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

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

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

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

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

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

(8) the concentration of our nonperforming assets in certain geographic regions and with affiliated borrowing groups;

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

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

(11) restrictions or limitations on access to funds from subsidiaries, thereby restricting our ability to make payments on our obligations or dividend payments;

(12) the availability and cost of capital and liquidity;

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

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

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

(16) the impact of future losses on our deferred tax assets and the impact on our financial results of changes in the valuation allowance for our deferred tax assets in future periods;

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

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

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

(20) the impact of the Emergency Economic Stabilization Act of 2008 (EESA), the American Recovery and Reinvestment Act (ARRA), the Financial Stability Plan and other recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation of banks and financial institutions, or the interpretation or application thereof, including restrictions, increased capital requirements, limitations and/or penalties arising from banking, securities and insurance laws, regulations and examinations;

(21) the impact on our financial results, reputation and business if we are unable to comply with all applicable federal and state regulations;

(22) the costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, including, without limitation, the pending litigation with CompuCredit Corporation relating to CB&T's Affinity Agreement with CompuCredit and the pending securities class action litigation filed against Synovus;

(23) the volatility of our stock price;

(24) the actual results achieved by our implementation of Project Optimus, and the risk that we may not achieve the anticipated cost savings and revenue increases from this initiative;

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

(26) other factors and other information contained in this document and in other reports and filings that Synovus makes with the SEC under the Exchange Act.

All written or oral forward-looking statements that are made by or are attributable to Synovus are expressly qualified by this cautionary notice. You should not place undue reliance on any forward-looking statements, since those statements speak only as of the date on which the statements are made. Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.

Executive Summary
The following financial review provides a discussion of Synovus' financial condition, changes in financial condition, and results of operations for the six and three months ended June 30, 2009.
Industry Overview
The first six months of 2009 continue to reflect the adverse impact of severe macro economic conditions which have negatively impacted liquidity and credit quality. Concerns regarding increased credit losses from the weakening economy have negatively affected capital and earnings of most financial institutions. Financial institutions continue to experience significant declines in the value of collateral for real estate loans and heightened credit losses, which have resulted in record levels of non-performing assets, charge-offs and foreclosures.
Liquidity in the debt markets remains low in spite of efforts by the U.S. Department of the Treasury (Treasury) and the Federal Reserve Bank (Federal Reserve) to inject capital into financial institutions. The federal funds rate set by the Federal Reserve has remained at 0.25% since December 2008, following a decline from 4.25% to 0.25% during 2008 through a series of seven rate reductions.
Treasury, the FDIC and other governmental agencies continue to enact rules and regulations to implement the EESA, the Troubled Asset Relief Program (TARP), the Financial Stability Plan, the ARRA and related economic recovery programs, many of which contain limitations on the ability of financial institutions to take certain actions or to engage in certain activities if the financial institution is a participant in the TARP Capital Purchase Program or related programs. Future regulations, or enforcement of the terms of programs already in place, may require financial institutions to raise additional capital and result in the conversion of preferred equity issued under TARP or other programs to common equity. There can be no assurance as to the actual impact of the EESA, the FDIC programs or any other governmental program on the financial markets. On May 7, 2009, the Federal Reserve Board announced the results of the Supervisory Capital Assessment Program ("SCAP"), commonly referred to as the "stress test," of the capital needs through the end of 2010 of the nineteen largest U.S. bank holding companies. As a result of the SCAP, a number of the bank holding companies reviewed as part of the SCAP were required, or voluntarily chose, to raise additional Tier 1 capital, particularly common equity. Following the release of the SCAP results, bank holding companies that were not part of the SCAP, such as Synovus, have faced significant speculation as to the results of the stress tests performed on the largest nineteen financial institutions and the hypothetical results of the stress test methodology if it was applied to other financial institutions, including regional banks smaller in size. See "Capital Resources and Liquidity". The severe economic conditions are expected to continue through 2009 and beyond. Financial institutions likely will continue to experience heightened credit losses and higher levels of non-performing assets, charge-offs and foreclosures. In light of these conditions, financial institutions also face heightened levels of scrutiny from federal and state regulators. These factors negatively influenced, and likely will continue to negatively influence, earning asset yields at a time when the market for deposits is intensely competitive. As a result, financial institutions experienced, and are expected to continue to experience, pressure on credit costs, loan yields, deposit and other borrowing costs, liquidity, and capital.

