be paid by Synovus. Forms of Proxies and Proxy Statements will also be
distributed through brokers, banks, nominees, custodians and other like parties
to the beneficial owners of shares of the $1.00 par value common stock of
Synovus ("Synovus Common Stock"), and Synovus will reimburse such parties for
their reasonable out-of-pocket expenses therefor. Synovus' mailing address is
Post Office Box 120, Columbus, Georgia 31902-0120.
The shares represented by the Proxy in the accompanying form, which when
properly executed, returned to Synovus' Board of Directors and not revoked, will
be voted in accordance with the instructions specified in such Proxy. If a
choice is not specified in a Proxy, the shares represented by such Proxy will be
voted "FOR" the election of the seven nominees for election as Class II
directors of Synovus named herein and in accordance with the recommendations of
the Board of Directors on the other matters brought before the Meeting.
Each Proxy granted may be revoked in writing at any time before the
authority granted thereby is exercised. Attendance at the Annual Meeting will
constitute a revocation of the Proxy for such Annual Meeting if the maker
thereof elects to vote in person.
This Proxy Statement and the enclosed Proxy are being first mailed to
shareholders on or about March 8, 1996.
B. Shareholder Proposals.
From time to time, Synovus' shareholders may present proposals which may be
proper subjects for inclusion in Synovus' Proxy Statement for consideration at
Synovus' Annual Meeting. To be considered for inclusion, shareholder proposals
must be submitted on a timely basis. Proposals for Synovus' 1997 Annual Meeting
must be received by Synovus no later than November 8, 1996, and any such
proposals, as well as any questions related thereto, should be directed to the
Secretary of Synovus.
1
C. Securities Entitled to Vote and Record Date.
Only shareholders of record at the close of business on February 23, 1996
are entitled to vote at the Annual Meeting, or any adjournment thereof. As of
that date, there were 77,264,014 shares of Synovus Common Stock outstanding and
entitled to vote. Synovus owned 43,930 shares of Synovus Common Stock on
February 23, 1996 as treasury shares, which are not considered to be outstanding
and are not entitled to be voted at the Annual Meeting. In accordance with the
amendment to Synovus' Articles of Incorporation which was adopted by the
shareholders of Synovus and became effective on April 24, 1986 (the "Voting
Amendment"), a holder of Synovus Common Stock will be entitled to ten votes on
each matter submitted to a vote of shareholders for each share of Synovus Common
Stock beneficially owned on February 23, 1996 which: (1) has had the same
beneficial owner since February 23, 1992; (2) was acquired by reason of
participation in a dividend reinvestment plan offered by Synovus and is held by
the same beneficial owner for whom it was acquired under such plan; (3) is held
by the same beneficial owner to whom it was issued as a result of an acquisition
of a company or business by Synovus where the resolutions adopted by Synovus'
Board of Directors approving such issuance specifically reference and grant such
rights; (4) was acquired under any employee, officer and/or director benefit
plan maintained for one or more employees, officers and/or directors of Synovus
and/or its subsidiaries, and is held by the same beneficial owner for whom it
was acquired under any such plan; (5) is held by the same beneficial owner to
whom it was issued by Synovus, or to whom it was transferred by Synovus from
treasury shares, and the resolutions adopted by Synovus' Board of Directors
approving such issuance and/or transfer specifically reference and grant such
rights; (6) was acquired as a direct result of a stock split, stock dividend or
other type of share distribution if the share as to which it was distributed was
acquired prior to, and has been held by the same beneficial owner since,
February 23, 1992; (7) has been beneficially owned continuously by the same
shareholder for a period of 48 consecutive months prior to the record date of
any meeting of shareholders at which the share is eligible to be voted; or (8)
is owned by a holder who, in addition to shares which are beneficially owned
under the provisions of (1)-(7) above, is the beneficial owner of less than
337,500 shares of Synovus Common Stock (which amount has been appropriately
adjusted to reflect the three-for-two stock splits effected in the form of 50%
stock dividends paid on October 1, 1986, October 3, 1988 and April 1, 1993,
respectively, and with such amount to be appropriately adjusted to properly
reflect any other change in Synovus Common Stock by means of a stock split, a
stock dividend, a recapitalization or otherwise occurring after April 24, 1986).
Shareholders of shares of Synovus Common Stock not described above are entitled
to one vote per share for each such share. The actual voting power of each
holder of shares of Synovus Common Stock will be based on information possessed
by Synovus at the time of the Annual Meeting.
As Synovus Common Stock is registered with the Securities and Exchange
Commission ("SEC") and is traded on the New York Stock Exchange ("NYSE"),
Synovus Common Stock is subject to the provisions of an NYSE rule which, in
general, prohibits a company's common stock and equity securities from being
authorized or remaining authorized for trading on the NYSE if the company issues
securities or takes other corporate action that would have the effect of
nullifying, restricting or disparately reducing the voting rights of existing
shareholders of the company. However, such rule contains a "grandfather"
provision, under which Synovus' Voting Amendment falls, which, in general,
permits grandfathered disparate voting rights plans to continue to operate as
adopted.
The number of votes that each shareholder will be entitled to exercise at
the Annual Meeting will depend upon whether each share held by the shareholder
meets the requirements which entitle one share of Synovus Common Stock to ten
votes on each matter submitted to a vote of shareholders. Shareholders of
Synovus Common Stock must complete the Certification on the reverse side of the
Proxy in order for any of the shares represented by the Proxy to be entitled to
ten votes per share.
SHAREHOLDERS AND BENEFICIAL OWNERS WHO DO NOT COMPLETE THE CERTIFICATIONS ON THE
REVERSE SIDES OF THEIR PROXY CARDS AND WHO WOULD, IF THEY HAD COMPLETED SUCH
CERTIFICATIONS, BE ENTITLED TO TEN VOTES PER SHARE, WILL BE ENTITLED TO ONLY ONE
VOTE PER SHARE.
2
D. Columbus Bank and Trust Company and Total System Services, Inc.
Synovus is the owner of all of the issued and outstanding shares of voting
common stock of Columbus Bank and Trust Company(R)("Columbus Bank"). Columbus
Bank owns individually 80.8% of the outstanding shares of Total System Services,
Inc.(SM) ("TSYS(R)"), a bankcard data processing company having 64,644,361
shares of $.10 par value voting common stock ("TSYS Common Stock") outstanding
on February 23, 1996.
II. ELECTION OF DIRECTORS
A. Information Concerning Directors and Nominees.
(1) Number and Classification of Directors.
In accordance with the vote of shareholders taken at Synovus' 1995 Annual
Meeting, the number of members of Synovus' Board of Directors was set at 20.
Synovus' Board of Directors is currently comprised of 20 members. The 20 members
who comprise Synovus' Board of Directors are divided into three classes of
directors: Class I directors, Class II directors and Class III directors, with
each of such Classes of directors serving staggered 3-year terms. At Synovus'
1995 Annual Meeting, Class I directors were elected to serve 3-year terms to
expire at Synovus' 1998 Annual Meeting and at Synovus' 1994 Annual Meeting,
Class III directors were elected to serve 3-year terms to expire at Synovus'
1997 Annual Meeting. The terms of office of the Class II directors expire at
Synovus' 1996 Annual Meeting. Given the division of Synovus' Board of Directors
into three classes, shareholders who do not favor the policies of Synovus' Board
of Directors would require at least two Annual Meetings of Shareholders to
replace a majority of the members of the Board.
(2) Nominees for Class II Directors and Vote Required.
Synovus' Board of Directors has selected seven nominees which it proposes
for election to Synovus' Board as Class II directors. The nominees for Class II
directors of Synovus will be elected to serve 3-year terms that will expire at
Synovus' 1999 Annual Meeting. The seven nominees for Class II directors of
Synovus are: Richard E. Anthony, Joe E. Beverly, Mason H. Lampton, John L.
Moulton, Elizabeth C. Ogie, John T. Oliver, Jr. and William L. Pherigo. Proxies
cannot be voted at the 1996 Annual Meeting for a greater number of persons than
the number of nominees named.
Under Georgia law, a majority of the issued and outstanding shares of
Synovus Common Stock entitled to vote must be represented at the 1996 Annual
Meeting to constitute a quorum. However, as is allowed by Georgia law, under
Synovus' bylaws and the Voting Amendment, a majority of the votes entitled to be
cast by the holders of all of the issued and outstanding shares of Synovus
Common Stock entitled to vote must be represented at the 1996 Annual Meeting in
order to constitute a quorum. Under both Georgia law and Synovus' bylaws, all
shares represented at the meeting, including shares abstaining and withholding
authority, are counted for purposes of determining whether a quorum exists. The
nominees for election as directors at the Annual Meeting who receive the
greatest number of votes (a plurality), a quorum being present, shall become
directors at the conclusion of the tabulation of votes. Thus, once a quorum has
been established, abstentions and broker non-votes have no effect upon the
election of directors. The shares represented by Proxies executed for Synovus'
1996 Annual Meeting in such manner as not to withhold authority to vote for the
election of any nominee for Synovus' Board of Directors shall be voted "FOR" the
election of the seven nominees for Class II directors on Synovus' Board named
herein.
If any nominee for Class II director of Synovus becomes unavailable for any
reason before Synovus' 1996 Annual Meeting, the shares represented by executed
Proxies may be voted for such substitute nominee as may be determined by the
holders of such Proxies. It is not anticipated that any nominee will be
unavailable for election.
3
SYNOVUS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
SEVEN NOMINEES FOR ELECTION AS CLASS II DIRECTORS ON SYNOVUS' BOARD SET FORTH
HEREIN.
B. Information Concerning Directors and Nominees for Class II Directors.
(1) General Information.
The following table sets forth the name, age, principal occupation and
employment (which, except as noted, has been for the past five years) of each of
the seven nominees for election as Class II directors of Synovus and the
remaining directors who will continue to serve on Synovus' Board of Directors,
his or her director classification, length of service as a director of Synovus,
any family relationships with other directors or executive officers of Synovus,
and any Board of Directors of which he or she is a member with respect to any
company with a class of securities registered with the SEC pursuant to Section
12 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or any
company which is subject to the requirements of Section 15(d) of that Act,
including TSYS, or any company registered with the SEC as an investment company
under the Investment Company Act of 1940 ("Public Company").
<TABLE>
<CAPTION> Synovus Year
Director First Principal Occupation
Classifi- Elected and Other Directorships
Name Age cation Director of Public Companies
- ------------------------------ ----- ---------- ------------ --------------------------
<S> <C> <C> <C> <C>
Daniel P. Amos 44 III 1991 Chief Executive Officer and
Director, AFLAC Incorporated
(Insurance Holding Company)
Richard E. Anthony<F1> 49 II 1993 Vice Chairman of the Board,
Synovus Financial Corp.; Chairman
of the Board, First Commercial
Bank of Birmingham (Banking
Subsidiary of Synovus)
Joe E. Beverly 54 II 1983 Vice Chairman of the Board,
Synovus Financial Corp.; Chairman
of the Board, Commercial Bank,
Thomasville, Georgia (Banking
Subsidiary of Synovus); Director,
Davis Water & Waste Industries,
Inc.
James H. Blanchard 54 I 1972 Chairman of the Board and Chief
Executive Officer, Synovus
Financial Corp.; Chairman of the
Executive Committee, Total System
Services, Inc.; Director, BellSouth
Corporation
Richard Y. Bradley<F2> 57 III 1991 Partner, Bradley & Hatcher (Law
Firm); Director, Total System
Services, Inc.
Stephen L. Burts, Jr.<F3> 43 I 1992 President and Chief Financial
Officer, Synovus Financial Corp.
