TABLE OF CONTENTS

 

 

Caption		Page
QUESTIONS AND ANSWERS ABOUT THE MERGER				1
WHO CAN HELP ANSWER YOUR QUESTIONS				2
SUMMARY				3
	The Companies			3
	The Merger			3
	Riverside’s Reasons for the Merger			3
	Opinion of Riverside’s Financial Advisor			4
	Riverside Special Shareholders’ Meeting			4
	Conditions to the Merger			4
	Accounting Treatment			5
	Material United States Federal Income Tax Consequences of the Merger			5
	Effective Date of Merger			5
	Dissenters’ Rights			5
	Risk Factors			5
	Interests of Riverside’s Directors and Executive Officers in the Merger			5
	Termination of the Merger Agreement			5
	No Solicitation			6
	Effect of Merger on Rights of Riverside Shareholders			6
	Comparative Market Price Information and Dividends			6
SELECTED FINANCIAL DATA				7
RISK FACTORS				9
FORWARD-LOOKING STATEMENTS				9
THE SPECIAL MEETING			10
	Date, Time and Place		10
	Matters to Be Considered at the Special Meeting		10
	Record Date; Stock Entitled to Vote; Quorum		10
	Vote Required		10
	Stock Ownership of Riverside Directors and Executive Officers		11
	Voting of Proxies		11
	Revoking Proxies		11
	Proxy Solicitation		12
	Recommendation of the Riverside Board		12
THE MERGER			12
	Structure of the Merger		12
	Terms of the Merger and Effective Date		12
	Background of the Merger		13
	Recommendation of the Riverside Board and Reasons for the Merger		15
	Opinion of Riverside’s Financial Advisor		16
	Representations and Warranties		23
	Conditions to the Merger		24
	No Solicitation		26
	Conduct of Business of Riverside Pending the Merger		26
	Regulatory Approvals		27
	Waiver and Amendment		27
	Termination and Termination Fee		27
	Interests of Riverside's Directors and Executive Officers in the Merger		27
	Employee Benefits		28
	Material United States Federal Income Tax Consequences of the Merger		28
	Accounting Treatment		29

 

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Expenses

29

	New York Stock Exchange Listing	29
	Resales of Synovus Common Stock	29

DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF

	RIVERSIDE SHAREHOLDERS	30
	Synovus Common Stock	32
	Riverside Common Stock	34
DISSENTERS’ RIGHTS.		34
DESCRIPTION OF SYNOVUS		36
Business		36
DESCRIPTION OF RIVERSIDE		36
	Business	36
	Market Area	36
	Lending Activities	37
	Competition	37
	Employees	37
	Description of Property	37
	Legal Proceedings	37
	Related Party Transactions	37
	Principal Shareholders	38
REGULATORY MATTERS		39
	General	39
	Dividends	39
	Capital Requirements	40
	Commitments to Subsidiary Banks	41
	Prompt Corrective Action	41
	Safety and Soundness Standards	42
	Depositor Preference Statute	42
	Gramm-Leach-Bliley Act	42
LEGAL MATTERS		43
EXPERTS		43
OTHER MATTERS		43
SHAREHOLDER PROPOSALS		43
WHERE YOU CAN FIND MORE INFORMATION		43
PRO FORMA FINANCIAL INFORMATION		45

 

 

APPENDIX A		Agreement and Plan of Merger, as amended			A-1
APPENDIX B		Georgia Dissenters' Rights Statute				B-1
APPENDIX C		Fairness Opinion of Burke Capital Group, L.L.C. dated September 6, 2005, as updated December 27, 2005				C-1
APPENDIX D		Tax Opinion of Powell Goldstein LLP.				D-1

 

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

 

Q:	Why is the merger being proposed?

 

A:

Riverside Bancshares, Inc.’s board of directors believes the merger is in the best interests of Riverside Bancshares, Inc., which in this document we refer to as Riverside, and will provide significant benefits to its shareholders. Synovus’ board of directors believes that the acquisition of Riverside will offer Synovus the opportunity to expand its banking operations in the attractive banking market of Atlanta, Georgia. To review the background and reasons for the merger in greater detail, see pages 13 through 15.

Q:	What will I receive in the merger?

 

A:	Riverside shareholders will receive 1.10 shares of Synovus common stock for each share of Riverside common stock they hold. Because the market price of Synovus common stock fluctuates, the value of securities you will receive will fluctuate on a day-to-day basis.

 

Synovus will not issue fractional shares in the merger. Instead, Riverside shareholders will receive a cash payment, without interest, for the value of any fraction of a share of Synovus common stock that they would otherwise be entitled to receive, based upon the closing price of Synovus common stock on the last business day immediately prior to the effective date of the merger.

 

Q:	What happens as the market price of Synovus common stock fluctuates?

 

A:	Because the market price of Synovus common stock fluctuates, at the time you vote you will not know what the shares will be worth when issued in the merger.

 

Q:	When is the merger expected to be completed?

 

A:	We expect to complete the merger in the first quarter of 2006.

Q:	What are the income tax consequences of the merger to me?

 

A:

Powell Goldstein LLP has issued an opinion, which it will confirm as of the effective date of the merger, that the merger will qualify as a reorganization under Section 368 of the Internal Revenue Code. Riverside shareholders generally will not recognize gain for federal income tax purposes as a result of the surrender of Riverside common stock for receipt of Synovus common stock (except to the extent of cash received in lieu of fractional shares or as a result of the exercise of dissenters’ rights). Your tax treatment may depend on your specific situation and many variables not within our control You should consult your own tax advisor for a full understanding of the tax consequences to you of the merger.

 

Q:	What am I being asked to vote upon and what is the required shareholder vote?

 

A:

You are being asked to approve the merger of Riverside into Synovus. Approval of the proposal requires the affirmative vote of holders of a majority of the shares of outstanding Class A and Class B common stock of Riverside, which are collectively referred to in this document as Riverside common stock, that are entitled to vote on the merger, voting together and not as separate classes. Riverside’s board of directors encourages you to vote at the special meeting. The Riverside board of directors has unanimously approved and adopted the merger agreement and recommends that Riverside shareholders vote FOR the approval of the merger.

Q:	What should I do now?

 

A:	You should read this document carefully and determine whether you desire to vote for approval of the merger.

Q:	Should I send in my stock certificates now?

 

A:	No. If the merger is completed, we will send you written instructions for exchanging your Riverside common stock certificates for Synovus common stock certificates.

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WHO CAN HELP ANSWER YOUR QUESTIONS

 

If you want additional copies of this document, or if you want to ask any questions about the merger, you should contact:

Riverside Bancshares, Inc.

1200 Johnson Ferry Road

Marietta, Georgia 30068

Attn: Phil Resch

Telephone: (770) 977-8585

 

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SUMMARY

 

This summary highlights selected information from this document and may not contain all the information that is important to you. For a more complete understanding of the merger and for a more complete description of the legal terms of the merger, you should read this entire document carefully, as well as the additional documents to which we refer you, including the merger agreement. See “Where You Can Find More Information” on page 43. Each item in this summary refers to the page where that subject is discussed in more detail.

 

The Companies (page 36)

Synovus Financial Corp.

1111 Bay Avenue, Suite 500

Columbus, Georgia 31901

Telephone: (706) 649-5220

 

Synovus is a diversified financial services company whose stock is traded on the New York Stock Exchange, or NYSE, under the symbol “SNV.” As of September 30, 2005, Synovus had total assets of approximately $27.1 billion, total deposits of $20.3 billion, shareholders’ equity of $2.9 billion and net loans of $20.6 billion. Synovus and its 39 commercial banking subsidiaries presently provide banking services in offices located in Georgia, Alabama, Florida, South Carolina and Tennessee. Synovus also provides a variety of other financial services including mortgage banking, securities brokerage, insurance agency, equipment leasing and trust services. In addition, Synovus holds an 81% interest in Total System Services, Inc., which in this document we refer to as TSYS, an electronic payment processing company whose stock is traded on the NYSE.

 

Riverside Bancshares, Inc.

1200 Johnson Ferry Road

Marietta, Georgia 30068

Telephone: (770) 977-8585

 

Riverside is registered as a bank holding company under the Bank Holding Company Act. As of September 30, 2005, Riverside had total assets of approximately $668.6 million, total deposits of $520.4 million, shareholders’ equity of $45.1 million and net loans of $465.8 million. Riverside has one banking subsidiary, Riverside Bank, Marietta, Georgia, which provides services through its five full-service banking offices. All references to Riverside refer to Riverside Bancshares, Inc. and its subsidiary bank, unless the context otherwise requires.

The Merger (page 12)

If the merger is approved by Riverside’s shareholders, Riverside will be merged into Synovus, and Riverside’s banking subsidiary, through which it operates, will initially become a wholly owned subsidiary of Synovus and will shortly thereafter be merged into Bank of North Georgia, a banking subsidiary of Synovus. The merger requires the approval of the holders of a majority of the Riverside common stock outstanding on the record date. The directors and executive officers of Riverside together own approximately 59% of the outstanding shares entitled to vote at the meeting, and we expect them to vote their shares in favor of the merger.

 

We have attached the merger agreement as Appendix “A” to this document. We encourage you to read the merger agreement, as it is the legal document that governs the merger.

 

Riverside’s Reasons for the Merger (page 15)

In reaching its decision to approve and recommend approval of the merger agreement, the Riverside board of directors considered a number of factors, including the following:

 

•

the value of the consideration to be received by Riverside shareholders relative to the book value and earnings per share of Riverside common stock;

•

certain information concerning the financial condition, results of operations and business prospects of Synovus;

 

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•

the financial terms of recent business combinations in the financial services industry and a comparison of the multiples of selected combinations with the terms of the proposed transaction with Synovus;

•

the average daily trading volumes of shares of Synovus common stock;

•

the alternatives to the merger, including remaining an independent institution;

•

the competitive and regulatory environment for financial institutions generally;

•

the expanded range of banking services that the merger will allow Riverside Bank to provide its customers;

•

the enhanced career opportunities and benefits afforded Riverside Bank employees as a result of the merger;

•

the expected new dividend yield for Riverside shareholders from owning Synovus common stock;

•

the fact that the merger will enable Riverside shareholders to exchange their shares of Riverside common stock for shares of common stock of a regional bank, the stock of which is widely held and actively traded, and that such consideration will be received tax-free; and

•

the opinion of Burke Capital Group, L.L.C. that the consideration to be received by Riverside shareholders as a result of the merger is fair from a financial point of view.

 

Opinion of Riverside’s Financial Advisor (page 16)

Riverside asked its financial advisor, Burke Capital Group, L.L.C., for advice on the fairness, from a financial point of view, of the merger consideration to Riverside’s shareholders. Burke Capital Group has delivered its written opinion to the Riverside board that as of September 6, 2005, when the merger agreement was executed, and December 27, 2005, when it was amended, the merger consideration was fair, from a financial point of view, to the shareholders of Riverside. The opinion, as updated, is attached as Appendix “C” to this document. You should read this opinion completely to understand the procedures followed, assumptions made, matters considered and limitations of the review undertaken by Burke Capital Group. Burke Capital Group’s opinion is addressed to the Riverside board and does not constitute a recommendation to any shareholder as to how to vote with respect to matters relating to the proposed merger. You should also be aware that the opinion of Burke Capital Group does not address the fairness of the merger consideration at the time the merger is completed or at any time other than the date of the opinion.

Riverside Special Shareholders’ Meeting (page 10)

The special meeting will be held at the main office of Riverside Bank, 1200 Johnson Ferry Road, Marietta, Georgia on ______, ___________, 2006, at _____ local time.

 

Conditions to the Merger (page 24)

Consummation of the merger is subject to various conditions, including:

 

•

receipt of Riverside shareholder approval;

•

receipt of the necessary regulatory approvals;

•

receipt of an opinion from Powell Goldstein LLP regarding tax aspects of the merger; and

•

satisfaction of other customary closing conditions.

 

The regulatory approvals necessary to consummate the merger and the other transactions contemplated by the merger agreement include the approval of the Board of Governors of the Federal Reserve System, which in this document we refer to as the Federal Reserve Board, and the Georgia Department of Banking and Finance. The merger has not yet been approved by the foregoing regulatory agencies.

 

 

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Accounting Treatment (page 29)

The merger will be accounted for as a purchase for financial reporting purposes.

 

Material United States Federal Income Tax Consequences of the Merger (page 28)

We expect that Synovus, Riverside and Riverside shareholders will not recognize any gain or loss for United States federal income tax purposes as a result of the merger. The boards of directors of both companies have received an opinion of tax counsel that the above will be the federal income tax consequences of the merger. A copy of this opinion is attached to this document as Appendix “D.” The opinion will not bind the Internal Revenue Service, which could take a different view. This tax treatment will not apply to any Riverside shareholder that exercises dissenters’ rights. Determining the actual tax consequences of the merger to you as an individual taxpayer can be complicated. The tax treatment will depend on your specific situation and many variables not within our control. You should consult your own tax advisor for a full understanding of the merger’s tax consequences.

 

Effective Date of Merger (page 12)

The merger will become effective when all of the conditions to the merger have been satisfied and Articles of Merger are filed with the Georgia Secretary of State. Subject to the conditions specified in the merger agreement, the parties anticipate that the merger will become effective in the first quarter of 2006. There can be no assurances, however, as to whether or when the merger will occur.

 

Dissenters’ Rights (page 34)

Holders of Riverside common stock are entitled to dissent from the merger under Georgia law and, if the merger is consummated, to receive payment in cash for the fair value of their shares, upon compliance with the dissenters’ rights provisions of the Georgia Business Corporation Code. To preserve these rights, a shareholder must not vote in favor of the merger and must deliver to Riverside a written notice of intent to demand payment for such shareholder’s shares before the vote on the merger at the special meeting of Riverside shareholders. The delivery of a proxy or vote against the merger is not considered such a notice. Failure to follow required procedures may result in the loss of statutory dissenters’ rights. Dissenters’ Rights are addressed in more detail beginning on page 34.

 

Risk Factors (page 9)

 

In addition to the other information included in this document, including the matters addressed in “Forward-Looking Statements” on page 9, you should carefully consider the material risk factors to the merger, beginning on page 9, in determining whether to vote in favor of the merger.

 

Interests of Riverside’s Directors and Executive Officers in the Merger (page 27)

Certain executive officers of Riverside have interests in the merger that are different from your interests. For example, Kessel D. Stelling, Jr., Chairman and Chief Executive Officer of Riverside, has entered into an employment agreement with Synovus, effective on the date the merger is completed, providing for his continued employment as the Chairman and Chief Executive Officer of Riverside Bank, and upon its merger into Bank of North Georgia as President and Chief Operating Officer of Bank of North Georgia, for a period of five years following the merger. In addition, Mr. Stelling and Riverside’s other directors and executive officers hold stock options that will become exercisable immediately prior to the effectiveness of the merger.

