Item 1. Business
Business and Business Segments
Synovus is a $14.9 billion asset financial services company which is a registered bank holding company. Synovus conducts a broad range of financial services through its banking and non-banking subsidiaries at more than 200 locations. Synovus is based in Columbus, Georgia and its stock is traded on the New York Stock Exchange under the symbol "SNV."
Synovus is engaged in two reportable business segments: banking (which is primarily involved in commercial banking activities and also provides retail banking, trust services, mortgage banking, securities brokerage and insurance services), and transaction processing (which includes consumer credit, debit, commercial, retail and stored value card processing and related services as well as debt collection and bankruptcy management services and the provision of software solutions for commercial card management programs). See Note 16 of Notes to Consolidated Financial Statements on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which is specifically incorporated herein by reference.
Banking and Bank-Related Subsidiaries and Services
Synovus currently has 39 wholly owned first and second tier banking subsidiaries located in four states (the "Banks"). Of the 39 bank subsidiaries, 26 are located in Georgia (including an internet only bank which offers stored value card products) and earn 61% of banking operations' revenues, seven are located in Alabama and earn 18% of banking operations' revenues, one is located in South Carolina and earns 14% of banking operations' revenues and five are located in Florida and earn 7% of banking operations' revenues.
The Banks offer commercial banking services, including commercial, financial, agricultural and real estate loans, and retail banking services, including accepting customary types of demand and savings deposits, making individual, consumer, 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, leasing services automated banking and electronic switch services, automated fund transfers and bank credit card services, including MasterCard and Visa services.
The bank-related wholly owned subsidiaries of Synovus are: (1) Synovus Securities, Inc., Columbus, Georgia, 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 services; (4) Synovus Insurance Services, Columbus, Georgia, which offers insurance agency services; and (5) Creative Financial Group, LTD. and R.A. Securities, Inc., Atlanta, Georgia, which provide financial planning services.
Transaction Processing and Other Affiliates and Services
Synovus has two wholly owned subsidiaries included in the transaction processing services segment: (1) ProCard, Inc., Golden, Colorado, which offers software solutions for commercial card management programs; and (2) TSYS Total Debt Management, Inc., Atlanta, Georgia, which provides debt collection and bankruptcy management services.
Total System Services, Inc.
Business. Established in 1983 as an outgrowth of an on-line accounting and bankcard data processing system developed for Synovus' subsidiary, Columbus Bank and Trust Company, Total System Services, Inc. ("TSYS") is now one of the world's largest electronic payments processors of consumer credit, debit, commercial, stored value and retail cards. Based in Columbus, Georgia, and traded on the New York Stock Exchange under the symbol "TSS," TSYS provides the electronic link between buyers and sellers with a comprehensive on-line system of data processing services servicing issuing institutions throughout the United States, Canada, Mexico, Honduras and the Caribbean, representing more than 195 million cardholder accounts on file as of December 31, 2000. TSYS will begin offering its services to financial institutions in Europe in 2001 and currently offers merchant services to financial institutions and other organizations in Japan. TSYS also offers value added products and services, such as credit evaluation, fraud control and marketing, to support its core processing services. Synovus owns 80.8 percent of TSYS.
TSYS has five wholly owned subsidiaries: (1) Columbus Depot Equipment Company, which sells and leases computer related equipment associated with TSYS' transaction processing services; (2) TSYS Total Solutions, Inc., which provides mail and correspondence processing services, teleservicing, data documentation capabilities, offset printing, customer service, collections and account solicitation services; (3) Columbus Productions, Inc., which provides full-service commercial printing and related services; (4) TSYS Canada, Inc., which provides programming support and assistance with the conversion of card portfolios to TS2; and (5) DotsConnect, Inc., which delivers e-payments software that allows buyers and sellers to conduct commerce electronically.
TSYS also holds: (1) a 49% equity interest in a joint venture company named Total System Services de Mexico, S.A. de C.V., which provides credit card related processing services to Mexican banks; (2) a 50% interest in Vital Processing Services L.L.C., a joint venture with Visa U.S.A. Inc., that offers fully integrated merchant transaction and related electronic information services to financial and nonfinancial institutions and their merchant customers; and (3) a 53% equity interest in GP Network Corporation, a company which provides merchant processing services to financial institutions and retailers in Japan.
Seasonality. Due to the seasonal nature of the credit card industry, TSYS' revenues and results of operations have generally increased in the fourth quarter of each year because of increased transaction and authorization volumes during the traditional holiday shopping season.