Salvador Diaz-Verson, Jr.<F4> 44 III 1985 Chairman of the Board,
Diaz-Verson Capital Investments,
Inc. (Investments and Money
Management); Chairman of the
Board, Diaz-Verson Funds Inc.;
Director, Clemente Capital, Inc.,
Miramar Securities, Inc. and Total
System Services, Inc.
C. Edward Floyd, M.D 61 I 1995 Vascular Surgeon
Gardiner W. Garrard, Jr. 55 I 1972 President, The Jordan Company
(Real Estate Development);
Director, Total System Services,
Inc.
V. Nathaniel Hansford 52 I 1985 Professor and Dean Emeritus --
School of Law, University of
Alabama
4
Synovus Year
Director First Principal Occupation
Classifi- Elected and Other Directorships
Name Age cation Director of Public Companies
- ------------------------------ ----- ---------- ------------ --------------------------
<S> <C> <C> <C> <C>
Mason H. Lampton 48 II 1993 President, The Hardaway Company
(Construction Company); Director,
Total System Services, Inc.
John L. Moulton 68 II 1980 President, Moulton, Lane & Hardin,
Inc. (Insurance, Estate Planning and
Employee Benefits); Chairman of
the Board, Security Bank and Trust
Company of Albany (Banking
Subsidiary of Synovus)
Elizabeth C. Ogie<F5> 45 II 1993 Philanthropist
John T. Oliver, Jr.<F6> 66 II 1993 Vice Chairman of the Executive
Committee, Synovus Financial
Corp.; Chairman of the Board, First
National Bank of Jasper (Banking
Subsidiary of Synovus)
H. Lynn Page 55 I 1978 Vice Chairman of the Board
(Retired) and Director, Synovus
Financial Corp., Columbus Bank
and Trust Company and Total
System Services, Inc.
William L. Pherigo<F7> 54 II 1995 President and Chief Executive
Officer, The National Bank of
South Carolina (Banking Subsidiary
of Synovus)
Robert V. Royall, Jr. 61 I 1995 Chairman of the Board, The
National Bank of South Carolina
(Banking Subsidiary of Synovus);
Director, Blue Cross Blue Shield of
South Carolina; Secretary of
Commerce, State of South Carolina
William B. Turner<F5> 73 III 1972 Chairman of the Board, Columbus
Bank and Trust Company;
Chairman of the Executive
Committee, W.C. Bradley Co.
(Metal Manufacturer and Real
Estate); Director, The Coca-Cola
Company and Total System
Services, Inc.; Chairman of the
Executive Committee, Synovus
Financial Corp.
George C. Woodruff, Jr. 67 III 1972 Real Estate and Personal
Investments; Director, Total
System Services, Inc. and United
Cities Gas Company
James D. Yancey<F8> 54 I 1978 Vice Chairman of the Board,
Synovus Financial Corp. and
Columbus Bank and Trust
Company; Director, Total System
Services, Inc.
- -------------
<FN>
<F1>Richard E. Anthony was elected Vice Chairman of Synovus in September, 1995.
Prior to 1995, Mr. Anthony served, and continues to serve, as President of
Synovus Financial Corp. of Alabama and Chairman of the Board of First Commercial
Bank of Birmingham, both of which companies are subsidiaries of Synovus.
<F2>Richard Y. Bradley formed Bradley & Hatcher in September, 1995. From 1991
until 1995, Mr. Bradley served as President of Bickerstaff Clay Products
Company, Inc.
<F3>Stephen L. Burts, Jr. was elected President and Chief Financial Officer of
Synovus in March, 1992. Prior to 1992, Mr. Burts served in various capacities
with Synovus and/or Columbus Bank, including Executive Vice President and
Treasurer.
<F4>Salvador Diaz-Verson, Jr. formed Diaz-Verson Capital Investments, Inc. in
September, 1991. From 1985 until 1991, Mr. Diaz-Verson was President of AFLAC
Incorporated.
<F5>Elizabeth C. Ogie is William B. Turner's niece.
5
<F6>John T. Oliver, Jr. was elected Vice Chairman of the Executive Committee of
Synovus in September, 1995. Prior to 1995, Mr. Oliver served, and continues to
serve, as Chairman of the Board of Synovus Financial Corp. of Alabama and First
National Bank of Jasper, both of which companies are subsidiaries of Synovus.
<F7>William L. Pherigo was elected President and Chief Executive Officer of The
National Bank of South Carolina effective January, 1996. From 1991 until 1996,
Mr. Pherigo served as President and Chief Operating Officer of The National Bank
of South Carolina.
<F8>James D. Yancey was elected Vice Chairman of the Board of Synovus in March,
1992. Prior to 1992, Mr. Yancey served in various capacities with Synovus and/or
Columbus Bank, including Vice Chairman of the Board and President of both
Synovus and Columbus Bank.
</TABLE>
(2) Synovus Common Stock Ownership of Directors and Management.
The following table sets forth, as of December 31, 1995, the number of
shares of Synovus Common Stock beneficially owned by each of Synovus' directors
and Synovus' five most highly compensated executive officers. To the best of
Synovus' knowledge, all shares of Synovus Common Stock beneficially owned by
such persons qualify for ten votes per share, subject to the completion by such
persons of the Certifications contained on the reverse side of their Proxy
Cards. Information relating to beneficial ownership of Synovus Common Stock is
based upon information furnished by each person or entity using "beneficial
ownership" concepts set forth in the rules of the SEC under Section 13(d) of the
Exchange Act.
<TABLE>
<CAPTION>
Shares of Shares of
Synovus Shares of Synovus
Common Synovus Common Percentage of
Stock Common Stock Stock Total Shares Outstanding
Beneficially Beneficially Beneficially of Synovus Shares of
Owned with Owned with Owned with Common Synovus
Sole Voting Shared Voting Sole Voting Stock Common Stock
and Invest- and Invest- but no Invest- Beneficially Beneficially
ment Power ment Power ment Power Owned as of Owned as of
Name as of 12/31/95 as of 12/31/95 as of 12/31/95 12/31/95 12/31/95
- ---------------------- ------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Daniel P. Amos 24,415 135,912<F1> --- 160,327 .20%
Richard E. Anthony 149,669 21,587 7,752 179,008 .23
Joe E. Beverly 126,591 1,350 27,117 155,058 .20
James H. Blanchard 448,729 7,381 24,526 480,636 .62
Richard Y. Bradley 4,521 37,481 --- 42,002 .05
Stephen L. Burts, Jr. 42,103<F2> --- 26,189 68,292 .09
Salvador Diaz-Verson, Jr. 17,806 175 --- 17,981 .02
C. Edward Floyd, M.D. 323,763 44,999 --- 368,762 .48
Gardiner W. Garrard, Jr. 57,605 423,959 --- 481,564 .62
V. Nathaniel Hansford 60,231 113,212 --- 173,443 .22
Mason H. Lampton 118,892 81,488<F3> --- 200,380 .26
John L. Moulton 102,055 54 --- 102,109 .13
Elizabeth C. Ogie 9,364 9,037,456<F4><F5> --- 9,046,820 11.71
John T. Oliver, Jr. 214,909<F6> 27,535 9,218 251,662 .33
H. Lynn Page 265,118 3,412 --- 268,530 .35
William L. Pherigo 120,742<F7> 1,524 --- 122,266 .16
Robert V. Royall, Jr. 161,649<F8> 50,058 --- 211,707 .27
William B. Turner 27,661 9,002,249<F5> --- 9,029,910 11.69
George C. Woodruff, Jr. 36,794 --- --- 36,794 .05
James D. Yancey 306,393 13,275 14,658 334,326 .43
- ---------------------------
6
<FN>
<F1>Includes 22,700 shares of Synovus Common Stock held by a charitable
foundation of which Mr. Amos is a trustee.
<F2>Includes 6,750 shares of Synovus Common Stock with respect to which Mr.
Burts has options to acquire.
<F3>Includes 74,118 shares of Synovus Common Stock held in a trust for which Mr.
Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of such
shares.
<F4>Includes 35,246 shares of Synovus Common Stock held by a charitable
foundation of which Mrs. Ogie is a trustee.
<F5>Includes 760,950 shares of Synovus Common Stock held by a charitable
foundation of which Mrs. Ogie and Mr. Turner are trustees and 8,235,427 shares
of Synovus Common Stock beneficially owned by TB&C Bancshares, Inc., of which
Mrs. Ogie and Mr. Turner are officers, directors and shareholders.
<F6> Includes 30,285 shares of Synovus Common Stock held by a charitable
foundation of which Mr. Oliver is trustee.
<F7> Includes 56,036 shares of Synovus Common Stock with respect to which Mr.
Pherigo has options to acquire.
<F8>Includes 61,979 shares of Synovus Common Stock with respect to which Mr.
Royall has options to acquire.
</TABLE>
The following table sets forth information, as of December 31, 1995, with
respect to the beneficial ownership of Synovus Common Stock by all directors and
executive officers of Synovus as a group. To the best of Synovus' knowledge, all
shares of Synovus Common Stock beneficially owned by all directors and executive
officers of Synovus qualify for ten votes per share, subject to the completion
by such persons of the Certifications contained on the reverse sides of their
Proxy Cards.
<TABLE>
Percentage of
<CAPTION> Shares of Outstanding Shares of
Synovus Common Stock Synovus Common Stock
Name of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/95 as of 12/31/95
- ----------------------- ------------------------ ----------------------------
<S> <C> <C>
All directors
and executive
officers of Synovus
as a group 12,812,934 16.59%
(includes
23 persons)
</TABLE>
For a detailed discussion of the beneficial ownership of TSYS Common Stock
by Synovus' named executive officers and directors and by all directors and
executive officers of Synovus as a group, see Section VI(C) hereof captioned
"TSYS Common Stock Ownership of Directors and Management."
C. Board Committees and Attendance.
The business and affairs of Synovus are under the direction of Synovus'
Board of Directors. During 1995, Synovus' Board of Directors held six regular
meetings and one special meeting. During 1995, each of Synovus' directors
attended at least 75% of the aggregate meetings of Synovus' Board of Directors
and the Committees thereof on which he or she sat, except Daniel P. Amos, who
attended 72%.
John P. Illges, III, Senior Vice President of The Robinson-Humphrey
Company, Inc., serves as a non-voting advisory director of Synovus. Mr. Illges'
service as a non-voting advisory director of Synovus is required under the
provisions of The Glass-Steagall Act and Regulation R promulgated thereunder,
which forbid an individual associated with an entity engaged in the offering and
underwriting of securities from serving as a director of a national bank, or as
a director of a parent bank holding company of a national bank. Mr. Illges
continues to serve as a director of Columbus Bank and TSYS.
Synovus' Board of Directors has three principal committees -- an Audit
Committee, a Compensation Committee and an Executive Committee. There is no
Nominating Committee of Synovus' Board of Directors.
7
Audit Committee. The members of the Audit Committee of Synovus' Board of
Directors are: Gardiner W. Garrard, Jr., Chairman, Salvador Diaz-Verson, Jr. and
George C. Woodruff, Jr. The primary functions engaged in by Synovus' Audit
Committee include: (i) annually recommending to Synovus' Board the independent
certified public accountants ("Independent Auditors") to be engaged by Synovus
for the next fiscal year; (ii) reviewing the plan and results of the annual
audit by Synovus' Independent Auditors; (iii) reviewing and approving the range
of management advisory services provided by Synovus' Independent Auditors; (iv)
reviewing Synovus' internal audit function and the adequacy of the internal
accounting control systems of Synovus and its subsidiaries; (v) reviewing the
results of regulatory examinations of Synovus and its subsidiaries; (vi)
periodically reviewing the financial statements of Synovus and the consolidated
financial statements of Synovus and its subsidiaries; and (vii) considering such
other matters with regard to the internal and independent audit of Synovus and
its subsidiaries as, in its discretion, it deems to be necessary or desirable,
periodically reporting to Synovus' Board as to the exercise of its duties and
responsibilities and, where appropriate, recommending matters in connection with
the audit function with respect to which Synovus' Board should consider taking
action. During 1995, Synovus' Audit Committee held one meeting.