 

Termination of the Merger Agreement (page 27)

 

Either Riverside or Synovus may terminate the merger agreement under the following circumstances, among others:

 

•

the mutual consent of Synovus and Riverside;

•

if the merger is not completed before April 30, 2006, unless the failure to consummate by this time is due to a breach of the merger agreement by the party seeking to terminate; or

 

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•

failure of any of the conditions set forth in the merger agreement unless the failure is due to a breach of the merger agreement by the party seeking to terminate.

 

Also, Riverside may terminate the merger agreement if the average closing price of the Synovus common stock on the NYSE for the 10 trading days prior to the effective date of the merger is less than $23.00 per share. Synovus may terminate the merger agreement if the average closing price of the Synovus common stock on the NYSE for the 10 trading days prior to the effective date of the merger is greater than $35.00 per share.

 

No Solicitation (page 26)

Riverside has agreed that until the completion of the merger, Riverside will not directly or indirectly take any specified actions with respect to any acquisition proposal. However, notwithstanding these restrictions, Riverside may, if necessary to comply with its fiduciary obligations and subject to other qualifications and conditions, furnish information and engage in discussions or negotiations in response to unsolicited acquisition proposals.

 

Effect of Merger on Rights of Riverside Shareholders (page 30)

Riverside is a Georgia corporation and, therefore, the rights of shareholders of Riverside currently are determined by reference to the Georgia Business Corporation Code and Riverside’s Articles of Incorporation and bylaws. At the effective time of the merger, shareholders of Riverside will become shareholders of Synovus, which is a Georgia corporation. As a result, your rights as shareholders of Synovus will then be determined by reference to the Georgia Business Corporation Code and Synovus’ Articles of Incorporation and bylaws. There are various differences between Synovus’ Articles of Incorporation and bylaws and Riverside’s Articles of Incorporation and bylaws.

 

Comparative Market Price Information and Dividends

 

Synovus common stock is listed on the NYSE under the symbol “SNV.” On December 28, 2005, there were approximately 327 holders of record of Riverside common stock. Trading in the Riverside Class A common stock is reported under the symbol “RSBK” via an internet-based, real-time securities quotation service known as the “pink sheets.” The Class B common stock is not listed in the pink sheets and has traded only sporadically. Management believes the prices paid for the Class B common stock represent the same price that would have been paid for the Class A common stock. As a result, and given that the Class B common stock will convert to Class A common stock on a one-to-one basis immediately prior to the effective time of the merger, the equivalent prices shown below apply equally to the Riverside Class A and Class B common stock.

The following table presents, for September 2, 2005 and __________, 2006:

•

the last reported sale price of one share of Synovus common stock, as reported on the NYSE Composite Transaction Tape;

•

the last reported sale price of Riverside Class A common stock as reported in the pink sheets; and

•

the equivalent per share price of Riverside common stock, giving effect to the merger.

September 2, 2005 was the last full trading day before the public announcement of the proposed merger, and __________, 2006, was the last day for which such information could be calculated before the date of this document. The equivalent price per share data for Riverside common stock has been determined by multiplying the last reported sale price of one share of Synovus common stock on each of these dates by the per share exchange ratio of 1.10.

 

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Date	Synovus Common Stock	Riverside Common Stock	Equivalent Price Per Share of Riverside Common Stock
September 2, 2005	$28.75	$26.00	$31.625
__________, 2006	$_____	$____	$______

 

The table below shows the high and low closing prices of Synovus common stock as reported by the New York Stock Exchange and the high and low sale prices of Riverside Class A common stock as reported in the pink sheets, together with each company’s cash dividends declared per share for the last two fiscal years plus the interim period.

 

	Synovus						Riverside
					Cash Dividends					Cash Dividends
	High		Low				High	Low
Quarter Ended
March 31, 2005	$28.51		$26.59		$0.1825		$36.00	$18.50		$0.06*
June 30, 2005	29.49		26.98		0.1825		25.50	20.00		0.06*
September 30, 2005	29.95		27.02		0.1825		33.00	22.00		0.06*
December 31, 2005	28.42		26.49		0.1825		29.50	26.50		0.06*
Quarter Ended
March 31, 2004	$28.82		$22.67		$0.1733		19.00	18.00		0.05
June 30, 2004	25.75		23.31		0.1733		19.00	18.05		0.05
September 30, 2004	26.50		24.49		0.1733		21.50	18.00		0.05
December 31, 2004	28.89		26.50		0.1733		25.00	19.00		0.05
Quarter Ended
March 31, 2003	$20.88		$17.89		$0.1650		14.67	12.17		--
June 30, 2003	23.62		17.31		0.1650		17.05	12.67		--
September 30, 2003	26.69		21.35		0.1650		16.25	10.00		--
December 31, 2003	29.04		25.99		0.1650		22.00	17.95		--
______________   *  Cash dividends on the Class B common stock, which was initially authorized in December 2004, were $.063 per      share in the quarter indicated.

 

The Riverside Class B common stock has traded only seven times since its issuance in December 2004, in each case in a sale back to Riverside or to its majority shareholder. The trades took place in the second, third and fourth quarters of 2005, with high and low sales prices of $25.00 and $23.00 per share for the second quarter; $26.00 and $25.00 per share for the third quarter; and $29.98 and $29.31 per share for the fourth quarter.

 

SELECTED FINANCIAL DATA 

 

The following tables show summary historical financial data for Synovus. The information in the following tables was derived from historical financial information contained in annual and quarterly reports and other information Synovus has filed with the SEC. When you read the summary financial information provided in the following table, you should also read the historical financial information contained in annual and quarterly reports and other information Synovus has filed with the SEC. See “WHERE YOU CAN FIND MORE INFORMATION” on page 43.

 

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Synovus Financial Corp.

Selected Financial Data

(Dollars in thousands, except per share data)

 

 

			Nine Months Ended September 30, (unaudited)
							Years Ended December 31,
			2005		2004		2004		2003		2002		2001		2000
Income Statement Data:
Total revenues (a)		$	2,124,932		1,769,406	$	2,381,615		2,129,902		1,949,688		1,792,286		1,626,966
Net interest income			708,752		636,643		860,679		763,064		717,504		629,791		562,332
Provision for losses on loans			61,745		54,464		75,319		71,777		65,327		51,673		44,341
Non-interest income (b)			1,416,778		1,132,674		1,521,011		1,369,329		1,234,822		1,164,217		1,065,415
Non-interest expense (d)			1,430,262		1,190,280		1,588,366		1,422,143		1,299,470		1,232,483		1,155,176
Net income			379,186		318,311		437,033		388,925		365,347		311,616		262,557
Per Share Data:
Net income – basic		$	1.22		1.04	$	1.42		1.29		1.23		1.07		0.93
Net income – diluted			1.20		1.03		1.41		1.28		1.21		1.05		0.92
Cash dividends declared			0.55		0.52		0.69		0.66		0.59		0.51		0.44
Book Value			9.21		8.32		8.52		7.43		6.79		5.75		4.98
Balance Sheet Data:
Investment securities		$	2,821,018		2,621,120	$	2,695,593		2,529,257		2,237,725		2,088,287		2,077,928
Loans, net of unearned income			20,904,677		18,871,056		19,480,396		16,464,914		14,463,909		12,417,917		10,751,887
Total assets			27,075,090		24,389,493		25,050,178		21,632,629		19,036,246		16,654,891		14,908,092
Deposits			20,279,210		17,774,384		18,577,468		15,941,609		13,928,834		12,146,198		11,161,710
Long-term debt			2,256,388		1,740,103		1,879,583		1,575,777		1,336,200		1,052,943		840,859
Shareholders' equity			2,874,906		2,576,714		2,641,289		2,245,039		2,040,853		1,694,946		1,417,171
Average total shareholders' equity			2,763,529		2,427,096		2,479,404		2,166,777		1,855,492		1,548,030		1,303,634
Average total assets			25,997,334		22,802,429		23,275,001		20,412,853		17,414,654		15,375,004		13,466,385
Performance Ratios and Other Data:
Return on average assets (c)			1.95	%	1.86		1.88	%	1.91		2.10		2.03		1.95
Return on average equity (c)			18.35		17.52		17.63		17.95		19.69		20.13		20.14
Net interest margin, before fees			4.01		3.90		3.92		3.90		4.27		4.28		4.36
Net interest margin, after fees			4.15		4.25		4.22		4.26		4.65		4.65		4.70
Efficiency ratio (d)			50.00		52.58		52.06		53.34		52.07		53.80		55.35
Dividend payout ratio (e)			45.83		50.49		48.94		51.56		48.76		48.57		47.83
Average shareholders' equity to average assets			10.63		10.64		10.65		10.61		10.65		10.07		9.68
Average shares outstanding, basic			311,204		306,435		307,262		302,010		297,325		290,304		283,552
Average shares outstanding, diluted			314,648		309,348		310,330		304,928		301,197		295,850		286,882

 

 

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(a) Consists of net interest income and non-interest income, excluding securities gains (losses).

(b) Includes reimbursable items, and with respect to the year ended December 31, 2002, impairment loss on private equity investment of $8.4 million (pre-tax).

(c) Returns for the nine months ended September 30, 2005 and 2004 are annualized.

(d) For the Financial Services segment, which excludes TSYS.

(e) Determined by dividing dividends declared per share (except those of TSYS) by net income per diluted share.

 

 

RISK FACTORS

 

In addition to the other information contained in or incorporated by reference into this document, including Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and Synovus’ Quarterly Reports on Form 10-Q for the quarters ended March 31,2005, June 30, 2005 and September 30, 2005, Riverside shareholders should carefully consider the matter described below deciding whether to vote to approve the merger agreement.

 

You may receive shares of Synovus common stock with a market value lower than you expected.

 

Synovus is offering to issue 1.10 shares of Synovus common stock for each share of Riverside common stock. This exchange ratio will not be adjusted for changes in the market price of Synovus common stock. Any change in the price of Synovus common stock prior to the merger will affect the value that Riverside shareholders will receive in the merger. If the market price of Synovus common stock declines, then the value of the consideration you will receive will decline as well. Stock price variations may result from a variety of factors that are beyond our control, including, market assessments of the likelihood the merger will be consummated, regulatory considerations, general market and economic conditions, and changes in, or market perceptions of changes in, the business operations or prospects of Synovus and its subsidiaries.

 

The price of Synovus common stock at and after the effective date of the merger may vary from its prices on (a) September 6, 2005, the date the merger agreement was executed and the initial fairness opinion was rendered, (b) December 27, 2005, the date the amendment to the merger agreement was executed and the updated fairness opinion was rendered, (c) the date of this document and (d) the date of Riverside’s special meeting of shareholders. Because the effective date of the merger will follow the date of Riverside’s special meeting of shareholders, at the time of the special meeting you will not know the market value of the Synovus common stock that you may receive upon completion of the merger.

 

FORWARD-LOOKING STATEMENTS

 

Synovus and Riverside make forward-looking statements in this document, and Synovus also makes forward-looking statements in its reports filed with the SEC that we incorporate by reference in this document, that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our operations. Also, when we use any of the words “believes,” “expects,” “anticipates” or similar expressions, we are making forward-looking statements. Many possible events or factors could affect the financial results and performance of each of our companies. This could cause results or performances to differ materially from those expressed in our forward-looking statements. A variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of our business include, but are not limited to, those discussed in the reports filed by Synovus with the SEC that are incorporated in this document by reference and those described below. You should consider these risks when you vote on the merger. These possible events or factors include the following:

 

•

those risks and uncertainties we identify or discuss in our filings with the SEC;

 

•

our cost savings from the merger are less than we expect, or we are unable to obtain those cost savings as soon as we expect;

•

costs or difficulties relating to the integration of Riverside may be greater than expected;

 

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•

revenue losses resulting from TSYS’s loss of the Bank of America consumer card portfolio processing business may be greater than expected;

•

we lose more deposits, customers, or business than we expect;

•

competition in the banking industry increases significantly;

•

our integration costs are higher than we expect or our operating costs after the merger are greater than we expect;

•

the merger does not generate the synergies we expect;

•

technological changes and systems integration are harder to make or more expensive than we expect;

•

changes in the interest rate environment reduce our margins;

•

general economic or business conditions are worse than we expect;

•

legislative or regulatory changes occur which adversely affect our business;

•

changes occur in business conditions and inflation; and

•

changes occur in the securities markets.

 

Management of each of Synovus and Riverside believes the forward-looking statements about its company are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Forward-looking statements speak only as of the date they are made and Synovus and Riverside undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

 

THE SPECIAL MEETING

 

We are furnishing this document to shareholders of Riverside in connection with the solicitation of proxies by the board of directors of Riverside for use at the special meeting of its shareholders.

 

Date, Time and Place

The special meeting will be held at the main office of Riverside Bank, 1200 Johnson Ferry Road, Marietta, Georgia 30068 on ______, ___________, 2006, at _____ local time.

 

Matters to Be Considered at the Special Meeting

At the special meeting, the shareholders of Riverside will be asked to consider and vote upon the approval of the merger, and such other matters as may properly be brought before the special meeting.

 

The Riverside board has unanimously approved the merger agreement and the transactions contemplated by the merger agreement and recommends that you vote “FOR” approval of the merger.

 

Record Date; Stock Entitled to Vote; Quorum

Only holders of record of Riverside common stock at the close of business on ___________, 2006, the record date for the Riverside special meeting, are entitled to receive notice of the special meeting and to vote at the special meeting. Holders of record of shares of Riverside common stock on the record date are each entitled to one vote per share on each matter to be considered at the special meeting.

 

On the record date, ________________, _______ shares of Riverside common stock were issued and outstanding and were held by __ holders of record.

 

A majority of all the issued and outstanding shares of Riverside common stock, present in person or by proxy, will constitute a quorum for the special meeting.

 

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Vote Required

The approval of the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Riverside Class A and Class B common stock that are entitled to vote on the merger, voting together as a single class.

 

The merger does not require the approval of Synovus’ shareholders. Synovus’ board of directors approved the merger on September 6, 2005.

 

Stock Ownership of Riverside Directors and Executive Officers

At the close of business on the record date, the directors and executive officers of Riverside owned and were entitled to vote approximately ___________shares of Riverside common stock. This ownership represents approximately ____% of the shares of Riverside common stock outstanding on that date. If they exercise all of their vested options, the number of shares will increase to _________ and the percentage will increase to ____%.

 

Voting of Proxies

Shares represented by all properly executed proxies received in time for the special meeting will be voted at the special meeting according to the voting instructions of the shareholder who executed the proxy. Properly executed proxies which do not contain voting instructions will be voted in favor of the merger.

