<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1995 1-7476
AMSOUTH BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0591257
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1400 AMSOUTH-SONAT TOWER 35203
BIRMINGHAM, ALABAMA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(205) 320-7151
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
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
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 (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 8, 1996 was $2,124,971,000. (Note 1)
As of March 8, 1996 AmSouth Bancorporation had 56,419,521 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, 1995: Part I,
Part II
Proxy Statement for Annual Meeting to be held April 18, 1996: 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 8,
1996 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AMSOUTH BANCORPORATION
FORM 10-K
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FORWARD LOOKING INFORMATION............................................... 1
PART I
Item 1. Business.......................................................... 2
Item 2. Properties........................................................ 8
Item 3. Legal Proceedings................................................. 9
Item 4. Submission of Matters to a Vote of Security Holders............... 9
Executive Officers of the Registrant...................................... 10
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Mat-
ters..................................................................... 12
Item 6. Selected Financial Data........................................... 13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 14
Item 8. Financial Statements and Supplementary Data....................... 14
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 14
PART III
Item 10. Directors and Executive Officers of the Registrant............... 14
Item 11. Executive Compensation........................................... 15
Item 12. Security Ownership of Certain Beneficial Owners and Management... 15
Item 13. Certain Relationships and Related Transactions................... 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 15
SIGNATURES................................................................ 16
EXHIBIT INDEX............................................................. 18
</TABLE>
<PAGE>
FORWARD LOOKING INFORMATION
This Form 10-K, including the portions of AmSouth's Annual Report to
Shareholders that are incorporated herein by reference, contains certain
forward looking information with respect to the financial condition, results of
operations and business of AmSouth including statements relating to: (A) the
net interest margin; (B) noninterest revenues; (C) loan losses; (D) various
expenses, including occupancy, equipment and employee benefits; (E) a possible
one-time payment related to the amount of AmSouth's deposits insured by the
Savings Association Insurance Fund; (F) a decrease in Federal Deposit Insurance
Corporation premiums; (G) Internal Revenue Service review of tax returns; (H)
legal proceedings; (I) growth in various categories of loans; (J) sources of
funding for asset growth; and (K) possible consolidation within the banking
industry. These forward looking statements involve certain risks,
uncertainties, estimates and assumptions by management. Factors that may cause
actual results to differ materially from those contemplated by such forward
looking statements include, among others, the following: (1) the rate of growth
of the economy, especially in the Southeast; (2) the stability of interest
rates; (3) relative strength/weakness in the consumer credit sector; (4)
AmSouth's ability to improve sales and service quality and to develop
profitable new products; (5) the successful implementation of technological
enhancements; (6) whether, and in what form, legislation is passed regarding
the Savings Association Insurance Fund; (7) the results of Internal Revenue
Service examinations of past tax returns; (8) the outcome of litigation
involving AmSouth, which depends on judicial interpretations of law and the
findings of juries; (9) the strength of the real estate markets; (10) whether
levels of consumer confidence remain high; (11) the success of AmSouth's
marketing and sales efforts; and (12) the performance of the stock and bond
markets.
1
<PAGE>
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, 1995, AmSouth had total consolidated
assets of approximately $17.7 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, 1995, AmSouth
Alabama had total consolidated assets of approximately $9.8 billion and total
consolidated deposits of approximately $7.0 billion. AmSouth Alabama is a full
service bank with 125 banking offices located throughout Alabama at December
31, 1995. Based upon total consolidated assets as of December 31, 1995, 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. 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 administration of debt issues and provision of
transfer agent services for 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 headquartered in Tampa, Florida.
At December 31, 1995, AmSouth Florida had total consolidated assets of
approximately $6.8 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, 1995, AmSouth Florida operated 116 banking offices in
Florida.
AmSouth Bank of Tennessee (AmSouth Tennessee) is headquartered in
Chattanooga, Tennessee. At December 31, 1995, AmSouth Tennessee had total
assets of approximately $1.1 billion and total deposits of approximately $829
million and was the ninth largest bank headquartered in Tennessee. AmSouth
Tennessee offers banking services similar to those of AmSouth Alabama. At
December 31, 1995, AmSouth Tennessee operated 22 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. All of AmSouth's banking subsidiaries are state-chartered
banks that are members of the Federal Reserve System.
As of February 29, 1996, AmSouth and its subsidiaries had 5,182 full-time
employees and 1,074 part-time employees.
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
2
<PAGE>
of competition include prices, interest rates, services, and availability of
products. AmSouth also competes with the other bank holding companies
headquartered in Alabama, Florida, Tennessee, Georgia, and other states for the
acquisition of financial institutions.
At December 31, 1995, of the bank holding companies headquartered in Alabama,
AmSouth was the second largest in terms of equity capital and total 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 were principally located unless the
acquisition was specifically authorized by the laws of the state in which the
bank being acquired was located.
For a number of years Alabama had a reciprocal interstate banking law that
allowed banks in several other states (primarily in the Southeast) and the
District of Columbia to acquire banks in Alabama provided there was reciprocal
legislation in the other jurisdictions. Alabama bank holding companies were
thereby permitted to acquire banks in the jurisdictions specified in the law
which had adopted such reciprocal legislation. These laws resulted in a
significant increase in competition for banking services in Alabama, Florida,
Tennessee, Georgia, and the other affected areas.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
IBBEA) authorized interstate acquisitions of banks and bank holding companies
without geographic limitation beginning September 29, 1995. In addition,
beginning June 1, 1997, the IBBEA authorizes a bank to merge with a bank in
another state as long as neither of the states has opted out of interstate
branching by May 31, 1997. A bank may establish and operate a de novo branch in
a state in which the bank does not maintain a branch if that state expressly
permits de novo branching. Once a bank has established branches in a state
through an interstate merger transaction, the bank may establish and acquire
additional branches at any location in the state where any bank involved in the
interstate merger transaction could have established or acquired branches under
applicable federal or state law. A bank that has established a branch in a
state through de novo branching may establish and acquire additional branches
in such state in the same manner and to the same extent as a bank having a
branch in such state as a result of an interstate merger. If a state opts out of
interstate branching within the specified time period, no bank in any other
state may establish a branch in the opting out state, whether through an
acquisition or de novo. Although the management of AmSouth cannot predict with
certainty the effect of the IBBEA on AmSouth, it is probable that the IBBEA
will result in greater consolidation within the banking industry.
BUSINESS COMBINATIONS
AmSouth continually evaluates business combination opportunities and from
time to time 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.
3
<PAGE>
SUPERVISION AND REGULATION
The following discussion addresses the regulatory framework applicable to
bank holding companies and their subsidiaries, and provides certain specific
information relevant to AmSouth. Regulation of financial institutions such as
AmSouth and its subsidiaries is intended primarily for the protection of
depositors, the deposit insurance funds of the Federal Deposit Insurance
Corporation (the FDIC) and the banking system as a whole, and generally is not
intended for the protection of stockholders or other investors.
The following is a summary of certain statutes and regulations that apply to
the operation of banking institutions. Changes in the applicable laws, and in
their application by regulatory agencies, cannot necessarily be predicted, but
they may have a material effect on the business and results of banking
organizations, including AmSouth.
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 percent 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.
AmSouth's subsidiary banks (the Subsidiary Banks) are subject to supervision
and examination by applicable federal and state banking agencies. As state
banks that are members of the Federal Reserve System, they are generally
subject to regulation by the Federal Reserve Board and the banking agencies of
the states in which they are located. Each of the Subsidiary Banks is also an
insured depository institution, and, therefore, also subject to regulation by
the FDIC. 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 and to allow affiliations between bank holding
companies and non-bank entities that are restricted under current law. AmSouth
is unable to predict whether any of these proposals will be adopted and, if so,
what their effect on AmSouth would be.
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's capital 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. The
payment of dividends by AmSouth and the Subsidiary Banks also may be affected
by other factors, such as the requirement to maintain capital at or above
regulatory guidelines.
Under Alabama law, a bank may not pay a dividend in excess of 90 percent of
its net earnings until the bank's surplus is equal to at least 20 percent of
capital. 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
4
<PAGE>
dividends if the total of all dividends declared by the bank in any calendar
year will exceed the total of (a) the bank's net earnings (as defined by
statute) for that year plus (b) 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.
The other Subsidiary Banks are also subject to varying restrictions on the
payment of dividends under applicable state laws. Under Florida law, before
declaring a dividend, a bank must (a) have transferred 20 percent of its net
profits for the period covered by the dividend to its surplus fund until the
fund is at least equal to the amount of common and preferred stock outstanding,
and (b) have charged off bad debts, depreciation and other worthless assets and
made provision for reasonably anticipated future losses on loans and other
assets. A bank may then declare a dividend equal to the net profits for the
period covered by the dividend plus its retained net profits for the preceding
two years. A bank may not declare a dividend from retained net profits that
accrued prior to the preceding two years without the approval of the Florida
Department of Banking and Finance. A bank may not declare a dividend if its net
income from the current year combined with net income from the preceding two
years is a loss or would cause the capital of the bank to fall below the
minimum amount required by law or regulation.
Under Tennessee law, AmSouth Tennessee may declare dividends not more than
once in each calendar quarter from undivided profits if (a) the bank's
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 or to any part
of the capital stock account without the consent of the Tennessee 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 percent of the capital stock and (ii) in an amount not
less than 10 percent of net profits until the surplus equals the capital stock.
In addition, as banks that are members of the Federal Reserve System, each
Subsidiary Bank 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 (a) the bank's net
profits (as defined and interpreted by regulation) for that year plus (b) the
retained net profits (as defined and interpreted by regulation) for the
preceding two years, less any required transfers to surplus. Each Subsidiary
Bank also can pay dividends only to the extent that retained net profits
(including the portion transferred to surplus) exceed its losses and bad debts.
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 a hearing, that such bank cease and desist from such practice.
The Federal Reserve Board has 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
has issued a policy statement which provides that bank holding companies and
state member banks should generally only pay dividends out of current operating
earnings.
At December 31, 1995, under dividend restrictions imposed under federal and
state laws, including those described above, the Subsidiary Banks, without
obtaining government approvals, could declare aggregate dividends of
approximately $197.9 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 regulatory
capital (Total Capital) to risk-weighted assets (including
5
<PAGE>
certain off-balance-sheet items, such as standby letters of credit) is 8
percent. 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,
1995, AmSouth's consolidated Tier 1 Capital and Total Capital ratios were 7.87
percent and 11.74 percent, respectively.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. The guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the Leverage Ratio), of 3 percent 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 percent, plus an additional cushion of 100 to 200
basis points. AmSouth's Leverage Ratio at December 31, 1995 was 6.38 percent.
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 applicable minimum capital requirements as of
December 31, 1995. 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, and, if so, at
what levels and on what schedule.
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 FDIC-insured depository institution is defined to be well
capitalized if it maintains a Leverage Ratio of at least 5 percent, a risk-
adjusted Tier 1 Capital Ratio of at least 6 percent, and a Total Capital Ratio
of at least 10 percent and is not subject to any order or written directive to
maintain any specific capital level. An FDIC-insured depository institution is
defined to be adequately capitalized if it maintains a Leverage Ratio of at
least 4 percent, a risk-adjusted Tier 1 Capital Ratio of at least 4 percent,
and a Total Capital Ratio of at least 8 percent. In addition, an FDIC-insured
depository institution will be considered: (a) undercapitalized if it fails to
meet any minimum required measure; (b) significantly undercapitalized if it is
significantly below such measure; and (c) critically undercapitalized if it
fails to maintain a level of tangible equity equal to not less than 2 percent
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 is operating in an unsafe or unsound manner or receives an
unsatisfactory examination rating. AmSouth believes that at December 31, 1995,
all of the Subsidiary Banks had capital ratios sufficient to qualify as "well
capitalized."
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 that 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
6
<PAGE>
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, 1995.
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 insured 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. An
insured depository institution's holding company must guarantee the capital
plan, up to an amount equal to the lesser of 5 percent 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 an
insured depository institution fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.
Significantly undercapitalized insured 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 insured depository institutions are subject
to appointment of a receiver or conservator.
Brokered Deposits
The FDIC has adopted regulations under the FDI Act governing the receipt of
brokered deposits. Under the regulations, an FDIC-insured depository
institution cannot accept, rollover or renew brokered deposits unless (a) it is
well capitalized or (b) it is adequately capitalized and receives a waiver from
the FDIC. A depository institution 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
depository institution 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 depository institution that is
well capitalized.
HOLDING COMPANY STRUCTURE
There are various legal restrictions on the extent to which AmSouth and its
nonbank subsidiaries may borrow or otherwise obtain funding from its Subsidiary
Banks. Each Subsidiary Bank (and its subsidiaries) is limited in engaging in
borrowing and other "covered transactions" with nonbank and non-savings bank
affiliates to the following amounts: (a) in the case of any such affiliate, the
aggregate amount of covered transactions of the Subsidiary Bank and its
subsidiaries may not exceed 10 percent of the capital stock and surplus of such
Subsidiary Bank; and (b) in the case of all affiliates, the aggregate amount of
covered transactions of the Subsidiary Bank and its subsidiaries may not exceed
20 percent 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
7
<PAGE>
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.
The FDI Act provides that, in the event of the "liquidation or other
resolution" of an insured depository institution, the claims of depositors of
such institution (including claims by the FDIC as subrogee of insured
depositors) and certain claims for administrative expenses of the FDIC as
receiver would be afforded a priority over other general unsecured claims
against the institution. If an insured depository institution fails, insured
and uninsured depositors, along with the FDIC, will be placed ahead of
unsecured, nondeposit creditors, including a parent holding company such as
AmSouth, in order of priority of payment.
Under the FDI Act, a depository institution insured by the FDIC, 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 in connection with (a) the
default of a commonly controlled FDIC-insured depository institution or (b) 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.
FDIC DEPOSIT INSURANCE ASSESSMENTS
The Subsidiary Banks are subject to FDIC deposit insurance assessments. On
August 8, 1995, the FDIC amended its regulations on insurance assessments to
establish a new assessment rate schedule of 4 to 31 cents per $100 of deposits
in replacement of the previous schedule of 23 to 31 cents per $100 of deposits
for institutions whose deposits are subject to assessment by the Bank Insurance
Fund (BIF). The FDIC has maintained the current assessment rate schedule of 23
to 31 cents per $100 of deposits for the institutions whose deposits are
subject to assessment by the Savings Association Insurance Fund (SAIF). The new
BIF schedule became effective on June 1, 1995. Assessments collected under the
previous assessment schedule in excess of the amount due under the new schedule
were refunded, with interest, from the effective date of the new schedule, and
AmSouth received a refund of approximately $5.0 million. On November 14, 1995,
the Board of Directors of the FDIC approved a further reduction in the
assessment schedule for BIF deposits. Effective January 1, 1996, the assessment
schedule ranges from 0 to 27 cents per $100 of deposits subject to BIF
assessments, based on each institution's risk classification. At December 31,
1995, AmSouth had a BIF deposit assessment base of $8.4 billion and a SAIF
deposit assessment base of $4.5 billion. Various legislative proposals
regarding the future of BIF and SAIF have been reported recently. Several of
these proposals include a one-time special assessment for SAIF deposits (which
could under certain proposals be as high as 0.85% of each insured institution's
SAIF deposit assessment base) and a subsequent reduced level of annual premiums
for SAIF deposits comparable to the rate for BIF deposits. AmSouth does not
currently know when or if any such proposal or any other related proposal may
be adopted. See "Noninterest Expenses" in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" of this Form 10-K.
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.
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.
ITEM 2. PROPERTIES
The executive offices of AmSouth 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
8
<PAGE>
Alabama is also a principal tenant of the AmSouth/Harbert Plaza, a 32-story
office building also located in downtown Birmingham, Alabama, and of a recently
constructed office complex in the Birmingham area. AmSouth Alabama's
headquarters and most of its operations are located in these facilities. Other
bank subsidiaries of AmSouth also have headquarters, banking and operational
offices located in Alabama, Florida, Tennessee and Georgia.
At December 31, 1995, AmSouth and its subsidiaries had 277 offices
(principally bank buildings) of which 194 were owned and 83 were either leased
or subject to a ground lease.
ITEM 3. LEGAL PROCEEDINGS
Several of AmSouth's subsidiaries are defendants in legal proceedings arising
in the ordinary course of business. Some of these proceedings seek relief or
damages that are substantial. The actions relate to AmSouth's lending,
collections, servicing, investment, trust and other activities.
Among the actions which are pending against AmSouth subsidiaries are actions
filed as class actions in the State of Alabama. The actions are similar to
others that have been brought in recent years in Alabama against financial
institutions in that they seek punitive damages in transactions involving
relatively small amounts of actual damages. In recent years, juries in Alabama
state courts have made large punitive damage awards in such cases. Legislation
which would limit these lawsuits has been introduced in the Alabama legislature
but has not been enacted into law. AmSouth cannot predict whether any such
legislation will be enacted.
It may take a number of years to finally resolve some of these legal
proceedings pending against AmSouth subsidiaries, due to their complexity and
other reasons. It is not possible to determine with any certainty at this time
the potential exposure from the proceedings. However, based upon the advice of
legal counsel, AmSouth's management is of the opinion that the ultimate
resolution of these legal proceedings will not have a material adverse effect
on AmSouth's financial condition or results of operations.
ITEM 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 1995.
9
<PAGE>
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:
<TABLE>
<C> <C> <S>
C. Dowd Ritter 48 President and Chief Executive Officer, AmSouth and
AmSouth Alabama (January 1996 to date); Director of
AmSouth and AmSouth Alabama. Formerly, President and
Chief Operating Officer, AmSouth and AmSouth Alabama
(August 1994 to December 1995), 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).
Michael C. Baker 48 Senior Executive Vice President and Capital
Management Group Head of AmSouth and AmSouth Alabama
(October 1995 to date); Director of AmSouth
Investment Services, Inc. Formerly, President and
Chief Executive Officer of Barnett Banks Trust Co.,
N.A. (1989 to July 1995).
Sloan D. Gibson, IV 42 Senior Executive Vice President of AmSouth and
AmSouth Alabama (October 1994 to date), and
Commercial Banking Group Head of AmSouth and 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),
both of Bank South N.A.
Kristen M. Hudak 44 Senior Executive Vice President and Chief Financial
Officer of AmSouth and AmSouth Alabama (April 1995
to date). Formerly, Chief Operating Officer of
Consolidated Bank, N.A. (1992-1995) and Senior Vice
President for Strategic and Financial Planning and
Chief Financial Officer of Southeast Banking
Corporation and Southeast Bank, N.A. (1987-1991).
W. Charles Mayer, III 41 Senior Executive Vice President of AmSouth (October
1994 to date) and Alabama Banking Group Head of
AmSouth and AmSouth Alabama and Senior Executive
Vice President and Birmingham City President of
AmSouth Alabama (May 1995 to date). Formerly,
Director, President and Chief Executive Officer of
AmSouth Tennessee (January 1993 to April 1995),
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).
Candice W. Rogers 46 Senior Executive Vice President and Consumer Banking
and Marketing Group Head of AmSouth and AmSouth
Alabama (August 1995 to date). Formerly, Executive
Vice President and Director of Marketing of AmSouth
and AmSouth Alabama (July 1994 to August 1995),
Senior Vice President and Director of Marketing,
Bank One Texas (February 1991 to July 1994), and
Senior Vice President and Director of Marketing,
United Banks of Colorado (1973 to 1991).
</TABLE>
10
<PAGE>
<TABLE>
<C> <C> <S>
E. W. Stephenson, Jr. 49 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. 53 Senior Executive Vice President of AmSouth (October
1994 to date); President (1992 to date), and Head of
West Coast Area and Commercial Banking (1994 to
date), all of AmSouth Florida; Director of AmSouth
Florida. Formerly, Chief Executive Officer of
AmSouth Florida (1992 to July 1993), Executive Vice
President of AmSouth (1992 to October 1994), 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).
David B. Edmonds 42 Executive Vice President and Human Resources
Director of AmSouth and AmSouth Alabama (October
1994 to date). Formerly, Director Human Resources,
Southeast Business Unit of Pepsi-Cola, Inc. (1986 to
September 1994).
Stephen A. Yoder 42 Executive Vice President and General Counsel of
AmSouth and AmSouth Alabama (August 1995 to date).
Formerly, Assistant General Counsel (1992 to 1995)
and Managing Counsel (1990 to 1992), both of Mellon
Bank Corporation.
</TABLE>
11
<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 1995 1994 1993 1992 1991
- ----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Cash dividends declared................ $ 1.54 $ 1.43 $ 1.22 $ 1.07 $ 0.98
Book value............................. 24.16 22.57 21.48 18.63 17.12
Tangible book value.................... 19.18 16.49 18.35 16.32 14.76
Market value at year end............... 40 3/8 25 3/4 31 1/4 32 5/8 21 1/2
Market price range:
High................................. 41 3/8 34 7/8 35 7/8 32 5/8 22 1/8
Low.................................. 25 3/4 25 3/8 27 3/8 21 3/8 12 3/8
Total trading volume (In thousands).... 33,044 20,965 21,059 12,363 8,434
Dividend yield at year end............. 3.96% 5.90% 4.48% 3.56% 4.84%
Dividend payout ratio.................. 51.33 63.56 42.21 42.80 48.04
Price earnings ratio................... 13.46X 11.44X 10.81X 13.05X 10.54X
Shareholders of record at year end..... 14,037 14,674 12,985 9,343 9,146
Average shares outstanding (In thou-
sands)................................ 58,262 56,527 50,848 46,684 43,652
</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 8, 1996, there were approximately 13,819 holders of record of
AmSouth's common stock.