Major Customers. A significant amount of TSYS' revenues are derived from long-term contracts with significant customers, including certain major customers. For the year ended December 31, 2000, Bank of America Corporation, Providian Financial Corporation and Sears Roebuck & Co. accounted for approximately 15%, 11% and 10%, respectively, of TSYS' total revenues. As a result, the loss of Bank of America Corporation, Providian Financial Corporation or Sears Roebuck & Co., or other major or significant customers, could have a material adverse effect on TSYS' financial condition and results of operations.
See "Non-Interest Income" under the "Financial Review" Section on pages through, "Non-Interest Expense" under the "Financial Review" Section on pages and, and Note 16 of Notes to Consolidated Financial Statements on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
Service Marks
Synovus owns the federally registered service marks of Synovus Financial Corp., Synovus, the stylized S logo, Synovus Mortgage Corp., Synovus Securities, Inc. and Synovus Trust Company. Synovus also owns additional registered service marks and 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.
TSYS owns the federally registered service marks TSYS, TS2, Total System Services, Inc., THE TOTAL SYSTEM and TSYS Total Solutions, to which TSYS believes strong customer identification attaches. TSYS also owns additional registered service marks and other service marks. Management does not believe the loss of such marks would have a material impact on the business of TSYS.
Acquisitions
Synovus has pursued a strategy of acquiring banks and financial services companies which are used to augment Synovus' internal growth. See Note 2 of Notes to Consolidated Financial Statements on pages and and "Acquisitions" under the "Financial Review" Section on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
Supervision, Regulation and Other Factors
General. Synovus is a registered bank holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System ("Board") under the Bank Holding Company Act ("BHC Act"), and by the Georgia Banking Department under the bank holding company laws of the State of Georgia. Synovus' affiliate national banking associations are subject to regulation and examination primarily by the Office of the Comptroller of the Currency ("OCC") and, secondarily, by the Federal Deposit Insurance Corporation ("FDIC") and
the Board. Synovus' state-chartered banks are subject to primary federal regulation and examination by the FDIC and, in addition, are regulated and examined by their respective state banking departments. Numerous other federal and state laws, as well as regulations promulgated by the Board , the state banking regulators, the OCC and the FDIC govern almost all aspects of the operations of the Banks. Various federal and state bodies regulate and supervise Synovus' non-banking subsidiaries including its brokerage, investment advisory, insurance agency and processing operations. These include, but are not limited to, the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., federal and state banking regulators and various state regulators of insurance and brokerage activities.
Recent Legislation. On November 12, 1999, former President Clinton signed into law legislation that allows bank holding companies to engage in a wider range of non-banking activities, including greater authority to engage in securities and insurance activities. Under the Gramm-Leach-Bliley Act (the "Act"), a bank holding company that elects to become a financial holding company may engage in any activity that the Board, in consultation with the Secretary of the Treasury, determines by regulation or order is: (1) financial in nature; (2) incidental to any such financial activity; or (3) complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. This Act makes significant changes in U.S. banking law, principally by repealing certain restrictive provisions of the 1933 Glass-Steagall Act. The Act specifies certain activities that are deemed to be financial in nature, including lending, exchanging, transferring, investing for others, or safeguarding money or securities; underwriting and selling insurance; providing financial, investment, or economic advisory services; underwriting, dealing in or making a market in, securities; and any activity currently permitted for bank holding companies by the Board under Section 4(c)(8) of the BHC Act. The Act does not authorize banks or their affiliates to engage in commercial activities that are not financial in nature. A bank holding company may elect to be treated as a financial holding company only if all depository institution subsidiaries of the holding company are well-capitalized, well-managed and have at least a satisfactory rating under the Community Reinvestment Act. Synovus became a financial holding company in April 2000.
National banks are also authorized by the Act to engage, through "financial subsidiaries," in any activity that is permissible for a financial holding company (as described above) and any activity that the Secretary of the Treasury, in consultation with the Board, determines is financial in nature or incidental to any such financial activity, except: (1) insurance underwriting; (2) real estate development or real estate investment activities (unless otherwise permitted by law); (3) insurance company portfolio investments; and (4) merchant banking. The authority of a national bank to invest in a financial subsidiary is subject to a number of conditions, including, among other things, requirements that the bank must be well-managed and well-capitalized (after deducting from the bank's capital outstanding investments in financial subsidiaries). The Act provides that state banks may invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law) subject to the same conditions that apply to national bank investments in financial subsidiaries.
