<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 COMMISSION FILE NUMBER 1-7476
SEPTEMBER 30, 1994
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
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 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 8, 1994 AmSouth Bancorporation had 58,002,681 shares of common
stock outstanding.
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<PAGE>
AMSOUTH BANCORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated statement of condition--September 30, 1994 and
December 31, 1993......................................... 1
Consolidated statement of earnings--Nine months and three
months ended September 30, 1994 and 1993.................. 2
Consolidated statement of shareholders' equity--Nine months
ended
September 30, 1994........................................ 3
Consolidated statement of cash flows--Nine months ended
September 30, 1994 and 1993............................... 4
Review Report of Independent Accountants................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 8
Part II. Other Information
Item 5. Other Information.................................. 18
Item 6. Exhibits and Reports on Form 8-K................... 18
Signatures........................................................... 19
Exhibit Index........................................................ 20
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1994 1993
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks............................ $ 821,865 $ 614,698
Federal funds sold and securities purchased under
agreements to resell.............................. 102,579 171,952
Trading securities................................. 5,823 94,844
Available-for-sale securities...................... 616,256 1,293,989
Held-to-maturity securities (market value of
$3,298,941 and $1,874,587 respectively)........... 3,396,617 1,823,317
Mortgage loans held for sale....................... 192,001 335,435
Loans.............................................. 11,085,348 8,611,708
Less: Allowance for loan losses.................... 164,756 131,510
Unearned income................................... 76,985 71,296
----------- -----------
Net loans......................................... 10,843,607 8,408,902
Premises and equipment, net........................ 270,873 234,155
Customers' acceptance liability.................... 2,779 6,264
Accrued interest receivable and other assets....... 616,787 486,065
----------- -----------
$16,869,187 $13,469,621
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand........................ $ 1,880,201 $ 1,747,694
Interest-bearing demand........................... 4,017,362 3,484,812
Savings........................................... 935,474 866,977
Time.............................................. 4,990,997 3,520,768
Certificates of deposit of $100,000 or more....... 784,227 742,738
----------- -----------
Total deposits................................... 12,608,261 10,362,989
Federal funds purchased and securities sold under
agreements to repurchase......................... 1,758,166 793,177
Other borrowed funds.............................. 633,737 667,318
Long-term debt.................................... 423,648 173,142
----------- -----------
Total deposits and interest-bearing liabilities.. 15,423,812 11,996,626
Acceptances outstanding............................ 2,779 6,264
Accrued expenses and other liabilities............. 124,099 324,006
----------- -----------
Total liabilities................................ 15,550,690 12,326,896
Shareholders' equity:
Preferred stock--no par value:
Authorized--2,000,000 shares;
Issued and outstanding--none...................... -0- -0-
Common stock--par value $1 a share:
Authorized--200,000,000 shares
Issued--59,526,410 shares and 54,534,691 shares,
respectively..................................... 59,526 54,535
Capital surplus................................... 578,041 469,842
Retained earnings................................. 723,327 645,465
Cost of common stock in treasury--1,500,000
shares........................................... (24,173) (24,173)
Deferred compensation on restricted stock......... (4,869) (2,944)
Unrealized losses on available-for-sale
securities, net of deferred taxes................ (13,355) -0-
----------- -----------
Total shareholders' equity....................... 1,318,497 1,142,725
----------- -----------
$16,869,187 $13,469,621
=========== ===========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUE FROM EARNING ASSETS
Loans.............................. $ 564,747 $ 454,063 $ 217,263 $ 155,069
Securities:
Trading securities................ 2,418 1,561 907 783
Available-for-sale securities..... 43,474 21,562 17,556 7,644
Held-to-maturity securities....... 129,913 135,528 56,010 44,019
--------- --------- --------- ---------
Total securities................ 175,805 158,651 74,473 52,446
Mortgage loans held for sale....... 9,901 10,450 2,803 4,243
Federal funds sold and securities
purchased under agreements to re-
sell.............................. 2,229 5,310 792 1,961
--------- --------- --------- ---------
Total revenue from earning as-
sets........................... 752,682 628,474 295,331 213,719
INTEREST EXPENSE
Interest-bearing demand deposits... 82,505 64,433 33,321 21,761
Savings deposits................... 17,705 15,579 6,459 5,276
Time deposits...................... 126,472 107,457 51,505 36,211
Certificates of deposit of $100,000
or more........................... 23,584 23,339 9,358 7,817
Federal funds purchased and securi-
ties sold under agreements to re-
purchase.......................... 46,337 24,142 25,759 8,364
Other borrowed funds............... 15,344 10,768 6,673 4,162
Long-term debt..................... 16,917 9,113 9,062 3,299
--------- --------- --------- ---------
Total interest expense.......... 328,864 254,831 142,137 86,890
GROSS INTEREST MARGIN.............. 423,818 373,643 153,194 126,829
Provision for loan losses.......... 9,954 15,330 4,773 (189)
--------- --------- --------- ---------
NET INTEREST MARGIN................ 413,864 358,313 148,421 127,018
NONINTEREST REVENUES
Service charges on deposit ac-
counts............................ 50,313 44,408 17,749 15,283
Trust income....................... 34,574 31,182 11,140 10,362
Credit card income................. 9,206 9,391 3,116 3,380
Investment services income......... 10,847 16,562 3,472 5,419
Mortgage administration fees....... 16,505 12,740 6,545 4,005
Investment securities gains........ 327 1,465 99 301
Portfolio income................... (2,064) 7,921 (3,213) 4,764
Other operating revenues........... 31,880 24,067 16,908 7,890
--------- --------- --------- ---------
Total noninterest revenues...... 151,588 147,736 55,816 51,404
NONINTEREST EXPENSES
Salaries and employee benefits..... 171,253 166,926 60,860 65,077
Net occupancy expense.............. 33,917 27,082 12,264 9,130
Equipment expense.................. 30,415 27,811 10,696 9,482
FDIC premiums...................... 17,899 15,989 6,669 5,347
Foreclosed properties expense...... 666 (3,002) 455 (2,857)
Other operating expenses........... 117,777 97,728 44,022 33,915
--------- --------- --------- ---------
Total noninterest expenses...... 371,927 332,534 134,966 120,094
INCOME BEFORE INCOME TAXES......... 193,525 173,515 69,271 58,328
Income taxes....................... 67,590 57,596 25,210 20,183
--------- --------- --------- ---------
NET INCOME...................... $ 125,935 $ 115,919 $ 44,061 $ 38,145
========= ========= ========= =========
Average common shares outstanding.. 56,021 50,583 58,894 51,050
Earnings per common share.......... $ 2.25 $ 2.29 $ 0.75 $ 0.75
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
COMMON CAPITAL RETAINED TREASURY DEFERRED LOSSES ON
STOCK SURPLUS EARNINGS STOCK COMPENSATION SECURITIES TOTAL
------- -------- -------- -------- ------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1994................... $54,535 $469,842 $645,465 $(24,173) $(2,944) $ -0- $1,142,725
Balance at beginning of
period for immaterial
pooling-of-interests
entities............... 1,070 9,192 11,231 -0- -0- -0- 21,493
Net income.............. -0- -0- 125,935 -0- -0- -0- 125,935
Cash dividends declared. -0- -0- (59,304) -0- -0- -0- (59,304)
Common stock transac-
tions:
Employee stock plans... 447 7,934 -0- -0- (1,925) -0- 6,456
Acquisition of Fortune
Bancorp, Inc.......... 4,474 121,363 -0- -0- -0- -0- 125,837
Purchase and retirement
of common stock....... (1,000) (30,290) -0- -0- -0- -0- (31,290)
Unrealized losses on
available-for-sale
securities, net of
deferred taxes......... -0- -0- -0- -0- -0- (13,355) (13,355)
------- -------- -------- -------- ------- -------- ----------
Balance at September 30,
1994................... $59,526 $578,041 $723,327 $(24,173) $(4,869) $(13,355) $1,318,497
======= ======== ======== ======== ======= ======== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
----------------------
1994 1993
----------- ---------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................. $ 125,935 $ 115,919
Adjustments to reconcile net income to net cash pro-
vided by operating activities:
Provision for loan losses............................ 9,954 15,330
Foreclosed property recoveries....................... (852) (3,185)
Depreciation and amortization of premises and equip-
ment................................................ 18,367 16,733
Amortization of premiums and discounts on held-to-ma-
turity securities and available-for-sale securities. (859) 1,679
Net decrease (increase) in mortgage loans held for
sale................................................ 160,964 (15,515)
Net decrease (increase) in trading securities........ 89,853 (34,132)
Proceeds from maturities and prepayments of avail-
able-for-sale securities............................ 172,833 107,517
Proceeds from sales of available-for-sale securities. 1,413,932 339,944
