-----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, OposYMkNlOV/u7YCdbxXWm7ER5aVzujFFH1KWn2aMnccxc0Tz9RMdgb8VYxdxONY fpXtzrHm9a1AZ/0monSurA== 0000931763-97-000814.txt : 19970515 0000931763-97-000814.hdr.sgml : 19970515 ACCESSION NUMBER: 0000931763-97-000814 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97604500 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 FOR QUARTERLY PERIOD ENDED MARCH 31, 1997 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q QUARTERLY REPORT PURSUSANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 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) AMSOUTH--SONAT TOWER 1900 FIFTH AVENUE NORTH BIRMINGHAM, ALABAMA 35203 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) 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 period 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 May 2, 1997, AmSouth Bancorporation had 82,947,971 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--March 31, 1997, December 31, 1996, and March 31, 1996..................... 3 Consolidated Statement of Earnings--Three months ended March 31, 1997 and 1996................................... 4 Consolidated Statement of Shareholders' Equity--Three months ended March 31, 1997...................................... 5 Consolidated Statement of Cash Flows--Three months ended March 31, 1997 and 1996................................... 6 Notes to Consolidated Financial Statements................... 7 Independent Accountants' Review Report....................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 9 Part II. Other Information Item 1. Legal Proceedings............................................. 18 Item 6. Exhibits and Reports on Form 8-K.............................. 18 Signatures............................................................... 19 Exhibit Index............................................................ 20 Forward Looking Information. This Quarterly Report on Form 10-Q contains certain forward looking statements with respect to the adequacy of the allowance for loan losses and the effect of legal proceedings on AmSouth's financial condition and results of operations. These forward looking statements involve certain risks, uncertainties, estimates and assumptions by management. Various factors could cause actual results to differ materially from those contemplated by such forward looking statements. With respect to the adequacy of the allowance for loan losses, these factors include the rate of growth of the economy, especially in the Southeast, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and the performance of the stock and bond markets. With regard to the effect of legal proceedings, various uncertainties are discussed in "Item 1. Legal Proceedings." Moreover, the outcome of litigation is inherently uncertain and depends on judicial interpretations of law and the findings of judges and juries. 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION (UNAUDITED)
MARCH 31 DECEMBER 31 MARCH 31 1997 1996 1996 ----------- ----------- ----------- (IN THOUSANDS) ASSETS Cash and due from banks................. $ 585,108 $ 648,494 $ 587,278 Federal funds sold and securities pur- chased under agreements to resell...... 2,275 15,000 1,600 Trading securities...................... 5,346 3,879 3,510 Available-for-sale securities........... 2,022,396 2,290,478 2,534,791 Held-to-maturity securities (market value of $2,541,803, $2,649,481 and $2,565,870, respectively).............. 2,567,247 2,644,706 2,574,911 Mortgage loans held for sale............ 41,822 60,582 121,672 Loans................................... 12,107,303 12,168,572 11,546,007 Less: Allowance for loan losses......... 179,049 179,049 177,930 Unearned income....................... 82,426 88,326 69,810 ----------- ----------- ----------- Net loans........................... 11,845,828 11,901,197 11,298,267 Premises and equipment, net............. 311,158 301,592 279,218 Customers' acceptance liability......... 2,236 3,190 3,311 Accrued interest receivable and other assets................................. 631,036 538,146 509,828 ----------- ----------- ----------- $18,014,452 $18,407,264 $17,914,386 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits and interest-bearing liabilities: Deposits: Noninterest-bearing demand............ $ 1,907,841 $ 1,951,543 $ 1,795,572 Interest-bearing demand............... 3,531,330 3,599,987 3,819,011 Savings............................... 1,073,954 1,068,555 1,025,472 Time.................................. 5,071,932 5,073,387 5,739,433 Certificates of deposit of $100,000 or more................................. 804,511 774,127 915,576 ----------- ----------- ----------- Total deposits...................... 12,389,568 12,467,599 13,295,064 Federal funds purchased and securities sold under agreements to repurchase... 1,165,664 1,872,286 1,898,094 Other borrowed funds................... 1,344,238 1,025,383 483,321 Long-term Federal Home Loan Bank ad- vances................................ 1,073,436 1,023,729 234,195 Other long-term debt................... 411,910 411,946 426,301 ----------- ----------- ----------- Total deposits and interest-bearing liabilities........................ 16,384,816 16,800,943 16,336,975 Acceptances outstanding................. 2,236 3,190 3,311 Accrued expenses and other liabilities.. 251,107 207,302 204,546 ----------- ----------- ----------- Total liabilities................... 16,638,159 17,011,435 16,544,832 ----------- ----------- ----------- 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--90,033,326, 90,034,023 and 90,044,613 shares, respectively...... 90,033 90,034 90,045 Capital surplus........................ 562,320 562,459 559,974 Retained earnings...................... 887,247 858,329 812,767 Cost of common stock in treasury-- 6,888,744, 5,997,737 and 5,375,898 shares, respectively.................. (160,361) (128,889) (105,479) Deferred compensation on restricted stock................................. (11,780) (10,400) (5,097) Unrealized gains on available-for-sale securities, net of deferred taxes..... 8,834 24,296 17,344 ----------- ----------- ----------- Total shareholders' equity.......... 1,376,293 1,395,829 1,369,554 ----------- ----------- ----------- $18,014,452 $18,407,264 $17,914,386 =========== =========== ===========
