-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kz4GEZVGvNbgXl96hDxq+UvebhIiJJv8SAd2pMSU+/5Rx+SnYOBAVIDO4wu7Gukf eNsOZjEAJKrnRY00RxkkZQ== 0000931763-95-000201.txt : 19951119 0000931763-95-000201.hdr.sgml : 19951119 ACCESSION NUMBER: 0000931763-95-000201 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMSOUTH BANCORPORATION CENTRAL INDEX KEY: 0000003133 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 630591257 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07476 FILM NUMBER: 95591233 BUSINESS ADDRESS: STREET 1: 1400 AMSOUTH SONAT TOWER CITY: BIRMINGHAM STATE: AL ZIP: 35203 BUSINESS PHONE: 2053207151 MAIL ADDRESS: STREET 1: 1400 AMSOUTH SONAT TOWER CITY: BRIMINGHAM STATE: AL ZIP: 35288 FORMER COMPANY: FORMER CONFORMED NAME: ALABAMA BANCORPORATION DATE OF NAME CHANGE: 19810527 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BIRMINGHAM CORP DATE OF NAME CHANGE: 19741107 10-Q 1 FORM 10-Q =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 COMMISSION FILE NUMBER 1-7476 AMSOUTH BANCORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 63-0591257 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 1400 AMSOUTH-SONAT TOWER 35203 BIRMINGHAM, ALABAMA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (205) 320-7151 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of November 10, 1995, AmSouth Bancorporation had 58,500,913 shares of common stock outstanding. =============================================================================== AMSOUTH BANCORPORATION FORM 10-Q INDEX PAGE ---- Part I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated Statement of Condition--September 30, 1995, December 31, 1994 and September 30, 1994.................. 1 Consolidated Statement of Earnings--Nine months and three months ended September 30, 1995 and 1994.................. 2 Consolidated Statement of Shareholders' Equity--Nine months ended September 30, 1995.................................. 3 Consolidated Statement of Cash Flows--Nine months ended September 30, 1995 and 1994............................... 4 Notes to Consolidated Financial Statements................. 5 Independent Accountants' Review Report..................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................. 8 Part II. Other Information Item 5. Other Information....................................... 20 Item 6. Exhibits and Reports on Form 8-K........................ 20 Signatures........................................................... 21 Exhibit Index........................................................ 22 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION (UNAUDITED)
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30 1995 1994 1994 ------------ ----------- ------------ (IN THOUSANDS) ASSETS Cash and due from banks................ $ 594,064 $ 616,639 $ 821,865 Federal funds sold and securities pur- chased under agreements to resell..... 7,250 152,525 102,579 Trading securities..................... 11,128 6,383 5,823 Available-for-sale securities.......... 522,805 383,039 616,256 Held-to-maturity securities (market value of $3,273,713, $3,169,513 and $3,298,941, respectively)............. 3,258,715 3,336,557 3,396,617 Mortgage loans held for sale........... 70,841 130,223 192,001 Loans.................................. 12,001,811 11,496,121 11,085,348 Less:Allowance for loan losses......... 179,550 171,167 164,756 Unearned income...................... 79,355 66,214 76,985 ----------- ----------- ----------- Net loans............................ 11,742,906 11,258,740 10,843,607 Premises and equipment, net............ 275,845 282,095 270,873 Customers' acceptance liability........ 1,631 6,979 2,779 Accrued interest receivable and other assets................................ 519,050 604,771 616,787 ----------- ----------- ----------- $17,004,235 $16,777,951 $16,869,187 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits and interest-bearing liabili- ties: Deposits: Noninterest-bearing demand............ $ 1,768,953 $ 1,902,310 $ 1,880,201 Interest-bearing demand............... 3,784,405 4,071,212 4,017,362 Savings............................... 995,434 901,738 935,474 Time.................................. 5,738,072 5,384,469 4,990,997 Certificates of deposit of $100,000 or more................................. 885,362 807,333 784,227 ----------- ----------- ----------- Total deposits....................... 13,172,226 13,067,062 12,608,261 Federal funds purchased and securities sold under agreements to repurchase.. 1,317,393 1,212,723 1,758,166 Other borrowed funds.................. 533,787 656,117 633,737 Long-term debt........................ 313,094 386,147 423,648 ----------- ----------- ----------- Total deposits and interest-bearing liabilities......................... 15,336,500 15,322,049 15,423,812 Acceptances outstanding................ 1,631 6,979 2,779 Accrued expenses and other liabilities. 278,885 138,465 124,099 ----------- ----------- ----------- Total liabilities.................... 15,617,016 15,467,493 15,550,690 ----------- ----------- ----------- Shareholders' equity: Preferred stock--no par value: Authorized--2,000,000 shares; Issued and outstanding--none.......... -0- -0- -0- Common stock--par value $1 a share: Authorized--200,000,000 shares Issued--59,980,078, 59,556,269 and 59,526,410 shares, respectively....... 59,980 59,556 59,526 Capital surplus....................... 589,582 579,579 578,041 Retained earnings..................... 763,688 703,121 723,327 Cost of common stock in treasury-- 1,500,000 shares..................... (24,173) (24,173) (24,173) Deferred compensation on restricted stock................................ (4,467) (3,031) (4,869) Unrealized gains/(losses) on avail- able-for-sale securities, net of de- ferred taxes......................... 2,609 (4,594) (13,355) ----------- ----------- ----------- Total shareholders' equity........... 1,387,219 1,310,458 1,318,497 ----------- ----------- ----------- $17,004,235 $16,777,951 $16,869,187 =========== =========== ===========
See notes to consolidated financial statements. 1 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
NINE MONTHS THREE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- -------------------- 1995 1994 1995 1994 --------- --------- --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUE FROM EARNING ASSETS Loans............................. $ 755,719 $ 564,747 $ 256,677 $ 217,263 Securities: Trading securities............... 280 2,418 27 907 Available-for-sale securities.... 27,407 43,474 8,900 17,556 Held-to-maturity securities...... 160,018 129,913 52,706 56,010 --------- --------- --------- --------- Total securities................. 187,705 175,805 61,633 74,473 Mortgage loans held for sale...... 4,265 9,901 1,192 2,803 Federal funds sold and securities purchased under agreements to re- sell............................. 998 2,229 13 792 --------- --------- --------- --------- Total revenue from earning as- sets............................ 948,687 752,682 319,515 295,331 INTEREST EXPENSE Interest-bearing demand deposits.. 108,098 82,505 33,139 33,321 Savings deposits.................. 20,690 17,705 6,805 6,459 Time deposits..................... 243,032 126,472 85,870 51,505 Certificates of deposit of $100,000 or more................. 39,159 23,584 14,018 9,358 Federal funds purchased and secu- rities sold under agreements to repurchase....................... 47,853 46,337 14,966 25,759 Other borrowed funds.............. 27,288 15,344 8,511 6,673 Long-term debt.................... 20,545 16,917 6,397 9,062 --------- --------- --------- --------- Total interest expense........... 506,665 328,864 169,706 142,137 NET INTEREST INCOME............... 442,022 423,818 149,809 153,194 Provision for loan losses......... 30,049 9,954 9,398 4,773 --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVI- SION FOR LOAN LOSSES............. 411,973 413,864 140,411 148,421 NONINTEREST REVENUES Service charges on deposit ac- counts........................... 62,014 50,313 21,651 17,749 Trust income...................... 36,811 34,574 12,339 11,140 Credit card income................ 10,833 9,206 3,906 3,116 Investment services income........ 8,238 10,847 2,324 3,472 Mortgage administration fees...... 8,353 16,505 136 6,545 Gain on sale of mortgage servic- ing.............................. 28,807 11,922 1,313 11,738 Securities gains.................. 481 327 285 99 Portfolio income.................. 3,606 (2,064) 353 (3,213) Other operating revenues.......... 20,815 19,958 6,120 5,170 --------- --------- --------- --------- Total noninterest revenues....... 179,958 151,588 48,427 55,816 NONINTEREST EXPENSES Salaries and employee benefits.... 173,661 171,253 52,832 60,860 Net occupancy expense............. 41,896 33,917 12,168 12,264 Equipment expense................. 39,090 30,415 11,213 10,696 FDIC premiums..................... 16,835 17,899 2,109 6,669 Amortization of goodwill.......... 11,983 7,479 4,059 3,884 Foreclosed properties expense..... (415) 666 (2) 455 Marketing expense................. 12,662 8,689 4,087 3,814 Postage and office supplies....... 17,576 16,646 5,684 6,077 Other operating expenses.......... 78,504 84,963 23,383 30,247 --------- --------- --------- --------- Total noninterest expenses....... 391,792 371,927 115,533 134,966 INCOME BEFORE INCOME TAXES........ 200,139 193,525 73,305 69,271 Income taxes...................... 73,076 67,590 27,210 25,210 --------- --------- --------- --------- Net income....................... $ 127,063 $ 125,935 $ 46,095 $ 44,061 ========= ========= ========= ========= Average common shares outstanding. 58,273 56,021 58,418 58,894 Earnings per common share......... $ 2.18 $ 2.25 $ 0.79 $ 0.75
See notes to consolidated financial statements. 2 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
UNREALIZED COMMON CAPITAL RETAINED TREASURY DEFERRED GAINS/(LOSSES) STOCK SURPLUS EARNINGS STOCK COMPENSATION ON SECURITIES TOTAL ------- -------- -------- -------- ------------ -------------- ---------- (IN THOUSANDS) Balance at January 1, 1995................... $59,556 $579,579 $703,121 $(24,173) $(3,031) $(4,594) $1,310,458 Net income.............. -0- -0- 127,063 -0- -0- -0- 127,063 Cash dividends declared. -0- -0- (66,496) -0- -0- -0- (66,496) Common stock transac- tions: Employee stock plans.... 424 10,003 -0- -0- (1,436) -0- 8,991 Unrealized gains on available-for-sale securities, net of deferred taxes......... -0- -0- -0- -0- -0- 7,203 7,203 ------- -------- -------- -------- ------- ------- ---------- Balance at September 30, 1995................... $59,980 $589,582 $763,688 $(24,173) $(4,467) $ 2,609 $1,387,219 ======= ======== ======== ======== ======= ======= ==========
See notes to consolidated financial statements. 3 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 ---------------------- 1995 1994 --------- ----------- (IN THOUSANDS) OPERATING ACTIVITIES Net income............................................. $ 127,063 $ 125,935 Adjustments to reconcile net income to net cash pro- vided by operating activities Provision for loan losses............................. 30,049 9,954 Foreclosed property recoveries........................ (322) (852) Depreciation and amortization of premises and equip- ment................................................. 20,768 18,367 Amortization of premiums and discounts on held-to-ma- turity securities and available-for-sale securities.. (3,950) (859) Net decrease in mortgage loans held for sale.......... 59,382 160,964 Net (increase) decrease in trading securities......... (2,748) 89,853 Net gains on sales of available-for-sale securities... (3,170) (491) Net gains on calls of held-to-maturity securities..... (481) (327) Net decrease in accrued interest receivable and other assets............................................... 83,274 152,241 Net increase (decrease) in accrued expenses and other liabilities.......................................... 74,399 (259,337) Provision (benefit) for deferred income taxes......... 10,782 (879) Amortization of intangible assets..................... 17,219 17,247 Other................................................. 802 (10,322) --------- ----------- Net cash provided by operating activities............. 413,067 301,494 INVESTING ACTIVITIES Proceeds from maturities and prepayments of available- for-sale securities................................... 22,309 172,833 Proceeds from sales of available-for-sale securities... 219,606 1,413,932 Purchases of available-for-sale securities............. (336,671) (391,462) Proceeds from maturities, prepayments and calls of held-to-maturity securities........................... 237,658 281,678 Purchases of held-to-maturity securities............... (157,421) (1,475,524) Net decrease in federal funds sold and securities pur- chased under agreements to resell..................... 145,275 82,191 Net increase in loans.................................. (426,072) (896,852) Net purchases of premises and equipment................ (12,835) (28,665) Net cash used for acquisitions......................... (13,221) (109,351) --------- ----------- Net cash used by investing activities................. (321,372) (951,220) FINANCING ACTIVITIES Net (decrease) increase in demand deposits and savings accounts.............................................. (354,579) 49,545 Net increase in time deposits.......................... 379,582 351,953 Net increase in federal funds purchased and securities sold under agreements to repurchase................... 104,670 485,840 Net decrease in other borrowed funds................... (133,330) (1,601) Issuance of long-term debt............................. 765 149,084 Payments for maturing long-term debt................... (74,757) (101,075) Cash dividends paid.................................... (44,278) (58,762) Proceeds from employee stock plans..................... 7,657 4,974 Purchase and retirement of common stock................ -0- (31,290) --------- ----------- Net cash (used) provided by financing activities...... (114,270) 848,668 --------- ----------- (Decrease) increase in cash and cash equivalents....... (22,575) 198,942 Cash and cash equivalents at beginning of period....... 616,639 614,698 Beginning consolidated cash balances of immaterial pooling-of-interests entities......................... -0- 8,225 --------- ----------- Cash and cash equivalents at end of period............. $ 594,064 $ 821,865 ========= ===========