In addition to the Act, there have been a number of legislative and regulatory proposals
that would have an impact on bank/financial holding companies and their bank and non-bank subsidiaries. It is impossible to predict whether or in what form these proposals may be adopted in the future and if adopted, what their effect will be on Synovus.
Pooling-of-Interests Accounting. In 1999 the Financial Accounting Standards Board ("FASB") published an Exposure Draft, Business Combinations and Intangible Assets, which would have prohibited the use of the pooling-of-interests method of accounting for business combinations initiated after the issuance date of the final Statement. The Exposure Draft would have also reduced the 40-year maximum amortization period for goodwill to 20 years and replaced the 40-year maximum amortization period for intangible assets other than goodwill with the presumption that the useful economic life is 20 years or less. However, it would have required that an identifiable intangible asset that is determined to have an indefinite economic life and an observable market value not be amortized.
During February 2001, the FASB issued a revised Exposure Draft which contains the FASB's tentative decisions requiring use of a nonamortization approach to account for purchased goodwill. Under this revised approach, goodwill would not be amortized to earnings. Instead, it would be reviewed for impairment and written down and expensed against earnings only in the periods in which the recorded value of the goodwill exceeded its implied fair value. In addition, the FASB reconfirmed the proposals to prohibit use of the pooling-of-interest method for transactions initiated after issuance of the final Statement. Currently, the revised Exposure Draft is issued for public comments. The FASB expects to issue a final Statement during the second quarter of 2001.
Dividends. Under the laws of the State of Georgia, Synovus, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in its Articles of Incorporation, and unless, after payment of the dividend, it would not be able to pay its debts when they become due in the usual course of its businesses or its total assets would be less than the sum of its total liabilities. Synovus is also subject to certain contractual and regulatory capital restrictions that limit the amount of cash dividends that Synovus may pay.
The primary sources of funds for Synovus' payment of dividends to its shareholders are dividends and fees to Synovus from its banking and nonbanking affiliates. Various federal and state statutory provisions and regulations limit the amount of dividends that the subsidiary banks of Synovus may pay. Pursuant to the regulations of the Georgia Banking Department, a Georgia bank must have approval of the Georgia Banking Department to pay cash dividends if, at the time of such payment: (i) the ratio of Tier 1 Capital to its adjusted total assets is less than 6%; (ii) the aggregate amount of dividends to be declared or anticipated to be declared during the current calendar year exceeds 50% of its net after-tax profit for the previous calendar year; or (iii) its total classified assets in its most recent regulatory examination exceeded 80% of its Tier 1 Capital plus its allowance for loan losses as reflected in the examination. In general, the approval of the Alabama Banking Department and the Florida Banking Department, as applicable, is required if the total of all dividends declared by an Alabama or Florida bank, as the case may be, in any year would exceed the total of its net profits (as defined) for that year
combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank's retained net income (as defined) for the current year plus retained net income for the preceding two years.
Federal and state banking regulations applicable to Synovus and its banking subsidiaries require minimum levels of capital which limit the amounts available for payment of dividends. See "Parent Company" under the "Financial Review" Section on page and Note 11 of Notes to Consolidated Financial Statements on pages and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
Capital Requirements. Synovus is required to comply with the capital adequacy standards established by the Board and its banking subsidiaries must comply with similar capital adequacy standards established by the OCC and FDIC, as applicable. There are two basic measures of capital adequacy for bank holding companies and their banking subsidiaries that have been promulgated by the Board, the FDIC and the OCC: a risk-based measure and a leverage measure. All applicable capital standards must be satisfied for a bank holding company or a bank to be considered in compliance. See "Capital Resources" and "Dividends" under the "Financial Review" Section on pages and and Note 11 of Notes to Consolidated Financial Statements on pages and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on the taking of brokered deposits, and certain other restrictions on its business. As described below, substantial additional restrictions can be imposed upon FDIC insured depository institutions that fail to meet applicable capital requirements. See "Prompt Corrective Action."
Commitments to Subsidiary Banks. Under the Board's 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.
In the event of Synovus' bankruptcy, any commitment by Synovus to a federal bank regulatory agency to maintain the capital of a banking subsidiary will be assumed by the bankruptcy trustee and entitled to a priority of payment. In addition, the Federal Deposit Insurance Act provides that any financial institution whose deposits are insured by the FDIC generally shall be liable for any loss incurred by the FDIC in connection with the default of, or any assistance provided by the FDIC to, a commonly controlled financial institution.
Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. Under this system the federal banking regulators are required to rate supervised institutions on the basis of five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and to take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions in the three undercapitalized categories, the severity of which will depend upon the capital category in which the institution is placed. Generally, subject to a narrow exception, FDICIA requires the banking regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.
Pursuant to FDICIA, the Board, the FDIC, the OCC and the Office of Thrift Supervision ("OTS") have adopted regulations setting forth a five-tier scheme for measuring the capital adequacy of the financial institutions they supervise. Under the regulations, an institution would be placed in one of the following capital categories: (i) well capitalized (an institution that has a Total Capital ratio of at least 10%, a Tier 1 Capital ratio of at least 6% and a Tier 1 Leverage Ratio of at least 5%); (ii) adequately capitalized (an institution that has a Total Capital ratio of at least 8%, a Tier 1 Capital ratio of at least 4% and a Tier 1 Leverage Ratio of at least 4%); (iii) undercapitalized (an institution that has a Total Capital ratio of under 8%, a Tier 1 Capital ratio of under 4% or a Tier 1 Leverage Ratio of under 4%); (iv) significantly undercapitalized (an institution that has a Total Capital ratio of under 6%, a Tier 1 Capital ratio of under 3% or a Tier 1 Leverage Ratio of under 3%); and (v) critically undercapitalized (an institution whose tangible equity is not greater than 2% of total tangible assets). The regulations permit the appropriate federal banking regulator to downgrade an institution to the next lower category if the regulator determines (i) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (ii) that the institution has received (and not corrected) a less-than-satisfactory rating for any of the categories of asset quality, management, earnings or liquidity in its most recent examination. Supervisory actions by the appropriate federal banking regulator depend upon an institution's classification within the five categories. Synovus' management believes that Synovus and its significant bank subsidiaries have the requisite capital levels to qualify as well capitalized institutions under the FDICIA regulations. See Note 11 of Notes to Consolidated Financial Statements on pages and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which is specifically incorporated herein by reference.
FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions are subject to growth limitations and are required to submit capital restoration plans. A depository institution's holding company must guarantee the capital plan, up to an amount equal to the lesser of 5% of the depository institution's assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan. Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository institution's capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator.
Safety and Soundness Standards. The Federal Deposit Insurance Act, as amended by FDICIA and the Riegle Community Development and Regulatory Improvement Act of 1994, requires the federal bank regulatory agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits and such other operational and managerial standards as the agencies deem appropriate. The federal bank regulatory agencies have adopted a set of guidelines prescribing safety and soundness standards pursuant to FDICIA. The guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. The guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal stockholders. The federal banking agencies determined that stock valuation standards were not appropriate. In addition, the agencies adopted regulations that authorize, but do not require, an agency to order an institution that has been given notice by an agency that it is not satisfying any of such safety and soundness standards to submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the prompt corrective action provisions of FDICIA. See "Prompt Corrective Action." If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties.
Depositor Preference Statute. Legislation has been enacted providing that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution would be afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the "liquidation or other resolution" of such an institution by any receiver.
TSYS. TSYS is subject to being examined, and is indirectly regulated, by federal and state financial institution regulatory agencies which regulate the financial institutions for which TSYS provides bankcard data processing services. Matters reviewed and examined by these
federal and state financial institution regulatory agencies have included TSYS' internal controls in connection with its present performance of bankcard data processing services, and the agreements pursuant to which TSYS provides such services.
As the Federal Reserve Bank of Atlanta has approved Synovus' indirect ownership of TSYS through Columbus Bank and Trust Company, TSYS is subject to direct regulation by the Board. TSYS was formed with the prior written approval of, and is subject to regulation and examination by, the Georgia Banking Department as a subsidiary of Columbus Bank and Trust Company. In addition, as TSYS and its subsidiaries operate as subsidiaries of Columbus Bank and Trust Company, they are subject to regulation by the FDIC.
Employees
On December 31, 2000, Synovus had 9,672 full time employees, 4,542 of whom are employees of TSYS.
Competition
Banking. The commercial banking business is highly competitive and the Banks compete actively with national and state banks for deposits, loans and trust accounts, and with savings and loan associations and credit unions for deposits and loans. In addition, Synovus and its banks and bank related subsidiaries compete with other financial institutions, including securities brokers and dealers, personal loan companies, insurance companies, finance companies, leasing companies, mortgage companies and certain governmental agencies, all of which actively engage in marketing various types of loans, deposit accounts and other services.