About Our Business
Synovus is a financial services holding company based in Columbus, Georgia, with approximately $34 billion in assets. Synovus provides integrated financial services including banking, financial management, insurance, mortgage, and leasing services through 30 wholly-owned subsidiary banks and other Synovus offices in Georgia, Alabama, South Carolina, Tennessee, and Florida. At June 30, 2009, our banks ranged in size from $261.1 million to $6.63 billion in total assets.
Our Key Financial Performance Indicators In terms of how we measure success in our business, the following are our key financial performance indicators:
• Capital Strength

• Liquidity

• Credit Quality

• Net Interest Margin

• Loan Growth

• Core Deposit Growth

• Fee Income Growth

• Expense Management

The net loss for the quarter was $586.9 million, or $1.82 per common share. The results for the second quarter were impacted by a non-cash charge of $173.4 million to record an increase in the valuation allowance for deferred tax assets. Total credit costs for the quarter ended June 30, 2009 were $807.8 million, including provision for losses on loans of $631.5 million and costs related to foreclosed real estate of $172.4 million. The credit costs were largely driven by a significant increase in the allowance for loan losses as well as the impact of losses on liquidations of non-performing assets. Non-performing assets decreased $15.0 million from the first quarter of 2009 as dispositions of non-performing assets reached $404 million in the second quarter.
Synovus' operating results excluding credit costs showed improvement in spite of the challenging economic environment. Synovus' pre-tax, pre-credit costs income (which excludes provision for losses on loans, credit costs, and certain other items, as shown in more detail on page 75 of this report) was $144.8 million, up $15.6 million over the first quarter of 2009. The net interest margin increased to 3.23%, or eighteen basis points, compared to the first quarter of 2009.

A summary of Synovus' financial performance for the three and six months ended June 30, 2009 and 2008, is set forth in the table below.

Financial Performance Summary

                                                   Six Months Ended                                       Three Months Ended
                                                       June 30,                                                June 30,
(in thousands, except per share data)           2009               2008             Change              2009               2008             Change
Pre-tax, pre-credit costs income (1)        $  274,101            346,515            (20.9 %)       $  144,835            176,092            (17.8 %)
Net Income (loss)                             (720,981 )           94,790             nm              (584,253 )           12,237             nm
Net income (loss) available to common
shareholders                                  (752,018 )           93,093             nm              (601,155 )          (12,099 )           nm
Diluted earnings (loss) per share
(EPS)                                            (2.28 )             0.28             nm                 (1.82 )             0.04             nm
Provision for losses on loans                  921,963            184,665            399.3 %           631,526             93,616            574.6 %

Non-interest income                            196,588            247,675            (20.6 %)          107,838            107,698              0.1 %

Non-interest expense                           659,674            467,338             41.2 %           396,316            265,964             49.0 %
Fundamental non-interest
expense (1)(2)                                 381,749            405,446             (5.8 %)          190,696            200,284             (4.8 %)

Other credit costs (3)                         230,585             38,829             nm               176,308             29,686             nm



                                                                                   Sequential
                                          June 30,             March 31,             Quarter             June 30,           Year Over Year
                                            2009                  2009             Change (4)              2008                 Change
Loans, net of unearned income          $ 27,585,741            27,730,272               (2.1 %)       $ 27,445,891                  0.5 %
Non-performing assets                     1,736,173             1,751,185               (3.4 %)            830,264                109.1 %
Core deposits (1)                        22,429,172            22,689,145               (4.6 %)         21,441,050                  4.6 %