 

Riverside intends to count shares of Riverside common stock present in person at the special meeting but not voting, and shares of Riverside common stock for which proxies are received but with respect to which holders of shares have abstained from voting on or voted against any matter, as present at the special meeting for purposes of determining the presence or absence of a quorum for the special meeting.

 

For voting purposes at the special meeting, only shares voted in favor of approval of the merger will be counted as favorable votes for such approval and adoption. A shareholder’s failure to submit a proxy, failure to vote in person, or abstention from voting with respect to the approval of the merger will have the same effect as if the shareholder voted against approval of the merger.

Shares held in street name that have been designated by brokers on proxy cards as not voted with respect to the merger (“broker non-votes”) will not be counted as votes cast on the merger. Shares with respect to which proxies have been marked as abstentions also will not be counted as votes cast on the merger. Shares with respect to which proxies have been marked as abstentions and broker non-votes will, however, be treated as shares present for purposes of determining whether a quorum is present.

 

The proposal to adopt the merger agreement is a non-discretionary item, meaning that brokerage firms may not vote shares in their discretion on behalf of a client if the client has not furnished voting instructions. Because the merger must be approved by the holders of a majority of the outstanding shares of Riverside common stock, abstentions and broker non-votes will have the same effect as a vote against the merger at the meeting. Accordingly, the Riverside board urges Riverside shareholders to complete, date and sign the accompanying proxy and return it promptly in the enclosed postage prepaid envelope.

 

We do not expect that any matters other than the proposal to approve the merger will be brought before the special meeting. However, if other matters are properly presented for a vote, the persons named as proxies will vote in accordance with their judgment with respect to those matters.

 

The persons named as proxies by a Riverside shareholder may propose and vote for one or more adjournments of the special meeting to permit further solicitations of proxies in favor of approval of the merger. However, the persons named as proxies will not vote any shares which are voted against the approval of the merger in favor of such an adjournment.

 

Revoking Proxies

Riverside shareholders of record may revoke their proxies at any time before the time their proxies are voted at the special meeting. A shareholder may revoke a proxy by taking any of the following actions:

 

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•

sending a written notice indicating his or her intention to revoke the proxy, including by telegram or facsimile, to the Corporate Secretary of Riverside;

•

submitting a later-dated signed proxy; or

•

attending the special meeting and voting or abstaining from voting in person.

Attendance at the special meeting alone without voting or abstaining from the vote on the merger will not revoke a proxy. Any written notice of a revocation of a proxy must be sent so that it will be delivered to the Corporate Secretary of Riverside, at Riverside’s principal executive offices, before the voting begins at the special meeting.

 

Proxy Solicitation

Riverside will pay the costs of printing this document and all other costs of soliciting proxies. In addition to solicitation by mail, the directors, officers and employees of Riverside may solicit proxies from shareholders of Riverside by telephone or by other means of communication. These directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with the solicitation. Riverside will arrange with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and Riverside will reimburse these record holders for their reasonable out-of-pocket expenses.

 

Recommendation of the Riverside Board

The Riverside board has unanimously adopted the merger agreement and believes that the proposed transaction is fair to and in the best interests of Riverside and its shareholders. The Riverside board unanimously recommends that Riverside shareholders vote “FOR” approval of the merger.

 

THE MERGER

 

The following is a description of the material information pertaining to the merger. This description is qualified in its entirety by reference to the full text of the merger agreement, a copy of which is attached as Appendix “A” to this document and is incorporated by reference. All shareholders are urged to read carefully the merger agreement, as well as the other appendices, in their entirety.

 

The boards of directors of Synovus and Riverside have approved, and the proper officers of Synovus and Riverside have executed and delivered, the merger agreement.

 

Structure of the Merger

 

On the effective date of the merger, Riverside will merge with and into Synovus, with Synovus as the surviving corporation and retaining the name Synovus Financial Corp. The articles of incorporation and bylaws of Synovus in effect immediately prior to the effective date of the merger will remain the articles of incorporation and bylaws of the surviving corporation after the effective date.

 

Terms of the Merger and Effective Date

On the effective date of the merger, which will be specified in the Articles of Merger to be filed with the Georgia Secretary of State, each issued and outstanding share of Riverside common stock as to which a dissenters’ right has not been exercised will be converted into the right to receive 1.10 shares of Synovus common stock.

 

You should obtain current stock price quotations for Synovus common stock. The market price of Synovus common stock will fluctuate before and after completion of the merger. You will not know when you vote on the merger precisely what the shares of Synovus common stock will be worth when issued in the merger.

 

After the effective date of the merger, outstanding certificates representing shares of Riverside common stock will represent shares of Synovus common stock. Certificates representing shares of Riverside common stock may be surrendered

 

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to Synovus by the Riverside shareholders on or after the effective date of the merger for new certificates representing shares of Synovus common stock. Until surrendered to Synovus, the certificates which previously represented shares of Riverside common stock will be deemed for all corporate purposes to evidence the ownership of the respective number of shares of Synovus common stock which the holders are entitled to receive upon their surrender to Synovus except for the payment of dividends, which is subject to the exchange of stock certificates.

 

Until the stock certificates nominally representing shares of Riverside common stock are surrendered to Synovus in exchange for certificates representing shares of Synovus common stock, no dividends payable as of any date after the effective date of the merger on the shares of Synovus common stock represented by the Riverside common stock certificates will be paid. However, Forms 1099 reporting the payment of dividends will be filed with the Internal Revenue Service and mailed to each shareholder. Upon the surrender to Synovus of the Riverside common stock certificates, Synovus will pay to the record holders the amount of dividends which previously had become payable, without interest, upon the shares of Synovus common stock represented by the outstanding Riverside common stock certificates.

 

Synovus will not issue fractional shares of Synovus common stock in the merger. Instead, Synovus will pay cash, without interest, in lieu of fractional shares, in an amount equal to the fractional part of a share of Synovus common stock multiplied by the closing price per share of Synovus common stock on the last business day immediately prior to the effective date of the merger.

 

The delivery of Synovus stock certificates and other amounts may be subject to forfeiture under applicable escheat laws if Riverside stock certificates are not surrendered for exchange within the legally specified periods of time, which vary with the state of residence of the certificate holder. Therefore, we urge all Riverside shareholders to surrender their Riverside stock certificates at the earliest possible date after consummation of the merger in accordance with instructions provided to you by Synovus in the letter of transmittal described in the following paragraph.

 

As soon as practicable following consummation of the merger, Synovus will send each shareholder of Riverside common stock a letter of transmittal explaining the procedure to be followed in exchanging certificates representing shares of Riverside common stock for certificates representing shares of Synovus common stock. Until the letter of transmittal is received, shareholders of Riverside should continue to hold their certificates representing shares of Riverside common stock. Do not send any Riverside stock certificates with your proxy card.

 

After the effective date of the merger, each outstanding Riverside stock option will be converted into an option to acquire shares of Synovus common stock. The exercise price of the converted options will be equal to the exercise price per share of the Riverside common stock under the original option divided by 1.10. The number of shares subject to the converted options will be equal to the product of the number of shares of Riverside common stock subject to the original option multiplied by 1.10.

 

Background of the Merger

Riverside’s board of directors has, over time, considered strategic combinations with a number of other financial institutions in assessing the best way to maximize the value of Riverside’s common stock, provide shareholder liquidity, ensure management continuity and diversify exposure to a single market concentration. Riverside’s board of directors takes several factors into account in evaluating potential combinations, including the financial terms of the proposed mergers, the trading volume of shares of potential acquirers, the compatibility of employee and credit cultures and the preservation of Riverside’s business operating culture and customer relationships. In exercising its fiduciary responsibility to shareholders, Riverside’s management and board of directors regularly assess the financial services industry as a whole, including the regulatory and competitive environment for banking services. In connection with this assessment, management has, from time to time, met with representatives of other financial institutions and received unsolicited indications of interest for a potential merger.

 

In this context, Riverside’s chief executive officer, Kessel D. Stelling, Jr., was introduced to Synovus in 2001 by Burke Capital Group and engaged in informal discussions with Synovus’ management team during 2001 and 2002 regarding a potential acquisition by Synovus. No firm offer resulted from these discussions and a potential price was not negotiated. The discussions ended in 2002, when Riverside’s management team and board of directors elected to focus on increasing earnings via branch expansion and other means of organic growth as opposed to becoming acquired by another institution.

 

 

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Riverside focused on this strategy during the next two years and consistently realized increased earnings as a result. Mr. Stelling continued to receive inquiries from other potential purchasers, both within and outside the Atlanta market, during this time and, with the board’s authorization, entered into discussions with some of them, although none resulted in an agreement.

 

Burke Capital Group served as Riverside’s financial advisor throughout this period and was formally engaged in 2003 to render general investment banking advice to Riverside. Burke Capital Group introduced Riverside to a potential out-of-state purchaser during the first quarter of 2005. While Riverside was engaged in informal discussions with that institution, Burke Capital Group made contact with other potentially interested parties, most of which had previously indicated an interest in Riverside. This group included Synovus.

 

Riverside’s board of directors and management team, together with Riverside’s legal counsel (Powell Goldstein, LLP) and representatives of Burke Capital Group, considered the terms of the indications of interest received as a result of this process throughout the second quarter of 2005. Because Riverside’s board consists of only three directors, including Mr. Stelling, the directors remained informed of the terms of the offers and discussed them on an ongoing basis.

 

By July 2005, Mr. Stelling and the other members of Riverside’s board of directors had determined that Synovus’ offer represented the best value for Riverside’s shareholders in terms of price, liquidity of the stock to be received, cultural fit, business objectives and customer relationships. Thereafter, Riverside continued to have discussions only with Synovus. During July 2005, Riverside and Synovus agreed upon general terms under which an acquisition of Riverside by Synovus might be acceptable.

 

During the first three weeks of August 2005, representatives of Synovus conducted a due diligence investigation of Riverside. At the same time, management of the two companies and their respective legal and financial advisors negotiated the terms of the merger agreement and Mr. Stelling’s employment agreement. Negotiations continued throughout August 2005.

 

On September 1, 2005, Riverside’s board of directors held a special meeting to analyze and consider the proposed merger with Synovus. Powell Goldstein reviewed the legal aspects of the merger agreement with the board, and Burke Capital Group summarized certain financial information relating to Synovus and the terms of the merger and rendered its verbal opinion that the terms of the merger were fair to Riverside’s shareholders from a financial point of view. After discussion, the board unanimously approved the merger agreement and the transactions contemplated thereby and agreed to recommend shareholder approval as well.

 

On September 6, 2005, Burke Capital Group delivered its written opinion as to the financial fairness of the merger, and Synovus and Riverside executed and delivered the merger agreement and issued a press release announcing the merger.

 

The merger agreement, as initially executed, contained a provision permitting Riverside to terminate the agreement if the closing price of the Synovus common stock fell below $27.00 per share. The termination right could be triggered on multiple occasions prior to the closing of the merger, and Riverside would be entitled to consider termination of the agreement each time the closing price fell below $27.00 per share. From October 10-12 and October 19-27, 2005, the closing price of the Synovus common stock was less than $27.00, but in each case Riverside’s management team discussed the circumstances and Synovus’ general prospects with representatives of Synovus and elected not to terminate the agreement at that time.

 

The closing price of the Synovus common stock thereafter remained above $27.00 per share until December 21, 2005, when Synovus announced that TSYS, an 81% owned electronic payment processing subsidiary of Synovus, had been notified by Bank of America of its intent to shift the processing of its consumer card portfolio in house in October of 2006, as described more fully in the Form 8-K filed by Synovus with the SEC on December 21, 2005. On that date, the closing price was $26.80 per share, although it thereafter rose back above $27.00. In addition, Riverside’s projected earnings had increased since the execution of the merger agreement in September. Principally in view of these two developments, the executive officers of Riverside and Synovus negotiated an increase in the exchange ratio from 1.0312 to 1.10 and other provisions of the amendment to the merger agreement, including a revision of the termination provisions to permit termination based on the 10-day average closing price prior to completion of the merger as opposed to a recurring trigger. The amendment also provides that for each Synovus cash dividend paid after January 1, 2006 (including dividends declared but unpaid as of the closing of the merger), Riverside may pay a dividend per share equal to the product of the applicable Synovus dividend per share and the 1.10 exchange ratio, plus an additional five percent per share for the Class B common stock.

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On December 27, 2005, Riverside and Synovus executed the amendment to the merger agreement and Burke Capital Group updated its fairness opinion to reflect the terms of the amendment. See “—Opinion of Riverside’s Financial Advisor” and Appendices “A” and “C.”

 

Recommendation of the Riverside Board and Reasons for the Merger

 

On September 1, 2005 the board of directors of Riverside unanimously approved and adopted the merger agreement, and on December 27, 2005, it approved and adopted the amendment to the merger agreement. The board of directors of Riverside believes that the merger and the terms and provisions of the merger agreement, as amended, are fair to and in the best interests of Riverside shareholders. The board of directors of Riverside unanimously recommends that you vote to approve the merger.

 

In reaching its decision to adopt and recommend approval of the merger agreement, the Riverside board considered a number of factors, including the following:

 

•

the value of the consideration to be received by Riverside shareholders relative to the book value and earnings per share of Riverside common stock;

 

•

certain information concerning the financial condition, results of operations and business prospects of Synovus;

 

•

the financial terms of recent business combinations in the financial services industry and a comparison of the multiples of selected combinations with the terms of the proposed transaction with Synovus;

 

•

the average daily trading volume of shares of Synovus common stock;

 

•

the alternatives to the merger, including remaining an independent institution;

 

•

the competitive and regulatory environment for financial institutions generally;

 

•

the expanded range of banking services that the merger will allow Riverside Bank to provide its customers;

 

•

the enhanced career opportunities and benefits afforded Riverside Bank employees as a result of the merger;

 

•

the expected new dividend yield for Riverside shareholders from owning Synovus common stock;

 

•

the fact that the merger will enable Riverside shareholders to exchange their shares of Riverside common stock for shares of common stock of a regional bank, the stock of which is widely held and actively traded, and that the consideration will be received tax-free; and

 

•

the opinion of Burke Capital Group, L.L.C. that the consideration to be received by Riverside shareholders as a result of the merger is fair from a financial point of view.

 

The foregoing discussion of the information and factors considered by the Riverside board is not intended to be exhaustive, but includes the material factors considered. In view of the variety of factors considered in connection with its evaluation of the merger and the offer price, the Riverside board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations, and individual directors may have given differing weights to different factors.

 

Each member of the board of directors of Riverside has indicated that he intends to vote his shares of Riverside common stock in favor of the merger.

 

 

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RIVERSIDE’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT RIVERSIDE SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT.