See notes to consolidated financial statements. 3 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED MARCH 31 ------------------------------------- 1997 1996 ------------------ ------------------ (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUE FROM EARNING ASSETS Loans.................................... $ 254,172 $ 250,828 Available-for-sale securities............ 37,456 38,472 Held-to-maturity securities.............. 44,231 40,221 Trading securities....................... 21 41 Mortgage loans held for sale............. 487 1,453 Federal funds sold and securities purchased under agreements to resell.... 301 349 ------------------ ------------------ Total revenue from earning assets.... 336,668 331,364 ------------------ ------------------ INTEREST EXPENSE Interest-bearing demand deposits......... 27,050 30,356 Savings deposits......................... 7,603 6,682 Time deposits............................ 69,585 83,372 Certificates of deposit of $100,000 or more.................................... 11,209 13,348 Federal funds purchased and securities sold under agreements to repurchase..... 19,290 21,805 Other borrowed funds..................... 12,954 7,585 Long-term Federal Home Loan Bank advances................................ 14,149 2,411 Other long-term debt..................... 7,661 8,100 ------------------ ------------------ Total interest expense............... 169,501 173,659 ------------------ ------------------ NET INTEREST INCOME...................... 167,167 157,705 Provision for loan losses................ 17,717 15,120 ------------------ ------------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............................. 149,450 142,585 ------------------ ------------------ NONINTEREST REVENUES Service charges on deposit accounts...... 24,331 23,122 Trust income............................. 14,795 13,481 Investment services income............... 5,338 3,488 Credit card income....................... 3,553 3,186 Interchange income....................... 2,667 1,683 Mortgage administration fees............. 1,284 1,122 Letters of credit income................. 2,223 2,034 Portfolio income......................... 2,564 1,875 Other operating revenues................. 6,927 5,027 ------------------ ------------------ Total noninterest revenues........... 63,682 55,018 ------------------ ------------------ NONINTEREST EXPENSES Salaries and employee benefits........... 61,159 57,239 Net occupancy expense.................... 13,714 13,190 Equipment expense........................ 13,564 12,803 Marketing expense........................ 4,593 4,377 Postage and office supplies.............. 5,746 5,876 Telephone expense........................ 4,601 3,350 Professional fees........................ 2,604 2,225 FDIC premiums............................ 585 2,562 Foreclosed properties expense............ 213 453 Amortization expense..................... 4,545 4,238 Other operating expenses................. 17,300 16,458 ------------------ ------------------ Total noninterest expenses........... 128,624 122,771 ------------------ ------------------ INCOME BEFORE INCOME TAXES............... 84,508 74,832 Income taxes............................. 29,935 27,669 ------------------ ------------------ NET INCOME........................... $ 54,573 $ 47,163 ================== ================== Average common shares outstanding*....... 83,789 85,532 Earnings per common share*............... $ 0.65 $ 0.55
- -------- * Restated for three-for-two common stock split. See notes to consolidated financial statements. 4 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, 1997................... $60,023 $592,470 $858,329 $(128,889) $(10,400) $ 24,296 $1,395,829 Adjustment for the effect of 3-for-2 common stock split..... 30,011 (30,011) -0- -0- -0- -0- -0- ------- -------- -------- --------- -------- -------- ---------- BALANCE AT JANUARY 1, 1997 RESTATED.......... 90,034 562,459 858,329 (128,889) (10,400) 24,296 1,395,829 Net income.............. -0- -0- 54,573 -0- -0- -0- 54,573 Cash dividends declared ($0.28 per common share)*................ -0- -0- (23,604) -0- -0- -0- (23,604) Common stock transactions: Purchase of common stock................. -0- -0- -0- (42,470) -0- -0- (42,470) Employee stock plans... (1) (150) (2,051) 9,739 (1,380) -0- 6,157 Dividend reinvestment.. -0- 11 -0- 1,259 -0- -0- 1,270 Unrealized losses on available-for-sale securities, net of deferred taxes......... -0- -0- -0- -0- -0- (15,462) (15,462) ------- -------- -------- --------- -------- -------- ---------- BALANCE AT MARCH 31, 1997................... $90,033 $562,320 $887,247 $(160,361) $(11,780) $ 8,834 $1,376,293 ======= ======== ======== ========= ======== ======== ==========
- -------- * Restated for three-for-two common stock split. See notes to consolidated financial statements. 5 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31 -------------------- 1997 1996 --------- --------- (IN THOUSANDS) OPERATING ACTIVITIES Net income............................................... $ 54,573 $ 47,163 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses............................... 17,717 15,120 Provision for foreclosed property losses................ 171 -0- Depreciation and amortization of premises and equipment. 8,123 6,799 Amortization of premiums and discounts on held-to- maturity securities and available-for-sale securities...................... (402) (1,043) Net decrease (increase) in mortgage loans held for sale. 18,760 (59,655) Net increase in trading securities...................... (1,504) (532) Net gains on sales of available-for-sale securities..... (2,406) (1,339) Net gains on calls of held-to-maturity securities....... -0- (118) Net (increase) decrease in accrued interest receivable and other assets....................................... (94,707) 20,835 Net increase in accrued expenses and other liabilities.. 34,675 49,247 Provision for deferred income taxes..................... 3,139 5,545 Amortization of intangible assets....................... 4,141 4,167 Other................................................... 1,803 451 --------- --------- Net cash provided by operating activities............ 44,083 86,640 --------- --------- INVESTING ACTIVITIES Proceeds from maturities and prepayments of available- for-sale securities..................................... 68,070 203,677 Proceeds from sales of available-for-sale securities..... 