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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1994 1-7476
AMSOUTH BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0591257
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1400 AMSOUTH-SONAT TOWER BIRMINGHAM, 35203
ALABAMA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(205) 320-7151
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C>
COMMON STOCK, PAR VALUE $1.00 PER SHARE NEW YORK STOCK EXCHANGE
FLOATING RATE NOTES DUE 1999 NEW YORK STOCK EXCHANGE
STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 10, 1995 was $1,758,368,000. (Note 1)
As of March 10, 1995 AmSouth Bancorporation had 58,150,530 shares of common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference herein:
Annual Report to Shareholders for the year ended December 31, 1994: Part I,
Part II
Proxy Statement for Annual Meeting to be held April 20, 1995: Part III
Note 1: In calculating the market value of securities held by nonaffiliates of
AmSouth as disclosed on the cover page of this Form 10-K, AmSouth has treated
as securities held by affiliates only voting stock owned as of March 10, 1995
by its directors and principal executive officers and voting stock held by
AmSouth's employee benefit plans; AmSouth has not treated securities held by
any of AmSouth's subsidiaries as pledgee or in a fiduciary capacity as
securities held by affiliates of AmSouth. AmSouth's response to this item is
not intended to be an admission that any person is an affiliate of AmSouth for
any purpose other than this response.
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AMSOUTH BANCORPORATION
FORM 10-K
INDEX
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PAGE
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<C> <S> <C>
PART I
Item 1. Business...................................................... 1
Item 2. Properties.................................................... 8
Item 3. Legal Proceedings............................................. 8
Item 4. Submission of Matters to a Vote of Security Holders .......... 9
Executive Officers of the Registrant.................................... 9
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters....................................................... 10
Item 6. Selected Financial Data....................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 12
Item 8. Financial Statements and Supplementary Data................... 12
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................... 12
PART III
Item 10. Directors and Executive Officers of the Registrant............ 12
Item 11. Executive Compensation........................................ 14
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................... 14
Item 13. Certain Relationships and Related Transactions................ 14
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K........................................................... 14
SIGNATURES.............................................................. 16
EXHIBIT INDEX........................................................... 18
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PART I
ITEM 1.BUSINESS
GENERAL
AmSouth Bancorporation (AmSouth) is a bank holding company which was
organized in 1970 as a corporation under the laws of Delaware and commenced
doing business in 1972. At December 31, 1994, AmSouth had total consolidated
assets of approximately $16.8 billion. AmSouth offers a broad range of bank and
bank-related services through its subsidiaries. AmSouth's principal banking
subsidiaries are AmSouth Bank of Alabama, AmSouth Bank of Florida, and AmSouth
Bank of Tennessee.
AmSouth Bank of Alabama (AmSouth Alabama), headquartered in Birmingham,
Alabama, is the largest subsidiary of AmSouth. As of December 31, 1994, AmSouth
Alabama had total consolidated assets of approximately $9.1 billion and total
consolidated deposits of approximately $6.8 billion. AmSouth Alabama is a full
service bank with 145 banking offices located throughout Alabama at December
31, 1994. Based upon total consolidated assets as of December 31, 1994, AmSouth
Alabama was the third largest bank headquartered in Alabama. It offers complete
consumer and commercial banking and trust services to businesses and
individuals. The Commercial Banking Group of AmSouth Alabama offers a variety
of products and services, including commercial lending, international banking,
and cash management sales and operations. The Investment Services Department
offers a range of investment products. Consumer Banking encompasses a wide
variety of transaction, credit, and investment services to meet the needs of a
diverse consumer customer base. AmSouth Alabama's network of automated teller
machines is linked with shared automated tellers in all 50 states. The Trust
Division of AmSouth Alabama is the largest in Alabama with more assets under
management than any other bank in Alabama. It offers a complete array of trust
services including estate and trust planning, investment management for
individuals and corporations, land and natural resources management, employee
benefit administration, and management of debt and equity issues for
corporations.
AmSouth Alabama also provides additional services through several
subsidiaries. AmSouth Leasing Corporation is a specialized lender providing
equipment leasing. Brokerage services and investment sales are provided by
AmSouth Investment Services, Inc., a registered broker-dealer.
AmSouth Bank of Florida (AmSouth Florida), is a state-chartered nonmember
bank headquartered in Tampa, Florida. At December 31, 1994, AmSouth Florida had
total consolidated assets of approximately $6.4 billion and total consolidated
deposits of approximately $5.2 billion and was the fifth largest bank
headquartered in Florida. It is a full-service bank that offers services
similar to those offered by AmSouth Alabama. At December 31, 1994, AmSouth
Florida operated 137 banking offices in Florida.
AmSouth Bank of Tennessee (AmSouth Tennessee) is a state-chartered nonmember
bank headquartered in Chattanooga, Tennessee. At December 31, 1994, AmSouth
Tennessee had total assets of approximately $1.1 billion and total deposits of
approximately $847.6 million. AmSouth Tennessee offers banking services similar
to those of AmSouth Alabama. At December 31, 1994, AmSouth Tennessee operated
21 offices in Tennessee. AmSouth also owns two other smaller banking
subsidiaries: AmSouth Bank of Walker County, located in Jasper, Alabama, and
AmSouth Bank of Georgia, headquartered in Rome, Georgia.
In December, 1994, AmSouth filed applications to convert AmSouth Florida,
AmSouth Tennessee, AmSouth Bank of Walker County and AmSouth Bank of Georgia
from state-chartered nonmember banks to state-chartered banks that are members
of the Federal Reserve System.
During 1994, AmSouth completed six business combinations, which are
reflected, to the extent required, in the Consolidated Financial Statements
contained in this Form 10-K for the year ended December 31, 1994. For further
information concerning these transactions, see Note B of the Notes to
Consolidated Financial Statements, which are incorporated by reference into
Item 8 of this Form 10-K.
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As of February 28, 1995, AmSouth and its subsidiaries had 5,858 full-time
employees and 1,183 part-time employees.
SUBSEQUENT EVENTS
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. On January 17, 1995, a special
meeting of the Tampa shareholders was held, the requisite votes necessary to
approve the business combination were not obtained, and the agreement was
subsequently terminated.
On February 16, 1995, Community Federal Savings Bank (Community Federal),
headquartered in Fort Oglethorpe, Georgia, was merged into AmSouth Bank of
Georgia. AmSouth paid approximately $17.0 million for all of the shares of
Community Federal stock. At December 31, 1994, Community Federal had assets of
approximately $107.0 million.
On January 17, 1995, AmSouth announced a change in the strategic direction of
its mortgage banking operations. AmSouth will continue to originate mortgage
loans through its branch banking network. However, it will discontinue
servicing third-party mortgage loans or purchasing mortgage servicing. This
will result in the sale of substantially all of the third-party servicing
portfolio, approximately $6.4 billion, of AmSouth's subsidiaries, and certain
origination offices of AmSouth Mortgage Company, Inc. (AmSouth Mortgage).
AmSouth continually evaluates business combination opportunities and
sometimes conducts due diligence activities in connection with them. As a
result, business combination discussions and, in some cases, negotiations may
take place, and transactions involving cash, debt or equity securities may be
expected. Any future business combination or series of business combinations
that AmSouth might undertake may be material, in terms of assets acquired or
liabilities assumed, to AmSouth's financial condition. Recent business
combinations in the banking industry have typically involved the payment of a
premium over book and market values. This practice may result in dilution of
book value and net income per share for the acquirers.
COMPETITION
AmSouth's subsidiaries compete aggressively with banks located in Alabama,
Florida, Tennessee, and Georgia, as well as large banks in major financial
centers and with other financial institutions, such as savings and loan
associations, credit unions, consumer finance companies, brokerage firms,
insurance companies, investment companies, mortgage companies, and financial
service operations of major retailers. Areas of competition include prices,
interest rates, services and availability of products. AmSouth also competes
with other bank holding companies for the acquisition of financial
institutions.
At December 31, 1994, of the bank holding companies headquartered in Alabama,
AmSouth was the largest in terms of equity capital and second largest in terms
of assets. However, in some geographic areas of Alabama, AmSouth's market share
is smaller than that of other banks and financial institutions competing in
those areas. Also, AmSouth is significantly smaller than many of the financial
institutions competing in Florida, Tennessee, and Georgia.
Various regulatory developments and existing laws have allowed financial
institutions to conduct significant activities on an interstate basis for a
number of years. During recent years, a number of financial institutions
expanded their out-of-state activities, and various states enacted legislation
intended to allow certain interstate banking combinations which otherwise would
be prohibited by federal law. For a number of years, the Bank Holding Company
Act of 1956, as amended (the BHCA), generally provided that no company which
owned or controlled a commercial bank in the United States could acquire
ownership or control of a commercial bank in a state other than the state in
which the company's banking subsidiaries
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were principally located unless the acquisition was specifically authorized by
the laws of the state in which the bank being acquired was located.
Alabama has a reciprocal interstate banking law that allows banks in several
other states (primarily in the Southeast) and the District of Columbia to
acquire banks in Alabama provided there is reciprocal legislation in the other
jurisdictions. Alabama bank holding companies are thereby permitted to acquire
banks in the jurisdictions specified in the law which have adopted such
reciprocal legislation. These laws have resulted in a significant increase in
competition for banking services in Alabama, Florida, Tennessee, Georgia, and
the other affected areas.
In September 1994, Congress adopted the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the Act). The Act removes current
restrictions on interstate acquisitions one year after the date of enactment.
Nationwide interstate branching is authorized under the law as of June 1, 1997,
but states may "opt-in" and permit branching sooner, or "opt-out" and prohibit
interstate branching within a particular state. The specific impact of this
legislation on AmSouth cannot be predicted at this time.
In 1989, the Financial Institutions Reform, Recovery and Enforcement Act of
1989 (FIRREA) was enacted. Among other things, FIRREA amended the BHCA to give
the Board of Governors of the Federal Reserve System (Federal Reserve Board)
the authority to approve the acquisition of savings associations by bank
holding companies. A bank holding company may also consolidate a savings
association it has acquired with a bank subsidiary.
SUPERVISION AND REGULATION
GENERAL
As a bank holding company, AmSouth is subject to the regulation and
supervision of the Federal Reserve Board under the BHCA. Under the BHCA, bank
holding companies may not in general directly or indirectly acquire the
ownership or control of more than 5% of the voting shares or substantially all
of the assets of any company, including a bank, without the prior approval of
the Federal Reserve Board. In addition, bank holding companies are generally
prohibited under the BHCA from engaging in nonbanking activities, subject to
certain exceptions. At the current time various proposals are pending in
Congress that would allow affiliations between bank holding companies and non-
bank entities that are currently restricted. Whether Congress will adopt any of
these proposals, and in what form, is not known at this time.
AmSouth's subsidiary banks (the Subsidiary Banks) are subject to supervision
and examination by applicable federal and state banking agencies. AmSouth
Alabama is an Alabama state bank that is a member of the Federal Reserve
System, subject to regulation by the Federal Reserve Board and the Alabama
State Banking Department. All of the other Subsidiary Banks are state-chartered
banks that are not members of the Federal Reserve System, and therefore are
generally subject to the regulations of and supervision by the Federal Deposit
Insurance Corporation (FDIC) and the banking agencies of the states in which
they are located. However, in December 1994, all of the other Subsidiary Banks
applied to become members of the Federal Reserve System, and, upon conversion,
would be regulated by the Federal Reserve Board and such state banking
agencies. The Subsidiary Banks are also subject to various requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon, and limitations on
the types of investments that may be made and the types of services that may be
offered. Various consumer laws and regulations also affect the operations of
the Subsidiary Banks. In addition to the impact of regulation, commercial banks
are affected significantly by the actions of the Federal Reserve Board as it
attempts to control the money supply and credit availability in order to
influence the economy.
Various legislative proposals have been made that would affect the operations
of bank holding companies and their subsidiaries, including proposals to revise
the bank regulatory system. AmSouth is unable to predict whether any of these
proposals will be adopted and, if so, what their effect on AmSouth would be.
3
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PAYMENT OF DIVIDENDS
AmSouth is a legal entity separate and distinct from its banking and other
subsidiaries. The principal source of cash flow for AmSouth, including cash
flow to pay dividends on AmSouth common stock and to pay interest and principal
on any debt of AmSouth, is dividends from the Subsidiary Banks. There are
statutory and regulatory limitations on the payment of dividends by the
Subsidiary Banks to AmSouth as well as by AmSouth to its shareholders.
Under Alabama law, a bank may not pay a dividend in excess of 90% of its net
earnings until the bank's surplus is equal to at least 20% of capital (which
AmSouth Alabama's surplus was as of December 31, 1994). AmSouth Alabama is also
required by Alabama law to obtain the prior approval of the superintendent of
the Alabama Banking Department for the payment of dividends if the total of all
dividends declared by the bank in any calendar year will exceed the total of
(i) the bank's net earnings (as defined by statute) for that year plus (ii) its
retained net earnings for the preceding two years, less any required transfers
to surplus. Also, no dividends may be paid from AmSouth Alabama's surplus
without the prior written approval of the superintendent.
As a bank that is a member of the Federal Reserve System, AmSouth Alabama is
required by federal law to obtain regulatory approval for the payment of
dividends if the total of all dividends declared by the Board of Directors of
such bank in any year will exceed the total of (1) the bank's net profits (as
defined and interpreted by regulation) for that year plus (2) the retained net
profits (as defined and interpreted by regulation) for the preceding two years,
less any required transfers to surplus. AmSouth Alabama also can pay dividends
only to the extent that retained net profits (including the portion transferred
to surplus) exceed bad debts.
All of the other Subsidiary Banks are also subject to varying restrictions on
the payment of dividends under applicable state laws. With respect to AmSouth
Florida, Florida law imposes dividend restrictions substantially similar to
those imposed under Alabama law on AmSouth Alabama. Under Tennessee law,
AmSouth Tennessee may declare dividends not more than once in each calendar
quarter from undivided profits if (a) the undivided profits account has been
maintained as required by law and (b) the required reserve against deposits is
not and will not thereby be impaired. Before any net profits are credited to
the undivided profits account, deductions for various expenses are required to
be made. No transfers may be made from the surplus account to the undivided
profits account without the consent of the Commissioner of Banking. In
addition, prior to determining that undivided profits are available for the
declaration of dividends, (a) any net loss must be deducted from the undivided
profits account and (b) transfers must be made from the undivided profits
account to the surplus account (i) in an amount required to raise the surplus
to 50% of the capital stock and (ii) in an amount not less than 10% of net
profits until the surplus equals the capital stock. Following completion of
their conversion to Federal Reserve Member Banks, as discussed above, all of
the Subsidiary Banks will be subject to the dividend restriction described with
respect to AmSouth Alabama in the immediately preceeding paragraph.
Furthermore, if, in the opinion of the applicable federal bank regulatory
authority, a bank under its jurisdiction is engaged in or is about to engage in
an unsafe or unsound practice (which, depending on the financial condition of
the bank, could include the payment of dividends), such authority may require,
after notice and hearing, that such bank cease and desist from such practice.
The Federal Reserve Board and the FDIC have indicated that paying dividends
that deplete a bank's capital base to an inadequate level would be an unsafe
and unsound banking practice. Under the Federal Deposit Insurance Act (the FDI
Act), an insured bank may not pay any dividend if it is undercapitalized or if
payment would cause it to become undercapitalized. Moreover, the Federal
Reserve Board and the FDIC have issued policy statements which provide that
bank holding companies and insured banks should generally only pay dividends
out of current operating earnings. The payment of dividends by AmSouth and the
Subsidiary Banks may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
4
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At December 31, 1994, under dividend restrictions imposed under federal and
state laws, AmSouth's Subsidiary Banks, without obtaining government approvals,
could declare aggregate dividends of approximately $210.4 million.
CAPITAL ADEQUACY AND RELATED MATTERS
Capital Guidelines
The Federal Reserve Board has adopted risk-based capital guidelines for bank
holding companies. The minimum guideline for the ratio of total capital (Total
Capital) to risk-weighted assets (including certain off-balance-sheet items,
such as standby letters of credit) is 8%. At least half of the Total Capital
must be composed of common stock, minority interests in the equity accounts of
consolidated subsidiaries, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets (Tier 1 Capital). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves. At December 31, 1994, AmSouth's consolidated Tier 1 Capital and Total
Capital ratios were 8.84% and 12.14%, respectively.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines which provide for a minimum ratio of Tier 1 Capital to quarterly
average assets, less goodwill and certain other intangible assets, (the
Leverage Ratio) of 3% for bank holding companies that meet certain specific
criteria, including having the highest regulatory rating. All other bank
holding companies generally are required to maintain a Leverage Ratio of at
least 3%, plus an additional cushion of 100 to 200 basis points. AmSouth's
Leverage Ratio at December 31, 1994 was 6.64%. The guidelines also provide that
bank holding companies experiencing internal growth or making acquisitions will
be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicators of capital strength in evaluating proposals for expansion or new
activities.
Each of the Subsidiary Banks itself is subject to risk-based and leverage
capital requirements, similar to those described above. Each of the Subsidiary
Banks was in compliance with minimum capital ratio requirements as of December
31, 1994. Neither AmSouth nor any of the Subsidiary Banks has been advised by
any federal banking agency of any specific minimum Leverage Ratio requirement
applicable to it.
All of the federal banking agencies have proposed regulations that would add
an additional risk-based capital requirement based upon the amount of an
institution's exposure to interest rate risk. In addition, bank regulators have
the ability to raise capital requirements applicable to banking organizations
beyond current levels. However, the management of AmSouth is unable to predict
whether and when higher capital requirements would be imposed.
Prompt Corrective Action
The FDI Act requires the federal banking regulators to take prompt corrective
action in respect of FDIC-insured depository institutions that do not meet
minimum capital requirements. The FDI Act establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." Under applicable
regulations, an insured depository institution is defined to be well
capitalized if it maintains a Leverage Ratio of at least 5%, a risk-adjusted
Tier 1 Capital Ratio of at least 6%, and a Total Capital Ratio of at least 10%
and is not otherwise in a "troubled condition" as specified by its appropriate
federal regulatory agency. An FDIC-insured depository institution is defined to
be adequately capitalized if it maintains a Leverage Ratio of at least 4%, a
risk-adjusted Tier 1 Capital Ratio of at least 4%, and a Total Capital Ratio of
at least 8%. In addition, an FDIC-insured depository institution will be
considered: (i) undercapitalized if it fails to meet any minimum required
measure; (ii) significantly undercapitalized if it is significantly below such
measure; and (iii) critically
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undercapitalized if it fails to maintain a level of tangible equity equal to
not less than 2% of total assets. An FDIC-insured depository institution may be
deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating.
The capital-based prompt corrective action provisions of the FDI Act and the
implementing regulations apply to FDIC-insured depository institutions and are
not directly applicable to holding companies which control such institutions.
However, the Federal Reserve Board has indicated that, in regulating bank
holding companies, it will take appropriate action at the holding company level
based on an assessment of the effectiveness of supervisory actions imposed upon
subsidiary depository institutions pursuant to such provisions and regulations.
Although the capital categories defined under the prompt corrective action
regulations are not directly applicable to AmSouth under existing law and
regulations, if AmSouth were placed in a capital category it would qualify as
well-capitalized as of December 31, 1994.
The FDI Act generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. A depository
institution's holding company must guarantee the capital plan, up to an amount
equal to the lesser of 5% of the depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan. The federal banking agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit
an acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
AmSouth believes that at December 31, 1994, all of the Subsidiary Banks
satisfied the "well capitalized" definition.
Brokered Deposits
The FDIC has adopted regulations under The FDI Act governing the receipt of
brokered deposits. Under the regulations, a bank cannot accept, rollover or
renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDIC. A bank that cannot
receive brokered deposits also cannot offer "pass-through" insurance on certain
employee benefit accounts. Whether or not it has obtained such a waiver, an
adequately capitalized bank may not pay an interest rate on any deposits in
excess of 75 basis points over certain prevailing market rates specified by
regulation. There are no such restrictions on a bank that is well capitalized.
Because AmSouth believes that all the Subsidiary Banks were well capitalized as
of December 31, 1994, AmSouth believes the brokered deposits regulation will
have no material effect on the funding or liquidity of any of the Subsidiary
Banks.
HOLDING COMPANY STRUCTURE
There are various legal restrictions on the extent to which AmSouth and its
nonbank subsidiaries can borrow or otherwise obtain credit from its Subsidiary
Banks. Each Subsidiary Bank (and its subsidiaries) is limited in engaging in
borrowing and other "covered transactions" with nonbank or nonsavings bank
affiliates to the following amounts: (i) in the case of any such affiliate, the
aggregate amount of covered transactions of the Subsidiary Bank and its
subsidiaries may not exceed 10% of the capital stock and surplus of such
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Subsidiary Bank; and (ii) in the case of all affiliates, the aggregate amount
of covered transactions of the Subsidiary Bank and its subsidiaries may not
exceed 20% of the capital stock and surplus of such Subsidiary Bank. Covered
transactions also are subject to certain collateralization requirements.
"Covered transactions" are defined by statute to include a loan or extension of
credit, as well as a purchase of securities issued by an affiliate, a purchase
of assets (unless otherwise exempted by the Federal Reserve Board), the
acceptance of securities issued by the affiliate as collateral for a loan, and
the issuance of a guarantee, acceptance, or letter of credit on behalf of an
affiliate.
Under Federal Reserve Board policy, AmSouth is expected to act as a source of
financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, AmSouth may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
Under the FDI Act, an insured depository institution, such as each of the
Subsidiary Banks, can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989 in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to any commonly controlled FDIC-
insured depository institution "in danger of default." "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions indicating
that a default is likely to occur in the absence of regulatory assistance.
The Omnibus Budget Reconciliation Act of 1993 provides that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be afforded a priority over other general
unsecured claims against such an institution, including federal funds and
letters of credit, in the "liquidation or other resolution" of such an
institution by any receiver.
FDIC DEPOSIT INSURANCE ASSESSMENTS
The Subsidiary Banks are subject to FDIC deposit insurance assessments. The
FDIC has adopted a risk-based premium schedule which has increased the
assessment rates for most FDIC-insured depository institutions. Under the
schedule, the premiums initially range from $.23 to $.31 for every $100 of
deposits. Each insured depository institution is assigned to one of three
capital groups -- well capitalized, adequately capitalized or undercapitalized
and further assigned to one of three subgroups within a capital group, on the
basis of supervisory evaluations by the institution's primary federal and, if
applicable, state supervisors and other information relevant to the
institution's financial condition and the risk posed to the applicable
insurance fund. The actual assessment rate applicable to a particular
institution will, therefore, depend in part upon the risk assessment
classification so assigned to the institution by the FDIC.
The FDIC is authorized to change the calculation and rates of insurance
premiums in certain circumstances. Any change in premiums would have an effect
on AmSouth's earnings. See the discussion of proposed changes in the premium
structure in "Management's Discussion and Analysis of Financial Condition and
Results of Operations." A number of issues are still outstanding, and the final
form of any such changes is not known.
Under the FDI Act, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
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ITEM 2.PROPERTIES
The executive offices of AmSouth and AmSouth Alabama are located in the 30-
story AmSouth-Sonat Tower in downtown Birmingham, Alabama. An undivided one-
half interest in this building is owned by AmSouth Alabama through an
unincorporated joint venture. AmSouth Alabama is a principal tenant of this
building. AmSouth Alabama is also a principal tenant of the AmSouth/Harbert
Plaza, a 32-story office building also located in downtown Birmingham, Alabama.
AmSouth Alabama's headquarters and most of its operations are located in the
AmSouth-Sonat Tower and the AmSouth/Harbert Plaza. An additional administrative
facility for AmSouth is currently under construction in the Birmingham, Alabama
area. AmSouth anticipates occupying the facility by mid-year 1995. Other bank
subsidiaries of AmSouth also have headquarters, banking and operational offices
located in Alabama, Florida, Tennessee and Georgia.
At December 31, 1994, AmSouth and its subsidiaries had 370 offices
(principally bank buildings) of which 196 were owned and 174 were either leased
or subject to a ground lease.
ITEM 3.LEGAL PROCEEDINGS
AmSouth's subsidiaries are routinely involved in litigation incidental to
their business. However, management believes that the ultimate resolution of
these matters will not materially affect the consolidated financial condition
and results of operations of AmSouth.