 

Management of Synovus believes that the merger will provide Synovus with expanded market share opportunities for profitable long-term growth and result in the addition of a well-suited and positioned banking organization into Synovus’ existing organization.

 

Opinion of Riverside’s Financial Advisor

 

Riverside retained Burke Capital Group, L.L.C., which we refer to as BCG, to act as its financial advisor in connection with a possible business combination. BCG is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, BCG is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

 

BCG acted as financial advisor to Riverside in connection with the proposed merger with Synovus and participated in certain of the negotiations leading to the merger agreement. Riverside selected BCG as its financial advisor for the merger based on its prior relationship with BCG and BCG’s resulting familiarity with Riverside’s business, results of operations, and corporate strategy. During the two years prior to its engagement in connection with the proposed merger, BCG served as Riverside’s financial advisor with respect to general investment banking matters and received fees aggregating $57,500 for its services during that period.

 

In connection with BCG’s current engagement, Riverside asked BCG to evaluate the fairness of the merger consideration to Riverside’s stockholders from a financial point of view. At the September 1, 2005 meeting of the Riverside board to evaluate the merger, BCG delivered to the board its oral opinion that, based upon and subject to various matters set forth in its opinion, the merger consideration selected by Riverside’s board of directors was fair to Riverside’s stockholders from a financial point of view. At this meeting, the Riverside board voted to approve the merger. On September 6, 2005, BCG delivered its written opinion as to the financial fairness of the transaction and the parties executed the merger agreement. BCG updated its fairness opinion on December 27, 2005 when the parties executed the amendment to the merger agreement.

 

THE FULL TEXT OF BCG’S WRITTEN OPINION, AS UPDATED, IS ATTACHED AS APPENDIX C TO THIS DOCUMENT. THE OPINION OUTLINES MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BCG IN RENDERING ITS OPINION. THE DESCRIPTION OF THE OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPINION. WE URGE YOU TO READ THE ENTIRE OPINION, AS UPDATED, CAREFULLY IN CONNECTION WITH YOUR CONSIDERATION OF THE PROPOSED MERGER.

 

BCG'S OPINION SPEAKS ONLY AS OF THE DATE OF THE OPINION. THE OPINION WAS DIRECTED TO THE RIVERSIDE BOARD AND IS DIRECTED ONLY TO THE FAIRNESS OF THE MERGER CONSIDERATION TO RIVERSIDE SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF RIVERSIDE TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE MERGER AND IS NOT A RECOMMENDATION TO ANY RIVERSIDE SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SHAREHOLDER MEETING WITH RESPECT TO THE MERGER, OR ANY OTHER MATTER.

 

In connection with rendering its opinion, BCG reviewed and considered, among other things:

 

•

the merger agreement and certain of the schedules thereto;

 

•

certain publicly available financial statements and other historical financial information of Riverside that it deemed relevant;

 

•

projected earnings estimates for Riverside for the years ending December 31, 2005 through 2010 prepared by and reviewed with senior management of Riverside and the views of senior management regarding Riverside’s business, financial condition, results of operations and future prospects;

 

 

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internal financial and operating information with respect to the business, operations and prospects of Riverside furnished to BCG by Riverside that is not publicly available;

 

•

certain publicly available financial statements and other historical financial information of Synovus that it deemed relevant;

 

•

the reported prices and trading activity of Synovus’ common stock and a comparison of those prices and activity with other publicly-traded companies that BCG deemed relevant;

 

•

the pro forma financial impact of the merger on Synovus’ ability to complete a transaction from a regulatory standpoint, based on assumptions determined by senior management of Riverside and BCG;

 

•

the financial terms of other recent business combinations in the commercial banking industry, to the extent publicly available;

 

•

the current market environment generally and the banking environment in particular; and

 

•

such other information, financial studies, analyses and investigations and financial, economic and market criteria as it considered relevant.

 

RIVERSIDE’S BOARD OF DIRECTORS DID NOT LIMIT THE INVESTIGATIONS MADE OR THE PROCEDURES FOLLOWED BY BCG IN GIVING ITS OPINION.

 

In performing its reviews and analyses and in rendering its opinion, BCG assumed and relied upon the accuracy and completeness of all the financial information, analyses and other information that was publicly available or otherwise furnished to, reviewed by or discussed with it and further relied on the assurances of management of Riverside and Synovus that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. BCG was not asked to and did not independently verify the accuracy or completeness of such information and it did not assume responsibility or liability for the accuracy or completeness of any of such information. BCG did not make an independent evaluation or appraisal of the assets, the collateral securing assets or the liabilities, contingent or otherwise, of Riverside or Synovus or any of their respective subsidiaries, or the ability to collect any such assets, nor was it furnished with any such evaluations or appraisals. BCG is not an expert in the evaluation of allowances for loan losses and it did not make an independent evaluation of the adequacy of the allowance for loan losses of Riverside or Synovus, nor did it review any individual credit files relating to Riverside or Synovus. With Riverside’s consent, BCG assumed that the respective allowances for loan losses for both Riverside and Synovus were adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. In addition, BCG did not conduct any physical inspection of the properties or facilities of Riverside or Synovus. BCG is not an accounting firm and it relied on the reports of the independent accountants of Riverside and the Directors of Synovus for the accuracy and completeness of the financial statements furnished to it.

 

BCG’s opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of its opinion. BCG assumed, in all respects material to its analysis, that all of the representations and warranties contained in the merger agreement and all related agreements are true and correct, that each party to such agreements will perform all of the covenants required to be performed by such party under such agreements and that the conditions precedent in the merger agreement are not waived. BCG also assumed that there has been no material change in Riverside’s and Synovus’ assets, financial condition, results of operations, business or prospects since the date of the last financial statements made available to them, and that Riverside and Synovus will remain as going concerns for all periods relevant to its analyses.

 

In rendering its opinion, BCG performed a variety of financial analyses. The following is a summary of the material analyses performed by BCG, but is not a complete description of all the analyses underlying BCG’s opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. BCG believes that its analyses must be considered as

 

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a whole and that selecting portions of the factors and analyses considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in BCG’s comparative analyses described below is identical to Riverside or Synovus and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Riverside or Synovus and the companies to which they are being compared.

 

The earnings projections used and relied upon by BCG in its analyses were based upon internal projections of Riverside. BCG assumed for purposes of its analyses that such performance would be achieved. BCG expressed no opinion as to such financial projections or the assumptions on which they were based. The financial projections furnished to BCG by Riverside were prepared for internal purposes only and not with a view towards public disclosure. These projections, as well as the other estimates used by BCG in its analyses, were based on numerous variables and assumptions which are inherently uncertain and, accordingly, actual results could vary materially from those set forth in such projections.

 

In performing its analyses, BCG also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Riverside, Synovus and BCG. The analyses performed by BCG are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. BCG prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the Riverside board at the September 1, 2005 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, BCG’s analyses do not necessarily reflect the value of Riverside’s common stock or Synovus’ common stock or the prices at which Riverside’s or Synovus’ common stock may be sold at any time.

 

The following discussion describes BCG’s analysis as it related to the original merger agreement and BCG’s fairness opinion dated September 6, 2005. Following this discussion, a separate section describes BCG’s updated fairness opinion dated December 27, 2005 relating to the merger agreement, as amended, and the material differences in its analysis relating to the amendment.

 

Summary and Analysis of Initial Merger Terms

 

BCG reviewed the financial terms of the merger as originally proposed, whereby the holders of Riverside stock would be entitled to receive, in exchange for their shares of Riverside stock, 1.0312 shares of Synovus common stock. Based upon the terms of the merger agreement and Synovus’ closing stock price of $28.75 on September 2, 2005, BCG calculated a transaction value of $169,058,855 or $29.65 per Riverside share on September 6, 2005, the date of the announcement. Utilizing Riverside’s publicly available financial information on the date of announcement, which was March 31, 2005 unaudited financial information, BCG calculated the following ratios:

 

 

 

The fully diluted share count was based upon Riverside’s 5,184,994 outstanding common shares and 710,639 outstanding options to purchase common shares at a weighted average strike price of $8.11. This analysis assumed no options would be exercised prior to closing. Any exercise of options prior to closing would change the fully diluted share count and would slightly change the per share consideration, but not the total transaction valuation.

 

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Analysis of Riverside

 

SELECTED PEER GROUP ANALYSIS

 

BCG used publicly available information to compare selected financial information for Riverside and a group of selected financial institutions. The group consisted of Riverside and 13 bank holding companies, which we refer to as the “Riverside Peer Group”. The Riverside Peer Group consisted of selected Georgia community banks with assets between $350 million and $750 million and having earned at least 100 bps (1.00%) on average assets for the trailing twelve months. The Riverside Peer Group was comprised of the following institutions:

 

 

The analysis calculated the median performance of the Riverside Peer Group, based upon the latest publicly available financial data, to Riverside’s March 31, 2005 unaudited financial results. The table below sets forth the comparative data.

 

 

Riverside’s performance was in line with the selected peer group.

 

ANALYSIS OF SELECTED MERGER TRANSACTIONS  

 

In order to address the specific valuation considerations within the Southeastern market that Riverside serves, BCG selected a group of comparable Southeastern merger and acquisition transactions and compared the pricing multiples to the multiples implied by the merger consideration. Specifically, BCG selected bank merger and acquisition transactions according to the following criteria:

 

•

merger and acquisition transactions announced after January 1, 2003, excluding sellers designated as Subchapter S corporations;

 

•

seller located within the Southeast - AL, AR, FL, GA, MS, NC, SC, TN, VA, WV.;

 

•

seller assets between $350 million and $1 billion; and

 

•

seller with ROAA greater than 100 bps in the latest quarter prior to announcement.

 

BCG selected eight transactions fitting the criteria listed above as being comparable to the proposed merger. The comparable transactions selected included the following:

 

 

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BCG reviewed the multiples of transaction value at announcement to last twelve months’ earnings, transaction value to book value, transaction value to tangible book value, and book premium to core deposits and computed high, low, mean, median, and quartile multiples and premiums for the transactions. These multiples and premiums were applied to Riverside’s financial information as of and for the period ended March 31, 2005 and were used to impute a transaction price. As illustrated in the following table, BCG derived an imputed range of values per share of Riverside’s common stock of $22.45 to $26.27 based upon the median and mean multiples of the selected Southeastern transactions.

 

 

The analysis showed that the merger consideration represented multiples of earnings and book value that were above the corresponding mean and median values for the comparable transactions. The merger consideration per share of $29.65 was above the range of values imputed by the mean and median multiples of the comparable transactions.

 

DISCOUNTED CASH FLOW ANALYSIS

 

Using a discounted dividends analysis, BCG estimated the present value of the future stream of dividends that Riverside could produce over the next five years in accordance with Riverside’s internal earnings forecast for 2005 – 2010. In order to derive the terminal value of Riverside’s earnings stream beyond 2009, BCG assumed terminal value multiples of fiscal year 2010 net income ranging from 15.0x to 17.0x. The dividend streams and terminal values were then discounted to present values using different discount rates (ranging from 11.0% to 15.0%) chosen to reflect different assumptions regarding the required rates of return to holders or prospective buyers of Riverside common stock. This discounted dividend analysis indicated a value range between $23.43 and $30.24 per share of Riverside common stock. The value of the consideration offered by Synovus to Riverside in the merger was $29.65 per share of Riverside common stock, which was within the range of values imputed from the discounted cash flow analysis.

 

Analysis of Synovus

 

SELECTED PEER GROUP ANALYSIS

 

BCG used publicly available information to compare selected financial information for Synovus and a group of selected financial institutions. The group consisted of Synovus and 15 bank holding companies, which we refer to as the “Synovus Peer Group.” The Synovus Peer Group consisted of selected continental U.S. banks with assets between $15 billion and $50 billion and having earned at least 100 bps (1.00%) on average assets for the trailing twelve months. The Synovus Peer Group was comprised of the following institutions:

 

 

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The analysis calculated the median performance of the Synovus Peer Group, based upon the latest publicly available financial data, to Synovus’ June 30, 2005 unaudited financial results. The table below sets forth the comparative data.

 

 

Synovus’ performance was in line with the selected peer group.

 

RELATIVE STOCK PRICE PERFORMANCE

 

BCG analyzed the price performance of Synovus common stock from December 31, 2003 to September 6, 2005 and compared that performance to the performance of the S&P Bank Index (WCB:BIX) over the same period. The S&P Bank Index is a market cap weighted price index composed of 25 major financial company stocks. The S&P Bank Index is not traded but is quoted under the symbol “BIX.” This analysis indicated the following cumulative changes in price over the period:

 

Synovus:

6.14%

 

S&P Bank Index:

3.86%

 

Other Factors and Analyses

 

BCG took into consideration various other factors and analyses, including: historical market prices and trading volumes for Synovus’ common stock; movements in the common stock of selected publicly-traded companies and movements in the S&P Bank Index.

 

Summary and Analysis of Amended Merger Terms

 

On December 27, 2005, following the execution of the amendment to the merger agreement, BCG re-evaluated the fairness of the merger consideration to Riverside’s stockholders from a financial point of view. BCG reviewed the revised financial terms of the proposed transaction whereby the holders of Riverside stock shall be entitled to receive, in exchange for their shares of Riverside stock, 1.10 shares of Synovus common stock. Based upon the terms of the merger agreement, as amended, and Synovus’ closing stock price of $27.22 per share on December 27, 2005, BCG calculated a transaction value of $170,994,207 or $29.94 per Riverside share on December 27, 2005, the date of the amendment to the merger agreement. The chart below compares the consideration to Riverside shareholders on the date of the announcement of the merger agreement on September 6, 2005, to the revised consideration on the date of the amendment to the merger agreement on December 27, 2005.

 

 

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In connection with updating its September 6, 2005 written opinion as of December 27, 2005, BCG reviewed and considered, among other things:

 

•

The merger agreement, the amendment to the merger agreement and certain of the schedules thereto;

 

•

Certain publicly available financial statements and other historical financial information of Riverside that it deemed relevant;

 

•

Internal financial and operating information with respect to the business, operations and prospects of Riverside furnished to BCG by Riverside that is not publicly available;

 

•

Certain publicly available financial statements and other historical financial information of Synovus that it deemed relevant;

 

•

The reported prices and trading activity of Synovus’ common stock and a comparison of those prices and activity with other publicly-traded companies that BCG deemed relevant;

 

•

The pro forma financial impact of the merger on Synovus’ ability to complete a transaction from a regulatory standpoint, based on assumptions determined by senior management of Riverside and BCG;

 

•

The financial terms of other recent business combinations in the commercial banking industry, to the extent publicly available;

 

•

The current market environment generally and the banking environment in particular; and

 

•

Such other information, financial studies, analyses and investigations and financial, economic and market criteria as it considered relevant.