378,435 303,731 Purchases of available-for-sale securities............... (185,150) (299,836) Proceeds from maturities, prepayments and calls of held- to-maturity securities.................................. 77,726 124,525 Purchases of held-to-maturity securities................. -0- (532,154) Net decrease in federal funds sold and securities purchased under agreements to resell.................... 12,725 175 Net decrease (increase) in loans......................... 33,652 (20,342) Net purchases of premises and equipment.................. (17,689) (9,591) --------- --------- Net cash provided (used) by investing activities..... 367,769 (229,815) --------- --------- FINANCING ACTIVITIES Net decrease in demand deposits and savings accounts..... (106,960) (112,056) Net increase (decrease) in time deposits................. 29,142 (44,025) Net (decrease) increase in federal funds purchased and securities sold under agreements to repurchase.......... (706,622) 37,004 Net increase in other borrowed funds..................... 293,759 36,008 Issuance of long-term Federal Home Loan Bank advances and other long-term debt.................................... 75,000 220,000 Payments for maturing long-term debt..................... (261) (850) Cash dividends paid...................................... (23,604) (22,566) Proceeds from employee stock plans and dividend reinvestment plan....................................... 6,778 4,702 Purchase of common stock................................. (42,470) (39,405) --------- --------- Net cash (used) provided by financing activities..... (475,238) 78,812 --------- --------- Decrease in cash and cash equivalents.................... (63,386) (64,363) Cash and cash equivalents at beginning of period......... 648,494 651,641 --------- --------- Cash and cash equivalents at end of period............... $ 585,108 $ 587,278 ========= =========
See notes to consolidated financial statements. 6 AMSOUTH BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1997 AND 1996 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. Certain amounts in the prior year's financial statements have been reclassified to conform with the 1997 presentation. These reclassifications had no effect on net income. All common share data presented reflect a three-for-two stock split completed in April 1997. The notes included herein should be read in conjunction with the notes to consolidated financial statements included in AmSouth Bancorporation's (AmSouth) 1996 annual report on Form 10-K. On January 1, 1997, AmSouth adopted Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," (Statement 125). Statement 125 provides accounting and reporting standards for transfers and servicing of financial assets and extinguishment of liabilities based on a consistent application of a "financial-components approach" that focuses on control. Under that approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered and derecognizes liabilities when extinguished. Statement 125 provides standards for consistently distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The adoption of Statement 125 resulted in no material impact on AmSouth's financial condition or results of operations. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share," which AmSouth is required to adopt on December 31, 1997. At that time, AmSouth will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary and fully diluted earnings per share for the three months ended March 31, 1997 and 1996 is not expected to be material. Cash Flows--For the three months ended March 31, 1997 and 1996, AmSouth paid interest of $159,048,000 and $169,773,000, respectively, and income taxes of $629,000 and $4,782,000, respectively. Noncash transfers from loans to foreclosed properties for the three months ended March 31, 1997 and 1996 were $3,432,000 and $5,105,000, respectively, and noncash transfers from foreclosed properties to loans were $331,000 and $91,000, respectively. For the three months ended March 31, 1996, noncash transfers from loans to available-for- sale securities of approximately $266,814,000 were made in connection with mortgage loan securitizations. Shareholders' Equity--During the first quarter of 1997, AmSouth purchased 1,200,000 shares of its common stock at a cost of $42,470,000 for the purpose of funding employee benefit and dividend reinvestment plans and for general corporate purposes. This repurchase was part of a plan approved in July 1996. Approximately 525,000 shares remain to be purchased under this plan. On March 20, 1997, AmSouth's Board of Directors approved a three-for-two common stock split in the form of a 50 percent common stock dividend. The stock dividend was paid on April 30 to shareholders of record as of April 4. The Board of Directors also authorized a new plan to repurchase up to 6,000,000 shares of AmSouth's common stock over the next two years. 7 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 March 31, 1997 and 1996, and the related consolidated statements of earnings and cash flows for the three-month periods ended March 31, 1997 and 1996, and the consolidated statement of shareholders' equity for the three-month period ended March 31, 1997. 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, 1996, 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, 1997, 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, 1996, 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 May 9, 1997 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AmSouth reported net income of $54.6 million for the three months ended March 31, 1997, a 15.7% increase over net income of $47.2 million for the same period of 1996. On a per common share basis, restated for the three-for-two stock split, earnings were $.65 and $.55, respectively. First quarter earnings resulted in an annualized return on average assets of 1.23% and an annualized return on average equity of 15.94% compared to 1.07% and 13.78%, respectively, for the first quarter of 1996. AmSouth's 1997 first quarter operating efficiency ratio improved to 55.24% compared to 57.03% for the prior year. NET INTEREST INCOME Net interest income on a fully taxable equivalent basis for the three months ended March 31, 1997 was $169.2 million, a 5.6% increase over the same period of 1996. The improvement in net interest income was primarily the result of an increase in the yield earned on average earning assets, primarily investment securities, combined with a decrease in the rate paid on interest-bearing liabilities, primarily time deposits. The net interest margin increased 21 basis points to 4.12% . Average earning assets increased $159.8 million primarily due to an increase in average loans net of unearned income. Exclusive of residential first mortgages, average loans net of unearned income increased $1.0 billion, or 12.9%, primarily in commercial, commercial real estate, other residential and dealer indirect loans. Average interest-bearing liabilities increased $214.2 million. Significant changes included increases of $870.2 million in Federal Home Loan Bank advances, $279.0 million in treasury, tax and loan notes and $164.4 million in short-term bank notes partially offset by a decrease in interest-bearing deposits of $932.6 million. 