Purchases of available-for-sale securities........... (391,462) (660,348)
Net gains on sales of available-for-sale securities.. (491) (4,823)
Net gains on calls and sales of held-to-maturity se-
curities............................................ (327) (1,465)
Net decrease in accrued interest receivable and other
assets.............................................. 152,241 260,899
Net (decrease) increase in accrued expenses and other
liabilities......................................... (259,337) 219,811
Net increase in deferred income tax benefits......... (879) (8,002)
Amortization of intangible assets.................... 17,247 10,420
Other................................................ (10,322) 817
----------- ---------
Net cash provided by operating activities.......... 1,496,797 361,599
INVESTING ACTIVITIES
Proceeds from maturities, prepayments and calls of
held-to-maturity securities........................... 281,678 605,229
Proceeds from sales of held-to-maturity securities..... -0- 109,419
Purchases of held-to-maturity securities............... (1,475,524) (667,121)
Net decrease (increase) in federal funds sold and
securities purchased under agreements to resell....... 82,191 (375,209)
Net increase in loans.................................. (896,852) (461,547)
Net purchases of premises and equipment................ (28,665) (43,947)
Net cash (used) provided by acquisitions............... (109,351) 9,661
----------- ---------
Net cash used by investing activities.............. (2,146,523) (823,515)
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits and savings
accounts.............................................. 49,545 (425,952)
Net increase in time deposits.......................... 351,953 439,135
Net increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase........ 485,840 (149,980)
Net (decrease) increase in other borrowed funds........ (1,601) 548,692
Issuance of long-term debt............................. 149,084 21,500
Payments for maturing long-term debt................... (101,075) (7,563)
Cash dividends paid.................................... (58,762) (40,176)
Proceeds from employee stock plans..................... 4,974 4,356
Purchase and retirement of stock....................... (31,290) -0-
----------- ---------
Net cash provided by financing activities.......... 848,668 390,012
----------- ---------
Increase (decrease) in cash and cash equivalents....... 198,942 (71,904)
Cash and cash equivalents at beginning of period....... 614,698 589,084
Beginning consolidated cash balances of immaterial
pooling-of-interests entities......................... 8,225 4,221
----------- ---------
Cash and cash equivalents at end of period............. $ 821,865 $ 521,401
=========== =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
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) 1993 annual report to shareholders 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. Prior year financial statements have been restated to include the
accounts of business combinations accounted for as poolings-of-interests unless
immaterial. Results of operations of companies purchased are included from the
dates of acquisitions.
Effective January 1, 1994, AmSouth adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (Statement 115). The Statement generally requires that debt and
equity securities that have readily determinable fair values be carried at fair
value unless they are intended to be held to maturity. Securities are
classified as held-to-maturity and carried at amortized cost only if AmSouth
has positive intent and ability to hold those securities to maturity. If not
classified as held-to-maturity, such securities are classified as trading
securities or securities available for sale. Net unrealized holding gains or
losses for securities available for sale are excluded from earnings and
reported as a separate component of shareholders' equity. The adoption of
Statement 115 resulted in no material impact on AmSouth's financial condition.
The Financial Accounting Standards Board has issued 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). The statement requires that certain impaired
loans be measured based on the present value of the collateral if the loan is
collateral dependent. AmSouth anticipates adoption of Statement 114 by January
1, 1995 as required, and the effect on AmSouth's financial condition or results
of operations has not been determined.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments" (Statement 119). The
statement generally requires disclosures about the amount, nature, and terms of
derivative financial instruments. Statement 119 requires that a distinction be
made between financial instruments held or issued for trading purposes and
financial instruments held or issued for purposes other than trading, with
differing disclosure requirements for the separate categories of financial
instruments. AmSouth anticipates adoption of Statement 119 by December 31,
1994, as required.
Business Combinations--During the second quarter of 1994, AmSouth completed
business combinations with Citizens National Corporation (Citizens),
headquartered in Naples, Florida, Parkway Bancorp, Inc. (Parkway),
headquartered in Fort Myers, Florida, and First Federal Savings Bank, Calhoun,
Georgia (Calhoun), all of which were accounted for using the pooling-of-
interests method of accounting. AmSouth issued approximately 1,604,000,
629,000, and 442,000 shares of common stock for all of the outstanding shares
of common stock of Citizens, Parkway, and Calhoun, respectively. At March 31,
1994, Citizens, Parkway, and Calhoun had total assets of approximately $313.0
million, $130.0 million, and $72.0 million, respectively.
In the aggregate, when the three month period ended March 31, 1994 is
restated for these three poolings-of-interests, AmSouth's gross interest margin
will be $134.3 million, net income will be $39.0 million, and earnings per
common share will be $0.72.
5
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
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 $167.0 million
of goodwill resulting from the acquisition will be amortized on a straight line
basis over 20 years.
The operating results of the Fortune acquisition are included in AmSouth's
consolidated statement of earnings since the date of acquisition. The following
unaudited pro forma summary presents the consolidated statement of earnings as
if the acquisition occurred at the beginning of 1993, after giving effect to
certain adjustments, including amortization of goodwill and related income tax
effects. These pro forma results have been prepared for comparison purposes
only and do not purport to be indications of what would have occurred had the
acquisition been made as of the beginning of 1993 or of results which may occur
in the future.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
---------------------
1994 1993
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Gross interest margin................................. $ 457,006 $ 427,980
Net income............................................ 110,666 114,563
Earnings per common share............................. 1.88 2.08
</TABLE>
On March 9, 1994, AmSouth signed an agreement to enter into a business
combination with The Tampa Banking Company (Tampa), headquartered in Tampa,
Florida, and its subsidiary, The Bank of Tampa. At September 30, 1994, Tampa
had total consolidated assets of approximately $213.4 million and total
consolidated deposits of approximately $197.8 million. Under the terms of the
agreement, AmSouth will issue 1.5592 shares of AmSouth common stock for each of
the outstanding shares of Tampa common stock, subject to adjustment. At
September 30, 1994, Tampa, had approximately 638,000 shares of common stock
outstanding. The transaction will be accounted for using the pooling-of-
interests method of accounting.
On March 31, 1994, AmSouth signed an agreement to acquire Community Federal
Savings Bank (Community), headquartered in Fort Oglethorpe, Georgia. At
September 30, 1994, Community had total assets of approximately $103.6 million
and total deposits of approximately $88.8 million. Under the terms of the
agreement, AmSouth will pay $65.50 for each of the outstanding shares of
Community common stock for a total purchase price of approximately $17 million.
The transaction will be accounted for using the purchase method of accounting.
Cash Flows--For the nine months ended September 30, 1994 and 1993, AmSouth
paid interest of $316,272,000 and $243,308,000, respectively, and income taxes
of $71,791,000 and $56,012,000, respectively. Noncash transfers from loans to
foreclosed properties for the nine months ended September 30, 1994 and 1993
were $23,369,000 and $8,919,000, respectively. For the nine months ended
September 30, 1994 and 1993, noncash transfers from foreclosed properties to
loans were $3,566,000 and $5,096,000, respectively. Noncash transfers from
available-for-sale securities to held-to-maturity securities for the nine
months ended September 30, 1994 and 1993, were $327,886,000 and none,
respectively.
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.
Shareholders' Equity--During the third quarter of 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.
6
<PAGE>
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, 1994 and 1993, and
the related consolidated statement of earnings for the three-month and nine-
month periods ended September 30, 1994 and 1993, and the consolidated statement
of cash flows for the nine-month periods ended September 30, 1994 and 1993.
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, 1993, 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, 1994, 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, 1993, is fairly stated, in all
material respects, in relation to the consolidated statement of condition from
which it has been derived.