8
<PAGE>
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters brought to a vote of security holders during the fourth
quarter of 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of AmSouth, their ages, the positions held by them
with AmSouth and certain of its subsidiaries, and their principal occupations
for the last five years are as follows:
John W. Woods, 63, Chairman and Chief Executive Officer of AmSouth (1972 to
date) and AmSouth Alabama (1983 to date); Director of AmSouth, AmSouth
Alabama and AmSouth Mortgage; formerly President of AmSouth (August 1993 to
August 1994) and AmSouth Alabama (August 1990 to August 1994).
C. Dowd Ritter, 47, President and Chief Operating Officer, AmSouth and
AmSouth Alabama (August 1994 to date); Director of AmSouth, AmSouth
Alabama, AmSouth Mortgage and AmSouth Investment Services, Inc.; formerly
Vice Chairman of the Board of AmSouth and AmSouth Alabama (July 1993 to
August 1994), Senior Executive Vice President of AmSouth and Senior
Executive Vice President and General Banking Group Head of AmSouth Alabama
(May 1991 to July 1993), and Senior Executive Vice President, Trust Officer
and Trust and Financial Services Group Head of AmSouth Alabama (August 1988
to May 1991).
A. Fox deFuniak, III, 54, Senior Executive Vice President and Birmingham
Banking Group Head of AmSouth Alabama (May 1991 to date); Director of
AmSouth Mortgage; formerly Senior Executive Vice President and Retail
Banking and Marketing Group Head of AmSouth Alabama (November 1989 to May
1991).
Sloan D. Gibson, IV, 41, Senior Executive Vice President of AmSouth and
AmSouth Alabama (October 1994 to date) and Head of the Commercial and
Business Banking Group of AmSouth Alabama (October 1993 to date); formerly
Executive Vice President (1993 to October 1994), Head of Consumer Banking
Administration (July 1993 to October 1993) and Senior Vice President,
General Banking Group (1992 to 1993), all of AmSouth Alabama, and Manager,
Special Assets (1991 to 1992), and Manager, Loan Administration (1990 to
1991), all of Bank South N.A.
W. Michael Graves, 48, Senior Executive Vice President of AmSouth and
AmSouth Alabama (December 1993 to date), Head of Trust and Private Banking
(October 1994 to date) and Alabama Banking Group Head (July 1993 to date)
of AmSouth Alabama; Director of AmSouth Mortgage; formerly Executive Vice
President and Regional Executive for the Central Region of AmSouth Alabama
(May 1991 to July 1993), and Executive Vice President in charge of
Birmingham and Shelby County Branch Systems of AmSouth Alabama (November
1989 to May 1991).
W. Charles Mayer, III, 40, Senior Executive Vice President of AmSouth
(October 1994 to date), Director, President and Chief Executive Officer of
AmSouth Tennessee (January 1993 to date); formerly Executive Vice President
of AmSouth (January 1993 to October 1994), and Executive Vice President and
Corporate Banking Division Head of AmSouth Alabama (June 1988 to January
1993).
E. W. Stephenson, Jr., 48, Chairman of the Board and Chief Executive
Officer of AmSouth Florida and Senior Executive Vice President of AmSouth
(July 1993 to date); Director of AmSouth Florida; formerly Executive Vice
President and Consumer and Marketing Division Head of AmSouth Alabama (May
1991 to July 1993), and Executive Vice President and Regional Executive for
the North Central Region of AmSouth Alabama (November 1989 to May 1991).
Alfred W. Swan, Jr., 52, Senior Executive Vice President of AmSouth
(October 1994 to date) and President (1992 to date) and Head of West Coast
Area and Commercial and Business Banking (1994 to date), all of AmSouth
Florida; Director of AmSouth Florida; formerly Executive Vice President of
AmSouth (1992 to October 1994), Chief Executive Officer of AmSouth Florida
(1992 to July 1993), Senior Vice President of AmSouth Alabama (November
1991 to March 1992), and President and Chief Operating Officer of Bank
South N.A. (1988 to 1991).
9
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AmSouth's common stock, par value $1.00 per share, is listed for trading on
the New York Stock Exchange under the symbol ASO. The following table sets
forth certain common stock data for the last five years.
<TABLE>
<CAPTION>
COMMON STOCK DATA 1994 1993 1992 1991 1990
----------------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Cash dividends declared............. $ 1.43 $ 1.22 $ 1.07 $ 0.98 $ 0.94
Book value.......................... 22.57 21.48 18.63 17.12 15.78
Tangible book value................. 16.49 18.35 16.32 14.76 13.08
Market value at year end............ 25 3/4 31 1/4 32 5/8 21 1/2 13
Market price range:
High.............................. 34 7/8 35 7/8 32 5/8 22 1/8 17 1/8
Low............................... 25 3/8 27 3/8 21 3/8 12 3/8 11 1/2
Total trading volume (In thousands). 20,965 21,059 12,363 8,434 5,150
Dividend yield at year end.......... 5.90% 4.48% 3.56% 4.84% 7.38%
Dividend payout ratio............... 63.56 42.21 42.80 48.04 50.27
Price earnings ratio................ 11.44X 10.81X 13.05X 10.54X 6.95X
Shareholders of record at year end.. 14,674 12,985 9,343 9,146 9,582
Average shares outstanding (In
thousands)......................... 56,527 50,848 46,684 43,652 41,956
</TABLE>
Quarterly high and low sales prices of and cash dividends declared on AmSouth
common stock are set forth in Note U of the Notes to Consolidated Financial
Statements, which are incorporated by reference into Item 8 of this Form 10-K.
As of March 10, 1995, there were approximately 14,722 holders of record of
AmSouth's common stock.
Restrictions on AmSouth's Subsidiary Banks to transfer funds to the holding
company at December 31, 1994 are set forth in Note P of the Notes to
Consolidated Financial Statements, which are incorporated by reference into
Item 8 of this Form 10-K.
10
<PAGE>
ITEM 6.SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five
years.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Revenue from earning
assets................. $ 1,047,741 $ 840,617 $ 772,251 $ 852,251 $ 880,032
Interest expense........ 480,414 339,326 341,706 486,848 556,404
----------- ----------- ----------- ----------- ----------
Gross interest margin... 567,327 501,291 430,545 365,403 323,628
Provision for loan
losses................. 30,103 27,966 38,581 48,647 45,407
----------- ----------- ----------- ----------- ----------
Net interest margin..... 537,224 473,325 391,964 316,756 278,221
Noninterest revenues,
excluding investment
securities gains....... 178,667 202,478 168,461 158,402 136,184
Investment securities
gains.................. 354 1,591 4,693 12,256 435
Noninterest expenses.... 522,905 458,831 400,548 366,403 311,658
----------- ----------- ----------- ----------- ----------
Income before applicable
income taxes........... 193,340 218,563 164,570 121,011 103,182
Applicable income taxes. 66,050 71,843 47,977 31,785 24,734
----------- ----------- ----------- ----------- ----------
Net income............ $ 127,290 $ 146,720 $ 116,593 $ 89,226 $ 78,448
=========== =========== =========== =========== ==========
PER COMMON SHARE
Net income............ $ 2.25 $ 2.89 $ 2.50 $ 2.04 $ 1.87
Cash dividends
declared............. 1.43 1.22 1.07 0.98 0.94
Average common shares
outstanding............ 56,527 50,848 46,684 43,652 41,956
SELECTED YEAR END
BALANCES
Loans net of unearned
income................. $11,429,907 $ 8,540,412 $ 6,716,595 $ 6,293,509 $6,382,299
Assets.................. 16,777,951 13,469,621 11,116,327 10,739,989 9,843,606
Deposits................ 13,067,062 10,362,989 8,626,221 8,528,109 8,076,625
Long-term debt.......... 386,147 173,142 139,510 142,332 133,519
Shareholders' equity.... 1,310,458 1,142,725 873,374 794,043 659,787
SELECTED AVERAGE
BALANCES
Loans net of unearned
income................. $ 9,918,274 $ 7,634,984 $ 6,334,313 $ 6,209,432 $6,254,370
Assets.................. 15,293,985 12,377,333 10,447,186 10,039,471 9,605,682
Deposits................ 11,562,936 9,537,516 8,346,207 8,148,424 7,684,047
Long-term debt.......... 339,426 167,879 141,307 138,015 136,281
Shareholders' equity.... 1,243,151 1,031,373 836,202 720,853 638,744
SELECTED RATIOS
Return on average
assets................. 0.83% 1.19% 1.12% 0.89% 0.82%
Return on average
equity................. 10.24 14.23 13.94 12.38 12.28
Gross interest spread... 4.14 4.56 4.72 4.25 3.99
Operating efficiency.... 68.72 63.48 64.24 65.59 64.45
Allowance for loan
losses to loans net of
unearned income........ 1.50 1.54 1.48 1.52 1.46
Nonperforming assets to
loans net of unearned
income, foreclosed
properties and
repossessions.......... 1.16 1.00 1.71 2.84 2.94
Ending equity to ending
assets................. 7.81 8.48 7.86 7.39 6.70
Average equity to
average assets......... 8.13 8.33 8.00 7.18 6.65
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of AmSouth's 1994 Annual Report to
Shareholders is hereby incorporated herein by reference.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of AmSouth and Subsidiaries, the
accompanying Notes to Consolidated Financial Statements, Management's Statement
on Responsibility for Financial Reporting, and the Report of Independent
Auditors contained in AmSouth's 1994 Annual Report to Shareholders are hereby
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors and director nominees of AmSouth included at
pages 6, 8 and 10 of AmSouth's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 20, 1995 (the Proxy Statement) is hereby
incorporated herein by reference. Information on AmSouth's executive officers
is included in Part I of this report. As of April 20, 1995 several directors of
AmSouth will (i) retire or (ii) not stand for reelection or resign voluntarily
as part of a restructuring of the Board of Directors. Information on them
follows.
<TABLE>
<CAPTION>
OFFICES WITH
DIRECTOR AMSOUTH OR PRINCIPAL OCCUPATION
NAME OF DIRECTOR AGE SINCE ITS SUBSIDIARIES FOR PAST 5 YEARS OTHER DIRECTORSHIPS(1)
---------------- --- -------- ---------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C>
George W. Barber, Jr. .. 54 1982 Director, Chairman of the
AmSouth Bank of Board, Barber
Alabama Dairies, Inc.
(processor and
distributor of dairy
products)
William D. Biggs, Sr.... 56 1990(2) Director, Real estate Carrillon
AmSouth Bank of development and Realty, Inc.
Alabama investments Martin
Industries
William J. Cabaniss, 56 1992(3) Director, President, Precision Protective Life
Jr. ................... AmSouth Bank of Grinding, Inc. Corporation
Alabama (machine grinding Birmingham Steel
company) Corporation
M. Miller Gorrie........ 59 1983 Director, Chairman and Chief Colonial
AmSouth Bank of Executive Officer, Properties
Alabama January 1995 to date, Trust
Brasfield & Gorrie WinsLoew
General Contractor, Furniture Inc.
Inc.; President and
Chief Executive
Officer, Brasfield &
Gorrie, Inc., 1967 to
date, and Brasfield &
Gorrie General
Contractor, Inc. 1988
to 1995 (general
contractors)
Robert A. Guthans....... 66 1991 Director, President and Chief
AmSouth Bank of Executive Officer,
Alabama 1973 to date,
Midstream Fuel
Service, Inc.,
Petroleum Energy
Products Co. and
Tenn-Tom Towing Co.
(fueling and towing
services)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
OFFICES WITH
DIRECTOR AMSOUTH OR PRINCIPAL OCCUPATION
NAME OF DIRECTOR AGE SINCE ITS SUBSIDIARIES FOR PAST 5 YEARS OTHER DIRECTORSHIPS(1)
---------------- --- -------- ---------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Elmer B. Harris 55 1989 Director, President and Chief Alabama Power
AmSouth Bank of Executive Officer, Company
Alabama March 1989 to date, The Southern
Alabama Power Company Company
(public utility) Southern
Electric
Generating
Company
Southern Company
Services, Inc.
Southern Nuclear
Company
James I. Harrison, Jr. 62 1988 Director, Chairman and Chief
AmSouth Bank of Executive Officer,
Alabama 1994 to date, and
President and Chief
Executive Officer,
1967 to 1994, Harco,
Inc. (retail drug
store chain)
Hugh B. Jacks 60 1983 Director, President, January Provident Life
AmSouth Bank of 1992 to date, and Accident
Alabama Potential Enterprises Insurance
(consulting and Company of
speaking); President, America
May 1983 to November ACME Cleveland
1991, BellSouth Corporation
Services
(communications)
E. Roberts Leatherbury 58 1982 Director, Executive Vice
AmSouth Bank of President, February
Alabama 1994 to date, Cooper/
T. Smith (stevedoring
and towing company);
Executive Vice
President, 1987 to
February 1994, Ryan-
Walsh, Inc. (cargo
handling and ship
services)
Mrs. H. Taylor 61 1992 Director, President and
Morrissette AmSouth Bank of Chairman, 1990 to
Alabama date, HTM Investment
& Development, Inc.
(personal investment
company)
Arthur R. Outlaw 68 1974 Vice Chairman of the Morrison
Board, December 1984 Restaurants,
to date, Morrison Inc.
Restaurants, Inc.
(restaurants-food
supplier)
William J. Rushton III 65 1979 Director, Chairman of the Board The Southern
AmSouth Bank of Emeritus, May 1994 to Company
Alabama date, Chairman of the Alabama Power
Board, May 1992 to Company
May 1994, and Protective Life
Chairman of the Board Corporation
and Chief Executive
Officer, 1982 to May
1992, all of
Protective Life
Corporation
(insurance holding
company)
W.A. Williamson, Jr. 59 1983 Director, Chairman, Kowaliga Genesco
AmSouth Bank of Capital, Inc.,
Alabama November 1993 to date
(investment company);
Chairman and Chief
Executive Officer,
1981 to 1992, Durr
Fillauer Medical,
Inc. (supplier of
drugs and other
medical products)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
OFFICES WITH
DIRECTOR AMSOUTH OR PRINCIPAL OCCUPATION
NAME OF DIRECTOR AGE SINCE ITS SUBSIDIARIES FOR PAST 5 YEARS OTHER DIRECTORSHIPS(1)
---------------- --- -------- ---------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Spencer H. Wright....... 70 1993 Chairman of the Chairman of the Board
Board and of AmSouth Bank of
Director, Tennessee, February
AmSouth Bank of 1993 to date;
Tennessee Chairman of the
Board, President and
Chief Executive
Officer, First
Chattanooga Financial
Corporation and First
Federal Bank, FSB,
1987 to February
1993; Chairman of the
Board, President and
Chief Executive
Officer, Spencer
Wright Industries,
Inc. (manufacturer of
tufting machinery and
other textile
equipment and parts)
</TABLE>
--------
(1) These are directorships with corporations subject to the registration or
reporting requirements of the Securities Exchange Act of 1934 or registered
under the Investment Company Act of 1940.
(2) Mr. Biggs was formerly a director from 1977 to 1988.
(3) Mr. Cabaniss was formerly a director from 1983 to 1988.
Information regarding late filings under Section 16(a) of the Securities
Exchange Act of 1934 included at page 12 of the Proxy Statement is hereby
incorporated herein by reference.
ITEM 11.EXECUTIVE COMPENSATION
Information regarding compensation of directors and executive officers
included at pages 13 through 20 of the Proxy Statement is hereby incorporated
herein by reference.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Voting Securities and Principal
Holders Thereof" at pages 1 through 4 of the Proxy Statement is hereby
incorporated herein by reference.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the Proxy Statement under the caption "Certain
Transactions" at pages 12 and 13 and the second paragraph under the caption
"Information with Respect to Compensation Committee Interlocks and Insider
Participation in Compensation Decisions" at page 17 is hereby incorporated
herein by reference.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
The following management's statement on responsibility for financial
reporting, report of independent auditors and consolidated financial statements
of AmSouth and its subsidiaries included in AmSouth's 1994 Annual Report to
Shareholders are incorporated by reference in Item 8.
Management's Statement on Responsibility for Financial Reporting
Report of Independent Auditors
14
<PAGE>
Consolidated Statement of Condition--December 31, 1994 and 1993
Consolidated Statement of Earnings--Years ended December 31, 1994, 1993 and
1992
Consolidated Statement of Shareholders' Equity--Years ended December 31,
1994, 1993, and 1992
Consolidated Statement of Cash Flows--Years ended December 31, 1994, 1993,
and 1992
Notes to Consolidated Financial Statements--Years ended December 31, 1994,
1993, and 1992
FINANCIAL STATEMENT SCHEDULES
All schedules to the consolidated financial statements required by Article 9
of Regulation S-X and all other schedules to the financial statements of
AmSouth required by Article 5 of Regulation S-X are not required under the
related instructions or are inapplicable and therefore have been omitted.
(B) REPORTS ON FORM 8-K
The following reports on Form 8-K were filed during the fourth quarter of
1994:
a) Report on Form 8-K filed October 14, 1994 to present pro forma financial
statements that give effect to pending mergers and acquisitions
including (i) unaudited pro forma combined condensed statement of
condition as of June 30, 1994 and (ii) unaudited pro forma combined
condensed statement of earnings for the six months ended June 30, 1994
and the year ended December 31, 1993.
b) Report on Form 8-K filed November 18, 1994 to present pro forma
financial statements that give effect to pending mergers and
acquisitions, including (i) unaudited pro forma combined condensed
statement of condition as of September 30, 1994 and (ii) unaudited pro
forma combined condensed statement of earnings for the nine months ended
September 30, 1994 and the year ended December 31, 1993.
c) Report on Form 8-K filed December 29, 1994 announcing the sale of
available-for-sale securities and termination of interest rate swap
contracts and the resulting effect on earnings.
(C) EXHIBITS
The exhibits listed in the Exhibit Index at page 18 of this Form 10-K are
filed herewith or are incorporated herein by reference.
15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AmSouth Bancorporation
/s/ John W. Woods
By __________________________________
JOHN W. WOODS
Chairman of the Board and Chief
Executive Officer
Date: March 30, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
/s/ John W. Woods /s/ M. List Underwood, Jr.
By __________________________________ By __________________________________
JOHN W. WOODS M. LIST UNDERWOOD, JR.
Chairman of the Board, Chief Executive Vice President and
Executive Officer and a Director Controller (Principal Financial
(Principal Executive Officer) Officer and Principal Accounting
Date: March 30, 1995 Officer)
Date: March 30, 1995
/s/ George W. Barber, Jr. /s/ William D. Biggs, Sr.
By __________________________________ By __________________________________
GEORGE W. BARBER, JR. WILLIAM D. BIGGS, SR.
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
/s/ Barney B. Burks, Jr. /s/ William J. Cabaniss, Jr.
By __________________________________ By __________________________________
BARNEY B. BURKS, JR. WILLIAM J. CABANISS, JR.
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
/s/ J. Harold Chandler /s/ Joseph M. Farley
By __________________________________ By __________________________________
J. HAROLD CHANDLER JOSEPH M. FARLEY
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
/s/ Rodney C. Gilbert
By __________________________________ By __________________________________
RODNEY C. GILBERT M. MILLER GORRIE
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
By __________________________________ /s/ Elmer B. Harris
ROBERT A. GUTHANS By __________________________________
A Director ELMER B. HARRIS
Date: March 30, 1995 A Director
Date: March 30, 1995
16
<PAGE>
/s/ James I. Harrison, Jr. /s/ Donald E. Hess
By __________________________________ By __________________________________
JAMES I. HARRISON, JR. DONALD E. HESS
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
By __________________________________ /s/ Ronald L. Kuehn, Jr.
HUGH B. JACKS By __________________________________
A Director RONALD L. KUEHN, JR.
Date: March 30, 1995 A Director
Date: March 30, 1995
By __________________________________ /s/ James R. Malone
E. ROBERTS LEATHERBURY By __________________________________
A Director JAMES R. MALONE
Date: March 30, 1995 A Director
Date: March 30, 1995
By __________________________________ /s/ Claude B. Nielsen
MRS. H. TAYLOR MORRISSETTE By __________________________________
A Director CLAUDE B. NIELSEN
Date: March 30, 1995 A Director
Date: March 30, 1995
/s/ Arthur R. Outlaw /s/ Z. Cartter Patten, III
By __________________________________ By __________________________________
ARTHUR R. OUTLAW Z. CARTTER PATTEN, III
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
/s/ Benjamin F. Payton, Ph.D. /s/ C. Dowd Ritter
By __________________________________ By __________________________________
BENJAMIN F. PAYTON, PH.D. C. DOWD RITTER
A Director A Director and Officer
Date: March 30, 1995 Date: March 30, 1995
/s/ Herbert A. Sklenar
By __________________________________ By __________________________________
WILLIAM J. RUSHTON III HERBERT A. SKLENAR
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
/s/ W.A. Williamson, Jr. /s/ Spencer H. Wright
By __________________________________ By __________________________________
W.A. WILLIAMSON, JR. SPENCER H. WRIGHT
A Director A Director
Date: March 30, 1995 Date: March 30, 1995
17
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference. Compensatory plans and arrangements are identified by an asterisk.
<TABLE>
<C> <S>
2-a Agreement and Plan of Reorganization dated as of January 21, 1993 among
The First National Bank of Clearwater and Mickler Corporation and
AmSouth Bancorporation (1)
2-b Agreement and Plan of Merger dated as of March 29, 1993 between Orange
Banking Corporation and AmSouth Bancorporation (2)
2-c 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 (3)
2-d Agreement and Plan of Merger dated as of May 11, 1993 between First
Sunbelt Bankshares, Inc. and AmSouth Bancorporation (4)
2-e Agreement and Plan of Merger dated as of June 30, 1993 between
FloridaBank, a Federal Savings Bank and AmSouth Bancorporation (5)
2-f Agreement and Plan of Merger dated as of July 29, 1993 between Parkway
Bancorp, Inc. and AmSouth Bancorporation (6)
2-g Agreement and Plan of Merger dated as of August 3, 1993 between First
Federal Savings Bank, Calhoun, Georgia and AmSouth Bancorporation (7)
2-h Agreement and Plan of Merger dated as of August 9, 1993 between
Citizens National Corporation and AmSouth Bancorporation (8)
2-i 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 (9)
3-a Restated Certificate of Incorporation of AmSouth Bancorporation (10)
3-b Bylaws of AmSouth Bancorporation (11)
4-a Instruments defining the rights of security holders (12)
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 (13)
4-c Certificate of Designation and Terms of Series A Preferred Stock of
AmSouth Bancorporation (14)
*10-a AmSouth Bancorporation Executive Incentive Plan (15)
*10-b AmSouth Bancorporation Transfer/Employee Relocation Policy (16)
*10-c AmSouth Bank Supplemental Retirement Plan (17)
*10-d AmSouth Bancorporation Long Term Incentive Compensation Plan (18)
*10-e Amendment No. 1 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (19)
*10-f Amendment No. 2 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (20)
*10-g Amendment No. 3 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (21)
*10-h Amendment No. 4 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (22)
*10-i Amendment No. 5 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan
*10-j 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan (23)
*10-k Amendment No. 1 to the AmSouth Bancorporation 1989 Long Term Incentive
Compensation Plan
</TABLE>
18
<PAGE>
<TABLE>
<C> <S>
*10-l Change in Control Compensation Agreements (24)
*10-m Deferred Compensation Plan for Directors of AmSouth and AmSouth Bank
N.A. (25)
10-n Agreement between AmSouth Bank N.A. and Brasfield & Gorrie General
Contractor, Inc. (Infrastructure) (26)
10-o Agreement between AmSouth Bank N.A. and Brasfield & Gorrie General
Contractor, Inc. (Buildings) (27)
10-p Guaranty Agreement between AmSouth Bank N.A. and Brasfield & Gorrie
General Contractor, Inc. (28)
*10-q Split Dollar Agreement (29)
11 Statement Regarding Computation of Earnings per Common Share
13 AmSouth Bancorporation's 1994 Annual Report to Shareholders, excluding
the portions thereof not incorporated by reference in this Form 10-K
21 List of Subsidiaries of AmSouth Bancorporation
23 Consent of Ernst & Young LLP, Independent Auditors
27 Financial Data Schedule
</TABLE>
19
<PAGE>
NOTES TO EXHIBITS
<TABLE>
<C> <S>
(1) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-60164), incorporated herein by reference
(2) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-49865), incorporated herein by reference
(3) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-64960), incorporated herein by reference
(4) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50041), incorporated herein by reference
(5) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50605), incorporated herein by reference
(6) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50727), incorporated herein by reference
(7) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-51767), incorporated herein by reference
(8) Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50865), incorporated herein by reference
(9) 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
(10) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference
(11) Filed as Exhibit 3 to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1994, incorporated herein by reference
(12) Instruments defining the rights of holders of long-term debt of AmSouth
are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-
K, and AmSouth hereby agrees to furnish a copy of said instruments to
the SEC upon request
(13) Filed as Exhibit 4-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference
(14) Filed as Exhibit 4-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference
(15) Filed as Exhibit 10(b) to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1993, incorporated herein by reference
(16) Filed as Exhibit 10-b to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1993, incorporated herein by reference
(17) Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1991, incorporated herein by reference
(18) 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
(19) Filed as Exhibit 10-e to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1985, incorporated herein by reference
(20) Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1987, incorporated herein by reference
(21) Filed as Exhibit 10(b) to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1988, incorporated herein by reference
(22) Filed as Exhibit 10-i to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1988, incorporated herein by reference
(23) Filed as Exhibit 10 to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, 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
</TABLE>
20
<PAGE>
<TABLE>
<C> <S>
(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 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
(29) Filed as Exhibit 10-p to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1994
</TABLE>
21
<PAGE>
EXHIBIT 10-i
AMENDMENT NUMBER FIVE
TO
AMSOUTH BANCORPORATION
LONG TERM INCENTIVE COMPENSATION PLAN
Pursuant to approval by the Board of Directors of AmSouth
Bancorporation, the AmSouth Bancorporation Long Term Incentive Compensation Plan
is hereby amended, effective May 19, 1994, by deleting therefrom the provisions
of Section 1.3(b) and inserting in lieu thereof the following:
"(b) Any shares of Common Stock to be delivered by the Company upon
the grant of Restricted Stock Awards or the exercise of Options
or Stock Appreciation Rights shall, at the discretion of the
Company, be issued from the Company's authorized but unissued
shares of Common Stock, be transferred from any available
treasury stock, or be purchased in the open market."