Compensation Committee. The members of the Compensation Committee of
Synovus' Board of Directors are: William B. Turner, Chairman, George C.
Woodruff, Jr. and Gardiner W. Garrard, Jr. The primary functions engaged in by
Synovus' Compensation Committee include: (i) evaluating the remuneration of
senior management and board members of Synovus and its subsidiaries and the
compensation and fringe benefit plans in which officers, employees and directors
of Synovus and its subsidiaries are eligible to participate; and (ii)
recommending to Synovus' Board whether or not it should modify, alter, amend,
terminate or approve such remuneration, compensation or fringe benefit plans.
During 1995, Synovus' Compensation Committee held two meetings.
Executive Committee. The members of Synovus' Executive Committee are:
William B. Turner, Chairman, James H. Blanchard, Gardiner W. Garrard, Jr.,
George C. Woodruff, Jr., James D. Yancey, John T. Oliver, Jr. and Richard Y.
Bradley. During the intervals between meetings of Synovus' Board of Directors,
Synovus' Executive Committee possesses and may exercise any and all the powers
of Synovus' Board of Directors in the management and direction of the business
and affairs of Synovus with respect to which specific direction has not been
previously given by Synovus' Board of Directors. During 1995, Synovus' Executive
Committee held five meetings.
D. Executive Officers.
The following table sets forth the name, age and position with Synovus of
each present executive officer of Synovus.
<TABLE>
<CAPTION>
Name Age Position with Synovus
- ---------------------- --- -----------------------------------------------
<S> <C> <C>
James H. Blanchard 54 Chairman of the Board and Chief Executive Officer
William B. Turner 73 Chairman of the Executive Committee
John T. Oliver, Jr. 66 Vice Chairman of the Executive Committee
James D. Yancey 54 Vice Chairman of the Board
Joe E. Beverly 54 Vice Chairman of the Board
Richard E. Anthony 49 Vice Chairman of the Board
Stephen L. Burts, Jr. 43 President and Chief Financial Officer
G. Sanders Griffith, III 42 Senior Executive Vice President, General
Counsel and Secretary
Thomas J. Prescott 41 Executive Vice President and Treasurer
Jay C. McClung 47 Executive Vice President
</TABLE>
Synovus' executive officers serve at the pleasure of Synovus' Board of
Directors. All of the executive officers of Synovus are members of Synovus'
Board of Directors, except G. Sanders Griffith, III, Thomas J. Prescott and Jay
C. McClung.
8
G. Sanders Griffith, III serves as Senior Executive Vice President, General
Counsel and Secretary of Synovus, positions he has held since October, 1995.
From 1988 until 1995, Mr. Griffith served in various capacities with Synovus,
including Executive Vice President, General Counsel and Secretary. Thomas J.
Prescott was elected Executive Vice President and Treasurer of Synovus in
January, 1994. From 1987 until 1994, Mr. Prescott served in various capacities
with Synovus, including Senior Vice President. Jay C. McClung was elected
Executive Vice President of Synovus in January, 1995. From 1986 until 1995, Mr.
McClung served in various capacities with Columbus Bank, including Senior Vice
President.
III. DIRECTORS' PROPOSAL TO APPROVE THE
SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN
Synovus' executive compensation program will include short-term incentive
bonus awards under the Synovus Financial Corp. Executive Bonus Plan (the "Plan")
beginning in 1996. The purposes of the Plan are to reward selected executive
officers for superior corporate performance and to attract and retain top
quality executive officers. Subject to approval by Synovus' shareholders,
compensation paid pursuant to the Plan is intended, to the extent reasonable, to
qualify for tax deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder, as may be
amended from time to time ("Section 162(m)").
Eligibility and Participation. The Chief Executive Officer and the four
highest compensated officers of Synovus and any publicly-traded subsidiary of
Synovus are eligible to participate in the Plan. Approximately 10 employees are
eligible to participate in the Plan. The Committee, as described below, has
discretion to select participants from among eligible employees from year to
year.
Description of Awards Under the Plan. Pursuant to the Plan, Synovus may
award incentive bonus opportunities to participants. Each fiscal year, the
Committee shall establish, in writing, the performance goals applicable to such
and/or any succeeding fiscal year. The performance measures which shall be used
to determine the amount of the incentive bonus award for each such performance
period shall be chosen from among the following for Synovus, any of its business
segments and/or any of its business units, unless and until the Committee
proposes a change in such measures for shareholder vote or applicable tax and/or
securities laws change to permit the Committee discretion to alter such
performance measures without obtaining shareholder approval: (i) return on
assets; (ii) net income; (iii) operating income; (iv) nonperforming assets
and/or loans as a percentage of total assets and/or loans; (v) return on capital
compared to cost of capital; (vi) earnings per share and/or earings per share
growth; (vii) return on equity; (viii) noninterest expense as a percentage of
total expense; (ix) loan charge-offs as a percentage of total loans; (x)
productivity and expense control; (xi) number of cardholder, merchant and/or
other customer accounts processed and/or converted by TSYS; (xii) successful
negotiation or renewal of contracts with new and/or existing customers by TSYS;
(xiii) stock price; and (xiv) asset growth. Awards shall be determined based on
the achievement of such preestablished performance goals, and shall be awarded
based on a percentage of a participant's base salary.
The Committee shall have no discretion to increase the amount of any award
under the Plan, but will retain the ability to eliminate or decrease an award
otherwise payable to a participant. The Committee shall certify, in writing,
that the performance goals have been met before any payments to participants may
be made. Payment of the incentive bonus award earned, if any, shall be made in
cash, as soon as practicable thereafter.
Termination of Employment. Any participant not employed by Synovus or a
publicly-traded subsidiary of Synovus on December 31 of any fiscal year will not
be entitled to an award unless otherwise determined by the Committee.
Maximum Amount Payable to Any Participant. The maximum amount payable for
each performance period under the Plan to any participant is one hundred fifty
percent (150%) of such participant's base salary; provided, however, that no
participant may receive an award for any performance period in excess of $1.5
million.
9
Deferral of Bonus Awards. Participants may elect to defer all or a portion
of an incentive bonus award payable under the Plan by providing an election, in
writing, to Synovus prior to the beginning of the year in which the incentive
bonus is to be earned. Deferred amounts shall earn interest at a rate equal to
the average annual short-term prime rate established by Columbus Bank for each
fiscal year.
Distributions of deferred amounts and interest earned thereon to
participants, or their beneficiaries, as applicable, shall be made in cash in
one lump sum or in up to 120 approximately equal monthly installments, as
determined by the Committee. Commencement of payment, in the form determined by
the Committee, shall begin within 30 days after the last day of the month of the
participant's termination of employment by reason of death (except by suicide)
or total disability, or at such time as determined by the Committee in the event
of termination of employment for any other reason; provided that no distribution
shall begin later than the date the participant attains age 70 1/2.
Amendment of the Plan. The Board of Directors may amend the Plan at any
time including amendments that increase the costs of the Plan and allocate
benefits between persons and groups in the table below differently; provided,
however, that no amendment shall be made without shareholder approval that
increases the maximum amount payable to any participant in excess of the limits
set forth above.
Duration of the Plan. The Plan shall remain in effect from the date it is
approved by Synovus' shareholders until the date it is terminated by the Board
of Directors. The Board of Directors may terminate the Plan at any time.
Administration. The Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). The Committee will be comprised of
two or more "outside" directors within the meaning of Section 162(m).
Estimate of Benefits. The amounts that will be paid pursuant to the Plan
are not currently determinable. The amounts that would have been awarded for
fiscal year 1995 if the Plan had been in effect and if the Chief Executive
Officer and the four highest compensated officers of Synovus participated in the
Plan are as follows:
<TABLE>
<CAPTION> NEW PLAN BENEFITS
SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN
Name Position Dollar Value ($)
- ------------------------------- ----------------------------------- ---------------------
<S> <C> <C>
James H. Blanchard Chairman of the Board and Chief $ 356,250
Executive Officer
James D. Yancey Vice Chairman of the Board 224,250
Stephen L. Burts, Jr. President and Chief Financial 168,500
Officer
Joe E. Beverly Vice Chairman of the Board 154,500
John T. Oliver, Jr. Vice Chairman of the Executive 145,800
Committee
Executive Group 1,049,300
Non-Executive Director Group -0-
Non-Executive Officer Employee Group -0-
</TABLE>
Adoption of the proposal requires an affirmative vote by the holders of
a majority of the votes cast thereon. Any shares not voted (whether by
absention, broker non-vote, or otherwise) have no impact on the vote.
SYNOVUS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE SYNOVUS FINANCIAL CORP. EXECUTIVE BONUS PLAN.
10
IV. EXECUTIVE COMPENSATION
(1) Summary Compensation Table.
The following table summarizes the cash and noncash compensation for each
of the last three fiscal years for the chief executive officer of Synovus and
for the other four most highly compensated executive officers of Synovus.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION> Long-Term
Annual Compensation Compensation Awards
-------------------------------------------------------- --------------------------------
Other Restricted Securities All
Annual Stock Underlying Other
Name and Compen- Award(s) Options/ Compen-
Principal Position Year Salary Bonus <F1> sation <F2> <F3> SARs sation<F4>
- --------------------- -------- --------------- -------------- --------------- --------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James H. Blanchard 1995 $475,000 $356,250 $ 2,000 $454,664 53,229 $240,351
Chairman of the 1994 377,650 253,238 2,000 146,246 25,434 146,943
Board and Chief 1993 288,750 144,375 2,000 -0- -0- 113,216
Executive Officer
James D. Yancey 1995 345,000 224,250 2,000 263,579 30,857 201,192
Vice Chairman 1994 273,310 177,652 2,000 94,254 16,392 133,817
of the Board 1993 246,750 123,375 2,000 -0- -0- 105,537
Stephen L. Burts, Jr. 1995 272,500 168,500 1,833 162,206 18,989 110,172
President and Chief 1994 208,050 129,830 -0- 56,252 9,783 61,360
Financial Officer 1993 183,750 91,875 5,000 -0- -0- 86,902
Joe E. Beverly 1995 257,500 154,500 2,000 167,254 19,582 125,699
Vice Chairman 1994 234,660 140,796 2,000 72,002 12,522 95,406
of the Board 1993 220,500 110,250 2,000 -0- -0- 97,452
John T. Oliver, Jr. 1995 243,000 145,800 2,000 152,059 17,802 64,565
Vice Chairman of the 1994<F5> -- -- -- -- -- --
Executive Committee 1993<F5> -- -- -- -- -- --
- ---------------------
<FN>
<F1> Bonus amount for 1995 includes special recognition award of $5,000 for Mr.
Burts.
<F2> Amount for 1995 includes matching contributions under the Director Stock
Purchase Plan of $2,000 each for Messrs. Blanchard, Yancey and Beverly and
$1,833 for Mr. Burts. Perquisites and other personal benefits are excluded
because the aggregate amount does not exceed the lesser of $50,000 or 10%
of annual salary and bonus for the named executives.