November 7, 1994
/s/ Ernst & Young LLP
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
AmSouth reported net income of $125.9 million for the nine months ended
September 30, 1994 compared to $115.9 million for the same period of 1993. On a
per common share basis, AmSouth earned $2.25 year-to-date 1994 compared to
$2.29 year-to-date 1993. For the third quarter of 1994, net income was $44.1
million or $.75 per common share. This was a 15.5% increase compared to net
income of $38.1 million for the third quarter of 1993. Earnings per common
share was the same for both quarters at $.75.
For the nine months ended September 30, 1994 and 1993, the annualized return
on average assets (ROA) was 1.13% and 1.27%, respectively. The annualized
return on average equity (ROE) for the same periods was 13.56% and 15.35%. For
the third quarter of 1994, ROA and ROE were 1.02% and 13.07%, respectively,
compared to 1.20% and 14.40% for the third quarter of 1993.
Net Interest Margin
For the nine months ended September 30, 1994, the net interest margin totaled
$413.9 million compared to $358.3 million for the same period of 1993. An
increase in revenue from earning assets and a decrease in provision for loan
losses were partially offset by an increase in interest expense. The net
interest margin for the third quarter of 1994 increased $21.4 million to $148.4
million compared to the same period last year. The gross interest spread
declined 33 basis points for the nine months compared to the prior year.
A 21.2% increase in year-to-date average earning assets combined with a 14
basis point decline in the nine month annualized yield resulted in a $124.2
million increase in revenue from earning assets. The primary reason for the
increase in average earning assets was a 27.1% increase in average loans net of
unearned income. Exclusive of the acquisition of Mid-State Federal Savings Bank
(Mid-State) in December 1993 and Fortune in June 1994, which were accounted for
as purchases, AmSouth's loan growth was approximately 16%. Residential first
mortgages represented approximately 49% of this growth. At September 30, 1994,
residential first mortgages comprised 37% of AmSouth's total loan portfolio
with approximately 67% of that balance at adjustable rates. Although rates
increased during the third quarter of 1994, the lower rates on residential
first mortgages during the first and second quarter of 1994 contributed to the
decrease in the nine month annualized yield on average earning assets.
The year-to-date average balance of total securities increased 14.4% with the
nine month annualized yield decreasing 29 basis points. The decline in yields
on securities was partially due to an overall decline in the market. Maturing
securities and securities sold during the prior twelve months were partially
replaced with lower yielding instruments.
Year-to-date average interest-bearing liabilities increased $2.2 billion,
funding approximately 91% of the growth in average earning assets. A $188.9
million increase in average noninterest-bearing deposits funded the remainder
of the increase. The nine month annualized rate paid on interest-bearing
liabilities increased 18 basis points. The combination of decreased yields and
increased rates resulted in the 33 basis point decline in the gross interest
spread.
During the third quarter of 1994, market interest rates increased as the
economy improved. AmSouth's yield on earning assets increased 12 basis points
compared to the third quarter of 1993. Rates on interest-bearing liabilities
increased faster resulting in a 56 basis point increase. For the third quarter
of 1994, volume increases in average earning assets and average interest-
bearing liabilities compared to the same period of 1993 were evenly matched.
The combination of these results decreased the gross interest spread 50 basis
points for the quarter compared to the third quarter of 1993.
AmSouth maintains an asset and liability process to control interest rate
risk and assist management in maintaining stability in the gross interest
margin. In addition, AmSouth utilizes various off-balance sheet instruments
such as interest rate swaps, caps and floors to manage interest rate risk.
Tables 4 and 5 summarize recent use of interest rate contracts and maturity of
current contracts outstanding. The contracts outstanding at September 30, 1994,
were being used to hedge the following balance sheet items for the notional
amounts shown:
8
<PAGE>
<TABLE>
<CAPTION>
NOTIONAL
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
Securities.................................................... $ 285
Loans......................................................... 950
Federal funds purchased and securities sold under agreements
to repurchase................................................ 705
Deposits...................................................... 600
------
$2,540
======
</TABLE>
In addition, AmSouth had interest rate contracts on behalf of its customers
in the amount of $81.4 million at September 30, 1994. For the nine months ended
September 30, 1994, interest rate contracts had no material impact on the gross
interest margin. The impact on the gross interest margin for the same period of
1993 was an increase of $6.0 million. For the quarter ended September 30, 1994,
interest rate contracts decreased the gross interest margin $1.4 million while
they resulted in an increase of $1.5 million for the third quarter of 1993.
Credit Quality
AmSouth maintains an allowance for loan losses to absorb potential future
losses. AmSouth's management continuously evaluates the adequacy of the
allowance for loan losses. As changes in the mix of the loan portfolio occur,
including the current increase in residential first mortgage loans which
inherently have less risk, management will monitor not only the absolute level
of the allowance but also the coverage ratio of nonperforming loans. Table 6
shows a comparison of the types of loans outstanding, nonperforming loans by
type, and net charge-offs by type for September 30, 1994 and 1993. The coverage
ratio of the allowance for loan losses to nonperforming loans decreased to
151.98% compared to 233.05% at September 30, 1993. A five quarter comparison of
the components of nonperforming assets is shown in Table 7. Nonperforming
assets as a percentage of loans net of unearned income, foreclosed properties
and repossessions increased from 1.05% at September 30, 1993 to 1.28% at
September 30, 1994. Without the effect of the Fortune purchase, the level of
nonperforming assets declined.
Table 8 presents a five quarter analysis of the allowance for loan losses. At
September 30, 1994, the ratio of allowance for loan losses to loans net of
unearned income was 1.50% compared to 1.47% for the prior year. The purchase of
Fortune added $35.0 million to the allowance for loan losses. Annualized net
charge-offs to average loans net of unearned income for the three months ended
September 30, 1994 was 18 basis points compared to net recoveries of two basis
points for the same period of 1993.
Noninterest Revenues and Noninterest Expenses
Noninterest revenues increased $3.9 million and $4.4 million for the nine
months and three months ended September 30, 1994, respectively, compared to the
same periods of 1993. Within the components of noninterest revenues, year-to-
date increases occurred in other operating revenues of $7.8 million, service
charges on deposit accounts of $5.9 million, mortgage administration fees of
$3.8 million, and trust income of $3.4 million. For the third quarter, the
largest increases occurred in other operating revenues of $9.0 million and in
service charges on deposit accounts and mortgage administration fees with each
increasing $2.5 million. The increase in other operating revenues for both
periods was due to a gain on the sale of servicing by AmSouth's mortgage
subsidiary of approximately $11.3 million. The increase in service charges on
deposit accounts was primarily due to an increased volume of analysis fees on
corporate accounts and overdraft fees. Year-to-date and third quarter portfolio
income decreased $10.0 million and $8.0 million, respectively, primarily due to
a $3.5 million loss on the sale of approximately $376.1 million of available-
for-sale securities during the third quarter and declines in the securities
market during 1994. Investment services income decreased $5.7 million for the
nine months and $1.9 million for the quarter primarily due to interest rate
instability in the bond market during 1994.
9
<PAGE>
Noninterest expenses increased $39.4 million for the nine months and $14.9
million for the third quarter compared to 1993. Exclusive of Mid-State and
Fortune, noninterest expenses increased $17.3 million for the nine months
compared to 1993, with no change for the third quarter compared to 1993. Year-
to-date 1994 salaries and employee benefits increased $4.3 million and
quarterly salaries and employee benefits decreased $4.2 million compared to the
prior year. Included in the 1993 year-to-date and quarterly amounts is the one
time cost of approximately $11.0 million for the enhanced retirement benefit
offered last year. Exclusive of this item, salaries and employee benefits
increased $15.3 million and $6.8 million for the same periods with the Mid-
State and Fortune acquisitions representing $7.6 million and $4.9 million of
the increase for the same periods. Other operating expenses increased $20.0
million for the nine months and $10.1 million for the quarter primarily due to
general overhead costs.