As of December 31, 2000, Synovus was the second largest bank holding company headquartered in Georgia, based on assets. Customers for banking services are generally influenced by convenience, quality of service, personal contacts, price of services and availability of products. Although the market share of Synovus varies in different markets, Synovus believes that its affiliates effectively compete with other banks and thrifts in their relevant market areas.
Transaction Processing. TSYS encounters vigorous competition in providing card processing services from several different sources. The national market in third party card processors is presently being provided by approximately seven vendors. TSYS believes that it is the second largest third party card processor in the United States. In addition, TSYS competes with in-house processors and with 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 card associations, data processing and card computer service firms and other such third party vendors located throughout the United States. Based upon available market share data, TSYS estimates that at the end of 2000 it held a 25% share of the domestic consumer card processing market, an 87% share of the Visa and MasterCard domestic commercial card processing market, a 17% share of the domestic retail card processing market and a 2% share of the domestic off-line debit processing market. In addition to processing cards for United States clients, TSYS also holds an approximately 42% market share
of the Mexican card processing market and an approximately 20% market share of the Canadian card processing market.
TSYS' major competitor in the card processing industry is First Data Resources, Inc., a wholly owned subsidiary of First Data Corporation, which is headquartered in Omaha, Nebraska, and provides card processing services, including authorization and data entry services. The principal methods of competition between TSYS and First Data Resources are price, quality, features and functionality, and reliability of service. Certain other subsidiaries of First Data Corporation also compete with TSYS. 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 through and the "Summary of Quarterly Financial Data" Section which is set forth on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001, which includes the information encompassed within "Selected Statistical Information," are specifically incorporated herein by reference.
Item 2.
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.
Synovus and its banking and bank related subsidiaries own 247 facilities encompassing approximately 1,938,744 square feet and lease 41 facilities encompassing approximately 259,761 square feet.
See Note 7 and Note 10 of Notes to Consolidated Financial Statements on pages through of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
TSYS owns a 377,000 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, purchasing and card production, as well as other related operations.
TSYS owns a 110,000 square foot building on a 23 acre site in Columbus, Georgia, which accommodates current and future office space needs. TSYS also owns a 104,000 square foot building on an 18 acre site in Columbus which functions as a second data center.
TSYS entered into an operating lease for the purpose of financing its 540,000 square foot new campus type facility on approximately 46 acres of land in downtown Columbus, Georgia. The campus facility serves as TSYS' corporate headquarters and houses administrative, client contact and programming team members. The campus facility consolidated most of TSYS' multiple Columbus locations.
Item 3.
Item 3. Legal Proceedings
See Note 10 of Notes to Consolidated Financial Statements on pages through of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which is specifically incorporated herein by reference.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
Item 5.
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 are set forth on pages and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which are specifically incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data
The "Selected Financial Data" Section which is set forth on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 is specifically incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The "Financial Review" Section which is set forth on pages through and the "Summary of Quarterly Financial Data" Section which is set forth on page of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001, which include the information encompassed by "Management's Discussion and Analysis of Financial Condition and Results of Operations," are specifically incorporated herein by reference.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See "Market Risk" under the "Financial Review" Section which is set forth on pages and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 which is specifically incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data
The "Summary of Quarterly Financial Data" Section which is set forth on page and the "Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, Notes to Consolidated Financial Statements and Independent Auditors' Report" Sections which are set forth on pages through and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 are specifically incorporated herein by reference.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The "ELECTION OF DIRECTORS" Section which is set forth on pages 3 through 6, the "EXECUTIVE OFFICERS" Section which is set forth on page 9 and the "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE SECTION" which is set forth on page 27 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 are specifically incorporated herein by reference.
Item 11.
Item 11. Executive Compensation
The "DIRECTORS' COMPENSATION" Section which is set forth on pages 8 and 9, the "EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option Exercises and Grants; and Employment Contracts and Change in Control Arrangements" Sections which are set forth on pages 13 through 16 and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" Section which is set forth on pages 19 and 20 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 are specifically incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The "STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS" Section
which is set forth on pages 9 through 11, the "PRINCIPAL SHAREHOLDERS" Section which is set forth on pages 21 through 23, and the "RELATIONSHIPS BETWEEN SYNOVUS, COLUMBUS BANK, TSYS AND CERTAIN OF SYNOVUS' SUBSIDIARIES AND AFFILIATES - - TSYS Stock Ownership of Directors and Management" Section which is set forth on pages 24 and 25 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 are specifically incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions
The "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 Stock by Columbus Bank" Section which is set forth on page 24, 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 24, 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 25 through 27 of Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001 are specifically incorporated herein by reference.