 

In connection with its analysis of the amended merger terms, BCG updated the selected peer group analysis to include September 30, 2005 financial information and included in its analysis of selected merger transactions the acquisition of Cavalry Bancorp by Pinnacle Financial Partners, which closed after September 6, 2005. The tabular data reported in the foregoing discussions of these analyses did not change except to the extent noted in the table shown below, which updates the table on page 20 showing the implied range of values per share of Riverside common stock based upon the mean and median multiples of the selected Southeastern transactions. The implied range of values per share reflects Riverside’s September 30, 2005 financials.

 

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BCG concluded that its updated analyses did not change its opinion and that the transaction remained fair to the Riverside shareholders from a financial point of view.

 

Information Regarding BCG

 

Pursuant to a letter agreement dated April 4, 2005, Riverside paid BCG a fee of $50,000 upon the delivery of its initial fairness opinion and the signing of the merger agreement. In addition, Riverside has agreed to pay BCG a financial advisory fee that will fluctuate based upon the ultimate value received by Riverside at the closing of the merger. As of December 27, 2005, the date of the amendment to the merger agreement, the fee payable to BCG at the closing of the merger was $1,949,710. In addition, Riverside has agreed to reimburse BCG for its reasonable out-of-pocket expenses and to indemnify BCG and certain related persons against certain liabilities arising out of or in conjunction with its rendering of services under its engagement, including certain liabilities under the federal securities laws.

 

Representations and Warranties

The merger agreement contains generally customary representations and warranties of Synovus and Riverside relating to their respective businesses. The representations of each of Synovus and Riverside have been made solely for the benefit of the other party and should not be relied on by any other person. In addition, the representations and warranties have been qualified by information set forth in confidential disclosure schedules exchanged by the parties in connection with signing the merger agreement. The information contained in these schedules modifies, qualifies and creates exceptions to the representations and warranties in the merger agreement. Each of Synovus and Riverside has made representations and warranties to the other in the merger agreement as to:

 

•

corporate existence, including good standing and qualification to conduct business;

•

capital structure;

•

due authorization, execution, delivery and enforceability of the merger agreement;

•

absence of any violation of agreements or law or regulation as a result of the merger;

•

with respect to Synovus only, SEC filings;

•

absence of undisclosed liabilities;

•

absence of material adverse changes;

•

legal proceedings and regulatory actions;

•

tax matters;

•

material contracts;

 

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•

employee benefit plans;

•

compliance with laws;

•

labor relations;

•

environmental matters;

•

tax treatment of the merger;

•

property;

•

fees payable to financial advisors in connection with the merger; and

•

accuracy of information included in this document.

 

Synovus also has made representations and warranties to Riverside with respect to the validity of the shares of Synovus common stock to be issued in connection with the merger.

 

Most of the representations and warranties of the parties will be deemed to be true and correct unless the totality of facts, circumstances or events inconsistent with the representations or warranties has had or is reasonably likely to have a material adverse effect on the business, results of operations or financial condition of the party making the representations and warranties or on the ability of the party to complete the transactions contemplated by the merger agreement. In determining whether a material adverse effect has occurred or is reasonably likely, the parties will disregard any effects resulting from: (a) changes in banking or similar laws of general applicability or their interpretations by courts or governmental authorities; or (b) changes in generally accepted accounting principles applicable to banks and bank holding companies.

 

Conditions to the Merger

Each party’s obligation to effect the merger is subject to the satisfaction or waiver of conditions which include, in addition to other closing conditions, the following:

 

•

approval of the merger agreement and the transactions contemplated by the merger agreement by the affirmative vote of the holders of a majority of the shares of Riverside common stock;

•

approval of the merger agreement and the transactions contemplated by the merger agreement by the Federal Reserve Board and the Georgia Department of Banking and Finance, and the receipt of all other regulatory consents and approvals that are necessary to the consummation of the transactions contemplated by the merger agreement;

•

the satisfaction of all other statutory or regulatory requirements, including the requirements of the NYSE or other self regulating organizations, which are necessary to the consummation of the transactions contemplated by the merger agreement;

•

no party shall be subject to any order, decree or injunction or any other action of a United States federal or state court or a United States federal or state governmental, regulatory or administrative agency or commission restraining, enjoining or otherwise prohibiting the transactions contemplated by the merger agreement;

•

the registration statement of which this document forms a part will have become effective and no stop order suspending the effectiveness of the registration statement will have been issued and no proceedings for that purpose will have been initiated or threatened by the SEC or any other regulatory authority; and

•

each party shall have received an opinion from Powell Goldstein LLP to the effect that the merger will be treated for federal income tax purposes as a tax-free reorganization within the meaning of Section 368 of the Internal Revenue Code.

 

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The obligation of Synovus to effect the merger is subject to the satisfaction or waiver of conditions, which include, in addition to the other closing conditions, the following:

•

each of the representations, warranties and covenants of Riverside contained in the merger agreement will be true on, or complied with by, the effective date of the merger in all material respects as if made on such date, or on the date when made in the case of any representation or warranty which specifically relates to an earlier date, and Synovus will have received a certificate signed by the Chief Executive Officer of Riverside, dated the effective date, to such effect;

•

there will be no discovery of facts, or actual or threatened causes of action, investigations or proceedings by or before any court or other governmental body that relates to or involves Riverside: (a) which, in the reasonable judgment of Synovus, would, or which may be foreseen to have, a material adverse effect upon Riverside or the consummation of the transactions contemplated by the merger agreement; (b) that challenges the validity or legality of the merger agreement or the consummation of the transactions contemplated by the merger agreement; or (c) that seeks to restrain or invalidate the consummation of the transactions contemplated by the merger agreement or seeks damages in connection therewith;

•

Synovus will not have learned of any fact or condition with respect to the business, properties, assets, liabilities, deposit relationships or earnings of Riverside which, in the reasonable judgment of Synovus, is materially at variance with one or more of the warranties or representations set forth in the merger agreement or which, in the reasonable judgment of Synovus, has or will have a material adverse effect on Riverside;

•

Kessel D. Stelling, Jr. will have entered into an employment agreement with Synovus;

•

on the effective date of the merger, Riverside Bank will have a CAMELS rating of at least 2 and a Compliance Rating and Community Reinvestment Act Rating of at least Satisfactory;

•

on the effective date of the merger, Riverside will have a non-performing assets ratio of not more than .30%, an annualized charge off ratio of not more than .10% and an allowance for loan losses which will be adequate in all material respects under generally accepted accounting principles applicable to banks;

•

the results of any regulatory exam of Riverside or Riverside Bank occurring between the date the merger agreement was signed and the closing date of the merger shall be reasonably satisfactory to Synovus;

•

Riverside will have delivered to Synovus certain environmental reports; and

•

each of the directors and officers of Riverside will have delivered a letter to Synovus to the effect that such person is not aware of any claims he might have against Riverside other than routine compensation, benefits and the like as an employee, or ordinary rights as a customer.

The obligation of Riverside to effect the merger is subject to the satisfaction or waiver of conditions, which include, in addition to other closing conditions, the following:

•

each of the representations, warranties and covenants of Synovus contained in the merger agreement will be true on, or complied with by, the effective date of the merger in all material respects as if made on such date, or on the date when made in the case of any representation or warranty which specifically relates to an earlier date, and Riverside will have received a certificate signed by the Chief Executive Officer of Synovus, dated the effective date, to such effect;

•

the listing for trading of the shares of Synovus common stock to be issued pursuant to the terms of the merger agreement on the NYSE shall have been approved by the NYSE subject to official notice of issuance;

•

there will be no discovery of facts, or actual or threatened causes of action, investigations or proceedings by or before any court or other governmental body that relates to or involves Synovus: (a) which, in the reasonable judgment of Riverside, would, or which may be foreseen to have, a material adverse effect upon either Synovus or the consummation of the transactions contemplated by the merger agreement; (b) that challenges the validity or legality of the merger agreement or the consummation of the transactions contemplated by the merger agreement; or (c) that seeks to restrain or invalidate the consummation of the transactions contemplated by the merger agreement or seeks damages in connection therewith;

 

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Riverside will not have learned of any fact or condition with respect to the business, properties, assets, liabilities, deposit relationships or earnings of Synovus which, in the reasonable judgment of Riverside, is materially at variance with one or more of the warranties or representations set forth in the merger agreement or which, in the reasonable judgment of Riverside, has or will have a material adverse effect on Synovus;

•

Riverside shall have received from the Senior Deputy General Counsel of Synovus an opinion to the effect that, among other opinions, the shares of Synovus common stock to be issued in the merger are duly authorized, validly issued, fully paid, nonassessable, and not subject to any preemptive rights;

•

Riverside shall have received a letter from Burke Capital Group to the effect that, in the opinion of such firm, merger consideration is fair from a financial point of view to the holders of Riverside common stock; and

•

Synovus will not have issued any shares of stock with preferences superior to those of the Synovus common stock to be issued to the shareholders of Riverside in connection with the merger.

No Solicitation

In the merger agreement, Riverside has agreed that it will not solicit or encourage any inquiry or proposal relating to the disposition of its business or assets, or the acquisition of its voting securities, or the merger of Riverside or any of its subsidiaries with any individual, corporation or other entity, or, subject to the fiduciary duties of the board of directors of Riverside, provide any individual, corporation or other entity with information or assistance or negotiate with any individual, corporation or other entity in furtherance of such inquiries or to obtain such a proposal. Riverside has also agreed that it will promptly notify Synovus in the event it receives any inquiry or proposal relating to any such transaction. These provisions are intended to increase the likelihood that the merger will be consummated in accordance with the terms of the merger agreement and may have the effect of discouraging persons who might now or prior to the effective date of the merger be interested in acquiring all of or a significant interest in Riverside from considering or proposing such an acquisition.

Conduct of Business of Riverside Pending the Merger

The merger agreement provides that prior to the effective date of the merger, Riverside and its subsidiaries will conduct business only in the ordinary course and will not, without the prior written consent of Synovus:

•

issue any options to purchase capital stock or issue any shares of capital stock, other than shares of Riverside common stock issued in connection with the exercise of currently outstanding options to purchase shares of Riverside common stock;

•

declare, set aside, or pay any dividend or distribution with respect to the capital stock of Riverside other than, for each cash dividend of Synovus paid after January 1, 2006 (including an amount for any dividends declared but unpaid as of the effective date of the merger), a cash dividend per share equal to the product of that Synovus cash dividend per share and the 1.10 exchange ratio, plus an additional five percent per share to be paid on the Riverside Class B common stock;

•

directly or indirectly redeem, purchase or otherwise acquire any capital stock of Riverside or its subsidiaries;

•

effect a split or reclassification of the capital stock of Riverside or its subsidiaries or a recapitalization of Riverside or its subsidiaries;

•

amend the Articles of Incorporation or bylaws of Riverside or its subsidiaries;

•

grant any increase in the salaries payable or to become payable by Riverside or its subsidiaries to any employee other than normal, annual salary increases to be made with regard to employees;

•

make any change in any bonus, group insurance, pension, profit sharing, deferred compensation, or other benefit plan, payment or arrangement made to, for or with respect to any employees or directors, except to the extent such changes are required by applicable laws or regulations;

•

enter into, terminate, modify or amend any contract, lease or other agreement with any officer or director of Riverside or its subsidiaries or any “associate” of any such officer or director, as such term is defined in Regulation 14A under the Securities Exchange Act of 1934, as amended, other than in the ordinary course of Riverside’ banking business;

 

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•

incur or assume any liabilities, other than in the ordinary course of business;

•

dispose of any of its assets or properties, other than in the ordinary course of business; or

•

take any other action not in the ordinary course of business.

Regulatory Approvals

Consummation of the merger and the other transactions contemplated by the merger agreement is subject to, and conditioned upon, receipt of the approvals from the Federal Reserve Board and the Georgia Department of Banking and Finance. Applications in connection with the merger were filed with the regulatory agencies on or about September 9, 2005. The merger has not yet been approved by the regulatory agencies.

 

There can be no assurance that the regulatory agencies will approve or take other required action with respect to the merger. Synovus and Riverside are not aware of any governmental approvals or actions that are required in order to consummate the merger except as described above. Should other approvals or actions be required, it is contemplated that Synovus and Riverside would seek the approval or action. There can be no assurance as to whether or when any other approval or action, if required, could be obtained.

 

Waiver and Amendment

Before the effective date of the merger, any provision of the merger agreement may be waived in writing by the party entitled to the benefits of such provision or by both parties, to the extent allowed by law. In addition, the merger agreement may be amended at any time, to the extent allowed by law, by an agreement in writing between the parties after approval of their respective boards of directors.

 

Termination and Termination Fee

The merger agreement may be terminated prior to the effective date either before or after its approval by the shareholders of Riverside. The merger agreement may be terminated by Synovus or Riverside:

•

by mutual consent of Synovus and Riverside;

•

if consummation of the merger does not occur by reason of the failure of any of the conditions precedent set forth in the merger agreement unless the failure to meet the conditions precedent is due to a breach of the merger agreement by the terminating party; or

•

if the merger is not consummated by April 30, 2006, unless the failure to consummate by such time is due to the breach of the merger agreement by the terminating party; or

 

In addition, the merger agreement may be terminated by Riverside if the average closing price of the Synovus common stock on the NYSE for the 10 trading days preceding the effective date of the merger is less than $23.00 per share. The merger agreement may be terminated by Synovus if the average closing price of the Synovus common stock on the NYSE for the 10 trading days preceding the effective date of the merger is greater than $35.00 per share.

 

If either party terminates the merger agreement due to the failure of the other party to satisfy its representations, warranties or covenants in the agreement, the terminating party will be entitled to a cash payment from the other party in the amount of the terminating party’s expenses related to the merger, up to a maximum of $150,000. This amount, with respect to either Synovus or Riverside, is not deemed an exclusive remedy or liquidated damages, in the event of a termination of the merger agreement due to the failure of Synovus or Riverside, as the case may be, to satisfy any of its representations, warranties or covenants contained in the merger agreement.

Interests of Riverside’s Directors and Executive Officers in the Merger

Some members of the Riverside board of directors and management have interests in the merger in addition to their interests generally as shareholders of Riverside. The Riverside board of directors was aware of these interests and considered them, in addition to other matters, in approving the merger agreement.