Capital Adequacy
At September 30, 1994, shareholders' equity totaled $1.3 billion, or 7.82% of
total assets. Since December 31, 1993, shareholders' equity increased $175.8
million primarily due to the equity issued for the Fortune purchase of $125.8
million and to net income less dividends of $66.6 million, offset by $31.3
million for the purchase and retirement of 1,000,000 shares of AmSouth common
stock. In May 1994, AmSouth issued $150.0 million in long-term subordinated
debt which qualifies as Tier 2 capital. At September 30, 1994, AmSouth remains
well 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%. Table 12 presents the calculation of the risk-adjusted capital ratios
for AmSouth at September 30, 1994 and 1993. In addition, the risk-adjusted
capital ratios for AmSouth's banking subsidiaries were well above the
regulatory minimum and each subsidiary was well-capitalized at September 30,
1994. The total risk-adjusted capital ratio for each of AmSouth's major
subsidiaries was:
<TABLE>
<S> <C>
AmSouth Bank of Alabama............................................... 11.24%
AmSouth Bank of Florida............................................... 11.83%
AmSouth Bank of Tennessee............................................. 16.24%
</TABLE>
10
<PAGE>
TABLE 1--FINANCIAL SUMMARY
<TABLE>
<CAPTION>
SEPTEMBER 30
-----------------------
%
1994 1993 CHANGE
----------- ---------- ------
(IN THOUSANDS
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
BALANCE SHEET SUMMARY
End of period balances:
Loans net of unearned income................... $11,008,363 $7,785,782 41.4%
Total securities............................... 4,018,696* 3,368,060 19.3
Total assets................................... 16,869,187 12,987,121 29.9
Total deposits................................. 12,608,261 9,551,681 32.0
Shareholders' equity........................... 1,318,497 1,064,556 23.9
Year to Date Average Balances:
Loans net of unearned income................... $ 9,509,976 $7,485,198 27.1%
Total securities............................... 3,799,210* 3,328,288 14.1
Total assets................................... 14,835,166 12,215,949 21.4
Total deposits................................. 11,112,240 9,416,130 18.0
Shareholders' equity........................... 1,241,774 1,009,924 23.0
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ --------------------
% %
1994 1993 CHANGE 1994 1993 CHANGE
-------- -------- ------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Net income............ $125,935 $115,919 8.6% $ 44,061 $ 38,145 15.5%
Per common share...... 2.25 2.29 (1.7) 0.75 0.75 0.0
SELECTED RATIOS
Return on average
assets (annualized).. 1.13% 1.27% 1.02% 1.20%
Return on average
equity (annualized).. 13.56 15.35 13.07 14.40
Average equity to
average assets....... 8.37 8.27 7.84 8.35
Allowance for loan
losses to loans net
of unearned income... 1.50 1.47 1.50 1.47
Efficiency ratio...... 63.41 62.22 63.51 65.84
COMMON STOCK DATA
Cash dividends
declared............. $ 1.05 $ 0.87 $ 0.35 $ 0.29
Book value at end of
period............... 22.72 20.82 22.72 20.82
Market value at end of
period............... 31 1/2 30 3/8 31 1/2 30 3/8
Average common shares
outstanding.......... 56,021 50,583 58,894 51,050
</TABLE>
- --------
* Includes adjustment for market valuation on available-for-sale securities of
$(21,391) for end-of-period balance and $(8,044) for year-to-date average
balance.
11
<PAGE>
TABLE 2--YEAR-TO-DATE YIELDS ON AVERAGE EARNINGS ASSETS AND RATES ON AVERAGE
INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
1994 1993
----------------------------------- -----------------------------------
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)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of unearned
income................ $ 9,509,976 $ 567,000 7.97% $ 7,485,198 $ 456,967 8.16%
Trading securities..... 54,517 2,449 6.01 63,255 1,630 3.45
Available-for-sale
securities............ 1,104,172 43,474 5.26 540,246 21,660 5.36
Held-to-maturity
securities
Taxable................ 2,324,512 111,632 6.42 2,338,538 114,533 6.55
Tax-free............... 324,053 27,122 11.19 386,249 30,970 10.72
------------- ---------- ------------- ----------
Total held-to-
maturity securities.. 2,648,565 138,754 7.00 2,724,787 145,503 7.14
------------- ---------- ------------- ----------
Total securities..... 3,807,254 184,677 6.49 3,328,288 168,793 6.78
Other earning assets... 326,374 12,130 4.97 441,071 15,760 4.78
------------- ---------- ------------- ----------
Total earning assets. 13,643,604 763,807 7.48 11,254,557 641,520 7.62
Cash and other assets.. 1,343,527 1,074,691
Allowance for loan
losses................ (143,921) (113,299)
Market valuation on
available-for-sale
securities............ (8,044) -0-
------------- -------------
$ 14,835,166 $ 12,215,949
============= =============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing
liabilities:
Interest-bearing demand
deposits.............. $ 3,746,383 82,505 2.94 $ 3,226,405 64,433 2.67
Savings deposits....... 919,538 17,705 2.57 764,512 15,579 2.72
Time deposits.......... 3,929,607 126,472 4.30 3,113,280 107,457 4.61
Certificates of deposit
of $100,000 or more... 747,141 23,584 4.22 731,259 23,339 4.27
Federal funds purchased
and securities sold
under agreements to
repurchase............ 1,500,422 46,337 4.13 1,021,255 24,142 3.16
Other interest-bearing
liabilities........... 815,394 32,261 5.29 622,522 19,881 4.27
------------- ---------- ------------- ----------
Total interest-
bearing liabilities.. 11,658,485 328,864 3.77 9,479,233 254,831 3.59
------- -------
Incremental interest
spread.............. 3.71% 4.03%
======= =======
Noninterest-bearing
demand deposits....... 1,769,571 1,580,674
Other liabilities...... 165,336 146,118
Shareholders' equity... 1,241,774 1,009,924
------------- -------------
$ 14,835,166 $ 12,215,949
============= =============
Gross interest
margin/spread on a
taxable equivalent
basis................. 434,943 4.26% 386,689 4.59%
======= =======
Taxable equivalent
adjustment:
Loans.................. 2,253 2,904
Securities............. 8,872 10,142
---------- ----------
Total taxable
equivalent
adjustment........... 11,125 13,046
---------- ----------
Gross interest
margin.............. $423,818 $373,643
========== ==========
</TABLE>
- --------
NOTE: The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate.