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 corporation'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 complete picture of AmSouth'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. AmSouth's earnings simulation model incorporates the effect of 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 varying interest rate environments. 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 March 31, 1997, the earnings simulation model results indicated that the corporation was in a relatively neutral interest rate risk position with the net interest income differential, in a plus or minus 200 basis point scenario, being less than two percent when compared to net interest income in 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 affected 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. 9 AmSouth, from time to time, utilizes various off-balance sheet instruments such as interest rate swaps, caps and floors to assist in managing interest rate risk. During the first quarter of 1997, AmSouth entered into additional interest rate swaps in the notional amount of $200.0 million. See Table 3. These swaps are being used to hedge designated investment securities. At March 31, 1997, AmSouth also held other off-balance sheet instruments to provide customers and AmSouth a means of managing the risks of changing interest and foreign exchange rates. These other off-balance sheet instruments were immaterial. At March 31, 1997, no off-balance sheet instruments were held for trading purposes. CREDIT QUALITY AmSouth maintains an allowance for loan losses which it believes is adequate to absorb losses inherent in the loan portfolio. A formal review is prepared quarterly to assess the risk in the portfolio and to determine the adequacy of the allowance for loan losses. The review includes analyses of historical performance, the level of nonperforming and adversely rated loans, specific analyses of certain problem loans, loan activity since the previous quarter, reports prepared by the Loan Review Department, consideration of current economic conditions, and other pertinent information. The level of allowance to net loans outstanding will vary depending on the overall results of this quarterly review. The review is presented to and subsequently approved by senior management and the Audit and Community Responsibility Committee of the Board of Directors. Table 6 presents a five quarter analysis of the allowance for loan losses. At March 31, 1997, the allowance for loan losses was $179.0 million, or 1.49% of loans net of unearned income, compared to $177.9 million, or 1.55%, for the prior year. The coverage ratio of the allowance for loan losses to nonperforming loans increased from 195.70% at March 31, 1996 to 225.31% for the same period in 1997 as the level of nonperforming loans decreased $11.5 million. For the three months ended March 31, 1997, net charge-offs were $17.7 million, an increase of $2.1 million compared to the same period of 1996. Increases occurred in both the consumer, primarily revolving credit, and commercial loan portfolios. Consumer net charge-offs rose to 1.11% of average consumer loans at March 31, 1997 compared to .97% for the prior year. Declining trends in credit quality in the consumer sector of the economy contributed to the increase in net charge-offs. Commercial net charge-offs increased to .06% of average commercial loans as net charge-offs for the first quarter of 1996 included a higher than normal level of recoveries. Total annualized net charge-offs to average loans net of unearned income for the three months ended March 31, 1997 was .60% compared to .54% for the same period of the prior year. The provision for loan losses for the three months ended March 31, 1997 was $17.7 million and equaled net charge-offs. Net charge-offs of impaired loans for the three months ended March 31, 1997 totaled $322 thousand. Table 7 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 improved from .95% at March 31, 1996 to .78% at March 31, 1997. The level of nonperforming assets decreased $14.7 million during the same period. Included in nonperforming assets at March 31, 1997 and 1996 was $43.1 million and $53.2 million, respectively, in loans that were considered to be impaired, substantially all of which were on a nonaccrual basis. Collateral dependent loans, which were measured at the fair value of the collateral, constituted approximately all of these impaired loans. There was $9.5 million in the allowance for loan losses specifically allocated to these impaired loans. The average balance of impaired loans for the three months ended March 31, 1997 and 1996 was $41.7 million and $55.2 million, respectively. AmSouth recorded no material interest income on its impaired loans during the three months ended March 31, 1997. NONINTEREST REVENUES AND NONINTEREST EXPENSES Noninterest revenues totaled $63.7 million at March 31, 1997 compared to $55.0 million for the same period of the prior year. Compared to the prior year, service charges on deposit accounts increased $1.2 million due to 10 increased account activity and decreased fee waivers. Trust income increased $1.3 million primarily from new employee benefit plan administration and personal trust accounts. Investment services income increased $1.9 million as a result of a higher sales volume of annuity products. The expansion of AmSouth's ATM network was the primary reason for a 