 

 

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Employment agreement. It is a condition to the merger that Kessel D. Stelling, Jr., Chairman and Chief Executive Officer of Riverside, enter into an employment agreement with Synovus before the effective date of the merger. On September 6, 2005, Mr. Stelling entered into the employment agreement, effective on the date the merger is completed with Synovus. The employment agreement provides for Mr. Stelling’s employment as the Chairman and Chief Executive Officer of Riverside Bank, and after the merger of Riverside Bank into Bank of North Georgia as President and Chief Operating Officer of Bank of North Georgia, for a period of five years following the merger. Under the employment agreement, Synovus will pay Mr. Stelling base annual compensation of $307,600 and Mr. Stelling will be a participant in, and eligible to receive a bonus under, Synovus’ incentive bonus plan. The employment agreement also provides Mr. Stelling with certain additional benefits, including an automobile allowance and reimbursement for business expenses, along with other perquisites. As part of Mr. Stelling’s employment agreement, Synovus and Mr. Stelling have also agreed to enter into Synovus’ standard change of control agreement. The change of control agreement provides severance pay and continuation of certain benefits in the event of a change of control of Synovus. In order to receive benefits under the change of control agreement, the executive’s employment must be terminated involuntarily and without cause, or by the executive for good reason (as defined), within two years following a change of control.

 

Directors’ and officers’ insurance and indemnity. Prior to the completion of the merger, Riverside will purchase for, and on behalf of, its current and former officers and directors, extended coverage under the current directors’ and officers’ liability insurance policy maintained by Riverside to provide for continued coverage of such insurance for a period of four years following the completion of the merger with respect to matters occurring prior to the completion of the merger. In addition, subject to certain conditions set forth in the merger agreement, for a period of four years after the effective date of the merger Synovus has agreed to indemnify each person entitled to indemnification from Riverside and its subsidiaries against any liability arising out of actions or omissions occurring at or prior to the effective date of the merger, including the transactions contemplated by the merger agreement, to the fullest extent permitted under Georgia law and by the applicable articles of incorporation and bylaws as in effect on the date of the merger agreement, including provisions relating to advances of expenses incurred in the defense of any litigation.

 

Riverside stock and options ownership. Riverside’s executive officers and directors and their affiliates own in the aggregate approximately 59% of the outstanding shares of Riverside common stock. In addition, Riverside’s executive officers and directors hold options under Riverside’s stock option plan for an aggregate of 224,826 shares of Riverside common stock with a weighted average exercise price of $4.67 per share. All options under the stock option plan will become exercisable as a result of the merger.

 

Employee Benefits

 

Synovus has agreed in the merger agreement that, following the effective date of the merger, Synovus will provide generally to employees of Riverside employee benefits, including without limitation pension benefits, health and welfare benefits, life insurance and vacation and severance arrangements, that are substantially similar, in the aggregate, to those currently provided by Riverside. As soon as administratively practicable following the effective date of the merger, Synovus has agreed to provide generally to employees of Riverside employee benefits which are substantially similar, in the aggregate, to those provided by Synovus and its subsidiaries to their similarly situated employees.

 

Material United States Federal Income Tax Consequences of the Merger

The following is a summary description of the material anticipated federal income tax consequences of the merger generally applicable to the shareholders of Riverside. This summary is not intended to be a complete description of all of the federal income tax consequences of the merger. No information is provided with respect to the tax consequences of the merger under any other tax laws, including applicable state, local and foreign tax laws, other than certain state tax laws. In addition, the following discussion may not be applicable with respect to specific categories of shareholders, including but not limited to persons who are corporations, trusts, dealers in securities, financial institutions, insurance companies or tax exempt organizations; persons who are not United States citizens or resident aliens or domestic entities (partnerships or trusts); persons who are subject to alternative minimum tax (to the extent that tax affects the tax consequences of the merger) or are subject to the “golden parachute” provisions of the Internal Revenue Code (to the extent that tax affects the tax consequences of the merger); persons whose shares of Riverside stock are treated as “section 306 stock” under Section 306 of the Internal Revenue Code; persons who acquired shares of Riverside stock by exercising employee stock options or otherwise as compensation; persons who do not hold their shares as capital assets; or persons who hold their shares as part of a “straddle” or “conversion transaction. No ruling has been or will be requested from the IRS with respect to the tax effects of the merger.

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The federal income tax laws are complex, and a shareholder’s individual circumstances may affect the tax consequences to the shareholder.

Synovus and Riverside have received an opinion from Powell Goldstein LLP, which it will confirm as of the effective date of the merger, to the effect that:

•

The merger will qualify as a reorganization under Section 368 of the Internal Revenue Code.

•

No gain or loss will be recognized by Riverside shareholders as a result of the exchange of their Riverside common stock in the Merger except for those Riverside shareholders exercising their right to dissent and to the extent that a Riverside shareholder receives cash in exchange for any fractional share that such Riverside shareholder would otherwise be entitled to receive.

•

The basis of the Synovus common stock (including any fractional shares that will be redeemed for cash) received by a Riverside shareholder in the merger in exchange for his Riverside common stock will equal the basis of such Riverside common stock and the holding period of such Synovus common stock will include the period that such Riverside shareholder has held such Riverside common stock.

•

Neither Synovus nor Riverside will recognize any income, gain, or loss as a result of the merger.

The tax opinion was issued on December 30, 2005, and is based upon customary assumptions and factual representations by the management of Synovus and Riverside.

Riverside shareholders are urged to consult their own tax advisors as to the specific tax consequences to them, based upon their individual facts, of the merger under federal, state, local and other applicable income tax laws.

Accounting Treatment

The merger will be accounted for by Synovus as a purchase transaction in accordance with generally accepted accounting principles in the United States of America. One effect of such accounting treatment is that the earnings of Riverside will be combined with the earnings of Synovus only from and after the effective date of the merger.

Expenses

The merger agreement provides that Synovus and Riverside will each pay its own expenses in connection with the merger and related transactions, including, but not limited to, the fees and expenses of its own investment bankers, legal counsel and accountants.

 

New York Stock Exchange Listing

Synovus common stock is listed on the NYSE. The shares of Synovus common stock to be issued to the shareholders of Riverside in the merger will be listed on the NYSE.

 

Resales of Synovus Common Stock

The shares of Synovus common stock issued pursuant to the merger agreement will be freely transferable under the Securities Act of 1933, except for shares issued to any shareholder who may be deemed to be an “affiliate” of Riverside for purposes of Rule 145 under the Securities Act as of the date of the Riverside special meeting. Affiliates may not sell their shares of Synovus common stock acquired in connection with the merger except pursuant to an effective registration statement under the Securities Act covering the resale of the shares or in compliance with Rule 145 promulgated under the Securities Act or another applicable exemption from the registration requirements of the Securities Act. Rule 145 imposes restrictions on the manner in which an affiliate may resell and the quantity of any resale of any of the shares of Synovus common stock received by the affiliate in the merger. Persons who may be deemed to be affiliates of Riverside generally include individuals or entities that control, are controlled by or are under common control with Riverside and may include executive officers and directors of Riverside as well as principal shareholders of Riverside.

 

Riverside has agreed in the merger agreement to use its best efforts to cause each director, executive officer and other person who is an affiliate of Riverside to enter into an agreement with Synovus providing that he or she will not sell, pledge, transfer or otherwise dispose of shares of Riverside common stock or Synovus common stock to be received in the merger except in compliance with Rule 145 or in a transaction exempt under the Securities Act. This prospectus does not cover

 

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resales of Synovus common stock following consummation of the merger, and no person may make use of this prospectus in connection with any such resale.

 

DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF

RIVERSIDE SHAREHOLDERS

 

If the merger is completed, all holders of Riverside common stock and options will become holders of shares of Synovus common stock or holders of options for shares of Synovus common stock. The rights of a holder of Synovus common stock are similar in some respects and different in other respects from the rights of a holder of Riverside common stock. The rights of Riverside shareholders are currently governed by the Georgia Business Corporation Code and the Articles of Incorporation and bylaws of Riverside. The rights of Synovus shareholders are currently governed by the Georgia Business Corporation Code and the Articles of Incorporation and bylaws of Synovus. The following discussion summarizes the material differences between the current rights of Riverside shareholders and the rights they will have as Synovus shareholders following the merger.

 

The following comparison of shareholders’ rights is necessarily a summary, is not intended to be complete or to identify all differences that may, under given situations, be material to shareholders and is subject, in all respects, and is qualified by reference to the Georgia Business Corporation Code, Riverside’s Articles of Incorporation and bylaws and Synovus’ Articles of Incorporation and bylaws.

 

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SYNOVUS		RIVERSIDE
•	Ten votes for each share held, except in limited circumstances described below	•	Class A common stock- One vote for each share held Class B common stock – One vote for each share held but only entitled to vote on certain extraordinary corporate actions, including the merger agreement
•	No cumulative voting rights in the election of directors, meaning that the holders of a plurality of the shares elect the entire board of directors	•	Same as Synovus
•	Dividends may be paid from funds legally available, subject to contractual and regulatory restrictions	•	Same as Synovus, except that the Class B common stock is entitled to a 5% preference in cash dividends declared on the Class A common stock
•	Right to participate pro rata in distribution of assets upon liquidation	•	Same as Synovus, except that the Class B common stock has a liquidation preference of $5.00 per share
•	No pre-emptive or other rights to subscribe for any additional shares or securities	•	Same as Synovus
•	No conversion rights	•	Same as Synovus, except that the Class B common stock converts to Class A common stock immediately prior to the effectiveness of a change in control of Riverside
•	Directors serve staggered 3-year terms	•	Directors serve one-year terms
•	Some corporate actions, including business combinations, require the affirmative action or vote of 66-2/3% of the votes entitled to be cast by the shareholders of all voting stock	•	Corporate actions, including business combinations (with certain exceptions), require the affirmative vote of a majority of the votes entitled to be cast at the meeting. See “Riverside Common Stock—Required Shareholder Vote” below for additional information.
•	No preferred stock is authorized	•	Same as Synovus
•	No charter provisions restricting the transfer of the shares	•	Transfers of the Class B common stock are subject to a right of first refusal in favor of Riverside

 

 

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Synovus Common Stock

Synovus is incorporated under the Georgia Business Corporation Code. Synovus is authorized to issue 600,000,000 shares of Synovus common stock, of which 312,637,929 shares were outstanding on December 27, 2005. Synovus has no preferred stock authorized. Synovus’ board of directors may at any time, without additional approval of the holders of Synovus common stock, issue authorized but unissued shares of Synovus common stock.

 

As described below, Synovus’ Articles of Incorporation and bylaws presently contain several provisions that may make Synovus a less attractive target for an acquisition of control by an outsider who lacks the support of Synovus’ board of directors.

 

Voting Rights; Anti-Takeover Effects; The Voting Amendment

 

Under an amendment to Synovus’ Articles of Incorporation and bylaws which became effective on April 24, 1986, referred to in this document as the “voting amendment,” shareholders of Synovus common stock are entitled to ten votes on each matter submitted to a vote at a meeting of shareholders for each share of Synovus common stock which:

 

•

has had the same beneficial owner since April 24, 1986;

•

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;

•

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, including shares of Synovus common stock to be issued to the former shareholders of Riverside upon consummation of the merger;

•

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 such plan;

•

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;

•

has been beneficially owned continuously by the same shareholder for a period of forty-eight (48) consecutive months before the record date of any meeting of shareholders at which the share is eligible to be voted;

•

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 has had the same beneficial owner for a period of forty-eight (48) consecutive months before the record date of any meeting of shareholders at which the share is eligible to be voted; or

•

is owned by a holder who, in addition to shares which are beneficially owned under any of the other requirements set forth above, is the beneficial owner of less than 1,139,063 shares of Synovus common stock, which amount has been appropriately adjusted to reflect the stock splits which have occurred subsequent to April 24, 1986 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 other similar action occurring after April 24, 1986.

 

Holders of shares of Synovus common stock not described above are entitled to one vote per share for each such share. A shareholder may own both ten-vote shares and one-vote shares, in which case he or she will be entitled to ten votes for each ten-vote share and one vote for each one-vote share.

 

In connection with various meetings of Synovus’ shareholders, shareholders are required to submit to Synovus’ board of directors satisfactory proof necessary for it to determine whether such shareholders’ shares of Synovus common stock are ten-vote shares. If such information is not provided to Synovus’ board of directors, shareholders who would, if they had provided such information, be entitled to ten votes per share, are entitled to only one vote per share.

 

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As Synovus common stock is registered with the SEC and is listed on the 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 listing 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 qualifies, which, in general, permits grandfathered disparate voting rights plans to continue to operate as adopted. Synovus’ management believes that all current shareholders of Synovus common stock are entitled to ten votes per share, and as such, the further issuance of any ten-vote shares would not disenfranchise any existing shareholders. In the event it is determined in the future that Synovus cannot continue to issue ten-vote shares in mergers and acquisitions, Synovus will consider repealing the voting amendment and restoring the principle of one share/one vote.

 

If the merger is approved, present shareholders of Riverside common stock, as future shareholders of Synovus common stock, will, under the voting amendment described above, be entitled to ten votes per share for each share of Synovus common stock received by them on the effective date of the merger. Each shareholder of Riverside may also acquire by purchase, stock dividend or otherwise, up to 1,139,063 additional shares of Synovus common stock which will also be entitled to ten votes per share. However, if a Riverside shareholder acquires by purchase, stock dividend or otherwise, more than 1,139,063 additional shares of Synovus common stock, he or she will be entitled to only receive one vote per share for each of the shares in excess of 1,139,063 shares until they have been held for four years.

 

Except with respect to voting, ten-vote shares and one-vote shares are identical in all respects and constitute a single class of stock, i.e., Synovus common stock. Neither the ten-vote shares nor the one-vote shares have a preference over the other with regard to dividends or upon liquidation. Synovus common stock does not carry any pre-emptive rights enabling a holder to subscribe for or receive shares of Synovus common stock.

 

Staggered Board of Directors; Supermajority Approvals

 

Under Synovus’ Articles of Incorporation and bylaws, Synovus’ board of directors is divided into three classes of directors serving staggered three year terms, with the terms of each class of directors to expire each succeeding year. Also under Synovus’ Articles of Incorporation and bylaws, the vote or action of shareholders possessing 66-2/3% of the votes entitled to be cast by the holders of all the issued and outstanding shares of Synovus common stock is required to:

 

•

call a special meeting of Synovus shareholders;

•

fix, from time to time, the number of members of Synovus’ board of directors;

•

remove a member of Synovus’ board of directors;

 

•

approve any merger or consolidation of Synovus with or into any other corporation, or the sale, lease, exchange or other disposition of all, or substantially all, of Synovus’ assets to or with any other corporation, person or entity, with respect to which the approval of Synovus’ shareholders is required by the provisions of the corporate laws of the State of Georgia; and

 

•

alter, delete or rescind any provision of Synovus’ Articles of Incorporation.