12
<PAGE>
TABLE 3--QUARTERLY YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE
INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
1994
----------------------------------------------------------------------------------------
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)
<C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of
unearned income.... $10,731,271 $218,001 8.06% $ 9,058,853 $180,089 7.97% $ 8,717,679 $168,909 7.86%
Trading securities. 50,144 923 7.30 37,597 598 6.38 76,094 928 4.95
Available-for-sale
securities......... 1,190,536 17,556 5.85 919,733 11,333 4.94 1,201,542 14,585 4.92
Held-to-maturity se-
curities
Taxable............ 3,120,246 50,000 6.36 2,326,573 36,068 6.22 1,509,848 25,564 6.87
Tax-free........... 308,343 8,749 11.26 321,311 8,934 11.15 342,884 9,440 11.17
----------- -------- ----------- -------- ----------- --------
Total held-to-
maturity
securities........ 3,428,589 58,749 6.80 2,647,884 45,002 6.83 1,852,732 35,004 7.66
----------- -------- ----------- -------- ----------- --------
Total securities. 4,669,269 77,228 6.56 3,605,214 56,933 6.33 3,130,368 50,517 6.54
Other earning
assets............. 276,081 3,595 5.17 289,617 4,017 5.56 415,216 4,518 4.41
----------- -------- ----------- -------- ----------- --------
Total earning as-
sets............. 15,676,621 298,824 7.56 12,953,684 241,039 7.46 12,263,263 223,944 7.41
Cash and other
assets............. 1,562,705 1,251,509 1,215,098
Allowance for loan
losses............. (165,240) (133,344) (132,818)
Market valuation on
available-for-sale
securities......... (18,349) (13,826) 8,337
----------- ----------- -----------
$17,055,737 $14,058,023 $13,353,880
=========== =========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-bearing
demand deposits... $ 4,084,672 33,321 3.24 $ 3,618,893 26,506 2.94 $ 3,529,482 22,679 2.61
Savings deposits... 958,903 6,459 2.67 921,136 5,647 2.46 877,682 5,599 2.59
Time deposits...... 4,639,285 51,505 4.40 3,574,761 38,133 4.28 3,562,947 36,834 4.19
Certificates of
deposit of $100,000
or more............ 815,600 9,358 4.55 695,062 7,220 4.17 729,820 7,006 3.89
Federal funds
purchased and
securities sold
under agreements to
repurchase......... 2,241,922 25,759 4.56 1,302,683 13,210 4.07 942,380 7,368 3.17
Other interest-
bearing
liabilities........ 1,050,845 15,735 5.94 815,117 10,235 5.04 574,989 6,290 4.44
----------- -------- ----------- -------- ----------- -------- -----
Total interest-
bearing
liabilities...... 13,791,227 142,137 4.09 10,927,652 100,951 3.71 10,217,300 85,776 3.40
-------- ----- -------- ----- -------- -----
Incremental interest
spread............. 3.47% 3.75% 4.01%
===== ===== =====
Noninterest-bearing
demand deposits.... 1,798,001 1,761,223 1,749,126
Other liabilities... 128,648 166,657 205,341
Shareholders'
equity............. 1,337,861 1,202,491 1,182,113
----------- ----------- -----------
$17,055,737 $14,058,023 $13,353,880
=========== =========== ===========
Gross interest
margin/spread on a
taxable equivalent
basis............... 156,687 3.97% 140,088 4.34% 138,168 4.57%
===== ===== =====
Taxable equivalent
adjustment:
Loans.............. 738 759 755
Securities......... 2,755 2,969 3,149
-------- -------- --------
Total taxable
equivalent
adjustment....... 3,493 3,728 3,904
-------- -------- --------
Gross interest
margin.......... $153,194 $136,360 $134,264
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1993
----------------------------------------------------------
FOURTH QUARTER THIRD QUARTER
---------------------------- ----------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- -------- ------ ----------- -------- ------
(TAXABLE EQUIVALENT BASIS--DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of
unearned income.... $ 8,035,879 $160,270 7.91% $ 7,689,530 $155,951 8.05%
Trading securities. 74,248 867 4.63 60,832 824 5.37
Available-for-sale
securities......... 798,382 10,981 5.46 657,840 7,676 4.63
Held-to-maturity se-
curities
Taxable............ 1,947,448 29,224 5.95 2,322,403 37,278 6.37
Tax-free........... 357,236 9,832 10.92 372,632 9,954 10.60
----------- -------- ----------- --------
Total held-to-
maturity
securities........ 2,304,684 39,056 6.72 2,695,035 47,232 6.95
----------- -------- ----------- --------
Total securities. 3,177,314 50,904 6.36 3,413,707 55,732 6.48
Other earning
assets............. 554,087 5,058 3.62 519,525 6,204 4.74
----------- -------- ----------- --------
Total earning as-
sets............. 11,767,280 216,232 7.29 11,622,762 217,887 7.44
Cash and other
assets............. 1,160,143 1,081,336
Allowance for loan
losses............. (118,338) (114,673)
Market valuation on
available-for-sale
securities......... -0- -0-
----------- -----------
$12,809,085 $12,589,425
=========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-bearing
demand deposits... $ 3,374,388 21,785 2.56 $ 3,266,837 21,761 2.64
Savings deposits... 796,633 5,153 2.57 772,594 5,276 2.71
Time deposits...... 3,291,675 35,761 4.31 3,212,326 36,211 4.47
Certificates of
deposit of $100,000
or more............ 718,244 7,347 4.06 740,251 7,817 4.19
Federal funds
purchased and
securities sold
under agreements to
repurchase......... 1,110,841 8,099 2.89 1,033,735 8,364 3.21
Other interest-
bearing
liabilities........ 549,993 6,350 4.58 726,900 7,461 4.07
----------- -------- ----- ----------- -------- -----
Total interest-
bearing
liabilities...... 9,841,774 84,495 3.41 9,752,643 86,890 3.53
-------- ----- -------- -----
Incremental interest
spread............. 3.88% 3.91%
===== =====
Noninterest-bearing
demand deposits.... 1,704,833 1,640,041
Other liabilities... 176,541 145,589
Shareholders'
equity............. 1,085,937 1,051,152
----------- -----------
$12,809,085 $12,589,425
=========== ===========
Gross interest
margin/spread on a
taxable equivalent
basis............... 131,737 4.44% 130,997 4.47%
===== =====
Taxable equivalent
adjustment:
Loans.............. 811 881
Securities......... 3,278 3,287
-------- --------
Total taxable
equivalent
adjustment....... 4,089 4,168
-------- --------
Gross interest
margin.......... $127,648 $126,829
======== ========
</TABLE>
- -----
NOTE: The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate.
13
<PAGE>
TABLE 4--INTEREST RATE SWAPS AND CAPS
<TABLE>
<CAPTION>
SWAPS
-------------------------------------
RECEIVE FIXED PAY FIXED BASIS OTHER CAPS TOTAL
------------- --------- ----- ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1990................... $ 300 $ -0- $ -0- $ -0- $ -0- $ 300
Additions............. -0- -0- -0- -0- 600 600
Maturities............ -0- -0- -0- -0- -0- -0-
Calls................. -0- -0- -0- -0- -0- -0-
----- ----- ----- ------ ------ ------
Balance at December 31,
1991................... 300 -0- -0- -0- 600 900
Additions............. 65 240 300 300 405 1,310
Maturities............ -0- -0- -0- -0- -0- -0-
Calls................. (60) -0- -0- -0- -0- (60)
----- ----- ----- ------ ------ ------
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................. (60) (60) -0- -0- -0- (120)
----- ----- ----- ------ ------ ------
Balance at September 30,
1994................... $ 125 $ 60 $ -0- $1,000 $1,355 $2,540
===== ===== ===== ====== ====== ======
</TABLE>
TABLE 5--MATURITIES AND INTEREST RATES EXCHANGED ON SWAPS AND CAPS
<TABLE>
<CAPTION>
MATURE DURING
SEPTEMBER 30 --------------------------------
1994 1994 1995 1996 1997 TOTAL
------------ ---- ------ ---- ---- ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional...................... $ 125 $ 60 $ 65 $-0- $-0- $ 125
Receive rate.................. 7.02% 9.04% 5.16% 7.02%
Pay rate...................... 4.96% 5.06% 5.06% 5.06%
Pay fixed swaps:
Notional...................... $ 60 $ 60 $ -0- $-0- $-0- $ 60
Receive rate.................. 5.05% 5.06% 5.06%
Pay rate...................... 4.00% 4.00% 4.00%
Other swaps:
Notional...................... $1,000 $-0- $ 300 $300 $400 $1,000
Receive rate.................. 4.67% 5.95% 5.33% 5.33% 5.52%
Pay rate...................... 4.97% 5.13% 5.13% 5.13% 5.13%
Total swap portfolio:
Notional...................... $1,185 $120 $ 365 $300 $400 $1,185
Receive rate.................. 4.94% 7.05% 5.81% 5.33% 5.33% 5.65%
Pay rate...................... 4.92% 4.53% 5.12% 5.13% 5.13% 5.07%
Total cap & floor portfolio:
Notional...................... $1,355 $-0- $1,245 $ 33 $ 77 $1,355
Receive rate.................. 0.03% 0.02% 0.53% 0.00% 0.03%
Pay rate...................... 0.41% 0.37% 1.24% 0.59% 0.41%
Total portfolio:
Notional...................... $2,540 $120 $1,610 $333 $477 $2,540
Receive rate.................. 2.32% 7.05% 1.33% 4.85% 4.47% 2.65%
Pay rate...................... 2.51% 4.53% 1.45% 4.74% 4.40% 2.58%
</TABLE>
- --------
NOTE: The maturities and interest rates exchanged are calculated assuming that
interest rates remain unchanged from average September 1994 rates. The
information presented could change as future interest rates increase or
decrease.