58.5% increase in interchange income. Included in other operating revenues in 1997 is income of $2.2 million generated from bank owned life insurance policies. Noninterest expenses increased 4.7% to $128.6 million at March 31, 1997 compared to $122.8 million for the same period of the prior year. Salaries and employee benefits increased $3.9 million primarily due to merit increases and increases in staffing in income producing areas. Net occupancy expense increased $524 thousand primarily due to a lease in a new office complex. Equipment expense increased $761 thousand primarily reflecting the costs of investments in technology for the consumer and commercial lines of business. Telephone expense increased $1.3 million as the network was established for the consumer and commercial technology projects. FDIC premiums decreased $2.0 million as a result of the Federal Deposit Insurance Corporation reducing the premium rate on deposits insured by the Savings Association Insurance Fund from $.23 to $.06 per $100 of deposits beginning January 1997. CAPITAL ADEQUACY At March 31, 1997, shareholders' equity totaled $1.4 billion or 7.64% of total assets. Since December 31, 1996, shareholders' equity has decreased $19.5 million as the increase from net income of $54.6 million was offset by dividends of $23.6 million and the purchase of 1,200,000 shares of AmSouth common stock for $42.5 million. Shareholders' equity was further reduced by a $15.5 million decrease in the unrealized gains on available-for-sale securities, net of deferred taxes. Table 10 presents the capital amounts and risk-adjusted capital ratios for AmSouth and its significant banking subsidiaries at March 31, 1997 and 1996. At March 31, 1997, AmSouth exceeded the regulatory minimum required risk- adjusted Tier 1 Capital Ratio of 4.00% and risk-adjusted Total Capital Ratio of 8.00%. In addition, the risk-adjusted capital ratios for AmSouth's banking subsidiaries were above the regulatory minimums and each subsidiary was well- capitalized at March 31, 1997. INTERSTATE BANKING AmSouth currently owns five subsidiary banks (the Subsidiary Banks) located in the states of Alabama, Florida, Georgia and Tennessee. AmSouth has received regulatory approval for the merger into AmSouth Bank of Alabama of each of the other Subsidiary Banks. The resulting bank would continue to be a state member bank with its headquarters in Birmingham, Alabama and would operate under the name "AmSouth Bank". AmSouth currently plans to effect the mergers on or about July 1, 1997. 11 TABLE 1--FINANCIAL SUMMARY
MARCH 31 ------------------------------ % 1997 1996 CHANGE -------------- -------------- ------------- (IN THOUSANDS EXCEPT PER SHARE DATA) BALANCE SHEET SUMMARY End-of-period balances: Loans net of unearned income....... $12,024,877 $11,476,197 4.8% Total investment securities........ 4,576,077* 5,082,755* (10.0) Total assets....................... 18,014,452 17,914,386 0.6 Total deposits..................... 12,389,568 13,295,064 (6.8) Shareholders' equity............... 1,376,293 1,369,554 0.5 Year-to-date average balances: Loans net of unearned income....... $11,924,065 $11,673,313 2.1% Total investment securities........ 4,663,404* 4,713,189* (1.1) Total assets....................... 17,972,254 17,683,545 1.6 Total deposits..................... 12,349,726 13,226,866 (6.6) Shareholders' equity............... 1,388,819 1,376,686 0.9 THREE MONTHS ENDED MARCH 31 ------------------------------ % 1997 1996 CHANGE -------------- -------------- ------------- EARNINGS SUMMARY Net income......................... $54,573 $47,163 15.7% Per common share **................ 0.65 0.55 18.2 SELECTED RATIOS Return on average assets (annualized)...................... 1.23% 1.07% Return on average equity (annualized)...................... 15.94 13.78 Average equity to assets........... 7.73 7.79 End of period equity to assets..... 7.64 7.64 End of period tangible equity to assets............................ 6.27 6.17 Allowance for loan losses to loans net of unearned income............ 1.49 1.55 Efficiency ratio................... 55.24 57.03 COMMON STOCK DATA ** Cash dividends declared............ $ 0.28 $ 0.27 Book value at end of period........ 16.55 16.17 Market value at end of period...... 32.17 25.92 Average common shares outstanding.. 83,789 85,532
- -------- * Excludes adjustment for market valuation on available-for-sale securities. ** Restated for three-for-two common stock split in April 1997. 12 TABLE 2--QUARTERLY YIELDS EARNED ON AVERAGE EARNING ASSETS AND RATES PAID ON AVERAGE INTEREST-BEARING LIABILITIES
1997 1996 ---------------------------- ---------------------------------------------------------- FIRST QUARTER FOURTH QUARTER THIRD 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... $11,924,065 $254,640 8.66% $11,802,480 $254,051 8.56% $11,726,594 $252,951 8.58% Available-for- sale securities... 2,060,299 37,456 7.37 2,324,417 42,081 7.20 2,468,474 43,008 6.93 Held-to-maturity securities: Taxable.......... 2,434,686 41,098 6.85 2,502,510 42,208 6.71 2,566,379 43,162 6.69 Tax-free......... 168,419 4,679 11.27 183,722 5,590 12.10 191,680 5,106 10.60 ----------- -------- ----------- -------- ----------- -------- Total held-to- maturity securities 2,603,105 45,777 7.13 2,686,232 47,798 7.08 2,758,059 48,268 6.96 ----------- -------- ----------- -------- ----------- -------- Total investment securities...... 4,663,404 83,233 7.24 5,010,649 89,879 7.14 5,226,533 91,276 6.95 Other earning assets............ 69,198 809 4.74 60,354 742 4.89 102,270 1,578 6.14 ----------- -------- ----- ----------- -------- ----- ----------- -------- ----- Total earning assets........... 16,656,667 338,682 8.25 16,873,483 344,672 8.13 17,055,397 345,805 8.07 -------- ----- -------- ----- -------- ----- Cash and other assets............ 1,464,118 1,321,914 1,332,692 Allowance for loan losses............ (180,643) (178,725) (178,764) Market valuation on available-for- sale securities... 32,112 33,873 13,767 ----------- ----------- ----------- $17,972,254 $18,050,545 $18,223,092 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits... $ 3,526,430 27,050 3.11 $ 3,552,445 27,480 3.08 $ 3,587,581 28,305 3.14 Savings deposits.. 1,073,866 7,603 2.87 1,059,981 7,557 2.84 1,044,721 7,294 2.78 Time deposits..... 