See notes to consolidated financial statements. 4 AMSOUTH BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 General--The consolidated financial statements conform to generally accepted ------- accounting principles and to general industry practices. The accompanying interim financial statements are unaudited; however, in the opinion of management, all adjustments necessary for the fair presentation of the consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The notes included herein should be read in conjunction with the notes to consolidated financial statements included in AmSouth Bancorporation's (AmSouth) 1994 annual report on Form 10-K. The consolidated financial statements include the accounts of AmSouth and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Results of operations of companies purchased are included from the dates of acquisitions. In March 1995, Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," (Statement 121) was issued by the Financial Accounting Standards Board (FASB). Statement 121 requires that long-lived assets and certain identifiable intangibles to be held and used by the entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The impact of Statement 121, when adopted on January 1, 1996, on AmSouth's financial condition or results of operations has not been determined at this time. In May 1995, FASB issued Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights, an amendment of FASB Statement No. 65" (Statement 122). FASB Statement No. 65, "Accounting for Certain Mortgage Banking Activities," required separate capitalization of purchased mortgage servicing rights but prohibited capitalization when servicing rights were acquired through loan origination activities. Statement 122 will require that purchased and originated mortgage servicing rights be accounted for in the same manner. The impact of Statement 122, when adopted on January 1, 1996, on AmSouth's financial condition or results of operations has not been determined at this time. Business Combinations--On June 23, 1994, AmSouth completed the acquisition --------------------- of Fortune Bancorp, Inc. (Fortune) which was accounted for using the purchase method of accounting through the issuance of approximately 4,474,000 shares of common stock and payment of approximately $144.6 million in cash. Approximately $172.5 million of goodwill resulting from the acquisition will be amortized on a straight line basis over 20 years. On February 16, 1995, AmSouth completed the acquisition of Community Federal Savings Bank (Community), headquartered in Fort Oglethorpe, Georgia. Under the terms of the agreement, AmSouth paid $65.50 for each of the outstanding shares of Community common stock for a total purchase price of approximately $17.0 million. The transaction was accounted for using the purchase method of accounting. Approximately $7.5 million of goodwill resulting from the acquisition will be amortized on a straight line basis over 20 years. Due to the immateriality of the transaction, pro forma information is not presented. Cash Flows--For the nine months ended September 30, 1995 and 1994, AmSouth ---------- paid interest of $497,491,000 and $316,272,000, respectively, and income taxes of $43,691,000 and $71,791,000, respectively. Noncash transfers from loans to foreclosed properties for the nine months ended September 30, 1995 and 1994 were $11,050,000 and $23,369,000, respectively, and noncash transfers from foreclosed properties to loans were $2,914,000 and $3,566,000, respectively. 5 Loans--Effective January 1, 1995, AmSouth adopted Statement of Financial ----- Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan," as amended by Statement of Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan--Income Recognition and Disclosures" (Statement 114). Impairment of a loan within the scope of Statement 114 is to be recognized and reported based on the present value of expected future cash flows discounted at the loan's effective interest rate, at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans are specifically reviewed loans for which it is probable that the creditor will be unable to collect all amounts due according to the terms of the loan agreement. A valuation allowance is required to the extent that the measure of the impaired loans is less than the recorded investment. A loan is not impaired during a period of delay in payment if the ultimate collectibility of all amounts due is expected. Statement 114 does not apply to larger groups of homogeneous loans such as consumer installment, bankcard and residential real estate mortgage loans, which are collectively evaluated for impairment. Impaired loans are therefore primarily commercial loans and commercial real estate loans. At September 30, 1995, the recorded investment in loans that were considered to be impaired under Statement 114 was $52.7 million (primarily all of which were on a nonaccrual basis). Collateral dependent loans, which were measured at the fair value of the collateral, constituted approximately 99% of impaired loans at September 30, 1995. The recorded investment in these loans approximated the fair value of the collateral resulting in no material balance in the allowance for loan losses for impaired loans at September 30, 1995. The average recorded investment in impaired loans for the three months and nine months ended September 30, 1995 was approximately $56.9 million and $58.8 million, respectively. Payments received on impaired loans for which the ultimate collectibility of principal is uncertain are generally applied first as principal reductions. No material amount of interest income was recognized on impaired loans for the three months and nine months ended September 30, 1995, respectively. The impact of the adoption of Statement 114 was immaterial to AmSouth's consolidated financial statements as of and for the three months and nine months ended September 30, 1995. In accordance with Statement 114, no retroactive application of its provision has been made to the consolidated financial statements for the periods prior to January 1, 1995. Goodwill--AmSouth reviews on a regular basis the carrying value of goodwill -------- to determine if any impairment has occurred or if the period of recoverability has changed. Long-Term Debt--On May 19, 1994, AmSouth issued $150.0 million in 7 3/4% -------------- Subordinated Notes Due 2004 at a discounted price of 99.389%. The net proceeds to AmSouth after commissions totaled $148.1 million. The notes will mature on May 15, 2004 and are not redeemable prior to maturity. The proceeds from the notes were used for the Fortune acquisition. This debt qualifies as Tier 2 capital in calculating risk-adjusted capital ratios. On November 6, 1995, AmSouth issued $150.0 million in 6.75% Subordinated Debentures Due November 1, 2025 at a discounted price of 99.883%. The net proceeds to AmSouth after commissions totaled $148.9 million. The debentures will mature on November 1, 2025 and may be redeemed on November 1, 2005 at the option of the registered holders thereof. Proceeds will be used for general corporate purposes. This debt qualifies as Tier 2 capital in calculating risk adjusted capital ratios. Shareholders' Equity--On September 22, 1994, AmSouth purchased 1,000,000 -------------------- shares of AmSouth Common Stock at a cost of $31.3 million for the sole purpose of replenishing shares issued by AmSouth in connection with its purchase of Fortune. On October 19, 1995, AmSouth's Board of Directors approved the repurchase by AmSouth of up to an aggregate of 2,265,000 shares of its common stock through December 31, 1998 for the sole purpose of satisfying requirements of employee benefit, dividend reinvestment and other stock issuance plans. This authorization replaces a previously approved share repurchase program. 6 [LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE] INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors AmSouth Bancorporation We have reviewed the accompanying consolidated statement of condition of AmSouth Bancorporation and subsidiaries as of September 30, 1995 and 1994, and the related consolidated statement of earnings for the three-month and nine- month periods ended September 30, 1995 and 1994, and the consolidated statement of cash flows for the nine-month periods ended September 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with the standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated statement of condition of AmSouth Bancorporation and subsidiaries as of December 31, 1994, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated January 31, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of condition as of December 31, 1994, is fairly stated, in all material respects, in relation to the consolidated statement of condition from which it has been derived. /s/ Ernst & Young LLP November 7, 1995 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AmSouth reported net income of $127.1 million for the nine months ended September 30, 1995 compared to $125.9 million for the same period of 1994. On a per common share basis, AmSouth earned $2.18 and $2.25, respectively. Year- to-date net income for 1995 included a pre-tax gain of $25.0 million from the sale of AmSouth's third party mortgage servicing portfolio to GE Capital Mortgage Services, Inc. Also included in year-to-date net income are expenses of $22.2 million associated primarily with AmSouth's recent productivity initiatives including business and branch consolidations and the development of new financial systems. Year-to-date earnings for 1995 resulted in an annualized return on average assets (ROA) of 1.01% and an annualized return on average equity (ROE) of 12.62% compared to 1.13% and 13.56%, respectively, for the first nine months of 1994. Net income for the third quarter of 1995 was $46.1 million, a 4.6% increase over net income of $44.1 million for the third quarter of 1994. On a per common share basis, net income for the third quarter was $.79 compared to $.75 for the same period of 1994. ROA and ROE for the third quarter were 1.09% and 13.38%, respectively, compared to 1.02% and 13.07% for the third quarter of 1994. Net Interest Income - ------------------- Net interest income for the nine months ended September 30, 1995 was $442.0 million, an increase of $18.2 million over the same period of 1994. The net interest margin for the nine months ended September 30, 1995 and 1994 was 3.88% and 4.26%, respectively. Compared to the prior year, AmSouth's yield on earning assets increased 75 basis points while rates paid on interest-bearing liabilities increased 122 basis points. Year-to-date average earning asset balances increased $19.6 million more than year-to-date average interest- bearing liability balances. The combination of these changes resulted in a 38 basis point decrease in the net interest margin. The increase in year-to-date average earning assets was primarily due to a $2.2 billion, or 23.3%, increase in average loans net of unearned income. Exclusive of the acquisition of Fortune in June 1994 and Community in February 1995, which were accounted for as purchases, AmSouth's loan growth was approximately 9.0%. The growth occurred primarily in residential first mortgages, dealer indirect loans and commercial loans. Year-to-date average total securities decreased $51.6 million. Average held- to-maturity securities increased $588.0 million primarily due to the purchase of mortgage-backed securities during the last half of 1994. Partially offsetting this increase were sales of low-yielding securities during 1994 from the available-for-sale portfolio. The year-to-date average balance of interest-bearing liabilities increased $1.9 billion, almost entirely funding the total growth in earning assets. Average interest-bearing deposits, primarily time deposits, increased $2.2 billion due to the acquisition of Fortune, growth in new markets entered into through business combinations, rising interest rates and a special marketing campaign during the last half of 1994. Other significant changes in average interest-bearing liabilities include a $419.8 million decrease in Federal funds purchased and securities sold under agreements to repurchase, a $158.9 million increase in Federal Home Loan Bank advances, and a $79.1 million increase in parent company subordinated long-term debt. Asset/Liability Management - -------------------------- AmSouth maintains a formal asset and liability management process to quantify, monitor and control interest rate risk and to assist management in maintaining stability in the net interest margin under varying interest rate environments. This is accomplished through the development and implementation of lending, funding and pricing strategies designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines. The primary tool used by AmSouth to measure interest rate risk is an earnings simulation model which evaluates the impact of different interest rate scenarios on the company's projected business plan over a 12 to 24 month horizon. Management feels that a more traditional interest sensitivity gap analysis does not provide a 8 complete picture of the corporation's exposure to interest rate changes since static gap models are a point-in-time measurement and therefore do not incorporate the effects of future balance sheet trends, changes in the relationship between yields earned and rates paid, patterns of rate movements in general or changes in prepayment speeds due to changes in rates. An earnings simulation model does incorporate all these factors in addition to the impact of certain embedded interest rate caps and floors on certain assets and liabilities while also reflecting management's anticipated action under different interest rate environments. Numerous interest rate scenarios are simulated on a regular basis to determine the range of interest rate risk. Net interest income performance is measured under scenarios ranging from plus or minus 100 basis points to plus or minus 300 basis points over 12 months compared to a stable interest rate environment. The net interest income differential is expressed as a percent of net interest income over twelve months if interest rates are unchanged. As of September 30, 1995, the earnings simulation model results indicated that the corporation was in a relatively neutral interest rate risk position with net interest income in a plus 200 basis point scenario being approximately 1.5% greater than stable and net interest income in a minus 200 basis point scenario being less than 1% lower than a stable interest rate scenario. This level of interest rate risk is well within the company's policy guidelines. A very important factor in determining this interest rate risk position is the extent to which pricing on administered rate deposit products including interest checking, savings, and money market accounts would be impacted under varying interest rate scenarios. At AmSouth, pricing for these products is assumed to be more variable in rising rate scenarios than in declining rate scenarios. While these assumptions are somewhat subjective, management reviews the anticipated pricing for these products on a regular basis and alters these assumptions whenever trends or market conditions dictate. Over the last few years, AmSouth has utilized various off-balance sheet instruments such as interest rate swaps, caps and floors to assist in managing interest rate risk. During the fourth quarter of 1994, AmSouth terminated $1.1 billion of interest rate swaps and $915.0 million of interest rate caps. A $300.0 million interest rate floor was terminated during the first quarter of 1995. For the three months and the nine months ended September 30, 1995, the impact of interest rate contracts on net interest income was a decrease of $2.6 million and $8.5 million, respectively. Interest rate contracts decreased net interest income $1.4 million and $145.8 thousand for the three months and nine months ended September 30, 1994. AmSouth had $140.0 million of interest rate caps remaining at September 30, 1995 with $90.0 million used to hedge Federal funds purchased and securities sold under agreements to repurchase and $50.0 million to hedge deposits. In addition, AmSouth had interest rate contracts on behalf of its customers in the amount of $61.9 million. At September 30, 1995, no off-balance sheet instruments were held for trading purposes. Credit Quality - -------------- AmSouth maintains an allowance for loan losses which management believes is adequate to absorb potential losses in the loan portfolio. The adequacy of the allowance is periodically reviewed by management based on several factors, including historical performance, the level of nonperforming and rated loans, loan growth and composition and current economic conditions. Table 7 presents a five quarter analysis of the allowance for loan losses. At September 30, 1995, the allowance for loan losses was $179.6 million, or 1.51% of loans net of unearned income, compared to $164.8 million, or 1.50%, for the prior year. The coverage ratio of the allowance for loan losses to nonperforming loans increased from 151.98% to 200.94% for the same period as the level of nonperforming loans decreased $19.1 million. Net charge-offs for the three months ended September 30, 1995 increased $4.1 million compared to the same period of 1994. For the three months and the nine months ended September 30, 1995, net charge-offs increased primarily in the dealer indirect and commercial real estate loan portfolios. Annualized net charge-offs to average loans net of unearned income for the three months ended September 30, 1995, was 30 basis points compared to 18 basis points for the same period of 1994. Year-to-date, the ratio was 27 basis points compared to 18 basis points for the prior year. The increased level of net charge-offs combined with stronger loan growth, primarily in consumer loans with a traditionally higher risk of loss, resulted in a higher provision for loan losses for the period. 