IN WITNESS WHEREOF, AmSouth Bancorporation has adopted and approved
this Amendment Number Five to the AmSouth Bancorporation Long Term Incentive
Compensation Plan by act of its Board of Directors and has caused same to be
executed in its name and on its behalf this 23rd day of December, 1994.
AMSOUTH BANCORPORATION
By /s/ John W. Woods
------------------------
John W. Woods
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
/s/ Carl L. Gorday
------------------------------
Assistant Secretary
<PAGE>
EXHIBIT 10-k
AMENDMENT NUMBER ONE
TO
1989 AMSOUTH BANCORPORATION
LONG TERM INCENTIVE COMPENSATION PLAN
Pursuant to approval by the Board of Directors of AmSouth Bancorporation,
the AmSouth Bancorporation Long Term Incentive Compensation Plan is hereby
amended, effective May 19, 1994, by deleting therefrom the provisions of
Section 1.3(d) and inserting in lieu thereof the following:
"(d) Any shares of Common Stock to be delivered by the Company upon the
grant of Restricted Stock Awards or the exercise of Options or Stock
Appreciation Rights shall, at the discretion of the Company, be
issued from the Company's authorized but unissued shares of Common
Stock, be transferred from any available treasury stock, or be
purchased in the open market."
IN WITNESS WHEREOF, AmSouth Bancorporation has adopted and approved this
Amendment Number One to the 1989 AmSouth Bancorporation Long Term Incentive
Compensation Plan by act of its Board of Directors and has caused same to be
executed in its name and on its behalf this 23rd day of December, 1994.
AMSOUTH BANCORPORATION
BY /s/ John W. Woods
-----------------------
John W. Woods
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
/s/ Carl L. Gorday
---------------------
Assistant Secretary
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
------------------ -----------------
1994 1993 1994 1993
------------------ -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income................................ $ 1,355 $30,802 $127,290 $146,720
======== ========= ======== ========
Average shares of common stock outstand-
ing...................................... 58,030 51,628 56,527 50,848
======== ========= ======== ========
Earnings per common share................. $ 0.02 $ 0.60 $ 2.25 $ 2.89
======== ========= ======== ========
</TABLE>
<PAGE>
EXHIBIT 13
AMSOUTH BANCORPORATION'S 1994 ANNUAL REPORT TO SHAREHOLDERS, EXCLUDING
THE PORTIONS THEREOF NOT INCORPORATED BY REFERENCE IN THIS FORM 10-K
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MANAGEMENT'S STATEMENT ON RESPONSIBILITY
FOR FINANCIAL REPORTING
--------------------------------------------------------------------------------
The management of AmSouth is responsible for the content and integrity of
the financial statements and all other financial information included in this
annual report. Management believes that the financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis to reflect, in all material respects, the substance of events
and transactions that should be included, and that the other financial
information in the annual report is consistent with those financial statements.
The financial statements necessarily include amounts that are based on
management's best estimates and judgments.
Management maintains and depends upon AmSouth's accounting systems and
related systems of internal controls. The internal control systems are designed
to ensure that transactions are properly authorized and recorded in the
corporation's financial records and to safeguard the corporation's assets from
material loss or misuse. The corporation maintains an internal audit staff which
monitors compliance with the corporation's systems of internal controls and
reports to management and to the Audit Committee of the Board of Directors.
The Audit Committee of the Board of Directors, composed solely of outside
directors, has responsibility for recommending to the Board of Directors the
appointment of the independent auditors for AmSouth. The Audit Committee meets
periodically with the internal auditors and the independent auditors to review
the scope and findings of their respective audits. The internal auditors,
independent auditors and management each have full and free access to meet
privately as well as together with the Audit Committee to discuss internal
controls, accounting, auditing or other financial reporting matters.
The consolidated financial statements of AmSouth have been audited by
Ernst & Young LLP, independent auditors, who were engaged to express an opinion
as to the fairness of presentation of such financial statements.
/s/ John W. Woods /s/ M. List Underwood, Jr.
John W. Woods M. List Underwood, Jr.
Chairman of the Board Executive Vice President
and Chief Executive Officer and Controller
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TWENTY
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
Board of Directors
AmSouth Bancorporation
We have audited the accompanying consolidated statement of condition of
AmSouth Bancorporation and subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AmSouth
Bancorporation and subsidiaries at December 31, 1994 and 1993 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in Note A to the financial statements, in 1994 the
Corporation changed its method of accounting for investments in securities.
/s/ Ernst & Young LLP
Birmingham, Alabama
January 31, 1995
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TWENTY ONE
<PAGE>
------------------------------------- AMSOUTH
CONSOLIDATED STATEMENT OF CONDITION BANCORPORATION
------------------------------------- AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
--------------------------------
(Dollars in thousands) 1994 1993
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 616,639 $ 614,698
Federal funds sold and securities purchased under agreements to resell 152,525 171,952
Trading securities 6,383 94,844
Available-for-sale securities 383,039 -0-
Securities held for sale (market value of $1,303,097) -0- 1,293,989
Held-to-maturity securities (market value of $3,169,513 and $1,874,587, respectively) 3,336,557 1,823,317
Mortgage loans held for sale 130,223 335,435
Loans 11,496,121 8,611,708
Less: Allowance for loan losses 171,167 131,509
Unearned income 66,214 71,296
------------------------------------------------------------------------------------------------------------------------
Net loans 11,258,740 8,408,903
Premises and equipment, net 282,095 234,155
Customers' acceptance liability 6,979 6,264
Accrued interest receivable and other assets 604,771 486,064
------------------------------------------------------------------------------------------------------------------------
$16,777,951 $13,469,621
--------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand $ 1,902,310 $ 1,747,694
Interest-bearing demand 4,071,212 3,484,812
Savings 901,738 866,977
Time 5,384,469 3,520,768
Certificates of deposit of $100,000 or more 807,333 742,738
------------------------------------------------------------------------------------------------------------------------
Total deposits 13,067,062 10,362,989
Federal funds purchased and securities sold under agreements to repurchase 1,212,723 793,177
Other borrowed funds 656,117 667,318
Long-term debt 386,147 173,142
------------------------------------------------------------------------------------------------------------------------
Total deposits and interest-bearing liabilities 15,322,049 11,996,626
Acceptances outstanding 6,979 6,264
Accrued expenses and other liabilities 138,465 324,006
------------------------------------------------------------------------------------------------------------------------
Total liabilities 15,467,493 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 - 59,556,269 shares and 54,708,016 shares, respectively 59,556 54,708
Capital surplus 579,579 469,669
Retained earnings 703,121 645,465
Cost of common stock in treasury - 1,500,000 shares (24,173) (24,173)
Deferred compensation on restricted stock (3,031) (2,944)
Unrealized losses on available-for-sale securities, net of deferred taxes (4,594) -0-
------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,310,458 1,142,725
------------------------------------------------------------------------------------------------------------------------
$16,777,951 $13,469,621
-------------------------------
</TABLE>
See notes to consolidated financial statements.
TWENTY TWO
<PAGE>
------------------------------------ AMSOUTH
CONSOLIDATED STATEMENT OF EARNINGS BANCORPORATION
------------------------------------ AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------------------
(In thousands except per share data) 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE FROM EARNING ASSETS
Loans $ 793,956 $ 613,522 $ 542,449
Securities:
Trading securities 2,550 2,423 1,753
Available-for-sale securities 52,005 32,641 5,231
Held-to-maturity securities 183,985 171,213 200,950
----------------------------------------------------------------------------------------------------------------------------
Total securities 238,540 206,277 207,934
Mortgage loans held for sale 12,609 14,338 14,910
Federal funds sold and securities purchased
under agreements to resell 2,636 6,480 6,958
----------------------------------------------------------------------------------------------------------------------------
Total revenue from earning assets 1,047,741 840,617 772,251
----------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing demand deposits 118,952 86,218 94,702
Savings deposits 24,261 20,732 18,218
Time deposits 191,997 143,218 148,416
Certificates of deposit of $100,000 or more 33,751 30,686 34,641
Federal funds purchased and securities sold
under agreements to repurchase 65,009 32,241 27,167
Other borrowed funds 21,610 13,870 6,706
Long-term debt 24,834 12,361 11,856
----------------------------------------------------------------------------------------------------------------------------
Total interest expense 480,414 339,326 341,706
----------------------------------------------------------------------------------------------------------------------------
GROSS INTEREST MARGIN 567,327 501,291 430,545
Provision for loan losses 30,103 27,966 38,581
----------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN 537,224 473,325 391,964
----------------------------------------------------------------------------------------------------------------------------
NONINTEREST REVENUES
Service charges on deposit accounts 67,682 59,379 52,711
Trust income 46,121 41,659 40,069
Investment services income 14,036 19,835 16,875
Mortgage administration fees 22,518 18,178 17,392
Other operating revenues 28,664 65,018 46,107
----------------------------------------------------------------------------------------------------------------------------
Total noninterest revenues 179,021 204,069 173,154
----------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
Salaries and employee benefits 232,050 222,756 181,766
Net occupancy expense 46,770 36,537 32,524
Equipment expense 41,432 39,213 32,548
FDIC premiums 24,664 21,413 18,868
Foreclosed properties expense 4,721 (2,197) 22,426
Other operating expenses 173,268 141,109 112,416
----------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses 522,905 458,831 400,548
----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 193,340 218,563 164,570
Income taxes 66,050 71,843 47,977
----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 127,290 $ 146,720 $ 116,593
------------------------------------------
Average common shares outstanding 56,527 50,848 46,684
Earnings per common share $ 2.25 $ 2.89 $ 2.50
</TABLE>
See notes to consolidated financial statements.
TWENTY THREE
<PAGE>
------------------------------------ AMSOUTH
CONSOLIDATED STATEMENT OF BANCORPORATION
SHAREHOLDERS' EQUITY AND SUBSIDIARIES
------------------------------------
<TABLE>
<CAPTION>
Unrealized
Common Capital Retained Treasury Deferred Gains (Losses)
(In thousands) Stock Surplus Earnings Stock Compensation on Securities Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1992 $47,889 $287,884 $484,236 $(24,173) $(1,764) $ (29) $ 794,043
Net income -0- -0- 116,593 -0- -0- -0- 116,593
Cash dividends declared -0- -0- (45,529) -0- -0- -0- (45,529)
Stock dividends of acquired banks -0- 493 (493) -0- -0- -0- -0-
Unrealized losses on equity securities of acquired banks -0- -0- -0- -0- -0- (93) (93)
Common stock transactions:
Employee stock plans 482 8,529 -0- -0- (651) -0- 8,360
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 48,371 296,906 554,807 (24,173) (2,415) (122) 873,374
Balance at beginning of period for First Sunbelt
Bankshares, Inc. 537 5,288 2,828 -0- -0- -0- 8,653
Net income -0- -0- 146,720 -0- -0- -0- 146,720
Cash dividends declared -0- -0- (58,890) -0- -0- -0- (58,890)
Unrealized gains on equity securities of acquired banks -0- -0- -0- -0- -0- 122 122
Common stock transactions:
Employee stock plans 289 7,834 -0- -0- (529) -0- 7,594
Orange Banking Corporation convertible debt -0- 3,000 -0- -0- -0- -0- 3,000
Stock issued in purchase transactions 5,511 156,641 -0- -0- -0- -0- 162,152
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 54,708 469,669 645,465 (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- 127,290 -0- -0- -0- 127,290
Cash dividends declared -0- -0- (80,865) -0- -0- -0- (80,865)
Common stock transactions:
Employee stock plans 304 8,402 -0- -0- (87) -0- 8,619
Acquisition of Fortune Bancorp, Inc. 4,474 121,363 -0- -0- -0- -0- 125,837
Purchase and retirement of common stock (1,000) (29,047) -0- -0- -0- -0- (30,047)
Unrealized losses on available-for-sale securities,
net of deferred taxes -0- -0- -0- -0- -0- (4,594) (4,594)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 $59,556 $579,579 $703,121 $(24,173) $(3,031) $(4,594) $1,310,458
---------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
TWENTY FOUR
<PAGE>
-------------------------------------- AMSOUTH
CONSOLIDATED STATEMENT OF CASH FLOWS BANCORPORATION
-------------------------------------- AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31
----------------------------------------
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 127,290 $ 146,720 $ 116,593
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Provision for loan losses 30,103 27,966 38,581
Provision for foreclosed property losses (recoveries) 1,748 (3,038) 16,059
Depreciation and amortization of premises and equipment 24,714 24,378 18,036
Amortization of premiums and discounts on held-to-maturity securities
and available-for-sale securities (1,446) 2,045 1,828
Net decrease (increase) in mortgage loans held for sale 221,642 (99,567) (95,543)
Net decrease (increase) in trading securities 89,281 (56,198) 2,847
Net losses (gains) on sales of available-for-sale securities 26,642 (13,057) (1,009)
Net gains on calls and sales of held-to-maturity securities (354) (1,591) (4,693)
Net decrease in accrued interest receivable and other assets 155,597 289,566 14,971
Net (decrease) increase in accrued expenses and other liabilities (293,437) 57,387 (344,842)
Provision (benefit) for deferred income taxes 19,681 (9,656) (7,487)
Amortization of intangible assets 26,537 16,894 13,673
Other (1,528) 2,191 1,123
------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 426,470 384,040 (229,863)
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of available-for-sale securities 332,288 220,096 14,567
Proceeds from sales of available-for-sale securities 1,650,528 913,633 686,238
Purchases of available-for-sale securities (545,757) (1,205,083) (506,513)
Proceeds from maturities, prepayments and calls of held-to-maturity securities 348,144 978,570 996,238
Proceeds from sales of held-to-maturity securities -0- 89,045 242,185
Purchases of held-to-maturity securities (1,481,636) (738,471) (1,490,369)
Net decrease in federal funds sold and securities purchased under
agreements to resell 32,245 87,944 197,646
Net increase in loans (1,347,994) (670,902) (449,894)
Net purchases of premises and equipment (39,916) (49,900) (39,357)
Net cash used for acquisitions (109,351) (28,382) -0-
------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (1,161,449) (403,450) (349,259)
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits and savings accounts 91,767 (234,651) 485,115
Net increase (decrease) in time deposits 769,758 318,036 (387,003)
Net (decrease) increase in federal funds purchased and securities sold under
agreements to repurchase (59,603) (271,613) 416,820
Net increase in other borrowed funds 20,779 274,160 138,312
Issuance of long-term debt 149,084 21,500 -0-
Payments for maturing long-term debt (138,965) (14,323) (7,416)
Cash dividends paid (80,823) (58,922) (45,535)
Proceeds from employee stock plans 6,745 6,616 7,664
Purchase and retirement of common stock (30,047) -0- -0-
------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 728,695 40,803 607,957
------------------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (6,284) 21,393 28,835
Cash and cash equivalents at beginning of year 614,698 589,084 560,249
Beginning consolidated cash balances of immaterial pooling-of-interests entities 8,225 4,221 -0-
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 616,639 $ 614,698 $ 589,084
-----------------------------------------
</TABLE>
See notes to consolidated financial statements.
TWENTY FIVE
<PAGE>
-------------------------------------------- AMSOUTH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS BANCORPORATION
-------------------------------------------- AND SUBSIDIARIES
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of AmSouth
Bancorporation (AmSouth) and the methods of applying those policies which
materially affect the accompanying financial statements are presented below.
BASIS OF PRESENTATION 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 acquisition.
CASH FLOWS For the Consolidated Statement of Cash Flows, AmSouth has defined
cash and cash equivalents as those amounts included in the Consolidated
Statement of Condition caption as "Cash and due from banks." For the years ended
December 31, 1994, 1993 and 1992, AmSouth paid interest of $467,791,000,
$313,593,000 and $321,180,000, respectively. For the years ended December 31,
1994, 1993, and 1992, noncash transfers from loans to foreclosed properties were
$28,184,000, $11,422,000 and $15,094,000, respectively. Noncash transfers from
foreclosed properties to loans for the years ended December 31, 1994, 1993, and
1992 were $3,773,000, $16,384,000 and $22,635,000, respectively. For the years
ended December 31, 1993 and 1992, noncash transfers from investment securities
to securities held for sale were $755,421,000 and $428,533,000, respectively.
Transactions related to securities held for sale in years prior to 1994 have
been reclassified from operating activities to investing activities.
SECURITIES AmSouth adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (Statement
115), on January 1, 1994. The statement generally requires that debt and equity
securities that have readily determinable market values be carried at fair value
unless they are intended to be held to maturity. AmSouth defines held-to-
maturity securities as debt securities which management has the positive intent
and ability to hold to maturity. Held-to-maturity securities are stated at cost,
adjusted for amortization of premiums and accretion of discounts on the constant
effective yield method. Trading securities are carried at market. Market
adjustments and realized gains or losses on the sale of trading securities are
reported as other operating revenues. Available-for-sale securities are defined
as equity securities and debt securities not classified as trading securities or
held-to-maturity securities. Available-for-sale securities are carried at fair
value. Unrealized holding gains or losses, net of deferred taxes, on available-
for-sale securities are excluded from earnings and reported as a separate
component of shareholders' equity. AmSouth determines the appropriate
classification of debt securities at the time of purchase. The cost of
securities is based on the specific identification method. The categories
defined as securities held for sale and investment securities in years prior to
the adoption of Statement 115 are reported as available-for-sale securities and
held-to-maturity securities, respectively.
MORTGAGE LOANS HELD FOR SALE Mortgage loans held for sale are carried at the
lower of aggregate cost or market value. Monthly market adjustments and realized
gains and losses are classified as other operating revenues.
INTEREST RATE CONTRACTS AND OTHER OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
AmSouth, from time to time, enters into interest rate contracts which are
designated to hedge imbalances in sensitivity to fluctuating interest rates
among certain assets and liabilities. These contracts continue to be accounted
for as hedges as long as they remain effective. Any gains or losses
TWENTY SIX
<PAGE>
realized are deferred and amortized as yield/rate adjustments of the hedged
assets or liabilities over the original life of the contract. Any realized gains
and losses on futures and forward contracts that qualify as hedges are deferred
and recognized as an adjustment of the carrying amount of the hedged asset or
liability or anticipated transaction. Interest rate swaps and futures and
forward contracts used for trading purposes are recorded at market value. Market
adjustments are reported as other operating revenues.
LOANS Interest income on commercial and real estate loans is accrued daily based
upon the outstanding principal amounts except for those classified as nonaccrual
loans. Interest income on certain consumer loans is accrued monthly based upon
the outstanding principal amounts except for those classified as nonaccrual
loans. Interest accrual is discontinued when it appears that future collection
of principal or interest according to the contractual terms may be doubtful.
Interest collections on nonaccrual loans for which the ultimate collectibility
of principal is uncertain are applied as principal reductions. Otherwise, such
collections are credited to income when received.
ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is maintained at a level
which is considered adequate to provide for potential losses based upon
management's evaluation of known and inherent risk characteristics of the loan
portfolio, the fair value of underlying collateral, recent loan loss experience,
current economic conditions, and other pertinent factors. A provision for loan
losses is charged to operations based on management's periodic evaluation of
these risks.
In May 1993, the Financial Accounting Standards Board (FASB) 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). Statement 114 generally will require all creditors
to account for impaired loans, except those loans that are accounted for at fair
value or at the lower of cost or fair value, at the present value of the
expected future cash flows discounted at the loan's effective interest rate or
if collateral dependent, at the fair value of the underlying collateral.
Statement 114, when adopted on January 1, 1995, is not expected to have a
material impact on AmSouth's financial condition or results of operations.
PREMISES AND EQUIPMENT Premises and equipment are stated at cost, less
accumulated depreciation and amortization. The provisions for depreciation and
amortization are computed generally by the straight-line method over the
estimated useful lives of the assets or terms of the leases, as applicable. The
annual provisions for depreciation and amortization have been computed
principally using estimated lives of five to forty years for premises and three
to ten years for furniture and equipment.
FORECLOSED PROPERTIES Foreclosed properties, including in-substance
foreclosures, are carried at the lower of the estimated net realizable value or
cost and are included in other assets, net of the allowance for foreclosed
property losses. For the years ended December 31, 1994, 1993, and 1992, a
provision/ (reduction) of $1,748,000, $(3,038,000) and $16,059,000 was
charged/(credited) to expense and write downs of properties charged to the
allowance totaled $2,018,000, $3,097,000 and $17,339,000, respectively. At
December 31, 1994, 1993, and 1992, the allowance had a balance of $3,638,000,
$3,908,000, and $7,520,000, respectively.
INTANGIBLE ASSETS Intangible assets, primarily goodwill and purchased mortgage
servicing rights, are included in other assets. Goodwill is amortized on a
straight-line basis primarily over twenty to twenty-five years. The carrying
value of goodwill will be reviewed if the facts and circumstances suggest that
it may be impaired. If this review indicates that goodwill will not be
recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization
TWENTY SEVEN
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
period, AmSouth's carrying value of the goodwill will be reduced by the
estimated shortfall of such cash flows. At December 31, 1994 and 1993, goodwill
totaled $286,400,000 and $130,867,000, respectively. Purchased mortgage
servicing rights are amortized over the estimated average lives of the related
loans. At December 31, 1994 and 1993, purchased mortgage servicing rights
totaled $64,387,000 and $32,649,000, respectively.
INCOME TAXES The consolidated financial statements have been prepared on the
accrual basis. When income and expenses are recognized in different periods for
financial reporting purposes and for purposes of computing income taxes
currently payable, deferred taxes are provided on such temporary differences.
Effective January 1, 1993, AmSouth adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (Statement 109). Under
Statement 109 deferred tax assets and liabilities are recognized for the
expected future tax consequences of events that have been recognized in the
financial statements or tax returns. Deferred tax assets and liabilities are
measured using the enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be realized or
settled. Prior years' financial statements have not been restated to apply the
provisions of Statement 109. The adoption of Statement 109 did not have a
material impact on AmSouth's financial condition or results of operations.
PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFIT PLANS AmSouth has a pension
plan for the benefit of substantially all regular, full-time employees. The plan
is trusteed and noncontributory. Costs of AmSouth's pension plan are actuarially
determined by the projected unit credit method with actuarial gains or losses
recognized each year and amortized separately.
AmSouth adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting For Postretirement Benefits Other than Pensions" (Statement 106) as
of January 1, 1993. Statement 106 requires employers to recognize postretirement
benefits on an accrual basis during the periods employees provide services to
earn those benefits. As permitted under Statement 106, AmSouth chose to amortize
the transition postretirement benefit obligation of approximately $4,400,000
over a 20 year period on a straight line basis.
AmSouth adopted Statement of Financial Accounting Standards No. 112, "Employers'
Accounting For Postemployment Benefits" (Statement 112) as of January 1, 1994.
Statement 112 requires employers who provide benefits to former or inactive
employees after employment but before retirement to recognize the obligation of
postemployment benefits on an accrual basis over the related service period. The
adoption of Statement 112 did not have a material impact on the financial
condition or results of operations of AmSouth.