5,171,390 69,585 5.46 5,292,106 72,724 5.47 5,586,176 79,029 5.63 Certificates of deposit of $100,000 or more.. 806,641 11,209 5.64 777,307 11,066 5.66 853,058 12,296 5.73 Federal funds purchased and securities sold under agreements to repurchase..... 1,515,388 19,290 5.16 1,771,740 23,146 5.20 1,870,288 24,365 5.18 Other interest- bearing liabilities....... 2,499,857 34,764 5.64 2,170,005 31,138 5.71 1,894,780 27,251 5.72 ----------- -------- ----- ----------- -------- ----- ----------- -------- ----- Total interest- bearing liabilities...... 14,593,572 169,501 4.71 14,623,584 173,111 4.71 14,836,604 178,540 4.79 -------- ----- -------- ----- -------- ----- INCREMENTAL INTEREST SPREAD. 3.54% 3.42% 3.28% ===== ===== ===== Noninterest- bearing demand deposits.......... 1,771,399 1,804,129 1,781,474 Other liabilities. 218,464 234,204 216,683 Shareholders' equity............ 1,388,819 1,388,628 1,388,331 ----------- ----------- ----------- $17,972,254 $18,050,545 $18,223,092 =========== =========== =========== NET INTEREST INCOME/MARGIN ON A TAXABLE EQUIVALENT BASIS........... 169,181 4.12% 171,561 4.04% 167,265 3.90% ===== ===== ===== Taxable equivalent adjustment: Loans............. 468 474 528 Securities........ 1,546 1,621 1,682 -------- -------- -------- Total taxable equivalent adjustment....... 2,014 2,095 2,210 -------- -------- -------- Net interest income.......... $167,167 $169,466 $165,055 ======== ======== ========
1996 ------------------------------------------------------------ SECOND QUARTER FIRST QUARTER ---------------------------- ---------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE ----------- -------- ------ ----------- -------- ------ ASSETS Earning assets: Loans net of unearned income... $11,575,473 $248,225 8.62% $11,673,313 $251,430 8.66% Available-for- sale securities... 2,419,311 40,912 6.80 2,354,687 38,472 6.57 Held-to-maturity securities: Taxable.......... 2,477,564 41,531 6.74 2,142,855 36,259 6.81 Tax-free......... 201,702 5,594 11.15 215,647 5,912 11.03 ----------- -------- ----------- -------- Total held-to- maturity securities 2,679,266 47,125 7.07 2,358,502 42,171 7.19 ----------- -------- ----------- -------- Total investment securities...... 5,098,577 88,037 6.94 4,713,189 80,643 6.88 Other earning assets............ 156,952 2,446 6.27 110,407 1,843 6.71 ----------- -------- ----- ----------- -------- ----- Total earning assets........... 16,831,002 338,708 8.09 16,496,909 333,916 8.14 -------- ----- -------- ----- Cash and other assets............ 1,324,032 1,333,274 Allowance for loan losses............ (178,475) (178,402) Market valuation on available-for- sale securities... 21,508 31,764 ----------- ----------- $17,998,067 $17,683,545 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits... $ 3,700,373 29,051 3.16 $ 3,846,397 30,356 3.17 Savings deposits.. 1,025,627 6,899 2.71 1,014,277 6,682 2.65 Time deposits..... 5,771,320 83,283 5.80 5,721,948 83,372 5.86 Certificates of deposit of $100,000 or more.. 880,157 12,602 5.76 928,322 13,348 5.78 Federal funds purchased and securities sold under agreements to repurchase..... 1,767,378 22,473 5.11 1,674,720 21,805 5.24 Other interest- bearing liabilities....... 1,492,290 21,822 5.88 1,193,692 18,096 6.10 ----------- -------- ----- ----------- -------- ----- Total interest- bearing liabilities...... 14,637,145 176,130 4.84 14,379,356 173,659 4.86 -------- ----- -------- ----- INCREMENTAL INTEREST SPREAD. 3.25% 3.28% ===== ===== Noninterest- bearing demand deposits.......... 1,767,696 1,715,922 Other liabilities. 219,469 211,581 Shareholders' equity............ 1,373,757 1,376,686 ----------- ----------- $17,998,067 $17,683,545 =========== =========== NET INTEREST INCOME/MARGIN ON A TAXABLE EQUIVALENT BASIS........... 162,578 3.89% 160,257 3.91% ===== ===== Taxable equivalent adjustment: Loans............. 574 602 Securities........ 1,849 1,950 -------- -------- Total taxable equivalent adjustment....... 2,423 2,552 -------- -------- Net interest income.......... $160,155 $157,705 ======== ========
- ---- NOTE: The taxable equivalent adjustment has been computed based on a 35% federal income tax rate. 13 TABLE 3--INTEREST RATE SWAPS, CAPS AND FLOORS
RECEIVE FIXED RATE CAPS SWAPS & FLOORS TOTAL ---------- -------- ------ (IN MILLIONS) Balance at January 1, 1997.......................... $370 $1,077 $1,447 Additions......................................... 200 -0- 200 Maturities........................................ -0- -0- -0- Calls............................................. -0- -0- -0- Terminations...................................... -0- -0- -0- ---- ------ ------ Balance at March 31, 1997........................... $570 $1,077 $1,647 ==== ====== ======
TABLE 4--MATURITIES ON CAPS AND INTEREST RATES EXCHANGED ON SWAPS
MATURE DURING -------------------------- 1997 1998 1999 2000 TOTAL ---- ----- ----- ------ ------ (DOLLARS IN MILLIONS) RECEIVE FIXED RATE SWAPS: Notional amount........................... $215 $ 275 $ 80 $ -0- $ 570 Receive rate.............................. 6.46% 6.73% 6.82% 0.00% 6.64% Pay rate.................................. 5.53% 5.54% 5.58% 0.00% 5.54% CAPS: Notional amount........................... $ 77 $ -0- $ -0- $1,000 $1,077
- -------- NOTE: The maturities and interest rates exchanged are calculated assuming that interest rates remain unchanged from average March 1997 rates. The information presented could change as future interest rates increase or decrease. TABLE 5--LOANS AND CREDIT QUALITY
NET CHARGE-OFFS LOANS* NONPERFORMING LOANS** THREE MONTHS ENDED MARCH 31 MARCH 31 MARCH 31 ----------------------- --------------------- ------------------- 1997 1996 1997 1996 1997 1996 ----------- ----------- ---------- ---------- --------- --------- (IN THOUSANDS) Commercial.............. $ 3,582,878 $ 3,049,679 $ 15,561 $ 17,096 $ 322 $ (553) ----------- ----------- ---------- ---------- --------- --------- Commercial real estate: Commercial real estate mortgages............. 1,683,402 1,565,544 23,854 35,377 492 573 Real estate construc- tion:................. 622,490 586,903 1,665 1,950 2 (246) ----------- ----------- ---------- ---------- --------- --------- Total commercial real estate............... 2,305,892 2,152,447 25,519 37,327 494 327 ----------- ----------- ---------- ---------- --------- --------- Consumer: Residential first mort- gages................. 2,961,672 3,416,763 26,380 31,141 381 784 Other residential mort- gages................. 929,753 700,934 5,106 980 398 24 Dealer indirect........ 1,205,451 1,055,321 5,148 3,384 3,753 5,565 Revolving credit....... 498,776 471,741 -0- -0- 8,554 6,388 Other consumer......... 540,455 629,312 1,755 991 3,815 3,106 ----------- ----------- ---------- ---------- --------- --------- Total consumer....... 6,136,107 6,274,071 38,389 36,496 16,901 15,867 ----------- ----------- ---------- ---------- --------- --------- $12,024,877 $11,476,197 $ 79,469 $ 90,919 $ 17,717 $ 15,641 =========== =========== ========== ========== ========= =========