Restrictions on AmSouth's Subsidiary Banks to transfer funds to the holding
company at December 31, 1995 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.
12
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five
years.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------ ------------ ----------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Revenue from earning as-
sets................... $ 1,275,063 $ 1,047,741 $ 840,617 $ 772,251 $ 852,251
Interest expense........ 679,396 480,414 339,326 341,706 486,848
------------ ------------ ----------- ----------- -----------
Net interest income..... 595,667 567,327 501,291 430,545 365,403
Provision for loan loss-
es..................... 40,139 30,103 27,966 38,581 48,647
------------ ------------ ----------- ----------- -----------
Net interest income
after provision for
loan losses............ 555,528 537,224 473,325 391,964 316,756
Noninterest revenues.... 231,778 179,021 204,069 173,154 170,658
Noninterest expenses.... 512,129 522,905 458,831 400,548 366,403
------------ ------------ ----------- ----------- -----------
Income before income
taxes.................. 275,177 193,340 218,563 164,570 121,011
Income taxes............ 100,222 66,050 71,843 47,977 31,785
------------ ------------ ----------- ----------- -----------
Net income............ $ 174,955 $ 127,290 $ 146,720 $ 116,593 $ 89,226
============ ============ =========== =========== ===========
PER COMMON SHARE
Net income............ $ 3.00 $ 2.25 $ 2.89 $ 2.50 $ 2.04
Cash dividends de-
clared............... 1.54 1.43 1.22 1.07 0.98
Average common shares
outstanding............ 58,262 56,527 50,848 46,684 43,652
SELECTED YEAR END BAL-
ANCES
Loans net of unearned
income................. $ 11,743,273 $ 11,429,907 $ 8,540,412 $ 6,716,595 $ 6,293,509
Assets.................. 17,738,795 16,777,951 13,469,621 11,116,327 10,739,989
Deposits................ 13,408,831 13,067,062 10,362,989 8,626,221 8,528,109
Long-term debt.......... 447,798 386,147 173,142 139,510 142,332
Shareholders' equity.... 1,383,475 1,310,458 1,142,725 873,374 794,043
SELECTED AVERAGE BAL-
ANCES
Loans net of unearned
income................. $ 11,747,385 $ 9,918,274 $ 7,634,984 $ 6,334,313 $ 6,209,432
Assets.................. 16,942,326 15,293,985 12,377,333 10,447,186 10,039,471
Deposits................ 13,267,170 11,562,936 9,537,516 8,346,207 8,148,424
Long-term debt.......... 360,088 339,426 167,879 141,307 138,015
Shareholders' equity.... 1,357,336 1,243,151 1,031,373 836,202 720,853
SELECTED RATIOS
Return on average as-
sets................... 1.03% 0.83% 1.19% 1.12% 0.89%
Return on average equi-
ty..................... 12.89 10.24 14.23 13.94 12.38
Net interest margin..... 3.88 4.14 4.56 4.72 4.25
Operating efficiency.... 60.98 68.72 63.48 64.24 65.59
Allowance for loan
losses to loans net of
unearned income........ 1.52 1.50 1.54 1.48 1.52
Nonperforming assets to
loans net of unearned
income, foreclosed
properties and
repossessions.......... 0.98 1.16 1.00 1.71 2.84
Ending equity to ending
assets................. 7.80 7.81 8.48 7.86 7.39
Average equity to aver-
age assets............. 8.01 8.13 8.33 8.00 7.18
</TABLE>
13
<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 1995 Annual Report to
Shareholders is 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 1995 Annual Report to Shareholders are
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 18, 1996 (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 18, 1996, three directors of
AmSouth will leave the Board. Information about them follows.
<TABLE>
<CAPTION>
OFFICES WITH
DIRECTOR AMSOUTH PRINCIPAL OCCUPATION OTHER
NAME OF DIRECTOR AGE SINCE OR ITS SUBSIDIARIES FOR PAST 5 YEARS DIRECTORSHIPS(1)
----------------- --- -------- ------------------- ------------------------ ----------------
<C> <C> <C> <C> <S> <C>
Barney B. Burks, Jr. 65 1988 Director, AmSouth Partner, Burks Brothers,
Bank of Florida 1954 to date
(investments);
Consultant to J.C.
Bradford & Co., 1986 to
date (brokerage firm);
Partner, Burks Tire &
Services, 1993 to date
(auto tire and service
facilities); Chairman of
the Board, July 1988 to
August 1993, AmSouth
Bank of Florida
Joseph M. Farley 68 1972 Of Counsel, Balch & Torchmark
Bingham (law firm), Corporation
November 1992 to date;
Chairman of the Board,
June 1992 to October
1992, Chairman of the
Board and Chief
Executive Officer, April
1991 to May 1992, and
President and Chief
Executive Officer,
January 1991 to April
1991, all of Southern
Nuclear Company (public
utility); Executive Vice
President and Corporate
Counsel, July 1991 to
October 1992, The
Southern Company (public
utility)
Z. Cartter Patten, III 55 1993 Director, AmSouth Chairman of the Board,
Bank of Tennessee 1976 to date, Patten and
and AmSouth Bank Patten, Inc. (investment
of Georgia advisory firm)
</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.
14
<PAGE>
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 22 of the Proxy Statement is hereby incorporated
herein by reference. Provided, however, the information provided under the
headings "Executive Compensation and Benefits Committee Report on Executive
Compensation" and "Performance Graph" shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, or
subject to Regulation 14A or 14C, other than as provided in Item 402 of
Regulation S-K, or to liabilities of Section 18 of the Securities Exchange Act
of 1934.
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 5 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 Executive Compensation and Benefits Committee
Interlocks and Insider Participation in Compensation Decisions" at page 18 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 1995 Annual Report to
Shareholders are incorporated by reference in Item 8.
Management's Statement on Responsibility for Financial Reporting
Report of Ernst & Young LLP, Independent Auditors
Consolidated Statement of Condition--December 31, 1995 and 1994
Consolidated Statement of Earnings--Years ended December 31, 1995, 1994 and
1993
Consolidated Statement of Shareholders' Equity - Years ended December 31,
1995, 1994, and 1993
Consolidated Statement of Cash Flows--Years ended December 31, 1995, 1994,
and 1993
Notes to Consolidated Financial Statements
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
1995:
a) Report on Form 8-K filed November 2, 1995 to report AmSouth's preliminary
results of operations for the third quarter of 1995.
b) Report on Form 8-K filed December 21, 1995 to report that C. Dowd Ritter
had been elected Chief Executive Officer of AmSouth effective January 1,
1996.
(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/ C. Dowd Ritter
By: _________________________________
C. DOWD RITTER
President and Chief Executive
Officer
Date: March 26, 1996
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/ C. Dowd Ritter /s/ Dennis J. Dill
By: _________________________________ By: _________________________________
C. DOWD RITTER DENNIS J. DILL
President, Chief Executive Officer Executive Vice President
and a Director Chief Accounting Officer
(Principal Executive Officer) (Principal Accounting Officer)
Date: March 26, 1996 Date: March 26, 1996
/s/ Kristen M. Hudak
By: _________________________________
KRISTEN M. HUDAK
Senior Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: March 26, 1996
16
<PAGE>
* *
By: _________________________________ By: _________________________________
BARNEY B. BURKS, JR. JAMES R. MALONE
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
* *
By: _________________________________ By: _________________________________
J. HAROLD CHANDLER CLAUDE B. NIELSEN
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
* *
By: _________________________________ By: _________________________________
JOSEPH M. FARLEY Z. CARTTER PATTEN, III
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
* *
By: _________________________________ By: _________________________________
RODNEY C. GILBERT BENJAMIN F. PAYTON, PH.D.
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
* *
By: _________________________________ By: _________________________________
ELMER B. HARRIS HERBERT A. SKLENAR
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
* *
By: _________________________________ By: _________________________________
DONALD E. HESS JOHN W. WOODS
A Director A Director
Date: March 26, 1996 Date: March 26, 1996
*
By: _________________________________
RONALD L. KUEHN, JR.
A Director
Date: March 26, 1996
*Carl L. Gorday, by signing his name hereto, does sign this document on behalf
of each of the persons indicated above pursuant to powers of attorney executed
by such persons and filed with the Securities and Exchange Commission.
/s/ Carl L. Gorday
By: _________________________________
CARL L. GORDAY
Attorney in Fact
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 Merger dated as of September 12, 1993, between
Fortune Bancorp, Inc. and AmSouth Bancorporation, as amended by
amendment dated as of May 11, 1994 (1)
2-b Agreement and Plan of Merger dated as of March 29, 1993 between Orange
Banking Corporation and AmSouth Bancorporation (2)
2-c Agreement and Plan of Merger dated as of June 30, 1993 between
FloridaBank, a Federal Savings Bank and AmSouth Bancorporation (3)
2-d Agreement and Plan of Merger dated as of July 29, 1993 between Parkway
Bancorp, Inc. and AmSouth Bancorporation (4)
2-e Agreement and Plan of Merger dated as of August 3, 1993 between First
Federal Savings Bank, Calhoun, Georgia and AmSouth Bancorporation (5)
2-f Agreement and Plan of Merger dated as of August 9, 1993 between Citizens
National Corporation and AmSouth Bancorporation (6)
3-a Restated Certificate of Incorporation of AmSouth Bancorporation (7)
3-b Bylaws of AmSouth Bancorporation (8)
4-a Instruments defining the rights of security holders (9)
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 (10)
4-c Certificate of Designation and Terms of Series A Preferred Stock of
AmSouth Bancorporation (11)
*10-a AmSouth Bancorporation Executive Incentive Plan (12)
*10-b AmSouth Bancorporation Transfer/Employee Relocation Policy (13)
*10-c AmSouth Bancorporation Supplemental Retirement Plan
*10-d AmSouth Bancorporation Long Term Incentive Compensation Plan (14)
*10-e Amendment No. 1 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (15)
*10-f Amendment No. 2 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (16)
*10-g Amendment No. 3 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (17)
*10-h Amendment No. 4 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (18)
*10-i Amendment No. 5 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (19)
*10-j Amendment No. 6 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (20)
*10-k 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan (21)
*10-l Amendment No. 1 to the 1989 AmSouth Bancorporation Long Term Incentive
Compensation Plan (22)
*10-m Amendment No. 2 to the 1989 AmSouth Bancorporation Long Term Incentive
Compensation Plan (23)
*10-n Change in Control Compensation Agreement (24)
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
*10-o Deferred Compensation Plan for Directors of AmSouth and AmSouth Bank N.A. (25)
*10-p Split Dollar Agreement (26)
*10-q AmSouth Bancorporation Supplemental Thrift Plan
*10-r Amendment Number One to the AmSouth Bancorporation Supplemental Thrift Plan
*10-s Employment Agreement for C. Dowd Ritter (27)
*10-t Form of Executive Severance Agreement for certain Executive Officers (28)
*10-u Letter Agreement with Kristen M. Hudak (29)
11 Statement Regarding Computation of Earnings per Share
13 AmSouth Bancorporation's 1995 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
24 Powers of Attorney
27 Financial Data Schedule
</TABLE>
19
<PAGE>
NOTES TO EXHIBITS
(1)Filed as Exhibit 2(a) to AmSouth's Report on Form 8-K filed on September
16, 1993, as amended by a Form 8-K/A filed on September 23, 1993, and
Annex A to the Supplement to the Proxy Statement/Prospectus dated May 12,
1994 and filed pursuant to Rule 424(b)(3), incorporated herein by
reference
(2)Filed as Exhibit 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. 33-50605), incorporated herein by reference
(4)Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50727), incorporated herein by reference
(5)Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-51767), incorporated herein by reference
(6)Filed as Exhibit 2(a) to AmSouth's Registration Statement on Form S-4
(Registration Statement No. 33-50865), incorporated herein by reference
(7)Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference
(8)Filed as Exhibit 3-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1995, incorporated herein by reference
(9)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
(10)Filed as Exhibit 4-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference (filed with
the Securities and Exchange Commission in Washington D.C., SEC File No.
1-7476, former File No. 0-6907)
(11)Filed as Exhibit 4-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1989, incorporated herein by reference (filed with
the Securities and Exchange Commission in Washington D.C., SEC File No.
1-7476, former File No. 0-6907)
(12)Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1995 incorporated herein by reference
(13)Filed as Exhibit 10-b to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1993, incorporated herein by reference
(14)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 (filed
with the Securities and Exchange Commission in Washington D.C., SEC File
No. 1-7476, former File No. 0-6907)
(15)Filed as Exhibit 10-e to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1985, incorporated herein by reference (filed with the
Securities and Exchange Commission in Washington D.C., SEC File No. 1-
7476, former File No. 0-6907)
(16)Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1987, incorporated herein by reference (filed
with the Securities and Exchange Commission in Washington D.C., SEC File
No. 1- 7476, former File No. 0-6907)
20
<PAGE>
(17)Filed as Exhibit 10(b) to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1988, incorporated herein by reference (filed
with the Securities and Exchange Commission in Washington D.C., SEC File
No. 1-7476, former File No. 0-6907)
(18)Filed as Exhibit 10-i to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1988, incorporated herein by reference (filed with the
Securities and Exchange Commission in Washington D.C., SEC File No. 1-
7476, former File No. 0-6907)
(19)Filed as Exhibit 10-i to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1994, incorporated herein by reference
(20)Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1995, incorporated herein by reference
(21)Filed as Exhibit 10 to AmSouth's Form 10-Q Quarterly Report for the quarter
ended March 31, 1993, incorporated herein by reference
(22)Filed as Exhibit 10-k to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1994, incorporated herein by reference
(23)Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1995, 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; agreement in
this form is with John W. Woods
(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 (filed with
the Securities and Exchange Commission in Washington D.C., SEC File No.
1-7476, former File No. 0-6907)
(26)Filed as Exhibit 10-p to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1994, incorporated herein by reference
(27)Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, incorporated herein by reference
(28)Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, incorporated herein by reference; agreements
in this form have been entered into with the following Executive
Officers: Michael C. Baker, David B. Edmonds, Sloan D. Gibson, IV,
Kristen M. Hudak, W. Charles Mayer, III, Candice W. Rogers, E.W.
Stephenson, Jr., Alfred W. Swan, Jr., and Stephen A. Yoder
(29)Filed as Exhibit 10-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, incorporated herein by reference
21
<PAGE>
EXHIBIT 1O-c
AMSOUTH BANCORPORATION
SUPPLEMENTAL RETIREMENT PLAN
AMENDED AND RESTATED AS OF JANUARY 1, 1995
AmSouth Bancorporation, with its principal offices located at Birmingham,
Alabama ("Sponsor") is currently the sponsor of the AmSouth Bancorporation
Retirement Plan ("Retirement Plan") in order to provide retirement benefits to
its employees and the employees of its participating subsidiaries.
Effective January 1, 1983 and pursuant to Section 3(36) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), AmSouth Bank N.A., an Employer
under the Retirement Plan, adopted a supplemental retirement benefit program
solely for the purpose of providing benefits in excess of the limitations on
benefits under the Retirement Plan imposed by Section 415 ("Section 415") of the
Internal Revenue Code of 1954, as amended at the date hereof and known as the
Internal Revenue Code of 1986 (amended from time to time, the "Code"), to
certain individuals under the Retirement Plan whose benefits under the
Retirement Plan are limited by Section 415.
Effective January 1, 1989, Section 401(a)(17) ("Section 401(a)(17)") of the Code
limited the amount of compensation which may be taken into account in
determining benefits from the Retirement Plan. Therefore, AmSouth Bank N.A.
amended and restated this supplemental retirement plan effective January 1, 1989
so that it provided benefits in excess of the limitations on benefits under the
Retirement Plan imposed not only by Section 415, but also by Section 401(a)(17),
to a select group of management or highly compensated employees whose benefits
under the Retirement Plan are limited by Section 415 and/or Section 401(a)(17).
Effective January 1, 1991, additional persons were added to this select group of
management or highly compensated employees, some of whom were employees of
subsidiaries of the Sponsor other than AmSouth Bank N.A. AmSouth Bank N.A.
amended and restated its supplemental plan, AmSouth Bancorporation adopted the
supplemental plan for itself and its subsidiaries who choose to have their
eligible employees covered by the supplemental plan ("Electing Employers"), and
AmSouth Bank N.A. became an Electing Employer under the supplemental plan.
Effective January 1, 1994, additional persons were added to the select group of
management or highly compensated employees.
<PAGE>
Effective January 1, 1995, the eligibility provisions of the plan were changed
and a revised definition of compensation was added to the plan for certain
participants. AmSouth Bancorporation hereby amends and restates this
supplemental plan as set forth below.
ARTICLE I
TITLE: DEFINITIONS
------------------
Section 1.01. The supplemental retirement plan set forth below shall be known as
- ------------
the AmSouth Bancorporation Supplemental Retirement Plan ("Supplemental Plan").
Section 1.02. The term "Member" shall refer to a person who is a member of
- ------------
(participant in) the Retirement Plan.
Section 1.03. The term "Plan Year" shall mean a calendar year.
- ------------
Section 1.04. The term "Review Board" shall mean the Review Board under the
- ------------
Retirement Plan.
ARTICLE II
PARTICIPATION IN THE SUPPLEMENTAL PLAN
--------------------------------------
Section 2.01. A select group of management or highly compensated Members whose
- ------------
benefits under the Retirement Plan (whether payable by reason of the Member's
retirement, death, disability or other termination of employment) may be limited
upon and after their commencement pursuant to Section 415 and/or Section
401(a)(17) shall be participants in the Supplemental Plan. The term
"Participant" shall include persons who fit one or more of the following
categories: (i) Members who were employed by AmSouth Bancorporation or one of
the Electing Employers on January 1, 1995 at an annual base salary, including
amounts not currently includible in gross income under Code Sections 125, 401(k)
or 402(a)(8), but excluding special pay, bonuses or other incentive pay,
reimbursement for expenses, special supplements for automobiles or club dues and
the Prior Profit Sharing Plan Bonus, (such compensation being referred to herein
as the "Eligibility Compensation") on such date of $150,000 or more, and/or (ii)
former Participants with an accrued Excess
2
<PAGE>
Benefit whose employment with AmSouth Bancorporation or one of the Electing
Employers terminated on or before January 1, 1995. In addition, after January 1,
1995, other Employees of the Sponsor or an Electing Employer shall become
Participants in this Supplemental Plan as of the first day of the month
immediately following the date such Employee's Eligibility Compensation first
equals or exceeds $150,000. A complete list of Members eligible to participate
in the Supplemental Plan pursuant to this Section 2.01 is maintained in the
permanent records of the AmSouth Bancorporation Human Resources Division.
ARTICLE III
BENEFITS UNDER THE SUPPLEMENTAL PLAN
------------------------------------
Section 3.01. Benefits payable under this Supplemental Plan to or on behalf of a
- ------------
Participant who retires after 1/1/95, shall be
equal to the excess, if any, of (A) less (B) (the "Excess Benefits") where
(A) is such Participant's benefits as a Member of the Retirement Plan calculated
without reference to any provision of the Retirement Plan limiting the amount of
benefits as provided by Section 415 of the Code or limiting the amount of
compensation taken into account as provided by Section 401(a)(17) of the Code
and further calculated by substituting the definition of "Monthly Earnings" set
forth in this Section 3.01 in place of the definition of such term in the
Retirement Plan, and (B) is the amount of benefits actually payable under the
Retirement Plan. For purposes of this Section 3.01 only, "Monthly Earnings"
shall mean the sum of (i) the Participant's regular basic monthly earnings prior
to the effect of elections under any plan or plans maintained by the Sponsor or
an Electing Employer which are within the scope of Sections 125 or 401(k) of the
Code, and (ii) one-twelfth of the bonus earned by a Participant under the
Executive Incentive Plan for the particular Plan Year, including Plan Years
prior to January 1, 1995 (regardless of whether the bonus is in fact paid in a
subsequent year). If a Participant retires, dies or becomes permanently disabled
prior to the time when the amount of the bonus for that Plan Year has been
determined, Monthly Earnings for the months in such Plan Year shall be
calculated using an estimate of such bonus determined by the AmSouth
Bancorporation Compensation Committee based on information regarding the
Sponsor's and Participant's performance as of the date of determination.
Notwithstanding the foregoing, the AmSouth Bancorporation
3
<PAGE>
Compensation Committee shall have the authority in its sole discretion to adjust
the amount of the bonus taken into consideration in the definition of Monthly
Earnings in this Section 3.01 for any and all Plan Years regardless of the fact
that the adjusted bonus is higher or lower than the bonus actually paid a
Participant under the Executive Incentive Plan.