EARNINGS PER COMMON SHARE Earnings per common share are based on the average
outstanding shares of common stock excluding treasury stock. The effects of
stock options outstanding and convertible debentures are immaterial to the
calculation of earnings per common share.
TWENTY EIGHT
<PAGE>
NOTE B
BUSINESS COMBINATIONS On June 23, 1994, AmSouth completed the acquisition of
Fortune Bancorp, Inc. (Fortune), which was accounted for using the purchase
method of accounting, through the issuance of approximately 4,474,000 shares of
common stock and payment of approximately $144.6 million in cash. AmSouth
subsequently purchased and retired 1,000,000 shares of common stock for the sole
purpose of replenishing shares issued in connection with this purchase. Fortune
had approximately $2.6 billion in consolidated assets at the date of
acquisition. Approximately $167.0 million of goodwill resulting from the
acquisition is being amortized on a straight line basis over 20 years.
The operating results of Fortune are included in AmSouth's consolidated
statement of earnings since the date of acquisition. The following unaudited pro
forma summary presents certain categories 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>
Years Ended December 31
---------------------------
(In thousands except per share amounts) 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Gross interest margin $ 599,431 $ 597,370
Noninterest revenues 184,574 214,894
Net income 111,345 144,248
Earnings per common share 1.92 2.56
</TABLE>
During the year ended December 31, 1994, AmSouth completed the following
business combinations which were accounted for using the pooling-of-interests
method of accounting:
<TABLE>
<CAPTION>
Common
Consolidated Shares
(In thousands) Location Date Assets Issued
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Orange Banking
Corporation (Orange) Orlando, FL January $ 354,000 1,332
FloridaBank,
A Federal Savings
Bank (FloridaBank) Jacksonville, FL February 272,000 759
Citizens National
Corporation
(Citizens) Naples, FL April 313,000 1,604
Parkway Bancorp, Inc.
(Parkway) Fort Myers, FL April 130,000 629
First Federal Savings Bank
(Calhoun) Calhoun, GA April 72,000 442
</TABLE>
AmSouth's 1994 consolidated financial statements include Orange, FloridaBank,
Citizens, Parkway, and Calhoun for the entire year. AmSouth's consolidated
financial statements for all periods prior to 1994 have been restated to include
Orange, FloridaBank and Citizens, but have not been restated to include Parkway
and Calhoun, the effect of which is not material to AmSouth's financial
condition or results of operations. Gross interest margin, noninterest revenues,
net income, and earnings per common share have been restated for 1993 and 1992
as follows:
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------
(In thousands except per share amounts) 1993 1992
---------------------------------------------------------------------------
<S> <C> <C>
AmSouth as originally reported:
Gross interest margin $ 462,077 $ 393,437
Noninterest revenues 194,361 164,249
Net income 146,227 108,049
Earnings per common share 3.10 2.51
As restated:
Gross interest margin 501,291 430,545
Noninterest revenues 204,069 173,154
Net income 146,720 116,593
Earnings per common share 2.89 2.50
</TABLE>
AmSouth has signed an agreement to acquire Community Federal Savings Bank
(Community), headquartered in Ft. Oglethorpe, Georgia. At December 31, 1994,
Community had total assets of approximately $107.0 million. Under the terms of
TWENTY NINE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
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.
The transaction is expected to close in the first quarter of 1995.
During the year ended December 31, 1993, AmSouth completed the following
acquisitions which were accounted for using the purchase method of accounting:
<TABLE>
<CAPTION>
Common
Consolidated Shares Cash
(In thousands) Location Assets Issued Paid
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Chattanooga
Financial Corporation
(FCFC) Chattanooga, TN $1,000,000 3,470 $2,800
Charter Banking
Corporation (Charter) St. Petersburg, FL 105,000 -0- 12,800
Mid-State Federal
Savings Bank
(Mid-State) Ocala, FL 734,000 2,041 32,200
</TABLE>
The resulting goodwill from the acquisitions of FCFC, Charter, and Mid-State of
$59.7 million is being amortized on a straight line basis over 20 years. The
operating results of these acquisitions are included in AmSouth's consolidated
statement of earnings since the date of acquisition.
During the year ended December 31, 1993, AmSouth completed the following
business combinations which were accounted for using the pooling-of-interests
method of accounting:
<TABLE>
<CAPTION>
Common
Consolidated Shares
(In thousands) Location Assets Issued
-------------------------------------------------------------------
<S> <C> <C> <C>
Mickler Corporation/
The First National
Bank of Clearwater Clearwater, FL $ 436,000 2,987
First Sunbelt
Bankshares, Inc. Rome, GA 102,000 537
</TABLE>
NOTE C
CASH AND DUE FROM BANKS AmSouth's banking subsidiaries are required to maintain
average reserve balances with the Federal Reserve Bank based on a percentage of
deposits. The average amount of those reserves for the year ended December 31,
1994 was approximately $141,000,000.
NOTE D
AVAILABLE-FOR-SALE SECURITIES The following is a summary of available-for-sale
securities at December 31:
<TABLE>
<CAPTION>
1994
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Carrying
(In thousands) Cost Gains Losses Amount
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities $150,829 $ 53 $ 631 $ 150,251
Mortgage-backed
securities 178,105 328 6,953 171,480
Equity securities 56,614 150 -0- 56,764
Other debt
securities 4,793 2 251 4,544
------------------------------------------------------------------------
$390,341 $ 533 $7,835 $ 383,039
---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1993
---------------------------------------------
Gross Gross
Carrying Unrealized Unrealized Market
(In thousands) Amount Gains Losses Value
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities $ 449,931 $1,396 $ 632 $ 450,695
Mortgage-backed
securities 805,067 8,367 199 813,235
Equity securities 36,801 174 -0- 36,975
Other debt
securities 2,190 2 -0- 2,192
------------------------------------------------------------------------
$1,293,989 $9,939 $ 831 $1,303,097
---------------------------------------------
</TABLE>
The carrying amount and amortized cost of available-for-sale securities by
maturity at December 31, 1994, were as follows:
<TABLE>
<CAPTION>
Amortized Carrying
(In thousands) Cost Amount
------------------------------------------------------------------------
<S> <C> <C>
Due within 1 year $ 2,439 $ 2,437
Due after 1 year through 5 years 152,705 151,887
Due after 5 years through 10 years -0- -0-
Due after 10 years 478 471
Mortgage-backed securities 178,105 171,480
Equity securities 56,614 56,764
------------------------------------------------------------------------
$390,341 $383,039
---------------------
</TABLE>
THIRTY
<PAGE>
Sales of available-for-sale securities were $1,657,755,000 and $1,004,553,000,
during 1994 and 1993, respectively. Gross gains of $4,584,000 and $13,991,000
and gross losses of $31,226,000 and $934,000 were realized on these sales for
1994 and 1993, respectively.
Available-for-sale securities with a carrying amount of $173,556,000 and
$487,431,000 at December 31, 1994 and 1993, respectively, were pledged for
collateral for public funds and trust deposits.
NOTE E
HELD-TO-MATURITY SECURITIES The amounts at which held-to-maturity securities are
carried and their approximate fair market values at December 31 are summarized
as follows:
<TABLE>
<CAPTION>
1994
---------------------------------------------
Gross Gross
Carrying Unrealized Unrealized Market
(In thousands) Amount Gains Losses Value
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities $ 505,006 $ 255 $ 31,819 $ 473,442
State, county and
municipal
securities 293,248 10,633 631 303,250
Mortgage-backed
securities 2,531,753 213 145,607 2,386,359
Other securities 6,550 2 90 6,462
---------------------------------------------------------------------
$3,336,557 $11,103 $178,147 $3,169,513
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1993
---------------------------------------------
Gross Gross
Carrying Unrealized Unrealized Market
(In thousands) Amount Gains Losses Value
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities $ 218,207 $ 8,393 $ 23 $ 226,577
State, county and
municipal
securities 353,054 27,802 122 380,734
Mortgage-backed
securities 1,216,628 18,736 3,455 1,231,909
Other securities 35,428 33 94 35,367
---------------------------------------------------------------------
$1,823,317 $54,964 $3,694 $1,874,587
----------------------------------------------
</TABLE>
The carrying amount and approximate market value of held-to-maturity securities
by maturity at December 31, 1994, were as follows:
<TABLE>
<CAPTION>
Carrying Market
(In thousands) Amount Value
---------------------------------------------------------------------
<S> <C> <C>
Due within 1 year $ 248,756 $ 233,827
Due after 1 year through 5 years 362,879 358,193
Due after 5 years through 10 years 137,917 134,325
Due after 10 years 55,252 56,809
Mortgage-backed securities 2,531,753 2,386,359
---------------------------------------------------------------------
$3,336,557 $3,169,513
------------------------
</TABLE>
Sales of held-to-maturity securities were $87,454,000 during 1993 resulting in
gross gains of $1,717,000 and gross losses of $126,000. Gains on calls of held-
to-maturity securities were $354,000 in 1994.
Held-to-maturity securities with a carrying amount of $1,235,597,000 and
$1,028,546,000 at December 31, 1994 and 1993, respectively, were pledged as
collateral for public funds and trust deposits.
NOTE F
LOANS The major categories of loans at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------------------------
(Dollars in thousands) Amount Percent Amount Percent
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $ 2,699,315 23.5% $2,460,922 28.6%
Commercial
real estate:
Commercial real
estate mortgage 1,370,877 11.9 1,217,465 14.1
Real estate
construction 540,722 4.7 415,670 4.8
---------------------------------------------------------------------------
Total commercial
real estate 1,911,599 16.6 1,633,135 18.9
---------------------------------------------------------------------------
Consumer:
Residential first
mortgages 4,275,570 37.2 2,488,462 28.9
Other residential
mortgages 632,073 5.5 511,604 5.9
Dealer indirect 886,872 7.7 599,031 7.0
Other consumer 1,090,692 9.5 918,554 10.7
---------------------------------------------------------------------------
Total consumer 6,885,207 59.9 4,517,651 52.5
---------------------------------------------------------------------------
$11,496,121 100.0% $8,611,708 100.0%
------------------------------------------
</TABLE>
At December 31, 1994 and 1993, nonaccrual and restructured loans totaled
$102,748,000 and $55,440,000, respectively. The amount of interest income
actually recognized on these loans during 1994 and 1993 was $733,000 and
$294,000,
THIRTY ONE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
respectively. The additional amount of interest income that would have been
recorded during 1994 and 1993 if the above amounts had been current in
accordance with their original terms was $6,174,000 and $3,752,000,
respectively.
Certain directors of AmSouth and its significant subsidiaries, including their
immediate families and companies in which they are principal owners, were loan
customers of AmSouth during 1994 and 1993. Such loans are made in the ordinary
course of business at normal credit terms, including interest rates and
collateral, and do not represent more than a normal risk of collection. Total
loans to these persons at December 31, 1994 and 1993 amounted to $73,875,000 and
$84,225,000, respectively. Activity during 1994 in loans to related parties
resulted in additions of $136,319,000 representing new loans, reductions of
$147,467,000 representing payments, and net additions of $798,000 representing
other changes.
NOTE G
ALLOWANCE FOR LOAN LOSSES A summary of changes in the allowance for loan
losses is shown below:
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $131,509 $ 99,646 $ 95,392
Loans charged off (43,929) (36,369) (46,040)
Recoveries of loans previously
charged off 17,034 16,621 11,713
----------------------------------------------------------------------
Net charge-offs (26,895) (19,748) (34,327)
Addition to allowance charged
to expense 30,103 27,966 38,581
Allowance acquired in bank
purchases 36,450 23,645 -0-
----------------------------------------------------------------------
Balance at December 31 $171,167 $131,509 $ 99,646
-----------------------------------
</TABLE>
NOTE H
PREMISES AND EQUIPMENT Premises and equipment at December 31 are summarized
as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Land $ 54,543 $ 37,172
Buildings 163,917 145,038
Furniture and fixtures 56,080 49,997
Equipment 146,572 109,373
Leasehold improvements 40,070 35,821
----------------------------------------------------------------------
461,182 377,401
Less allowances for depreciation
and amortization 179,087 143,246
----------------------------------------------------------------------
$282,095 $234,155
----------------------
</TABLE>
NOTE I
DEPOSITS The aggregate amount of time deposits of $100,000 or more, excluding
certificates of deposit of $100,000 or more, in domestic bank offices at
December 31, 1994 and 1993 were $92,065,000 and $181,841,000, respectively.
NOTE J
OTHER BORROWED FUNDS Other borrowed funds at December 31 is summarized as
follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
---------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank advances $ 257,200 $ 94,250
Eurodollars purchased 136,039 11,194
Treasury, tax and loan notes 129,221 330,963
Term federal funds purchased 124,000 130,000
Commercial paper 1,786 1,968
Current portion of long-term debt 253 150
Securities sold short -0- 90,361
Other short-term debt 7,618 8,432
---------------------------------------------------------------------
$656,117 $667,318
---------------------
</TABLE>
THIRTY TWO
<PAGE>
At December 31, 1994, AmSouth had a line of credit arrangement for short-term
debt with a bank enabling the parent company to borrow up to $1,000,000 subject
to such terms as AmSouth and the bank may mutually agree. This arrangement is
reviewed annually for renewal of the credit line. AmSouth pays commitment fees
of 1/4% per annum on the line which is available solely to support commercial
paper borrowings. The line of credit was not in use at December 31, 1994.
Short-term advances from the Federal Home Loan Bank had interest rates ranging
from 4.23% to 6.37% at December 31, 1994. Remaining interest-bearing balances at
December 31, 1994, had interest rates ranging from 3.03% to 9.00%, and
substantially all of these balances had interest rates below 6.50%.
NOTE K
LONG-TERM DEBT Long-term debt at December 31 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
-------------------------------------------------------------------
<S> <C> <C>
7 3/4% Subordinated Notes Due 2004 $149,137 $ -0-
Federal Home Loan Bank advances 103,093 38,472
Subordinated Capital Notes Due 1999 99,440 99,311
Floating Rate Notes Due 1999 7,474 7,951
7 1/2% Convertible Subordinated Debentures 3,819 3,598
Long-term notes payable 23,184 23,810
-------------------------------------------------------------------
$386,147 $173,142
--------------------
</TABLE>
The 7 3/4% Subordinated Notes Due 2004 were issued May 19, 1994 at a discounted
price of 99.389%. The net proceeds to AmSouth after commissions totaled
$148,100,000. The notes will mature on May 15, 2004 and are not redeemable prior
to maturity.
Advances from the Federal Home Loan Bank had maturities ranging from 1996 to
2013 and interest rates ranging from 3.00% to 9.30%. Of the balance outstanding
at December 31, 1994, $79,629,000 had interest rates below 6.00%.
The Subordinated Capital Notes Due 1999 were issued in 1987 at a discounted
price of 99.125%. The net proceeds to AmSouth after commissions totaled
$98,450,000 for an effective rate to maturity of 9.60%. The notes will mature on
May 1, 1999 and will be repaid with either equity securities with a market value
of $100,000,000 or with cash generated from the sale of equity securities.
The average outstanding balance and average interest rate for 1994 on the
Floating Rate Notes Due 1999 were $7,647,000 and 4.60%, respectively. The rate
per annum for each semiannual period is the higher of one percent above the
three month Treasury Bill rate or a rate fixed by AmSouth. The interest rate
payable for the period ending February 28, 1995 is 5.50%. The notes are
redeemable at the option of the holder on any March 1 or September 1 at their
principal amount plus accrued interest.
The 7 1/2% Convertible Subordinated Debentures, due 2001, are redeemable on
August 1, 1996 and debentureholders may thereafter elect, during the 30-day
period following the call, to convert their debentures into either $170.91 cash
per $100 principal amount, or 17.18199 shares of AmSouth common stock (maximum
of 419,103 shares) or a combination of each. The redemption premium is being
amortized to August 1, 1996.
Long-term notes payable at December 31, 1994, included $22,884,000 of notes
maturing from 1997 to 2017 with interest rates ranging from 5.20% to 5.75%. The
remaining $300,000 of notes will mature in 1997 with an interest rate of 9.00%.
THIRTY THREE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
The aggregate maturities of long-term debt outstanding at December 31, 1994
are summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
---------------------------------------------------------------------
<S> <C>
1995 $ 253
1996 87,760
1997 13,596
1998 124
1999 107,045
Thereafter 177,622
---------------------------------------------------------------------
386,400
Less current portion of long-term debt 253
---------------------------------------------------------------------
$386,147
--------
</TABLE>
NOTE L
OFF-BALANCE SHEET FINANCIAL AGREEMENTS AmSouth enters into a variety of
financial instrument agreements to help customers manage their exposure to
interest rate and foreign currency fluctuations, and finance international
activities. AmSouth also uses similar instruments to manage its exposure to
changes in interest and foreign exchange rates, as well as to profit from
arbitrage opportunities.
Futures and forward contracts provide customers and AmSouth a means of managing
the risks of changing interest and foreign exchange rates. These contracts
represent commitments either to purchase or sell securities, other money market
instruments, or foreign currency at a future date and at a specified price.
AmSouth is subject to the market risk associated with changes in the value of
the underlying financial instrument as well as the risk that another party will
fail to perform. The gross contract amount of futures and forward contracts
represents the extent of AmSouth's involvement. However, those amounts
significantly exceed the future cash requirements as AmSouth intends to close
out open trading positions prior to settlement and thus is subject only to the
change in value of the instruments. The gross amount of contracts represents
AmSouth's maximum exposure to credit risk.
Interest rate swaps are agreements to exchange interest payments computed on
notional amounts. Swaps subject AmSouth to market risk associated with changes
in interest rates, as well as the risk that another party will fail to perform.
Interest rate caps and floors are contracts in which a counterparty pays or
receives a cash payment from another counterparty if a floating rate index rises
above or falls below a predetermined level.
Market risk resulting from a position in a particular off-balance sheet
financial instrument may be offset by other on- or off-balance sheet
transactions. AmSouth monitors overall sensitivity to interest rate changes by
analyzing the net effect of potential changes in interest rates on the market
value of both on- and off-balance sheet financial instruments and the related
future cash flow streams. AmSouth manages the credit risk of counterparty
defaults in these transactions by limiting the total amount of arrangements
outstanding, both by individual counterparty and in the aggregate, and by
monitoring the size and maturity structure of the off-balance sheet portfolio.
The following table identifies the gross contract or notional amounts of off-
balance sheet financial instruments at December 31:
<TABLE>
<CAPTION>
(In millions) 1994 1993
-----------------------------------------------------------------------
<S> <C> <C>
Forward contracts-commitments to sell $ 77.5 $ 338.0
Notional amount of interest rate swaps:
Receive fixed rate 27.8 218.6
Receive variable rate 27.8 1,053.6
Notional amount of interest rate caps and floors 448.2 1,034.7
Forward foreign exchange contracts:
Commitments to purchase 24.3 16.1
Commitments to sell 26.9 18.8
Written options sold 80.0 97.0
Written options purchased 23.6 -0-
</TABLE>
THIRTY FOUR
<PAGE>
The notional amounts of interest rate contracts used by AmSouth to hedge balance
sheet items at December 31 are shown below:
<TABLE>
<CAPTION>
(In millions) 1994 1993
----------------------------------------------------------------
<S> <C> <C>
Securities $-0- $ 325
Loans 300 300
Federal funds purchased and securities
sold under agreements to repurchase 90 705
Deposits 50 900
----------------------------------------------------------------
$440 $2,230
-----------------
</TABLE>
During 1994 AmSouth terminated all non-customer interest rate swaps, and
$915,000,000 of interest rate caps. Interest rate swaps held for trading
purposes for a portion of 1994, resulted in a fourth quarter realized loss of
$16,372,000 which is included in other operating revenues. The average fair
value of these interest rate swaps during the period in which they were held for
trading purposes represented a liability of approximately $26.5 million. The
amortization of deferred loss related to closed interest rate contracts and
included in the gross interest margin was $2,400,000 in 1994. The amount of
amortized deferred loss to be recognized over the remaining lives of the
contracts is $10,296,000, $6,559,000 and $292,000 for 1995, 1996 and 1997,
respectively.
NOTE M
COMMITMENTS AND CONTINGENCIES AmSouth and its subsidiaries lease land, premises,
and equipment under cancellable and noncancellable leases some of which contain
renewal options under various terms. The leased properties are used primarily
for banking purposes.
The total rental expense on operating leases for the years ended December 31,
1994, 1993 and 1992 was $32,693,000, $24,893,000 and $24,865,000, respectively.
There were no material contingent rental expenses for 1994, 1993, or 1992.
Future minimum payments, by year and in the aggregate, for noncancellable
operating leases with initial or remaining terms of one year or more consisted
of the following at December 31, 1994:
<TABLE>
<CAPTION>
(In thousands)
-------------------------------------------------------
<S> <C>
1995 $ 27,839
1996 26,191
1997 23,708
1998 21,887
1999 19,718
Thereafter 224,621
-------------------------------------------------------
$ 343,964
---------
</TABLE>
During 1994 AmSouth entered into a transaction to sell and leaseback certain
property in conjunction with the construction of an administration facility in
the Birmingham, Alabama area. The future minimum rental payments are included in
the table above. A related party has a contract to construct the administration
facility. This contract represents approximately $56.0 million of the estimated
total construction cost of $92.0 million. Funds in the amount of approximately
$32.0 million have been expended on the related party contract and total funds
in the amount of approximately $50.0 million have been expended on the
construction project through December 31, 1994. Subsequent to December 31, 1994,
AmSouth entered into an agreement to sublease a portion of the facility. The
rental payments received by AmSouth will reduce the future minimum payments
presented in the table above.
AmSouth and its subsidiaries are contingently liable with respect to various
loan commitments and other contingent liabilities in the normal course of
business. AmSouth's maximum exposure to credit loss for loan commitments
(unfunded loans and unused lines of credit), standby letters of credit, loans
sold with recourse, and securities underwriting at December 31, 1994 was as
follows:
<TABLE>
<CAPTION>
(In millions)
-------------------------------------------------------
<S> <C>
Commitments to extend credit $5,435.3
Standby letters of credit 569.6
Loans sold with recourse 37.6
Securities underwriting 43.2
</TABLE>
THIRTY FIVE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
The credit risk associated with loan commitments and standby letters of credit
is essentially the same as that involved in extending loans to customers and is
subject to the company's credit policies. Collateral is obtained based on
management's assessment of the customer.
Various legal proceedings are pending against AmSouth and its subsidiaries.
Based upon legal counsel's opinion, management considers that any liability
resulting from various legal proceedings would not have a material impact on the
financial condition or results of operations of AmSouth.
NOTE N
SHAREHOLDERS' EQUITY AmSouth offers a Dividend Reinvestment and Common Stock
Purchase Plan, whereby shareholders can reinvest dividends to acquire shares of
common stock. Shareholders may also invest additional cash up to $5,000 per
quarter with no brokerage commissions or fees charged.
On June 15, 1989, AmSouth's Board of Directors approved a Stockholder Protection
Rights Agreement and distributed Rights to common shareholders. Each Right
entitles its registered holder, upon occurrence of certain events, to purchase
from AmSouth one one-hundredth of a share of Series A Preferred Stock, without
par value, for $115, subject to adjustment. The Rights will be exercisable only
if a person or group acquires 15% or more of AmSouth's common stock or commences
a tender offer that will result in such person or group owning 15% or more of
AmSouth's common stock. The Rights may be redeemed by action of the Board of
Directors for one cent per Right.
At the Annual Meeting of Shareholders on April 15, 1993, an amendment of
AmSouth's Restated Certificate of Incorporation to increase the authorized
common stock, $1.00 par value, from 75,000,000 to 200,000,000 shares was
approved.
During 1994, AmSouth purchased and retired 1,000,000 shares of AmSouth common
stock at a cost of $30,047,000 for the sole purpose of replenishing shares
issued by AmSouth in connection with its acquisition of Fortune.
At December 31, 1994, there were 989,146 shares reserved for issuance under the
Dividend Reinvestment and Common Stock Purchase Plan, 1,423,904 shares reserved
for issuance under stock compensation plans and 170,426 shares reserved for
issuance under the employee stock purchase plan for a total of 2,583,476 shares.
As disclosed in Note B, approximately 8,240,000 and 9,035,000 shares of AmSouth
common stock, net of shares reacquired, were issued for various acquisitions
that were consummated during 1994 and 1993, respectively.
NOTE O
LONG-TERM INCENTIVE COMPENSATION PLAN AmSouth has long-term incentive
compensation plans which permit the granting of incentive awards in the form of
stock options, restricted stock awards, and stock appreciation rights.