- -------- * Net of unearned income. ** Exclusive of accruing loans 90 days past due. 14 TABLE 6--ALLOWANCE FOR LOAN LOSSES
1997 1996 ----------- ----------------------------------------------- 1ST QUARTER 4TH QUARTER 3RD QUARTER 2ND QUARTER 1ST QUARTER ----------- ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Balance at beginning of period................. $179,049 $179,350 $178,724 $177,930 $178,451 Loans charged off....... (22,632) (23,009) (21,202) (18,442) (20,626) Recoveries of loans pre- viously charged off.... 4,915 4,211 4,323 5,187 4,985 -------- -------- -------- -------- -------- Net charge-offs......... (17,717) (18,798) (16,879) (13,255) (15,641) Addition to allowance charged to expense..... 17,717 18,497 17,505 14,049 15,120 -------- -------- -------- -------- -------- Balance at end of peri- od..................... $179,049 $179,049 $179,350 $178,724 $177,930 ======== ======== ======== ======== ======== Allowance for loan losses to loans net of unearned income........ 1.49% 1.48% 1.52% 1.55% 1.55% Allowance for loan losses to nonperforming loans.................. 225.31% 229.41% 221.40% 213.83% 195.70% Allowance for loan losses to nonperforming assets................. 189.69% 189.84% 183.67% 182.29% 163.06% Net charge-offs to aver- age loans net of un- earned income (annualized)........... 0.60% 0.63% 0.57% 0.46% 0.54%
TABLE 7--NONPERFORMING ASSETS
1997 1996 -------- ------------------------------------------- MARCH 31 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31 -------- ----------- ------------ -------- -------- (DOLLARS IN THOUSANDS) Nonaccrual loans........ $ 79,469 $ 78,048 $ 81,007 $ 83,583 $ 90,919 Foreclosed properties... 12,890 14,445 13,874 12,845 14,764 Repossessions........... 2,030 1,822 2,769 1,614 3,439 -------- -------- -------- -------- -------- Total nonperforming as- sets*................. $ 94,389 $ 94,315 $ 97,650 $ 98,042 $109,122 ======== ======== ======== ======== ======== Nonperforming assets* to loans net of unearned income, foreclosed properties and repossessions.......... 0.78% 0.78% 0.82% 0.85% 0.95% Accruing loans 90 days past due............... $ 32,535 $ 36,382 $ 39,535 $ 39,944 $ 40,110
- -------- * Exclusive of accruing loans 90 days past due. 15 TABLE 8--INVESTMENT SECURITIES
MARCH 31, 1997 MARCH 31, 1996 --------------------- --------------------- CARRYING MARKET CARRYING MARKET AMOUNT VALUE AMOUNT VALUE ---------- ---------- ---------- ---------- (IN THOUSANDS) HELD-TO-MATURITY: U.S. Treasury and federal agency securities...................... $2,159,255 $2,131,235 $2,109,300 $2,093,261 State, county and municipal secu- rities.......................... 162,941 168,413 208,929 219,273 Other securities................. 245,051 242,155 256,682 253,336 ---------- ---------- ---------- ---------- $2,567,247 $2,541,803 $2,574,911 $2,565,870 ========== ========== ========== ========== AVAILABLE-FOR-SALE: U.S. Treasury and federal agency securities...................... $1,831,993 $2,299,853 Other securities................. 190,403 234,938 ---------- ---------- $2,022,396 $2,534,791 ========== ==========
- -------- 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 March 31, 1997 were approximately 4.1 years and 7.06%, respectively. Included in the balance was $3.5 billion of mortgage-backed securities, $851 million of which were variable rate. The weighted average remaining life and the weighted average yield of mortgage-backed securities at March 31, 1997 were approximately 4.4 years and 7.04%, respectively. The duration of the combined portfolios, which considers the repricing frequency of variable rate securities, is approximately 2.4 years. 2. The available-for-sale portfolio included net unrealized gains of $13.6 million and $26.9 million at March 31, 1997 and 1996, respectively. TABLE 9 - OTHER INTEREST-BEARING LIABILITIES
MARCH 31 ------------------- 1997 1996 ---------- -------- (IN THOUSANDS) OTHER BORROWED FUNDS: Treasury, tax and loan notes............................. $ 849,730 $283,690 Short-term Federal Home Loan Bank advances............... 185,000 183,000 Short-term bank notes.................................... 200,000 -0- Other short-term debt.................................... 109,508 16,631 ---------- -------- Total other borrowed funds............................. $1,344,238 $483,321 ========== ======== OTHER LONG-TERM DEBT: 6 3/4% Subordinated Debentures Due 2025.................. $ 149,849 $149,832 7 3/4% Subordinated Notes Due 2004....................... 149,343 149,252 Subordinated Capital Notes Due 1999...................... 99,731 99,602 Long-term notes payable.................................. 12,987 27,615 ---------- -------- Total other long-term debt............................. $ 411,910 $426,301 ========== ========
16 TABLE 10--CAPITAL AMOUNTS AND RATIOS
MARCH 31 ---------------------------------- 1997 1996 ---------------- ---------------- AMOUNT RATIO AMOUNT RATIO ---------- ----- ---------- ----- (DOLLARS IN THOUSANDS) TIER 1 CAPITAL: AmSouth................................... $1,103,443 7.82% $1,071,654 7.98% AmSouth Bank of Alabama................... 845,507 9.64 795,953 9.45 AmSouth Bank of Florida................... 425,978 9.91 414,195 9.93 AmSouth Bank of Tennessee................. 103,191 12.68 100,265 14.26 TOTAL CAPITAL: AmSouth................................... $1,619,015 11.47% $1,598,413 11.91% AmSouth Bank of Alabama................... 937,007 10.68 884,371 10.50 AmSouth Bank of Florida................... 479,954 11.16 466,570 11.19 AmSouth Bank of Tennessee................. 113,386 13.94 109,094 15.51 LEVERAGE: AmSouth................................... $1,103,443 6.23% $1,071,654 6.16% AmSouth Bank of Alabama................... 845,507 8.52 795,953 8.27 AmSouth Bank of Florida................... 425,978 6.27 414,195 6.05 AmSouth Bank of Tennessee................. 103,191 9.26 100,265 9.29