<F3> Amount consists of value of award, net of consideration paid by the
executive. As of December 31, 1995, Messrs. Blanchard, Yancey, Burts,
Beverly and Oliver held 24,526, 14,658, 26,189, 27,117 and 9,218 restricted
shares, respectively, with a value of $702,057, $419,585, $749,660,
$776,224 and $263,865, respectively. On September 5, 1995, restricted stock
was awarded in the amount of 17,743, 10,286, 6,330, 6,527 and 5,934 shares
to Messrs. Blanchard, Yancey, Burts, Beverly and Oliver, respectively, with
the following vesting schedule: 20% on September 4, 1996; 20% on September
4, 1997; 20% on September 4, 1998; 20% on September 4, 1999; and 20% on
September 4, 2000. On June 29,1994, restricted stock was awarded in the
amount of 8,478, 5,464, 3,261, 4,174 and 4,104 shares to Messrs. Blanchard,
Yancey, Burts, Beverly and Oliver, respectively, with the following vesting
schedule: 20% on June 28, 1995; 20% on June 28, 1996; 20% on June 28, 1997;
20% on June 28, 1998; and 20% on June 28, 1999. Dividends are paid on all
restricted shares.
11
<F4> The 1995 amount includes director fees of $55,150, $56,900, $29,000,
$43,600 and $24,600 for Messrs. Blanchard, Yancey, Burts, Beverly and
Oliver, respectively, in connection with their service as directors of
Synovus and certain of its subsidiaries; contributions or other allocations
to defined contribution plans of $30,000 for each executive; allocations
pursuant to defined contribution excess benefit agreements of $102,891,
$66,309, $44,899, $31,655 and $9,965 for each of Messrs. Blanchard, Yancey,
Burts, Beverly and Oliver, respectively; premiums paid for group term life
insurance coverage of $720, $720, $648 and $691 for each of Messrs.
Blanchard, Yancey, Burts and Beverly, respectively; the economic benefit of
life insurance coverage related to split-dollar life insurance policies of
$879, $656, $25 and $355 for each of Messrs. Blanchard, Yancey, Burts and
Beverly, respectively; and the dollar value of the benefit of premiums paid
for split-dollar life insurance policies (unrelated to term life insurance
coverage) projected on an actuarial basis of $50,711, $46 607, $5,600 and
$19,398 for each of Messrs. Blanchard, Yancey, Burts and Beverly,
respectively.
<F5> Disclosure is not required for 1994 and 1993.
</TABLE>
(2) Stock Option Exercises and Grants.
The following tables provide certain information regarding stock options
granted and exercised in the last fiscal year and the number and value of
unexercised options at the end of the fiscal year.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION> Individual Grants
- -----------------------------------------------------------------------------------------
% of Total Potential
Options/ Realized Value at
SARs Exercise Assumed Annual Rates of
Options/ Granted to or Stock Price Appreciation
SARs Employees Base For Option Term <F2>
Granted in Fiscal Price Expiration ---------------------
Name (#)<F1> Year ($/Share) Date 5%($) 10% ($)
- ------------------------------ ------------ -------------- -------------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
James H. Blanchard 53,229 7.32% $22.75 09/04/03 $578,067 $1,385,019
James D. Yancey 30,857 4.24% 22.75 09/04/03 335,107 802,899
Stephen L. Burts, Jr. 18,989 2.61% 22.75 09/04/03 206,221 494,094
Joe E. Beverly 19,582 2.69% 22.75 09/04/03 212,661 509,524
John T. Oliver, Jr. 17,802 2.45% 22.75 09/04/03 193,330 463,208
- -----------
<FN>
<F1> Options granted on September 4, 1995 at fair market value to executives in
tandem with restricted stock awards as part of the Synovus 1994 Long-Term
Incentive Plan. Options become exercisable on September 4, 1997.
<F2> The dollar gains under these columns result from calculations using the
identified growth rates and are not intended to forecast future price
appreciation of Synovus Common Stock.
</TABLE>
12
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<CAPTION> Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Value Options/SARs at FY-End (#) Options/SARs at FY-End ($)<F1>
Acquired on Realized -------------------------- -------------------------------
Name Exercise (#) ($)<F1> Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------ ------------ --------- --------------------------- -------------------------------
<S> <C> <C> <C> <C>
James H. Blanchard -0- -0- 0 / 78,663 0 / $602,032
James D. Yancey -0- -0- 0 / 47,249 0 / $367,744
Stephen L. Burts, Jr. -0- -0- 6,750 / 28,772 $155,883 / $222,842
Joe E. Beverly -0- -0- 0 / 32,104 0 / $257,482
John T. Oliver, Jr -0- -0- 0 / 52,614 0 / $546,249
- ----------
<FN>
<F1>Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
</TABLE>
(3) Compensation of Directors.
Compensation. During 1995, each of Synovus' directors received a $15,000
annual retainer, and fees of $800 for each meeting of Synovus' Board of
Directors and each Executive Committee meeting they personnally attended.
Members of the Committees of Synovus' Board of Directors (other than the
Executive Committee) received fees of $500, with the Chairmen of such Committees
receiving fees of $750, for each Committee meeting they personally attended. In
addition, directors of Synovus received an $800 fee for each board meeting from
which their absence was excused and an $800 fee for one meeting without regard
to the reason for their absence.
Director Stock Purchase Plan. Synovus' Director Stock Purchase Plan
("DSPP") is a non-tax-qualified, contributory stock purchase plan pursuant to
which qualifying directors can purchase, with the assistance of contributions
from Synovus, presently issued and outstanding shares of Synovus Common Stock.
Under the terms of the DSPP, qualifying directors can elect to contribute up to
$1,000 per calendar quarter to make purchases of Synovus Common Stock, and
Synovus contributes an additional amount equal to 50% of the director's cash
contribution. Participants in the DSPP are fully vested in, and may request the
issuance to them of, all shares of Synovus Common Stock purchased for their
benefit thereunder.
Consulting Agreement. H. Lynn Page, a director and the former Vice Chairman
of the Board of Synovus, and Synovus are parties to a Consulting Agreement
pursuant to which Mr. Page was paid $24,000 by Synovus during 1995 for providing
consulting and advisory services to Synovus in connection with portfolio
management and potential opportunities for business expansion.
(4) Employment Contracts and Change in Control Arrangements.
Blanchard Employment Agreement. On October 13, 1977, Synovus entered into
an Employment Agreement with James H. Blanchard ("Blanchard"), Chairman of the
Board of Synovus, whereunder Synovus paid Blanchard a salary of $475,000 during
1995. The base salary paid to Blanchard is determined by the Compensation
Committee of the Board of Directors of Synovus on an annual basis. The Blanchard
Employment Agreement provides that Synovus shall pay deferred compensation of
$468,000 to Blanchard or his beneficiaries over a 10 to 15 year period in the
event of Blanchard's death, total disability or termination of employment,
subject to certain conditions of forfeiture in the event Synovus terminates
Blanchard's employment "for cause" (as defined), in the event of his violation
of his 2-year Covenant Not to Compete, or in the event of his death by suicide.
The Blanchard Employment Agreement is automatically renewable annually and is
subject to termination on 30 days written notice.
13
Yancey Employment Agreement. On December 8, 1977, effective January 1,
1977, Synovus entered into an Employment Agreement with James D. Yancey
("Yancey"), Vice Chairman of the Board of Synovus and Columbus Bank, whereunder
Synovus paid Yancey a salary of $345,000 during 1995. The base salary paid to
Yancey is determined by the Compensation Committee of the Board of Directors of
Synovus on an annual basis. The Yancey Employment Agreement provides that
Synovus shall pay deferred compensation of $375,000 to Yancey or his
beneficiaries over a 10 to 15 year period in the event of the death, total
disability or termination of employment of Yancey, subject to certain conditions
of forfeiture in the event Synovus terminates Yancey's employment "for cause"
(as defined), in the event of his violation of his 2-year Covenant Not to
Compete, or in the event of his death by suicide. The Yancey Employment
Agreement is automatically renewable annually and is subject to termination on
30 days written notice.
Beverly Employment Agreement. On January 15, 1979, Synovus entered into an
Employment Agreement with Joe E. Beverly ("Beverly"), Vice Chairman of the Board
of Synovus, whereunder Beverly was paid a salary of $257,500 during 1995. The
base salary paid to Beverly is determined by the Compensation Committee of the
Board of Directors of Synovus on an annual basis. The Beverly Employment
Agreement provides that Synovus shall pay deferred compensation of $375,000 to
Beverly or his beneficiaries over a 10 to 15 year period in the event of
Beverly's death, total disability or termination of employment, subject to
certain conditions of forfeiture in the event Synovus terminates Beverly's
employment "for cause" (as defined), in the event of his violation of his 2-year
Covenant Not to Compete, or in the event of his death by suicide. The Beverly
Employment Agreement is automatically renewable annually and is subject to
termination on 30 days written notice.
Oliver Employment Agreement. On December 31, 1992, Synovus entered into an
Employment Agreement with John T. Oliver, Jr. ("Oliver"), Vice Chairman of the
Executive Committee of Synovus, whereunder Oliver was paid a salary of $243,000
during 1995. The base salary paid to Oliver is determined by the Compensation
Committee of the Board of Directors of Synovus on an annual basis. The Oliver
Employment Agreement is for a five year term.
Long-Term Incentive Plans. Messrs. Blanchard, Yancey, Burts, Beverly and
Oliver each hold shares of restricted stock of Synovus and options to purchase
stock of Synovus which were issued pursuant to the Synovus Financial Corp. 1992
and 1994 Long-Term Incentive Plans. Under the terms of the Synovus Financial
Corp. 1992 and 1994 Long-Term Incentive Plans, in the event of a change in
control of Synovus, the vesting of any stock options, stock appreciation and
other similar rights, restricted stock and performance awards will be
accelerated so that all awards not previously exercisable and vested will become
fully exercisable and vested.
Change of Control Agreements. Effective January 1, 1996, Synovus entered
into Change of Control Agreements ("Agreements") with Messrs. Blanchard, Yancey,
Burts, Beverly and Oliver and certain other executive officers. The Change of
Control Agreements provide severance pay and continuation of certain benefits in
the event of a Change of Control. In order to receive benefits under the
Agreements, the executive's employment must be terminated involuntarily, without
cause, whether actual or "constructive" within one year following a Change of
Control or the executive may voluntarily or involuntarily terminate employment
during the thirteenth month following a Change of Control. Generally, a "Change
of Control" is deemed to occur in any of the following circumstances: (1) the
acquisition by any person of 20% or more of the "beneficial ownership" of
Synovus' outstanding voting stock, with certain exceptions for Turner family
members; (2) the persons serving as directors of Synovus as of January 1, 1996
and those replacements or additions subsequently approved by a two-thirds (2/3)
vote of the Board ceasing to comprise at least two-thirds (2/3) of the Board;
(3) a merger, consolidation, reorganization or sale of Synovus' assets unless
(a) the previous beneficial owners of Synovus own more than two-thirds (2/3) of
the new company, (b) no person owns more than 20% of the new company, and (c)
two-thirds (2/3) of the new company's Board were members of the incumbent Board
which approved the business combination; or (4) a "triggering event" occurs as
defined in the Synvous Rights Agreement.
14
Under the Agreements, severance pay would equal three times current base
salary and bonus, with bonus being defined as the average of the previous three
years measured as a percentage of base salary multiplied by current base salary.
Medical, life, disability and other welfare benefits will be provided at the
expense of Synovus for three years with the level of coverage being determined
by the amount elected by the executive during the open enrollment period
immediately preceding the Change of Control. Executives would also receive a
short-year bonus for the year of separation based on the greater of a half
year's maximum bonus or pro rata maximum bonus to the date of termination and a
cash amount in lieu of a long-term incentive award for the year of separation.