The following table summarizes the activity relating to stock options during
1992, 1993 and 1994:
<TABLE>
<CAPTION>
Number
of Shares Option Price per Share
-------------------------------------------------------------------------
<S> <C> <C>
Balance at January 1, 1992 1,275,535 $10.17 -$22.00
Options exercised (404,773) 10.17 - 22.00
Options forfeited (2,500) 26.50
Options granted 200,900 26.50
-------------------------------------------
Balance at December 31, 1992 1,069,162 13.42 - 26.50
Options exercised (191,488) 13.42 - 26.50
Options forfeited (13,570) 15.92 - 29.75
Options granted 196,100 28.38 - 29.75
-------------------------------------------
Balance at December 31, 1993 1,060,204 15.75 - 29.75
Options assumed in business
combinations 72,748 4.53 - 17.34
Options exercised (188,422) 6.96 - 29.75
Options forfeited (54,800) 16.67 - 31.25
Options granted 324,750 29.63 - 31.50
-------------------------------------------
Balance at December 31, 1994 1,214,480 $ 4.53 -$31.50
---------
</TABLE>
THIRTY SIX
<PAGE>
The option period for the stock options is generally ten years. Of the options
outstanding at December 31, 1994, those granted during 1994 have a one year
restriction period from the date of grant. All other options outstanding were
exercisable.
AmSouth also has issued common stock as restricted stock awards to key officers
with the restriction that they remain employed with AmSouth for a period ranging
from three to five years at the same or a higher level. During 1992, 57,000
restricted shares were awarded and 12,000 shares of restricted stock awards were
forfeited. During 1993, 51,875 restricted shares were awarded, 11,200 shares of
restricted stock awards were forfeited and the restrictions were removed on
35,200 shares. During 1994, 115,777 restricted shares were awarded, 62,525
shares of restricted stock awards were forfeited and the restrictions were
removed on 17,975 shares. At December 31, 1994, AmSouth had 233,052 shares of
common stock outstanding representing restricted stock awards.
At December 31, 1994, there were no stock appreciation rights outstanding.
NOTE P
RESTRICTIONS ON TRANSFER OF FUNDS Certain restrictions exist regarding the
ability of banking subsidiaries to transfer funds to the parent company as
loans, advances, or dividends. At December 31, 1994, AmSouth's banking
subsidiaries had net assets of $210,404,000 available for dividends without
prior regulatory approval. Substantially all of the parent company's retained
earnings at December 31, 1994 and 1993 represented undistributed earnings of its
banking subsidiaries.
NOTE Q
PENSION AND OTHER EMPLOYEE BENEFIT PLANS As of December 31, 1994, AmSouth
maintained a corporate pension plan, which covers substantially all regular
full-time employees. The pension plan benefits are based on years of service and
the employee's compensation during the last 120 months of employment. AmSouth's
policy is to fund the minimum level allowed by ERISA.
Net periodic pension expense includes the following components:
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------
(In thousands) 1994 1993 1992
--------------------------------------------------------------------
<S> <C> <C> <C>
Service cost of the
current period $ 5,556 $ 4,332 $ 4,084
Interest cost on the projected
benefit obligation 11,098 9,690 8,810
Actual return on assets
held in the plan 2,321 (16,549) (16,409)
Net amortization of transition
asset and net gain (loss) (14,536) 4,699 5,578
Expense for enhanced retirement
benefit offering -0- 11,400 -0-
--------------------------------------------------------------------
Pension expense $ 4,439 $ 13,572 $ 2,063
---------------------------------
</TABLE>
The following table sets forth the funded status of the plan and the amounts
shown in the accompanying Consolidated Statement of Condition at December 31:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested $ 118,372 $134,711
Nonvested 4,428 4,409
------------------------------------------------------------------------
Accumulated benefit obligation $122,800 $139,120
-----------------------
Actuarial present value of projected benefit
obligation for service rendered to date $(135,969) $(157,932)
Plan assets at fair value, primarily listed
stocks and bonds and U.S. obligations 134,913 152,423
------------------------------------------------------------------------
Plan assets less than projected
benefit obligation (1,056) (5,509)
Recognition of transfer of plan assets in excess
of projected benefit obligation 5,003 3,053
Unrecognized net gain from past experience
different from that assumed and effects
of changes in assumptions (16,335) (5,381)
Unrecognized net transition asset (4,470) (6,125)
------------------------------------------------------------------------
Accrued pension cost included in
other liabilities $ (16,858) $ (13,962)
-------------------------
</TABLE>
The weighted-average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.50% and 4.50%, respectively, at December 31,
1994, 7.50% and 5.00%, respectively, at December 31, 1993, and
THIRTY SEVEN
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
8.50% and 5.50%, respectively, at December 31, 1992. The average expected long-
term rate of return on plan assets is approximately 8.50% at December 31, 1994,
1993, and 1992. At December 31, 1994, the plan assets included AmSouth common
stock with a market value of $7,740,000.
AmSouth also maintains a thrift plan and an employee stock purchase plan which
cover substantially all regular full-time employees. For each employee, AmSouth
makes matching contributions of 50% of the first 5% of base pay that each
employee contributes to the thrift plan. The cost of the thrift plan for the
years ended December 31, 1994, 1993, and 1992 was $2,350,000, $2,075,000, and
$2,128,000, respectively. Under the employee stock purchase plan, an employee
may invest up to $2,000 each calendar year in purchases of AmSouth common stock
and AmSouth will contribute a matching 25% toward the purchase. Additional
purchases of up to $8,000 more may be made on an unmatched basis with no
administrative or brokerage fees charged.
AmSouth also sponsors other postretirement benefit plans. In 1993, AmSouth
adopted Statement of Financial Accounting Standards No. 106, "Employers
Accounting for Postretirement Benefits Other than Pensions" (Statement 106). The
adoption of Statement 106 did not have a material impact on the financial
condition or results of operations of AmSouth.
NOTE R
INCOME TAXES The provisions for income taxes charged to earnings are summarized
as follows:
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------
(In thousands) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal $ 41,309 $71,660 $47,301
State 5,060 9,839 8,163
-----------------------------------------------------------------------------
46,369 81,499 55,464
-----------------------------------------------------------------------------
Deferred tax expense (benefit):
Federal 16,459 (8,200) (5,855)
State 3,222 (1,456) (1,632)
-----------------------------------------------------------------------------
19,681 (9,656) (7,487)
-----------------------------------------------------------------------------
$ 66,050 $71,843 $47,977
-----------------------------------
</TABLE>
During 1992, deferred income taxes were provided for timing differences in the
recognition of revenue and expense for tax and financial reporting purposes. The
tax effect of these differences for 1992 is as follows:
<TABLE>
<CAPTION>
Year Ended
(In thousands) December 31, 1992
-----------------------------------------------------------------------------
<S> <C>
Depreciation $ 269
Provision for loan losses (1,583)
Lease rentals (3,142)
Recapture of bad debt reserves (15)
Write-downs on foreclosures (1,413)
Other (1,603)
-----------------------------------------------------------------------------
$(7,487)
---------
</TABLE>
The differences between the actual income tax expense and the amount computed by
applying the statutory federal income tax rate to income before income taxes are
as follows:
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------
(In thousands) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at federal income tax rate $ 67,669 $ 76,469 $ 56,360
State and local income taxes,
net of federal tax benefits 5,383 5,484 4,004
Goodwill amortization 3,911 2,353 1,467
Tax exempt interest (10,437) (12,485) (14,502)
Other (476) 22 648
-----------------------------------------------------------------------------
$ 66,050 $ 71,843 $ 47,977
---------------------------------
</TABLE>
THIRTY EIGHT
<PAGE>
The significant temporary differences which create deferred tax assets and
liabilities at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Nonaccruing loans $ 3,872 $ 2,549
Allowance for loan losses 64,240 46,296
Accrued early retirement benefits 4,442 4,587
Lease rentals 5,632 7,599
Basis in loans 7,551 (5,426)
Basis in deposits 2,228 3,528
Pension expense 3,440 1,159
Other 20,844 17,502
----------------------------------------------------------------------
112,249 77,794
----------------------------------------------------------------------
Deferred tax liabilities:
Depreciation (17,115) (16,217)
Recapture of tax bad debt reserves (18,301) (10,865)
Basis in purchased mortgage servicing rights (4,234) (1,583)
Other (16,607) (12,633)
----------------------------------------------------------------------
(56,257) (41,298)
----------------------------------------------------------------------
Net deferred tax assets $ 55,992 $ 36,496
-----------------------
</TABLE>
Income taxes paid were $66,979,000, $72,546,000, and $48,373,000, for the years
ended December 31, 1994, 1993, and 1992, respectively.
Applicable income tax (benefit) expense of $(9,884,000), $5,508,000, and
$2,144,000 on securities losses and gains for the years ended December 31, 1994,
1993, and 1992, respectively, is included in the provision for income taxes.
NOTE S
OTHER OPERATING REVENUES AND OTHER OPERATING EXPENSES The components of other
operating revenues and other operating expenses are as follows:
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------
(In thousands) 1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
Other operating revenues:
Gains (losses) on sale of
mortgage servicing $ 23,766 $ (20) $ 112
Credit card income 12,663 13,277 11,091
(Losses) gains on sale of
available-for-sale securities (26,642) 13,057 1,009
Gains on held-to-maturity
securities 354 1,591 4,693
Other portfolio (losses) income (14,451) 3,910 1,207
Other 32,974 33,203 27,995
----------------------------------------------------------------------
Total other operating revenues $ 28,664 $ 65,018 $ 46,107
---------------------------------
Other operating expenses:
Postage and office supplies $ 22,718 $ 19,825 $ 16,899
Advertising 13,758 9,579 7,310
Professional fees 12,501 10,728 8,688
Amortization of intangibles 26,537 16,894 13,673
Other 97,754 84,083 65,846
----------------------------------------------------------------------
Total other operating expenses $ 173,268 $141,109 $112,416
---------------------------------
</TABLE>
NOTE T
CONDENSED PARENT COMPANY INFORMATION
STATEMENT OF CONDITION
<TABLE>
<CAPTION>
December 31
---------------------------
(In thousands) 1994 1993
----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in subsidiaries $1,495,497 $1,180,403
Loans 28,400 28,400
Securities purchased under
agreements to resell 216 9,900
Other earning assets 26,900 20,405
Other assets 26,217 23,807
----------------------------------------------------------------------
$1,577,230 $1,262,915
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ 1,786 $ 1,968
Subordinated Notes 149,137 -0-
Subordinated Capital Notes 99,440 99,311
Other long-term debt 15,742 16,150
Other borrowed funds 150 150
Accrued interest payable
and other liabilities 517 2,611
----------------------------------------------------------------------
Total liabilities 266,772 120,190
----------------------------------------------------------------------
Shareholders' equity 1,310,458 1,142,725
----------------------------------------------------------------------
$1,577,230 $1,262,915
---------------------------
</TABLE>
THIRTY NINE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF EARNINGS
Years Ended December 31
------------------------------
(In thousands) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Dividends from subsidiaries $ 97,025 $ 69,807 $ 55,575
Interest and other 2,827 4,658 2,942
----------------------------------------------------------------------------
99,852 74,465 58,517
----------------------------------------------------------------------------
EXPENSES
Interest 17,607 10,835 11,225
Other 4,307 5,233 4,263
----------------------------------------------------------------------------
21,914 16,068 15,488
----------------------------------------------------------------------------
Income before income taxes
and equity in undistributed
earnings of subsidiaries 77,938 58,397 43,029
Income taxes (credit) (6,163) (3,780) (4,103)
----------------------------------------------------------------------------
Income before equity in undistributed
earnings of subsidiaries 84,101 62,177 47,132
Equity in undistributed
earnings of subsidiaries 43,189 84,543 69,461
----------------------------------------------------------------------------
NET INCOME $127,290 $146,720 $116,593
------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Years Ended December 31
------------------------------
(In thousands) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $127,290 $146,720 $116,593
Adjustments to reconcile
net income to net cash
provided by operating activities:
Amortization of goodwill 2,386 2,386 2,386
Other amortization 1,107 1,772 961
Net (increase) decrease in accrued
interest receivable and other assets (908) 115 (341)
Net increase (decrease)
in accrued expenses
and other liabilities 922 590 (1,022)
Equity in undistributed earnings
of subsidiaries (43,189) (84,543) (69,461)
----------------------------------------------------------------------------
Net cash provided by
operating activities 87,608 67,040 49,116
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Net increase in advances to subsidiaries -0- (8,600) (7,939)
Net decrease in short-term investments 3,339 48,902 5,752
Capital contributions to subsidiaries -0- (3,000) (1,000)
Distribution from subsidiary -0- -0- 2,270
Net purchases of premises
and equipment (218) (5,405) (4,761)
Net cash used for acquisitions (138,007) (44,119) -0-
----------------------------------------------------------------------------
Net cash used by
investing activities (134,886) (12,222) (5,678)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Net (decrease) increase in
commercial paper (182) (1,161) 63
Issuance of long-term debt 149,084 -0- -0-
Payments on long-term debt (628) (1,338) (4,766)
Cash dividends paid (80,823) (58,922) (45,535)
Proceeds from employee benefit plans 6,745 6,616 7,664
Purchase of treasury stock (30,047) -0- -0-
----------------------------------------------------------------------------
Net cash provided (used) by
financing activities 44,149 (54,805) (42,574)
----------------------------------------------------------------------------
(Decrease) increase in cash (3,129) 13 864
Cash at beginning of year 3,058 1,865 1,001
Beginning cash balances of immaterial
pooling-of-interests entities 104 1,180 -0-
----------------------------------------------------------------------------
Cash at end of year $ 33 $ 3,058 $ 1,865
------------------------------
</TABLE>
NOTE U
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Selected quarterly results of
operations for the four quarters ended December 31, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
1994
----------------------------------------
(In thousands except Fourth Third Second First
per share data) Quarter Quarter Quarter Quarter
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from earning assets $295,059 $295,331 $237,311 $220,040
Interest expense 151,550 142,137 100,951 85,776
Gross interest margin 143,509 153,194 136,360 134,264
Provision for loan losses 20,149 4,773 2,974 2,207
Income (loss) before
income taxes (185) 69,271 64,414 59,840
Net income 1,355 44,061 42,900 38,974
Per common share:
Net income .02 .75 .78 .72
Cash dividends declared .38 .35 .35 .35
Market price range:
High 31 7/8 34 7/8 33 1/8 32
Low 25 3/8 30 1/2 29 5/8 29 1/4
</TABLE>
<TABLE>
<CAPTION>
1993
----------------------------------------
(In thousands except Fourth Third Second First
per share data) Quarter Quarter Quarter Quarter
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from earning assets $212,143 $213,719 $210,869 $203,886
Interest expense 84,495 86,890 85,724 82,217
Gross interest margin 127,648 126,829 125,145 121,669
Provision for loan losses 12,635 (189) 8,035 7,485
Income before
income taxes 45,049 58,328 59,203 55,983
Net income 30,802 38,145 39,699 38,074
Per common share:
Net income .60 .75 .78 .77
Cash dividends declared .35 .29 .29 .29
Market price range:
High 31 1/2 33 5/8 35 7/8 34 1/8
Low 27 3/8 29 1/4 30 3/8 29 5/8
</TABLE>
Note: The total of quarterly net income per common share does not equal annual
amounts due to rounding.
FORTY
<PAGE>
NOTE V
FAIR VALUE OF FINANCIAL INSTRUMENTS For the purposes of this disclosure, the
estimated fair value of financial instruments with immediate and shorter-term
maturities (generally 90 days or less) is assumed to be the same as the recorded
book value. These instruments include the statement of condition lines captioned
cash and due from banks, federal funds sold and securities purchased under
agreements to resell, customers' acceptance liability, federal funds purchased
and securities sold under agreements to repurchase, other borrowed funds, and
acceptances outstanding. Trading securities and available-for-sale securities
are recorded at fair value on the statement of condition.
The carrying amount and estimated fair values of other financial instruments
at December 31 is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------
Carrying Estimated Carrying Estimated
(In thousands) Amount Fair Value Amount Fair Value
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Held-to-maturity
securities $ 3,336,557 $ 3,169,513 $ 1,823,317 $ 1,874,587
Mortgage loans
held for sale 130,223 130,223 335,435 335,435
Net loans 11,258,740 11,206,062 8,408,903 8,509,341
Financial liabilities:
Deposits 13,067,062 13,053,924 10,362,989 10,408,026
Long-term debt 386,147 378,340 173,142 188,500
Off-balance sheet:
Off-balance sheet
financial instruments
(net receivable position) -0- 4,802 -0- 9,793
Commitments to
extend credit
and standby
letters of credit -0- (2,427) -0- (1,862)
</TABLE>
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" (Statement 107), requires the disclosure of
estimated fair values for all financial instruments, both assets and liabilities
on- and off-balance sheet, for which it is practicable to estimate their value
along with pertinent information on those financial instruments for which such
values are not available.
Fair value estimates are made at a specific point in time and are based on
relevant market information which is continuously changing. Because no quoted
market prices exist for a significant portion of AmSouth's financial
instruments, fair values for such instruments are based on management's
assumptions with respect to future economic conditions, estimated discount
rates, estimates of the amount and timing of future cash flows, expected loss
experience, and other factors. These estimates are subjective in nature
involving uncertainties and matters of significant judgment; therefore, they
cannot be determined with precision. Changes in the assumptions could
significantly affect the estimates.
Statement 107 fair value estimates include certain on- and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. For example, AmSouth has a substantial trust department
that contributes net fee income annually. The trust department is not considered
a financial instrument, and its value has not been incorporated into the fair
value estimates. Other significant assets and liabilities that are not
considered financial assets or liabilities include the mortgage banking
operation, brokerage network, premises and equipment, core deposit intangible,
and goodwill. In addition, the tax ramifications related to the realization of
the unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates. As a result, the
Statement 107 fair value disclosures should not be considered an indication of
the fair value of the corporation taken as a whole.
The following methods and assumptions were used by AmSouth in estimating its
fair value disclosures for financial instruments:
FORTY ONE
<PAGE>
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
Securities and mortgage loans held for sale: Fair values for securities and
mortgage loans held for sale are based on quoted market prices, where available.
Where quoted market prices are not available, fair values are based on quoted
market prices of similar instruments, adjusted for any significant differences
between the quoted instruments and the instruments being valued.
Loans: The fair values of variable rate loans that reprice frequently and have
no significant change in credit risk are assumed to approximate carrying
amounts. The fair values for credit card loans and equity lines of credit are
estimated using pricing models with assumptions based on current conditions in
the secondary market for those instruments. The fair values for other loans
(e.g., commercial, commercial real estate, certain mortgage loans and consumer
loans) are estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of similar
credit quality and estimates of maturity based on AmSouth's historical
experience. The carrying amount of accrued interest receivable approximates its
fair value.
Commitments to extend credit and standby letters of credit: The fair value of
commitments to extend credit is estimated based on the amount of unamortized
deferred loan commitment fees. The fair value of letters of credit is based on
the amount of unearned fees plus the estimated cost to terminate the letters of
credit.
Off-balance sheet instruments: The fair value of interest rate swaps, financial
futures, and interest rate caps and floors are obtained from dealer quotes.
These values represent the estimated amount the corporation would receive or pay
to terminate the contracts or agreements, taking into account current interest
rates and, when appropriate, the current creditworthiness of the counterparties.
Deposit liabilities: The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, savings accounts, and money market and
interest-bearing checking accounts is, by definition, equal to the amount
payable on demand (carrying amount). The fair values for variable rate fixed-
term money market accounts and certificates of deposit approximate their
carrying amounts. Fair values for fixed rate certificates of deposit are
estimated using a discounted cash flow calculation that applies interest rates
currently being offered on certificates of deposit to a schedule of aggregated
expected monthly maturities on time deposits.
Long-term borrowings: The fair values of long-term borrowings (other than
deposits) are estimated using discounted cash flow analyses, based on AmSouth's
current incremental borrowing rates for similar types of borrowing arrangements.
FORTY TWO
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AmSouth reported net income of $127.3 million for the year ended December 31,
1994 compared to $146.7 million for the year ended 1993 and $116.6 million for
the year ended 1992. On a per common share basis for the same periods, AmSouth
earned $2.25, $2.89 and $2.50, respectively. The $19.4 million decrease in net
income for 1994 reflected a decline in noninterest revenues and an increase in
noninterest expenses, partially offset by an increase in the gross interest
margin. Net income for all years presented has been restated to include business
combinations accounted for as poolings-of-interests unless immaterial. For the
year ended December 31, 1994, the return on average assets was .83% compared to
1.19% for the year ended 1993 and 1.12% for the year ended 1992. For the same
periods, the return on average equity was 10.24%, 14.23% and 13.94%,
respectively. The decline in net income combined with balance sheet growth from
the acquisition of Fortune, a $2.6 billion thrift acquired in June, 1994 and
accounted for as a purchase transaction, impacted both of these ratios.
Rapidly rising interest rates during 1994 resulted in the gross interest spread
declining 42 basis points, as the adjustability of certain assets was limited
more than that of certain liabilities. The interest rate environment also led to
the sale of mortgage-backed and U.S. Treasury securities from the available-for-
sale securities portfolio resulting in losses of $26.6 million primarily in the
fourth quarter of 1994 and interest rate swap losses of $16.4 million. These
transactions reduced interest rate sensitivity going forward and provided for
the reinvestment of proceeds from securities sales into higher-yielding,
shorter-term securities. These losses were partially offset by $23.8 million in
gains on the sale of mortgage servicing. Growth in noninterest expenses was
primarily due to the acquisition of Fortune, and the December, 1993 acquisition
of Mid-State, both purchase accounting transactions.
Loans, net of unearned income, increased $2.9 billion in 1994 primarily due to
growth in residential first mortgages and dealer indirect loans. The acquisition
of Fortune, which was a thrift with residential mortgages representing the
majority of the loans in its portfolio, accounted for approximately 56% of the
growth in residential first mortgages. Dealer indirect loans increased due to
expansion of new markets. Loan growth was primarily funded by an increase of
$2.7 billion in deposits, resulting from the acquisition of Fortune and an
increase in time deposits due to a special deposit marketing campaign.
GROSS INTEREST MARGIN The gross interest margin is defined as the difference
between the revenues from earning assets and interest expense on interest-
bearing liabilities. The gross interest margin is a function of the average
balances of earning assets and interest-bearing liabilities and the yields
earned and rates paid on those balances. In managing the gross interest margin,
management must maintain a satisfactory spread between the yields earned and
rates paid. The gross interest spread is calculated by dividing the taxable
equivalent gross interest margin by average earning assets. This ratio reflects
the gross profitability of earning assets funded by interest-bearing sources as
well as those funded by sources that incur no interest cost, primarily
noninterest-bearing demand deposits. The incremental interest spread is the
difference between the yields on earning assets and the cost of interest-bearing
funds. This calculation and similar ratios are used to assist in pricing
decisions for interest-related products.
Table 1 presents for 1994, 1993 and 1992, by major categories of assets and
liabilities, the average balances, the components of the taxable equivalent
gross interest margin, the yield or rate, and the incremental and gross interest
spreads.