9 During the fourth quarter of 1994, the level of charge-offs increased primarily due to the charge off of five specific loans. Three of these loans totaling $3.1 million were from acquired institutions and were specifically reserved for at the date of acquisition. To date, AmSouth has not encountered any material credit quality issue as a result of the recent acquisitions that were not reserved for at the time of merger. Table 8 presents a five quarter comparison of the components of nonperforming assets. As a percentage of loans net of unearned income, foreclosed properties and repossessions, nonperforming assets decreased from 1.28% at September 30, 1994, to .88% at September 30, 1995. The level of nonperforming assets decreased $37.2 million during the same period. Noninterest Revenues and Noninterest Expenses - --------------------------------------------- Year-to-date noninterest revenues totaled $180.0 million at September 30, 1995 compared to $151.6 million for the same period of the prior year. Included in 1995 other operating revenues is a $25.0 million gain from AmSouth's sale of its third party mortgage servicing portfolio to GE Capital Mortgage Services, Inc. Other operating revenues for 1994 also included an $11.3 million sale of servicing gain. Exclusive of these gains, year-to-date noninterest revenues increased 10.5% compared to the prior year. Within other components of noninterest revenues, increases occurred in service charges on deposit accounts of $11.7 million and portfolio income of $5.7 million. The increase in service charges on deposit accounts was primarily due to an increased volume of overdraft fees and service charges on consumer accounts. Portfolio income increased due to improvements in the securities market. Mortgage administration fees decreased $8.2 million due to the sale of third party mortgage servicing. Noninterest revenues for the third quarter of 1995 were $48.4 million. Excluding an $11.3 million sale of servicing gain which occurred in the third quarter of 1994, noninterest revenues for the third quarter of 1995 increased 8.8%. Changes were primarily for the same reasons discussed in the year-to- date analysis. Noninterest expenses for the nine months ended September 30, 1995, were $391.8 million compared to $371.9 million for the same period of 1994. Exclusive of the $22.2 million of productivity initiative expenses discussed previously, noninterest expenses declined slightly. Salaries and employee benefits decreased 2.5% net of $6.7 million of expenses related to business and branch consolidations. Occupancy costs of $5.5 million for branch consolidations are included in the $8.0 million increase in net occupancy expense. Equipment expense increased $8.7 million and included $4.7 million for development costs of new financial systems and the write-off of various leases. The acquisition of Fortune in June 1994 contributed to the remaining increases in these categories of noninterest expenses. FDIC premiums decreased $1.1 million due to an approximately $5.0 million deposit insurance premium refund from the FDIC, partially offset by additional premiums paid on higher levels of deposits. Noninterest expenses for the third quarter of 1995 totaled $115.5 million compared to $135.0 million for the third quarter of 1994. The 14.4% decrease included an $8.0 million decrease in salaries and employee benefits, a $5.3 million decrease in purchased mortgage servicing rights amortization and an approximately $5.0 million FDIC deposit insurance premium refund. Capital Adequacy - ---------------- At September 30, 1995, shareholders' equity totaled $1.4 billion or 8.16% of total assets. Since December 31, 1994, shareholders' equity increased $76.8 million as net income exceeded dividends by $60.6 million, the market value of available-for-sale securities, net of deferred taxes, increased $7.2 million and employee stock plans contributed $9.0 million. Table 12 presents the calculation of the risk-adjusted capital ratios for AmSouth at September 30, 1995 and 1994. At September 30, 1995, AmSouth remains above the regulatory minimum required risk-adjusted Tier 1 capital ratio of 4.00% and the regulatory minimum required risk-adjusted total capital ratio of 8.00%. In addition, the risk-adjusted capital ratios for AmSouth's banking subsidiaries were above 10 the regulatory minimum and each subsidiary was well-capitalized at September 30, 1995. The total risk-adjusted capital ratio for each of AmSouth's major subsidiaries was: AmSouth Bank of Alabama............................................... 10.57% AmSouth Bank of Florida............................................... 10.98% AmSouth Bank of Tennessee............................................. 15.13%
Regulatory Developments - ----------------------- On August 8, 1995, the FDIC amended its regulations on insurance assessments to establish a new assessment rate schedule of 4 to 31 cents per $100 of deposits in replacement of the existing schedule of 23 to 31 cents per $100 of deposits for institutions whose deposits are subject to assessment by the Bank Insurance Fund (BIF). The FDIC has maintained the current assessment rate schedule of 23 to 31 cents per $100 of deposits for the institutions whose deposits are subject to assessment by the Savings Association Insurance Fund (SAIF). The new BIF schedule will become effective on the first day of the month after the month in which BIF reaches its "designated reserve ratio" of 1.25%, which the FDIC has estimated occurred sometime in the second quarter of 1995. Assessments collected under the previous assessment schedule in excess of the amount due under the new schedule were refunded, with interest, from the effective date of the new schedule. As noted above, AmSouth received a refund of approximately $5.0 million. AmSouth has a BIF deposit assessment base of $8.5 billion and a SAIF deposit assessment base of $4.5 billion. Various legislative proposals regarding the future of BIF and SAIF have been reported recently. Several of these proposals include a one-time special assessment for SAIF deposits (which could under certain proposals be as high as 0.85% of each insured institution's SAIF deposit assessment base) and a subsequent reduced level of annual premiums for SAIF deposits comparable to the rate for BIF deposits. AmSouth does not currently know when or if any such proposal or any other related proposal may be adopted. 11 TABLE 1--FINANCIAL SUMMARY
SEPTEMBER 30 ------------------------------ % 1995 1994 CHANGE -------------- -------------- ------------- (IN THOUSANDS EXCEPT PER SHARE DATA) BALANCE SHEET SUMMARY End-of-period balances: Loans net of unearned income....... $11,922,456 $11,008,363 8.3 % Total securities................... 3,792,648* 4,018,696* (5.6) Total assets....................... 17,004,235 16,869,187 0.8 Total deposits..................... 13,172,226 12,608,261 4.5 Shareholders' equity............... 1,387,219 1,318,497 5.2 Year-to-date average balances: Loans net of unearned income....... $11,727,594 $ 9,509,976 23.3 % Total securities................... 3,747,570* 3,799,210* (1.4) Total assets....................... 16,869,446 14,835,166 13.7 Total deposits..................... 13,265,976 11,112,240 19.4 Shareholders' equity............... 1,346,145 1,241,774 8.4
NINE MONTHS THREE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------- % -------------------- % 1995 1994 CHANGE 1995 1994 CHANGE --------- --------- ------ --------- --------- ------ EARNINGS SUMMARY Net income............ $127,063 $125,935 0.9 % $46,095 $44,061 4.6% Per common share...... 2.18 2.25 (3.1) 0.79 0.75 5.3 SELECTED RATIOS Return on average as- sets (annualized).... 1.01% 1.13% 1.09% 1.02% Return on average eq- uity (annualized).... 12.62 13.56 13.38 13.07 Average equity to av- erage assets......... 7.98 8.37 8.13 7.84 Allowance for loan losses to loans net of unearned income... 1.51 1.50 1.51 1.50 Efficiency ratio...... 62.03 63.41 57.40 63.51 COMMON STOCK DATA Cash dividends de- clared............... $ 1.14 $ 1.05 $ 0.38 $ 0.35 Book value at end of period............... 23.72 22.72 23.72 22.72 Market value at end of period............... 38 31 1/2 38 31 1/2 Average common shares outstanding.......... 58,273 56,021 58,418 58,894
- -------- * Includes adjustment for market valuation on available-for-sale securities of $4,199 and $(21,391) for end of period balances and $1,322 and $(8,044) for year-to-date average balances for 1995 and 1994, respectively. 12 TABLE 2--YEAR-TO-DATE YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE INTEREST-BEARING LIABILITIES
1995 1994 ----------------------------------- ----------------------------------- NINE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30 ----------------------------------- ----------------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE --------- -------- ------ -------- -------- ------ (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS) ASSETS Earning assets: Loans net of unearned income................ $11,727,594 $758,005 8.64% $ 9,509,976 $567,000 7.97% Trading securities..... 6,745 290 5.75 54,517 2,449 6.01 Available-for-sale se- curities.............. 502,981 27,407 7.29 1,104,172 43,474 5.26 Held-to-maturity secu- rities: Taxable................ 2,965,488 145,192 6.55 2,324,512 111,632 6.42 Tax-free............... 271,034 22,126 10.91 324,053 27,122 11.19 ----------- -------- ----------- -------- Total held-to-maturity securities........... 3,236,522 167,318 6.91 2,648,565 138,754 7.00 ----------- -------- ----------- -------- Total securities...... 3,746,248 195,015 6.96 3,807,254 184,677 6.49 Other earning assets... 103,019 5,263 6.83 326,374 12,130 4.97 ----------- -------- ----------- -------- Total earning assets.. 15,576,861 958,283 8.23 13,643,604 763,807 7.48 Cash and other assets... 1,467,199 1,343,527 Allowance for loan loss- es..................... (175,936) (143,921) Market valuation on available-for-sale se- curities............... 1,322 (8,044) ----------- ----------- $16,869,446 $14,835,166 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits.............. $ 3,917,453 108,098 3.69 $ 3,746,383 82,505 2.94 Savings deposits....... 946,992 20,690 2.92 919,538 17,705 2.57 Time deposits.......... 5,740,896 243,032 5.66 3,929,607 126,472 4.30 Certificates of deposit of $100,000 or more... 899,062 39,159 5.82 747,141 23,584 4.22 Federal funds purchased and securities sold under agreements to repurchase............ 1,080,661 47,853 5.92 1,500,422 46,337 4.13 Other interest-bearing liabilities........... 987,061 47,833 6.48 815,394 32,261 5.29 ------------- -------- ----------- -------- Total interest-bearing liabilities.......... 13,572,125 506,665 4.99 11,658,485 328,864 3.77 -------- ------- -------- ------- Incremental interest spread................. 3.24% 3.71% ======= ======= Noninterest-bearing de- mand deposits.......... 1,761,573 1,769,571 Other liabilities....... 189,603 165,336 Shareholders' equity.... 1,346,145 1,241,774 ------------- ----------- $ 16,869,446 $14,835,166 ============= =========== Net interest income/margin on a tax- able equivalent basis....... 451,618 3.88% 434,943 4.26% ======= ======= Taxable equivalent ad- justment: Loans.................. 2,286 2,253 Securities............. 7,310 8,872 -------- -------- Total taxable equivalent adjustment........... 9,596 11,125 -------- -------- Net interest income... $442,022 $423,818 ======== ========
- -------- NOTE: The taxable equivalent adjustment has been computed based on a 35% federal income tax rate. 13 TABLE 3--QUARTERLY YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE INTEREST-BEARING LIABILITIES
1995 ---------------------------------------------------------------------------------------- THIRD QUARTER SECOND QUARTER FIRST QUARTER ---------------------------- ---------------------------- ---------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE ----------- -------- ------ ----------- -------- ------ ----------- -------- ------ (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS) ASSETS Earning assets: Loans net of unearned income. $11,816,908 $257,422 8.64% $11,801,298 $255,285 8.68% $11,561,740 $245,298 8.60% Trading securities...... 2,797 27 3.83 9,194 106 4.62 10,395 157 6.13 Available-for- sale securities. 496,588 8,900 7.11 477,809 8,608 7.23 534,967 9,899 7.50 Held-to-maturity securities: Taxable.......... 2,908,333 48,044 6.55 2,970,284 48,378 6.53 3,019,065 48,770 6.55 Tax-free......... 255,893 6,957 10.79 273,382 7,531 11.05 284,138 7,638 10.90 ----------- -------- ----------- -------- ----------- -------- Total held-to- maturity securities..... 3,164,226 55,001 6.90 3,243,666 55,909 6.91 3,303,203 56,408 6.93 ----------- -------- ----------- -------- ----------- -------- Total securities..... 3,663,611 63,928 6.92 3,730,669 64,623 6.95 3,848,565 66,464 7.00 Other earning assets.......... 87,315 1,205 5.48 90,660 1,868 8.26 125,537 2,190 7.07 ----------- -------- ----------- -------- ----------- -------- Total earning assets......... 15,567,834 322,555 8.22 15,622,627 321,776 8.26 15,535,842 313,952 8.20 Cash and other assets........... 1,404,025 1,479,463 1,516,028 Allowance for loan losses........... (179,588) (175,616) (172,526) Market valuation on available-for- sale securities.. 4,324 1,985 (2,416) ----------- ----------- ----------- $16,796,595 $16,928,459 $16,876,928 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits. $ 3,830,799 33,139 3.43 $ 3,901,245 36,849 3.79 $ 4,022,419 38,110 3.84 Savings deposits. 986,486 6,805 2.74 949,737 7,178 3.03 903,844 6,707 3.01 Time deposits.... 5,792,071 85,870 5.88 5,874,024 84,198 5.75 5,553,978 72,964 5.33 Certificates of deposit of $100,000 or more............ 919,357 14,018 6.05 911,668 13,537 5.96 865,568 11,604 5.44 Federal funds purchased and securities sold under agreements to repurchase... 1,044,177 14,966 5.69 946,492 14,518 6.15 1,247,584 18,369 5.97 Other interest- bearing liabilities..... 913,192 14,908 6.48 993,363 16,102 6.50 1,056,203 16,823 6.46 ----------- -------- ----------- -------- ----------- -------- Total interest- bearing liabilities.... 