 

This allows directors to be removed only for cause by 66-2/3% of the votes entitled to be cast at a shareholders’ meeting called for that purpose. Vacancies or new directorships can only be filled by a majority vote of the directors then in office. Synovus’ staggered board of directors, especially when combined with the voting amendment, makes it more difficult for its shareholders to force an immediate change in the composition of the majority of the board. A potential acquiror with shares recently acquired, and not entitled to 10 votes per share under the voting amendment, may be discouraged or prevented from soliciting proxies for the purpose of electing directors other than those nominated by current management for the purpose of changing the policies or control of Synovus.

 

Evaluation of Business Combinations

 

Synovus’ Articles of Incorporation also provide that in evaluating any business combination or other action, Synovus’ board of directors may consider, in addition to the amount of consideration involved and the effects on Synovus and its shareholders, the interests of the employees, customers, suppliers and creditors of Synovus and its subsidiaries, the

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communities in which offices of the corporation or its subsidiaries are located, and any other factors the board of directors deems pertinent.

 

Riverside Common Stock

The Articles of Incorporation of Riverside authorize the issuance of 8,000,000 shares of Class A common stock and 2,000,000 shares of Class B common stock. At December 28, 2005, there were 5,128,992 shares of Riverside Class A common stock issued and outstanding and 110,314 shares of Riverside Class B common stock issued and outstanding. The remaining authorized shares of Riverside common stock may be issued from time to time in such amounts as the board of directors determines. Each holder of Riverside Class A common stock has one vote per share upon all matters voted upon by shareholders. Class B common stock is, in general, nonvoting. However, each holder of Class B common stock is entitled to one vote per share on certain extraordinary corporate actions, including the merger agreement. Voting rights are noncumulative so that shareholders holding a majority of the outstanding shares of Riverside common stock are able to elect all members of the board of directors. The Class B common stock has a 5% dividend preference as compared to the Class A common stock, which means that if a cash dividend is declared on the Class A common stock, each share of Class B common stock is entitled to a 5% greater dividend payment. The Class B common stock also has a liquidation preference of $5.00 per share, which represents the amount to which its holders are entitled (to the extent available) prior to the distribution of available Riverside assets to the Class A shareholders upon liquidation of the Company. The Class B common stock converts to Class A common stock immediately prior to the consummation of a change of control of Riverside, such as the proposed merger.

 

All shares of Riverside common stock, when issued and fully paid, are non-assessable and are not subject to redemption and have no preemptive rights. Subject to the preference of the Class B common stock described above, upon the liquidation, dissolution or winding up of Riverside, whether voluntary or involuntary, holders of Riverside common stock are entitled to share ratably, after satisfaction in full of all liabilities, in all remaining assets of Riverside available for distribution. Subject to the dividend preference of the Class B common stock described above, all shares of Riverside common stock are entitled to share equally in such dividends as the board of directors may declare on the Riverside common stock from sources legally available therefor. Riverside is a holding company and conducts almost all of its operations through its bank subsidiary. Accordingly, Riverside depends on the cash flow of its subsidiary bank to meet its obligations. Riverside’s subsidiary bank is limited in the amount of dividends it can pay to Riverside without prior regulatory approval. Also, bank regulators have the authority to prohibit Riverside’s subsidiary bank from paying dividends if they think the payment would be an unsafe and unsound banking practice.

 

Required Shareholder Vote

 

Under Riverside’s articles of incorporation and bylaws, Riverside’s board of directors is elected by a plurality of the outstanding shares of Class A common stock. The Class B common stock is nonvoting except on certain extraordinary corporate events, such as the proposed merger. Changes to the number of directors, removal of directors without cause, and mergers with or sales of substantially all assets to a 5% beneficial owner of Riverside’s Class A common stock require approval by 80% of the outstanding shares of common stock entitled to vote on the matter unless 80% of the directors then in office have approved the transaction. Georgia law requires that the merger agreement be approved by the holders of a majority of the outstanding shares of Class A and Class B common stock that are entitled to vote on the merger, voting as a single class.

 

The preceding descriptive information concerning Synovus common stock and Riverside common stock outlines certain provisions of Synovus' Articles of Incorporation and bylaws, Riverside’ Articles of Incorporation and bylaws and certain statutes regulating the rights of holders of Synovus and Riverside common stock. The information is not a complete description of those documents and statutes and is subject in all respects to provisions of the Articles of Incorporation and bylaws of Synovus, the Articles of Incorporation and bylaws of Riverside and the laws of the State of Georgia.

 

DISSENTERS’ RIGHTS

 

Pursuant to Sections 7-1-537 and 14-2-1301 et. seq. of the Official Code of Georgia Annotated, as amended (“Georgia Law”), any shareholder of record of Riverside common stock who objects to the merger, and who fully complies with all of the provisions of Georgia Law, will be entitled to demand and receive payment in cash of an amount equal to the fair value of his or her shares of Riverside common stock if the merger is consummated. A record shareholder may assert

 

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dissenters' rights as to fewer than all the shares registered in his or her name only if the shareholder dissents with respect to all shares beneficially owned by any one beneficial shareholder and notifies Riverside in writing of the names and addresses of each person on whose behalf he or she asserts dissenters' rights. A beneficial owner must dissent with respect to all the shares he or she owns. For the purpose of determining the amount to be received in connection with the exercise of statutory dissenters' rights under Georgia Law, the fair value of a dissenting shareholder’s Riverside common stock is determined as of the close of the business on the date prior to the effective date of the merger, excluding any appreciation or depreciation therein in anticipation of the merger.

 

Any Riverside shareholder desiring to receive payment of the fair value of his or her Riverside common stock in accordance with the requirements of Georgia Law: (a) must file with Riverside prior to the special meeting of shareholders of Riverside at which the vote will be taken on the merger agreement, or at the special meeting, but before the vote is taken, a written notice of his or her intent to demand payment of the fair value of his or her shares of Riverside common stock if the merger agreement is approved and the merger is consummated; (b) must not vote in favor of the proposal to which he or she objects, although he or she may abstain from voting; and (c) must, by the date specified in the dissenters' notice (“Dissenters’ Notice”) mailed to him or her by Riverside, which date shall not be fewer than 30 nor more than 60 days from the shareholders’ receipt of the Dissenters’ Notice, demand payment for his or her shares and deposit his or her share certificates in accordance with the terms of the Dissenters’ Notice. A filing of the written notice of intent to demand payment for shares should be sent to: Riverside Bancshares, Inc., 1200 Johnson Ferry Road, Marietta, Georgia 30068. A vote against the merger agreement alone will not satisfy the requirements for the separate written notice of intent to demand payment and the payment demand referred to in conditions (a) and (c) above; all three conditions must be separately complied with.

 

If the merger agreement is approved and the merger is authorized, Synovus, as the surviving corporation from the merger, will mail within 10 days after the closing of the merger to each dissenting shareholder who has complied with conditions (a) and (b) above, a Dissenters’ Notice, addressed to the dissenting shareholder at such address as he has furnished in writing, or, if none, at the shareholder’s address as it appears on the records of Riverside, which notice will: (1) state where the payment demand must be sent and where and when certificates for certificated shares must be deposited; (2) inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received, and (3) set a day by which Synovus must receive the payment demand, which date may not be less than 30 nor more than 60 days after the Dissenters’ Notice is delivered. A record shareholder who does not demand payment or deposit his share certificates where required, each by the date specified in the Dissenters' Notice, is not entitled to payment for his shares.

 

If all of the conditions specified in (1), (2) and (3) in the immediately preceding paragraph are fully complied with, Synovus is required to make a written offer, within 10 days of the later of the date the merger is consummated or receipt of the payment demand, to each dissenting shareholder to purchase all of his or her shares of Riverside common stock at a specified price that Synovus considers to be their fair value, plus accrued interest, as of the close of business on the day prior to the merger, excluding any change in value induced by the proposed merger or its consummation.

 

The offer of payment must be accompanied by:

 

(1)

A copy of Riverside’s balance sheet as of the end of a fiscal year not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any;

 

(2)

A statement of Synovus’ estimate of the fair value of the shares;

 

(3)

An explanation of how the interest was calculated;

 

(4)

A statement of the dissenter’s right to demand payment under Section 14-2-1327 of Georgia Law; and

 

(5)

A copy of Section 14-2-1301 et. seq. of Georgia Law, a copy of which is attached to this document as Appendix “B.”

 

Assuming the merger has been effected, if the shareholder accepts Synovus’ offer by written notice within 30 days after the offer or is deemed to have accepted the offer by failing to respond within said 30 days, payment for his or her shares shall be made within 60 days after the making of the offer of or the consummation of the merger, whichever is later. If the shareholder is dissatisfied with the offer, he or she may notify Synovus of his or her own estimate of fair value and demand

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payment of that amount and interest due. If a dissenting shareholder's demand for payment under Section 14-2-1327 of Georgia Law remains unsettled, Synovus shall commence a proceeding within 60 days after receiving the payment demand and petition the Superior Court of Gwinnett County, Georgia to determine the fair value of the dissenter’s shares and accrued interest, which interest shall be computed from the effective date of the merger. If Riverside does not commence the proceeding within the 60 day period, it must pay each dissenter whose demand remains unsettled the amount demanded.

 

The foregoing does not purport to be a complete statement of the provisions of Georgia Law relating to statutory dissenters’ rights and is qualified in its entirety by reference to said provisions, relevant portions of which are reproduced in full in Appendix “B” to this document, which is incorporated herein by reference.

 

DESCRIPTION OF SYNOVUS

 

Business

Synovus is a diversified financial services company and a registered financial holding company and bank holding company with approximately $27.1 billion in assets. Synovus provides integrated financial services including banking, financial management, insurance, mortgage and leasing services through bank subsidiaries and other offices in Georgia, Alabama, South Carolina, Florida and Tennessee and electronic payment processing services through its 81% owned subsidiary, TSYS. Synovus is based in Columbus, Georgia and its stock is traded on the NYSE under the symbol “SNV.”

 

Synovus is engaged in two business segments:

 

•

financial services, which primarily involve commercial banking activities, as well as retail banking, financial management, mortgage, leasing and insurance services; and

 

•

transaction processing services, which consist primarily of electronic payment processing services, including consumer, commercial, retail, government services, debit and stored value card processing and related services.

 

As of September 30, 2005, Synovus had total assets of approximately $27.1 billion, net loans of $20.6 billion, total deposits of $20.3 billion and total shareholders’ equity of $2.9 billion.

 

Synovus’ principal executive offices are located at 1111 Bay Avenue, Suite 500, Columbus, Georgia 31901, and its telephone number is (706) 649-5220. Synovus’ website is www.synvous.com. Information included on Synovus’ website is expressly not incorporated by reference into this prospectus.

 

Additional information about Synovus is included in documents incorporated into this document by reference. See “Where You Can Find More Information” on page 43. Shareholders desiring copies of such documents may contact Synovus at its address or phone number indicated under “Where You Can Find More Information.”

 

DESCRIPTION OF RIVERSIDE

 

Business

 

Riverside, previously known as American Bankshares, Inc., is a bank holding company whose business is conducted by its wholly-owned subsidiary, Riverside Bank, previously known as Cobb American Bank and Trust Company. Riverside and Riverside Bank formally changed their names in 1998 and 1996, respectively. Riverside provides a full array of personal and electronic financial services including traditional deposit, lending, mortgage, and other financial products and serves to its commercial and retail customers.

 

Market Area

 

Riverside’s principal executive and banking officers are located in Marietta, Georgia, with three additional branches serving Cobb County and one branch in the Buckhead area of Fulton County.

 

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Lending Activities

 

The primary source of income generated by Riverside is the interest earned from both its loan and investment portfolios. To develop business, Riverside relies to a large extent on providing a personal banking relationship tailored to the needs of its customers. Riverside also relies on the personalized approach of its directors and officers, who have extensive business and personal contacts in the community. Riverside also offers services typically associated with larger regional and national banks, including online banking, Small Business Administration Loans, commercial and residential development loans and mortgages – in addition to a complete array of traditional bank transaction accounts, investments and loans.

 

At September 30, 2005, Riverside’s loan portfolio was $471.5 million, representing approximately 71% of total assets. As of such date, Riverside’s loan portfolio consisted of 9% commercial loans, 47% real estate secured loans, excluding construction and land development loans, 38% real estate construction and land development loans and 6% installment or consumer loans.

 

Competition

 

Competition in the banking and financial services industry is intense. In its primary market area, Riverside competes with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Many of these competitors have substantially greater resources and lending limits than Riverside and they offer certain services that Riverside does not or cannot provide. In addition, many of Riverside’s non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally chartered and insured banks.

 

Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans and other credit and service charges, the quality of the services rendered, the convenience of banking facilities, and, in the case of loans to commercial borrowers, relative lending limits.

 

Employees

 

As of September 30, 2005, Riverside employed 87 full-time equivalent employees. None of these employees is covered by a collective bargaining agreement and management believes that its employee relations are good.

 

Description of Property

 

Riverside operates its main office and four additional branch locations in Cobb and Fulton Counties, Georgia. Riverside owns each of the branch office locations except for the Galleria location, which is leased. Set forth below is the location of each Riverside branch:

 

	East Cobb / Main Offices	1200 Johnson Ferry Road, Marietta, Georgia 30068
	Riverside Bank of Buckhead	334 East Paces Ferry Road, Atlanta, Georgia 30305
	Chastain	555 Chastain Road, Kennesaw, Georgia 30144
	Marietta Square	214 Roswell Street, Marietta, Georgia 30060
	Galleria	2841 Akers Mill Road, Atlanta, Georgia 30339

 

Legal Proceedings

 

Riverside is periodically a party to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens or foreclose on loan defaults, claims involving the making and servicing of real property loans, and other issues incident to its business. Management is not aware of any proceeding threatened or pending against Riverside which, if determined adversely, would have a material adverse effect on its business or financial position.

 

Related Party Transactions

 

Riverside has had various loan and other banking transactions in the ordinary course of business with the directors, executive officers, and principal shareholders of Riverside, or an associate of such person. All such transactions: (a) have been made in the ordinary course of business; (b) have been made on substantially the same terms, including interest rates and

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collateral on loans, as those prevailing at the time for comparable transactions with unrelated persons; and (c) in the opinion of management do not involve more than the normal risk of collectibility or present other unfavorable features. At September 30, 2005, the total dollar amount of extensions of credit to directors, executive officers and Riverside principal shareholders identified below, and any of their associates, excluding extensions of credit which were less than $60,000 to any one such person and their associates, were $12 million, which represented approximately 27% of total capital.

 

Principal Shareholders

 

The following table sets forth, as of December 28, 2005, the stock ownership by each of Riverside’s directors and executive officers, by all directors and executive officers as a group, and by each owner of more than 5% of the outstanding shares of Riverside common stock.