14
<PAGE>
TABLE 6--LOANS AND CREDIT QUALITY
<TABLE>
<CAPTION>
LOANS NONPERFORMING LOANS* NET CHARGE-OFFS
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
---------------------- -------------------------------------
1994 1993 1994 1993 1994 1993
----------- ---------- ---------- ----------------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial.............. $ 2,681,371 $2,314,750 $ 24,442 $ 14,941 $ 2,402 $ 3,795
Commercial real estate:
Commercial real estate
mortgages:
Owner occupied........ 589,088 363,669 15,758 1,281 (114) (6,064)
Nonowner occupied..... 774,915 808,934 35,836 20,677 (2,026) 1,452
----------- ---------- ---------- --------- ------- -------
Total commercial
real estate
mortgages.......... 1,364,003 1,172,603 51,594 21,958 (2,140) (4,612)
----------- ---------- ---------- --------- ------- -------
Real estate
construction:
Owner occupied........ 203,680 119,814 1,074 1,871 (74) -0-
Nonowner occupied..... 289,527 258,660 2,077 1,810 (7) (63)
----------- ---------- ---------- --------- ------- -------
Total real estate
construction....... 493,207 378,474 3,151 3,681 (81) (63)
----------- ---------- ---------- --------- ------- -------
Total commercial
real estate...... 1,857,210 1,551,077 54,745 25,639 (2,221) (4,675)
----------- ---------- ---------- --------- ------- -------
Consumer:
Residential first
mortgages............ 4,112,346 2,037,690 24,785 6,029 421 430
Other residential
mortgages............ 609,152 494,976 23 30 14 96
Dealer indirect....... 844,033 586,773 47 -0- 1,197 1,722
Other consumer........ 981,236 873,865 4,363 2,549 11,344 12,627
----------- ---------- ---------- --------- ------- -------
Total consumer...... 6,546,767 3,993,304 29,218 8,608 12,976 14,875
----------- ---------- ---------- --------- ------- -------
$11,085,348 $7,859,131 $ 108,405 $ 49,188 $13,157 $13,995
=========== ========== ========== ========= ======= =======
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due.
TABLE 7--NONPERFORMING ASSETS
<TABLE>
<CAPTION>
1994 1993
--------------------------- ---------------------
SEPT 30 JUNE 30 MAR 31 DEC 31 SEPT 30
-------- -------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans............ $ 97,186 $ 90,550 $63,540 $53,020 $46,514
Restructured loans.......... 11,219 11,175 1,827 2,420 2,674
-------- -------- ------- ------- -------
Total nonperforming loans. 108,405 101,725 65,367 55,440 49,188
Foreclosed properties....... 31,673 35,266 25,323 29,273 31,939
Repossessions............... 1,664 887 888 1,081 683
-------- -------- ------- ------- -------
Total nonperforming
assets*.................. $141,742 $137,878 $91,578 $85,794 $81,810
======== ======== ======= ======= =======
Nonperforming assets* to
loans net of unearned
income, foreclosed
properties and
repossessions.............. 1.28% 1.30% 1.02% 1.00% 1.05%
Accruing loans 90 days past
due........................ $ 44,293 $ 29,959 $28,638 $20,917 $21,074
======== ======== ======= ======= =======
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due.
15
<PAGE>
TABLE 8--ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1994 1993
----------------------------------- -----------------------
3RD QUARTER 2ND QUARTER 1ST QUARTER 4TH QUARTER 3RD QUARTER
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $164,746 $130,488 $131,509 $114,634 $114,420
Loans charged off....... 9,066 9,512 8,894 8,017 9,189
Recoveries of loans
previously charged off. 4,303 5,796 4,216 2,264 9,592
-------- -------- -------- -------- --------
Net charge-offs
(recoveries)........... 4,763 3,716 4,678 5,753 (403)
Addition (reduction) to
allowance charged
(credited) to expense.. 4,773 2,974 2,207 12,636 (189)
Allowance acquired in
acquisitions........... -0- 35,000 1,450 9,993 -0-
-------- -------- -------- -------- --------
Balance at end of
period................. $164,756 $164,746 $130,488 $131,510 $114,634
======== ======== ======== ======== ========
Allowance for loan
losses to loans net of
unearned income........ 1.50% 1.56% 1.46% 1.54% 1.47%
Allowance for loan
losses to nonperforming
loans.................. 151.98% 161.95% 199.62% 237.21% 233.05%
Allowance for loan
losses to nonperforming
assets................. 116.24% 119.49% 142.49% 153.28% 140.12%
Net charge-offs to
average loans net of
unearned income
(annualized)........... 0.18% 0.16% 0.22% 0.28% (0.02%)
</TABLE>
TABLE 9--ALLOWANCE FOR FORECLOSED PROPERTY LOSSES
<TABLE>
<CAPTION>
1994 1993
----------------------------------- -----------------------
3RD QUARTER 2ND QUARTER 1ST QUARTER 4TH QUARTER 3RD QUARTER
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $2,692 $3,574 $3,908 $ 2,890 $ 7,251
Addition (reduction) of
allowance charged
(credited) to expense.. 225 (627) (450) (1,684) (1,060)
Net recoveries
(writedowns)/(losses).. (889) (255) 116 1,848 (3,301)
Allowance acquired in
bank purchases......... -0- -0- -0- 854 -0-
------ ------ ------ ------- -------
Balance at end of the
period................. $2,028 $2,692 $3,574 $ 3,908 $ 2,890
====== ====== ====== ======= =======
</TABLE>
TABLE 10--SECURITIES
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
--------------------- ---------------------
CARRYING MARKET CARRYING MARKET
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Held-to-maturity
U.S. Treasury and federal agency
securities...................... $3,087,544 $2,975,407 $1,938,382 $1,998,836
State, county and municipal
securities...................... 301,685 316,193 365,388 394,381
Other securities................. 7,388 7,341 225,835 228,872
---------- ---------- ---------- ----------
$3,396,617 $3,298,941 $2,529,605 $2,622,089
========== ========== ========== ==========
Available-for-sale
U.S. Treasury and federal agency
securities...................... $ 545,412 $ 597,963
Other securities................. 70,844 167,125
---------- ----------
$ 616,256 $ 765,088
========== ==========
</TABLE>
16
<PAGE>
TABLE 11--OTHER INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
SEPTEMBER 30
---------------------
1994 1993
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Short-term:
Treasury, tax, and loan note........................... $ 290,078 $ 681,000
Federal Home Loan Bank advances........................ 258,500 -0-
Term federal funds purchased........................... 74,000 180,000
Other.................................................. 11,159 76,308
---------- ----------
Total short-term..................................... 633,737 937,308
Long-term:
7 3/4% Subordinated Notes Due 2004..................... 149,114 -0-
Federal Home Loan Bank advances........................ 140,505 10,000
Subordinated Capital Notes Due 1999.................... 99,408 99,279
Floating Rate Notes Due 1999........................... 7,474 7,951
7 1/2% Convertible Subordinated Debentures............. 3,764 3,543
Long-term notes payable................................ 23,383 49,331
---------- ----------
Total long-term...................................... 423,648 170,104
---------- ----------
Total other interest-bearing liabilities........... $1,057,385 $1,107,412
========== ==========
</TABLE>
TABLE 12--CAPITAL RATIOS
<TABLE>
<CAPTION>
SEPTEMBER 30
------------------------
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk-adjusted capital ratio:
Total assets....................................... $16,869,187 $12,987,121
Adjusted allowance for loan losses................. 146,574 114,793
Adjustment for risk-weighting of balance sheet
items............................................. (6,478,427) (4,524,220)
Adjustment for off-balance sheet items............. 1,377,564 1,317,299
Add unrealized losses on available-for-sale
securities........................................ 21,391 -0-
Less certain intangible assets..................... (228,525) (96,052)
----------- -----------
Total risk-adjusted assets....................... $11,707,764 $ 9,798,941
=========== ===========
Shareholders' equity............................... $ 1,318,497 $ 1,064,556
Add unrealized loss on available-for-sale
securities (net of deferred taxes)................ 13,355 -0-
Less certain intangible assets..................... (228,525) (96,052)
----------- -----------
Tier I capital..................................... 1,103,327 968,504
Adjusted allowance for loan losses................. 146,574 114,793
Qualifying long-term debt.......................... 252,286 102,822
----------- -----------
Tier II capital.................................... 398,860 217,615
----------- -----------
Total capital.................................... $ 1,502,187 $ 1,186,119
=========== ===========
Tier I capital to total risk-adjusted assets....... 9.42% 9.88%
Total capital to risk-adjusted assets.............. 12.83% 12.10%
Other capital ratios:
Leverage........................................... 6.56% 7.75%
Equity to assets................................... 7.82% 8.20%
Tangible equity to assets.......................... 5.80% 7.29%
</TABLE>
17
<PAGE>
PART II
OTHER INFORMATION
ITEM 5. OTHER INFORMATION
(a) On June 16, 1994, AmSouth announced its intention to repurchase over
three years up to 1,500,000 shares of AmSouth Common Stock to be used in
connection with AmSouth's employee benefit plans. Also, on September 22,
1994, AmSouth announced that an additional 1,000,000 shares of AmSouth
Common Stock would be repurchased by AmSouth in the open market or in
negotiated transactions prior to December 31, 1994 for the sole purpose of
replenishing shares issued by AmSouth in connection with its purchase of
Fortune. As of September 30, 1994, AmSouth had completed the repurchase of
1,000,000 shares under these programs.