13,486,082 169,706 4.99 13,576,529 172,382 5.09 13,649,596 164,577 4.89 -------- ----- -------- ----- -------- ----- Incremental interest spread.. 3.23% 3.17% 3.31% ===== ===== ===== Noninterest- bearing demand deposits......... 1,730,937 1,798,087 1,755,973 Other liabilities. 213,217 212,513 147,208 Shareholders' equity........... 1,366,359 1,341,330 1,324,151 ----------- ----------- ----------- $16,796,595 $16,928,459 $16,876,928 =========== =========== =========== Net interest income/margin on a taxable equivalent basis. 152,849 3.90% 149,394 3.84% 149,375 3.90% ===== ===== ===== Taxable equivalent adjustment: Loans............ 745 784 757 Securities....... 2,295 2,488 2,527 -------- -------- -------- Total taxable equivalent adjustment..... 3,040 3,272 3,284 -------- -------- -------- Net interest income......... $149,809 $146,122 $146,091 ======== ======== ======== 1994 ---------------------------------------------------------- FOURTH QUARTER THIRD QUARTER ---------------------------- ---------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE ----------- -------- ------ ----------- -------- ------ (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS) ASSETS Earning assets: Loans net of unearned income. $11,129,127 $230,021 8.20% $10,731,271 $218,001 8.06% Trading securities...... 11,005 140 5.05 50,144 923 7.30 Available-for- sale securities. 611,432 8,531 5.54 1,190,536 17,556 5.85 Held-to-maturity securities: Taxable.......... 3,072,008 48,550 6.27 3,120,246 50,000 6.36 Tax-free......... 296,523 8,163 10.92 308,343 8,749 11.26 ----------- -------- ----------- -------- Total held-to- maturity securities..... 3,368,531 56,713 6.68 3,428,589 58,749 6.80 ----------- -------- ----------- -------- Total securities..... 3,990,968 65,384 6.50 4,669,269 77,228 6.56 Other earning assets.......... 190,128 3,115 6.50 276,081 3,595 5.17 ----------- -------- ----------- -------- Total earning assets......... 15,310,223 298,520 7.74 15,676,621 298,824 7.56 Cash and other assets........... 1,531,345 1,562,705 Allowance for loan losses........... (163,282) (165,240) Market valuation on available-for- sale securities.. (24,426) (18,349) ----------- ----------- $16,653,860 $17,055,737 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits. $ 4,041,852 36,447 3.58 $ 4,084,672 33,321 3.24 Savings deposits. 913,960 6,556 2.85 958,903 6,459 2.67 Time deposits.... 5,327,641 65,524 4.88 4,639,285 51,505 4.40 Certificates of deposit of $100,000 or more............ 807,689 10,168 4.99 815,600 9,358 4.55 Federal funds purchased and securities sold under agreements to repurchase... 1,406,294 18,672 5.27 2,241,922 25,759 4.56 Other interest- bearing liabilities..... 891,325 14,183 6.31 1,050,845 15,735 5.94 ----------- -------- ----------- -------- Total interest- bearing liabilities.... 13,388,761 151,550 4.49 13,791,227 142,137 4.09 -------- ----- -------- ----- Incremental interest spread.. 3.25% 3.47% ===== ===== Noninterest- bearing demand deposits......... 1,810,308 1,798,001 Other liabilities. 146,597 128,648 Shareholders' equity........... 1,308,194 1,337,861 ----------- ----------- $16,653,860 $17,055,737 =========== =========== Net interest income/margin on a taxable equivalent basis. 146,970 3.81% 156,687 3.97% ===== ===== Taxable equivalent adjustment: Loans............ 812 738 Securities....... 2,649 2,755 -------- -------- Total taxable equivalent adjustment..... 3,461 3,493 -------- -------- Net interest income......... $143,509 $153,194 ======== ========
- ----- NOTE: The taxable equivalent adjustment has been computed based on a 35% federal income tax rate. 14 TABLE 4--INTEREST RATE SWAPS, CAPS AND FLOORS
SWAPS -------------------------------------- CAPS RECEIVE FIXED PAY FIXED BASIS OTHER & FLOORS TOTAL ------------- --------- ----- ------- -------- ------- (IN MILLIONS) Balance at December 31, 1992................... $ 305 $ 240 $ 300 $ 300 $1,005 $ 2,150 Additions............. -0- -0- -0- 300 20 320 Maturities............ -0- -0- -0- -0- -0- -0- Calls................. (120) (120) -0- -0- -0- (240) ----- ----- ----- ------- ------ ------- Balance at December 31, 1993................... 185 120 300 600 1,025 2,230 Additions............. -0- -0- -0- 400 350 750 Maturities............ -0- -0- (300) -0- (20) (320) Calls................. (120) (120) -0- -0- -0- (240) Terminations.......... (65) -0- -0- (1,000) (915) (1,980) ----- ----- ----- ------- ------ ------- Balance at December 31, 1994................... -0- -0- -0- -0- 440 440 Additions............. -0- -0- -0- -0- -0- -0- Maturities............ -0- -0- -0- -0- -0- -0- Calls................. -0- -0- -0- -0- -0- -0- Terminations.......... -0- -0- -0- -0- (300) (300) ----- ----- ----- ------- ------ ------- Balance at September 30, 1995................... $ -0- $ -0- $ -0- $ -0- $ 140 $ 140 ===== ===== ===== ======= ====== =======
TABLE 5--MATURITIES AND INTEREST RATES EXCHANGED ON CAPS
MATURE DURING ------------------- 1995 1996 1997 TOTAL ----- ----- ----- ----- (DOLLARS IN MILLIONS) Notional............................................ $ 30 $ 33 $ 77 $ 140 Receive rate........................................ 1.61% 0.98% 0.00% 0.58% Pay rate............................................ 1.34% 1.21% 0.59% 0.90%
- -------- NOTE: The maturities and interest rates exchanged are calculated assuming that interest rates remain unchanged from average September 1995 rates. The information presented could change as future interest rates increase or decrease. 15 TABLE 6--LOANS AND CREDIT QUALITY
LOANS NONPERFORMING LOANS* NET CHARGE-OFFS SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 ----------------------- -------------------- ---------------- 1995 1994 1995 1994 1995 1994 ----------- ----------- -------------------- ------- ------- (IN THOUSANDS) Commercial.............. $ 3,033,409 $ 2,681,371 $11,554 $ 24,442 $ 2,971 $ 2,402 Commercial real estate: Commercial real estate mortgages: Owner occupied........ 601,829 589,088 5,578 15,758 62 (114) Nonowner occupied..... 874,665 774,915 21,560 35,836 1,331 (2,026) ----------- ----------- ------- -------- ------- ------- Total commercial real estate mortgages.......... 1,476,494 1,364,003 27,138 51,594 1,393 (2,140) ----------- ----------- ------- -------- ------- ------- Real estate construction: Owner occupied........ 151,715 203,680 7,806 1,074 270 (74) Nonowner occupied..... 344,352 289,527 4,037 2,077 (41) (7) ----------- ----------- ------- -------- ------- ------- Total real estate construction....... 496,067 493,207 11,843 3,151 229 (81) ----------- ----------- ------- -------- ------- ------- Total commercial real estate...... 1,972,561 1,857,210 38,981 54,745 1,622 (2,221) ----------- ----------- ------- -------- ------- ------- Consumer: Residential first mortgages............. 4,272,370 4,112,346 30,922 24,785 612 421 Other residential mortgages............. 665,629 609,152 1,106 23 (193) 14 Dealer indirect........ 1,041,744 844,033 4,525 47 5,012 1,197 Other consumer......... 1,016,098 981,236 2,267 4,363 13,395 11,344 ----------- ----------- ------- -------- ------- ------- Total consumer...... 6,995,841 6,546,767 38,820 29,218 18,826 12,976 ----------- ----------- ------- -------- ------- ------- $12,001,811 $11,085,348 $89,355 $108,405 $23,419 $13,157 =========== =========== ======= ======== ======= =======
- -------- * Exclusive of accruing loans 90 days past due. TABLE 7--ALLOWANCE FOR LOAN LOSSES
1995 1994 ----------------------------------- --------------------------- 3RD QUARTER 2ND QUARTER 1ST QUARTER 4TH QUARTER 3RD QUARTER ----------- ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Balance at beginning of period................. $179,002 $174,398 $171,167 $164,756 $164,746 Loans charged off....... 12,290 11,833 9,161 16,457 9,066 Recoveries of loans pre- viously charged off.... 3,440 4,130 2,295 2,719 4,303 -------- -------- -------- -------- -------- Net charge-offs......... 8,850 7,703 6,866 13,738 4,763 Addition to allowance charged to expense..... 9,398 12,307 8,344 20,149 4,773 Allowance acquired in acquisitions........... -0- -0- 1,753 -0- -0- -------- -------- -------- -------- -------- Balance at end of peri- od..................... $179,550 $179,002 $174,398 $171,167 $164,756 ======== ======== ======== ======== ======== Allowance for loan losses to loans net of unearned income........ 1.51% 1.50% 1.48% 1.50% 1.50% Allowance for loan losses to nonperforming loans.................. 200.94% 186.25% 169.74% 166.59% 151.98% Allowance for loan losses to nonperforming assets................. 171.73% 153.98% 134.67% 128.61% 116.24% Net charge-offs to aver- age loans net of un- earned income (annualized)........... 0.30% 0.26% 0.24% 0.49% 0.18%
16 TABLE 8--NONPERFORMING ASSETS
1995 1994 ---------------------------- ------------------ SEP 30 JUN 30 MAR 31 DEC 31 SEPT 30 -------- -------- -------- -------- -------- (DOLLARS IN THOUSANDS) Impaired loans............... $ 52,741 $ 61,123 $ 62,555 $ -0- $ -0- Other nonaccrual loans....... 36,614 34,988 39,409 89,545 97,186 Restructured loans........... -0- -0- 781 13,203 11,219 -------- -------- -------- -------- -------- Total nonperforming loans.. 89,355 96,111 102,745 102,748 108,405 Foreclosed properties........ 13,144 18,112 24,656 28,263 31,673 Repossessions................ 2,052 2,028 2,097 2,079 1,664 -------- -------- -------- -------- -------- Total nonperforming assets*................... $104,551 $116,251 $129,498 $133,090 $141,742 ======== ======== ======== ======== ======== Nonperforming assets* to loans net of unearned income, foreclosed properties and repossessions............... 0.88% 0.97% 1.10% 1.16% 1.28% ======== ======== ======== ======== ======== Accruing loans 90 days past due......................... $ 45,548 $ 34,663 $ 33,685 $ 34,246 $ 44,293 ======== ======== ======== ======== ========
- -------- * Exclusive of accruing loans 90 days past due. TABLE 9--ALLOWANCE FOR FORECLOSED PROPERTY LOSSES
1995 1994 ----------------------------------- ----------------------- 3RD QUARTER 2ND QUARTER 1ST QUARTER 4TH QUARTER 3RD QUARTER ----------- ----------- ----------- ----------- ----------- (IN THOUSANDS) Balance at beginning of period................. $ 2,312 $2,857 $3,638 $2,028 $2,692 Addition (reduction) of allowance charged (credited) to expense.. -0- (48) (274) 2,600 225 Net writedowns/losses... (1,583) (497) (507) (990) (889) ------- ------ ------ ------ ------ Balance at end of the period................. $ 729 $2,312 $2,857 $3,638 $2,028 ======= ====== ====== ====== ======
17 TABLE 10--SECURITIES
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 --------------------- --------------------- CARRYING MARKET CARRYING MARKET AMOUNT VALUE AMOUNT VALUE ---------- ---------- ---------- ---------- (IN THOUSANDS) Held-to-maturity U.S. Treasury and federal agency securities...................... $3,004,790 $3,007,257 $3,087,544 $2,975,407 State, county and municipal secu- rities.......................... 247,375 259,991 301,685 316,193 Other securities................. 6,550 6,465 7,388 7,341 ---------- ---------- ---------- ---------- $3,258,715 $3,273,713 $3,396,617 $3,298,941 ========== ========== ========== ========== Available-for-sale U.S. Treasury and federal agency securities...................... $ 333,090 $ 545,412 Other securities................. 189,715 70,844 ---------- ---------- $ 522,805 $ 616,256 ========== ==========
- -------- NOTES: 1. The weighted average remaining life, which reflects the amortization on mortgage related and other asset backed securities, and the weighted average yield on the combined held-to-maturity and available-for-sale portfolios at September 30, 1995 were approximately five years and 6.70%, respectively. Included in the balance is $2.6 billion of mortgage-backed securities, $900 million of which are variable rate. The weighted average remaining life and the weighted average yield of mortgage-backed securities at September 30, 1995 were approximately six years and 6.81%, respectively. The duration of the combined portfolios which considers the repricing frequency of variable rate securities is approximately 2.2 years. 2. The available-for-sale portfolio included an unrealized gain of $4.2 million and an unrealized loss of $21.4 million at September 30, 1995 and 1994, respectively. TABLE 11--OTHER INTEREST-BEARING LIABILITIES
SEPTEMBER 30 ------------------- 1995 1994 -------- ---------- (IN THOUSANDS) Short-term: Treasury, tax, and loan note............................. $275,482 $ 290,078 Federal Home Loan Bank advances.......................... 161,950 258,500 Term federal funds purchased............................. 82,030 74,000 Other.................................................... 14,325 11,159 -------- ---------- Total short-term....................................... 533,787 633,737 -------- ---------- Long-term: 7 3/4% Subordinated Notes Due 2004....................... 149,206 149,114 Subordinated Capital Notes Due 1999...................... 99,537 99,408 Federal Home Loan Bank advances.......................... 29,947 140,505 Floating Rate Notes Due 1999............................. 6,899 7,474 7 1/2% Convertible Subordinated Debentures............... 3,986 3,764 Long-term notes payable.................................. 23,519 23,383 -------- ---------- Total long-term........................................ 313,094 423,648 -------- ---------- Total other interest-bearing liabilities............. $846,881 $1,057,385 ======== ==========
18 TABLE 12--CAPITAL RATIOS
SEPTEMBER 30 ------------------------ 1995 1994 ----------- ----------- (DOLLARS IN THOUSANDS) Risk-adjusted capital ratio: Total assets....................................... $17,004,235 $16,869,187 Adjusted allowance for loan losses................. 162,136 146,574 Adjustment for risk-weighting of balance sheet items............................................. (5,912,037) (6,478,427) Adjustment for off-balance sheet items............. 1,994,340 1,377,564 Add unrealized (gains)/losses on available-for-sale securities........................................ (4,184) 21,391 Less certain intangible assets..................... (288,866) (228,525) ----------- ----------- Total risk-adjusted assets....................... $12,955,624 $11,707,764 =========== =========== Shareholders' equity............................... $ 1,387,219 $ 1,318,497 Add unrealized (gains)/losses on available-for-sale securities (net of deferred taxes)................ (2,609) 13,355 Less certain intangible assets..................... (288,866) (228,525) ----------- ----------- Tier I capital..................................... 1,095,744 1,103,327 Adjusted allowance for loan losses................. 162,136 146,574 Qualifying long-term debt.......................... 208,928 252,286 ----------- ----------- Tier II capital.................................... 371,064 398,860 ----------- ----------- Total capital.................................... $ 1,466,808 $ 1,502,187 =========== =========== Tier I capital to total risk-adjusted assets....... 8.46% 9.42% Total capital to risk-adjusted assets.............. 11.32% 12.83% Other capital ratios: Leverage........................................... 6.64% 6.56% Equity to assets................................... 8.16% 7.82% Tangible equity to assets.......................... 6.57% 5.80%