Section 3.02. Except as provided in Section 3.01 above, a Participant's Excess
- ------------
Benefits shall be calculated in the same manner regularly applied by the Sponsor
to all of the relevant terms and conditions of the Retirement Plan.
Section 3.03. A Participant's Excess Benefits shall be paid at the time, in the
- ------------
manner and to the person when, as and to whom or which the benefits payable to
or on behalf of the Participant as a Member of the Retirement Plan which give
rise to Participant's Excess Benefits are paid or in such manner otherwise
approved by the Board of Directors of the Sponsor. Notwithstanding the preceding
sentence, a Participant whose employment with AmSouth Bancorporation or an
Electing Employer terminates due to retirement, death or permanent disability
may elect to have his or her Excess Benefits paid in the form of an employee-
owned annuity contract (and the Participant shall be compensated for the amount
of federal and state income taxes associated with the imputed income resulting
from the purchase of an annuity) or an equivalent lump sum payment.
ARTICLE IV
PLAN ADMINISTRATOR
------------------
Section 4.01. The plan administrator ("Plan Administrator") for the Retirement
- ------------
Plan shall also administer the Supplemental Plan. In doing so, the Plan
Administrator shall apply the Participants' claims for Excess Benefits hereunder
the same procedures as are set forth in the Retirement Plan governing claims for
benefits and appeals to the Review Board from denials of claims for benefits.
4
<PAGE>
ARTICLE V
NATURE OF EMPLOYER OBLIGATION AND PARTICIPANT INTEREST
------------------------------------------------------
Section 5.01. The interest of the Participant and/or any person claiming by or
- ------------
through him under the Supplemental Plan shall be solely that of an unsecured
general creditor of the Sponsor and the Electing Employers. The Excess Benefits
payable under the Supplemental Plan shall be payable solely from the general
assets of the Sponsor and the Electing Employers, and neither the Participant
nor any person claiming by or through him shall have any right to look to any
specific property separate from such general assets in satisfaction of any claim
for payment of Excess Benefits.
Section 5.02. In all respects any Excess Benefits shall be independent of, and
- ------------
in addition to, any other benefits or compensation of any sort, payable to or on
behalf of the Participant under any other arrangement sponsored by the Sponsor
or Electing Employers or any other agreement between the Sponsor or Electing
Employer and the Participant in any capacity.
ARTICLE VI
ADDITION OR WITHDRAWAL OF ELECTING EMPLOYERS
--------------------------------------------
Section 6.01. Every subsidiary or affiliate of the Sponsor shall become an
- ------------
Electing Employer hereunder without further action as of January 1, 1991 or its
later date of 80% ownership, directly or indirectly, by the Sponsor.
Section 6.02. An Electing Employer who wishes to withdraw from the Supplemental
- ------------
Plan shall deliver to the Sponsor a resolution from its Board of Directors which
authorizes its withdrawal as an Electing Employer and which indicates the reason
or reasons for such withdrawal. Withdrawal may only take place upon the approval
of the Board of Directors of the Sponsor and with such amendments to the
Supplemental Plan as the Sponsor shall deem necessary or desirable. Withdrawal
shall be subject to the provisions of Section 7.02 below.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01. The Supplemental Plan may be amended or discontinued by the
- ------------
Sponsor at any time except as provided in Section 7.02 below. The Sponsor may
designate additional Participants under the Supplemental Plan or remove persons
as Participants under the Supplemental Plan at any time except as provided in
Section 7.02 below.
5
<PAGE>
Section 7.02. Notwithstanding the provisions of Sections 6.02 or 7.01:
- ------------
(a) Excess Benefits which are in pay status shall not be discontinued under
any circumstances prior to their natural termination pursuant to the terms of
the Supplemental Plan at the time of the relevant amendment or discontinuance of
the Supplemental Plan, the removal of Participants or the withdrawal by an
Electing Employer.
(b) Excess Benefits hereunder which have been accrued prior to the date of
any amendment or discontinuation of the Supplemental Plan, the removal of a
Participant or the withdrawal of an Electing Employer shall remain a binding
obligation of the Sponsor and Electing Employer or any successor in interest to
either of them, and no amendment or discontinuation of the Supplemental Plan,
removal of a Participant or withdrawal by an Electing Employer shall deprive a
Participant of said accrued Excess Benefit.
Section 7.03. The Supplemental Plan shall not be deemed to constitute a contract
- ------------
between the Sponsor or the Electing Employer and any Participant or employee, or
to be a consideration or an inducement for the employment of any Participant or
employee. Nothing contained in the Supplemental Plan shall be deemed to give any
Participant or employee the right to be retained in the service of the Sponsor
or Electing Employer or to interfere with the right of the Sponsor or Electing
Employer to discharge any Participant or employee at any time regardless of the
effect which such discharge shall or may have upon him under the Supplemental
Plan.
Section 7.04. None of the Participant's rights to Excess Benefits under the
- ------------
Supplemental Plan are subject to the claims of creditors of a Participant or any
person claiming by or through him and will not be subject to attachment,
garnishment or any other legal process. Neither a Participant or any person
claiming by or through him may assign, sell, borrow on or otherwise encumber any
of his beneficial interest under the Supplemental Plan nor shall any such
interest be in any manner liable for or subject to the deeds, contracts,
liabilities, engagements or torts of a Participant or any person claiming by or
through him.
Section 7.05. The Supplemental Plan shall be construed in accordance with the
- ------------
laws of the State of Alabama, except where such laws are superseded by ERISA, in
which case ERISA shall control.
Section 7.06. In making any distribution to or for the benefit of any minor or
- ------------
incompetent person, the Plan Administrator, in its sole, absolute and
uncontrolled
6
<PAGE>
discretion, may, but need not, direct such distribution to a legal or natural
guardian or other relative of such minor or court appointed committee of such
incompetent, or to any adult with whom such minor or incompetent temporarily or
permanently resides, and any such guardian, committee, relative or other person
shall have full authority and discretion to expend such distribution for the use
and benefit of such minor or incompetent. The receipt of such guardian,
committee, relative or other person shall be a complete discharge to the Sponsor
and Electing Employer without any responsibility on its part or on the part of
the Plan Administrator to see to the application thereof.
Section 7.07. In case any provision of the Supplemental Plan shall be held
- ------------
illegal or invalid for any reason or in any particular circumstance or instance,
such illegality or invalidity shall not affect its remaining parts in such
circumstance or instance nor the enforceability of such provision in any other
circumstance or instance and the Supplemental Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted herein
for application to the particular circumstance or instance.
IN WITNESS WHEREOF, AmSouth Bancorporation has caused this amended and
restated Supplemental Plan to be executed this 21st day of December, 1995
effective as of January 1, 1995.
AMSOUTH BANCORPORATION
By /s/ John W. Woods
----------------------------
Its Chairman & CEO
---------------------------
ATTEST:
/s/ William H. Caughran, Jr.
- ---------------------------------
Its Assistant Secretary
------------------------------
7
<PAGE>
EXHIBIT 10-q
AMSOUTH BANCORPORATION
SUPPLEMENTAL THRIFT PLAN
(EFFECTIVE JANUARY 1, 1995)
<PAGE>
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT OF THE PLAN
AmSouth Bancorporation (the "Company") established the AmSouth Bancorporation
Supplemental Thrift Plan for eligible employees of the Company and participating
Affiliates, effective as of January 1, 1995. This plan shall be known as the
AmSouth Bancorporation Supplemental Thrift Plan (the "Plan").
1.2 PURPOSE OF THE PLAN
The Plan is intended to restore benefits that are cut back as a result of
certain legal limits that apply to the AmSouth Bancorporation Thrift Plan.
The group of eligible employees shall be limited to a "select group of
management or highly compensated employees" within the meaning of ERISA Section
201(2).
Benefits provided under this Plan shall be paid solely from the general assets
of the Company and participating Affiliates. This Plan, therefore, is exempt
from the participation, vesting, funding and fiduciary requirements of Title I
of ERISA.
1.3 APPLICABILITY OF THE PLAN
This Plan applies only to eligible Employees who are in the active employ of the
Company or a participating Affiliate on or after January 1, 1995.
<PAGE>
ARTICLE II. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth
below unless otherwise expressly provided. When the defined meaning is intended,
the term is capitalized. The definition of any term in the singular shall also
include the plural.
2.1 ACCOUNT
Account means the bookkeeping account for each Participant that represents the
Participant's total interest under the Plan. A Participant's Account consists of
the following subaccounts:
(a) Salary Reduction Contributions Account means the portion of the
Participant's Account attributable to salary reduction contributions made on
the Participant's behalf under Section 4.1, including any gains and losses
credited on such contributions under Section 5.2.
(b) Matching Contributions Account means the portion of the Participant's
Account attributable to matching contributions made by the Employer on the
Participant's behalf under Section 4.2 including any gains and losses
credited on such contributions under Section 5.2.
2.2 AFFILIATE
Affiliate means--
-2-
<PAGE>
(a) AmSouth Bancorporation, and
(b) any other entity which, along with the Company, is a member of a controlled
group of employers under Code Section 414(b), (c), (m), or (o).
2.3 BENEFICIARY
A Participant's Beneficiary under this Plan shall be the same person or entity
designated as the Participant's beneficiary under the Thrift Plan.
2.4 BOARD
Board means the Company's Board of Directors.
2.5 CODE
Code means the Internal Revenue Code of 1986, as amended, or as it may be
amended from time to time. A reference to a particular section of the Code shall
also be deemed to refer to the regulations under that Code section.
2.6 COMPANY
Company means AmSouth Bancorporation or any successor thereto.
2.7 COMPENSATION
Compensation for any Plan Year means a participant's "Compensation" as defined
under the Thrift Plan, without regard to any limits on such Compensation imposed
by Code section 401(a)(17).
-3-
<PAGE>
2.8 EMPLOYEE
Employee means any person who is employed by the Company or an Affiliate.
2.9 EMPLOYER
Employer means the Company and each Affiliate which has adopted this Plan for
its eligible Employees.
2.10 ERISA
ERISA means the Employee Retirement Income Security Act of 1974, as amended, or
as it may be amended from time to time. A reference to a particular section of
ERISA shall also be deemed to refer to the regulations under that section.
2.11 PARTICIPANT
Participant means an Employee of an Employer who has met, and continues to meet,
the eligibility requirements of Section 3.1.
2.12 PLAN
-4-
<PAGE>
Plan means the AmSouth Bancorporation Supplemental Thrift Plan, as amended from
time to time.
2.13 PLAN ADMINISTRATOR
Plan Administrator means the Corporate Human Resources Division of AmSouth Bank
of Alabama.
2.14 PLAN YEAR
Plan Year means the calendar year.
2.15 REVIEW BOARD
The Review Board under this Plan shall be the same group of individuals who
comprise the Review Board under the Thrift Plan.
2.16 THRIFT PLAN
Thrift Plan means the AmSouth Bancorporation Thrift Plan, which is a defined
contribution profit sharing plan with a cash or deferred arrangement qualified
under Code Sections 401(a), (k) and (m) as amended from time to time.
2.17 TERMINATION OF SERVICE
Termination of Service means an Employee's death or resignation, discharge, or
retirement from the Company and its Affiliates.
2.18 VALUATION DATE
Valuation Date means the last day of each calendar quarter and any other date
that the Plan Administrator selects in its sole discretion for the revaluation
and adjustment of Accounts.
-5-
<PAGE>
ARTICLE III. PARTICIPATION
3.1 ELIGIBILITY
(a) Any Employee who is eligible to participate in the Thrift Plan and whose
annual base salary including amounts not currently includible in gross
income under Code sections 125, 401(k) or 402(a)(8) but excluding special
pay, bonuses or other incentive pay, reimbursement for expenses, special
supplements for automobile or club dues and the Prior Profit Sharing Plan
Bonus ("Base Salary") as of January 1, 1995 is equal to or greater than
$150,000 shall be a Participant in this Plan as of January 1, 1995.
(b) Any other Employee who satisfies the criteria in both (i), and (ii) below
shall be a Participant in this Plan on the date on which the last of the
following occurs: (i) the date such person becomes eligible to participate
in the Thrift Plan, or (ii) the first day of the month immediately following
the date such person's annual Base Salary equals or exceeds $150,000.
(c) Any other Employee shall be a Participant on the first day of the month
immediately following the date he or she is designated in writing as a
Participant in this Plan by the Chief Executive Officer of the Company or
his designee.
However, no Employee shall become a Participant unless the Employee is a member
of a "select group of management or highly compensated employees" within the
meaning of ERISA Section 201(2).
-6-
<PAGE>
3.2 DURATION
An Employee who becomes a Participant under section 3.1 shall remain an active
Participant until -- his or her Termination of Service. No contributions shall
be credited to the Account of an individual after his active participation has
been terminated. However, such individual shall continue to be a Participant for
all other purposes until all benefits to which he or she is entitled to receive
under this Plan have been paid.
ARTICLE IV BENEFITS
4.1 SALARY REDUCTION CONTRIBUTIONS
(a) Salary Reduction Agreement. Each Participant in this Plan may execute a
--------------------------
supplemental salary reduction agreement on a form prescribed by the Plan
Administrator. On this form the Participant may elect to reduce his or her
Compensation for the Plan Year by a whole percentage that does not exceed ten
percent (10%). The supplemental salary reduction agreement shall be executed
prior to the first day of the Plan Year for which it is to be effective or,
in the case of a Participant who first becomes eligible to
-7-
<PAGE>
participate in the Plan during the Plan Year, the supplemental salary
reduction agreement shall be executed within 30 days of initial eligibility
under this Plan effective for Compensation earned subsequent to the election.
The supplemental salary reduction agreement for any Plan Year shall be
irrevocable for such Plan Year. Moreover, an election for a Plan Year shall
remain in full force and effect for all subsequent Plan Years unless modified
or revoked by the Participant in writing to the Plan Administrator before the
first day of the Plan Year for which such modification or revocation is to be
effective. Notwithstanding the preceding sentence, a supplemental salary
reduction agreement shall be revoked automatically once a Participant ceases
to be an active Participant as set forth in Section 3.2 of this Plan.
(b) Effectiveness of Salary Reduction Agreement. A Participant's supplemental
--------------------------------------------
salary reduction agreement shall take effect and amounts specified in the
supplemental salary reduction agreement shall begin to be credited to such
Participant's Salary Reduction Contributions Account at such time as the
Participant has made the maximum pre-tax elective deferrals to the Thrift
Plan allowed by Code Section 402 (g) or by the provisions of the Thrift Plan.
(c) Allocation. Salary reduction contributions shall be allocated to the
----------
Participant's Salary Reduction Contributions Account as of the last day of
each calendar quarter within the Plan Year.
4.2 EMPLOYER MATCHING CONTRIBUTIONS
(a) Eligibility. A Participant shall be credited with matching contributions
------------
under this Plan for such Plan Year at such time as the Participant ceases to
receive a matching contribution under Section 4.01 of the Thrift Plan
-8-
<PAGE>
regardless of whether such Participant's supplemental salary reduction
agreement has become effective as provided in Section 4.1 (b) above.
(b) Amount. The amount of matching contributions credited to a Participant's
------
account under this Plan shall be equal to 50% of the sum of (i) and (ii)
below:
(i) the Participant's unmatched pre-tax elective deferrals made to
the Thrift Plan pursuant to Section 4.02 of the Thrift Plan; and
(ii) salary reduction contributions credited to the Participant's
account under this Plan pursuant to the Participant's supplemental salary
reduction agreement.
Provided, however, that (A) no matching contributions shall be made on salary
reduction contributions or deferrals under (i) or (ii) above to the extent that
such salary reduction contributions or deferrals (determined on a per payroll
basis) exceed five percent (5%) of a Participant's Compensation; and (B) nothing
in this Section 4.2 shall entitle a Participant to be credited with a matching
contribution under this Plan for any salary reduction contribution or deferral
made to the Thrift Plan prior to the time such Participant has received the
maximum matching contributions to the Thrift Plan allowed under the terms of the
Thrift Plan.
(c) Allocations. Matching contributions shall be allocated to the Participant's
-----------
Matching Contributions Account as of the last day of each calendar quarter
within the Plan Year.
4.3 FORFEITABILITY OF BENEFITS.
-9-
<PAGE>
Participants shall have a 100% vested and nonforfeitable right to the balance of
their Account under this Plan at all times, subject, however, to the substantial
risk of forfeiture set forth in Section 5.3.
ARTICLE V. ACCOUNTS; FINANCING
5.1 PARTICIPANT ACCOUNTS
Each contribution credited to a Participant under Article IV shall be allocated
to an individual bookkeeping Account maintained on behalf of that Participant by
the Plan Administrator. Each Participant's Account shall be adjusted for
earnings in the manner described in Section 5.2.
5.2 VALUATION OF PARTICIPANT ACCOUNTS
As of each Valuation Date, each Participant's Account shall be adjusted to
reflect earnings as follows. An average of the Participant's Account (the
"Average Account Balance") shall be obtained by dividing (a) the sum of (i) the
Participant's Account as of the immediately preceding Valuation Date and (ii)
the Participant's Account as of the immediately preceding Valuation Date plus
all contributions since the immediately preceding Valuation Date, by (b) two.
The Participant's Average Account Balance shall be multiplied by the Applicable
Interest Rate, and this product shall be added to or subtracted from the
Participant's Account. The Applicable Interest Rate shall be determined by
calculating the percentage (either positive or negative) obtained by dividing
the Participant's net earnings or losses of all funds in the Thrift Plan as of
the Valuation Date by the
-10-
<PAGE>
Participant's average Thrift Plan balance. The Participant's average Thrift Plan
balance shall be calculated by dividing (a) the sum of (i) the Participant's
total balance in the Thrift Plan as of the Valuation Date and (ii) the
Participant's total balance in the Thrift Plan as of the immediately preceding
Valuation Date, by (b) two.
5.3 FINANCING
The benefits under this Plan shall be paid out of the general assets of the
Employers. The benefits shall not be funded in advance of payment in any way. No
Participant or Beneficiary shall have any interest in any specific asset of any
Employer. To the extent that any person acquires a right to receive payments
under this Plan, such right shall be no greater than the right of any unsecured
general creditor of any Employer. Nothing contained in this Plan, and no action
taken pursuant to the provisions of this Plan, shall create a trust of any kind
or a fiduciary relationship between an Employer and any Participant or
Beneficiary or a right of continued employment for any Participant.
ARTICLE VI. DISTRIBUTIONS
6.1 TERMINATION OF SERVICE
Upon a Participant's Termination of Service, the Participant shall be entitled
to the balance of his or her Account. This balance shall be paid to the
Participant in a lump sum cash payment within 90 days of the Valuation Date
immediately following the Participant's Termination of Service.
6.2 DEATH OF THE PARTICIPANT
-11-
<PAGE>
If the Participant dies before the distribution of his or her Account, the
balance in the Account shall be distributed to the Participant's Beneficiary in
a lump sum cash payment within 90 days of the Valuation Date immediately
following the Participant's death.
6.3 NO IN-SERVICE WITHDRAWALS
A Participant may not receive a distribution from his or her Account before
incurring a Termination of Service.
ARTICLE VII ADMINISTRATION
7.1 ADMINISTRATION
The Plan shall be administered by the Plan Administrator. The Plan Administrator
shall have all powers necessary or appropriate to carry out the provisions of
the Plan. It may, from time to time, establish rules for the administration of
the Plan and the transaction of the Plan's business. The Plan Administrator
shall have absolute and complete discretionary authority to interpret and
administer the Plan and shall have the exclusive right to make any finding of
fact necessary or appropriate for any purpose under the Plan including, but not
limited to, the determination of eligibility for and amount of any benefit. The
Plan Administrator shall have the exclusive right to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the
Plan or in connection with its administration, including, without limitation,
the right to remedy or resolve possible ambiguities, inconsistencies, or
omissions by general rule or particular decision, all in its sole and absolute
discretion. To the extent permitted by law, all finding of fact, determinations,
interpretations, and decisions of the Plan
-12-
<PAGE>
Administrator shall be conclusive and binding upon all persons having or
claiming to have any interest or right under the Plan. The Plan Administrator
may, in its sole and absolute discretion, delegate any of its powers and duties
under this Plan to one or more individuals. In such a case, every reference in
the Plan to the Plan Administrator shall be deemed to include such matters
within their jurisdiction. The Plan Administrator shall have the right to
consult with attorneys and other advisors regarding its duties under this Plan,
which attorney and advisors may be employed by an Employer.
7.2 APPEALS FROM DENIAL OF CLAIMS
If any claim for benefits under the Plan is wholly or partially denied, the
claimant shall be given notice of the denial. This notice shall be in writing,
within a reasonable period of time after receipt of the claim by the Plan
Administrator. This period shall not exceed 90 days after receipt of the claim,
except that if special circumstances require an extension of time, written
notice of the extension shall be furnished to the claimant, and an additional 90
days will be considered reasonable.
This notice shall be written in a manner calculated to be understood by the
claimant and shall set forth the following information:
(a) the specific reasons for the denial;
(b) specific reference to the Plan provisions on which the denial is based;
(c) a description of any additional material or information necessary for the
claimant to perfect the claim and an
-13-
<PAGE>
explanation of why this material or information is necessary;
(d) an explanation that a full and fair review by the Review Board of the
decision denying the claim may be requested by the claimant or an authorized
representative by filing with the Secretary of the Review Board, within 60
days after the notice has been received, a written request for the review;
and
(e) if this request is so filed, an explanation that the claimant or an
authorized representative may review pertinent documents and submit issues
and comments in writing within the same 60-day period specified in subsection
(d).