(b) As of the date of this Form 10-Q, AmSouth is a party to two pending
business combinations, which are summarized in the table below.
Consummation of each of these transactions remains subject to fulfillment
of a number of conditions. No assurances can be given that such conditions
will be fulfilled or that such transactions will be consummated.
<TABLE>
<CAPTION>
APPROXIMATE
NAME OF COMPANY TO BE HEADQUARTERS TOTAL CONSIDERATION/EXPECTED
ACQUIRED LOCATION ASSETS (1) ACCOUNTING TREATMENT
--------------------- ------------------------ ------------ ----------------------------------
<S> <C> <C> <C>
The Tampa Banking
Company................ Tampa, Florida $213 million common stock/pooling-of- interests
Community Federal
Savings Bank........... Fort Oglethorpe, Georgia $104 million cash/purchase
</TABLE>
- --------
(1) The dollar amounts indicated represent assets of the specified organization
as of September 30, 1994.
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)--Forms 8-K
The following Forms 8-K have been filed by AmSouth since June 30, 1994:
Form 8-K filed on July 8, 1994, as amended by Form 8-K/A filed on
August 17, 1994, to report the merger of Fortune Bancorp, Inc. into
AmSouth, and to present financial statements and pro forma financial
statements regarding the merger.
Form 8-K filed on October 14, 1994 to report pro forma financial
statements that give effect to pending mergers and acquisitions as of
June 30, 1994.
18
<PAGE>
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.
Date: November 10, 1994 /s/ John W. Woods
By:__________________________________
Chairman of the Board and
Chief Executive Officer
Date: November 10, 1994 /s/ M. List Underwood, Jr.
By:__________________________________
Executive Vice President and
Controller
(Principal Accounting Officer)
19
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference.
<TABLE>
<C> <S>
2-a Agreement and Plan of Merger dated as of March 9, 1994 between The
Tampa Banking Company and AmSouth Bancorporation (1)
2-b Agreement and Plan of Reorganization dated as of January 21, 1993
among the First National Bank of Clearwater and Mickler Corporation
and AmSouth Bancorporation (2)
2-c Agreement and Plan of Merger dated as of March 29, 1993 between
Orange Banking Corporation and AmSouth Bancorporation (3)
2-d Amended and Restated Agreement and Plan of Reorganization by and
between Mid-State Federal Savings Bank and AmSouth Bancorporation
dated as of April 22, 1993, and amended and restated as of June 22,
1993 (4)
2-e Agreement and Plan of Merger dated as of May 11, 1993 between First
Sunbelt Bankshares Inc. and AmSouth Bancorporation (5)
2-f Agreement and Plan of Merger dated as of June 30, 1993 between
FloridaBank, a Federal Savings Bank and AmSouth Bancorporation (6)
2-g Agreement and Plan of Merger dated as of July 29, 1993 between
Parkway Bancorp, Inc. and AmSouth Bancorporation (7)
2-h Agreement and Plan of Merger dated as of August 3, 1993 between First
Federal Savings Bank, Calhoun, Georgia and AmSouth Bancorporation (8)
2-i Agreement and Plan of Merger dated as of August 9, 1993 between
Citizens National Corporation and AmSouth Bancorporation (9)
2-j 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 (10)
4-a Instruments defining the rights of security holders (11)
4-b Stockholder Protection Rights Agreement dated as of June 15, 1989
between AmSouth Bancorporation and AmSouth Bank, National Association
as Rights Agent, including as Exhibit A the forms of Rights
Certificate and of Election to Exercise and as Exhibit B the form of
Certificate of Designation and Terms of Series A Preferred Stock (12)
4-c Certificate of Designation and Terms of Series A Preferred Stock of
AmSouth Bancorporation (13)
10-a AmSouth Bancorporation Executive Incentive Plan (14)
10-b AmSouth Bancorporation Transfer/Employee Relocation Policy (15)
10-c AmSouth Bank Supplemental Retirement Plan (16)
10-d AmSouth Bancorporation Long Term Incentive Compensation Plan (17)
10-e Amendment No. 1 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (18)
10-f Amendment No. 2 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (19)
10-g Amendment No. 3 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (20)
10-h Amendment No. 4 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (21)
10-i 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan (22)
10-j AmSouth Bancorporation 1987 Substitute Stock Option Plan (23)
10-k Change in Control Compensation Agreements (24)
10-l Deferred Compensation Plan for Directors of AmSouth and AmSouth Bank
N.A. (25)
</TABLE>
20
<PAGE>
<TABLE>
<C> <S>
10-m Agreement between AmSouth Bank N.A. and Brasfield and Gorrie General
Contractor, Inc. (Infrastructure) (26)
10-n Agreement between AmSouth Bank N.A. and Brasfield & Gorrie General
Contractor, Inc. (Buildings) (27)
10-o Guaranty Agreement between AmSouth Bank N.A. and Brasfield & Gorrie
General Contractor, Inc. (28)
10-p Split Dollar Agreement
11 Statement re Computation of Earnings per Share
15 Letter re Unaudited Interim Financial Information
27 Financial Data Schedule
</TABLE>
21
<PAGE>
NOTES TO EXHIBITS
<TABLE>
<C> <S>
(1) Filed as Exhibit 2 to AmSouth's Registration Statement on Form S-4
(Registration Statement
No. 33-56053), incorporated herein by reference
(2) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-60164), incorporated herein by
reference
(3) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-49865), incorporated herein by
reference
(4) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-64960), incorporated herein by
reference
(5) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50041), incorporated herein by
reference
(6) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50605), incorporated herein by
reference
(7) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50727), incorporated herein by
reference
(8) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-51767), incorporated herein by
reference
(9) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50865), incorporated herein by
reference
(10) 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
(11) Instruments defining the rights of holders of long-term debt of
AmSouth are not filed herewith pursuant to Item 601(b)(4)(v) of
Regulation S-K, and AmSouth hereby agrees to furnish a copy of said
instruments to the SEC upon request
(12) Filed as Exhibit 4-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference
(13) Filed as Exhibit 4-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference
(14) Filed as Exhibit 10(b) to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1993, incorporated herein by reference
(15) Filed as Exhibit 10-b to AmSouth's Form 10-K Annual Report for the
year ended December 31, 1993, incorporated herein by reference
(16) Filed as Exhibit 10-b to AmSouth's Form 10-Q quarterly Report for the
quarter ended September 30, 1991, incorporated herein by reference
(17) Filed as part of Exhibit 23 to AmSouth's Form 10-Q Quarterly Report
for the quarter ended March 31, 1984, incorporated herein by reference
(18) Filed as Exhibit 10-e to AmSouth's Form 10-K Annual Report for the
year ended December 31, 1985, incorporated herein by reference
(19) Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1987, incorporated herein by reference
(20) Filed as Exhibit 10(b) to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1988, incorporated herein by reference
</TABLE>
22
<PAGE>
<TABLE>
<C> <S>
(21) Filed as Exhibit 10-i to AmSouth's Form 10-K Annual Report for the
year ended December 31, 1988, incorporated herein by reference
(22) Filed as Exhibit 10 to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference
(23) Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1988, incorporated herein by reference
(24) Filed as Exhibit 10-k to AmSouth's Form 10-K Annual Report for the
year ended December 31, 1992, incorporated herein by reference
(25) Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1986, incorporated herein by reference
(26) Filed as Exhibit 10-m to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1994, incorporated herein by reference
(27) Filed as Exhibit 10-n to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1994, incorporated herein by reference
(28) Filed as Exhibit 10-o to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1994, incorporated herein by reference
</TABLE>
23
<PAGE>
Exhibit 10-p
SPLIT DOLLAR AGREEMENT
1. Purposes of Agreement
---------------------
THIS AGREEMENT is made as of this 1st day of August, 1994 between AmSouth
Bancorporation (the "Company") and the Woods Irrevocable Trust dated
February 18, 1981.