FORTY THREE
<PAGE>
TABLE 1
YIELDS ON AVERAGE EARNING ASSETS AND RATES PAID
ON AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
1994
-------------------------------------------
Average Revenue/ Yield/
(Taxable equivalent basis - dollars in thousands) Balance Expense Rate
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Earning assets:
Loans net of unearned income $ 9,918,274 $ 797,020 8.04%
Trading securities 43,089 2,587 6.00
Available-for-sale securities 979,974 52,005 5.31
Held-to-maturity securities:
Taxable 2,512,922 160,181 6.37
Tax-free 317,114 35,289 11.13
-----------------------------------------------------------------------------------------------
Total held-to-maturity securities 2,830,036 195,470 6.91
-----------------------------------------------------------------------------------------------
Total securities 3,853,099 250,062 6.49
Federal funds sold and securities purchased
under agreements to resell 84,234 2,636 3.13
Mortgage loans held for sale 207,799 12,609 6.07
-----------------------------------------------------------------------------------------------
Total earning assets 14,063,406 1,062,327 7.55
Cash and other assets 1,391,553
Less allowance for loan losses (148,801)
Market valuation on available-for-sale securities (12,173)
-----------------------------------------------------------------------------------------------
$15,293,985
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 3,820,580 118,952 3.11
Savings deposits 918,132 24,261 2.64
Time deposits 4,281,988 191,997 4.48
Certificates of deposit of $100,000 or more 762,403 33,751 4.43
Federal funds purchased and securities sold
under agreements to repurchase 1,476,696 65,009 4.40
Other borrowed funds 495,107 21,610 4.36
Subordinated Capital Notes Due 1999 99,376 9,504 9.56
Federal Home Loan Bank advances 112,550 6,442 5.72
Floating Rate Notes Due 1999 7,647 352 4.60
7 3/4% Subordinated Notes Due 2004 90,281 7,047 7.81
7 1/2% Convertible Subordinated Debentures 3,709 404 10.89
Long-term notes payable 25,863 1,085 4.20
-----------------------------------------------------------------------------------------------
Total interest-bearing liabilities 12,094,332 480,414 3.97
-----------------------------------------------------------------------------------------------
Incremental interest spread 3.58%
-----
Noninterest-bearing demand deposits 1,779,833
Other liabilities 176,669
Shareholders' equity 1,243,151
-----------------------------------------------------------------------------------------------
$15,293,985
-----------
Gross interest margin/spread on a
taxable equivalent basis 581,913 4.14%
-----
Taxable equivalent adjustment:
Loans 3,064
Held-to-maturity securities 11,485
Other earning assets 37
-----------------------------------------------------------------------------------------------
Total taxable equivalent adjustment 14,586
-----------------------------------------------------------------------------------------------
Gross interest margin $ 567,327
----------
</TABLE>
FORTY FOUR
<PAGE>
<TABLE>
<CAPTION>
1993 1992
-------------------------------- ---------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
(Taxable equivalent basis - dollars in thousands) Balance Expense Rate Balance Expense Rate
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of unearned income $ 7,634,984 $617,237 8.08% $ 6,334,313 $547,054 8.64%
Trading securities 49,448 2,496 5.05 31,125 1,807 5.81
Available-for-sale securities 605,558 32,641 5.39 81,374 5,231 6.43
Held-to-maturity securities:
Taxable 2,239,254 143,772 6.42 2,260,612 168,924 7.47
Tax-free 379,236 41,102 10.84 451,289 47,221 10.46
------------------------------------------------------------------------------------------------------------------------------
Total held-to-maturity securities 2,618,490 184,874 7.06 2,711,901 216,145 7.97
------------------------------------------------------------------------------------------------------------------------------
Total securities 3,273,496 220,011 6.72 2,824,400 223,183 7.90
Federal funds sold and securities purchased
under agreements to resell 233,684 6,480 2.77 186,736 6,958 3.73
Mortgage loans held for sale 245,021 14,338 5.85 202,107 14,910 7.38
------------------------------------------------------------------------------------------------------------------------------
Total earning assets 11,387,185 858,066 7.54 9,547,556 792,105 8.30
Cash and other assets 1,105,149 996,626
Less allowance for loan losses (115,001) (96,996)
Market valuation on available-for-sale securities -0- -0-
------------------------------------------------------------------------------------------------------------------------------
$12,377,333 $10,447,186
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits $ 3,263,054 86,218 2.64 $ 3,033,034 94,702 3.12
Savings deposits 773,131 20,732 2.68 575,082 18,218 3.17
Time deposits 3,161,697 143,218 4.53 2,745,790 148,416 5.41
Certificates of deposit of $100,000 or more 728,206 30,686 4.21 687,514 34,641 5.04
Federal funds purchased and securities sold
under agreements to repurchase 1,046,827 32,241 3.08 798,188 27,167 3.40
Other borrowed funds 438,992 13,870 3.16 182,254 6,706 3.68
Subordinated Capital Notes Due 1999 99,247 9,530 9.60 99,117 9,496 9.58
Federal Home Loan Bank advances 14,447 838 5.80 -0- -0- --
Floating Rate Notes Due 1999 8,172 310 3.79 8,733 449 5.14
7 3/4% Subordinated Notes Due 2004 -0- -0- -- -0- -0- --
7 1/2% Convertible Subordinated Debentures 3,488 404 11.58 3,266 404 12.37
Long-term notes payable 42,525 1,279 3.01 30,191 1,507 4.99
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 9,579,786 339,326 3.54 8,163,169 341,706 4.19
------------------------------------------------------------------------------------------------------------------------------
Incremental interest spread 4.00% 4.11%
---- ----
Noninterest-bearing demand deposits 1,611,428 1,304,787
Other liabilities 154,746 143,028
Shareholders' equity 1,031,373 836,202
------------------------------------------------------------------------------------------------------------------------------
$12,377,333 $10,447,186
----------- -----------
Gross interest margin/spread on a
taxable equivalent basis 518,740 4.56% 450,399 4.72%
---- ----
Taxable equivalent adjustment:
Loans 3,715 4,605
Held-to-maturity securities 13,661 15,195
Other earning assets 73 54
------------------------------------------------------------------------------------------------------------------------------
Total taxable equivalent adjustment 17,449 19,854
------------------------------------------------------------------------------------------------------------------------------
Gross interest margin $501,291 $430,545
-------- --------
</TABLE>
Note: The taxable equivalent adjustment for 1994 and 1993 has been computed
based on a 35% federal income tax rate (34% for 1992) and has given effect
to the disallowance of interest expense, for federal income tax purposes
related to certain tax-free assets. Loans net of unearned income includes
nonaccrual loans for all years presented.
FORTY FIVE
<PAGE>
The taxable equivalent gross interest margin for 1994 increased $63.2 million
compared to 1993, as the gross interest spread declined 42 basis points. The
rapid increases in interest rates particularly during the last quarter of 1994
increased rates on interest-bearing liabilities faster than yields on earning
assets. The yields on average loans decreased by four basis points as the level
of lower-yielding residential mortgage loans increased with the acquisition of
Fortune. During the fourth quarter management made the decision to sell certain
low yielding securities in the available-for-sale securities portfolio and to
terminate the company's interest rate swaps and certain interest rate caps. The
impact of interest rate swaps, caps and floors on the gross interest margin for
1994 and 1993 was a decrease of $4.3 million and an increase of $7.4 million,
respectively. The impact of the amortization of the deferred loss from the
termination of interest rate swaps and caps on the gross interest margin for
1995, 1996 and 1997 will be $10.3 million, $6.6 million and $292 thousand,
respectively.
The compression in the gross interest spread for 1994 was primarily due to the
decreased incremental interest spread. The 16 basis point decline in the gross
interest spread from 1992 to 1993 was due to a combination of a decline in the
incremental interest spread and lower yields earned on earning assets funded by
noninterest-bearing sources.
Table 2 shows the change from year to year for each component of the taxable
equivalent gross interest margin separated into the amount generated by volume
changes and the amount generated by changes in the yields earned or rates paid.
The $63.2 million increase in the gross interest margin during 1994 was due to
increases in earning asset balances partially offset by increases in interest-
bearing liabilities and higher rates on interest-bearing liabilities.
FORTY SIX
<PAGE>
TABLE 2
VOLUME AND YIELD/RATE VARIANCES
<TABLE>
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
Change Due to Change Due to
---------------------- ---------------------
Yield/ Yield/
(Taxable equivalent basis - in thousands) Volume Rate Net Volume Rate Net
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE EARNED ON
Loans net of unearned income $183,500 $ (3,717) $179,783 $106,859 $(36,676) $70,183
Trading securities (346) 437 91 950 (261) 689
Available-for-sale securities 19,877 (513) 19,364 28,388 (978) 27,410
Held-to-maturity securities:
Taxable securities 17,451 (1,042) 16,409 (1,582) (23,570) (25,152)
Tax-free securities (6,888) 1,075 (5,813) (7,760) 1,641 (6,119)
-----------------------------------------------------------------------------------------------------------------------------
Total held-to-maturity securities 14,679 (4,083) 10,596 (7,248) (24,023) (31,271)
-----------------------------------------------------------------------------------------------------------------------------
Total securities 37,834 (7,783) 30,051 32,754 (35,926) (3,172)
Federal funds sold and securities purchased
under agreements to resell (4,588) 744 (3,844) 1,527 (2,005) (478)
Mortgage loans held for sale (2,243) 514 (1,729) 2,834 (3,406) (572)
-----------------------------------------------------------------------------------------------------------------------------
Total earning assets 202,161 2,100 204,261 143,135 (77,174) 65,961
-----------------------------------------------------------------------------------------------------------------------------
INTEREST PAID ON
Interest-bearing demand deposits 16,015 16,719 32,734 6,818 (15,302) (8,484)
Savings deposits 3,836 (307) 3,529 5,608 (3,094) 2,514
Time deposits 50,247 (1,468) 48,779 20,721 (25,919) (5,198)
Certificates of deposit of $100,000 or more 1,476 1,589 3,065 1,961 (5,916) (3,955)
Federal funds purchased and securities sold
under agreements to repurchase 16,019 16,749 32,768 7,846 (2,772) 5,074
Other borrowed funds 1,943 5,797 7,740 8,233 (1,069) 7,164
Subordinated Capital Notes Due 1999 12 (38) (26) 12 22 34
Federal Home Loan Bank advances 5,615 (11) 5,604 838 -0- 838
Floating Rate Notes Due 1999 (21) 63 42 (27) (112) (139)
7 3/4% Convertible Notes Due 2004 7,047 -0- 7,047 -0- -0- -0-
7 1/2% Convertible Subordinated Debentures 25 (25) -0- 26 (26) -0-
Long-term notes payable (600) 406 (194) 492 (720) (228)
-----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 96,464 44,624 141,088 54,461 (56,841) (2,380)
-----------------------------------------------------------------------------------------------------------------------------
Gross interest margin on a taxable
equivalent basis $113,874 $ (50,701) 63,173 $ 84,250 $(15,909) 68,341
---------------------- ---------------------
Less: taxable equivalent adjustment (2,863) (2,405)
--------- -------
Gross interest margin $ 66,036 $70,746
--------- -------
</TABLE>
Notes:
1. The change in interest resulting from both volume and yield/rate has been
allocated to change due to volume and change due to yield/rate in proportion
to the relationship of the absolute dollar amounts of the change in each.
2. The computation of the taxable equivalent adjustment has given effect to the
disallowance of interest expense for federal income tax purposes related to
certain tax-free assets.
3. Variances are computed on a line-by-line basis and are non-additive.
FORTY SEVEN
<PAGE>
TABLE 3
NONINTEREST REVENUES AND NONINTEREST EXPENSES
<TABLE>
<CAPTION>
Years Ended December 31 Compound
-------------------------------------------------------------------------- Growth Rate
(Dollars in thousands) 1994 1993 1992 1991 1990 1989 1994/1989
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest revenues
Service charges on deposit accounts $ 67,682 $ 59,379 $ 52,711 $ 50,328 $ 40,669 $ 35,615 13.70%
Trust income 46,121 41,659 40,069 37,891 36,196 32,421 7.30
Investment services income 14,036 19,835 16,875 12,715 7,936 7,441 13.53
Mortgage administration fees 22,518 18,178 17,392 17,227 16,555 14,930 8.57
Credit card income 12,663 13,277 11,091 10,071 9,243 11,184 2.52
Other operating revenues 16,001 51,741 35,016 42,426 26,020 29,272 (11.38)
----------------------------------------------------------------------------------------------------------------------
$179,021 $204,069 $173,154 $170,658 $136,619 $130,863 6.47%
--------------------------------------------------------------------------
Noninterest expenses
Salaries $197,160 $180,065 $155,075 $136,924 $129,684 $122,657 9.96%
Employee benefits 34,890 42,691 26,691 23,559 22,374 21,195 10.48
Net occupancy expense 46,770 36,537 32,524 26,956 25,191 22,590 15.67
Equipment expense 41,432 39,213 32,548 30,882 30,011 28,408 7.84
FDIC premiums 24,664 21,413 18,868 16,834 9,520 6,630 30.05
Foreclosed properties expense (income) 4,721 (2,197) 22,426 36,933 8,754 7,428 (8.67)
Other operating expenses 173,268 141,109 112,416 94,315 86,124 85,448 15.19
----------------------------------------------------------------------------------------------------------------------
$522,905 $458,831 $400,548 $366,403 $311,658 $294,356 12.18%
--------------------------------------------------------------------------
</TABLE>
NONINTEREST REVENUES AND NONINTEREST EXPENSES Table 3 shows noninterest revenues
and noninterest expenses for 1989 through 1994 and a five-year compound growth
rate for each of the components.
Noninterest revenues for 1994 decreased $25.0 million compared to 1993.
Noninterest revenues included increases in service charges on deposit accounts
of $8.3 million, trust income of $4.5 million and mortgage administration fees
of $4.3 million. These increases were offset by decreases in investment services
income of $5.8 million and other operating revenues of $36.4 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. The
increase in trust fees was generated primarily in Alabama. Mortgage
administration fees increased due to the increase in servicing related to the
acquisition of Fortune. Rising interest rates and interest rate instability in
the bond market were the primary reasons for the decline in investment services
income. Other operating revenues decreased due to losses on the sales of
available-for-sale securities of $26.6 million in 1994 compared to gains on the
sales of such securities of $13.1 million in 1993. Also contributing to the
decline in other operating revenues was the loss on interest rate swaps of $16.4
million and lower gains from sales of residential first mortgages of $5.5
million. These items were partially offset by a gain on the sale of mortgage
servicing of $23.8 million.
Noninterest revenues for 1993 increased $30.9 million compared to 1992. The
largest increases occurred from gains on the sale of available-for-sale
securities of $12.0 million, service charges on deposit accounts of $6.7 million
and investment services income of $3.0 million.
Noninterest expenses for 1994 increased $64.1 million, or 14.0%, compared to a
1993 increase of $58.3 million, or 14.6%. The acquisition of Fortune in June,
1994 and Mid-State in December, 1993, which were accounted for as purchase
transactions, contributed approximately $41.8 million
FORTY EIGHT
<PAGE>
to the increase. Salaries and employee benefits increased $9.3 million compared
to 1993. Adjusted for the one-time charge of $12.2 million included in 1993 for
the early retirement offering, the 1994 increase was $21.5 million. The impact
of Fortune and Mid-State accounted for approximately $9.5 million of the
increase in salaries and employee benefits. The remainder of the increase was
attributable to normal merit increases and sales-related incentive compensation
in income-producing areas.
Net occupancy expense increased 28.0% in 1994 and 12.3% in 1993. The increase in
1994 was primarily due to a 35.0% increase in the number of offices and higher
rents paid for facilities.
Foreclosed properties expense increased $6.9 million during 1994. Adjusted for
$3.5 million of recoveries in 1993, the increase was $3.4 million. Included in
the increase was a $1.7 million increase to the allowance for foreclosed
property losses. The remainder of the increase was primarily due to increased
expenses related to carrying the foreclosed property.
Other operating expenses increased $32.2 million, or 22.8%, compared to a 1993
increase of $28.7 million, or 25.5%. Included in the increase is a $9.6 million
increase in the amortization of intangibles due to the write-off of purchased
mortgage servicing rights and the amortization of goodwill associated with the
Fortune and Mid-State acquisitions. Advertising increased $4.2 million primarily
due to the expansion into new markets. Also, noncredit operational losses
increased $7.8 million due to the increased activity and volume of transactions
during 1994. The most significant amount was $3.2 million of check kite losses
in Alabama and Florida.
In January 1995, the Federal Deposit Insurance Corporation (FDIC) issued a
proposal to reduce deposit insurance rate assessments for bank and thrift
members of the Bank Insurance Fund (BIF). The reduction is expected to be
effective mid-year 1995 as BIF reaches its statutorily-mandated minimum
designated reserve ratio of 1.25%. The proposal will drop the lowest assessment
rate from 23 to four basis points. At December 31, 1994, approximately 65.0% of
AmSouth's assessment base was BIF deposits. Based on AmSouth's BIF assessment
base, this proposal would result in a decrease of approximately $7.7 million in
FDIC premium expense in 1995.
INCOME TAXES AmSouth's income tax expense was $66.1 million in 1994, $71.8
million in 1993, and $48.0 million in 1992. The decrease in income tax expense
from 1993 to 1994 is due primarily to the decrease in pretax income. The
significant increase in income tax expense from 1992 to 1993 is due primarily to
the combined effects of increased levels of pretax income and an increase in the
company's effective tax rate.
The effective tax rate for 1994 was 34.2% compared to 32.9% in 1993, and 29.2%
in 1992. The 1994 increase resulted from a continued decrease in tax-exempt
revenues and from an increase in financial statement intangible amortization
expense which is not deductible for income tax purposes. Cash outlays for income
taxes have exceeded income tax expense in 1994, 1993, and 1992 primarily due to
the income tax treatment required for accounting for loan losses. A detail of
the deferred tax assets and liabilities is included in Note R of the Notes to
Consolidated Financial Statements.
Currently, AmSouth's consolidated tax returns for 1987 through 1990 are under
review by the Internal Revenue Service. Management does not anticipate these
reviews to result in any material impact on AmSouth's financial condition or
results of operations.
SUBSIDIARY PERFORMANCE AmSouth has banking subsidiaries located in four
southeastern states. Two of the banking subsidiaries, AmSouth
FORTY NINE
<PAGE>
Bank of Alabama (AmSouth Alabama) and AmSouth Bank of Florida (AmSouth Florida),
comprised approximately 92.0% of total consolidated assets at December 31, 1994.
AmSouth Alabama had $9.1 billion in total assets at December 31, 1994, and
contributed approximately 57.0% to 1994 consolidated net income. Net income for
1994 decreased $41.0 million compared to 1993 primarily due to losses on the
sale of available-for-sale securities and the termination of interest rate swaps
previously discussed. AmSouth Alabama had 145 banking offices at year end.
AmSouth Florida had total assets at December 31, 1994 of $6.4 billion reflecting
a $2.9 billion increase over December 31, 1993. This increase was primarily due
to the acquisition of Fortune, which had $2.6 billion in total assets at the
date of acquisition. AmSouth Florida contributed approximately 33.0% to
consolidated net income. The net income increase of $22.4 million was primarily
due to the inclusion in 1994 income of Fortune for approximately six months and
Mid-State for the entire year and the inclusion in 1993 net income of merger-
related expenses. Due to the 1994 business combinations, the number of AmSouth
Florida offices increased from 93 at December 31, 1993 to 137 at December 31,
1994.
The remaining banking subsidiaries had total assets at December 31, 1994 of $1.3
billion and operated 29 offices. Combined, these subsidiaries contributed 8.9%
to consolidated net income.
AmSouth Mortgage contributed 9.8% to consolidated net income. The increase in
1994 net income compared to 1993 is primarily due to the sale of mortgage
servicing and the acquisition of Fortune which had a $3.7 billion mortgage-
servicing portfolio.
In January 1995, AmSouth announced a change in the strategic direction of its
mortgage banking operations. AmSouth will continue to originate mortgage loans
throughout its branch banking network; however, AmSouth will no longer be in the
business of servicing mortgage loans for third parties or purchasing mortgage
servicing. This will result in the sale of approximately $6.4 billion of
AmSouth's servicing portfolio and eight out-of-market origination offices in the
first half of 1995.
Parent company losses increased during 1994 primarily due to interest expense
from the issuance of $150.0 million of subordinated capital notes in May, 1994.
Table 4 presents the amounts contributed to consolidated net income by each
subsidiary for the years ended December 31, 1994, 1993 and 1992.
TABLE 4
SUBSIDIARY NET INCOME
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
-----------------------------------------------------------------
<S> <C> <C> <C>
AmSouth Bank
of Alabama $ 72,285 $113,257 $ 98,661
AmSouth Bank
of Florida 42,537 20,098 25,208
AmSouth Bank
of Tennessee 9,637 9,828 (410)
AmSouth Bank
of Georgia 1,103 1,133 819
AmSouth Mortgage
Company 12,494 6,265 7,357
Parent company,
other subsidiaries
and eliminations (10,766) (3,861) (15,042)
-----------------------------------------------------------------
$127,290 $146,720 $116,593
--------------------------------
</TABLE>
ASSET AND LIABILITY MANAGEMENT AND LIQUIDITY AmSouth maintains a formal asset
and liability management process to control interest rate risk and assist
management in maintaining stability in the gross interest margin as a result of
changes in the level of interest rates and the spread relationships between
interest rates.
AmSouth uses an earnings simulation model to evaluate the impact of different
interest rate
FIFTY
<PAGE>
scenarios on the gross interest margin. Management feels that a traditional
interest sensitivity gap analysis does not provide a complete picture of a
corporation's exposure to interest rate changes. Static gap models are a point-
in-time measurement and do not incorporate the effects of future balance sheet
trends, changes in the relationship between yields earned and rates paid,
patterns of rate movements and changes in prepayment speeds due to changes in
rates. Also, static gap models do not fully integrate the effects of embedded
interest rate caps and floors as well as certain off-balance sheet alternatives.
AmSouth's earnings simulation model incorporates all of these factors and
reflects management's actions based on different interest rate environments.
This model projects the gross interest margin over the next twelve months under
a variety of higher and lower interest rate environments. However, to the extent
detailed static gap reports represent well thought out estimates of the timing
of receipt of existing balance sheet cash flows they are useful. It is within
this context that AmSouth utilizes its gap report. Additionally, the gap report
reflects management's view of the implied maturity distribution of indeterminate
maturity accounts as related to point-in-time interest rate risk. Table 5
presents the company's gap position at December 31, 1994 which indicates that
AmSouth is in a moderately negative gap position over the next twelve-month time
period.
FIFTY ONE
<PAGE>
TABLE 5
INTEREST SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
Over One
and Less
0-30 31-60 61-90 91-180 181-365 Than Five Over Five
(Dollars in thousands) Days Days Days Days Days Years Years Total
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Federal funds sold and
securities purchased
under agreements to resell $ 152,525 $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ 152,525
Trading securities 6,383 -0- -0- -0- -0- -0- -0- 6,383
Available-for-sale securities 94,454 8,798 7,005 22,439 40,792 187,763 21,788 383,039
Held-to-maturity securities 192,278 216,154 39,126 302,276 606,396 1,018,103 962,224 3,336,557
Mortgage loans held for sale 43,408 43,408 43,407 -0- -0- -0- -0- 130,223
Loans net of unearned
income 3,294,070 999,820 332,108 751,387 1,321,318 3,862,798 868,406 11,429,907
-----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 3,783,118 1,268,180 421,646 1,076,102 1,968,506 5,068,664 1,852,418 15,438,634
Cash and other assets -0- -0- -0- -0- -0- -0- 1,510,484 1,510,484
Less allowance for
loan losses -0- -0- -0- -0- -0- -0- (171,167) (171,167)
-----------------------------------------------------------------------------------------------------------------------------------
$ 3,783,118 $1,268,180 $ 421,646 $1,076,102 $1,968,506 $5,068,664 $3,191,735 $16,777,951
---------------------------------------------------------------------------------------------------
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing liabilities:
Interest-bearing
demand deposits $ 2,504,937 $ 97,752 $ 17,892 $ 53,676 $ 107,354 $ 791,561 $ 498,040 $ 4,071,212
Savings deposits 272,106 7,657 7,657 22,971 45,946 337,366 208,035 901,738
Time deposits 578,335 293,230 285,586 709,865 1,296,126 2,188,353 32,974 5,384,469
Certificates of deposit of
$100,000 or more 111,167 56,239 46,113 82,608 127,775 383,431 -0- 807,333
Federal funds purchased
and securities sold
under agreements
to repurchase 1,211,664 -0- 1,059 -0- -0- -0- -0- 1,212,723
Other borrowed funds 289,467 56,000 59,500 10,450 240,700 -0- -0- 656,117
Long-term debt 7,461 -0- 9,976 -0- 3,939 186,168 178,603 386,147
-----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 4,975,137 510,878 427,783 879,570 1,821,840 3,886,879 917,652 13,419,739
Noninterest-bearing
demand deposits 210,333 20,900 20,900 62,700 125,396 920,790 541,291 1,902,310
Other liabilities -0- -0- -0- -0- -0- -0- 145,444 145,444
Shareholders' equity -0- -0- -0- -0- -0- -0- 1,310,458 1,310,458
-----------------------------------------------------------------------------------------------------------------------------------
$ 5,185,470 $ 531,778 $ 448,683 $ 942,270 $1,947,236 $4,807,669 $2,914,845 $16,777,951
---------------------------------------------------------------------------------------------------
Off-balance sheet financial
instruments $ (50,000) $ -0- $ -0- $ -0- $ 30,000 $ 20,000 $ -0- $ -0-
---------------------------------------------------------------------------------------------------
Rate sensitivity gap:
Dollar amount $(1,352,352) $ 736,402 $ (27,037) $ 133,832 $ (8,730)
Percent of total
earning assets (8.8)% 4.8% (0.2)% 0.9% (0.1)%
Cumulative dollar amount $(1,352,352) $ (615,950) $(642,987) $ (509,155) $ (517,885)
</TABLE>
--------------
Note: Certain interest-sensitive assets and liabilities are included in the
table based on historical experience rather than contractual maturities.