If the executive has already received a long-term incentive award in the
separation year, the amount would equal 1.5 times the market grant and if the
executive has not, the amount would equal 2.5 times the market grant.
Executives who are impacted by the Internal Revenue Service excise tax that
applies to certain change of control agreements would receive additional gross
up payments so that they are in the same position as if there were no excise
tax. The Agreements do not provide for retirement benefits or perquisites.
Notwithstanding anything to the contrary set forth in any of Synovus'
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following Performance Graph and Compensation Committee
Report on Executive Compensation shall not be incorporated by reference into any
such filings.
15
(5) Stock Performance Graph.
The following graph compares the yearly percentage change in cumulative
shareholder return on Synovus Common Stock with the cumulative total return of
the Standard & Poor's 500 Index and the Keefe, Bruyette & Woods 50 Bank Index
for the last five fiscal years (assuming a $100 investment on December 31, 1990
and reinvestment of all dividends).
[Omitted Stock Performance Graph is represented by the following table.]
<TABLE>
<CAPTION> COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
SYNOVUS FINANCIAL CORP., S&P 500 AND KBW 50 BANK INDEX
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
SNV $100 $125 $164 $202 $202 $324
S&P 500 $100 $130 $140 $154 $156 $215
KBW 50 $100 $158 $202 $213 $202 $323
</TABLE>
16
(6) Compensation Committee Report on Executive Compensation.
The Compensation Committee (the "Committee") of the Board of Directors of
Synovus is responsible for evaluating the remuneration of senior management and
board members of Synovus and its subsidiaries and the compensation and fringe
benefit plans in which officers, employees and directors of Synovus and its
subsidiaries are eligible to participate. Because Synovus' mission is to create
superior shareholder value by retaining and attracting well-trained and
highly-motivated people who deliver the very best quality customer service, the
Committee's executive compensation policies are designed to attract and retain
highly-motivated and well-trained executives in order to create superior
shareholder value.
Elements of Executive Compensation. The four elements of executive
compensation at Synovus are:
o Base Salary
o Annual Bonus
o Long-Term Incentives
o Other Benefits
The Committee believes that a substantial portion, though not a majority,
of an executive's compensation should be "at-risk" based upon Synovus'
short-term performance (through the annual bonus and the Synovus/TSYS Profit
Sharing Plan and the Synovus/TSYS 401(k) Savings Plan) and long-term performance
(through long-term incentives including stock options and restricted stock
awards). The remainder of each executive's compensation is primarily based upon
the competitive practices of a select group of approximately 18 banks that had
similar "market value added" as Synovus during the previous ten years ("similar
companies"). "Market value added," or "MVA," as used by the Committee in this
context, equals stock price increase during the ten-year period, plus dividends
for the ten-year period, minus increases to paid-in capital during such period.
This subtraction eliminates value added through acquisitions. Prior to 1995, the
Committee made market comparisons with banking companies that were similar in
size to Synovus. The Committee decided to use the "MVA" approach instead of a
"size-based" approach in 1995 because it believes the MVA approach more
accurately reflects Synovus' competitors and represents the most appropriate
market data for the compensation of Synovus executives. The companies used for
comparison under both the "size-based" and "MVA" approaches are not the same
companies included in the peer group index appearing in the Stock Performance
Graph above.
A description of each element of executive compensation and the factors and
criteria used by the Committee in determining these elements is discussed below:
Base Salary. Base salary is an executive's annual rate of pay without
regard to any other elements of compensation. The primary consideration in
determining an executive's base salary is a market comparison of the base
salaries at similar companies for similar positions based upon the executive's
level of responsibility and experience. Base salaries are targeted at the median
level of the similar companies used in the comparison. In addition to market
comparisons, individual performance (measured by the quality of Synovus'
strategic plan, the executive's management responsibilities and development, and
the executive's industry and civic involvement) is also considered in
determining an executive's base salary, although these factors do not weigh
heavily in determining base salary. Based solely upon market comparisons, the
Committee increased Mr. Blanchard's base salary in 1995. The Committee also
increased the base salaries of Synovus' other executive officers in 1995 based
solely upon market comparisons.
Annual Bonus. Annual bonuses are awarded pursuant to the terms of
Synovus' Incentive Bonus Plan. Under the Incentive Bonus Plan, bonus
amounts are paid as a percentage of base pay based on
financial performance goals such as revenues, earnings and asset quality.
The maximum percentage payouts under the Incentive Bonus Plan are 75%
for Mr. Blanchard, 65% for Mr. Yancey and 60% for Messrs. Burts,
Beverly and Oliver. For Mr. Blanchard and Synovus' other executive officers,
17
the 1995 goal under the Incentive Bonus Plan was a single net income
goal for Synovus. Synovus' financial performance and individual performance,
separate from the financial performance goals established at the beginning of
the year, can reduce bonus awards determined by the attainment of the
established goals, although this was not the case for any of Synovus' executive
officers. Because the net income goal for 1995 under the Incentive Bonus Plan
was exceeded and the overall financial results of Synovus were favorable, Mr.
Blanchard and Synovus' other executive officers were awarded the maximum bonus
amount for which each executive was eligible. Beginning in 1996, annual bonuses
for Mr. Blanchard and Synovus' other four most highly compensated executive
officers will be awarded under the Synovus Financial Corp. Executive Bonus Plan.
See Section III hereof captioned "Directors' Proposal to Approve the Synovus
Financial Corp. Executive Bonus Plan."
Long-Term Incentives. The two types of long-term incentives awarded to
executives to date are stock options and restricted stock awards. Restricted
stock awards are designed to focus executives on the long-term performance of
Synovus. Stock options provide executives with the opportunity to buy and
maintain an equity interest in Synovus and to share in the appreciation of the
value of Synovus Common Stock. Executives are encouraged to hold the shares
received upon the lapse of restrictions on restricted stock awards and upon the
exercise of stock options, linking their interests to those of Synovus'
shareholders. The Committee restructured its approach for granting long-term
incentive awards in 1994. During this restructuring, the Committee established a
payout matrix for future long-term incentive grants that uses total shareholder
return as measured by Synovus' performance (stock price increases plus
dividends) and how Synovus' total shareholder return compares to the return of
the peer group of companies appearing in the Stock Performance Graph above. For
the long-term incentive awards made in 1995, total shareholder return and peer
comparisons were measured during the 1992 to 1994 performance period. Applying
the results of the 1992 to 1994 performance period to the payout matrix, the
Committee granted Mr. Blanchard and Synovus' other executive officers restricted
stock awards and stock options in 1995.
Benefits. Benefits offered to executives serve a different purpose than the
other elements of total compensation. In general, these benefits provide either
retirement income or protection against catastrophic events such as illness,
disability and death. Executives generally receive the same benefits offered to
the general employee population, with the only exceptions designed to promote
tax efficiency or to replace other benefits lost due to regulatory limits. The
Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS 401(k) Savings Plan,
including an excess benefit arrangement designed to replace benefits lost due to
regulatory limits (collectively the "Plan"), is the largest component of
Synovus' benefits package for executives. The Plan is directly related to
corporate performance because the amount of contributions to the Plan (to a
maximum of 14% of an executive's compensation) is a function of Synovus'
profitability. For 1995, Mr. Blanchard and Synovus' other executive officers
received a Plan contribution of 10.57% of their compensation based upon the
profitability formula under the Plan. The remaining benefits provided to
executives are primarily based upon the competitive practices of similar
companies.
In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to limit the deductibility for federal income tax purposes of annual
compensation paid by a publicly held corporation to its chief executive officer
and four other highest paid executives for amounts greater than $1 million
unless certain conditions are met. Although none of Synovus' executive officers
are currently affected by this provision, the Committee believes that this
provision could affect Synovus' executive officers in the future. Because the
Committee seeks to maximize shareholder value, the Committee has taken steps to
ensure the deductibility of compensation in excess of $1 million in the future,
although the Committee reserves the ability to make awards which do not qualify
for full deductibility under Section 162(m) of the Code if the Committee
determines that the benefits of so doing outweigh full deductibility.
18
The Committee believes that the executive compensation policies serve the
best interests of the shareholders and of Synovus. A substantial portion of the
compensation of Synovus' executives is directly related to and commensurate with
Synovus' performance. The Committee believes that the performance of Synovus to
date validates the Committee's compensation philosophy.
William B. Turner
Gardiner W. Garrard, Jr.
George C. Woodruff, Jr.
(7) Compensation Committee Interlocks and Insider Participation.
The members of Synovus' Compensation Committee during 1995 were William B.
Turner, Gardiner W. Garrard, Jr. and George C. Woodruff, Jr. Messrs. Garrard and
Woodruff are not current or former officers or employees of Synovus or its
subsidiaries.
Mr. Turner is Chairman of the Executive Committee of Synovus, Chairman of
the Board of Columbus Bank, a director of TSYS and Chairman of the Executive
Committee of W.C. Bradley Co. James H. Blanchard, Chairman of the Board of
Synovus and Chairman of the Executive Committee of TSYS, serves as a director of
Columbus Bank and W.C. Bradley Co. James D. Yancey is Vice Chairman of the Board
of Synovus and Columbus Bank and is a director of TSYS. During 1995, Synovus and
its subsidiaries, including Columbus Bank, paid to W.C. Bradley Co. an aggregate
of $7,338, which payments were primarily for printing services and marketing
materials provided by W.C. Bradley Co. These payments were made in the ordinary
course of business on substantially the same terms as those prevailing at the
time for comparable transactions with unrelated third parties. TSYS leases
various properties in Columbus, Georgia from W.C. Bradley Co. for office space
and storage. The rent paid for the space in 1995, which is approximately 107,295
square feet, is approximately $746,508. The lease agreements were made
substantially on the same terms as those prevailing at the time for comparable
leases for similar facilities with an unrelated third party in Columbus,
Georgia.
Columbus Bank and W.C. Bradley Co. are equal partners in B&C Company, a
Georgia general partnership formed to acquire, own and operate aircraft for
their mutual benefit and the benefit of their affiliated corporations and their
employees. Columbus Bank and W.C. Bradley have each agreed to remit to B&C
Company fixed fees for each hour they fly the aircraft owned and/or leased by
B&C Company, plus certain other amounts for engine startup and reserves and
other items, and have agreed to fly such aircraft for a fixed number of hours
each per year. For use of such aircraft during 1995, Columbus Bank paid to B&C
Company an aggregate sum of $664,999. This amount represents the charges
incurred by Columbus Bank and its affiliated corporations for use of B&C Company
aircraft, and includes $239,131 for TSYS' use of such aircraft, for which
Columbus Bank was reimbursed by TSYS.
TB&C Bancshares, Inc. is a principal shareholder of Synovus. TB&C
Bancshares, Inc. is a "family bank holding company" organized by William B.