17 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Several of AmSouth's subsidiaries are defendants in legal proceedings arising in the ordinary course of business. Some of these proceedings seek relief or damages that are substantial. The actions relate to AmSouth's lending, collections, servicing, investment, trust and other activities. Among the actions which are pending against AmSouth subsidiaries are actions filed as class actions in the State of Alabama. The actions are similar to others that have been brought in recent years in Alabama against financial institutions in that they seek punitive damage awards in transactions involving relatively small amounts of actual damages. In recent years, juries in Alabama state courts have made large punitive damage awards in such cases. Legislation which would limit these lawsuits has been proposed from time to time in the Alabama legislature but has not been enacted into law. AmSouth cannot predict whether any such legislation will be enacted. It may take a number of years to finally resolve some of these legal proceedings pending against AmSouth subsidiaries, due to their complexity and for other reasons. It is not possible to determine with any certainty at this time the corporation's potential exposure from the proceedings. However, based upon the advice of legal counsel, AmSouth's management is of the opinion that the ultimate resolution of these legal proceedings will not have a material adverse effect on AmSouth's financial condition or results of operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ITEM 6(A)--EXHIBITS The exhibits listed in the Exhibit Index at page 20 of this Form 10-Q are filed herewith or are incorporated by reference herein. ITEM 6(B)--REPORTS ON FORM 8-K One report on Form 8-K was filed by AmSouth during the period January 1, 1997 to March 31, 1997. The report was filed on March 28, 1997 and reported that AmSouth's Board of Directors had approved (1) a three-for-two stock split with respect to the company's common stock and (2) the repurchase of up to 4,000,000 shares of the company's common stock (6,000,000 shares on a post- split basis). 18 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. May 12, 1997 /s/ C. Dowd Ritter By: _________________________________ C. DOWD RITTER Chairman of the Board, President and Chief Executive Officer May 12, 1997 /s/ Robert R. Windelspecht By: _________________________________ ROBERT R. WINDELSPECHT Executive Vice President Controller 19 EXHIBIT INDEX The following is a list of exhibits including items incorporated by reference. 3-a Restated Certificate of Incorporation of AmSouth Bancorporation (1) 3-b By-Laws of AmSouth Bancorporation (2) 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
NOTES TO EXHIBITS (1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the quarter ended March 31, 1993, incorporated herein by reference. (2) Filed as Exhibit 3-b to AmSouth's Form 10-K Annual Report for the year ended December 31, 1996, incorporated herein by reference. 20 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 AMSOUTH BANCORPORATION STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED MARCH 31 --------------------- 1997 1996 ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net income ............................................ $54,573 $ 47,163 ========== ========== Average shares of common stock outstanding*............ 83,789 85,532 ========== ========== Earnings per common share* ............................ $ 0.65 $ 0.55 ========== ==========
- -------- * Restated for three-for-two common stock split. EX-15 3 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT 15 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 May 9, 1997 relating to the unaudited consolidated financial statements of AmSouth Bancorporation and subsidiaries which are included in its Form 10-Q for the quarter ended March 31, 1997: 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-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. 33-58777 pertaining to the Director Restricted Stock Plan; Form S-8 No. 333-02099 pertaining to the AmSouth Bancorporation Thrift Plan; Form S-3 No. 333-06641 pertaining to the AmSouth Bancorporation 7 1/2% Convertible Subordinated Debentures; and Form S-8 No. 333-05631 pertaining to the 1996 Long Term Incentive Compensation 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 May 9, 1997 EX-21 4 LIST OF SUBSIDIARIES OF AMSOUTH BANCORPORATION EXHIBIT 21 AMSOUTH BANCORPORATION LIST OF SUBSIDIARIES The following is a list of all subsidiaries of AmSouth Bancorporation 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 Leasing Corporation.............. Alabama AmSouth Investment Services, Inc......... Alabama AmSouth Riverchase, Inc.................. Alabama Fifth Avenue Realty Company.............. (unincorporated joint venture) First Gulf Insurance Agency, Inc......... Alabama Five Points Capital Advisors, Inc........ Alabama National Properties and Mining Company, Inc..................................... Delaware Rockhaven Asset Management, LLC.......... Delaware Alabanc Properties, Inc................... Delaware AmSouth Bank of Florida................... Florida AmSouth Insurance Agency, Inc............ Florida AmSouth Real Estate Holdings, Inc........ Alabama AmSouth Real Estate Management, Inc..... Alabama AmSouth Retirement Services, Inc......... Florida Fortune Mortgage Corporation............. Florida Service Mortgage and Insurance Agency, Inc..................................... Florida AmSouth Bank of Georgia................... Georgia AmSouth Bank of Tennessee................. Tennessee FMLS, Inc................................ Tennessee AmSouth Bank of Walker County............. Alabama
EX-27 5 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, 6 AND 7 OF ITEM 2 OF THE AMSOUTH BANCORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 585,108 0 2,275 5,346 2,022,396 2,567,247 2,541,803 12,107,303 179,049 18,014,452 12,389,568 2,509,902 253,343 1,485,346 0 0 90,033 1,286,260 18,014,452 254,172 81,687 809 336,668 115,447 169,501 167,167 17,717 2,406 128,624 84,508 84,508 0 0 54,573 0.65 0.65 4.12 79,469 32,535 0 0 179,049 22,632 4,915 179,049 0 0 0
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