FIFTY TWO
<PAGE>
Each month the Asset/Liability Committee reviews the earnings simulation model
results with respect to the estimated impact of various interest rate scenarios
on the gross interest margin and approves any major adjustments in the company's
interest rate sensitivity which are deemed necessary. During 1994, interest rate
increases resulted in AmSouth raising its prime rate by 275 basis points. These
rate increases served to limit the adjustability of certain asset accounts more
than certain liability accounts and were the primary reason that the gross
spread declined 76 basis points from the first quarter to the fourth quarter of
1994. Additional spread decline was due to an increase in lower-yielding
residential mortgage loans following the acquisition of Fortune and other
business combinations. At December 31, 1994, interest rate exposure was within
the approved AmSouth guidelines. During the fourth quarter of 1994, AmSouth sold
$370.8 million of available-for-sale securities and terminated all interest rate
swaps and $915.0 million of interest rate caps to significantly reduce the
expected variability of AmSouth's gross interest margin over a 12 month horizon
to changes in market interest rates.
AmSouth's management believes it has adequate flexibility to alter the overall
interest rate sensitivity structure as necessary to minimize exposure to changes
in interest rates. Additional tools and control reports exist beyond the
earnings simulation and gap reports. These include such measurements as duration
of equity and the corresponding mark-to-market evaluation of equity which
provide an indication of risk over an extended period of time.
From time to time, AmSouth utilizes various off-balance sheet instruments such
as interest rate swaps, caps and floors to manage interest rate risk. Table 6
summarizes the activity, by notional amount, of all off-balance sheet financial
instruments for the years 1994, 1993 and 1992.
Table 7 summarizes the expected maturities and interest rates exchanged on
AmSouth's interest rate caps and floors at December 31, 1994. Both
TABLE 6
INTEREST RATE SWAPS, CAPS AND FLOORS
<TABLE>
<CAPTION>
Swaps
------------------------------------------------- Caps
(In millions) Receive fixed Pay fixed Basis Other & Floors Total
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 (120) (120) -0- -0- -0- (240)
Terminations (65) -0- -0- (1,000) (915) (1,980)
----------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 $ -0- $ -0- $ -0- $ -0- $ 440 $ 440
----------------------------------------------------------------------
</TABLE>
FIFTY THREE
<PAGE>
the timing of the maturities and the variable interest payments and receipts
vary as certain interest rates change. The maturities and interest rates
exchanged are calculated assuming that interest rates remain unchanged from
average December 1994 rates. The information presented could change as future
rates increase or decrease.
TABLE 7
MATURITIES AND INTEREST RATES
EXCHANGED ON CAPS AND FLOORS
<TABLE>
<CAPTION>
Mature During
----------------------------
(Dollars in millions) 1995 1996 1997 Total
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notional amount $ 330 $ 33 $ 77 $ 440
Receive rate 0.19% 1.24% 0.00% 0.23%
Pay rate 0.17% 1.25% 0.59% 0.33%
</TABLE>
Additionally AmSouth's mortgage subsidiary, AmSouth Mortgage Company, Inc.
(AmSouth Mortgage), in the normal course of business, enters into forward
commitments to sell certain mortgages it originates. At December 31,1994, these
forward commitments totaled $77.5 million with terms of 60 to 90 days. During
1994, 1993 and 1992, AmSouth Mortgage originated loans totaling $1.5 billion,
$2.0 billion and $611.0 million, respectively.
AmSouth's goal in liquidity management is to satisfy the cash flow requirements
of depositors and borrowers while at the same time meeting the cash flow needs
of AmSouth. This is accomplished through the active management of both the asset
and liability sides of the statement of condition. The liquidity position of
AmSouth is monitored on a daily basis. In addition, the Asset/Liability
Committee reviews liquidity on a monthly basis and makes any changes necessary
as a result of the asset/liability management process or anticipated cash flow
changes. The Committee also compares on a monthly basis the company's liquidity
position to established corporate liquidity guidelines. At December 31, 1994,
AmSouth was within all of the limits which have been established. The primary
sources of liquidity on the asset side of the statement of condition are
maturities and cash flows from both loans and investments. Liquidity on the
liability side is maintained primarily through the growth in core deposits and
the ability to obtain economical wholesale funding in national and regional
markets. AmSouth's most commonly used sources of short-term borrowings are
(1) federal funds (i.e., the excess reserves of other financial institutions);
(2) repurchase agreements, whereby U.S. government and government agency
securities are pledged as collateral for short-term borrowings; and (3) pledges
of acceptable assets as collateral for public deposits and certain tax
collection monies. In addition to these sources, AmSouth has the ability to
borrow from the Federal Reserve Bank, and access other wholesale funding sources
such as Eurodollar deposits, certificates of deposit, commercial paper, and
lines of credit. Selected bank subsidiaries also have the ability to borrow from
Federal Home Loan Banks. AmSouth also has the ability to offer $150.0 million of
unsecured senior debt securities, unsecured subordinated debt securities or
warrants to purchase such debt securities under an existing shelf registration
with the Securities and Exchange Commission. Table 8 summarizes AmSouth's credit
ratings at December 31, 1994.
<TABLE>
<CAPTION>
TABLE 8
CREDIT RATINGS Standard &
Moody's Poor's Fitch
-------------------------------------------------------------------
<S> <C> <C> <C>
7 3/4% Subordinated Notes
Due 2004 A3 A- -
Subordinated Capital Notes
Due 1999 A3 A- -
Floating Rate Notes Due 1999 A2 A A+
Commercial paper P-1 A1 -
Certificates of deposit* Aa3 A+ -
Short-term counterparty* P-1 A1 -
Long-term counterparty* Aa3 A+ -
------------------------
</TABLE>
* AmSouth Bank of Alabama
FIFTY FOUR
<PAGE>
TABLE 9
COMPOSITION OF EARNING ASSETS
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------------
Average Percent Average Percent Average Percent
(Dollars in thousands) Balance of Total Balance of Total Balance of Total
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans net of unearned income $ 9,918,274 70.5% $ 7,634,984 67.1% $6,334,313 66.3%
Held-to-maturity securities 2,830,036 20.1 2,618,490 23.0 2,711,901 28.4
Available-for-sale securities 979,974 7.0 605,558 5.3 81,374 0.9
Trading securities 43,089 0.3 49,448 0.4 31,125 0.3
Other earning assets 292,033 2.1 478,705 4.2 388,843 4.1
-----------------------------------------------------------------------------------------------------------------------------
$14,063,406 100.0% $11,387,185 100.0% $9,547,556 100.0%
------------------------------------------------------------------------------------
</TABLE>
EARNING ASSETS AmSouth's earning assets consist of loans, securities, and other
earning assets. Further discussion of the significant aspects of each of these
earning assets follows. Table 9 illustrates the composition of average earning
assets for the years ended December 31, 1994, 1993, and 1992.
LOANS AND LOAN QUALITY Loans are the primary earning asset for AmSouth. The loan
portfolio provides the highest level of revenues and the highest degree of risk
for the company. When analyzing prospective loans, management assesses both
interest rate objectives and credit quality objectives in determining whether to
extend a given loan and the appropriate pricing for that loan. AmSouth maintains
a diversified portfolio in order to spread its risk and reduce its exposure to
economic downturns which may occur in different segments of the economy or in
particular industries.
TABLE 10
COMPOSITION OF LOANS
<TABLE>
<CAPTION>
December 31
--------------------------------------------------
(In millions) 1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 2,699 $2,461 $2,345 $2,335 $2,354
Commercial real estate:
Commercial real estate mortgage 1,371 1,217 1,050 975 1,059
Real estate construction 541 416 288 288 278
-------------------------------------------------------------------------------------------------
Total commercial real estate 1,912 1,633 1,338 1,263 1,337
Consumer:
Residential first mortgages 4,276 2,488 1,291 1,178 1,196
Other residential mortgages 632 512 450 420 352
Dealer indirect 887 599 496 506 589
Other consumer 1,090 919 867 674 660
-------------------------------------------------------------------------------------------------
Total consumer 6,885 4,518 3,104 2,778 2,797
-------------------------------------------------------------------------------------------------
11,496 8,612 6,787 6,376 6,488
Less unearned income 66 72 70 82 106
-------------------------------------------------------------------------------------------------
$11,430 $8,540 $6,717 $6,294 $6,382
--------------------------------------------------
</TABLE>
FIFTY FIVE
<PAGE>
The composition of the loan portfolio at AmSouth, as shown in Table 10, has
shifted over the last several years. In 1990, consumer loans represented
approximately 44% of total loans outstanding, while in 1994, consumer loans
represented approximately 60% of total loans outstanding. The two largest
increases in consumer loans from December 31, 1993 to December 31, 1994 were
increases in residential first mortgages of $1.8 billion and dealer indirect
loans of $288.0 million. Of the total growth in residential first mortgages,
approximately $1.0 billion was related to the acquisition of Fortune which was a
thrift with residential first mortgages representing the majority of loans held
in its portfolio. Approximately $600.0 million of the increase was growth in
markets existing prior to AmSouth's 1993 and 1994 business combinations. At
December 31, 1994, approximately 68% of the residential first mortgages held by
AmSouth's subsidiaries were adjustable-rate mortgages. The remaining balance of
residential first mortgages maintained by AmSouth were fixed-rate mortgages with
most having final maturities of 15 years or shorter. Since approximately 37% of
total loans are residential first mortgages, management will continue to
evaluate this level in the mix o f the loan portfolio and its impact on the
gross interest margin. Dealer indirect loans increased primarily due to
expansion into new markets and general economic conditions. Other consumer loans
increased $171.0 million primarily due to an increase in consumer installment
loans. Also within the consumer loan category, bankcard loans remained flat at
$350.0 million and student loans increased $32.0 million to $135.0 million.
The commercial and commercial real estate loan portfolio grew $238.0 million and
$279.0 million, respectively, in 1994. The increase in both portfolios was
primarily attributable to the business combinations completed in 1994.
Industry and loan type diversification is reviewed quarterly by AmSouth's
management. Exposure limits are established, where appropriate, for particular
industries or types of loans. Table 11 provides the composition of the loan
portfolio by industry. The increase in the commercial loan portfolio was
primarily due to loans to financial services companies. Commercial real estate
loans are categorized by the type of collateral. Owner occupied properties
include mortgages where the borrower is a primary tenant, such as a factory or
warehouse loan. Nonowner occupied lending represents those loans where the
primary method of repayment is anticipated to come from rental income and
generally has inherently more risk than owner occupied lending. Approximately
79% of the 1994 increase in commercial real estate was collateralized by owner
occupied properties. At December 31, 1994, 42.3% of the total commercial real
estate portfolio was represented by owner occupied properties.
FIFTY SIX
<PAGE>
TABLE 11
LOANS BY INDUSTRY
<TABLE>
<CAPTION>
December 31
------------------- Increase
(In millions) 1994 1993 (Decrease)
-------------------------------------------------------------------
<S> <C> <C> <C>
Commercial:
Manufacturing $ 483 $ 461 $ 22
Trade 459 470 (11)
Transportation,
communication
and utilities 191 184 7
Health services 197 209 (12)
Other services 443 318 125
Construction 105 85 20
Other 821 734 87
-------------------------------------------------------------------
Total commercial 2,699 2,461 238
-------------------------------------------------------------------
Commercial real estate:
Commercial real
estate mortgage:
Owner occupied 589 440 149
Multifamily 209 133 76
Other nonowner
occupied 573 644 (71)
-------------------------------------------------------------------
Total commercial
real estate
mortgages 1,371 1,217 154
-------------------------------------------------------------------
Real estate construction:
Owner occupied 220 148 72
Nonowner occupied 321 268 53
-------------------------------------------------------------------
Total real estate
construction 541 416 125
-------------------------------------------------------------------
Total commercial
real estate 1,912 1,633 279
-------------------------------------------------------------------
Consumer:
Residential first
mortgages 4,276 2,488 1,788
Other residential
mortgages 632 512 120
Revolving credit 72 76 (4)
Bankcard 278 275 3
Dealer indirect 887 599 288
Other 740 568 172
-------------------------------------------------------------------
Total consumer 6,885 4,518 2,367
-------------------------------------------------------------------
$11,496 $8,612 $2,884
----------------------------------
</TABLE>
AmSouth offers loan products to customers with varying maturity schedules. Table
12 presents the maturities of certain loans at December 31, 1994.
AmSouth has written loan policies which include loan underwriting procedures and
the approval process. Depending primarily on the amount of the loan, there are
various approval levels including the branch or department level, the area
level, and the centralized Corporate Credit Committee.
AmSouth has a Loan Review Department which performs ongoing, independent reviews
of specific loans for credit quality, proper documentation and the risk
management process. This department is centralized and independent of the
lending function. The results of its examinations are reported to the Audit
Committee of the Board of Directors as well as AmSouth's independent auditors.
In addition, regular reports are made to senior management regarding the credit
quality of the loan portfolio as well as trends in the portfolio.
Each commercial loan recorded at AmSouth is assigned a risk rating on a
numerical scale from one to eight by the loan officer, subject to review by the
Loan Review Department. Consumer loan portfolios are assigned bulk ratings on
the same scale by type of loan and performance. The risk profile of the loan
portfolio established by these ratings and trends are reported to management and
the Audit Committee. Designated credit officers who are organizationally
independent of the production areas oversee the loan approval process, review
adherence to credit policies and performance of the credit administration
function, and monitor efforts to reduce nonperforming assets and classified
assets.
Management closely monitors loans and other assets which are classified as
nonperforming assets. Nonperforming assets include nonaccrual loans, loans
restructured because of the debtor's financial difficulties, foreclosed
properties, and repossessions. Loans are generally placed on
FIFTY SEVEN
<PAGE>
TABLE 12
SELECTED LOAN MATURITIES AND SENSITIVITY TO CHANGE IN INTEREST RATES
<TABLE>
<CAPTION>
Due After One But
Within Five Years Due After Five Years
Due in One ------------------------ ----------------------
Year or Fixed Variable Fixed Variable
(In millions) Less Rate Rate Total Rate Rate Total Total
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural $1,748 $574 $365 $ 939 $10 $2 $12 $2,699
Real estate construction 381 63 97 160 -0- -0- -0- 541
----------------------------------------------------------------------------------------------------------------------------
Total $2,129 $637 $462 $1,099 $10 $2 $12 $3,240
------------------------------------------------------------------------
</TABLE>
nonaccrual if full collection of principal and interest becomes unlikely (even
if all payments are current), or if the loan is delinquent in principal or
interest payments for 90 days or more, unless the loan is well secured and in
the process of collection. Table 13 details the components of nonperforming
assets at year end for each of the last five years. Nonperforming assets
excluding accruing loans 90 days past due (nonperforming assets), increased
$47.3 million, or 55.1%, during 1994. This follows a $30.3 million, or 26.1%
decrease during 1993. Without the effect of the Fortune purchase, the level of
nonperforming assets increased approximately $12.9 million in 1994. During 1994,
AmSouth incurred net credit related costs (provision for loan losses and
foreclosed properties expense) of $34.8 million.
At December 31, 1994, AmSouth had $11.1 million in potential problem loans
representing loans currently on accrual where information about possible credit
problems causes management to have doubts about the borrowers' ability to comply
with the present loan repayment terms which may result in those loans being
reported as nonaccrual, past due greater than ninety days or troubled debt
restructurings in the future.
Effective January 1, 1995, AmSouth will adopt 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). An
TABLE 13
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
December 31
--------------------------------------------------------------------
(Dollars in thousands) 1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 89,545 $53,020 $ 57,213 $ 69,953 $ 90,702
Restructured loans 13,203 2,420 4,924 3,398 86
----------------------------------------------------------------------------------------------------------------
Nonperforming loans 102,748 55,440 62,137 73,351 90,788
Foreclosed properties 28,263 29,273 52,771 106,799 95,715
Repossessions 2,079 1,081 1,196 1,919 4,398
----------------------------------------------------------------------------------------------------------------
Total nonperforming assets* $133,090 $85,794 $116,104 $182,069 $190,901
--------------------------------------------------------------------
Nonperforming assets* to loans
net of unearned income, foreclosed
properties and repossessions 1.16% 1.00% 1.71% 2.84% 2.94%
Accruing loans 90 days past due $ 34,246 $20,917 $ 18,007 $ 22,401 $ 23,384
</TABLE>
--------------------------------------
*Exclusive of accruing loans 90 days past due.
FIFTY EIGHT
<PAGE>
impaired loan within the scope of Statement 114 is to be recognized based on the
present value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. The impact on the company's
financial condition and results of operations resulting from the adoption of
Statement 114 is not expected to be material.
Table 14 presents nonperforming loans and year-to-date net charge-offs and both
as a percentage of average net loans by category for December 31, 1994 and 1993.
For the year ended December 31, 1994, total net charge-offs as a percentage of
average loans net of unearned income totaled 27 basis points compared to 26
basis points for the year ended December 31, 1993. Net charge-offs for 1993
included a $6.3 million recovery of a loan previously charged off.
TABLE 14
CREDIT QUALITY
<TABLE>
<CAPTION>
Nonperforming Loans* Net Charge-offs
----------------------------------------------- ------------------------------------------------
% of % of % of % of
December 31 Average December 31 Average December 31 Average December 31 Average
1994 Loans** per 1993 Loans** per 1994 Loans** per 1993 Loans** per
(Dollars in thousands) Category Category Category Category
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial $ 19,617 0.76% $22,069 0.95% $ 5,884 0.23% $ 4,028 0.17%
Commercial real estate:
Commercial real estate
mortgage:
Owner occupied 4,546 0.82 2,029 0.45 1,218 0.22 (5,458) (1.21)
Nonowner occupied 39,890 5.30 18,503 2.72 (989) (0.13) 1,289 0.19
---------------------------------------------------------------------------------------------------------------------------------
Total commercial real
estate mortgage 44,436 3.39 20,532 1.81 229 0.02 (4,169) (0.37)
---------------------------------------------------------------------------------------------------------------------------------
Real estate construction:
Owner occupied 2,258 1.30 1,785 1.21 (63) (0.04) -0- -0-
Nonowner occupied 3,650 1.37 518 0.24 (7) -- (39) (0.02)
---------------------------------------------------------------------------------------------------------------------------------
Total real estate
construction 5,908 1.34 2,303 0.63 (70) (0.02) (39) (0.01)
---------------------------------------------------------------------------------------------------------------------------------
Total commercial
real estate 50,344 2.88 22,835 1.52 159 0.01 (4,208) (0.28)
---------------------------------------------------------------------------------------------------------------------------------
Consumer:
Residential first
mortgages 24,939 0.74 8,516 0.44 2,498 0.07 601 0.03
Other residential
mortgages 26 -- -0- -- (39) (0.01) 238 0.05
Dealer indirect 594 0.09 47 0.01 2,568 0.37 1,833 0.37
Other consumer 7,228 0.73 1,973 0.23 15,825 1.60 17,256 2.02
---------------------------------------------------------------------------------------------------------------------------------
Total consumer 32,787 0.59 10,536 0.28 20,852 0.37 19,928 0.53
---------------------------------------------------------------------------------------------------------------------------------
$102,748 1.04% $55,440 0.73% $26,895 0.27% $19,748 0.26%
------------------------------------------------------------------------------------------------
</TABLE>
----------
* Exclusive of accruing loans 90 days past due.
** Net of unearned income
FIFTY NINE
<PAGE>
For the year ended December 31, 1994, the level of foreclosed properties
remained essentially flat compared to 1993. Table 15 presents foreclosed
properties by type of property and their carrying value at December 31, 1994.
The appraised value of foreclosed properties at December 31, 1994 was $37.6
million. The coverage ratio, which is computed as the appraised value as a
percentage of carrying value, was 133.1% at December 31, 1994.
TABLE 15
COMPOSITION OF FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
Carrying Percent
(Dollars in thousands) Value of Total
----------------------------------------------------------------
<S> <C> <C>
Commercial buildings $ 9,934 31.1%
Residential 6,719 21.1
Land/lots 4,951 15.5
Apartments 3,140 9.8
Shopping centers 3,085 9.7
Other 4,072 12.8
----------------------------------------------------------------
$31,901 100.0%
Allowance for foreclosed
property losses (3,638)
----------------------------------------------------------------
$28,263
-------
</TABLE>
Table 16 is a summary of the allowance for foreclosed property losses for 1994,
1993, and 1992. The balance in this allowance account represents temporary
decreases in the value of AmSouth's foreclosed properties and reflects the
company's intention to sell the majority of these properties in the near future.
TABLE 16
ALLOWANCE FOR FORECLOSED
PROPERTY LOSSES
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $3,908 $7,520 $8,800
Net write-downs/
losses (2,018) (3,097) (17,339)
Addition (reduction)
to allowance charged
(credited) to expense 1,748 (3,038) 16,059
Allowance acquired in
bank purchases -0- 2,523 -0-
---------------------------------------------------------------
Balance at December 31 $3,638 $3,908 $7,520
--------------------------
</TABLE>
During 1994, 1993, and 1992, the average balance of foreclosed properties and
repossessions totaled $32.1 million, $42.4 million, and $85.2 million,
respectively. The approximate pre-tax cost of carrying these assets, assuming a
cost of funds equal to the average rate paid on interest-bearing liabilities for
the year, was $1.3 million for 1994, $1.5 million for 1993, and $3.6 million for
1992. Due to changing interest rates, these costs may not be an accurate
indicator of the possible impact on future earnings if these assets were
converted into earning assets.
AmSouth recognizes interest income on nonaccrual loans on a cash basis only when
there is no substantial doubt as to the collection of principal. During 1994,
$6.2 million in revenue would have been recognized had the loans included in
nonaccrual at year end been on an accrual basis for the entire year. Revenues
included approximately $732.8 thousand recorded in 1994 for these loans.
Despite AmSouth's credit standards, internal controls, and continuous loan
review system, the risk inherent in the nature of lending results in periodic
loan charge-offs. AmSouth maintains an allowance for loan losses which it
believes is adequate to absorb losses in the loan portfolio. A formal review is
prepared quarterly to assess the risk in the portfolio in determining the
adequacy of the allowance for loan losses. The review includes analyses of
historical performance, the level of nonperforming and 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 review is then
presented to and subsequently approved by management and the Audit Committee of
the Board of Directors. The level of allowance to net loans outstanding will
vary depending on the overall results of this quarterly review.
SIXTY
<PAGE>
Over the past several years, AmSouth has maintained an allowance for loan losses
at the end of the period to loans net of unearned income approximating 1.50%. At
December 31, 1994, the allowance at the end of the period to loans net of
unearned income was 1.50%. This produces a coverage ratio for nonperforming
loans of 166.6%.
Table 17 is a summary of the allocation of the allowance for loan losses as
determined by internal formulas. Although amounts are assigned to certain
classifications of loans, the balance of the allowance for loan losses at
December 31, 1994, is considered to be a general allowance and, therefore, is
available for charge-offs of any type of loan which may be necessary in the
future.
TABLE 17
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
-------------------------------- --------------------------------
Percentage of Percentage of
Loans* in Each Loans* in Each
Allowance Category to Allowance Category to
(Dollars in thousands) Allocation Total Loans* Allocation Total Loans*
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $ 29,184 23.6% $ 37,868 29.9%
Commercial real estate:
Commercial real estate mortgage 30,464 12.0 21,385 13.3
Real estate construction 12,021 4.7 5,901 4.3
----------------------------------------------------------------------------------------------------------------------------
Total commercial real estate 42,485 16.7 27,286 17.6
Consumer:
Residential first mortgages 18,514 37.4 4,076 28.5
Other residential mortgages 2,289 5.6 719 6.2
Dealer indirect 7,916 7.2 6,108 6.7
Other consumer 21,822 9.5 20,613 11.1
----------------------------------------------------------------------------------------------------------------------------
Total consumer 50,541 59.7 31,516 52.5
----------------------------------------------------------------------------------------------------------------------------
Unfunded commitments 7,241 -- 5,650 --
Standby letters of credit 1,825 -- 1,660 --
Unallocated 39,891 -- 27,529 --
----------------------------------------------------------------------------------------------------------------------------
$171,167 100.0% $131,509 100.0%
---------------------------------------------------------------------
</TABLE>
------------------------
* Net of unearned income
SIXTY ONE
<PAGE>
Table 18 summarizes AmSouth's loan loss experience and coverage ratios for the
last five years.