The Review Board's actions shall be in accordance with Section 2.06 of the
Thrift Plan.
7.3 TAX WITHHOLDING
The Employer may withhold from any payment under this Plan any federal, state,
or local taxes required by law to be withheld with respect to the payment and
any sum the Employer may reasonably estimate as necessary to cover any taxes for
which it may be liable and that may be assessed with regard to the payment.
7.4 EXPENSES
All expenses incurred in the administration of the Plan shall be paid by the
Employers.
-14-
<PAGE>
ARTICLE VIII. ADOPTION OF THE PLAN BY AFFILIATE; AMENDMENT AND TERMINATION OF
THE PLAN
8.1 ADOPTION OF THE PLAN BY AFFILIATE
All Affiliates of the Company are deemed to have adopted this Plan as of the
later of (i) the effective date of this Plan as set forth in Section 1.1 or (ii)
the date of such Affiliate's affiliation with the Company.
8.2 AMENDMENT AND TERMINATION
The Company hereby reserves the right to amend, modify or terminate the Plan at
any time and for any reason by action of the Board or the Compensation Committee
of the Board. However, no amendment or termination shall adversely affect the
amount of benefits accrued by a Participant prior to the date of the amendment
or termination.
ARTICLE IX. MISCELLANEOUS PROVISIONS
9.1 NONALIENATION
No benefit payable under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge. Any attempt to anticipate, alienate, sell, transfer, assign, pledge,
-15-
<PAGE>
encumber, or charge shall be void. Benefits shall not be in any manner subject
to the debts, contracts, liabilities, engagements, or torts of, or claims
against, any Participant or Beneficiary, including claims of creditors, claims
for alimony or support, and any other like or unlike claims.
9.2 DISTRIBUTION TO MINORS & INCOMPETENTS
In making any distribution to or for the benefit of any minor or incompetent
person, the Plan Administrator, in its sole and absolute discretion, may, but
need not, direct such distribution to a legal or natural guardian or other
relative of such minor or court appointed committee of such incompetent, or to
any adult with whom such minor or incompetent temporarily or permanently
resides, and any such guardian, committee, relative or other person shall have
full authority and discretion to expend such distribution for the use and
benefit of such minor or incompetent. The receipt of such guardian, committee,
relative or other person shall be a complete discharge to the Company and any
Employer hereunder without any responsibility on its part or on the part of the
Plan Administrator to see to the application thereof.
9.3 SEVERABILITY
If any provision of this Plan shall be held illegal or invalid, the illegality
or invalidity shall not affect its remaining parts. The Plan shall be construed
and enforced as if it did not contain the illegal or invalid provision.
9.4 APPLICABLE LAW
Except to the extent preempted by applicable federal law, this Plan shall be
governed by and construed in accordance with the laws of the state of Alabama.
-16-
<PAGE>
IN WITNESS WHEREOF, AmSouth Bancorporation, on behalf of itself and all
participating Affiliates, has caused its authorized officers to execute this
document on December 21, 1995 effective as of January 1, 1995.
AMSOUTH BANCORPORATION
By /s/ John W. Woods
----------------------------
Its Chairman & CEO
---------------------------
ATTEST:
/s/ William H. Caughran, Jr.
- -------------------------------
Its Assistant Secretary
----------------------------
-17-
<PAGE>
EXHIBIT 10-r
AMENDMENT NUMBER 1
TO THE
AMSOUTH BANCORPORATION SUPPLEMENTAL THRIFT PLAN
(the "Plan")
AmSouth Bancorporation further amends the Plan, effective January 1, 1996,
as follows:
1. By deleting the second sentence of Section 4.1(a) and substituting the
following therefor: "On this form the Participant may elect to reduce his or
her Compensation for the Plan Year by a whole percentage that does not exceed
fifteen (15%)."
2. By deleting Section 4.2(b) in its entirety and substituting the
following therefor:
(b) Amount. The amount of matching contributions credited to a
------
Participant's account under this Plan shall be equal to 100% of the sum of
(i) and (ii) below:
(i) the Participant's unmatched (determined on a per payroll basis)
pre-tax elective deferrals made to the Thrift Plan pursuant to Section
4.02 of the Thrift Plan; and
(ii) salary reduction contributions credited to the Participant's
account under this Plan pursuant to the Participant's supplemental
salary reduction agreement.
Provided, however, that (A) no matching contributions shall be made on
salary reduction contributions or deferrals under (i) or (ii) above to the
extent that such salary reduction contributions or deferrals (determined on
a per payroll basis) exceed six percent (6%) of a Participant's
Compensation; and (B) nothing in this Section 4.2 shall entitle a
Participant to be credited with a matching contribution under this Plan for
any salary reduction contribution or deferral made to the Thrift Plan prior
to the time such Participant has received the maximum matching
contributions to the Thrift Plan allowed under the terms of the Thrift
Plan.
<PAGE>
IN WITNESS WHEREOF, AmSouth Bancorporation has on behalf of itself and all
participating Employers executed this Amendment Number 1 on this 21st day of
December, 1995 to be effective January 1, 1996.
AMSOUTH BANCORPORATION
ATTEST:
By: /s/ John W. Woods
-----------------------------
/s/ William H. Caughran, Jr. John W. Woods
- -------------------------------- Chairman of the Board and
William H. Caughran, Jr. Chief Executive Officer
Assistant Secretary
-2-
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
--------------------------------------
1995 1994 1995 1994
--------- ------------------ ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income.............................. $ 47,892 $ 1,355 $ 174,955 $ 127,290
========= ======== ========= =========
Average shares of common stock outstand-
ing.................................... 58,231 58,030 58,262 56,527
========= ======== ========= =========
Earnings per common share............... $ 0.82 $ 0.02 $ 3.00 $ 2.25
========= ======== ========= =========
</TABLE>
<PAGE>
EXHIBIT 13
AMSOUTH BANCORPORATION'S 1995 ANNUAL REPORT
TO SHAREHOLDERS, EXCLUDING THE PORTIONS THEREOF
NOT INCORPORATED BY REFERENCE IN THIS FORM 10-K
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Summary of Consolidated
Financial Performance
AmSouth Bancorporation (AmSouth) reported earnings per share in 1995 of
$3.00 compared to $2.25 per share for 1994 and $2.89 per share in 1993. Net
income for the same periods totaled $175.0 million, $127.3 million and $146.7
million, respectively. Contributing to the improvement in earnings for 1995
were higher net interest income, growth in noninterest revenues and control of
noninterest expenses. An increase in the provision for loan losses in 1995
partially offset the improvement in earnings. Net income for 1995 includes a
pre-tax gain of $25.0 million from the sale of AmSouth's third-party mortgage
servicing portfolio and pre-tax expenses of $22.2 million recorded during the
second quarter associated primarily with productivity initiatives, including
business and branch consolidations and the development of new systems. Despite
an increase in net interest income in 1994, net income for the year declined,
reflecting lower noninterest revenues, an increase in noninterest expenses and
a higher provision for loan losses. The lower noninterest revenues in 1994 were
the result of losses on the sale of available-for-sale securities of $26.6
million and a loss on the termination of interest rate swaps of $11.9 million.
Partially offsetting the effect of these losses in 1994, were gains of $23.8
million from the sale of mortgage servicing and a gain of $5.5 million from the
sale of residential first mortgages. In 1993, net income improved due to higher
net interest income, a lower loan loss provision and an increase in noninterest
revenues. These favorable variances were offset, in part, by an increase in
noninterest expenses during the year.
Two key measures of profitability in the banking industry are return on average
equity (ROE) and return on average assets (ROA). ROE was 12.89 percent in 1995
versus 10.24 percent in 1994 and 14.23 percent in 1993. ROA rose to 1.03 percent
in 1995 from .83 percent in 1994. ROA was 1.19 percent in 1993 (See graphs
below).
This section of the annual report provides a narrative discussion and
analysis of AmSouth's financial condition and results of operations for the
previous three years. Net income for all years presented has been restated to
include business combinations accounted for as pooling-of-interests unless
immaterial. All tables, graphs and financial statements should be considered
an integral part of this analysis.
Earnings Per Share
[GRAPH APPEAR HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995
-----------------------------------------
EARNINGS PER SHARE 2.04 2.50 2.89 2.25 3.00
</TABLE>
Return on Average Equity
[GRAPH APPEAR HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995
--------------------------------------------
RETURN ON AVERAGE
EQUITY (PERCENT) 12.38 13.94 14.23 10.24 12.89
</TABLE>
Return on Average Assets
[GRAPH APPEAR HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995
------------------------------------------
RETURN ON AVERAGE
ASSETS (PERCENT) 0.89 1.12 1.19 0.83 1.03
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Earnings Analysis
Net Interest Income
Net interest income (NII), defined as the amount of revenue generated by
earning assets reduced by the interest cost of funding those assets, is the
principal source of earnings for AmSouth, constituting 72.4 percent of total
net revenues in 1995, 76.5 percent in 1994 and 71.8 percent in 1993.
Consequently, changes in the mix and volume of earning assets and
interest-bearing liabilities, and their related yields and interest rates, have
a major impact on earnings.
For purposes of this earnings analysis, net interest income has been
adjusted to a fully taxable equivalent basis for certain tax-exempt loans and
investments included in earning assets. Earning assets, including loans, have
been presented as averages, net of unearned income.
NII for 1995 was $608.0 million, an increase of 4.5 percent from the $581.9
million reported for 1994. In 1994, NII grew 12.2 percent from the $518.7
million reported for 1993. The improvement in NII for each of the three years
was due to a higher volume of average earning assets and a shift in the mix to
include a higher proportion of loans. In 1995, average earning assets
increased 11.4 percent while average loans grew 18.4 percent, reflecting
growth in both commercial and consumer loans. During the year, average
loans as a percentage of average earning assets increased to 75.0 percent from
70.5 percent in 1994. The average rate of growth in loans during 1994 was 29.9
percent compared to an increase of 23.5 percent in earning assets. In 1993,
average loans increased 20.5 percent versus an increase in average earning
assets of 19.3 percent, and constituted 67.1 percent of total average earning
assets. Also contributing to the higher level of earning assets and loans
during this three year period were the completion of twelve separate
acquisitions and business combinations. The largest transactions were First
Chattanooga Financial Corporation (FCFC), completed during the first quarter of
1993, Mid-State Federal Savings Bank (Mid-State), acquired in December, 1993
and Fortune Bancorp, Inc. (Fortune), consummated in the second quarter of 1994.
All were accounted for as purchases and added, on a combined basis,
approximately $1.7 billion in total assets in 1993 and $2.6 billion in 1994.
The growth in average earning assets in 1995 was funded by an increase in
deposits. Total average deposits, AmSouth's largest source of funding,
increased 14.7 percent to $13.3 billion and funded 84.7 percent of total
average earning assets in 1995. The increase in total deposits, which were
primarily time deposits, was due to growth from new markets entered into
through business combinations and acquisitions and special marketing campaigns
conducted during the last half of 1994 and the first
Table 1
Composition of Earning Assets
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------------------------------------------------------------
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........... $11,747,385 75.0% $ 9,918,274 70.5% $ 7,634,984 67.1%
Held-to-maturity securities............ 3,275,545 20.9 2,830,036 20.1 2,618,490 23.0
Available-for-sale securities.......... 540,574 3.5 979,974 7.0 605,558 5.3
Trading securities..................... 6,331 0.0 43,089 0.3 49,448 0.4
Other earning assets................... 95,587 0.6 292,033 2.1 478,705 4.2
---------------------------------------------------------------------------------
$15,665,422 100.0% $14,063,406 100.0% $11,387,185 100.0%
=================================================================================
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 2
Volume and Yield/Rate Variances
<TABLE>
<CAPTION>
1995 Compared to 1994 1994 Compared to 1993
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.................. $154,953 $ 64,439 $219,392 $183,500 $(3,717) $179,783
Trading securities............................ (1,908) (360) (2,268) (346) 437 91
Available-for-sale securities................. (27,930) 13,959 (13,971) 19,877 (513) 19,364
Held-to-maturity securities:
Taxable securities......................... 32,753 4,711 37,464 17,451 (1,042) 16,409
Tax-free securities........................ (6,079) (769) (6,848) (6,888) 1,075 (5,813)
----------------------------------------------------------------------------
Total held-to-maturity securities............. 26,674 3,942 30,616 10,563 33 10,596
----------------------------------------------------------------------------
Total securities.............................. (3,164) 17,541 14,377 30,094 (43) 30,051
Federal funds sold and securities purchased
under agreements to resell................. (3,206) 1,665 (1,541) (4,588) 744 (3,844)
Mortgage loans held for sale.................. (8,580) 1,449 (7,131) (2,243) 514 (1,729)
----------------------------------------------------------------------------
Total earning assets.......................... 140,003 85,094 225,097 206,763 (2,502) 204,261
----------------------------------------------------------------------------
Interest paid on
Interest-bearing demand deposits.............. 2,316 18,586 20,902 16,015 16,719 32,734
Savings deposits.............................. 1,166 2,073 3,239 3,836 (307) 3,529
Time deposits................................. 74,939 60,902 135,841 50,247 (1,468) 48,779
Certificates of deposit of $100,000 or more... 8,067 12,460 20,527 1,476 1,589 3,065
Federal funds purchased and securities sold
under agreements to repurchase............. (15,823) 17,996 2,173 16,019 16,749 32,768
Other borrowed funds.......................... 5,348 7,539 12,887 1,943 5,797 7,740
Subordinated Capital Notes Due 1999........... 12 (21) (9) 12 (38) (26)
Federal Home Loan Bank advances............... (3,897) 1,280 (2,617) 5,615 (11) 5,604
Floating Rate Notes Due 1999.................. (24) 135 111 (21) 63 42
6 3/4% Subordinated Debentures Due 2025....... 1,489 -0- 1,489 -0- -0- -0-
7 3/4% Subordinated Notes Due 2004............ 4,641 29 4,670 7,047 -0- 7,047
7 1/2% Convertible Subordinated Debentures.... 23 (23) -0- 25 (25) -0-
Long-term notes payable....................... (100) (131) (231) (600) 406 (194)
----------------------------------------------------------------------------
Total interest-bearing liabilities............ 78,157 120,825 198,982 101,614 39,474 141,088
----------------------------------------------------------------------------
Net interest income on a taxable
equivalent basis........................... $ 61,846 $(35,731) 26,115 $105,149 $(41,976) 63,173
===================== =====================
Add: taxable equivalent adjustment............ 2,225 2,863
-------- --------
Net interest income........................... $ 28,340 $ 66,036
======== ========
</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.
16
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
quarter of 1995. Total average deposits in 1994 were $11.6 billion, funding
82.2 percent of average earning assets, compared to the $9.5 billion of total
deposits which funded 83.8 percent of average earning assets in 1993. The
decline in the percentage of average earning assets funded by total deposits in
1994 was primarily due to the acquisition of Fortune during the year.
Another key factor in the determination of the level of NII is the net
interest margin (NIM). The NIM is computed by dividing fully taxable
equivalent NII by average earning assets and measures how effectively the bank
utilizes its earning assets in relationship to the interest cost of funding
them. The NIM was 3.88 percent in 1995 compared to 4.14 percent during 1994
and 4.56 percent in 1993. Contributing to the decline in NIM during the three
years was a narrowing in the net interest spread or the difference between the
average rate earned on earning assets on a fully taxable equivalent basis and
the average rate paid for interest-bearing liabilities. The net interest
spread in 1995 was 3.24 percent versus 3.58 percent in 1994 and 4.00 percent in
1993. The decreases in the NIM and spread during this period partially reflect
the repricing and rate sensitivity characteristics of AmSouth's balance sheet
as well as acquisitions. In 1995, the rate of decline lessened compared to 1994
because of the generally declining interest rate environment throughout most of
1995 and actions taken in the fourth quarter of 1994 to reduce AmSouth's
overall interest rate risk. The compression in the NIM and spread in 1994 was
primarily the result of a 250 basis point increase in the general level of
interest rates during the year and the acquisition of Fortune which had a NIM
of approximately 2.50 percent just prior to consummation of the transaction.
The decrease experienced in the NIM and spread in 1993 was primarily due to the
acquisition of FCFC during the first quarter of the year (See graph below and
Table 3).
Management anticipates a stable NIM during 1996 compared to the level
experienced in 1995 provided the economy continues to grow at a moderate pace
and interest rates remain relatively stable.
Provision for Loan Losses
The provision for loan losses in 1995 totaled $40.1 million, a $10.0 million
increase from the $30.1 million reported in 1994 and $12.1 million higher than
the $28.0 million reported in 1993. At the same time, net charge-offs
increased in 1995 to $34.6 million from $26.9 million in 1994 and $19.7 million
in 1993. The lower level of net charge-offs in 1993 included a $6.3 million
recovery on a commercial loan originally charged-off in 1991. The
increases in the provision for loan losses and net
Net Interest Income, Margin
and Spread Trend Analysis
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----------------------------------------------
<S> <C> <C> <C> <C> <C>
NET INTEREST INCOME (MILLIONS) 387.9 450.4 518.7 581.9 608.0
NET INTEREST SPREAD (PERCENT) 3.53 4.11 4.00 3.58 3.24
NET INTEREST MARGIN (PERCENT) 4.24 4.72 4.56 4.14 3.88
</TABLE>
Provision for Loan Losses and
Net Charge-Offs to Average Loans
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----------------------------------------------
<S> <C> <C> <C> <C> <C>
PROVISION (MILLIONS) 48.6 38.6 28.0 30.1 40.1
NET CHARGE-OFFS TO AVG LOANS
(PERCENT) 0.75 0.54 0.26 0.27 0.29
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 3
<TABLE>
<CAPTION>
Yields on Average Earning Assets and Rates
Paid on Average Interest-Bearing Liabilities 1995
--------------------------------------------------
Average Revenue/ Yield/
(Taxable equivalent basis-dollars in thousands) Balance Expense Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Earning assets:
Loans net of unearned income.......................... $11,747,385 $1,016,412 8.65%
Trading securities.................................... 6,331 319 5.04
Available-for-sale securities......................... 538,133 38,034 7.07
Held-to-maturity securities:
Taxable............................................ 3,014,160 197,645 6.56
Tax-free........................................... 261,385 28,441 10.88
---------- ----------
Total held-to-maturity securities............... 3,275,545 226,086 6.90
---------- ----------
Total securities............................. 3,820,009 264,439 6.92
Federal funds sold and securities purchased
under agreements to resell......................... 15,590 1,095 7.02
Mortgage loans held for sale.......................... 79,997 5,478 6.85
---------- ---------- -----
Total earning assets............................... 15,662,981 1,287,424 8.22
Cash and other assets.................................... 1,453,599 ---------- -----
Less allowance for loan losses........................... (176,695)
Market valuation on available-for-sale securities........ 2,441
-----------
$16,942,326
===========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits...................... $ 3,893,721 139,854 3.59
Savings deposits...................................... 960,969 27,500 2.86
Time deposits......................................... 5,732,897 327,838 5.72
Certificates of deposit of $100,000 or more........... 923,866 54,278 5.88
Federal funds purchased and securities sold
under agreements to repurchase..................... 1,158,196 67,182 5.80
Other borrowed funds.................................. 603,700 34,497 5.71
Long-term borrowings:
Subordinated Capital Notes Due 1999................... 99,505 9,495 9.54
Federal Home Loan Bank advances....................... 54,000 3,825 7.08
Floating Rate Notes Due 1999.......................... 7,143 463 6.48
6 3/4% Subordinated Debentures Due 2025............... 22,987 1,489 6.48
7 3/4% Subordinated Notes Due 2004.................... 149,182 11,717 7.85
7 1/2% Convertible Subordinated Debentures............ 3,931 404 10.28
Long-term notes payable............................... 23,340 854 3.66
----------- ---------- -----
Total interest-bearing liabilities................. 13,633,437 679,396 4.98
---------- -----
Net interest spread............................ 3.24%
Noninterest-bearing demand deposits...................... 1,755,717 =====
Other liabilities........................................ 195,836
Shareholders' equity..................................... 1,357,336
-----------
$16,942,326
===========
Net interest margin on a taxable
equivalent basis................................ 608,028 3.88%
Taxable equivalent adjustment:........................... =====
Loans................................................. 2,968
Held-to-maturity securities........................... 9,383
Other earning assets.................................. 10
-----------
Total taxable equivalent adjustment................ 12,361
-----------
Net interest income............................. $ 595,667
===========
</TABLE>
Note: The taxable equivalent adjustment has been computed based on a 35% federal
income tax rate 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.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
1994 1993
- ------------------------------------------ ------------------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 9,918,274 $ 797,020 8.04% $ 7,634,984 $617,237 8.08%
43,089 2,587 6.00 49,448 2,496 5.05
979,974 52,005 5.31 605,558 32,641 5.39
2,512,922 160,181 6.37 2,239,254 143,772 6.42
317,114 35,289 11.13 379,236 41,102 10.84
- ----------- ----------- ---------- --------
2,830,036 195,470 6.91 2,618,490 184,874 7.06
- ----------- ----------- ---------- --------
3,853,099 250,062 6.49 3,273,496 220,011 6.72
84,234 2,636 3.13 233,684 6,480 2.77
207,799 12,609 6.07 245,021 14,338 5.85
- ----------- ----------- ----- ---------- -------- -----
14,063,406 1,062,327 7.55 11,387,185 858,066 7.54
1,391,553 ----------- ----- 1,105,149 -------- -----
(148,801) (115,001)
(12,173) -0-
- ----------- -----------
$15,293,985 $12,377,333
=========== ===========
$ 3,820,580 118,952 3.11 $ 3,263,054 86,218 2.64
918,132 24,261 2.64 773,131 20,732 2.68
4,281,988 191,997 4.48 3,161,697 143,218 4.53
762,403 33,751 4.43 728,206 30,686 4.21
1,476,696 65,009 4.40 1,046,827 32,241 3.08
495,107 21,610 4.36 438,992 13,870 3.16
99,376 9,504 9.56 99,247 9,530 9.60
112,550 6,442 5.72 14,447 838 5.80
7,647 352 4.60 8,172 310 3.79
-0- -0- - -0- -0- -
90,281 7,047 7.81 -0- -0- -
3,709 404 10.89 3,488 404 11.58
25,863 1,085 4.20 42,525 1,279 3.01
- ----------- -------- ----- ---------- -------- -----
12,094,332 480,414 3.97 9,579,786 339,326 3.54
-------- ----- -------- -----
3.58% 4.00%
1,779,833 ===== 1,611,428 =====
176,669 154,746
1,243,151 1,031,373
- ----------- -----------
$15,293,985 $12,377,333
=========== ===========
581,913 4.14% 518,740 4.56%
===== =====
3,064 3,715
11,485 13,661
37 73
---------- --------
14,586 17,449
---------- --------
$ 567,327 $501,291
========== ========
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
charge-offs over the last two years generally reflect higher levels of
credit risk in the loan portfolio, primarily due to increasing loan volumes
and emerging weakness in the consumer sector, combined with aggressive
marketing initiatives to develop business in AmSouth's new markets (See graph
on page 17).