Part IV
Item 14.
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 through and of the Financial Appendix to Synovus' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 25, 2001, in response to Item 8, Part II, Financial Statements and Supplementary Data.
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Income - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Changes in Shareholders' Equity - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows - Years Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements - December 31, 2000, 1999 and 1998
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 Exchange Commission on July 23, 1990 (File No. 33-35926).
3.2 Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 4.2 of Synovus' Registration Statement on Form S-8 filed with the Securities and Exchange Commission on May 31, 2000 (File No. 333-38232).
4.1 Form of Rights Agreement incorporated by reference to Exhibit 4.1 of Synovus' Registration Statement on Form 8- A dated April 28, 1999 filed with the Commission on April 28, 1999 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 Agreement of 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 10.3 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the Commission on March 22, 2000.
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. 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 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 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. 1994 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. incorporated by reference to Exhibit 10.17 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 25, 1996.
10.18 Synovus Financial Corp. Executive Bonus Plan incorporated by reference to Exhibit 10.18 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the
Commission on March 25, 1996.
10.19 Change of Control Agreements incorporated by reference to Exhibit 10.19 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 25, 1996.
10.20 Consulting Agreement of Joe E. Beverly incorporated by reference to Exhibit 10.20 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as filed with the Commission on March 6, 1997.
10.21 Employment Agreement of James H. Blanchard incorporated by reference to Exhibit 10 of Synovus' Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, as filed with the Commission on November 15, 1999.
10.22 Synovus Financial Corp. 2000 Long-Term Incentive Plan incorporated by reference to Exhibit 10.22 of Synovus' Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the Commission on March 22, 2000.
20.1 Proxy Statement, including Financial Appendix, for the Annual Meeting of Shareholders of Synovus to be held on April 25, 2001, 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 2000 Annual Report on Form 10-K.
99.1 Annual Report on Form 11-K for the Synovus Financial Corp. Employee Stock Purchase Plan for the year ended December 31, 2000 (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, 2000 (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 19, 2000, Synovus filed a Form 8-K with the Commission in connection with the announcement of its earnings, and the earnings of Total System Services, Inc., for the third quarter of 2000.
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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 16, 2001 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 Richard E. Anthony, 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 16, 2001 - -------------------------------------------- William B. Turner, Director and Chairman of the Executive Committee
/s/James H. Blanchard Date: March 16, 2001 - -------------------------------------------- James H. Blanchard, Chairman of the Board and Principal Executive Officer
/s/James D. Yancey Date: March 16, 2001 - -------------------------------------------- James D. Yancey, President and Director
/s/Richard E. Anthony Date: March 16, 2001 - -------------------------------------------- Richard E. Anthony, Vice Chairman of the Board
/s/Walter M. Deriso, Jr. Date: March 16, 2001 - -------------------------------------------- Walter M. Deriso, Jr., Vice Chairman of the Board
/s/Thomas J. Prescott Date: March 16, 2001 - -------------------------------------------- Thomas J. Prescott, Executive Vice President, Treasurer, Principal Accounting and Financial Officer
/s/Joe E. Beverly Date: March 16, 2001 - -------------------------------------------- Joe E. Beverly, Director
/s/Richard Y. Bradley Date: March 16, 2001 - -------------------------------------------- Richard Y. Bradley, Director
/s/C. Edward Floyd Date: March 16, 2001 - -------------------------------------------- C. Edward Floyd, Director
/s/Gardiner W. Garrard, Jr. Date: March 16, 2001 - -------------------------------------------- Gardiner W. Garrard, Jr., Director
/s/V. Nathaniel Hansford Date: March 16, 2001 - -------------------------------------------- V. Nathaniel Hansford, Director
/s/John P. Illges, III Date: March 16, 2001 - --------------------------------------------- John P. Illges, III, Director
/s/Mason H. Lampton Date: March 16, 2001 - -------------------------------------------- Mason H. Lampton, Director
/s/Elizabeth C. Ogie Date: March 16, 2001 - -------------------------------------------- Elizabeth C. Ogie, Director
/s/H. Lynn Page Date: March 16, 2001 - -------------------------------------------- H. Lynn Page, Director
/s/Robert V. Royall Date: March 16, 2001 - -------------------------------------------- Robert V. Royall, Director
/s/Melvin T. Stith Date: March 16, 2001 - -------------------------------------------- Melvin T. Stith, Director
Date: - -------------------------------------------- Alfred W. Jones III, Director
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