19 PART II OTHER INFORMATION ITEM 5. OTHER INFORMATION (a) On October 19, 1995, AmSouth's Board of Directors approved the repurchase by AmSouth of up to an aggregate of 2,265,000 shares of its common stock through December 31, 1998. This authorization replaces a previously approved share repurchase program. (b) In July 1995, all of AmSouth's subsidiary banks that were state nonmember banks converted to state banks that are members of the Federal Reserve System. All of AmSouth's subsidiary banks are now state member banks. As such, their primary federal regulator is the Board of Governors of the Federal Reserve System and they are also subject to regulation by the states in which they are located. (c) On November 6, 1995, AmSouth issued $150.0 million in 6.75% Subordinated Debentures Due November 1, 2025 at a discounted price of 99.883%. The net proceeds to AmSouth after commissions totaled $148.9 million. The debentures will mature on November 1, 2025 and may be redeemed on November 1, 2005 at the option of the registered holders thereof. Proceeds will be used for general corporate purposes. This debt qualifies as Tier 2 capital in calculating risk adjusted capital ratios. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ITEM 6(A)--EXHIBITS -------- The exhibits listed in the Exhibit Index at page 22 of this Form 10-Q are filed herewith or are incorporated by reference herein. ITEM 6(B)--FORMS 8-K --------- No report on Form 8-K was filed by AmSouth during the period July 1, 1995 to September 30, 1995. 20 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AMSOUTH HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. /s/ John W. Woods November 13, 1995 By: _________________________________ John W. Woods Chairman of the Board and ------------------------- Chief Executive Officer ----------------------- /s/ Dennis J. Dill November 13, 1995 By: _________________________________ Dennis J. Dill Executive Vice President and ---------------------------- Chief Accounting Officer ------------------------ 21 EXHIBIT INDEX The following is a list of exhibits including items incorporated by reference. 2 Agreement and Plan of Merger dated as of September 12, 1993, between Fortune Bancorp, Inc. and AmSouth Bancorporation, as amended by amendment dated as of May 11, 1994 (1) 3-a Restated Certificate of Incorporation of AmSouth Bancorporation (2) 3-b Amendment to By-Laws of AmSouth Bancorporation 3-c By-Laws of AmSouth Bancorporation, as amended 10-a Amendment Number Two to AmSouth Bancorporation 1989 Long Term Incentive Compensation Plan 10-b Amendment Number Six to AmSouth Bancorporation Long Term Incentive Compensation Plan 10-c Form of Executive Severance Agreement for Certain Executive Officers (3) 11 Statement Re: Computation of Earnings per Share 15 Letter Re: Unaudited Interim Financial Information 21 List of Subsidiaries of AmSouth Bancorporation 27 Financial Data Schedule
22 NOTES TO EXHIBITS (1) Filed as Exhibit 2(a) to AmSouth's Report on Form 8-K filed on September 16, 1993, as amended by a Form 8-K/A filed on September 23, 1993, and Annex A to the Supplement to the Proxy Statement/Prospectus dated May 12, 1994, and filed pursuant to rule 424 (b)(3), incorporated herein by reference. (2) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the quarter ended March 31, 1993, incorporated herein by reference. (3) An Executive Severance Agreement has been entered into with Michael C. Baker in the form filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the quarter ended June 30, 1995, incorporated herein by reference. 23 EX-3.B 2 AMENDMENT TO BY-LAWS EXHIBIT 3-b RESOLVED, that paragraph (c) of Section 3.2 of the By-Laws is hereby amended in its entirety to read as follows: (c) Any director who has (i) reached the age of sixty-eight (68) years, (ii) become disabled to the extent that (in the judgment of a majority of the remaining outside directors) he or she is unable to perform the duties of a director of this corporation, or (iii) retired or otherwise become permanently separated from the business or professional position which he or she held at the time of his or her election to the Board of Directors will retire from the Board of Directors at the Annual Meeting of Shareholders of the Corporation next following the event in (i), (ii) or (iii) that requires retirement of such director from the Board. EX-3.C 3 BY-LAWS AS AMENDED EXHIBIT 3-C 400-1 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article I - Offices Date: April, 1995 SECTION 1.1: PRINCIPAL OFFICE AND OTHER OFFICES The principal office of the corporation shall be in Birmingham, Jefferson County, Alabama. The corporation may have such other offices, either within or without the State of Alabama, as the Board of Directors may designate or as the business of the corporation may require from time to time. 400-2 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article II - Shareholders Date: April, 1995 SECTION 2.1: ANNUAL MEETING The annual meeting of the shareholders shall be held on the third Thursday in the month of April in each year, at the hour of 11:00 o'clock, a.m., local time, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state in which the meeting is to be held, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. SECTION 2.2: SPECIAL MEETINGS Special meetings of the shareholders, for any purpose or purposes, may be called only as provided in the Restated Certificate of Incorporation. SECTION 2.3: PLACE OF MEETING The place of meeting shall be the principal office of the corporation in the State of Alabama unless some other place, either within or without the State of Alabama, is designated by the directors. SECTION 2.4: NOTICE OF MEETING: FORM; CONTENTS; DELIVERY METHOD; DELIVERY TIME Written or printed notice stating (a) the place, day, and hour of the meeting and, in the case of a special meeting, or a meeting which is required by statute to be held for any special purpose, or of an annual meeting at which special action is to be taken, (b) the purpose or purposes for which the meeting is called, or the special action which is proposed to be taken shall be delivered either personally or by mail, by or at the direction of the Board of Directors, the Chief Executive Officer, the Secretary, or the persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the shareholder at his or her address as it appears on the records of the corporation, with postage thereon prepaid. Any such notice which relates to an annual meeting of shareholders shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting; and, any such notice which relates to any special meeting of shareholders shall be delivered as provided in the Restated Certificate of Incorporation. SECTION 2.5: CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE For the purpose of determining which shareholders are entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or which shareholders are entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a stated period, but not to exceed, in any case, fifty (50) days, or in the case of a determination of shareholders eligible to vote at a special meeting of shareholders called by the shareholders, not more than seventy-five (75) days, before the meeting or other event or occasion. If the stock transfer books shall be closed for the purpose of determining which shareholders are entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors or, in the case of a dividend record date, the Executive Committee may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in the case of a meeting of shareholders, not less than ten (10) days (or, in the case of a determination of shareholders eligible to vote at a special meeting of shareholders called by the shareholders, not more than seventy-five (75) days) prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of the shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. SECTION 2.6: VOTING LISTS The officer or agent having charge of the stock ledger for shares of the corporation shall make, at least ten (10) days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock ledger shall be the only evidence as to who are the shareholders entitled to examine such list or stock ledger or books of the corporation or to vote in person or by proxy at any meeting of shareholders. SECTION 2.7: QUORUM A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting under the original notice. The shareholders present at a duly organized meeting may continue to transact business until the meeting is adjourned, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. SECTION 2.8: PROXIES At all meetings of shareholders, a shareholder may vote by proxy in writing executed by the shareholder or by his or her duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. SECTION 2.9: VOTING OF SHARES Each outstanding share entitled to vote shall be entitled to one (1) vote upon each matter submitted to a vote at a meeting of the shareholders. SECTION 2.10: VOTING OF SHARES BY CERTAIN HOLDERS Except as provided in this paragraph, shares standing in the name of another corporation may be voted by such officer, agent, or proxy, as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares belonging to another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation is held by the corporation, shall not be voted at any meeting or counted in determining the total number of outstanding shares at any given time; provided, however, that nothing in this section shall be construed as limiting the right of any such other corporation to vote stock of the corporation held by it in a fiduciary capacity. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy; but, no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares standing in the name of a receiver may be voted by such receiver, and shares held or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority so to do is contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his or her proxy, may represent such shares and vote thereon. Treasury shares shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the presence of a quorum. SECTION 2.11: INSPECTORS Prior to any meeting of shareholders, the Board of Directors or the Chief Executive Officer shall appoint one or more inspectors to act at the meeting and make a written report and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of shareholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Inspectors may, but are not required to be, employees of the corporation or of its subsidiaries. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at the meeting. No ballot, proxy, or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a shareholder who submits a proxy by telegram, cablegram, or other electronic transmission from which it can be determined that the proxy was authorized by the shareholder, ballots, and the regular books and records of the corporation, and they may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the shareholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable. 400-3 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article III - Board of Directors Date: April, 1995 SECTION 3.1: GENERAL POWERS The business and affairs of the corporation shall be managed under the direction of its Board of Directors. SECTION 3.2: NUMBER, TENURE, AND QUALIFICATIONS (a) Subject to the provisions of Paragraph (5) of Section XI of the Restated Certificate of Incorporation relating to the rights of the holders of any class or series of Preferred Stock, as defined in Section IV of the Restated Certificate of Incorporation, to elect under specified circumstances by separate class vote additional directors, the number of directors of the corporation shall be fixed from time to time by the affirmative vote of two-thirds of the total number of directors then in office who have been elected by the holders of the capital stock of the corporation entitled to vote generally for the election of directors. No decrease in the number of directors shall shorten the term of any incumbent director. (b) Directors need not be residents of the States of Alabama or Delaware nor shareholders of the corporation. (c) Any director who has (i) reached the age of sixty-eight (68) years, (ii) become disabled to the extent that (in the judgment of a majority of the remaining outside directors) he or she is unable to perform the duties of a director of this corporation or (iii) retired or otherwise become permanently separated from the business or professional position which he or she held at the time of his or her election to the Board of Directors will retire from the Board of Directors at the Annual Meeting of Shareholders of the Corporation next following the event in (i), (ii) or (iii) that requires retirement of such director from the Board. (d) Any director who is an officer of the corporation, or of any subsidiary thereof, shall resign as a director effective on the date he or she ceases to be an officer. (e) On recommendation of the Director Affairs Committee, the application to any individual of any provision of this Section 3.2 (c) (i) and (iii) may be waived by the Board of Directors; provided, however, that any such waiver shall be effective only on a year-to-year basis. SECTION 3.3: REGULAR MEETINGS A regular meeting of the Board of Directors shall be held without other notice than this by-law at 1:00 o'clock, p. m., local time, on the third Thursday of the months of January, February, April, June, July, October, and December (unless such date shall fall on a holiday observed by AmSouth Bank of Alabama, in which event, the meeting shall be held on the next succeeding business day and at the same hour or at such other hour as may be designated by the Board of Directors). The Board of Directors may provide, by resolution, the time and place, either within or without the State of Alabama, for the holding of additional or substitute regular meetings without other notice than such resolution. SECTION 3.4: SPECIAL MEETINGS Special meetings of the Board of Directors may be called by or at the request of the Chief Executive Officer or any three (3) directors. A special meeting of the Board of Directors shall be held at the principal office of the corporation unless all directors agree in advance and in writing that it be held at another place, either within or without the State of Alabama. SECTION 3.5: PARTICIPATION BY CONFERENCE TELEPHONE Members of the Board of Directors, or of any committee thereof, may participate in any meeting of the Board of Directors or of any such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other; and, participation in a meeting in such manner shall constitute presence in person at the meeting. SECTION 3.6: INFORMAL ACTION Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if, prior to such action, a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or committee. SECTION 3.7: NOTICE At least one (1) day's notice of any special meeting of the Board of Directors or of any meeting of a committee of the Board of Directors shall be given to all directors or committee members, as the case may be, unless, in the opinion of the officers or directors calling the meeting, an emergency exists which requires less than one (1) day's notice; in that event, only such notice need be given as such officer or directors shall direct. Any director may waive notice of any meeting. (See, Section 10.1 of these by-laws.) The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. SECTION 3.8: FEES By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof, and may be paid a fixed sum for attendance at each such meeting or a stated salary as director, or