Measured as a percentage of loans, net charge-offs have increased during the
previous two years. Management expects loan losses to continue to rise in
1996 both in absolute terms and measured as a percentage of average loans.
The exact amount of the increase cannot be determined, however, one of the
primary factors affecting the magnitude of the increase is the continuing shift
in the mix of the loan portfolio to include a greater proportion of commercial,
commercial real estate and consumer loans and fewer residential mortgages. In
addition, other factors include further weakness in the consumer sector during
1996 and continuation of aggressive marketing programs to develop new business.
Additional discussion of asset quality trends may be found in the section of
this report entitled Credit Risk Management Process and Loan Quality.
Noninterest Revenues
Total noninterest revenues for the year rose 29.5 percent to $231.8 million
from the $179.0 million reported for 1994. Other operating revenues in 1995
include a $25.0 million gain from AmSouth's sale of its third-party mortgage
servicing portfolio during the second quarter. In 1994, other operating
revenues included gains of $23.8 million from the sale of mortgage servicing,
losses on the sale of available-for-sale securities of $26.6 million, a loss on
the termination of interest rate swaps of $11.9 million and a gain of $5.5
million from sales of residential first mortgages. Excluding these items in
both years, total noninterest revenues increased 9.9 percent in 1995 from the
prior year.
The largest single category of noninterest revenues contributing to the
increase in 1995 was service charges on deposit accounts, which increased $16.0
million or 23.7 percent over 1994. Approximately one third of the increase, or
$5.1 million, is attributable to a revenue enhancement initiative that was
implemented in the second quarter of 1995 to automate the payment of certain
demand deposit account service fees. The remainder of the increase was due to
a reduction in the amount of waived service charges and a higher volume of
consumer account activity.
Trust income increased in 1995 to $50.3 million, or 9.0 percent, from the
$46.1 million of revenue reported in 1994. The increase was primarily from
increased customer activity in personal trusts, including estates, new employee
benefit plan administration accounts and higher fees.
Credit card income also contributed to the overall increase in noninterest
revenues with an increase in 1995 of $2.0 million or 16.0 percent. The
increase reflects a higher level of customer activity and an increase in the
number of cardholder accounts, a result of direct mail marketing campaigns
conducted in 1995.
Partially offsetting the increases in total noninterest revenues were
declines in investment services income and mortgage administration fees.
Investment services income decreased $3.3 million in 1995 primarily due to
management's decision to scale down the institutional bond sales area within
the correspondent banking division. Mortgage administration fees decreased
$13.9 million due to the sale of third-party mortgage servicing during the
second quarter of 1995.
Management expects, on a recurring basis, total noninterest revenues in 1996
to exceed the levels reported in 1995. The primary reasons include a continued
emphasis on sales and service quality, higher levels of transaction volumes,
particularly on products introduced during 1995 and further development of new
products.
Noninterest revenues for 1994 decreased $25.0 million compared to 1993.
Noninterest revenues
20
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 4
<TABLE>
<CAPTION>
Noninterest Revenues and
Noninterest Expenses Years Ended December 31 Compound
---------------------------------------------------------------------- Growth Rate
(Dollars in thousands) 1995 1994 1993 1992 1991 1990 1995/1990
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest revenues
Service charges on deposit accounts...... $ 83,717 $ 67,682 $ 59,379 $ 52,711 $ 50,328 $ 40,669 15.53%
Trust income............................. 50,272 46,121 41,659 40,069 37,891 36,196 6.79
Credit card income....................... 14,684 12,663 13,277 11,091 10,071 9,243 9.70
Investment services income............... 10,775 14,036 19,835 16,875 12,715 7,936 6.31
Mortgage administration fees............. 8,572 22,518 18,178 17,392 17,227 16,555 (12.33)
Other operating revenues................. 63,758 16,001 51,741 35,016 42,426 26,020 19.63
----------------------------------------------------------------------
$231,778 $179,021 $204,069 $173,154 $170,658 $136,619 11.15%
======================================================================
Noninterest expenses
Salaries................................. $191,071 $197,160 $180,065 $155,075 $136,924 $129,684 8.06%
Net occupancy expense.................... 53,918 46,770 36,537 32,524 26,956 25,191 16.44
Equipment expense........................ 50,289 41,432 39,213 32,548 30,882 30,011 10.88
Employee benefits........................ 35,246 34,890 42,691 26,691 23,559 22,374 9.51
FDIC premiums............................ 20,315 24,664 21,413 18,868 16,834 9,520 16.37
Foreclosed properties expense (income)... 372 4,721 (2,197) 22,426 36,933 8,754 (46.83)
Other operating expenses................. 160,918 173,268 141,109 112,416 94,315 86,124 13.32
----------------------------------------------------------------------
$512,129 $522,905 $458,831 $400,548 $366,403 $311,658 10.44%
======================================================================
</TABLE>
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 other service fees. The increase in
trust fees was generated primarily from an increase in customer activity in the
administration of personal trusts. Mortgage administration fees increased due
to the increase in servicing related to the acquisition of Fortune. Rising
interest rates and increased 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 operating revenues was the
loss on the termination of interest rate swaps of $11.9 million and lower gains
from sales of residential first mortgages of $5.5 million. These items were
partially offset by gains on the sale of mortgage servicing of $23.8 million.
Each of the major categories of noninterest revenues for 1990 through 1995,
with a five year compound growth rate for each component, is shown in Table 4.
Operating Efficiency Ratio
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING EFFICIENCY (PERCENT) 65.6 64.2 63.5 68.7 61.0
</TABLE>
Noninterest Expenses
Noninterest expenses for 1995 were $512.1 million compared to $522.9
million the previous year, a decrease of $10.8 million or 2.1 percent.
Excluding the one-time productivity initiatives expense of $22.2 million
charged to earnings in the second quarter of
21
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
1995, total noninterest expenses in 1995 compared to 1994 declined $33.0 million
or 6.3 percent. There were several reasons for the decrease in noninterest
expenses during 1995. The most significant ones were the sale of third-party
mortgage servicing, which reduced the amortization expense of Purchased Mortgage
Servicing Rights (PMSR's) and other operating expenses, the consolidation of
branches, the downsizing of the institutional bond sales area within the
correspondent banking area, and the reduction of deposit insurance premiums by
the Federal Deposit Insurance Corporation (FDIC). This reduction in expenses
resulted in a significant improvement in AmSouth's operating efficiency as
measured by the ratio of total noninterest expenses to NII and total noninterest
revenues. This ratio as reported for 1995, was 61.0 percent compared to 68.7
percent for 1994 and 63.5 percent for 1993.
The largest category of noninterest expenses is salaries expense. These costs
declined in 1995 to $191.1 million or 3.1 percent from the level reported the
prior year. Excluding the one-time costs associated with the business and branch
consolidations, salaries in 1995 decreased $12.8 million or 6.5 percent. The
lower expense reflects an approximate 1,000 person or 13.0 percent decline in
the number of employees at the end of 1995 compared to year-end 1994. Employee
benefits as reported in 1995 were $35.2 million, an increase of 1.0 percent over
1994.
Management expects employee benefits expense to increase at a faster rate in
1996 due to a higher company match in the thrift plan and enhancements to
employee life insurance benefits. These changes were made to remain competitive
and continue to attract the most qualified personnel.
Net occupancy expense was $53.9 million in 1995 compared to $46.8 million in
1994, an increase of $7.1 million or 15.3 percent. Included in the increase
were expenses totaling $5.5 million related to the business and branch
consolidation initiatives. Without those costs, net occupancy expense
increased 3.5 percent between years, primarily from higher rental costs.
Occupancy expenses are expected to increase at a higher rate in the future
because of AmSouth's obligation under a lease in a new office complex.
Equipment expense in 1995 was $50.3 million, an increase of $8.9 million or
21.4 percent from 1994, and included $4.7 million for development costs of new
systems and the write-off of various leases. Excluding these one-time costs,
equipment expense in 1995 increased $4.2 million or 10.1 percent, due primarily
to investments in technology related to the consumer and commercial lines of
business. These expenses are expected to grow at a significant rate in the
near future as further investments in technological enhancements are made in
support of the lines of business.
FDIC premiums declined $4.3 million or 17.6 percent in 1995 due to a $5.0
million deposit insurance premium refund received during the third quarter of
1995. This reflects the reduction in insurance premium rates from 23 cents to
4 cents per $100 of deposits for those deposits insured by the Bank Insurance
Fund (BIF). At December 31, 1995, approximately 65.0 percent of AmSouth's
assessment deposit base was insured by BIF. The remaining 35.0 percent of the
assessment deposit base is insured by the Savings Association Insurance Fund
(SAIF), whose rates were not lowered from 23 cents per $100 of deposits in
1995.
In November of 1995, the FDIC again reduced the premium rate on BIF insured
deposits for most banks to zero beginning in 1996. This action further lowers
AmSouth's FDIC premiums on BIF insured deposits in 1996 by an estimated $10.0
million. However, there is currently pending legislation in the U.S. Congress
which would charge a special one-time
22
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
assessment on insured deposits to recapitalize the SAIF to its
statutorily-mandated minimum designated reserve ratio of 1.25 percent. The
current version of this proposed legislation would impose this assessment at a
rate of 85 cents per $100 of SAIF insured deposits. Included in this proposed
legislation is a proposal to lower the special assessment for those
institutions meeting certain qualifications. The reduction would be achieved by
lowering the SAIF deposit assessment base for such institutions by 20 percent
prior to the calculation of the special charge. AmSouth believes that it would
qualify for this treatment under the current version of this legislation and,
as a result, would incur a one-time cost of approximately $31.0 million on a
pre-tax basis if the legislation is passed as currently drafted. The charge to
earnings would not occur until the law has been enacted. Due to the uncertain
nature of legislative affairs, management cannot predict with any degree of
accuracy when the legislation will be enacted, if at all, or what form the
final legislation may take.
Foreclosed properties expense decreased $4.3 million in 1995 compared to
1994. This decline directly reflects the lower level of foreclosed properties
held as nonperforming assets in 1995 versus 1994. Foreclosed properties totaled
$16.2 million at the end of 1995, a decrease of $12.1 million from $28.3
million at the prior year-end.
Other operating expenses in 1995 were $160.9 million compared to $173.3
million in 1994, a decrease of $12.4 million or 7.2 percent. The decrease
included $4.5 million of expense related to the productivity initiatives. The
remainder of the decrease was primarily the result of lower amortization of
PMSR's due to the sale of third-party mortgage servicing earlier in the year.
Noninterest expenses for 1994 increased $64.1 million, or 14.0 percent,
compared to a 1993 increase of $58.3 million, or 14.6 percent. 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 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 an
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 percent in 1994 primarily due to a 35.0
percent increase in the number of offices due to the acquisitions 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 properties.
Other operating expenses in 1994 increased $32.2 million, or 22.8 percent.
Included in the increase was a $9.6 million increase in 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.
Each of the major categories of noninterest expenses for 1990 through 1995,
with a five year compound growth rate for each component, is shown in Table 4.
23
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Income Taxes
AmSouth's income tax expense was $100.2 million in 1995, $66.1 million in
1994, and $71.8 million in 1993. The increase in income tax expense in 1995
from 1994 was due primarily to the increase in pre-tax income. Conversely, the
decrease in income tax expense in 1994 from 1993 was primarily the result of a
decrease in pre-tax income.
The effective tax rate for 1995 was 36.4 percent compared to 34.2 percent in
1994, and 32.9 percent in 1993. The 1995 increase resulted from a continued
decrease in tax-exempt revenues and an increase in financial statement
intangible amortization expense which is not deductible for income tax
purposes. A detail of the deferred tax assets and liabilities is included in
Note R of the Notes to Consolidated Financial Statements.
During 1995, AmSouth's tax returns for the years 1987 through 1990 were
audited by the Internal Revenue Service. There were no material adjustments
made.
Currently, AmSouth's consolidated tax returns for 1991 through 1994 are
under review by the Internal Revenue Service. Management does not anticipate
that these reviews will result in any adjustments that would have a material
impact on AmSouth's financial condition or results of operations.
Statement of Condition Analysis
At December 31, 1995, AmSouth reported total assets of $17.7 billion
compared to $16.8 billion at the end of 1994. Average total assets were $16.9
billion in 1995 versus $15.3 billion in 1994. The acquisition of Fortune in
mid-year 1994 is the primary reason for the increase in average assets between
years.
Earning Assets
In banking, the predominate earning assets are loans and investment
securities. The proportion of earning assets to total assets measures the
effectiveness of management's efforts to invest available funds into the most
efficient and profitable uses. In 1995 earning assets were 92.5 percent of
total average assets compared to 92.0 percent in 1994. The increase in 1995 is
primarily a reflection of the growth in loans experienced during the year.
Earning Assets as a
Percentage of Average Assets
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------------------------------------
<S> <C> <C> <C> <C> <C>
LOANS (PERCENT) 61.9 60.6 61.7 64.9 69.3
INVESTMENT SECURITIES (PERCENT) 26.3 27.0 26.4 25.2 22.6
OTHER EARNING ASSETS (PERCENT) 3.1 3.8 3.9 1.9 0.6
</TABLE>
Securities
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (Statement 115) requires entities
to classify debt and equity securities as either held-to-maturity,
available-for-sale or trading securities. 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. AmSouth adopted Statement 115 on January 1, 1994.
24
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 5
<TABLE>
<CAPTION>
Securities December 31
-------------------------------------
(In millions) 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trading securities:
U.S. Treasury and federal agency securities....... $ -0- $ -0- $ 85
Other securities.................................. 3 4 3
-------------------------------------
Total taxable.................................. 3 4 88
State, county and municipal securities............ -0- 2 7
-------------------------------------
3 6 95
-------------------------------------
Available-for-sale securities:
U.S. Treasury and federal agency securities....... 2,138 322 1,255
Other securities.................................. 342 61 39
-------------------------------------
2,480 383 1,294
-------------------------------------
Held-to-maturity securities:
U.S. Treasury and federal agency securities....... 1,842 3,037 1,430
Other securities.................................. 101 7 40
-------------------------------------
Total taxable.................................. 1,943 3,044 1,470
State, county and municipal securities............ 224 293 353
------------------------------------
2,167 3,337 1,823
-------------------------------------
$4,650 $3,726 $3,212
=====================================
</TABLE>
On November 15, 1995, the Financial Accounting Standards Board (FASB) staff
issued a report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities." This report provided
implementation guidance and a one-time opportunity for companies to reclassify
a portion or all of its investment securities, without regard to the company's
stated intent in prior or subsequent periods. The report required that such
reclassification be completed by December 31, 1995.
As a result of the FASB guide, management reclassified securities
increasing the amount and proportion of available-for-sale securities in the
portfolio. The primary reason for the increase was to enhance the overall
liquidity and management flexibility of the investment securities portfolio.
At December 31, 1995, available-for-sale securities totaled $2.5 billion and
represented 53.3 percent of the total portfolio compared to $383.0 million, or
10.3 percent, in available-for-sale securities at the end of 1994. These
securities at year-end 1995 consisted primarily of U.S. Treasury securities,
variable rate mortgage-backed securities, other private asset-backed
securities and equities. Also included in the available-for-sale category at
the end of the year were $352.0 million of AmSouth's variable rate residential
first mortgage loans securitized in the fourth quarter of 1995 through the
Federal Home Loan Mortgage Corporation. The average life of the portfolio is
estimated to be 4.7 years with a duration of 1.1 years. Total realized
gains of $3.7 million from the sale of available-for-sale securities were
included in other operating revenues for 1995, compared to $26.6 million of
realized losses in 1994. Unrealized gains on the securities of $21.7 million,
net of deferred taxes, were included as an addition to shareholders' equity on
December 31, 1995.
Available-for-sale securities declined $911.0 million during 1994 primarily
due to the sale of mortgage-backed securities and U.S. Treasury securi-
25
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
ties. 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 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 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 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, after giving effect to the reclassification,
were $2.2 billion at the end of 1995 compared to $3.3 billion at year-end 1994.
In addition to the reclassification, securities totaling $353.8 million matured
or were called during 1995 and contributed to the decline in held-to-maturity
securities between years. In the fourth quarter of 1995, AmSouth purchased
$538.2 million of primarily agency CMO's to replace this run-off as well as
anticipated run-off in the first quarter of 1996. Securities classified as
held-to-maturity at the end of 1995 consisted primarily of agency CMO's,
federal agencies, mortgage-backed securities and state, county and
Table 6
Available-for-Sale Securities and Held-to-Maturity Securities
Relative Contractual 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............. $125,116 6.65% $622,201 6.74% $176,117 7.67% $1,181,897 6.82%
Other securities................. -0- - 33,367 8.32 71,991 6.28 48,240 6.58
---------------------------------------------------------------------------------------
$125,116 6.65% $655,568 6.82% $248,108 7.27% $1,230,137 6.81%
=======================================================================================
Percentage of total portfolio.... 5.54% 29.02% 10.98% 54.46%
Held-to-maturity securities:
U.S. Treasury and federal
agency securities............. $ 1,086 5.69% $422,262 6.40% $ 21,609 7.44% $1,397,444 7.15%
State, county and
municipal obligations......... 41,983 10.72 107,313 11.02 48,104 10.95 27,344 11.38
Other securities................. 1,126 4.26 202 8.55 1,075 7.95 97,461 6.59
---------------------------------------------------------------------------------------
$ 44,195 10.43% $529,777 7.33% $ 70,788 9.83% $1,522,249 7.17%
=======================================================================================
Percentage of total portfolio.... 2.04% 24.45% 3.27% 70.24%
Taxable equivalent adjustment
for calculation of yield...... $ 1,575 $ 4,140 $1,843 $1,090
</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 $96 million of mortgage-backed securities and
those indicated as maturing after ten years includes $1.2 billion 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, and they are predominantly variable-rate
securities.
3. The amount of held-to-maturity securities indicated as maturing after five
but within ten years includes $22 million of mortgage-backed securities and
those indicated as maturing after ten years includes $1.4 billion 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.
4. Federal Reserve Bank stock, Federal Home Loan Bank stock, and equity stock
of other corporations held by AmSouth are not included in the above table.
26
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
municipal obligations. The average life of these securities is estimated to
be 3.8 years with a duration of 2.2 years. At December 31, 1995, the held-to-
maturity portfolio had an unrealized gain of $26.4 million.
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 the purchases of
mortgage-backed securities during the first half of 1994.
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, 1995 declined to $3.0 million from $6.0 million at the
end of 1994, reflecting lower levels of customer demand and the downsizing of
the institutional bond sales area within the correspondent banking division
during 1995. There were no unrealized gains in 1995 compared to unrealized
gains of $854.4 thousand in 1994. (See Table 5).