Turner, and his sisters, Sarah T. Butler and Elizabeth T. Corn. TB&C Bancshares,
Inc. is a party to a lease agreement pursuant to which it leases voting and
certain other rights in a total of 3,944,253 shares of Synovus Common Stock held
in trust by Synovus Trust Company, a subsidiary of Columbus Bank, as Trustee of
three trusts for the benefit of Mr. Turner, Mrs. Butler and Mrs. Corn and their
respective descendants. During 1995, TB&C Bancshares, Inc. paid Synovus Trust
Company, as Trustee, $303,635 pursuant to the terms of the lease agreement,
which amount represents the fair market value of the voting rights as determined
by an independent appraiser. William B. Turner, Chairman of the Executive
Committee of Synovus, Chairman of the Board of Columbus Bank and a director of
TSYS, is an officer, director and shareholder of W.C. Bradley Co. and TB&C
Bancshares, Inc. James H. Blanchard, Chairman of the Board of Synovus, Chairman
of the Executive Committee of TSYS and a director of Columbus
19
Bank, is a director of W.C. Bradley Co. Elizabeth C. Ogie, the niece of William
B. Turner, is a director of W.C. Bradley Co., Columbus Bank and Synovus and is
an officer, director and shareholder of TB&C Bancshares, Inc. W. Walter Miller,
Jr., the brother-in-law of Elizabeth C. Ogie, is a director of W.C. Bradley Co.
and Senior Vice President and a director of TSYS. Stephen T. Butler, the nephew
of William B. Turner, is an officer and director of W.C. Bradley Co., an
officer, director and shareholder of TB&C Bancshares, Inc. and is a director of
Columbus Bank. Samuel M. Wellborn, III, the President and a director of Columbus
Bank, is a director of W.C. Bradley Co. W.B. Turner, Jr., the son of William
B.Turner, is an officer and director of W.C. Bradley Co., an officer, director
and shareholder of TB&C Bancshares, Inc. and a director of Columbus Bank. John
T. Turner, the son of William B. Turner, is an officer and director of W.C.
Bradley Co., a shareholder of TB&C Bancshares, Inc. and a director of Columbus
Bank. Sarah T. Butler and Elizabeth T. Corn, the sisters of William B. Turner,
are shareholders of W.C. Bradley Co., are officers, directors and shareholders
of TB&C Bancshares, Inc. and may be deemed to be principal shareholders of
Synovus as a result of their relationship with TB&C Bancshares, Inc.
Gardiner W. Garrard, Jr. is President of The Jordan Company. On October 1,
1993, TSYS entered into a lease with The Jordan Company pursuant to which TSYS
leases from The Jordan Company approximately 10,000 square feet of office space
in Columbus, Georgia for $5,000 per month, payable in advance, which lease
expires on September 30, 1996. The lease was made on substantially the same
terms as those prevailing at the time for leases of comparable property between
unrelated third parties. Gardiner W. Garrard, Jr., a director of TSYS, Columbus
Bank and Synovus, is an officer, director and shareholder of The Jordan Company.
Richard M. Olnick, the brother-in-law of Gardiner W. Garrard, Jr. and a director
of Columbus Bank, is an officer, director and shareholder of The Jordan Company.
George C. Woodruff, Jr. is a shareholder of George C. Woodruff Co. During
1995, George C. Woodruff Co. received payments of $4,582, $49,262 and $70,690 in
connection with office space leased by, and landscaping services provided for,
Synovus, Columbus Bank and TSYS, respectively. These payments were made in the
ordinary course of business on substantially the same terms as those prevailing
at the time for comparable transactions with unrelated third parties. George C.
Woodruff, Jr. is a director of Synovus, Columbus Bank and TSYS.
(8) Transactions with Management.
During 1995, the subsidiary banks of Synovus had outstanding loans directly
to or indirectly accruing to the benefit of certain of the then directors and
executive officers of Synovus, and their related interests. These loans were
made in the ordinary course of business and were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others. In the opinion of Synovus' management,
such loans do not involve more than normal risks of collectibility or present
other unfavorable features. In the future, the subsidiary banks of Synovus
expect to have banking transactions in the ordinary course of business with
Synovus' directors, executive officers and their related interests.
During 1995, Synovus and its wholly-owned subsidiaries and TSYS paid to
Communicorp, Inc. an aggregate of $567,702 and $569,309, respectively. These
payments were made in the ordinary course of business on substantially the same
terms as those prevailing at the time for comparable transactions with unrelated
third parties, and were primarily for various printing and business
communication services provided by Communicorp, Inc. to Synovus and its
wholly-owned subsidiaries and TSYS. Communicorp, Inc. is a wholly-owned
subsidiary of AFLAC Incorporated. Daniel P. Amos, a director of Synovus and
Columbus Bank, is Chief Executive Officer and a director of AFLAC Incorporated.
Bradley & Hatcher, a law firm located in Columbus, Georgia, performed legal
services on behalf of Synovus Trust Company during 1995. Richard Y. Bradley, a
director of Synovus, Columbus Bank and TSYS, is a partner of Bradley & Hatcher.
20
For information about transactions with companies that are affiliates of
William B. Turner, Gardiner W. Garrard, Jr. and George C. Woodruff, Jr.,
directors of Synovus, See Section IV (7) hereof captioned "Compensation
Committee Interlocks and Insider Participation."
V. PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of Synovus Common Stock
held by the only known holders of more than 5% of the outstanding shares of
Synovus Common Stock.
<TABLE>
Percentage of
<CAPTION> Shares of Outstanding Shares of
Synovus Common Stock Synovus Common Stock
Name and Address Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/95 as of 12/31/95
- ----------------------- ------------------------- ---------------------------
<S> <C> <C>
Synovus Trust Company 10,383,409<F1> 13.44%
1148 Broadway
Columbus, Georgia 31901
TB&C Bancshares, Inc.<F2> 8,235,427 10.66
1017 Front Avenue
Columbus, Georgia 31901
William B. Turner<F2> 9,029,910<F3> 11.69
P.O. Box 120
Columbus, Georgia 31902
Sarah T. Butler<F2> 9,041,722<F3> 11.70
P.O. Box 120
Columbus, Georgia 31902
Elizabeth T. Corn<F2> 9,156,011<F3> 11.85
P.O. Box 120
Columbus, Georgia 31902
W.B. Turner, Jr.<F2> 9,010,783<F3> 11.66
P.O. Box 120
Columbus, Georgia 31902
Stephen T. Butler<F2> 9,021,708<F3> 11.68
P.O. Box 120
Columbus, Georgia 31902
Elizabeth C. Ogie<F2> 9,046,820<F3> 11.71
P.O. Box 120
Columbus, Georgia 31902
- -----------------------------------
<FN>
<F1> As of December 31, 1995, the banking and trust company subsidiaries of
Synovus, including Columbus Bank through its wholly-owned subsidiary Synovus
Trust Company ("Synovus Trust"), held in various fiduciary capacities a total of
10,973,377 shares of Synovus Common Stock as to which they possessed sole or
shared voting or investment power. Of this total, Synovus Trust held 6,089,873
shares as to which it possessed sole investment power, 5,893,582 shares as to
which it possessed sole voting power, 269,639 shares as to which it possessed
shared voting power and 4,293,536 shares as to which it possessed shared
investment power. The other banking subsidiaries of Synovus held 589,968 shares
as to which they possessed sole voting or investment power and no shares as to
which they possessed shared voting and investment power. In addition, as of
December 31, 1995, Synovus Trust and the banking subsidiaries of Synovus held in
various agency capacities an additional 6,540,054 shares of Synovus Common
21
Stock as to which they possessed no voting or investment power. Of this
additional amount as to which no voting or investment power was possessed,
Synovus Trust and the banking subsidiaries of Synovus held 6,499,765 and 40,289
shares, respectively. Synovus and its subsidiaries disclaim beneficial ownership
of all shares of Synovus Common Stock which are held by them in various
fiduciary and agency capacities.
<F2>TB&C Bancshares, Inc. ("TB&C") is a "family bank holding company" organized
by William B. Turner (the Chairman of Synovus' Executive Committee) and his
sisters, Sarah T. Butler and Elizabeth T. Corn. The six directors of TB&C, Mr.
Turner, Mmes. Butler and Corn, Elizabeth C. Ogie (the daughter of Mrs. Corn),
Stephen T. Butler (the son of Mrs. Butler), and William B. Turner, Jr. (the son
of Mr. Turner), are each construed to be the beneficial owners of the 8,235,427
shares of Synovus Common Stock beneficially owned by TB&C. As TB&C owns 10.66%
of the outstanding shares of Synovus Common Stock, TB&C is registered as a bank
holding company. To the best of Synovus' knowledge, the shares of Synovus Common
Stock beneficially owned by TB&C qualify for ten votes per share, subject to the
completion by TB&C of the Certification contained on the reverse side of its
Proxy Card.
<F3>Includes 4,291,174 shares of Synovus Common Stock individually owned by
TB&C; 760,950 shares held by a charitable foundation of which each of the
directors of TB&C is a trustee; in the case of Mrs. Corn and Mrs. Ogie, 35,246
shares of Synovus Common Stock held by a charitable foundation of which Mrs.
Corn and Mrs. Ogie are trustees; and 3,944,253 shares of Synovus Common Stock
benefically owned by TB&C pursuant to a lease agreement between TB&C and Synovus
Trust as Trustee of three trusts for the benefit of Mr. Turner, Mrs. Butler and
Mrs. Corn and their respective descendants. Pursuant to the agreement, TB&C
leases from Synovus Trust as Trustee of such trusts voting and certain other
rights with respect to the shares of Synovus Common Stock held in such trusts.
</TABLE>
VI. RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF
SYNOVUS' SUBSIDIARIES AND AFFILIATES
A. Beneficial Ownership of TSYS Common Stock by Columbus Bank.
The following table sets forth, as of December 31, 1995, the number of
shares of TSYS Common Stock beneficially owned by Columbus Bank, the only known
beneficial owner of more than 5% of the issued and outstanding shares of TSYS
Common Stock.
<TABLE>
Percentage of
<CAPTION> Shares of Outstanding Shares of
TSYS Common Stock TSYS Common Stock
Name and Address Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/95 as of 12/31/95
- ----------------------- ------------------------ ------------------------
<S> <C> <C>
Columbus Bank
and Trust Company 52,200,646 <F1><F2> 80.8%
1148 Broadway
Columbus, Georgia 31901
- -----------------
<FN>
<F1>Columbus Bank individually owns these shares.
<F2>As of December 31, 1995, Synovus Trust held in various fiduciary capacities
a total of 316,617 shares (.49%) of TSYS Common Stock. Of this total, Synovus
Trust held 287,139 shares as to which it possessed sole voting or investment
power and 29,478 shares as to which it possessed shared voting and investment
power. In addition, as of December 31, 1995, Synovus Trust held in various
agency capacities an additional 492,982 shares of TSYS Common Stock as to which
it possessed no voting or investment power. Synovus and Synovus Trust disclaim
beneficial ownership of all shares of TSYS Common Stock which are held by
Synovus Trust in various fiduciary and agency capacities.
</TABLE>
22
Columbus Bank, by virtue of its ownership of 52,200,646 shares, or 80.8% of
the outstanding shares of TSYS Common Stock on December 31, 1995, presently
controls TSYS. Synovus presently controls Columbus Bank.
B. Interlocking Directorates of Synovus, Columbus Bank and TSYS.
Eight of the members of and nominees to serve on Synovus' Board of
Directors also serve as members of the Boards of Directors of TSYS and Columbus
Bank. They are James H. Blanchard, Richard Y. Bradley, Salvador Diaz-Verson,
Jr., Gardiner W. Garrard, Jr., H. Lynn Page, William B. Turner, George C.
Woodruff, Jr. and James D. Yancey. Daniel P. Amos and Elizabeth C. Ogie serve as
members of the Board of Directors of Columbus Bank but do not serve as members
of the Board of Directors of TSYS. Mason H. Lampton serves on the Board of
Directors of TSYS and as an Advisory Director of Columbus Bank.
C. TSYS Common Stock Ownership of Directors and Management.
The following table sets forth, as of December 31, 1995, the number of
shares of TSYS Common Stock beneficially owned by each of Synovus' directors and
Synovus' five most highly compensated executive officers.