both. SECTION 3.9: QUORUM Except as otherwise provided in Section XI of the Restated Certificate of Incorporation, a majority of the sum of (i) the number of directors determined pursuant to Paragraph (2) of Section XI of the Restated Certificate of Incorporation and Section 3.2(a) of these by-laws, and (ii) the number of directors, if any, elected under specified circumstances by a separate class vote of the holders of any class or series of Preferred Stock, as defined in Section IV of the Restated Certificate of Incorporation, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; but, if less than such quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 3.10: MANNER OF ACTING Except as provided in Sections VIII and XI of the Restated Certificate of Incorporation and Section 3.2(a) and Section 3.15 of these by-laws, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 3.11: VACANCIES Any vacancy occurring in the Board of Directors and any directorship to be filled by reason of an increase in the number of directorships or any other reason shall be filled according to the provisions of Section XI of the Restated Certificate of Incorporation. SECTION 3.12: COMMITTEES OF THE BOARD OF DIRECTORS The standing committees of the Board of Directors shall be the following: a. Executive Committee b. Strategic Planning Committee c. Director Affairs Committee d. Executive Compensation and Benefits Committee e. Audit, Compliance, and Public Policy Committee f. Finance and Pension Fund Committee SECTION 3.13: COMMITTEE MEMBERSHIP AND OPERATIONS SECTION 3.13 (a): The Executive Committee will be made up of the Chairman of the Board, as chairman of the committee, and the chairmen of the other standing committees. SECTION 3.13 (b): The Strategic Planning Committee shall consist of all outside, independent directors. (1) A director will not be considered as "independent" if he or she is an employee or former employee of the corporation or any of its subsidiaries, or is a substantial customer of or a supplier of goods or services to the corporation, or is a significant advisor or consultant to the corporation, except when the Board has determined that the facts of such relationship with the corporation are not such as would influence the exercise of independent judgment by the director. (The ownership of stock in the corporation by directors is encouraged and the ownership of a substantial amount of stock is not in itself a basis for a director to be considered as not "independent".) (2) A director will not be considered an "outside" director if he or she is an employee or a former employee of the corporation or any of its subsidiaries. SECTION 3.13 (c): The membership of the standing committees other than the Executive Committee will be composed only of outside directors; there will be no less than three outside directors on each of the committees; and, in the case of the Executive Compensation and Benefits Committee, none of the members shall be or shall have been an employee or officer of the corporation or its subsidiaries or be eligible (or have been eligible during the twelve months preceding assignment to the committee) to participate in any compensation plan of the corporation, the administration of which is limited to directors who are not eligible to participate. SECTION 3.13 (d): Directors may serve on more than one committee but no director simultaneously may be chairman of more than one committee. SECTION 3.13 (e): Each committee will have a secretary, who may, but need not be, a member of the committee or of the Board, whose duty it will be to take and transcribe minutes of each committee meeting and to deliver them to the Secretary of the corporation. SECTION 3.13 (f): Annually, at its organizational meeting, the Board of Directors will elect members to committee memberships and appoint chairmen of the committees. Members and chairmen of committees will serve until their successors are elected and may succeed themselves. At the time membership of a committee is elected, the Board may designate one or more directors as alternate members, who may replace any absent or disqualified member at any meeting of that committee. SECTION 3.13 (g): The Chairman of the Board of Directors and the chairman of each committee will determine when the committee meets. Either the Chairman of the Board of Directors or the chairman of a committee may call meetings of the committee at any time. SECTION 3.13 (h): The Chairman of the Board of Directors and the chairman of each committee will develop the committee's agenda, which will be consistent with the role of the committee as provided in these by-laws or in the Board of Directors resolution establishing the committee. SECTION 3.13 (i): A majority of the members of a committee shall constitute a quorum of its members and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of the committee. Further, in the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she, or they constitute a quorum and if they act unanimously, may appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. SECTION 3.14: STANDING COMMITTEES' AREAS OF RESPONSIBILITY SECTION 3.14 (a): EXECUTIVE COMMITTEE In the time between meetings of the Board of Directors, the Executive Committee shall have and may exercise all of the authority and powers of the Board of Directors to the extent allowed by law, specifically including, without thereby limiting the generality of the foregoing, the authority to declare dividends. The Executive Committee shall inform the Board of Directors of all actions taken by it at the first meeting of the Board of Directors following the taking of any such action. SECTION 3.14 (b): STRATEGIC PLANNING COMMITTEE Duties and responsibilities: (1) To review periodically with the Chief Executive Officer of the corporation the mission and strategy of the corporation and its major subsidiaries; (2) To review and address with the Chief Executive Officer the significant issues and opportunities which affect the corporation and its strategy as such issues and opportunities arise; (3) To review and act upon the recommendations of the Chief Executive Officer with respect to plans which will further the execution of the corporation's strategy; (4) To review and act upon the recommendations of the Chief Executive Officer with respect to modification of the mission or strategy of the corporation; (5) To review annually the corporation's plans for succession and management development of key officers of the corporation, and to have on a continuing basis the recommendation of the Chief Executive Officer as to his successor, should he resign, die, or become unexpectedly disabled; (6) To review at least twice annually, in executive session at which members are free to raise any subject, its evaluation of the performance of the Chief Executive Officer. SECTION 3.14 (c): AUDIT, COMPLIANCE, AND PUBLIC POLICY COMMITTEE Duties and Responsibilities: (1) To protect the shareholders, customers, employees, and directors of the corporation and its subsidiaries from undue risks and from liability by securing and reviewing financial and other information about the corporation and its subsidiaries and by monitoring the compliance of the corporation and its subsidiaries with the various laws and regulations to which the corporation and its subsidiaries are subject (including, without limitation, the provisions of the Federal Deposit Insurance Corporation Improvement Act [FIDICIA]); (2) To review with the chief internal auditor and the independent public accountant their annual audit plans, including the degree of coordination of their respective plans and to enquire into the extent to which the planned audit scope can be relied upon to detect fraud or weakness in internal controls; (3) To make recommendations to the Board of Directors with regard to the appointment or discharge of the corporation's independent public accountants; (4) To review with the independent public accountants the cooperation received from management during the course of the audit and the extent to which any restrictions placed upon them may have affected their examination; (5) To review the Annual Report to Shareholders prior to its publication and to discuss with the independent public accountants any significant transactions not a normal part of the corporation's business, significant adjustments proposed by them, and comments submitted by the independent public accountants concerning the corporation's system of internal accounting control, together with management's actions to correct any deficiencies noted; (6) To review steps taken to assure compliance with the corporation's policy regarding conflicts of interest and business ethics; (7) To review transactions or relationships between the corporation and any director, officer, or stockholder owning more than 5% of the corporation's common stock (including any family members of the foregoing); and to make recommendations to the Board of Directors concerning whether such relationships should continue; and, to ascertain that appropriate reporting of such transactions or relationships has been made in accordance with regulations of the Securities and Exchange Commission and other regulatory agencies; (8) To review the quality and depth of staffing of the corporation's financial, accounting, and internal audit personnel; (9) To review the scope of the internal auditors' activities, their reports of findings resulting from the examination of the corporation's records, operations, and systems of internal accounting controls, and matters affecting their independence in the performance of the audit of the corporation's accounts; (10) To meet at least annually with the independent public accountants and internal auditors to verify the corporation's financial statements, internal accounting control systems, and compliance with the corporation's policy, laws, and other regulations of the various banks and other subsidiaries owned by the corporation and to review with them the results of examinations by regulatory agencies and the effectiveness of the corrective action taken by management in response to the examination reports; (11) To consider and review the policies and practices established by the corporation from time to time to address issues of social and public concern, including, but not limited to, equal employment opportunity, charitable and educational contributions, health and safety programs, environmental protection and energy conservation, government affairs, and shareholder relations; (12) To review significant legislative and other social trends and developments of importance to the corporation and its employees and customers; (13) To report, and make recommendations, to the Board of Directors from time to time, as the committee may deem advisable, on any of the matters described above; (14) To review expense accounts and executive perquisites of the corporation's Management Committee; (15) To communicate and meet regularly and in private session with (i) the corporation's independent public accountants, (ii) the corporation's internal auditors, (iii) the corporation's officers responsible for loan review, and (iv) the corporation's senior management; (16) To review all significant litigation involving the corporation and, particularly, all litigation involving claims of wrong-doing by directors, officers, or independent public accountants of the corporation; (17) To review annually with management their plans for the scope of the independent public accountants' activities, including their performance of non-audit services, and expected fees to be incurred therefore, the accountant's report of findings resulting from examination of the corporation's records and systems of internal accounting controls, and matters affecting their independence in the performance of the audit of the corporation's books and records SECTION 3.14 (d): EXECUTIVE COMPENSATION AND BENEFITS COMMITTEE. Duties and Responsibilities: (1) Periodically to examine and make recommendations to the Board of Directors regarding the corporation's overall executive compensation structure; (2) To administer the corporation's executive compensation plans or other arrangements providing for benefits to officers of the corporation in accordance with the terms of the plans and any rules and regulations thereunder, and to delegate all or a portion of its powers and responsibilities with respect to such plans to the Chief Executive Officer of the corporation; provided, however, that the Committee shall retain all power and responsibility with respect to awards granted to officers of the corporation or its subsidiaries at the level of Executive Vice President and above; (3) To designate the employees eligible to be granted awards under the corporation's executive compensation plans and other arrangements providing for benefits to officers of the corporation, and the type, amount, and timing of such awards; provided, however, that the committee may delegate to the Chief Executive Officer of the corporation its responsibilities to approve awards to employees of the corporation and its subsidiaries below the level of Executive Vice Presidents; (4) To review and make recommendations to the Board of Directors with respect to creation of new executive compensation plans of the corporation and plan terminations; (5) To consider and make recommendations to the Board of Directors concerning amendments to existing executive compensation plans; (6) To review annually and approve the salaries paid to officers of the corporation and of its subsidiaries at the level of Executive Vice President and above; (7) To consider and recommend to the Board of Directors the terms of any contractual agreements and other similar arrangements that may be entered into with officers of the corporation and of its subsidiaries; (8) To recommend to the Board of Directors a slate of executive officers of the corporation at the level of the Management Committee or higher to be elected annually and to recommend at other appropriate times, with respect to executive officers at the level of the Management Committee or higher, their removal, promotion, and the filling of vacancies which occur during the year; (9) To review and approve or disapprove the holding or assuming of any office or board membership or similar position with any non-affiliated corporation or other entity by any officer of the corporation or by any officer of any subsidiary or affiliate of the corporation at the level of Executive Vice President or above; provided, however, that action of the committee shall not be required for holding positions with any "not-for-profit" entity, including any civic, religious, community, or charitable institution nor for positions held by officers of the Trust Division as a part of their duties as trust officers. The committee shall act upon the written recommendation of the Chief Executive Officer and no officer at the level of Executive Vice President or above shall accept or stand for election for any such position without the prior approval of this committee. SECTION 3.14 (e): FINANCE AND PENSION FUND COMMITTEE. Duties and Responsibilities: (1) To review and make recommendations regarding: (A) dividend policy and action; (B) issuance of debt and equity securities by the corporation and its subsidiaries and affiliates and the material terms of all such debt and equity securities; and, (C) guarantees of debt by the corporation, its subsidiaries and affiliates. (2) To review