AmSouth's policy requires all securities purchased for the securities
portfolio, except state, county and local municipal obligations, to be rated
investment grade or better. Securities backed by the U.S. government and its
agencies, both on a direct and indirect basis, represented approximately 85.6
percent of the portfolio at December 31, 1995. Approximately 48.0 percent of
state, county and local municipal securities at year-end 1995 were rated
single A or above. Most of the remaining securities were not rated,
generally because of the relatively small size of the issue and the expense
associated with obtaining a rating.
Loans
Loans are the single largest category of earning assets for AmSouth and
produce the highest level of revenues. At December 31, 1995, loans, net of
unearned income, totaled $11.7 billion, an increase of 2.7 percent from the
$11.4 billion reported at the end of 1994. The growth in loans during 1995
would have been greater, except for management's decision in the latter
half of 1994 to reduce the proportion of residential first mortgages held in
the loan portfolio. To accomplish this objective, residential first mortgages
continued to be originated but, for the most part, sold into the secondary
market. The existing portfolio was allowed to run-off through normal
pay-downs, maturities and prepayments. Finally, a portion of current
outstandings was securitized and
Table 7
<TABLE>
<CAPTION>
Major Loan Categories December 31
-----------------------------------------------------------------------
(In millions) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial............................... $ 3,112 $ 2,699 $2,461 $2,345 $2,335
Commercial real estate:
Commercial real estate mortgage....... 1,523 1,371 1,217 1,050 975
Real estate construction.............. 526 541 416 288 288
-----------------------------------------------------------------------
Total commercial real estate....... 2,049 1,912 1,633 1,338 1,263
-----------------------------------------------------------------------
Consumer:
Residential first mortgages........... 3,802 4,276 2,488 1,291 1,178
Other residential mortgages........... 693 632 512 450 420
Dealer indirect....................... 1,058 887 599 496 506
Revolving credit...................... 477 350 341 358 198
Other consumer........................ 629 740 578 509 476
-----------------------------------------------------------------------
Total consumer..................... 6,659 6,885 4,518 3,104 2,778
-----------------------------------------------------------------------
11,820 11,496 8,612 6,787 6,376
Less unearned income..................... 77 66 72 70 82
-----------------------------------------------------------------------
$11,743 $11,430 $8,540 $6,717 $6,294
=======================================================================
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
LOAN COMPOSITION
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------------------------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL (BILLIONS) 2.34 2.35 2.46 2.70 3.11
COMMERCIAL REAL ESTATE (BILLIONS) 1.26 1.34 1.63 1.91 2.05
CONSUMER (BILLIONS) 1.60 1.81 2.03 2.61 2.86
RESIDENTIAL FIRST MTGS (BILLIONS) 1.18 1.29 2.49 4.28 3.80
</TABLE>
reclassified to securities. All of these elements in 1995 combined to
reduce residential first mortgages to $3.8 billion at the end of the year from
$4.3 billion at year-end 1994. Excluding residential first mortgages, total
loans, net of unearned income, increased $787.2 million or 11.0 percent at
December 31, 1995 from the level reported at the end of 1994. Table 7 provides
a five year trend of major loan categories. At December 31, 1995, there were no
loan concentrations other than those shown in Table 7.
The loan portfolio at AmSouth is comprised of four main components:
commercial loans, commercial real estate loans, consumer loans and, within the
consumer loan category, residential first mortgages. At the end of 1995,
commercial loans represented 26.3 percent of the total portfolio, commercial
real estate loans were 17.4 percent, while consumer loans, excluding residential
first mortgages, were 24.1 percent and residential first mortgages comprised
32.2 percent. This compares with 23.5 percent, 16.6 percent, 22.7 percent, and
37.2 percent at the end of 1994 for commercial loans, commercial real estate
loans, consumer loans and residential first mortgages, respectively. The shift
in the mix of the loan portfolio between years was primarily the result of the
decision to reduce the proportion of residential first mortgages held in the
portfolio while increasing consumer, commercial and commercial real estate
loans.
Commercial loans at the end of 1995 were $3.1 billion compared to $2.7
billion at December 31, 1994, an increase of 15.3 percent. The strong growth
was primarily a function of management's strategy, formulated several years
ago, to apply relationship banking concepts across all lines of business. In
1995, this approach produced solid results in many commercial lending segments
and increases in several industry groups. An area where AmSouth has developed a
specialty over the last several years is lending to the health services
industry. Commercial loans to the health services industry increased
approximately $65.0 million in 1995 due to the generally strong growth in the
industry and the large number of health care providers and related businesses
in AmSouth's primary markets. Another area, equipment lease financing,
expanded significantly in 1995 and contributed $96.0 million of the overall
commercial loan growth during the year. A majority of the increase was
centered in the transportation, communication and utilities industry group and
included mostly investment grade counterparties. Finally, increases were also
experienced in the manufacturing and trade industries during 1995.
Table 8
<TABLE>
<CAPTION>
Selected Loan Maturities and Sensitivity
to Change in Interest Rates 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...................... $1,267 $ 626 $ 739 $1,365 $284 $196 $ 480 $3,112
Commercial real estate mortgage. 196 458 286 744 387 196 583 1,523
Real estate construction........ 276 53 153 206 14 30 44 526
------------------------------------------------------------------------------------------
Total $1,739 $1,137 $1,178 $2,315 $685 $422 $1,107 $5,161
==========================================================================================
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Management expects further growth in commercial loans in 1996 due to a
continued emphasis on new business development and further application of its
relationship banking concept. In order for this growth to occur, the economy
must remain stable or improve throughout the year.
Commercial real estate loans are comprised of two primary categories;
commercial real estate mortgages and real estate construction loans. In 1995,
commercial real estate mortgages increased $152.0 million or 11.1 percent. Real
estate construction loans declined in 1995 to $526.0 million from $541.0
million reported at the end of 1994, a decrease of $15.0 million or 2.8
percent. On a combined basis, owner occupied properties totaled $776.0 million
or 37.8 percent of total commercial real estate loans in 1995, while non-owner
occupied properties were $1.3 billion or 62.2 percent of the total. This
compares with $809.0 million or 42.3 percent of owner occupied properties and
$1.1 billion or 57.7 percent of non-owner occupied properties at the end of
1994. Management anticipates both categories of commercial real estate loans to
increase during 1996, provided the economy and AmSouth's real estate markets
remain strong.
Consumer loans, excluding residential first mortgages, include primarily
dealer indirect, other residential mortgages including second mortgage
installment loans and home equity lines of credit, bankcard, and other consumer
loans. Dealer indirect loans reached $1.1 billion at the end of 1995, an
increase of $171.0 million or 19.3 percent from the $887.0 million of loans
outstanding at the end of 1994. These loans consist primarily of loans made to
individuals to finance the purchase of new and used automobiles. The increase
in 1995 was a direct result of a generally strong economy and the expansion
into new Florida markets.
Other residential mortgages increased $61.0 million during 1995 to $693.0
million at the end of the year from $632.0 million at the prior year-end. The
increase was primarily the result of new customers acquired in 1995 from direct
mail marketing promotions of home equity lines of credit.
Revolving credit, which consists primarily of bankcard outstandings, at the end
of 1995 increased $127.0 million or 36.3 percent above the level reported at
year-end 1994. The reason for the increase was an increase in the number of
cardholders from 294,000 accounts in 1994 to 367,000 accounts in 1995, a result
of several targeted, direct marketing campaigns conducted during the year. Other
consumer loans decreased in 1995 primarily due to the sale in mid-year of
approximately $90 million of government guaranteed student loans.
Management anticipates in 1996 that consumer loans, excluding residential
mortgages, will continue to grow, provided the economy remains stable and
consumer confidence is high. The growth will be achieved through a combination
of direct mail marketing campaigns and a continued emphasis on cross selling in
branches and service quality.
The commercial and commercial real estate loan portfolios 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.
The two largest increases in consumer loans from December 31, 1993 to 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. Dealer indirect loans increased primarily due to the
initial expansion into new markets. Revolving credit increased from the
29
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
prior year-end by $9.0 million or 2.6 percent to $350.0 million of
outstandings at the end of 1994. Other consumer loans increased $162.0 million
primarily due to an increase in direct installment loans.
Other Earning Assets
Other earning assets consist primarily 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 temporary
investments in the corporation's overall funding and cash management operations.
Federal funds sold and resell agreements at December 31, 1995 were $1.8 million,
a decline of $150.8 million from the end of 1994. These assets were replaced by
higher yielding loans and securities. Mortgage loans held for sale decreased to
$62.0 million at the end of 1995 from $130.2 million the prior year-end, a
result of lower mortgage loan originations during 1995.
Deposits
Deposits are AmSouth's primary source of funding and their cost is the
largest category of interest expense. Average total deposits reached $13.3
billion in 1995, representing an increase of $1.7 billion or 14.7 percent over
total average deposits in 1994 of $11.6 billion. There are five principal
components of total deposits: noninterest-bearing demand, interest-bearing
demand, savings, time and certificates of deposit of $100,000 or more. The
largest component is time deposits, which comprised approximately 43 percent
of the total in 1995 compared to approximately 37 percent in 1994. The primary
reason for the shift in the mix in 1995 was an increase of $1.5 billion or 33.9
percent in time deposits during the year. This strong growth was primarily due
to the acquisition of Fortune in mid-year 1994 and special time deposit
promotional campaigns conducted during the latter half of 1994 and the first
quarter of 1995. The preference for time deposits by customers in 1995,
combined with lower interest rates, caused the other two largest deposit
categories to decline. Interest-bearing demand deposits decreased $73.1
million on average in 1995, while noninterest-bearing demand deposits declined
$24.1 million. At the same time, the percentage of interest-bearing demand
deposits to total deposits declined to approximately 29 percent in 1995 from
approximately 33 percent in 1994 and the percentage of noninterest-bearing
demand deposits to total deposits decreased to approximately 13 percent from
approximately 15 percent during 1994.
Average total deposits increased $2.0 billion
Table 9
<TABLE>
<CAPTION>
Average Deposits December 31
----------------------------------------------------------------------------------
(In thousands) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand........ $ 1,755,717 $ 1,779,833 $ 1,611,428 $1,304,787 $1,136,869
Interest-bearing demand........... 3,893,721 3,820,580 3,263,054 3,033,034 2,846,676
Savings........................... 960,969 918,132 773,131 575,082 482,998
Time:
Retail......................... 4,652,502 3,343,936 2,359,352 2,085,556 2,312,726
Individual retirement accounts. 928,901 784,736 639,866 517,227 468,742
Other.......................... 151,494 153,316 162,479 143,007 159,023
----------------------------------------------------------------------------------
Total time.................. 5,732,897 4,281,988 3,161,697 2,745,790 2,940,491
----------------------------------------------------------------------------------
Certificates of deposit of
$100,000 or more............... 923,866 762,403 728,206 687,514 741,390
----------------------------------------------------------------------------------
$13,267,170 $11,562,936 $ 9,537,516 $8,346,207 $8,148,424
==================================================================================
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Deposit Composition
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----------------------------------
<S> <C> <C> <C> <C> <C>
NONINTEREST-BEARING DEMAND (BILLIONS) 1.14 1.30 1.61 1.78 1.76
INTEREST-BEARING DEMAND (BILLIONS) 2.85 3.03 3.26 3.82 3.89
TIME (BILLIONS) 2.94 2.75 3.16 4.28 5.73
SAVINGS (BILLIONS) 0.48 0.58 0.77 0.92 0.96
CDs GREATER THAN $100m (BILLIONS) 0.74 0.69 0.73 0.76 0.92
</TABLE>
during 1994. Approximately 41 percent of the increase is attributable to the
acquisition of Fortune. Additional deposit growth in new markets entered into
through business combinations accounted for 50 percent of the increase. The
largest increase in average total deposits, $984.6 million, occurred in retail
time deposits. The Fortune acquisition and a special deposit marketing
campaign during the last half of 1994 were the primary reasons for the increase.
Table 10 provides a maturity schedule for time deposits of $100,000 or more
at December 31.
Other Interest-Bearing Liabilities
Other interest-bearing liabilities include 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), and other borrowed funds. Average federal funds
purchased and repurchase agreements declined in 1995 to $1.2 billion, or 21.6
percent, from the $1.5 billion averaged in 1994. The principal reasons for the
decrease were the growth in total average deposits in 1995 and a shift of
funding into the lower cost categories of other borrowed funds. Other borrowed
funds, which include master notes, commercial paper, 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, increased in 1995
to average $603.7 million versus $495.1 million in 1994, an increase of 21.9
percent.
At December 31, 1995, 1994, and 1993, federal funds purchased and repurchase
agreements totaled $1.9 billion, $1.2 billion, and $793.2 million respectively,
with weighted average interest rates of 4.93 percent, 5.48 percent, and 2.73
percent, respectively. The maximum amount outstanding at any month end during
each of the last three years was $1.9 billion, $2.4 billion, and $1.2 billion,
respectively. The average daily balance and average interest rates for each
year are presented in Table 3.
As the competition for deposits continues to intensify, management
anticipates that the reliance on short-term interest-bearing liabilities, other
than deposits, to fund asset growth will increase. A significant increase is
expected in 1996 if interest rates continue their downward trend and the
performance of the stock and bond markets remains strong.
Table 10
<TABLE>
<CAPTION>
Maturity of Time Deposits of $100,000 or More December 31
------------------------------------------------
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Three months or less.......................... $ 493,848 $233,282 $302,970
Over three through six months................. 131,062 102,370 128,859
Over six through twelve months................ 254,626 127,775 234,069
Over twelve months............................ 171,958 435,971 258,681
------------------------------------------------
$1,051,494 $899,398 $924,579
================================================
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Long-term debt during 1995 averaged $360.1 million, an increase of $20.7
million from the prior year. The reason for the increase was the issuance in
May 1994 of $150.0 million in 7 3/4% subordinated notes due in the year 2004
and the issuance in November 1995 of $150.0 million of 6.75% subordinated
debentures due in the year 2025 but which may be put by the holder after ten
years. Substantially all of the proceeds from the 7 3/4% subordinated notes
were used to fund the cash portion of the Fortune acquisition purchase price.
A portion of the proceeds, $49.0 million, from the 6.75% subordinated
debentures was used to purchase 1,265,000 shares of AmSouth common stock as
part of a program, approved by AmSouth's Board of Directors in October 1995,
to provide shares for AmSouth's dividend reinvestment plan and stock-based
employee benefit plans. The remaining proceeds are available for further
purchases of AmSouth common stock under the previously mentioned program, which
has 1,000,000 additional shares authorized, or for general corporate purposes.
Partially offsetting the increase from the debt issuance during 1995, was a
decline in the long-term portion of FHLB advances of $58.6 million on average.
Shareholders' Equity
At December 31, 1995, shareholders' equity totaled $1.4 billion, an increase
of $73.0 million or 5.6 percent from year-end 1994. The sources of growth in
shareholders' equity during 1995 were the retention of net income,
issuances of common stock under the various stock-based employee benefits plans
and a $26.3 million increase in unrealized gains on available-for-sale
securities. Partially offsetting the increases were cash dividends declared
of $89.9 million and the purchase of 1,265,000 shares of AmSouth common stock
for $49.0 million to provide shares for the dividend reinvestment and employee
benefit plans. Information on prior years may be found in the Consolidated
Statement of Shareholders' Equity on page 50 of this report.
In October 1995 management recommended, and the Board of Directors
approved, a new capital and dividend policy for AmSouth. All of the guidelines
contained within the policy were developed based on industry standards,
regulatory requirements, perceived risk of the various lines of business and
future growth opportunities. Periodically, management will re-evaluate the
policy and present its findings to the Board of Directors to ensure that the
policy continues to support corporate objectives, the regulatory environment,
and changes in market conditions.
At December 31, 1995, AmSouth met or exceeded all of the minimum capital
standards for the parent company and its subsidiaries as established by the
company's capital and dividend policy. Refer to Table 11 entitled Capital
Ratios for specific information.
RISK MANAGEMENT
Risk identification and management are key elements in the overall
management of AmSouth. Management believes the primary risk exposures are
interest rate, liquidity and credit risks. Some of the more significant
processes used to manage and control these risks are described in the following
paragraphs.
Asset and Liability Management
AmSouth maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. This is accomplished through the development and implementation
of lending, funding and pricing strategies designed to maximize net interest
income performance under varying interest rate environments subject to specific
liquidity and interest rate risk guidelines.
32
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 11
<TABLE>
<CAPTION>
Capital Ratios December 31
-------------------------------
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Risk-adjusted capital ratio:
Total assets............................................................ $17,738,795 $16,777,951
Adjusted allowance for loan losses...................................... 171,294 154,458
Adjustment for risk-weighting of balance sheet items.................... (6,235,763) (6,075,915)
Adjustment for off-balance sheet items.................................. 2,332,722 1,700,491
Unrealized (gains)/losses on available-for-sale securities.............. (34,364) 7,317
Less certain intangible assets.......................................... (284,707) (224,381)
-------------------------------
Total risk adjusted assets.............................................. $13,687,977 $12,339,921
===============================
Shareholders' equity.................................................... $ 1,383,475 $ 1,310,458
Unrealized (gains)/losses on available-for-sale securities
(net of deferred taxes).............................................. (21,705) 4,594
Less certain intangible assets.......................................... (284,707) (224,381)
-------------------------------
Tier I capital.......................................................... 1,077,063 1,090,671
-------------------------------
Adjusted allowance for loan losses...................................... 171,294 154,458
Qualifying long-term debt............................................... 358,797 252,396
-------------------------------
Tier II capital......................................................... 530,091 406,854
-------------------------------
Total capital........................................................... $ 1,607,154 $ 1,497,525
===============================
Tier I capital to total risk-adjusted assets............................ 7.87% 8.84%
Total capital to total risk-adjusted assets............................. 11.74 12.14
Other capital ratios:
Leverage................................................................ 6.38 6.64
Ending equity to ending assets.......................................... 7.80 7.81
Tangible equity to assets............................................... 6.29 5.83
</TABLE>
Interest Rate Risk
The primary tool used by AmSouth to measure interest rate risk is an
earnings simulation model which evaluates the impact of different interest rate
scenarios on the company's projected business plan over a 12 to 24 month
horizon. Management feels that a more traditional interest sensitivity gap
analysis does not provide a complete picture of the corporation's exposure to
interest rate changes since static gap models are a point-in-time measurement
and, therefore, do not incorporate the effects of future balance sheet trends,
changes in the relationship between yields earned and rates paid, patterns or
rate movements in general or changes in prepayment speeds due to changes in
rates. AmSouth's earnings simulation model incorporates the effect of these
factors in addition to the impact of certain embedded interest rate caps and
floors on certain assets and liabilities while also reflecting management's
anticipated action under varying interest rate environments. Interest rate
scenarios are simulated on a regular basis to determine the range of interest
rate risk. Net interest income performance is measured under scenarios ranging
from plus or minus 100 basis points to plus or minus 300 basis points over 12
months compared to a stable interest rate environment. The net interest
income differential is expressed as a percent of net interest income over
twelve months if interest rates are unchanged. As of December 31, 1995, the
earnings simulation model results indicated that the corporation was in a
relatively neutral interest rate risk position with the net interest income
differential, in a plus or minus 200 basis point scenario, being less than 1
percent when compared to net interest income
33
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
under stable rates. This level of interest rate risk is well within the
company's policy guidelines. A very important factor in determining this
interest rate risk position is the extent to which pricing on administered rate
deposit products including interest checking, savings, and money market
accounts would be affected under varying interest rate scenarios. At AmSouth,
pricing for these products is assumed to be more variable in rising rate
scenarios than in declining rate scenarios. While these assumptions are
somewhat subjective, management reviews the anticipated pricing for these
products on a regular basis and alters these assumptions whenever trends or
market conditions dictate.
AmSouth has, from time to time, utilized various off-balance sheet
instruments such as interest rate swaps and caps to assist in managing interest
rate risk. As of December 31, 1995, AmSouth had a $1.0 billion notional amount
of caps outstanding, $500 million of caps sold and $500 million of caps
purchased, as hedges on $500 million of prime rate loans. This transaction
effectively locks-in the historically wide 300 basis point spread between the
federal funds and prime rates in a rising rate environment. The earnings
sensitivity of these caps, using the earnings simulation model and assuming an
immediate increase in interest rates of 200 basis points at the beginning of
the year, would result in a $250 thousand loss in earnings for the year. A
decrease would have no effect as the rates would be below the cap of 6 percent
on the federal funds rate. The preceding assumes that the spread between the
federal funds rate and prime rate will be consistent with their spread based on
the daily average rate for the month of December 1995. Assuming that the
current market spread between the prime rate and the federal funds rate widens
by 50 basis points, AmSouth would incur a loss of $2.5 million for the year on
this transaction. If the spread decreased by 50 basis points, AmSouth would have
a positive effect on earnings of $2.5 million for the year.
In addition to the caps, AmSouth had interest rate swaps as of December 31,
1995 in the notional amount of $150.0 million which were purchased to hedge the
cost of $150.0 million of 6.75% subordinated debentures issued in the fourth
quarter of 1995. This swap effectively converts the fixed rate debt to a
floating rate, tied to the one month LIBOR rate. Assuming a 200 basis point
immediate increase in rates as of the beginning of January 1996, AmSouth would
recognize a loss in earnings of approximately $2.1 million for the year. A 200
basis point decrease in rates would result in approximately $3.9 million of
income for the year.