WHEREAS, John W. Woods (the "Employee") is an employee of the Company; and
WHEREAS, the Employee shall be insured under policy number 948090074U (the
"Policy") issued by Metropolitan Life Insurance Company ("Metropolitan");
and
WHEREAS, the owner of the Policy shall be the Woods Irrevocable Trust dated
February 18, 1981 (the "Owner"); and
WHEREAS, the Company is willing to assist in the payment of premiums under
the Policy as provided in this Agreement; and
WHEREAS, the Owner has agreed to assign an interest in the Policy to the
Company as collateral security for such premium payments, at the time of the
first premium payment, on a form of agreement approved by the Company (the
"Collateral Assignment");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
described herein, the Company and the Owner hereby agree as follows:
2. Payment of Premiums
-------------------
By the Owner: The Owner's share of the annual premium for the Policy while
-------------
this agreement is in effect will be an amount equal to the amount the
Employee would have paid, had such coverage been provided through the group
insurance plans of the Company, as in effect at the date of this agreement,
without regard to dollar limits on those policies.
By the Company: The Company shall pay the balance of premiums on the Policy
---------------
until the earlier of the Program Maturity Age and the termination of this
Agreement under Article 6. The Company may increase or decrease the
scheduled premium for any year after the first year. Each premium for the
Policy following execution of this Agreement will be transferred by the
Company to the appropriate Metropolitan account within 31 days following the
anniversary date of the Policy.
The premium payment period and the Program Maturity Age may also be changed
by the Company to the extent necessary for compliance of the Policy with
Sections 7702 and 7702A of the Internal Revenue Code and the regulations
thereunder, if deemed to be in the interest of both parties.
1
<PAGE>
3. Policy Beneficiary Designation
------------------------------
The right to designate and change the beneficiary of the Policy and to
elect an optional mode of settlement is reserved to the Owner of the
Policy. Such Policy Owner shall have the right to designate and change the
beneficiaries and contingent beneficiaries and to elect an optional mode of
settlement subject to the interest of the Company as Assignee under the
Collateral Assignment Agreement, and the Company will make the Policy
available to the Owner, if required for endorsement of a change of
beneficiary.
4. Payment of Policy Proceeds in Event of Death of Employee
--------------------------------------------------------
If the Employee dies while the Policy and this Agreement are in force, the
proceeds of the Policy will be payable as follows:
(a) Part shall be payable to the Company; this part shall be equal to the
aggregate amount of the advances made by the Company pursuant to this
Agreement. The Company may request and/or Metropolitan may be required
to provide a Policy death benefit in excess of Plan requirements in
order to comply with Internal Revenue Code Sections 7702 and 7702A, if
deemed to be in the interest of both parties. In such event, any
excess death benefits shall be payable to the Company.
(b) The entire outstanding balance of the proceeds in excess of the part
payable under (a) above shall be payable to the beneficiary of the
Policy.
5. Company's Exercise of Rights as Assignee
----------------------------------------
The Company, during the lifetime of the Employee and prior to the
termination of this Agreement, may exercise any of its rights as Assignee
of the Policy without the consent of the Employee.
Subject to Company's rights as Assignee, the Owner retains all rights as
Owner of the Policy, including the right of assignment. The Owner agrees
not to withdraw, surrender, borrow against, or pledge as security for a
loan any portion of the Policy cash value while this Agreement is in
effect.
6. Termination of Agreement
------------------------
This Agreement shall terminate at the discretion of the Company if any of
the following takes place:
(a) Retirement of the Employee;
(b) The insolvency of the Company;
2
<PAGE>
(c) The failure of the employee to pay the premium under Article 2 of this
Agreement;
(d) Payment to the Company by the Employee of the aggregate amount of the
advances made by the Company pursuant to this Agreement;
(e) Termination of this Agreement pursuant to Article 7; or
(f) The death of the Employee.
In the event of termination of this Agreement, the aggregate of the advances
made by the Company pursuant to this Agreement (or, if less, the net cash
value in the Policy), shall become due and payable to the Company. Upon
payment of such amount, from the Policy, the Employee, or whatever other
source, the Company shall execute a release of the Collateral Assignment
Agreement and deliver such release and the Policy to the Owner.
7. Amendment and Assignment of Agreement
-------------------------------------
(a) This Agreement shall not be modified or amended except in writing
signed by the parties hereto.
(b) This Agreement is binding upon the heirs, administrators, successors or
assigns of each party.
(c) This Agreement may be terminated by either party by 30 days' written
notice to the other.
8. State Law
---------
This Agreement shall be subject to and construed in accordance with the laws
of the State of Alabama.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
AMSOUTH BANCORPORATION
WOOD IRREVOCABLE TRUST
DATED FEBRUARY 18, 1981
By: /s/ C. Stanley Bailey By: /s/ W. Baker Crow, IV
------------------------- ---------------------------
Title: Vice Chairman Title: Senior Vice President &
---------------------- ------------------------
Trust Officer
------------------------
Witness: /s/ Henry D. Rumble
----------------------
3
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------- -------------------
1994 1993 1994 1993
--------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income............................. $ 125,935 $ 115,919 $ 44,061 $ 38,145
========= ========= ========= =========
Average shares of common stock
outstanding........................... 56,021 50,583 58,894 51,050
========= ========= ========= =========
Earnings per common share.............. $ 2.25 $ 2.29 $ 0.75 $ 0.75
========= ========= ========= =========
</TABLE>
24
<PAGE>
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,
1994, relating to the unaudited consolidated interim financial statements of
AmSouth Bancorporation and subsidiaries which are included in its Form 10-Q for
the quarter ended September 30, 1994:
Form S-8 No. 33-52243 pertaining to the assumption by AmSouth
Bancorporation of FloridaBank Stock Option Plan and Stock
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-3 No. 33-55683 pertaining to the Dividend Reinvestment and
Common Stock Purchase Plan.
Form S-4 No. 33-56053 pertaining to the acquisition of the Tampa
Banking Company.
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, 1994
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from the
Consolidated Statement of Condition, the Consolidated Statement of Earning, and
Tables 2, 7, and 8 of Item 2 of the AmSouth Bancorporation Form 10-Q for the
Quarterly period ended September 30, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 821,865
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 102,579
<TRADING-ASSETS> 5,823
<INVESTMENTS-HELD-FOR-SALE> 616,256
<INVESTMENTS-CARRYING> 3,396,617
<INVESTMENTS-MARKET> 3,298,941
<LOANS> 11,085,348
<ALLOWANCE> 164,756
<TOTAL-ASSETS> 16,869,187
<DEPOSITS> 12,608,261
<SHORT-TERM> 2,391,903
<LIABILITIES-OTHER> 126,878
<LONG-TERM> 423,648
<COMMON> 59,526
0
0
<OTHER-SE> 1,258,971
<TOTAL-LIABILITIES-AND-EQUITY> 16,869,187
<INTEREST-LOAN> 564,747
<INTEREST-INVEST> 175,805
<INTEREST-OTHER> 12,130
<INTEREST-TOTAL> 752,682
<INTEREST-DEPOSIT> 250,266
<INTEREST-EXPENSE> 328,864
<INTEREST-INCOME-NET> 423,818
<LOAN-LOSSES> 9,954
<SECURITIES-GAINS> 327
<EXPENSE-OTHER> 371,927
<INCOME-PRETAX> 193,525
<INCOME-PRE-EXTRAORDINARY> 193,525
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,935
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.26
<LOANS-NON> 97,186
<LOANS-PAST> 44,293
<LOANS-TROUBLED> 11,219
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 131,509
<CHARGE-OFFS> 27,472
<RECOVERIES> 14,315
<ALLOWANCE-CLOSE> 164,756
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