the recommendations of the corporation's management concerning financial policies and, based thereon, to set and approve: (A) Long-term financial policies and annual financial plans of the corporation and its subsidiaries; (B) Policies relating to management of foreign currencies and foreign credit of the corporation and its subsidiaries; (C) Policies for portfolio investments of the corporation and its subsidiaries; (D) Expenditures, commitments, and dispositions by the corporation and its subsidiaries of property valued in excess of Five Million Dollars; except, however, no such approval shall be required for the disposition of property acquired by a bank in the collection of a debt due to the bank, through foreclosure or otherwise (generally "Other Real Estate Owned"); (E) The selection and appointment of investment bankers and managing underwriters in connection with the issuance of securities by the corporation, its subsidiaries, or affiliates; and, (F) The terms of loans made by the corporation to its subsidiaries or affiliates and borrowings by the corporation from its subsidiaries or affiliates. (3) To review at least annually the risk- management policy of the corporation and its program of insurance; (4) To review at least annually the financial status and investment performance of all the corporation's retirement and employee benefit plans; (5) To select and appoint plan administrators, trustees, actuaries, and investment managers (and allocate assets of the plans among investment managers, if any) and to review periodically the administration of the plans; (6) To review annually the actuarial assumptions and reports for the plans; (7) To establish and, as appropriate, review the investment and funding policies and objectives of the plans; (8) To review at least annually compliance with the Employee Retirement Income Security Act of 1974, as amended, and Internal Revenue Service and Department of Labor regulations; (9) To review and approve plan amendments of a non-material nature; (10) To review and make recommendations to the Board of Directors with respect to the creation of new plans of the corporation subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, plan terminations, and plan amendments of a material nature. SECTION 3.14 (f): DIRECTOR AFFAIRS COMMITTEE Duties and Responsibilities: (1) To recommend to the Board of Directors criteria regarding composition of the Board of Directors, the size of the Board of Directors, the mix of employee and non-employee directors, and Board of Directors retirement and tenure policies; (2) To review and make recommendations to the Board of Directors regarding director compensation and benefits; (3) To review qualifications of candidates for Board of Directors membership; (4) To screen and interview possible candidates for Board of Directors membership and to assist in attracting qualified candidates; (5) To recommend to the Board of Directors a slate of nominees or individual nominees to be proposed for election as directors at annual meetings and other appropriate times; (6) To review the qualifications and effectiveness of incumbent directors and the Board of Directors. SECTION 3.15: OTHER COMMITTEES OF THE BOARD The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, which, to the extent provided in such resolution or resolutions, shall have, and may during intervals between the meetings of the Board of Directors exercise, the powers of the Board of Directors in the management of the business and affairs of the corporation and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee or committees shall consist of two or more of the directors of the corporation and shall have such name or names as may be determined from time to time by resolution or resolutions adopted by the Board of Directors. The designation of any such committee or committees and the delegation thereto of authority shall not operate to relieve the Board of Directors, nor any member thereof, of any responsibility imposed upon it, him, or her, by law. SECTION 3.16: EMERITUS BOARD OF DIRECTORS There shall be an "Emeritus Board of Directors" which shall consist of directors of the corporation who have retired, either by reason of age or because of being retired or otherwise permanently separated from the business or professional position which he or she held at the time of his or her election to the Board of Directors. The Emeritus Board of Directors will meet with the senior management of the corporation quarterly or at such other times as may be determined by the Board of Directors on the recommendation of the Director Affairs Committee. Retiring directors of the corporation (including officer-directors) shall be eligible to become Emeritus Directors of the corporation for a period not to exceed five (5) years or as otherwise may be determined by the Board of Directors on the recommendation of the Director Affairs Committee. By resolution of the Board of Directors, Emeritus Directors may be paid their reasonable transportation expenses, if any, of attendance at each meeting of the Emeritus Board and also may be paid a fixed sum for attendance at each such meeting or a stated salary as Emeritus Director, or both. 400-4 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article IV - Officers And Employees Date: April, 1995 SECTION 4.1: GENERAL (a) NUMBER. The officers of this corporation shall consist of a Chairman of the Board of Directors, a President, one or more Vice Presidents (one or more of whom may be designated by the Board of Directors as Senior Executive Vice President, Executive Vice President, Senior Vice President, or such other title as the Board of Directors may determine), a Chief Accounting Officer, and a Corporate Secretary and may also include such other officers as the Board of Directors may from time to time determine, including, but not limited to, one or more Vice Chairmen and one or more Assistant Secretaries. Either the Chairman of the Board or the President shall be designated by the Board of Directors as the Chief Executive Officer of the corporation; the President, a Vice Chairman, or one of the Vice Presidents may be designated by the Board as the Chief Operating Officer of the corporation; and, other officers may be designated by other titles such as "Chief Compliance Officer", "Chief Financial Officer", "Chief Credit Officer", and the like. (b) EXECUTIVE OFFICERS; ORDER OF AUTHORITY. As used in these by-laws, the term "Executive Officers" shall include the Chairman of the Board (if, but only if, he also is the Chief Executive Officer), the President (regardless of whether he is the Chief Executive Officer), any Vice Chairman of the Board, the Senior Executive Vice Presidents, and the Executive Vice Presidents. Their "order of authority" shall be the order in which their titles are listed above; except that, if two or more officers have the same title, their order of authority shall be any order of authority designated by the Board of Directors or the Executive Compensation and Benefits Committee. (c) DUAL OFFICES. Any two or more offices in this corporation may, except where prohibited by law, be held by the same individual. In cases where an individual holds more than one office, that person shall have the authority of all offices so held and shall occupy the "order of authority" provided in these by-laws for the more senior of the offices held. (d) MANNER OF ELECTION; TERM OF OFFICE. Except as provided below, all officers shall be elected annually by the Board of Directors at their first meeting next following the Annual Meeting of Shareholders of the corporation, or as soon thereafter as is practicable; and, their terms of office shall be for one (1) year, commencing upon election, or until their successors are elected and qualified, whichever occurs later. The Board of Directors may, at any time and for any reason sufficient to them, elect such other officers as they may deem desirable. Each of the two (2) Executive Officers having the highest order of authority has the power to elect or appoint all employees and all officers holding a title at or below that of Senior Vice President. Appointment of employees and election of persons to an office at or below the level of Senior Vice President shall be made, unless one of the said two (2) Executive Officers acts directly in a particular instance, as provided in the personnel policies of the corporation, as they may from time to time be adopted, amended, and modified. Compensation of all officers and employees shall be fixed as provided in the personnel policies of this corporation. (e) REMOVAL FROM OFFICE. All officers and employees serve at the will of this corporation and may be removed from office and employment at any time, with or without cause. Only the Board of Directors or its Executive Committee can remove from office the Chief Executive Officer, the Chairman of the Board, or the President. All other officers and employees may be removed from office by either of the two (2) Executive Officers having the highest order of authority or by any person authorized so to do by the personnel policies of this corporation; and, unless one of the said two (2) Executive Officers acts directly in a particular instance, removal from office or employment shall be as provided in the personnel policies of the corporation, as they may from time to time be adopted, amended, and modified. (f) VACANCIES Offices becoming vacant will be filled by the Board of Directors or the Executive Committee as soon as deemed practicable. In the event of a vacancy in any of the offices of the Executive Officers, any of the other Executive Officers remaining may be elected to fill the vacancy in such office for such period as the Board of Directors may determine or until further action by the Board. SECTION 4.2: CHIEF EXECUTIVE OFFICER Subject to the control of the Board of Directors, of the Executive Committee, and of other committees of the Board having authority, the Chief Executive Officer shall be vested with authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law; and shall have general charge of the corporation and of its business and affairs, including authority over the detailed operations of the corporation and over its employees; and, subject to the limitations stated, shall have full power and authority to do and perform in the name of the corporation all acts necessary or proper in his opinion to be done and performed and to execute for and in the name of the corporation all instruments, agreements, and deeds which may be authorized to be executed on behalf of the corporation or which may be required by law. SECTION 4.3: CHAIRMAN OF THE BOARD The Chairman of the Board, or in his absence, the President or other Executive Officers, in their order of authority, shall preside at all regular, called, or special meetings of the Board of Directors, the Executive Committee, and the shareholders, and at adjournments thereof. SECTION 4.4: PRESIDENT The President shall, subject to the direction of the Board of Directors, its Executive Committee, other committees of the Board of Directors having authority (and, if he is not the Chief Executive Officer, then also subject to the direction of the Chief Executive Officer), be vested with authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law. The President, regardless of whether he is also the Chief Executive Officer, shall have the same power to sign for the corporation as is prescribed in these by-laws for the Chief Executive Officer. The President shall perform all duties incidental to the office and shall perform such other duties as may be assigned from time to time by the Board of Directors or the Chief Executive Officer. SECTION 4.5: OTHER EXECUTIVE OFFICERS Each of the Executive Officers shall (subject to the direction of the Board of Directors and of the committees of the Board having authority and to the direction of the Chief Executive Officer) have and may exercise authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law and, in general, to discharge the functions and to exercise the authority vested in the Chief Executive Officer in matters not otherwise acted upon by the Chief Executive Officer or by other Executive Officers senior in the order of authority. Subject to the limitations stated above, the authority of each Executive Officer shall include authority over the operations of the corporation within his or her assigned areas of responsibility and over assigned employees, and authority to do and perform in the name of the corporation all acts necessary or proper in his or her opinion to be done and performed and to execute for and in the name of the corporation all instruments, agreements, and deeds which may be authorized to be executed on behalf of the corporation or required by law. SECTION 4.6: VICE PRESIDENTS Any Vice President shall have the authority to execute in the name of the corporation stock certificates of the corporation and transfers, conveyances, certificates, releases, satisfactions, authentications, options, proxies, leases, including oil, gas, and other mineral leases, agreements or other instruments pertaining to investment, assets or operations of the corporation or powers held or controlled by the corporation. The Vice Presidents shall have such other powers as are from time to time conferred upon them by the Board of Directors, committees of the Board, and the Executive Officers. SECTION 4.7: CHIEF ACCOUNTING OFFICER OR CONTROLLER An officer of the corporation shall be appointed "Chief Accounting Officer" or "Controller" and shall have custody of the corporation's general accounting records, shall prepare financial statements, tax returns, profit plans and reports to regulatory authorities, and shall have such other duties as the Chief Executive Officer or other Executive Officer may assign him from time to time. SECTION 4.8: THE SECRETARY The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one (1) or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a record of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) have general charge of the stock transfer books of the corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by these by-laws, by the Chief Executive Officer, or by the Board of Directors. SECTION 4.9: EXERCISE OF AUTHORITY OF CHIEF EXECUTIVE OFFICER BY OTHER EXECUTIVE OFFICERS In case of the disqualification, disability, death, resignation, or removal of the Chief Executive Officer, and until the Board of Directors has filled the vacancy, the Executive Officers, in their order of authority, shall act as such Chief Executive Officer and with his full authority. SECTION 4.10: MANAGEMENT COMMITTEE There shall be a Management Committee of the corporation to consist of such officers of the corporation and its subsidiaries as may be appointed to sit thereon by the Chief Executive Officer. The committee shall be chaired by the Chief Executive Officer and shall meet at his call. The Management Committee shall develop, publish, and implement detailed policies and procedures on behalf of the corporation and its subsidiaries and affiliates under such guidelines as may from time to time be adopted by the Board of Directors, which reserves the right to amend or revoke actions of the Management Committee The Management Committee shall also have the duty to amend, make additions to, or deletions from, or revoke such policies and procedures, to the extent the committee deems such actions to be necessary and desirable. The committee shall have the duty to publish policies and procedures in the form of a manual or manuals for distribution to appropriate personnel of the corporation and its subsidiaries and affiliates. In addition to the duties prescribed above, the Management Committee shall have such other and further duties and responsibilities as may from time to time be assigned to it by the Board of Directors or the Chief Executive Officer. 