Net interest margin                            3.23 %                3.05 %           18 bp                   3.57 %            (34) bp
Nonperforming assets ratio                     6.24                  6.25            (1) bp                   3.00              324 bp
Loans past due over 90 days and
still accruing interest                        0.11                  0.11             0 bp                    0.14              (3) bp
Total past due loans and still
accruing interest                              1.20                  2.12            (92) bp                  1.33              (13) bp
Net charge-off ratio (quarter)                 5.09                  3.53            156 bp                   1.04              405 bp
Net charge-off ratio (ytd)                     4.31                  3.53             78 bp                   1.18              313 bp

Tier 1 capital                         $  2,862,225             3,454,987              (68.8 %)       $  2,891,831                 (1.0 %)
Tier 1 common equity                      1,928,370             2,523,119              (95.0 %)          2,881,634                (33.2 %)
Total risk-based capital                  3,836,405             4,440,573              (54.5 %)          3,987,595                 (3.8 %)
Tier 1 capital ratio                           9.53 %               11.06 %         (153) bp                  8.91 %             62 bp
Tier 1 common equity ratio                     6.42                  8.08           (166) bp                  8.88             (246) bp
Total risk-based capital ratio                12.77                 14.22           (145) bp                 12.29               48 bp
Tangible common equity to
tangible assets (1)                            6.05                  7.80           (175) bp                  8.71             (266) bp
Tangible common equity to
risk-weighted assets (1)                       6.90                  8.61           (171) bp                  9.05             (215) bp

(1) See reconciliation of non-GAAP Financial Measures on page 75.

(2) Fundamental non-interest expense is comprised of total non-interest expense less other credit costs, FDIC insurance expense, restructuring charges, Visa litigation recovery, and goodwill impairment expense.

(3) Other credit costs are comprised primarily of foreclosed real estate costs, reserve for unfunded commitments, and charges related to other loans held for sale.

(4) Ratios are annualized

nm = non meaningful

Critical Accounting Policies
The accounting and financial reporting policies of Synovus conform to U.S. generally accepted accounting principles (GAAP) and to general practices within the banking and financial services industries. Synovus has identified certain of its accounting policies as "critical accounting policies." In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. The application of these policies has a significant impact on Synovus' financial statements. Synovus' financial results could differ significantly if different judgments or estimates are applied in the application of these policies. Allowance for Loan Losses
Notes 1 and 8 to Synovus' consolidated financial statements in Synovus' 2008 annual report on Form 10-K contain a discussion of the allowance for loan losses. The allowance for loan losses at June 30, 2009 was $918.7 million. The allowance for loan losses is a significant estimate and is regularly evaluated by Synovus for adequacy. The allowance for loan losses is determined based on an analysis which assesses the probable loss within the loan portfolio. The allowance for loan losses consists of two components: the allocated and unallocated allowances. Both components of the allowance are available to cover inherent losses in the portfolio. Significant judgments or estimates made in the determination of the allowance for loan losses consist of the risk ratings for loans in the commercial loan portfolio, the valuation of the collateral for loans that are classified as impaired loans, the qualitative loss factors, and management's plan for disposition of non-performing loans. In determining an adequate allowance for loan losses, management makes numerous assumptions, estimates and assessments. The use of different estimates or assumptions could produce different provisions for losses on loans.
As a part of our problem asset disposition strategy, management intends to identify certain non-performing loans for disposition through liquidation or other sales. While all of the non-performing loans have not yet been specifically identified, these types of sales are expected to result in significantly lower proceeds than traditional sales, which could result in additional losses. The excess of carrying value over estimated net proceeds from sale is charged-off against the allowance for loan losses when management has determined the loans or groups of loans for disposition through these liquidation strategies.
Commercial Loans - Risk Ratings and Loss Factors Commercial loans are assigned a risk rating on a nine point scale. For commercial loans that are not considered impaired, the allocated allowance for loan losses is determined based upon the expected loss percentage factors that correspond to each risk rating.
The risk ratings are based on the borrowers' credit risk profile, considering factors such as debt service history and capacity, inherent risk in the credit (e.g., based on industry type and source of repayment), and collateral position. Ratings 7 through 9 are modeled after the bank regulatory classifications of substandard, doubtful, and loss. Expected loss percentage factors are based on the probable loss including qualitative factors. The probable loss considers the probability of default, the loss given default, and certain qualitative factors as determined by loan category and risk rating. Through March 31, 2009, the probability of default loss factors were based on industry data. Beginning April 1, 2009, the probability of default loss factors are based on internal default experience because this was the first reporting period when sufficient internal default data became available. This change resulted in a net increase in the allocated allowance for loan losses for the commercial portfolio of approximately $30 million during the three months ended June 30, 2009. The loss given default factors are based on industry data, which will continue to be