<TABLE>
<CAPTION>
Shares of TSYS Shares of TSYS
Common Stock Common Stock Percentage of
Beneficially Beneficially Total Outstanding
Owned with Owned with Shares Shares of
Sole Voting Shared Voting of TSYS TSYS Common
and Investment and Investment Common Stock Stock
Power as of Power as of Owned as of Owned as of
Name 12/31/95 12/31/95 12/31/95 12/31/95
- --------------------------- ------------------- --------------------- ------------------- -------------
<S> <C> <C> <C> <C>
Daniel P. Amos ----- 273,600 273,600 .42%
Richard E. Anthony ----- ----- ----- ---
Joe E. Beverly ----- ----- ----- ---
James H. Blanchard 260,400 120,741 381,141 .59
Richard Y. Bradley 6,733 ----- 6,733 .01
Stephen L. Burts,Jr. ----- ----- ----- ---
Salvador Diaz-Verson, Jr. 18,502 1,800 20,302 .03
C. Edward Floyd, M.D. ----- ----- ----- ---
Gardiner W. Garrard, Jr. 2,865 ----- 2,865 .004
V. Nathaniel Hansford ----- 1,000 1,000 .002
Mason H. Lampton 8,752 34,210<F1> 42,962 .07
John L. Moulton 1,112 1,112 2,224 .003
Elizabeth C. Ogie 2,400 9,640<F2> 12,040 .02
John T. Oliver, Jr. ----- ----- ----- ---
H. Lynn Page 229,307 31,882 261,189 .40
William L. Pherigo ----- ----- ----- ---
Robert V. Royall, Jr. 1,200 ----- 1,200 .002
William B. Turner 50,057 192,000 242,057 .37
George C. Woodruff, Jr. 35,575 2,000 37,575 .06
James D. Yancey 288,380 8,000 296,380 .46
- --------------
<FN>
<F1> Includes 9,600 shares of TSYS Common Stock held in a trust for which Mr.
Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of such
shares.
23
<F2> Includes 9,280 shares of TSYS Common Stock held by a charitable foundation
of which Mrs. Ogie is a trustee.
</TABLE>
The following table sets forth information, as of December 31, 1995, with
respect to the beneficial ownership of TSYS Common Stock by all directors and
executive officers of Synovus as a group.
<TABLE>
Percentage of
<CAPTION> Shares of Outstanding Shares of
TSYS Common Stock TSYS Common Stock
Name of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/95 as of 12/31/95
- ------------------------------ ----------------------- ----------------------
<S> <C> <C>
All directors
and executive
officers of Synovus as a
group 1,588,142 2.46%
(includes 23 persons)
</TABLE>
D. Transactions and Agreements Between Synovus, Columbus Bank, TSYS and
Certain of Synovus' Subsidiaries.
During 1995, Columbus Bank and 30 of Synovus' other banking subsidiaries
received bankcard data processing services from TSYS. The bankcard data
processing agreement between Columbus Bank and TSYS can be terminated by
Columbus Bank upon 60 days prior written notice to TSYS or terminated by TSYS
upon 180 days prior written notice to Columbus Bank. During 1995, TSYS charged
Columbus Bank and 30 of Synovus' other banking subsidiaries $2,641,337, in the
aggregate, including the reimbursement of $836,057 of out of pocket expenses,
for the performance of bankcard data processing services. TSYS' charges to
Columbus Bank and Synovus' other banking subsidiaries for bankcard data
processing services are comparable to, and are determined on the same basis as,
charges by TSYS to similarly situated unrelated third parties.
Synovus Administrative Services Corp. ("SASC"), a wholly-owned subsidiary
of Synovus, was formed in 1995 to provide administrative services to Synovus'
subsidiary companies, including TSYS. In connection with the formation of SASC,
TSYS sold SASC property and equipment at book value of approximately $438,000.
Additionally, TSYS and SASC are parties to a Lease Agreement pursuant to which
SASC leased from TSYS office space for lease payments aggregating $198,578
during 1995. The terms of these transactions are comparable to those which could
have been obtained in transactions with unaffiliated third parties.
Synovus and TSYS and SASC and TSYS are parties to Management Agreements
(having one year, automatically renewable, unless terminated, terms), pursuant
to which Synovus and SASC provide certain management services to TSYS. During
1995, these services included human resource services, maintenance services,
security services, communication services, corporate education services, travel
services, investor relations services, corporate governance services, legal
services, regulatory and statutory compliance services, executive management
services performed on behalf of TSYS by certain of Synovus' officers and
financial services. As compensation for management services provided during
1995, TSYS paid Synovus and SASC management fees of $1,039,693 and $3,158,695,
respectively. As compensation for payroll processing support services provided
by TSYS to Synovus during 1995, Synovus paid TSYS a management fee of $361,093.
Management fees are subject to future adjustments based upon the management
services then being provided, based upon charges at the time by unrelated third
parties for comparable services.
During 1995, Columbus Bank served as trustee of various employee benefit
plans of TSYS. During 1995, TSYS paid Columbus Bank trustee's fees under these
plans of $187,374.
During 1995, Columbus Depot Equipment Company ("CDEC"), a wholly-owned
subsidiary of TSYS, and Columbus Bank and 24 of Synovus' other subsidiaries were
parties to Lease Agreements pursuant to which Columbus Bank and 24 of Synovus'
other subsidiaries leased from CDEC computer related equipment for
bankcard and bank data processing services for lease payments
24
aggregating $155,813. During 1995, CDEC sold Columbus Bank and certain of
Synovus' other subsidiaries computer related equipment for bankcard and bank
data processing services for payments aggregating $107,534. In addition, CDEC
was paid $25,925 by Columbus Bank and certain of Synovus' other subsidiaries for
monitoring such equipment and $160 for servicing various computer related
equipment. The terms, conditions, rental rates and/or sales prices provided for
in these Agreements are comparable to corresponding terms, conditions and rates
provided for in leases and sales of similar equipment offered by unrelated third
parties.
During 1995, Synovus Data Corp., a wholly-owned subsidiary of Synovus, paid
TSYS $701,159 for data links, network services and other miscellaneous items
related to the data processing services which Synovus Data Corp. provides to its
customers, which amount was reimbursed to Synovus Data Corp. by its customers,
and $103,944 for management services. During 1995, TSYS paid Synovus Data Corp.
$96,000 primarily for computer processing services. The charges for processing,
management and other services are comparable to those between unrelated third
parties.
During 1995, TSYS and Synovus Data Corp. were parties to a Lease Agreement
pursuant to which TSYS leased from Synovus Data Corp. portions of its office
building for lease payments aggregating $214,650. During 1995, TSYS and Columbus
Bank were parties to Lease Agreements pursuant to which Columbus Bank leased
from TSYS portions of its maintenance and warehouse facilities for lease
payments aggregating $20,203. In August, 1993, TSYS entered into a three-year
Lease Agreement with Columbus Bank pursuant to which it leases office space from
Columbus Bank for lease payments of $4,483 per month. The terms, conditions and
rental rates provided for in these Lease Agreements are comparable to
corresponding terms, conditions and rates provided for in leases of similar
facilities offered by unrelated third parties in the Columbus, Georgia area.
During 1995, Synovus, Columbus Bank and other Synovus subsidiaries paid to
Columbus Productions, Inc., a wholly-owned subsidiary of TSYS, an aggregate of
$523,660 for printing services. The charges for printing services are comparable
to those between unrelated third parties.
During 1995, TSYS purchased 17,122 shares of Synovus Common Stock from
Synovus for $389,526 and simultaneously granted the shares to certain executive
officers of TSYS as restricted stock awards. The per share purchase price of
such shares was equal to the fair market value of a share of Synovus Common
Stock on the date of purchase.
Most customers of the services marketed as THE TOTAL SYSTEM(SM) maintain
special clearing demand deposit accounts with Columbus Bank to facilitate the
settlement of bankcard transactions between Visa(R), MasterCard(R), TSYS and the
customers. In certain cases, with the approval of Columbus Bank, these special
clearing accounts may also be utilized by customers for other correspondent
banking transactions with Columbus Bank.
During 1995, TSYS and its subsidiaries were paid $837,354 of interest by
Columbus Bank in connection with deposit accounts with, and commercial paper
purchased from, Columbus Bank. During 1995, a subsidiary of TSYS paid Columbus
Bank $77,709 of interest in connection with a loan from Columbus Bank. These
interest rates are comparable to those in transactions between unrelated third
parties.
Effective December 28, 1990, TSYS, the Development Authority of Columbus,
Georgia, and Columbus Bank, as Trustee, consummated the issuance of, and various
banking subsidiaries of Synovus purchased, $15,000,000 of industrial development
revenue bonds, the proceeds of which were used by TSYS to acquire and construct
its 210,000 square foot North Center production facility. As a result of the
consummation of such financing, TSYS will lease its North Center facility from
the Development Authority for a period of 30 years, with the lease payments to
be paid thereon being used by the Authority to satisfy its obligations to the
purchasers of the bonds. The terms of such bonds, including the 9.75% rate of
interest to be paid thereon and the schedule upon which principal will be repaid
included therein, and the various other documents pursuant to which
25
such bonds were issued, were arrived at as a result of arm's-length negotiations
between TSYS, the Authority, the Trustee and the various subsidiary banks of
Synovus which purchased the bonds, and are no less favorable than could be
obtained from unrelated third parties. During 1995, TSYS made principal payments
of $25,000 and interest payments of $609 in connection with such bonds.
TSYS has entered into an agreement with Columbus Bank with respect to the
use of aircraft owned or leased by B&C Company, a Georgia general partnership in
which Columbus Bank and W.C. Bradley Co. are equal partners. TSYS paid Columbus
Bank $239,131 for its use of the B&C Company aircraft during 1995. The charges
payable by TSYS to Columbus Bank in connection with its use of this aircraft
approximate charges available to unrelated third parties in the State of Georgia
for use of comparable aircraft for commercial purposes.
VII. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires Synovus' officers and directors,
and persons who own more than ten percent of Synovus Common Stock, to file
reports of ownership and changes in ownership on Forms 3,4 and 5 with the SEC
and the New York Stock Exchange. Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish Synovus with
copies of all Section 16(a) forms they file.
To Synovus' knowledge, based solely on its review of the copies of such
forms received by it, and written representations from certain reporting persons
that no Forms 5 were required for those persons, Synovus believes that during
the fiscal year ended December 31, 1995 all Section 16(a) filing requirements
applicable to its officers, directors, and greater than ten percent beneficial
owners were complied with, except that Mr. Burts filed one amended Form 4
reporting late one transaction; Mr. Anthony filed two amended Forms 4 reporting
late three transactions; Mr. Blanchard filed one amended Form 4 reporting late
one transaction; and Mr. Yancey filed one amended Form 4 reporting late one
transaction. In addition, Mr. Page and Mr. Yancey each filed an amended Form 4
to correct a previously filed timely report that misstated the number of shares
of Synovus Common Stock gifted to family members.
VIII. INDEPENDENT AUDITORS
On March 1, 1996, Synovus' Board of Directors appointed KPMG Peat Marwick
LLP, Certified Public Accountants, as the independent auditors to audit the
consolidated financial statements of Synovus and its subsidiaries for the fiscal
year ending December 31, 1996. The Board of Directors knows of no direct or
material indirect financial interest by KPMG Peat Marwick LLP in Synovus or any
of its subsidiaries, or of any connection between KPMG Peat Marwick LLP and
Synovus or any of its subsidiaries, in any capacity as promoter, underwriter,
voting trustee, director, officer, shareholder or employee.
Representatives of KPMG Peat Marwick LLP, Certified Public Accountants,
will be present at Synovus' 1996 Annual Meeting with the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
IX. FINANCIAL INFORMATION WITH REFERENCE TO SYNOVUS AND ITS SUBSIDIARIES
CONTAINED IN SYNOVUS' 1995 ANNUAL REPORT
Detailed financial information for Synovus and its subsidiaries for their
1995 fiscal year is included in Synovus' 1995 Annual Report that is being mailed
to Synovus' shareholders together with this Proxy Statement.