As of December 31, 1995, AmSouth held other off-balance sheet instruments
to provide customers and AmSouth a means of managing the risks of changing
interest and foreign exchange rates. These other off-balance sheet instruments
are immaterial.
AmSouth terminated $1.1 billion of interest rate swaps and $915.0 million
of interest rate caps during the fourth quarter of 1994. The impact of interest
rate contracts on net interest income in 1995 was a decrease of $10.8 million.
This compares with a decrease in net interest income from the effect of
interest rate contracts during 1994 of $4.3 million. Of these amounts, $10.3
million in 1995 and $2.4 million in 1994 were due to the amortization of the
deferred loss on the termination of interest rate swaps that occurred in the
fourth quarter of 1994. The effect of the amortization of the deferred loss
on net interest income in 1996 is $6.6 million and in 1997, when it will be
fully amortized, is $292 thousand.
34
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 12
<TABLE>
<CAPTION>
Interest Sensitivity Analysis
0-30 31-60 61-90 91-180
(Dollars in thousands) Days Days Days Days
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Earning assets:
Federal funds sold and
securities purchased
under agreements to resell.......... $ 1,775 $ -0- $ -0- $ -0-
Trading securities..................... 2,978 -0- -0- -0-
Available-for-sale securities.......... 260,517 113,753 70,957 398,515
Held-to-maturity securities............ 33,470 27,661 116,664 65,362
Mortgage loans held for sale........... 31,518 30,499 -0- -0-
Loans net of unearned income........... 3,451,336 968,884 345,293 736,823
------------------------------------------------------------
Total earning assets................ 3,781,594 1,140,797 532,914 1,200,700
Cash and other assets.................. -0- -0- -0- -0-
Less allowance for loan losses......... -0- -0- -0- -0-
------------------------------------------------------------
$ 3,781,594 $ 1,140,797 $ 532,914 $ 1,200,700
============================================================
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits....... $ 2,443,551 $ 56,369 $ 17,760 $ 53,281
Savings deposits....................... 309,377 8,398 8,398 25,194
Time deposits.......................... 471,967 288,218 233,118 1,015,842
Certificates of deposit of
$100,000 or more.................... 289,678 73,656 85,882 131,062
Federal funds purchased and
securities sold
under agreements
to repurchase....................... 1,861,090 -0- -0- -0-
Other borrowed funds................. 406,636 28,474 5,183 13,000
Long-term debt....................... 96 -0- 6,889 96
----------------------------------------------------------
Total interest-bearing liabilities..... 5,782,395 455,115 357,230 1,238,475
Noninterest-bearing demand
deposits............................. 187,477 19,682 19,682 59,046
Other liabilities...................... -0- -0- -0- -0-
Shareholders' equity................... -0- -0- -0- -0-
------------------------------------------------------------
$ 5,969,872 $ 474,797 $ 376,912 $ 1,297,521
============================================================
Off-balance sheet financial
instruments......................... $ 150,000 $ -0- $ -0- $ -0-
============================================================
Rate sensitivity gap:
Dollar amount....................... $(2,338,278) $ 666,000 $ 156,002 $ (96,821)
Percent of total earning assets..... (14.2)% 4.0% 0.9% (0.6)%
Cumulative dollar amount............ $(2,338,278) $(1,672,278) $(1,516,276) $(1,613,097)
</TABLE>
Note: Certain interest-sensitive assets and liabilities are included in the
table based on historical re-pricing experience rather than contractual
maturities.
<TABLE>
<CAPTION>
Interest Sensitivity Analysis Over One and Less
181-365 Than Five Over Five
(Dollars in thousands) Days Years Years Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Earning assets:
Federal funds sold and
securities purchased
under agreements to resell.......... $ -0- $ -0- $ -0- $ 1,775
Trading securities..................... -0- -0- -0- 2,978
Available-for-sale securities.......... 773,950 632,368 229,753 2,479,813
Held-to-maturity securities............ 222,072 1,233,540 468,240 2,167,009
Mortgage loans held for sale........... -0- -0- -0- 62,017
Loans net of unearned income........... 1,344,205 4,087,667 809,065 11,743,273
-------------------------------------------------------------
Total earning assets................ 2,340,227 5,953,575 1,507,058 16,456,865
Cash and other assets.................. -0- -0- 1,460,381 1,460,381
Less allowance for loan losses......... -0- -0- (178,451) (178,451)
-------------------------------------------------------------
$ 2,340,227 $ 5,953,575 $ 2,788,988 $17,738,795
=============================================================
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits....... $ 106,563 $ 761,848 $ 473,134 $ 3,912,506
Savings deposits....................... 50,386 365,679 237,667 1,005,099
Time deposits.......................... 2,113,435 1,526,247 12,303 5,661,130
Certificates of deposit of
$100,000 or more.................... 243,007 171,858 100 995,243
Federal funds purchased and
securities sold
under agreements
to repurchase....................... -0- -0- -0- 1,861,090
Other borrowed funds................. 30,000 -0- -0- 483,293
Long-term debt....................... 4,258 114,037 322,422 447,798
-------------------------------------------------------------
Total interest-bearing liabilities..... 2,547,649 2,939,669 1,045,626 14,366,159
Noninterest-bearing demand
deposits............................. 118,094 891,615 539,257 1,834,853
Other liabilities...................... -0- -0- 154,308 154,308
Shareholders' equity................... -0- -0- 1,383,475 1,383,475
-------------------------------------------------------------
$ 2,665,743 $ 3,831,284 $ 3,122,666 $17,738,795
=============================================================
Off-balance sheet financial
instruments......................... $ -0- $ (150,000) $ -0- $ -0-
=============================================================
Rate sensitivity gap:
Dollar amount....................... $ (325,516)
Percent of total earning assets..... (2.0)%
Cumulative dollar amount............ $(1,938,613)
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 13 summarizes the activity, by notional amount, of off-balance sheet
financial instruments utilized in the asset and liability management process at
AmSouth for the years 1995, 1994 and 1993.
Table 13
<TABLE>
<CAPTION>
Interest Rate Swaps, Caps
and Floors Swaps
--------------------------------------------------------- Caps
(In millions) Receive fixed Pay fixed Basis Other & Floors Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993....... $ 305 $ 240 $ 300 $ 300 $1,005 $2,150
Additions...................... -0- -0- -0- 300 20 320
Maturities..................... -0- -0- -0- -0- -0- -0-
Calls.......................... (120) (120) -0- -0- -0- (240)
--------------------------------------------------------------------------------------
Balance at December 31, 1993..... 185 120 300 600 1,025 2,230
Additions...................... -0- -0- -0- 400 350 750
Maturities..................... -0- -0- (300) -0- (20) (320)
Calls.......................... (120) (120) -0- -0- -0- (240)
Terminations................... (65) -0- -0- (1,000) (915) (1,980)
--------------------------------------------------------------------------------------
Balance at December 31, 1994..... -0- -0- -0- -0- 440 440
Additions...................... 150 -0- -0- -0- 1,000 1,150
Maturities..................... -0- -0- -0- -0- (30) (30)
Calls.......................... -0- -0- -0- -0- -0- -0-
Terminations................... -0- -0- -0- -0- (300) (300)
--------------------------------------------------------------------------------------
Balance at December 31, 1995..... $ 150 $ -0- $ -0- $ -0- $1,110 $1,260
======================================================================================
</TABLE>
Table 14 summarizes the expected maturities on AmSouth's interest rate caps
at December 31, 1995 and interest rates exchanged on swaps. Both 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 1995 rates. The information presented could change as future
rates increase or decrease. (See Note L of the Notes to Consolidated Financial
Statements.)
Table 14
<TABLE>
<CAPTION>
Maturities on Caps and Interest
Rates Exchanged on Swaps Mature During
----------------------------------------------------------------------
(Dollars in millions) 1996 1997 1998 1999 2000 Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional amount............ $ 150 $ -0- $ -0- $ -0- $ -0- $ 150
Receive rate............... 6.28% 0.00% 0.00% 0.00% 0.00% 6.28%
Pay rate................... 5.69% 0.00% 0.00% 0.00% 0.00% 5.69%
Caps:
Notional amount............ $ 33 $ 77 $ -0- $ -0- $1,000 $1,110
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Liquidity
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 the corporation. This is accomplished through the active
management of both the asset and liability sides of the balance sheet. The
liquidity position of AmSouth is monitored on a daily basis. In addition, the
Asset/Liability Committee reviews liquidity on a monthly basis and approves any
changes in strategy that are 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, 1995, AmSouth was within all of the
guidelines which have been established. The primary sources of liquidity on the
asset side of the balance sheet are maturities and cash flows from both loans
and investments. Liquidity on the liability side is generated primarily through
growth in core deposits and the ability to obtain economical wholesale funding
in national and regional markets through a variety of sources. AmSouth's most
commonly used sources of wholesale funding 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 can 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 (FHLB). FHLB advances are competitively priced and
actively used as a source of funds with usage expected to continue increasing
in the future. Also, AmSouth Bank of Alabama during 1995 established a short
and medium-term note facility of up to $1.0 billion in borrowing capacity.
Maintaining adequate credit ratings on debt issues is critical to liquidity
because it affects the ability of AmSouth to attract funds from various sources
on a cost competitive basis. Table 15 summarizes AmSouth's credit ratings at
December 31, 1995.
<TABLE>
<CAPTION>
Table 15 Standard &
Credit Ratings Moody's Poor's Bankwatch
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
7 3/4% Subordinated Notes Due 2004.......... A3 BBB+ A
6 3/4% Subordinated Debentures Due 2025..... A3 BBB+ A
Subordinated Capital Notes Due 1999......... A3 BBB+ A
Floating Rate Notes Due 1999................ A2 A- -
Commercial paper............................ P-1 A-1 TBW-1
Certificates of deposit..................... AA3* A -
Short-term counterparty..................... P-1* A-1 -
Long-term counterparty...................... AA3* A -
</TABLE>
* AmSouth Bank of Alabama
37
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Credit Risk Management Process and Loan Quality
The loan portfolio at AmSouth holds the highest degree of risk for the
company. AmSouth manages and controls risk in the loan portfolio through
adherence to consistent standards established by senior management, combined
with a commitment to producing quality assets, developing profitable
relationships and meeting strategic growth targets.
AmSouth has written credit policies based on the strategic direction of the
company. These policies establish underwriting standards, place limits on
exposure, and set other limits or standards as deemed necessary and prudent.
Also included in the policy, and primarily determined by the amount of the
loan, are various approval levels, ranging from the branch or department level
to the centralized Corporate Credit Committee or the Boards of Directors of the
subsidiary banks.
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. Industry and loan type
diversification is reviewed quarterly.
AmSouth has a Credit Review Department which performs ongoing, independent
reviews of the risk management process, proper documentation and specific
loans. 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 and the Board of Directors 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 nine by the loan officer using established credit
policy guidelines, subject to review by the Credit Review Department.
In addition, 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. Consumer loan portfolios are assigned ratings by
pools on the same scale as commercial loans and are based on type of loan
and performance. The risk profile of the loan portfolio established by these
ratings and trends is reported to management, the Audit Committee and the Board
of Directors.
The Credit Administration function includes designated credit officers, who
are organizationally independent of the production areas, that oversee the loan
approval process, ensure adherence to credit policies and monitor efforts to
reduce nonperforming and classified assets. Additionally, a centralized
function handles the resolution and disposition of certain other assets to
ensure the optimal level of performance of these assets is achieved.
Risk in the consumer loan portfolio is further managed through utilization
of state-of-the-art computerized credit scoring, in-depth analysis of portfolio
components and specific account selection, management and collection
techniques. In addition, collections is centralized to capitalize on the
collection specialization and economies of scale as well as to provide
consistent application of collection procedures. The collection process is also
automated to ensure timely collection of accounts and consistent management of
risk associated with delinquent accounts. Finally, loan operations provides a
final independent document review with notification to the loan officers of any
document exceptions.
38
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Nonperforming Assets
Management closely monitors loans and other assets which are classified as
nonperforming assets. Nonperforming assets include impaired loans, other
nonaccrual loans, restructured loans, foreclosed properties, and repossessions.
Effective January 1, 1995, AmSouth adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures"
(Statement 114). A loan is impaired when, based on current information and
events, it is probable that AmSouth will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Statement 114 does not
apply to larger groups of homogeneous consumer loans so impaired loans are
primarily commercial loans and commercial real estate loans. Essentially all
impaired loans at the end of 1995 were on nonaccrual status. Loans are generally
placed on 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. Nonperforming assets, excluding
accruing loans 90 days past due, decreased $17.6 million, or 13.2 percent,
during 1995. This follows a $47.3 million, or 55.1 percent increase during 1994.
Without the effect of the Fortune purchase, the level of nonperforming assets
increased approximately $12.9 million in 1994. The graph entitled Nonperforming
Assets Trend and Table 16 provide trend information and detail components of
nonperforming assets for each of the last five years.
Nonperforming Assets Trend
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
----------------------------------
<S> <C> <C> <C> <C> <C>
NONPERFORMING ASSETS (MILLIONS) 182.1 116.1 85.8 133.1 115.5
NONPERFORMING ASSETS/LOANS (PERCENT) 2.84 1.71 1.00 1.16 0.98
</TABLE>
Table 16
<TABLE>
<CAPTION>
Nonperforming Assets December 31
------------------------------------------------------------------------
(Dollars in thousands) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Impaired loans......................... $ 55,993 $ -0- $ -0- $ -0- $ -0-
Other nonaccrual loans................. 40,253 89,545 53,020 57,213 69,953
Restructured loans..................... -0- 13,203 2,420 4,924 3,398
------------------------------------------------------------------------
Nonperforming loans.................. 96,246 102,748 55,440 62,137 73,351
------------------------------------------------------------------------
Foreclosed properties.................. 16,150 28,263 29,273 52,771 106,799
Repossessions.......................... 3,114 2,079 1,081 1,196 1,919
------------------------------------------------------------------------
Total nonperforming assets*.......... $115,510 $133,090 $ 85,794 $ 116,104 $182,069
========================================================================
Nonperforming assets*
to loans net of unearned income,
foreclosed properties
and repossessions.................... 0.98% 1.16% 1.00% 1.71% 2.84%
========================================================================
Accruing loans 90 days past due........ $ 39,618 $ 34,246 $ 20,917 $ 18,007 $22,401
========================================================================
</TABLE>
*Exclusive of accruing loans 90 days past due.
39
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The decline in nonperforming assets in 1995, compared to 1994, was the
result of a decrease in both nonperforming loans and foreclosed properties.
Nonperforming loans were $96.2 million at the end of 1995, versus $102.7
million the previous year-end, a decline of $6.5 million or 6.3 percent.
Commercial and commercial real estate nonperforming loans were lower in 1995,
on a combined basis, by $14.0 million, while total nonperforming consumer loans
were higher by $7.5 million. The improvement in the levels of non-performing
commercial and commercial real estate loans during 1995 is attributable to
lower interest rates and relatively strong real estate markets throughout
AmSouth's trade areas. Nonperforming consumer loans were higher in 1995 because
of an increase in loan volumes and a higher dollar amount of delinquencies,
brought on by a general weakness in the consumer sector. Table 17 presents
nonperforming loans and year-to-date net charge-offs and both as a percentage
of average net loans by category for December 31, 1995 and 1994.
For the year ended December 31, 1995, the level of foreclosed properties
improved significantly from the level reported at year-end 1994. The improvement
was due to the improved economic environment and aggressive disposition of
properties during 1995.
Table 17
<TABLE>
<CAPTION>
Nonperforming Loans and Nonperforming Loans* Net Charge-offs
Net Charge-offs ------------------------------------------- ----------------------------------------------
% of % of % of % of
December 31 Average December 31 Average December 31 Average December 31 Average
1995 Loans** per 1994 Loans** per 1995 Loans** per 1994 Loans** per
(Dollars in thousands) Category Category Category Category
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial........................... $ 16,301 0.57% $ 19,617 0.76% $ 4,595 0.16% $ 5,884 0.23%
Commercial real estate:
Commercial real estate mortgage... 36,617 2.58 44,436 3.39 1,397 0.10 229 0.02
Real estate construction.......... 3,075 0.60 5,908 1.34 185 0.04 (70) (0.02)
-------------------------------------------------------------------------------------
Total commercial real estate...... 39,692 2.05 50,344 2.88 1,582 0.08 159 0.01
-------------------------------------------------------------------------------------
Consumer:
Residential first mortgages....... 30,459 0.71 24,939 0.74 726 0.02 2,498 0.07
Other residential mortgages....... 1,011 0.16 26 - (153) (0.02) (39) (0.01)
Dealer indirect................... 6,486 0.69 594 0.09 7,599 0.80 2,568 0.37
Revolving credit.................. -0- - -0- - 15,401 3.99 13,340 4.17
Other consumer.................... 2,297 0.35 7,228 1.08 4,858 0.75 2,485 0.37
-------------------------------------------------------------------------------------
Total consumer.................... 40,253 0.58 32,787 0.59 28,431 0.41 20,852 0.37
-------------------------------------------------------------------------------------
$ 96,246 0.82% $102,748 1.04% $34,608 0.29% $26,895 0.27%
=====================================================================================
</TABLE>
* Exclusive of accruing loans 90 days past due.
** Net of unearned income
40
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 18 presents foreclosed properties by type of property and their
carrying values at December 31, 1995. The appraised values of the properties at
year-end 1995 were $20.0 million. The appraised values as a percentage of
carrying values were 123.7 percent on December 31, 1995.
Table 18
Composition of
Foreclosed Properties Carrying Percent
(Dollars in thousands) Value of Total
- ---------------------------------------------------------
Residential......................... $ 7,249 42.9%
Residential land/lots............... 4,597 27.2
Shopping centers.................... 2,406 14.2
Commercial buildings................ 2,198 13.0
Other............................... 466 2.7
-------------------
16,916 100.0%
=====
Allowance for foreclosed
property losses............. (766)
-------
$16,150
=======
Table 19 is a summary of the allowance for foreclosed property losses for
1995, 1994, and 1993. The decline in the balance of the allowance account in
1995 reflects the decrease in foreclosed properties during the year.
In management's opinion, all material potential problem loans as of December
31, 1995, are included in nonperforming assets or accruing loans 90 days past
due as shown in Table 16, Nonperforming Assets.
Table 19
Allowance for Foreclosed
Property Losses
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------
Balance at January 1.............. $ 3,638 $ 3,908 $ 7,520
Net write-downs/losses............ (2,550) (2,018) (3,097)
(Reduction) addition
to allowance
(credited) charged
to expense................ (322) 1,748 (3,038)
Allowance acquired in bank
purchases................. -0- -0- 2,523
-------------------------------
Balance at December 31............ $ 766 $ 3,638 $ 3,908
===============================
Allowance for Loan Losses
AmSouth maintains an allowance for loan losses which it believes is adequate
to absorb losses inherent in the loan portfolio. A formal review is prepared
quarterly to assess the risk in the portfolio and to determine the adequacy of
the allowance for loan losses. The review includes analyses of historical
performance, the level of nonperforming and adversely rated loans, specific
analyses of certain problem loans, loan activity since the previous quarter,
reports prepared by the Loan Review Department, consideration of current
economic conditions, and other pertinent information. The level of allowance to
net loans outstanding will vary depending on the overall results of this
quarterly review. The review is then presented to and subsequently approved by
senior management and the Audit Committee of the Board of Directors.
41
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Table 20
Allowance for Loan Losses
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1.................. $ 171,167 $ 131,509 $ 99,646 $ 95,392 $ 92,946
Loans charged-off:
Commercial......................... (7,991) (13,304) (8,492) (16,276) (18,331)
Real estate construction........... (455) (154) (178) (537) (375)
Real estate mortgage............... (4,455) (6,661) (3,776) (14,685) (22,671)
Dealer indirect.................... (10,385) (4,270) (3,557) (4,612) (8,179)
Revolving credit................... (17,203) (14,810) (15,449) (5,196) (2,907)
Other consumer..................... (6,793) (4,730) (4,917) (4,734) (8,746)
--------------------------------------------------------------------------------
Total charge-offs....... (47,282) (43,929) (36,369) (46,040) (61,209)
--------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial......................... 3,396 7,420 4,464 3,252 10,756
Real estate construction........... 270 224 217 3,828 194
Real estate mortgage............... 2,485 3,973 7,106 592 374
Dealer indirect.................... 2,786 1,702 1,760 1,572 1,220
Revolving credit................... 1,802 1,470 1,009 781 464
Other consumer..................... 1,935 2,245 2,065 1,688 1,701
--------------------------------------------------------------------------------
Total recoveries................ 12,674 17,034 16,621 11,713 14,709
--------------------------------------------------------------------------------
Net charge-offs....................... (34,608) (26,895) (19,748) (34,327) (46,500)
--------------------------------------------------------------------------------
Addition to allowance charged to expense 40,139 30,103 27,966 38,581 48,647
Allowance acquired in bank purchases.. 1,753 36,450 23,645 -0- 299
-------------------------------------------------------------------------------
Balance at December 31................ $ 178,451 $ 171,167 $ 131,509 $ 99,646 $ 95,392
===============================================================================
Loans net of unearned income,
outstanding at end of period....... $11,743,273 $11,429,907 $8,540,412 $6,716,595 $ 6,293,509
Average loans net of unearned income,
outstanding for the period......... $11,747,385 $ 9,918,274 $7,634,984 $6,334,313 $ 6,209,432
Ratios
Allowance at end of period to loans
net of unearned income.......... 1.52% 1.50% 1.54% 1.48% 1.52%
Allowance at end of period to average
loans net of unearned income.... 1.52 1.73 1.72 1.57 1.54
Allowance at end of period to
nonperforming loans*............ 185.41 166.59 237.21 160.36 130.05
Allowance at end of period to
nonperforming assets*........... 154.49 128.61 153.28 85.82 52.39
Net charge-offs to average loans net of
unearned income................. 0.29 0.27 0.26 0.54 0.75
Net charge-offs to allowance at end of
period.......................... 19.39 15.71 15.02 34.45 48.75
Recoveries to prior year charge-offs 28.85 46.84 36.10 19.14 25.36
</TABLE>
* Exclusive of accruing loans 90 days past due
42
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
At December 31, 1995, the allowance for loan losses to loans, net of
unearned income, was 1.52 percent while coverage of nonperforming loans was
185.4 percent. This compares with an allowance for loan losses to loans, net
of unearned income, at the end of 1994 of 1.50 percent and to nonperforming
loans for the same period of 166.6 percent.