used until sufficient internal data becomes available. The qualitative factors consider credit concentrations, recent levels and trends in delinquencies and nonaccrual loans, and growth in the loan portfolio. The occurrence of certain events could result in changes to the expected loss factors. Accordingly, these expected loss factors are reviewed periodically and modified as necessary. Each loan is assigned a risk rating during the approval process. This process begins with a rating recommendation from the loan officer responsible for originating the loan. The rating recommendation is subject to approvals from other members of management and/or loan committees depending on the size and type of credit. Ratings are re-evaluated on a quarterly basis. Additionally, an independent Parent Company credit review function evaluates each bank's risk rating process at least every six months. Impaired Loans
Management considers a loan to be impaired when the ultimate collectibility of all amounts due according to the contractual terms of the loan agreement are in doubt. A majority of our impaired loans are collateral-dependent. The net carrying amount of collateral-dependent impaired loans is equal to the lower of the loans' principal balance or the fair value of the collateral (less estimated costs to sell) not only at the date at which impairment is initially recognized, but also at each subsequent reporting period. Accordingly, our policy requires that we update the fair value of the collateral securing collateral-dependent impaired loans each calendar quarter. Impaired loans, not including impaired loans held for sale, had a net carrying value of $1.23 billion at June 30, 2009. Most of these loans are secured by real estate, with the majority classified as collateral-dependent loans. The fair value of the real estate securing these loans is generally determined based upon appraisals performed by a certified or licensed appraiser. Management also considers other factors or recent developments, such as selling costs and anticipated sales values considering management's plans for disposition, which could result in adjustments to the collateral value estimates indicated in the appraisals.
Estimated losses on collateral-dependent impaired loans are typically charged-off. At June 30, 2009, $971.9 million, or 78.8%, of impaired loans consisted of collateral-dependent impaired loans for which Synovus has recognized charge-offs of approximately $284.0 million. These loans are recorded at the lower of cost or estimated fair value of the underlying collateral net of selling costs. However, if a collateral-dependent loan is placed on impaired status at or near the end of a calendar quarter, management records an allowance for loan losses based on the loan's risk rating while an updated appraisal is being obtained. The estimated losses on these loans are recorded as a charge-off during the following quarter after the receipt of a current appraisal or fair value estimate based on current market conditions, including absorption rates. Management does not expect a material difference between the current allocated allowance on these loans and the actual charge-off.
As part of our problem asset disposition strategy, management intends to identify certain impaired loans for liquidation through loan sales in future quarters. While the specific loans have not yet been identified, these liquidations are expected to result in significantly lower proceeds than the fair value of these loans, which is included as a component of our allowance for loan losses.
During the second quarter of 2009, Synovus was able to significantly accelerate the pace of asset dispositions. This experience provided management a basis to estimate the loan sales (consisting primarily of non-performing loans) that will be completed over the next two quarters. Based on this, the provision expense for the second quarter of 2009 includes management's estimate of the losses associated with these asset dispositions that are both probable and can be reasonably estimated as of June 30, 2009.
Loans or pools of loans are transferred to the other loans held for sale portfolio when the intent to hold the loans has changed due to portfolio management or risk mitigation strategies and when there is a plan to sell the loans within a reasonable period of time. The value of the loans or pools of loans is primarily determined by analyzing the underlying collateral of the loan and the external market prices of similar assets. At the time of transfer, if the estimated net

realizable value is less than the cost, the difference is recorded as a charge-off against the allowance for loan losses. Retail Loans - Loss Factors
The allocated allowance for loan losses for retail loans is generally determined by segregating the retail loan portfolio into pools of homogeneous loan categories. Expected loss factors applied to these pools are based on the . . .