26
X. OTHER MATTERS
As of the time of the preparation of this Proxy Statement, Synovus' Board
of Directors has not been informed of any matters to be presented by or on
behalf of Synovus' Board of Directors or its management for action at Synovus'
1996 Annual Meeting which are not referred to herein. If any other matters come
before the Annual Meeting or any adjournment thereof, it is the intention of the
persons named in the accompanying Proxy to vote thereon in accordance with their
best judgment.
Synovus' shareholders are urged to vote, date and sign the enclosed Proxy
solicited on behalf of Synovus' Board of Directors and return it at once in the
envelope which is enclosed for that purpose. This should be done whether or not
the shareholder plans to attend Synovus' 1996 Annual Meeting.
By Order of the Board of Directors
/s/James H. Blanchard
JAMES H. BLANCHARD
Chairman of the Board, Synovus Financial Corp.
Columbus, Georgia
March 8, 1996
27
SUBSIDIARIES OF SYNOVUS FINANCIAL CORP.
<TABLE>
<CAPTION>
Georgia Corporations Stock Ownership
- --------------------------------------------------------------------------------
<S> <C>
Columbus Bank and Trust Company<F1> 100%
Commercial Bank 100%
Commercial Bank and Trust Company of Troup County 100%
Security Bank and Trust Company of Albany 100%
Sumter Bank and Trust Company 100%
The Coastal Bank of Georgia 100%
First State Bank and Trust Company of Valdosta 100%
Bank of Hazlehurst 100%
Synovus Securities, Inc. 100%
The Cohutta Banking Company 100%
Bank of Coweta 100%
Citizens Bank and Trust of West Georgia 100%
First Community Bank of Tifton 100%
Synovus Data Corp. 100%
CB&T Bank of Middle Georgia 100%
Sea Island Bank 100%
1
<PAGE>
Citizens First Bank<F2> 100%
The Citizens Bank 100%
The Citizens Bank of Cochran 100%
Athens First Bank & Trust Company<F3> 100%
Citizens & Merchants State Bank 100%
Synovus Administrative Services Corp. 100%
Alabama Corporations
- --------------------
Synovus Financial Corp. of Alabama 100%
Community Bank and Trust of Southeast Alabama 100%
First Commercial Bank of Huntsville 100%
The Bank of Tuscaloosa 100%
Sterling Bank 100%
First Commercial Bank of Birmingham<F4> 100%
CB&T Bank of Russell County 100%
Florida Corporations
- --------------------
Quincy State Bank 100%
The Tallahassee State Bank 100%
Bank of Pensacola 100%
2
<PAGE>
Vanguard Bank and Trust Company 100%
First Coast Community Bank 100%
Arizona Corporations
- --------------------
Sumbank Life Insurance Company 100%
National Banking Associations
- -----------------------------
The National Bank of Walton County (GA) 100%
Peachtree National Bank (GA) 100%
First National Bank of Jasper (AL) 100%
National Bank of South Carolina (SC) 100%
<FN>
- --------
<F1> Columbus Bank and Trust Company has one majority-owned subsidiary, Total
System Services, Inc., a Georgia corporation, and one wholly-owned
subsidiary, Synovus Trust Company, a Georgia corporation. Total System
Services, Inc. has four wholly-owned subsidiaries, Columbus Depot Equipment
Company, Mailtek, Inc., Lincoln Marketing, Inc. and Columbus Productions,
Inc., all of which are Georgia corporations.
<F2> Citizens First Bank has one wholly-owned subsidiary, Citizens Service
Company, a Georgia corporation.
<F3> Athens First Bank & Trust Company has one wholly-owned subsidiary, Athena
Service Corporation, a Georgia corporation.
<F4> First Commercial Bank of Birmingham has three wholly-owned subsidiaries,
First Commercial Mortgage Corporation, First Commercial Credit Corporation
and Synvous Mortgage Corp., all of which are Alabama corporations.
</TABLE>
filings\subsid2.snv
3
<PAGE>
Accountants' Consent
The Board of Directors
Synovus Financial Corp.:
We consent to the incorporation by reference in the Registration Statements (No.
33-35926, No. 33-56614, No. 33-40738, No. 33-39845, No. 2-93472, No. 2-94639,
No. 33-77900, No. 33-77980, No. 33-79518, No. 33-89782, No. 33-90630, No.
33-90632, No. 33-91690, No. 33-60473, and No. 33-60475) on Form S-8 of Synovus
Financial Corp. of our report dated January 26, 1996, relating to the
consolidated statements of condition of Synovus Financial Corp. and subsidiaries
as of December 31, 1995 and 1994, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the years in the three-
year period ended December 31, 1995, which report appears in Synovus' 1995
Annual Report to Shareholders and is incorporated by reference in the 1995
annual report on Form 10-K of Synovus Financial Corp.
Our report dated January 26, 1996 refers to a change in the accounting for
investment securities at December 31, 1993 to adopt the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."
KPMG PEAT MARWICK LLP
Atlanta, Georgia
March 22, 1996
Accountants' Consent
The Board of Directors
Synovus Financial Corp.:
We consent to the incorporation by reference in the Registration Statements
(No. 33-42844 and No. 33-85948) on Form S-3 of Synovus Financial Corp. of our
report dated January 26, 1996, relating to the consolidated statements of
condition of Synovus Financial Corp. and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1995, which report appears in Synovus' 1995 Annual Report to
Shareholders and is incorporated by reference in the 1995 annual report on Form
10-K of Synovus Financial Corp.
Our report dated January 26, 1996 refers to a change in the accounting for
investment securities at December 31, 1993 to adopt the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."
KPMG PEAT MARWICK LLP
Atlanta, Georgia
March 22, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Synovus Financial Corp. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SYNOVUS FINANCIAL CORP.
(Registrant)
March 22, 1996 By:/s/ James H. Blanchard
----------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, James D. Yancey and
Stephen L. Burts, Jr., and each of them, his or her true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this report and to file the
same, with all exhibits and schedules thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney(s)-in-fact and agent(s) full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney(s)-in-fact and
agent(s), or their substitute(s), may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, as amended, this report has been signed by the following
persons in the capacities and on the dates indicated.
/s/ William B. Turner Date: March 22, 1996
- -----------------------------
William B. Turner,
Director and Chairman of
the Executive Committee
/s/ James H. Blanchard Date: March 22, 1996
- -----------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
/s/ John T. Oliver, Jr. Date: March 22, 1996
- -----------------------------
John T. Oliver, Jr.,
Director and Vice Chairman
of the Executive Committee
/s/ James D. Yancey Date: March 22, 1996
- -----------------------------
James D. Yancey,
Vice Chairman of the Board
/s/ Joe E. Beverly Date: March 22, 1996
- -----------------------------
Joe E. Beverly,
Vice Chairman of the Board
/s/ Richard E. Anthony Date: March 22,1996
- -----------------------------
Richard E. Anthony,
Vice Chairman of the Board
/s/ Stephen L. Burts, Jr. Date: March 22, 1996
- -----------------------------
Stephen L. Burts, Jr.,
President,
Principal Financial Officer and Director
/s/ G. Sanders Griffith, III Date: March 22, 1996
- -----------------------------
G. Sanders Griffith, III,
Senior Executive Vice President,
General Counsel and Secretary
/s/ Thomas J. Prescott Date: March 22, 1996
- -----------------------------
Thomas J. Prescott,
Executive Vice President, Treasurer and
Principal Accounting Officer
/s/ Jay C. McClung Date: March 22, 1996
- -----------------------------
Jay C. McClung,
Executive Vice President
/s/ Daniel P. Amos Date: March 22, 1996
- -----------------------------
Daniel P. Amos,
Director
/s/ Richard Y. Bradley Date: March 22, 1996
- -----------------------------
Richard Y. Bradley,
Director
/s/ Salvador Diaz-Verson, Jr. Date: March 22, 1996
- -----------------------------
Salvador Diaz-Verson, Jr.,
Director
/s/ C. Edward Floyd Date: March 22, 1996
- -----------------------------
C. Edward Floyd,
Director
/s/ Gardiner W. Garrard, Jr. Date: March 22, 1996
- -----------------------------
Gardiner W. Garrard, Jr.,
Director
/s/ V. Nathaniel Hansford Date: March 22, 1996
- -----------------------------
V. Nathaniel Hansford,
Director
/s/ Mason H. Lampton Date: March 22, 1996
- -----------------------------
Mason H. Lampton,
Director
/s/ John L. Moulton Date: March 22, 1996
- -----------------------------
John L. Moulton,
Director
/s/ Elizabeth C. Ogie Date: March 22, 1996
- -----------------------------
Elizabeth C. Ogie,
Director
/s/ William L. Pherigo Date: March 22, 1996
- -----------------------------
Wiliam L. Pherigo,
Director
/s/ Robert V. Royall, Jr. Date: March 22, 1996
- -----------------------------
Robert V. Royall, Jr.,
Director
/s/H. Lynn Page Date: March 22, 1996
- -----------------------------
H. Lynn Page,
Director
/s/ George C. Woodruff, Jr. Date: March 22, 1996
- -----------------------------
George C. Woodruff, Jr.,
Director
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYNOVUS FINANCIAL CORP. FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000018349
<NAME> SYNOVUS FINANCIAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 382,696
<INT-BEARING-DEPOSITS> 1,093
<FED-FUNDS-SOLD> 123,832
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,106,298
<INVESTMENTS-CARRYING> 380,918
<INVESTMENTS-MARKET> 386,579
<LOANS> 5,512,030
<ALLOWANCE> 81,384
<TOTAL-ASSETS> 7,927,595
<DEPOSITS> 6,727,879
<SHORT-TERM> 229,477
<LIABILITIES-OTHER> 142,079
<LONG-TERM> 106,815
0
0
<COMMON> 77,281
<OTHER-SE> 616,274
<TOTAL-LIABILITIES-AND-EQUITY> 7,927,595
<INTEREST-LOAN> 525,080
<INTEREST-INVEST> 84,595
<INTEREST-OTHER> 6,113
<INTEREST-TOTAL> 615,788
<INTEREST-DEPOSIT> 253,761
<INTEREST-EXPENSE> 273,913
<INTEREST-INCOME-NET> 341,875
<LOAN-LOSSES> 25,787
<SECURITIES-GAINS> 368
<EXPENSE-OTHER> 477,453
<INCOME-PRETAX> 179,469
<INCOME-PRE-EXTRAORDINARY> 114,583
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,583
<EPS-PRIMARY> 1.00<F1>
<EPS-DILUTED> 1.00<F1>
<YIELD-ACTUAL> 5.15
<LOANS-NON> 23,202
<LOANS-PAST> 11,417
<LOANS-TROUBLED> 80,131
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 75,018
<CHARGE-OFFS> 24,932
<RECOVERIES> 4,510
<ALLOWANCE-CLOSE> 81,384
<ALLOWANCE-DOMESTIC> 18,936
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 62,448
<FN>
<F1> ON MARCH 11, 1996 SYNOVUS FINANCIAL CORP. ANNOUNCED A THREE-FOR-TWO STOCK
SPLIT EFFECTIVE APRIL 8, 1996 TO SHAREHOLDERS OF RECORD AS OF MARCH 21,
1996. PER SHARE DATA HAS BEEN RETROACTIVELY RESTATED TO REFLECT THE
ADDITIONAL SHARES OUTSTANDING RESULTING FROM THE STOCK SPLIT.
</FN>
</TABLE>