 

Name	Shares Beneficially Owned(1)	Percentage of Class
Five Percent Shareholders
ABS Investors, LLC	2,776,022	53.0%
Directors
Kessel D. Stelling, Jr.	2,822,982 (2)	53.5%
Rodney Knowles III	225,350 (3)	4.3%
John A. Williams	2,790,022 (4)	53.1%
Non-Director Executive Officers
Robert Garcia, Jr.	111,965 (5)	2.1%
Eileen Jordan	0	0.0%
Philip F. Resch	27,131 (6)	*
Carol Smith	52,581	1.0%
Harry E. Smith	60,163 (7)	1.1%
All Directors and Executive Officers, as a Group (8 Persons)	3,314,172 (8)	60.7%

 

* Represents beneficial ownership of less than 1%.

 

 

(1)

The information contained in this table with respect to Riverside common stock ownership reflects “beneficial ownership” as determined in accordance with Rule 13d-3 under the Exchange Act. Information with respect to beneficial ownership is based upon information furnished by each owner. With respect to certain of the individual directors and executive officers listed in the table, the number of shares indicated includes shares of Riverside common stock that the individual has the right to acquire now or within the next 60 days through the exercise of previously granted options.

 

(2)	Includes 2,776,022 shares held by ABS Investors, LLC, of which Mr. Stelling is a managing member, 450 shares held by Mr. Stelling’s children and 36,625 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

(3)

Includes 57,135 shares held by Duck Hawk Investment LP, of which Mr. Knowles is a general partner, 16,875 shares held by Mr. Knowles’ spouse, 6,000 shares held jointly by Mr. Knowles’ spouse and children and 12,500 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

(4)	Includes 2,776,022 shares held by ABS Investors, LLC, of which Mr. Williams is a managing member, and 14,000 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

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(5)	Includes 81,137 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

(6)	Includes 26,002 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

(7)	Includes 54,562 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

(8)	Includes 224,826 shares issuable upon the exercise of stock options exercisable now or within the next 60 days.

 

REGULATORY MATTERS

General

Synovus is a registered bank holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 and by the Georgia Department of Banking and Finance under the bank holding company laws of the State of Georgia. Synovus became a financial holding company under the Gramm-Leach-Bliley Act of 1999 in April 2000. Financial holding companies may engage in a variety of activities, some of which are not permitted for other bank holding companies that are not financial holding companies. Synovus’ affiliate national banking associations are subject to regulation and examination primarily by the Office of the Comptroller of the Currency, which we refer to as the OCC, and, secondarily, by the FDIC and the Federal Reserve 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 Federal Reserve 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 SEC, the National Association of Securities Dealers, Inc., federal and state banking regulators and various state regulators of insurance and brokerage activities.

 

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 business or its total assets would be less than the sum of its total liabilities. Synovus is also subject to regulatory capital restrictions that limit the amount of cash dividends that it may pay. Additionally, Synovus is subject to contractual restrictions that limit the amount of cash dividends it may pay. As Riverside is also a Georgia corporation, it is subject to similar dividend restrictions.

 

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. Similarly, the primary source of funds for Riverside’s payment of dividends to its shareholders are dividends to Riverside from its banking affiliate, Riverside Bank. Various federal and state statutory provisions and regulations limit the amount of dividends that the subsidiary banks of Synovus and Riverside may pay. Under the regulations of the Georgia Department of Banking and Finance, a Georgia bank must have approval of the Georgia Department of Banking and Finance to pay cash dividends if, at the time of such payment:

 

•

the ratio of Tier 1 capital to adjusted total assets is less than 6%;

•

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 profits for the previous calendar year; or

•

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, Florida Department of Financial Services and Tennessee Department of Financial Institutions is required if the total of all dividends declared by an Alabama, Florida or Tennessee bank, as the case may be, in any year would exceed the total of its net profits for that year combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank’s retained net income for the current year plus retained net

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income for the preceding two years. Approval of the Federal Reserve Board is required for payment of any dividend by a state chartered bank that is a member of the Federal Reserve System and sometimes referred to as a state member bank, if the total of all dividends declared by the bank in any calendar year would exceed the total of its net profits, as defined by regulatory agencies, for that year combined with its retained net profits for the proceeding two years. In addition, a state member bank may not pay a dividend in an amount greater than its net profits then on hand.

 

Some of Synovus’ banking affiliates have in the past been required to secure prior regulatory approval for the payment of dividends to Synovus in excess of regulatory limits and may be required to seek approval for the payment of dividends to Synovus in excess of those limits in the future. If prior regulatory approvals are sought, there is no assurance that any such regulatory approvals will be granted.

 

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. Synovus’ objective is to pay out at least one-third of prior year’s earnings in cash dividends to its shareholders. Synovus and its predecessors have paid cash dividends on their common stock in every year since 1891. Under restrictions imposed under federal and state laws, Synovus’ subsidiary banks could declare aggregate dividends to Synovus of approximately $295 million during 2005 without obtaining regulatory approval.

 

Capital Requirements

Synovus and Riverside are required to comply with the capital adequacy standards established by the Federal Reserve Board and their banking subsidiaries must comply with similar capital adequacy standards established by the OCC and FDIC, as applicable. As a financial holding company, each of Synovus subsidiaries are required to maintain capital levels required for a well-capitalized institution. See the section entitled “Prompt Corrective Action” below.

 

There are two basic measures of capital adequacy for bank holding companies and their banking subsidiaries that have been promulgated by the Federal Reserve 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.

 

The bank regulatory agencies 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 Synovus’ risk-weighted assets are on-balance sheet assets in the form of loans. Capital is categorized into two types: Tier 1 and Tier 2.

 

In addition to the risk-based capital standards, a minimum leverage ratio (also referred to as the Tier 1 leverage ratio) of 4% is required for the highest-rated financial holding companies that 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 1 capital divided by quarterly average assets, net of certain intangibles.

 

At September 30, 2005, Synovus’ Total risk-based capital ratio was 14.23%, its Tier 1 capital ratio was 10.18% and its Tier 1 leverage ratio was 9.99%. Assuming the merger had been consummated on September 30, 2005, the Total risk-based capital ratio of Synovus would have been 14.08%, its Tier 1 capital ratio would have been 10.10% and its Tier 1 leverage ratio would have been 9.88%. Each of these ratios exceeds the current requirements under the Federal Reserve Board’s capital guidelines.

 

At September 30, 2005, Riverside’s Total risk-based capital ratio was 10.84%, its Tier 1 capital ratio was 9.84% and its Tier 1 leverage ratio was 8.67%. Each of these ratios exceeds the current requirements under the Federal Reserve Board’s capital guidelines.

 

Each of Synovus’ and Riverside’s banking subsidiaries is subject to similar risk-based and leverage capital requirements adopted by its applicable federal banking agency, and each was in compliance with the applicable minimum capital requirements as of September 30, 2005.

 

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 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” below.

 

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Commitments to Subsidiary Banks

Under the Federal Reserve 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 that 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 that 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 will 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. All of Synovus’ bank subsidiaries are FDIC-insured institutions.

 

Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act of 1991 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 as described below. The federal banking regulators are also required to take 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, the Federal Deposit Insurance Corporation Improvement Act 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.

 

Under the Federal Deposit Insurance Corporation Improvement Act, the Federal Reserve Board, the FDIC, the OCC and the Office of Thrift Supervision 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:

 

•

Well Capitalized - an institution that has a Total risk-based 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%;

•

Adequately Capitalized - an institution that has a Total risk-based 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%;

•

Undercapitalized - an institution that has a Total risk-based capital ratio of under 8%, a Tier 1 capital ratio of under 4% or a Tier 1 leverage ratio of under 4%;

•

Significantly Undercapitalized - an institution that has a Total risk-based capital ratio of under 6%, a Tier 1 capital ratio of under 3% or a Tier 1 leverage ratio of under 3%; and

•

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 (1) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (2) 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 bank subsidiaries have the requisite capital levels to qualify as well capitalized institutions under the Federal Deposit Insurance Corporation Improvement Act regulations.

 

The Federal Deposit Insurance Corporation Improvement Act generally prohibits a depository institution from making any capital distribution, including payment of a dividend, or paying any management fee to its holding company if the 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

 

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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 the Federal Deposit Insurance Corporation Improvement Act 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 under the Federal Deposit Insurance Corporation Improvement Act. 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 shareholder. The federal banking agencies determined that stock valuation standards were not appropriate. In addition, the agencies have 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 the Federal Deposit Insurance Corporation Improvement Act. See “Prompt Corrective Action” above. 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

Federal law provides 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.

Gramm-Leach-Bliley Act

On November 12, 1999, legislation was enacted which 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, a bank holding company that elects to become a financial holding company may engage in any activity that the Federal Reserve 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. The legislation makes significant changes in United States banking law, principally by repealing restrictive provisions of the 1933 Glass-Steagall Act. The legislation 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 Federal Reserve Board under Section 4(c)(8) of the Bank Holding Company Act. The legislation 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.

 

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In addition to the Gramm-Leach-Bliley 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 nonbank 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.

 

LEGAL MATTERS

 

The validity of the Synovus common stock to be issued in connection with the merger will be passed upon by Kathleen Moates, Senior Vice President and Senior Deputy General Counsel of Synovus. Ms. Moates beneficially owns shares of Synovus common stock and options to purchase additional shares of Synovus common stock. As of the date of this document, the number of shares Ms. Moates owns or has the right to acquire upon exercise of her options is, in the aggregate, less than 0.1% of the outstanding shares of Synovus common stock. Powell Goldstein LLP will deliver its opinion to Synovus and Riverside as to certain United States federal income tax matters.

 

EXPERTS

 

The consolidated financial statements of Synovus Financial Corp. and subsidiaries as of December 31, 2004 and 2003 and for each of the years in the three-year period ended December 31, 2004, and management’s assessment of the effectiveness of internal control over financial reporting (which is included in the Report of Management on Internal Control Over Financial Reporting) as of December 31, 2004, have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

 

The audit report on the consolidated financial statements as of December 31, 2004 and 2003, and for each of the years in the three-year period ended December 31, 2004 refers to a change in the method of accounting for goodwill in 2002. The audit report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2004 contains an explanatory paragraph that states that Synovus acquired both Trust One Bank and Peoples Florida Banking Corporation during 2004. Synovus excluded from its assessment of the effectiveness of Synovus’ internal control over financial reporting as of December 31, 2004, Trust One Bank’s internal control over financial reporting and Peoples Florida Banking Corporation’s internal control over financial reporting. The audit of internal control over financial reporting of Synovus also excluded an evaluation of the internal control over financial reporting of Trust One Bank and Peoples Florida Banking Corporation.

 

OTHER MATTERS

 

Riverside’s board of directors does not know of any matters to be presented at the special meeting other than the proposal to approve the merger. If any other matters are properly brought before the special meeting or any adjournment of the special meeting, the enclosed proxy will be deemed to confer discretionary authority on the individuals named as proxies to vote the shares represented by the proxy as to any such matters.

 

SHAREHOLDER PROPOSALS

 

Synovus’ 2006 annual meeting of shareholders will be held in April 2006. Any shareholder satisfying the SEC’s requirements and wishing to submit a proposal to be included in the proxy statement for the 2006 annual meeting of shareholders should submit the proposal in writing to the Secretary, Synovus Financial Corp., 1111 Bay Avenue, Suite 500, Columbus, Georgia 31901. Synovus must have received a proposal by November 18, 2005 to consider it for inclusion in the proxy statement for the 2006 annual meeting of shareholders.

 

If the merger is not consummated, Riverside will inform its shareholders of the date and time of its 2006 annual meeting of shareholders.

 

WHERE YOU CAN FIND MORE INFORMATION

 

Synovus files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that Synovus files with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further

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information on the public reference room. These SEC filings are also available to the public from commercial document retrieval services and at the Internet web site maintained by the SEC at http://www.sec.gov. Reports, proxy statements and other information should also be available for inspection at the offices of the NYSE.

 

Synovus filed a registration statement on Form S-4 to register with the SEC the Synovus common stock to be issued to Riverside shareholders in the merger. This document is a part of that registration statement and constitutes a prospectus of Synovus. As permitted by SEC rules, this document does not contain all the information you can find in Synovus’ registration statement or the exhibits to that registration statement.

 

The SEC permits Synovus to “incorporate by reference” information into this document, which means that Synovus can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered part of this document, except for any information superseded by information contained directly in this document or in later filed documents incorporated by reference in this document.

 

This document incorporates by reference the documents set forth below that Synovus has previously filed with the SEC. These documents contain important information about Synovus and its business.

 

Synovus SEC Filings (File No. 1-10312)

 

(1)

Synovus’ Annual Report on Form 10-K for the year ended December 31, 2004, as amended on April 28, 2005;

 

(2)

Synovus’ Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005;

 

(3)

Synovus’ Current Reports on Form 8-K filed on January 19, 2005, January 20, 2005, January 25, 2005, February 3, 2005, March 28, 2005, April 26, 2005, June 14, 2005, July 12, 2005, July 20, 2005, September 6, 2005, October 19, 2005, November 23, 2005, December 21, 2005 and December 27, 2005; and

 

(4)

the description of Synovus common stock contained in Synovus’ Registration Statement on Form 8-A filed with the SEC on August 21, 1989.

 

Synovus also incorporates by reference additional documents that may be filed with the SEC under Sections 13(a), 13(c), 14 and 15 (d) under the Securities Exchange Act of 1934, as amended, between the date of this document and the date of the Riverside special meeting. These include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.

 

Synovus has supplied all information contained or incorporated by reference in this document relating to Synovus, and Riverside has supplied all information contained in this document relating to Riverside.

 

You can obtain any of the documents incorporated by reference from Synovus, the SEC or the SEC’s Internet web site as described above. Documents incorporated by reference are available from Synovus without charge, excluding all exhibits, except that if Synovus has specifically incorporated by reference an exhibit in this document, the exhibit will also be available without charge. You may obtain documents incorporated by reference in this document by requesting them in writing or by telephone from Synovus at the following addresses:

 

Synovus Financial Corp.

1111 Bay Avenue, Suite 500

Columbus, Georgia 31901

Attn: G. Sanders Griffith, III

Senior Executive Vice President,

General Counsel & Secretary

Telephone: (706) 649-2267

 

If you would like to request documents, please do so by ___________, 2006 to receive them before the Riverside special meeting.

 

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You should rely only on the information contained or incorporated by reference in this document. Synovus and Riverside have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated __________, 2006. You should not assume that the information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to shareholders nor the issuance of Synovus common stock in the merger creates any implication to the contrary.

 

PRO FORMA FINANCIAL INFORMATION

 

Pro forma financial information reflecting the acquisition of Riverside by Synovus is not presented in this document because the pro forma effect is not significant.

 

 

 

 

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