400-5 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject Article V - Contracts, Loans, Checks and Deposits, Proxies DATE: April, 1995 SECTION 5.1: CONTRACTS The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 5.2: LOANS No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 5.3: CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 5.4: DEPOSITS All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select. SECTION 5.5: PROXIES Unless otherwise provided by resolution of the Board of Directors, the Chief Executive Officer may from time to time appoint an attorney or agent of the corporation, to cast the votes which the corporation may be entitled to cast as the holder of stock or other securities in any other corporation any of whose stock or other securities may be held by the corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name and on behalf of the corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed, in the name and on behalf of the corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. 400-6 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article VI - Certificates for Shares and Their Transfer Date: January, 1994 SECTION 6.1: CERTIFICATES FOR SHARES Certificates shall be issued only for whole shares and no certificate will be issued for a fractional share. Certificates representing whole shares of the corporation shall be in such form as shall be determined by the Board of Directors, such certificates shall be signed in the manner provided by the General Corporation Law of Delaware by the Chief Executive Officer and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefore upon such terms and indemnity to the corporation as the Board of Directors may prescribe. SECTION 6.2: TRANSFER OF SHARES Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his or her legal representative, who shall furnish proper evidence of authority to transfer, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. 400-7 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article VII - Fiscal Year Date: May, 1990 SECTION 7.1: The fiscal year of the corporation shall begin on the first day of January and end on the 31st day of December in each year. 400-8 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article VIII - Dividends Date: April, 1995 SECTION 8.1: The Board of Directors or its Executive Committee may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. 400-9 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article IX - Seal Date: May, 1990 SECTION 9.1 The corporate seal of the corporation shall be a circular die around which shall be the words "AmSouth Bancorporation." 400-10 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article X - Waiver of Notice Date: May, 1990 SECTION 10.1: Whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of these by-laws, the Restated Certificate of Incorporation, or the provisions of law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. 400-11 Section: BY-LAWS (AMSOUTH BANCORPORATION) Subject: Article XI - Amendments Date: April, 1995 SECTION 11.1: POWER OF DIRECTORS TO AMEND The Board of Directors shall have the power to alter, amend, and repeal the by-laws of the corporation or adopt new by-laws for the corporation at any regular or special meeting of the Board. SECTION 11.2: POWER OF SHAREHOLDERS TO AMEND (a) The shareholders may alter, amend, or repeal the by- laws of the corporation or adopt new by-laws for the corporation at any annual meeting or at a special meeting called for the purpose, and all by-laws made by the directors may be altered, amended, or repealed by the shareholders; (1) provided, however, that the affirmative vote of the holders of sixty-seven percent (67%) of the combined voting power of the then outstanding shares of capital stock of this corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Section VII of the Restated Certificate of Incorporation of this corporation, or adopt any provision of these by- laws that would cause these by-laws to be inconsistent with the provisions of Section VII of the Restated Certificate of Incorporation of this corporation; (2) provided further, however, that the affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of this corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Section XI of the Restated Certificate of Incorporation of this corporation or to adopt any provision of these by-laws that would cause these by- laws to be inconsistent with the provisions of Section XI of the Restated Certificate of Incorporation of this corporation; (3) provided further, however, that the affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of this corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal any provision of Paragraph (a) of Section 3.2 of these by-laws or to adopt any provision of these by-laws that would cause these by-laws to be inconsistent with the provisions of Paragraph (a) of Section 3.2 of these by-laws; (4) provided further, however, that the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of the voting stock and the affirmative vote of the holders of not less than sixty-seven percent (67%) of the voting stock held by stockholders other than an Interested Stockholder (as defined in Section VIII of the Restated Certificate of Incorporation) shall be required for the shareholders to alter, amend, or repeal Section VIII of the Restated Certificate of Incorporation of this corporation, or to adopt any provision of these by-laws that would cause these by-laws to be inconsistent with the provisions of Section VIII of the Restated Certificate of Incorporation of this corporation. (b) The affirmative vote of the holders of sixty-seven percent (67%) of the combined voting power of the then outstanding shares of capital stock of this corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (1) of this Section 11.2 of these by-laws or to adopt any provision of these by-laws that would cause these by-laws to be inconsistent with Paragraph (a) (1) of this Section 11.2 of these by-laws. (c) The affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of this corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (2) or (a) (3) of this Section 11.2 of these by-laws or to adopt any provision of these by-laws inconsistent with Paragraph (a) (2) or (a) (3) of this Section 11.2 of these by-laws. (d) The affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of the voting stock and the affirmative vote of the holders of not less than sixty-seven percent (67%) of the voting stock held by stockholders other than an Interested Stockholder (as defined in Section VIII of the Restated Certificate of Incorporation) shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (4) of this Section 11.2 or to adopt any provision of these by-laws that would cause these by-laws to be inconsistent with Paragraph (a) (4) of this Section 11.2 of these by-laws. EX-10.A 4 AMEND. #2 TO 1989 L.T. INCENTIVE COMP. PLAN EXHIBIT 10-a AMENDMENT NUMBER TWO TO 1989 AMSOUTH BANCORPORATION LONG TERM INCENTIVE COMPENSATION PLAN Pursuant to approval by the Board of Directors of AmSouth Bancorporation, the 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan is hereby amended, effective July 20, 1995, by deleting subsections (4) and (5) of Section 5.6(b) thereof, and inserting the word "and" immediately after subsection (3), and substituting in lieu of the deleted subsections (4) and (5) the following: "(4) if the Grantee making the Election is an Officer of the Company within the meaning of Section 16(b), the exercise, lapsing of restrictions and Elections with respect to Options, Stock Appreciation Rights and Restricted Stock Awards shall be subject to such other limits and restrictions as shall be imposed by the Committee from time to time to ensure or promote compliance with Section 16(b) and other applicable laws and regulations." IN WITNESS WHEREOF, AmSouth Bancorporation has adopted and approved this Amendment Number Two to the 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan by act of its Board of Directors and has caused same to be executed in its name and on its behalf this 5th day of September, 1995 to be effective as of July 20, 1995. AMSOUTH BANCORPORATION By: /s/ John W. Woods ------------------------------------- John W. Woods Chairman of the Board and Chief Executive Officer ATTEST: /s/ Carl L. Gorday - ---------------------------- Assistant Secretary EX-10.B 5 AMEND. #6 TO L.T. INCENTIVE COMP. PLAN EXHIBIT 10-b AMENDMENT NUMBER SIX TO AMSOUTH BANCORPORATION LONG TERM INCENTIVE COMPENSATION PLAN Pursuant to approval by the Board of Directors of AmSouth Bancorporation, the AmSouth Bancorporation Long Term Incentive Compensation Plan is hereby amended, effective July 20, 1995, by deleting subsections (4) and (5) of Section 5.6(b) thereof, and inserting the word "and" immediately after subsection (3), and substituting in lieu of the deleted subsections (4) and (5) the following: "(4) if the Grantee making the Election is an officer of the Company within the meaning of Section 16(b), the exercise, lapsing of restrictions and Elections with respect to Options, Stock Appreciation Rights and Restricted Stock Awards shall be subject to such other limits and restrictions as shall be imposed by the Committee from time to time to ensure or promote compliance with Section 16(b) and other applicable laws and regulations." IN WITNESS WHEREOF, AmSouth Bancorporation has adopted and approved this Amendment Number Six to the AmSouth Bancorporation Long Term Incentive Compensation Plan by act of its Board of Directors and has caused same to be executed in its name and on its behalf this 5th day of September, 1995 to be effective as of July 20, 1995. AMSOUTH BANCORPORATION By: /s/ John W. Woods ------------------------------------- John W. Woods Chairman of the Board and Chief Executive Officer ATTEST: /s/ Carl L. Gorday - ---------------------------- Assistant Secretary EX-11 6 COMPUTATION OF EANINGS PER SHARE EXHIBIT 11 AMSOUTH BANCORPORATION STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
NINE MONTHS THREE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------- ------------------- 1995 1994 1995 1994 --------- --------- --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net income............................. $ 127,063 $ 125,935 $ 46,095 $ 44,061 ========= ========= ========= ========= Average shares of common stock out- standing.............................. 58,273 56,021 58,418 58,894 ========= ========= ========= ========= Earnings per common share.............. $ 2.18 $ 2.25 $ 0.79 $ 0.75 ========= ========= ========= =========
EX-15 7 UNAUDITED INTERIM FINANCIAL INFORMATION Exhibit 15--Letter Re: Unaudited Interim Financial Information Board of Directors AmSouth Bancorporation We are aware of the incorporation by reference in the following Registration Statements and in their related Prospectuses, of our report dated November 7, 1995, relating to the unaudited consolidated financial statements of AmSouth Bancorporation and subsidiaries which are included in its Form 10-Q for the quarter ended September 30, 1995: Form S-3 No. 33-55683 pertaining to the Dividend Reinvestment and Common Stock Purchase Plan; Form S-8 No. 33-52243 pertaining to the assumption by AmSouth Bancorporation of FloridaBank Stock Option Plan and FloridaBank Stock Option Plan--1993; Form S-8 No. 33-52113 pertaining to the 1989 Long Term Incentive Compensation Plan; Form S-3 No. 33-50363 pertaining to the Debt Shelf Registration; Form S-8 No. 33-35218 pertaining to the 1989 Long Term Incentive Compensation Plan; Form S-8 No. 33-37905 pertaining to the AmSouth Bancorporation Thrift Plan; Form S-8 No. 33-9368 pertaining to the Long Term Incentive Compensation Plan; Form S-8 No. 33-2927 (as amended) pertaining to the Employee Stock Purchase Plan; Form S-8 No. 2-97464 pertaining to the Long Term Incentive Compensation Plan; Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common Stock Purchase Plan; Form S-8 No. 33-19016 pertaining to the Long Term Incentive Compensation Plan; Form S-8 No. 33-18653 pertaining to the 1987 Substitute Stock Option Plan; and, Form S-8 No. 33-58777 pertaining to the Director Restricted Stock Plan. Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part of the registration statements prepared or certified by accountants within the meaning of Sections 7 or 11 of the Securities Act of 1933. /s/ Ernst & Young LLP November 7, 1995 EX-21 8 LIST OF SUBSIDIARIES EXHIBIT 21 AMSOUTH BANCORPORATION LIST OF SUBSIDIARIES The following is a list of all subsidiaries of AmSouth and the jurisdiction in which they were organized. Each subsidiary does business under its own name. Name Jurisdiction Where Organized ---- ---------------------------- AmSouth Bank of Alabama.......................... Alabama AmSouth Investment Services, Inc.............. Alabama AmSouth Leasing Corporation................... Alabama AmSouth Mortgage Company, Inc................. Delaware AmSouth Realty, Inc........................... Delaware AmSouth Riverchase, Inc....................... Alabama Fifth Avenue Realty Company................... (unincorporated joint venture) FirstGulf Insurance Agency, Inc............... Alabama National Properties and Mining Company, Inc... Delaware AmSouth Bank of Florida.......................... Florida Amfed Service Corporation..................... Florida Amfed Mortgage Corporation................ Florida AmSouth Insurance Agency, Inc................. Florida AmSouth Retirement Services, Inc.............. Florida First City Service Corporation................ Florida Horseshoe Bend Land Company (partnership). Tennessee Fortune Mortgage Corporation.................. Florida MSF Marketing, Inc............................ Florida MSF Properties, Inc........................... Florida Service Mortgage and Insurance Agency, Inc.... Florida AmSouth Bank of Tennessee........................ Tennessee FMLS, Inc..................................... Tennessee AmSouth Bank of Georgia.......................... Georgia Alabanc Properties, Inc.......................... Delaware AmSouth Bank of Walker County.................... Alabama AmSouth of Louisiana, Inc........................ Louisiana Fortune Equity Corporation....................... Florida First Clearwater Corporation.................. Florida MSF Management Corp.............................. Florida MSF Financial Corp............................ Florida Trivest Enterprises, Inc......................... Florida EX-27 9 ARTICLE 9 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF CONDITION, THE CONSOLIDATED STATEMENT OF EARNINGS, AND TABLES 2, 7, AND 8 OF ITEM 2 OF THE AMSOUTH BANCORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 594,064 0 7,250 11,128 522,805 3,258,715 3,273,713 12,001,811 179,550 17,004,235 13,172,226 1,851,180 280,516 313,094 59,980 0 0 1,327,239 17,004,235 755,719 187,705 5,263 948,687 410,979 506,665 442,022 30,049 481 391,792 200,139 200,139 0 0 127,063 2.18 0 3.88 89,355 45,548 0 0 171,167 33,284 9,865 179,550 0 0 0
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