TABLE 18
ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
(Dollars in thousands) 1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1 $ 131,509 $ 99,646 $ 95,392 $ 92,946 $ 96,142
Loans charged off:
Commercial, financial and agricultural (13,304) (8,492) (16,276) (18,331) (24,245)
Real estate construction (154) (178) (537) (375) (779)
Real estate mortgage (6,661) (3,776) (14,685) (22,671) (14,295)
Installment (23,810) (23,923) (14,542) (19,832) (18,686)
----------------------------------------------------------------------------------------------------------------------------
Total charge-offs (43,929) (36,369) (46,040) (61,209) (58,005)
----------------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 7,420 4,464 3,252 10,756 6,493
Real estate construction 224 217 3,828 194 1
Real estate mortgage 3,973 7,106 592 374 587
Installment 5,417 4,834 4,041 3,385 2,321
----------------------------------------------------------------------------------------------------------------------------
Total recoveries 17,034 16,621 11,713 14,709 9,402
----------------------------------------------------------------------------------------------------------------------------
Net charge-offs (26,895) (19,748) (34,327) (46,500) (48,603)
----------------------------------------------------------------------------------------------------------------------------
Addition to allowance charged to expense 30,103 27,966 38,581 48,647 45,407
Allowance acquired in bank purchases 36,450 23,645 -0- 299 -0-
----------------------------------------------------------------------------------------------------------------------------
Balance at December 31 $ 171,167 $ 131,509 $ 99,646 $ 95,392 $ 92,946
--------------------------------------------------------------------
Loans net of unearned income,
outstanding at end of period
$11,429,907 $8,540,412 $6,716,595 $6,293,509 $6,382,299
Average loans net of unearned income,
outstanding for the period $ 9,918,274 $7,634,984 $6,334,313 $6,209,432 $6,254,370
Ratios
Allowance at end of period to loans
net of unearned income 1.50% 1.54% 1.48% 1.52% 1.46%
Allowance at end of period to average
loans net of unearned income 1.73 1.72 1.57 1.54 1.49
Allowance at end of period to
nonperforming loans * 166.59 237.21 160.36 130.05 102.38
Allowance at end of period to
nonperforming assets * 128.61 153.28 85.82 52.39 48.69
Net charge-offs to average loans net of
unearned income 0.27 0.26 0.54 0.75 0.78
Net charge-offs to allowance at end of period 15.71 15.02 34.45 48.75 52.29
Recoveries to prior year charge-offs 46.84 36.10 19.14 25.36 29.34
</TABLE>
----------------------------------------------
* Exclusive of accruing loans 90 days past due
SIXTY TWO
<PAGE>
SECURITIES 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 market values be carried at
market 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
the 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 available-for-sale securities. Trading securities are carried at
market value with unrealized gains and losses included in other operating
revenues. Available-for-sale securities are also carried at market value with
unrealized gains and losses, net of deferred taxes, reported as a separate
component of shareholders' equity. At December 31, 1994, AmSouth reported
trading securities of $6.4 million, available-for-sale securities of $383.0
million and held-to-maturity securities of $3.3 billion. Table 19 presents
AmSouth's securities portfolio at December 31, 1994, 1993, 1992.
TABLE 19
SECURITIES
<TABLE>
<CAPTION>
December 31
-----------------------------
(In millions) 1994 1993 1992
------------------------------------------------------------------------
<S> <C> <C> <C>
Trading securities:
U.S. Treasury and federal
agency securities $ -0- $ 85 $ 22
Other securities 4 3 5
------------------------------------------------------------------------
Total taxable 4 88 27
State, county and
municipal securities 2 7 12
------------------------------------------------------------------------
6 95 39
------------------------------------------------------------------------
Available-for-sale securities:
U.S. Treasury and federal
agency securities 322 1,255 287
Other securities 61 39 50
------------------------------------------------------------------------
383 1,294 337
------------------------------------------------------------------------
Held-to-maturity securities:
U.S. Treasury and federal
agency securities 3,037 1,430 1,837
Other securities 7 40 364
------------------------------------------------------------------------
Total taxable 3,044 1,470 2,201
State, county and
municipal securities 293 353 407
------------------------------------------------------------------------
3,337 1,823 2,608
------------------------------------------------------------------------
$3,726 $3,212 $2,984
-----------------------------
</TABLE>
Trading securities are primarily held to provide a short-term inventory of
securities for sale to customers of AmSouth's investment services area. The
balance at December 31, 1994, declined $88.5 million consistent with lower
levels of customer demand. Unrealized gains of $854.4 thousand were included in
other operating revenues for 1994.
Available-for-sale securities declined $911.0 million during 1994 primarily due
to the sale of mortgage-backed securities and U.S. Treasury securities.
Approximately $290.0 million of U.S. Treasury securities were sold during the
year. During the first quarter of 1994, AmSouth sold approximately $200.0
million of mortgage-backed securities. As rates began to rise rapidly in the
latter part of 1994, additional sales of low
SIXTY THREE
<PAGE>
yielding mortgage-backed securities totaling $512.0 million occurred. The
proceeds of approximately $370.0 million from such sales occurring in December,
1994, were reinvested in shorter term securities, helping to reduce interest
rate sensitivity in the future. Total net realized losses of $26.6 million from
the sale of available-for-sale securities were included in other operating
revenues for 1994, compared to $13.1 million of net realized gains in 1993. At
December 31, 1994, unrealized losses, net of deferred taxes, of $4.6 million
were included as a reduction to shareholders' equity.
Held-to-maturity securities increased $1.5 billion during 1994. Approximately
$200.0 million of the increase was due to the acquisition of Fortune. The
remainder of the increase was primarily due to purchases of mortgage-backed
securities during the first half of 1994. At December 31, 1994, $2.5 billion of
the held-to-maturity portfolio consisted of mortgage-backed securities which
were either direct issues or collateralized by direct issues of the U.S.
Government or federally sponsored agencies. Approximately 66% of the mortgage-
backed securities are fixed-rate securities. The average life of these
securities is estimated to be five and one-half years with a duration of three
and one-half years. Also included in the held-to-maturity portfolio at December
31, 1994, were $293.2 million of state, county and municipal obligations. A
total of 46.0% of these tax-free securities were rated by leading independent
agencies with 94.0% of those securities rated "A" or above. The remaining
securities were not rated, generally because of the size of the issue and the
expense associated with obtaining a rating. At December 31, 1994, AmSouth did
not have more than 10% of its shareholders' equity invested in the tax-free
obligations of any one issuer where the securities are payable from the same
source of income or taxing authority.
Table 20 presents maturities of the available-for-sale and held-to-maturity
portfolios at December 31, 1994.
SIXTY FOUR
<PAGE>
TABLE 20
AVAILABLE-FOR-SALE SECURITIES
AND HELD-TO-MATURITY SECURITIES
RELATIVE MATURITIES AND WEIGHTED AVERAGE YIELDS
<TABLE>
<CAPTION>
Due Within Due After One but Due After Five but Due After
One Year Within Five Years Within Ten Years Ten Years
(Taxable equivalent basis - ------------------ ------------------ ------------------ ---------------------
dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale securities:
U.S. Treasury and federal
agency securities $ 1,993 5.39% $161,613 7.43% $ 25,302 8.59% $ 132,823 6.12%
Other securities -0- - 4,073 5.41 -0- - 9,663 5.74
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,993 5.39% $165,686 7.38% $ 25,302 8.59% $ 142,486 6.09%
--------------------------------------------------------------------------------------------
Percentage of total portfolio 0.60% 49.39% 7.54% 42.47%
Held-to-maturity securities:
U.S. Treasury and federal
agency securities $12,040 6.34% $645,037 5.98% $429,608 7.50% $1,950,068 6.67%
State, county and municipal
obligations 50,856 11.34 131,787 10.99 60,727 11.03 49,878 11.19
Other securities -0- - 2,775 8.32 3,750 7.38 31 6.28
-----------------------------------------------------------------------------------------------------------------------------------
$62,896 10.36% $779,599 6.81% $494,085 7.95% $1,999,977 6.78%
--------------------------------------------------------------------------------------------
Percentage of total portfolio 1.89% 23.37% 14.81% 59.93%
Taxable equivalent adjustment
for calculation of yield $ 2,019 $ 5,056 $ 2,345 $ 1,954
</TABLE>
-----------
Notes:
1. The weighted average yields were computed by dividing the taxable equivalent
interest income by the book value of the appropriate securities. The taxable
equivalent interest income does not give effect to the disallowance of
interest expense, for federal income tax purposes, related to certain tax-
free assets.
2. The amount of available-for-sale securities indicated as maturing after five
but within ten years includes $21 million of mortgage-backed securities and
those indicated as maturing after ten years includes $133 million of
mortgage-backed securities. Although these securities have long-term
maturities, according to mortgage industry standards, the estimated weighted
average remaining life of these securities held in AmSouth's investment
portfolio is less than four years.
3. The amount of held-to-maturity securities indicated as maturing after five
but within ten years includes $348 million of mortgage-backed securities and
those indicated as maturing after ten years includes $1,950 million of
mortgage-backed securities. Although these securities have long-term
maturities, according to mortgage industry standards, the estimated weighted
average remaining life of these securities held in AmSouth's investment
portfolio is less than six years.
4. Federal Reserve Bank stock, Federal Home Loan Bank stock, and preferred stock
of other corporations held by AmSouth are not included in the above table.
SIXTY FIVE
<PAGE>
TABLE 21
AVERAGE DEPOSITS
<TABLE>
<CAPTION>
December 31
-----------------------------------------------------------------------
(In thousands) 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand $ 1,779,833 $1,611,428 $1,304,787 $1,136,869 $1,176,610
Interest-bearing demand 3,820,580 3,263,054 3,033,034 2,846,676 2,497,252
Savings 918,132 773,131 575,082 482,998 448,991
Time:
Retail 3,343,936 2,359,352 2,085,556 2,312,726 2,264,923
Individual retirement accounts 784,736 639,866 517,227 468,742 415,640
Other 153,316 162,479 143,007 159,023 154,303
-----------------------------------------------------------------------------------------------------------------------------
Total time 4,281,988 3,161,697 2,745,790 2,940,491 2,834,866
-----------------------------------------------------------------------------------------------------------------------------
Certificates of deposit of
$100,000 or more 762,403 728,206 687,514 741,390 726,328
-----------------------------------------------------------------------------------------------------------------------------
$11,562,936 $9,537,516 $8,346,207 $8,148,424 $7,684,047
-----------------------------------------------------------------------
</TABLE>
OTHER EARNING ASSETS Other earning assets consist of federal funds sold and
securities purchased under agreements to resell (resell agreements) and mortgage
loans held for sale. Federal funds sold and resell agreements serve as a short-
term investment alternative while assisting in the management of interest rate
sensitivity. The average balance of federal funds sold and resell agreements for
1994 was $84.2 million compared to $233.7 million for 1993.
At December 31, 1994, the balance of mortgage loans held for sale was $130.2
million compared to $335.4 million at December 31, 1993. These loans were
primarily originated through AmSouth Mortgage.
DEPOSITS Table 21 outlines the composition of the average deposits of AmSouth
for the last five years. AmSouth's principal source of funding and consequently
liquidity is its deposits.
Average total deposits increased $2.0 billion during 1994. Approximately 41% of
the increase is attributable to the acquisition of Fortune. Additional deposit
growth in new markets entered into through business combinations accounted for
50% of the increase. The largest increase in average total deposits, $984.6
million, occurred in retail time deposits. The rising interest rate environment
and a special deposit marketing campaign during the last half of 1994 were the
primary reasons for the increase. A significant portion of these new deposits
are certificates of deposit for terms exceeding 20 months that should reduce
AmSouth's interest rate sensitivity going forward.
Table 22 provides a maturity schedule for time deposits of $100,000 or more at
December 31.
TABLE 22
MATURITY OF TIME DEPOSITS
OF $100,000 OR MORE
<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
----------------------------------------------------------------
<S> <C> <C> <C>
Three months or less $233,282 $302,970 $269,139
Over three through
six months 102,370 128,859 108,179
Over six through
twelve months 127,775 234,069 186,136
Over twelve months 435,971 258,681 188,492
----------------------------------------------------------------
$899,398 $924,579 $751,946
--------------------------------
</TABLE>
OTHER INTEREST-BEARING LIABILITIES Other interest-bearing liabilities includes
all interest-bearing liabilities except deposits. Short-term liabilities
included in this category consist of federal funds purchased and securities sold
under agreements to repurchase (repurchase agreements),
SIXTY SIX
<PAGE>
and other borrowed funds. Average federal funds purchased and repurchase
agreements, which provide an overnight source of funds, increased $429.9 million
in 1994 as AmSouth funded its earning asset growth. At December 31, 1994, 1993,
and 1992, federal funds purchased and repurchase agreements totaled $1.2
billion, $793.2 million, and $990.0 million, respectively, with weighted average
interest rates of 5.48%, 2.73%, and 2.85%, respectively. The maximum amount
outstanding at any month end during each of the last three years was $2.4
billion, $1.2 billion, and $988.6 million, respectively. The average daily
balance and average interest rates for each year are presented in Table 1.
Other borrowed funds include master notes, commercial paper, Eurodollars
purchased, term federal funds purchased, short-term Federal Home Loan Bank
(FHLB) advances, the current portion of long-term debt, and treasury, tax and
loan notes. During 1994, the average balance of other borrowed funds increased
$56.1 million primarily as the result of increases in short-term FHLB advances
of $100.1 million and term federal funds purchased of $28.2 million, partially
offset by a decrease in treasury, tax and loan notes of $82.0 million.
At December 31, 1994 and 1993, AmSouth had long-term debt outstanding of $386.1
million and $173.1 million, respectively. In general, the debt has been used to
fund acquisitions, inject capital into subsidiary banks, provide capital for
nonbanking subsidiaries, and for other general corporate purposes. 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. Substantially all of the proceeds from the notes
were used to fund the cash portion of the Fortune purchase price.
SHAREHOLDERS' EQUITY AmSouth has always placed great emphasis on maintaining its
strong capital base. At December 31, 1994, shareholders' equity totaled $1.3
billion, or 7.81% of total assets. Since December 31, 1993, shareholders' equity
increased $167.7 million primarily due to the $95.8 million of net equity issued
for the Fortune purchase and $46.4 million of net income less dividends.
Management is committed to maintaining shareholders' equity at a level
sufficient to assure its shareholders, customers, and regulators that AmSouth is
financially sound, and to enable AmSouth to sustain an appropriate degree of
leverage to provide a desirable level of profitability.
Regulators use a risk-adjusted calculation to aid in their assessment of capital
adequacy. This ratio is weighted to reflect the credit risk associated with an
institution's assets, both recorded and unrecorded. At December 31, 1994, the
minimum required risk-adjusted capital ratio for Tier I capital (shareholders'
equity less certain intangibles) was 4.00% and the minimum required risk-
adjusted total capital ratio was 8.00%. Tier II capital includes the long-term
subordinated debt of $150.0 million issued during 1994, other qualifying long-
term debt, and the allowance for loan losses, which is limited to 1.25% of risk-
adjusted assets. There is no minimum for Tier II capital, however it cannot
exceed Tier 1 capital. As shown in Table 23, AmSouth's risk-adjusted capital
ratios were above the minimum requirements.
SIXTY SEVEN
<PAGE>
TABLE 23
CAPITAL RATIOS
<TABLE>
<CAPTION>
December 31
--------------------------------
(Dollars in thousands) 1994 1993
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Risk-adjusted capital ratio:
Total assets $16,777,951 $13,469,621
Adjusted allowance for loan losses 154,458 123,948
Adjustment for risk-weighting of balance sheet items (6,075,915) (5,003,071)
Adjustment for off-balance sheet items 1,700,491 1,380,600
Unrealized losses on available-for-sale securities 7,317 -0-
Less certain intangible assets (224,381) (67,893)
--------------------------------------------------------------------------------------------------------------------
Total risk adjusted assets $12,339,921 $ 9,903,205
--------------------------------
Shareholders' equity $ 1,310,458 $ 1,142,725
Unrealized losses on available-for-sale securities (net of deferred taxes) 4,594 -0-
Less certain intangible assets (224,381) (67,893)
--------------------------------------------------------------------------------------------------------------------
Tier I capital 1,090,671 1,074,832
Adjusted allowance for loan losses 154,458 123,948
Qualifying long-term debt 252,396 102,909
--------------------------------------------------------------------------------------------------------------------
Tier II capital 406,854 226,857
--------------------------------------------------------------------------------------------------------------------
Total capital $ 1,497,525 $ 1,301,689
--------------------------------
Tier I capital to total risk-adjusted assets 8.84% 10.85%
Total capital to total risk-adjusted assets 12.14 13.14
Other capital ratios:
Leverage 6.64 8.44
Ending equity to ending assets 7.81 8.48
Tangible equity to assets 5.83 7.34
</TABLE>
In addition, the total risk-adjusted capital ratios for the company's banking
subsidiaries at December 31, 1994, as well as other pertinent measures of
capital adequacy, were above the minimum regulatory requirements. All of the
company's banking subsidiaries were well capitalized as defined by federal
banking regulations. The total risk-adjusted capital ratio for each of AmSouth's
major banking subsidiaries was:
AmSouth Bank of Alabama 10.61%
AmSouth Bank of Florida 11.13%
AmSouth Bank of Tennessee 15.98%
Management monitors the level of goodwill and other intangibles and the impact
on capital ratios. At December 31, 1994 AmSouth had $286.4 million of goodwill.
Goodwill increased during 1994 due to approximately $167.0 million added as a
result of the Fortune acquisition. Other intangibles are primarily purchased
mortgage servicing rights (PMSRs) which totaled $64.4 million at December 31,
1994. PMSRs will be eliminated upon completion of the sale of the mortgage
servicing portfolio during 1995. The tangible equity to assets ratio at December
31, 1994 was 5.83%. The ratio is expected to exceed 6.00% after the sale of the
mortgage servicing portfolio. Of the total amount of goodwill, $7.2 million was
recorded at the parent company. The parent company's double leverage ratio at
year end 1994 and 1993 was 114.7% and 104.0%, respectively.
SIXTY EIGHT
<PAGE>
At December 31, 1994, the book value per share of AmSouth's common stock was
$22.57 compared to $21.48 at December 31, 1993. The market value per common
share at year end 1994 was $25.75 or 114.1% of book value, compared to $31.25 or
145.5% of book value at year end 1993. At December 31, 1994, total market
capitalization was $1.5 billion.
AmSouth is generally dependent upon dividends from its subsidiary banks to fund
the dividends to its shareholders, capital injections to subsidiaries, and
certain other operating costs. During 1994, AmSouth declared dividends of $1.43
per common share, which totaled $80.9 million, compared to $1.22 per common
share and $58.9 million in 1993. The dividend payout ratio for 1994 was 63.56%
compared to 42.21% for 1993. The higher dividend payout ratio, as well as the
lower rate of internal capital generation, was due to the lower level of net
income for 1994. Table 24 shows the computation of AmSouth's rate of internal
capital generation for the last five years.
TABLE 24
RATE OF INTERNAL CAPITAL GENERATION
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Return on average assets 0.83% 1.19% 1.12% 0.89% 0.82%
(divided by)
Average equity to average assets 8.13 8.33 8.00 7.18 6.65
=
Return on average equity 10.24 14.23 13.94 12.38 12.28
X
Earnings retention ratio 36.44 57.79 57.20 51.96 49.73
=
Internal capital generation ratio 3.73 8.22 7.97 6.43 6.11
</TABLE>
SIXTY NINE
<PAGE>
EXHIBIT 21
AMSOUTH BANCORPORATION
LIST OF SUBSIDIARIES
The following is a list of all subsidiaries of AmSouth and the jurisdiction
in which they were organized. Each subsidiary does business under its own name.
<TABLE>
<CAPTION>
NAME JURISDICTION WHERE ORGANIZED
---- ----------------------------
<S> <C>
AmSouth Bank of Alabama...................... Alabama
AmSouth Mortgage Company, Inc. ............ Delaware
Fifth Avenue Realty Company................ (unincorporated joint venture)
AmSouth Leasing Corporation................ Alabama
AmSouth Investment Services, Inc. ......... Alabama
First Gulf Insurance Agency, Inc. ......... Alabama
National Properties and Mining Company,
Inc. ..................................... Delaware
AmSouth Realty, Inc. ...................... Delaware
AmSouth Riverchase, Inc. .................. Alabama
AmSouth of Louisiana, Inc. .................. Louisiana
Alabanc Properties, Inc. .................... Delaware
AmSouth Bank of Florida...................... Florida
First City Service Corporation............. Florida
Horseshoe Bend Land Company (partner-
ship)................................... Tennessee
AmSouth Commercial Real Estate Corporation. Georgia
MSF Marketing, Inc. ....................... Florida
MSF Properties, Inc. ...................... Florida
AmSouth Retirement Services, Inc. ......... Florida
Orange Bank Development Corporation........ Florida
Parkway Service Corporation................ Florida
Service Mortgage and Insurance Agency,
Inc. ..................................... Florida
AmFed Service Corporation.................. Florida
AmFed Mortgage Corporation............... Florida
Largo Service Corporation.................. Florida
AmSouth Bank of Georgia...................... Georgia
AmSouth Bank of Tennessee.................... Tennessee
FMLS, Inc.................................. Tennessee
AmSouth Bank of Walker County................ Alabama
MSF Management Corp. ........................ Florida
MSF Financial Corp. ....................... Florida
Trivest Enterprises, Inc. ................... Florida
Fortune Equity Corporation................... Florida
First Clearwater Corporation............... Florida
</TABLE>
<PAGE>
Exhibit 23--CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements of AmSouth Bancorporation and in the related Prospectuses, of our
report dated January 31, 1995, with respect to the consolidated financial
statements of AmSouth Bancorporation and subsidiaries incorporated by reference
in this Annual Report (Form 10-K) for the year ended December 31, 1994:
Form S-3 No. 33-55683 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-52243 pertaining to the assumption by AmSouth
Bancorporation of FloridaBank Stock Option Plan and FloridaBank Stock
Option Plan - 1993;
Form S-8 No. 33-52113 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-3 No. 33-50363 pertaining to the Debt Shelf Registration;
Form S-8 No. 33-35218 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-8 No. 33-37905 pertaining to the AmSouth Bancorporation Thrift Plan;
Form S-8 No. 33-9368 pertaining to the Long Term Incentive Compensation
Plan;
Form S-8 No. 33-2927 (as amended) pertaining to the Employee Stock Purchase
Plan;
Form S-8 No. 2-97464 pertaining to the Long Term Incentive Compensation
Plan;
Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-19016 pertaining to the Long Term Incentive Compensation
Plan; and,
Form S-8 No. 33-18653 pertaining to the 1987 Substitute Stock Option Plan.
/s/ Ernst & Young LLP
Birmingham, Alabama
March 24, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Condition, the Consolidated Statement of Earnings and
Note E of the Notes to Consolidated Financial Statements of Item 8, and Tables
1, 13 and 18 of Item 7 of the AmSouth Bancorporation Form 10-K for the year
ended December 31, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 616,639
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 152,525
<TRADING-ASSETS> 6,383
<INVESTMENTS-HELD-FOR-SALE> 383,039
<INVESTMENTS-CARRYING> 3,336,557
<INVESTMENTS-MARKET> 3,169,513
<LOANS> 11,496,121
<ALLOWANCE> 171,167
<TOTAL-ASSETS> 16,777,951
<DEPOSITS> 13,067,062
<SHORT-TERM> 1,868,840
<LIABILITIES-OTHER> 145,444
<LONG-TERM> 386,147
<COMMON> 59,556
0
0
<OTHER-SE> 1,250,902
<TOTAL-LIABILITIES-AND-EQUITY> 16,777,951
<INTEREST-LOAN> 793,956
<INTEREST-INVEST> 238,540
<INTEREST-OTHER> 15,245
<INTEREST-TOTAL> 1,047,741
<INTEREST-DEPOSIT> 368,961
<INTEREST-EXPENSE> 480,414
<INTEREST-INCOME-NET> 567,327
<LOAN-LOSSES> 30,103
<SECURITIES-GAINS> 354
<EXPENSE-OTHER> 522,905
<INCOME-PRETAX> 193,340
<INCOME-PRE-EXTRAORDINARY> 193,340
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127,290
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 0.00
<YIELD-ACTUAL> 4.14
<LOANS-NON> 89,545
<LOANS-PAST> 34,246
<LOANS-TROUBLED> 13,203
<LOANS-PROBLEM> 11,100
<ALLOWANCE-OPEN> 131,509
<CHARGE-OFFS> 43,929
<RECOVERIES> 17,034
<ALLOWANCE-CLOSE> 171,167
<ALLOWANCE-DOMESTIC> 131,276
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 39,891
</TABLE>