Table 21 is a summary of the allocation of the allowance for loan losses as
determined by internal analysis. Although amounts are assigned to certain
classifications of loans, the balance of the allowance for loan losses at
December 31, 1995, 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>
<CAPTION>
Table 21 December 31, 1995 December 31, 1994 December 31, 1993
-------------------------- --------------------------- -----------------------------
Allocation of the Allowance Percentage of Percentage of Percentage of
for Loan Losses Loans* in Each Loans* in Each Loans* in Each
Allowance Category to Allowance Category to Allowance Category to
(Dollars in thousands) Allocation Total Loans* Allocation Total Loans* Allocation Total Loans*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial............................ $ 30,125 26.0% $ 29,184 23.6% $ 37,868 29.9%
Commercial real estate:
Commercial real estate mortgage.... 29,177 13.0 30,464 12.0 21,385 13.3
Real estate construction........... 5,302 4.5 12,021 4.7 5,901 4.3
----------------------------------------------------------------------------------------
Total commercial real estate.... 34,479 17.5 42,485 16.7 27,286 17.6
----------------------------------------------------------------------------------------
Consumer:
Residential first mortgages........ 18,699 32.4 18,514 37.4 4,076 28.5
Other residential mortgages........ 4,188 6.0 2,289 5.6 719 6.2
Dealer indirect.................... 13,809 8.8 7,916 7.2 6,108 6.7
Revolving credit................... 23,837 4.1 12,441 3.1 16,099 4.0
Other consumer..................... 16,845 5.2 9,381 6.4 4,514 7.1
----------------------------------------------------------------------------------------
Total consumer.................. 77,378 56.5 50,541 59.7 31,516 52.5
Unfunded commitments.................. 6,685 - 7,241 - 5,650 -
Standby letters of credit............. 3,880 - 1,825 - 1,660 -
Unallocated........................... 25,904 - 39,891 - 27,529 -
----------------------------------------------------------------------------------------
$178,451 100.0% $171,167 100.0% $131,509 100.0%
========================================================================================
</TABLE>
* Net of unearned income
43
<PAGE>
- --------------------------------------------------------------------------------
SUPPLEMENTAL FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1985-1995
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks...................... $ 651,641 $ 616,639 $ 614,698 $ 589,084 $ 560,249
Temporary investments........................ 2,546,583 672,170 1,896,220 806,257 676,604
Held-to-maturity securities.................. 2,167,009 3,336,557 1,823,317 2,607,748 2,780,821
Loans net of unearned income................. 11,743,273 11,429,907 8,540,412 6,716,595 6,293,509
Less allowance for loan losses............... 178,451 171,167 131,509 99,646 95,392
------------------------------------------------------------------------------
Net loans............................... 11,564,822 11,258,740 8,408,903 6,616,949 6,198,117
Premises and equipment....................... 276,426 282,095 234,155 182,305 160,984
Other assets................................. 532,314 611,750 492,328 313,984 363,214
------------------------------------------------------------------------------
Total assets............................ $17,738,795 $16,777,951 $13,469,621 $11,116,327 $10,739,989
==============================================================================
Liabilities and Shareholders' Equity
Deposits..................................... $13,408,831 $13,067,062 $10,362,989 $ 8,626,221 $ 8,528,109
Federal funds purchased and
repurchase agreements................... 1,861,090 1,212,723 793,177 989,790 572,970
Other interest-bearing liabilities........... 931,091 1,042,264 840,460 509,915 378,020
------------------------------------------------------------------------------
Total deposits and
interest-bearing liabilities............. 16,201,012 15,322,049 11,996,626 10,125,926 9,479,099
Acceptances outstanding...................... 2,007 6,979 6,264 6,005 3,498
Accrued expenses and other
liabilities................................. 152,301 138,465 324,006 111,022 463,349
------------------------------------------------------------------------------
Total liabilities....................... 16,355,320 15,467,493 12,326,896 10,242,953 9,945,946
Shareholders' equity......................... 1,383,475 1,310,458 1,142,725 873,374 794,043
------------------------------------------------------------------------------
Total liabilities and
shareholders' equity.................... $17,738,795 $16,777,951 $13,469,621 $11,116,327 $10,739,989
==============================================================================
</TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
YEARS ENDED DECEMBER 31, 1985-1995
<TABLE>
<CAPTION>
(In thousands except per share data) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue from earning assets.................. $ 1,275,063 $ 1,047,741 $ 840,617 $ 772,251 $ 852,251
Interest expense............................. 679,396 480,414 339,326 341,706 486,848
----------------------------------------------------------------------
Net interest income.......................... 595,667 567,327 501,291 430,545 365,403
Provision for loan losses.................... 40,139 30,103 27,966 38,581 48,647
----------------------------------------------------------------------
Net interest income after provision
for loan losses.............................. 555,528 537,224 473,325 391,964 316,756
Noninterest revenues......................... 231,778 179,021 204,069 173,154 170,658
Noninterest expenses......................... 512,129 522,905 458,831 400,548 366,403
----------------------------------------------------------------------
Income before income taxes................... 275,177 193,340 218,563 164,570 121,011
Income taxes................................. 100,222 66,050 71,843 47,977 31,785
----------------------------------------------------------------------
Net income................................... $ 174,955 $ 127,290 $ 146,720 $ 116,593 $ 89,226
======================================================================
Average common shares outstanding............ 58,262 56,527 50,848 46,684 43,652
Earnings per common share.................... $3.00 $2.25 $2.89 $2.50 $2.04
Cash dividends declared per
common share................................. $1.54 $1.43 $1.22 $1.07 $0.98
</TABLE>
44
<PAGE>
<TABLE><CAPTION>
Ten-Year
Compound
Growth Rate
1990 1989 1988 1987 1986 1985 1995/1985
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 623,744 $ 495,013 $ 511,666 $ 463,219 $ 511,124 $ 494,908 2.79%
178,944 221,231 160,202 195,161 224,959 242,600 26.50
2,214,608 2,166,410 2,185,972 1,887,610 1,529,605 1,226,894 5.85
6,382,299 6,316,472 5,873,735 5,426,186 4,424,240 3,812,427 11.91
92,946 96,142 75,945 72,895 61,668 54,980 12.49
- -----------------------------------------------------------------------------------------------------------------------
6,289,353 6,220,330 5,797,790 5,353,291 4,362,572 3,757,447 11.90
154,761 143,638 142,545 153,968 126,613 126,726 8.11
382,196 371,159 408,220 400,590 347,604 272,141 6.94
- -----------------------------------------------------------------------------------------------------------------------
$ 9,843,606 $ 9,617,781 $ 9,206,395 $ 8,453,839 $ 7,102,477 $ 6,120,716 11.23%
=======================================================================================================================
$ 8,076,625 $ 7,600,319 $ 7,299,116 $ 6,544,631 $ 5,462,258 $ 4,507,634 11.52%
828,903 1,079,951 883,237 964,187 822,348 759,977 9.37
173,668 189,582 252,255 199,550 145,758 287,130 12.48
- -----------------------------------------------------------------------------------------------------------------------
9,079,196 8,869,852 8,434,608 7,708,368 6,430,364 5,554,741 11.30
22,245 24,422 90,123 104,166 103,803 71,293 (30.02)
82,378 94,465 86,372 93,681 92,052 75,538 7.26
- -----------------------------------------------------------------------------------------------------------------------
9,183,819 8,988,739 8,611,103 7,906,215 6,626,219 5,701,572 11.11
659,787 629,042 595,292 547,624 476,258 419,144 12.68
- -----------------------------------------------------------------------------------------------------------------------
$ 9,843,606 $ 9,617,781 $ 9,206,395 $ 8,453,839 $ 7,102,477 $ 6,120,716 11.23%
=======================================================================================================================
Ten-Year
Compound
Growth Rate
1990 1989 1988 1987 1986 1985 1995/1985
- -----------------------------------------------------------------------------------------------------------------------
$ 880,032 $ 871,102 $ 747,511 $ 600,865 $ 531,491 $ 475,174 10.37%
556,404 570,359 469,216 347,459 294,187 279,587 9.29
- -----------------------------------------------------------------------------------------------------------------------
323,628 300,743 278,295 253,406 237,304 195,587 11.78
45,407 47,766 19,611 42,416 21,698 23,039 5.71
- -----------------------------------------------------------------------------------------------------------------------
278,221 252,977 258,684 210,990 215,606 172,548 12.40
136,619 130,863 128,714 121,167 106,252 81,625 11.00
311,658 294,356 274,398 247,587 227,796 185,876 10.67
- -----------------------------------------------------------------------------------------------------------------------
103,182 89,484 113,000 84,570 94,062 68,297 14.95
24,734 17,185 25,128 16,825 19,229 9,656 26.36
- -----------------------------------------------------------------------------------------------------------------------
$ 78,448 $ 72,299 $ 87,872 $ 67,745 $ 74,833 $ 58,641 11.55%
=======================================================================================================================
41,956 43,095 43,002 42,360 41,935 36,582 4.76%
$1.87 $1.68 $2.04 $1.60 $1.78 $1.60 6.47%
$0.94 $0.89 $0.84 $0.79 $0.71 $0.63 9.35%
</TABLE>
45
<PAGE>
- --------------------------------------------------------------------------------
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/ C. Dowd Ritter /s/ Dennis J. Dill
C. Dowd Ritter Dennis J. Dill
President and Executive Vice President
Chief Executive Officer Chief Accounting Officer
46
<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, 1995 and 1994, and
the related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. 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, 1995 and 1994 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Birmingham, Alabama
January 31, 1996
47
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
<TABLE>
<CAPTION>
December 31
--------------------------------
(Dollars in thousands) 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks........................................... $ 651,641 $ 616,639
Federal funds sold and securities purchased under
agreements to resell........................................... 1,775 152,525
Trading securities................................................ 2,978 6,383
Available-for-sale securities..................................... 2,479,813 383,039
Held-to-maturity securities (market value of $2,193,421
and $3,169,513, respectively).................................. 2,167,009 3,336,557
Mortgage loans held for sale...................................... 62,017 130,223
Loans............................................................. 11,819,809 11,496,121
Less: Allowance for loan losses................................... 178,451 171,167
Unearned income............................................. 76,536 66,214
--------------------------------
Net loans.............................................. 11,564,822 11,258,740
Premises and equipment, net....................................... 276,426 282,095
Customers' acceptance liability................................... 2,007 6,979
Accrued interest receivable and other assets...................... 530,307 604,771
--------------------------------
$17,738,795 $16,777,951
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand.................................. $ 1,834,853 $ 1,902,310
Interest-bearing demand..................................... 3,912,506 4,071,212
Savings..................................................... 1,005,099 901,738
Time........................................................ 5,661,130 5,384,469
Certificates of deposit of $100,000 or more................. 995,243 807,333
--------------------------------
Total deposits............................................ 13,408,831 13,067,062
Federal funds purchased and securities sold under
agreements to repurchase.................................... 1,861,090 1,212,723
Other borrowed funds........................................... 483,293 656,117
Long-term debt................................................. 447,798 386,147
--------------------------------
Total deposits and interest-bearing liabilities.......... 16,201,012 15,322,049
Acceptances outstanding........................................... 2,007 6,979
Accrued expenses and other liabilities............................ 152,301 138,465
--------------------------------
Total liabilities........................................ 16,355,320 15,467,493
--------------------------------
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 - 60,030,242 shares and 59,556,269 shares,
respectively............................................... 60,030 59,556
Capital surplus................................................ 590,882 579,579
Retained earnings.............................................. 788,170 703,121
Cost of common stock in treasury - 2,765,000 shares
and 1,500,000 shares, respectively.......................... (73,192) (24,173)
Deferred compensation on restricted stock...................... (4,120) (3,031)
Unrealized gains/(losses) on available-for-sale
securities, net of deferred taxes........................... 21,705 (4,594)
--------------------------------
Total shareholders' equity............................... 1,383,475 1,310,458
--------------------------------
$17,738,795 $ 16,777,951
================================
</TABLE>
See notes to consolidated financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
Years Ended December 31
--------------------------------------------
(In thousands except per share data) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue from earning assets
Loans................................................................. $ 1,013,444 $ 793,956 $ 613,522
Securities:
Trading securities................................................. 309 2,550 2,423
Available-for-sale securities...................................... 38,034 52,005 32,641
Held-to-maturity securities........................................ 216,703 183,985 171,213
-----------------------------------------------
Total securities................................................ 255,046 238,540 206,277
Mortgage loans held for sale.......................................... 5,478 12,609 14,338
Federal funds sold and securities purchased under
agreements to resell............................................... 1,095 2,636 6,480
-----------------------------------------------
Total revenue from earning assets............................... 1,275,063 1,047,741 840,617
-----------------------------------------------
Interest expense
Interest-bearing demand deposits...................................... 139,854 118,952 86,218
Savings deposits...................................................... 27,500 24,261 20,732
Time deposits......................................................... 327,838 191,997 143,218
Certificates of deposit of $100,000 or more........................... 54,278 33,751 30,686
Federal funds purchased and securities sold under
agreements to repurchase........................................... 67,182 65,009 32,241
Other borrowed funds.................................................. 34,496 21,610 13,870
Long-term debt........................................................ 28,248 24,834 12,361
-----------------------------------------------
Total interest expense.......................................... 679,396 480,414 339,326
-----------------------------------------------
Net interest income................................................... 595,667 567,327 501,291
Provision for loan losses............................................. 40,139 30,103 27,966
-----------------------------------------------
Net interest income after provision for loan losses................... 555,528 537,224 473,325
-----------------------------------------------
Noninterest revenues
Service charges on deposit accounts................................... 83,717 67,682 59,379
Trust income.......................................................... 50,272 46,121 41,659
Investment services income............................................ 10,775 14,036 19,835
Mortgage administration fees.......................................... 8,572 22,518 18,178
Other operating revenues.............................................. 78,442 28,664 65,018
-----------------------------------------------
Total noninterest revenues...................................... 231,778 179,021 204,069
-----------------------------------------------
Noninterest expenses
Salaries and employee benefits........................................ 226,317 232,050 222,756
Net occupancy expense................................................. 53,918 46,770 36,537
Equipment expense..................................................... 50,289 41,432 39,213
FDIC premiums......................................................... 20,315 24,664 21,413
Foreclosed properties expense......................................... 372 4,721 (2,197)
Other operating expenses.............................................. 160,918 173,268 141,109
-----------------------------------------------
Total noninterest expenses...................................... 512,129 522,905 458,831
-----------------------------------------------
Income before income taxes............................................ 275,177 193,340 218,563
Income taxes.......................................................... 100,222 66,050 71,843
-----------------------------------------------
Net income...................................................... $ 174,955 $ 127,290 $ 146,720
===============================================
Average common shares outstanding..................................... 58,262 56,527 50,848
Earnings per common share............................................. $3.00 $2.25 $2.89
</TABLE>
See notes to consolidated financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Unrealized
Gains/
Common Capital Retained Treasury Deferred (Losses) on
(In thousands) Stock Surplus Earnings Stock Compensation Securities Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993............. $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
($1.22 per common share)............ -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-
interest 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
($1.43 per common share)............ -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
Net income............................. -0- -0- 174,955 -0- -0- -0- 174,955
Cash dividends declared
($1.54 per common share)............ -0- -0- (89,906) -0- -0- -0- (89,906)
Common stock transactions:
Employee stock plans................ 474 11,303 -0- -0- (1,089) -0- 10,688
Purchase of common stock............ -0- -0- -0- (49,019) -0- -0- (49,019)
Unrealized gains on available-for-sale
securities, net of deferred taxes... -0- -0- -0- -0- -0- 26,299 26,299
---------------------------------------------------------------------------------------
Balance at December 31, 1995........... $60,030 $590,882 $788,170 $(73,192) $(4,120) $21,705 $1,383,475
=======================================================================================
</TABLE>
See notes to consolidated financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31
-------------------------------------------------
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income.................................................................. $ 174,955 $ 127,290 $ 146,720
Adjustments to reconcile net income to net cash provided
(used) by operating activities
Provision for loan losses............................................. 40,139 30,103 27,966
Provision for foreclosed property (recoveries) losses................. (322) 1,748 (3,038)
Depreciation and amortization of premises and equipment............... 27,825 24,714 24,378
Amortization of premiums and discounts on held-to-maturity
securities and available-for-sale securities....................... (5,172) (1,446) 2,045
Net decrease (increase) in mortgage loans held for sale............... 68,275 221,642 (99,567)
Net decrease (increase) in trading securities......................... 5,300 89,281 (56,198)
Net (gains) losses on sales of available-for-sale securities.......... (3,717) 26,642 (13,057)
Net gains on calls and sales of held-to-maturity securities........... (741) (354) (1,591)
Net decrease in accrued interest receivable and other assets.......... 73,841 155,597 289,566
Net increase (decrease) in accrued expenses and other liabilities..... 16,990 (293,437) 57,387
Provision (benefit) for deferred income taxes......................... 2,598 19,681 (9,656)
Amortization of intangible assets..................................... 21,402 26,537 16,894
Other................................................................. (2,012) (1,528) 2,191
-----------------------------------------------------
Net cash provided by operating activities.......................... 419,361 426,470 384,040
-----------------------------------------------------
Investing activities
Proceeds from maturities and prepayments of
available-for-sale securities............................................ 64,561 332,288 220,096
Proceeds from sales of available-for-sale securities........................ 225,546 1,650,528 913,633
Purchases of available-for-sale securities.................................. (496,766) (545,757) (1,205,083)
Proceeds from maturities, prepayments and calls of
held-to-maturity securities.............................................. 353,823 348,144 978,570
Proceeds from sales of held-to-maturity securities.......................... -0- -0- 89,045
Purchases of held-to-maturity securities.................................... (692,966) (1,481,636) (738,471)
Net decrease in federal funds sold and securities
purchased under agreements to resell..................................... 150,750 32,245 87,944
Net increase in loans....................................................... (612,821) (1,347,994) (670,902)
Net purchases of premises and equipment..................................... (20,473) (39,916) (49,900)
Net cash used for acquisitions.............................................. (13,221) (109,351) (28,382)
-----------------------------------------------------
Net cash used by investing activities................................. (1,041,567) (1,161,449) (403,450)
-----------------------------------------------------
Financing activities
Net (decrease) increase in demand deposits and savings accounts............. (150,913) 91,767 (234,651)
Net increase in time deposits............................................... 413,268 769,758 318,036
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase....................... 648,367 (59,603) (271,613)
Net (decrease) increase in other borrowed funds............................. (184,126) 20,779 274,160
Issuance of long-term debt.................................................. 150,592 149,084 21,500
Payments for maturing long-term debt........................................ (89,892) (138,965) (14,323)
Cash dividends paid......................................................... (89,906) (80,823) (58,922)
Proceeds from employee stock plans.......................................... 8,837 6,745 6,616
Purchase of common stock.................................................... (49,019) (30,047) -0-
-----------------------------------------------------
Net cash provided by financing activities............................. 657,208 728,695 40,803
-----------------------------------------------------
Increase (decrease) in cash and cash equivalents............................ 35,002 (6,284) 21,393
Cash and cash equivalents at beginning of period............................ 616,639 614,698 589,084
Beginning consolidated cash balances of immaterial
pooling-of-interests entities............................................ -0- 8,225 4,221
-----------------------------------------------------
Cash and cash equivalents at end of period.................................. $ 651,641 $ 616,639 $ 614,698
=====================================================
</TABLE>
See notes to consolidated financial statements.
51
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AmSouth Bancorporation (AmSouth), through its wholly owned subsidiaries,
provides a broad array of financial products and services throughout Alabama,
Florida, Tennessee and Georgia. AmSouth's principal activities include retail
and commercial banking, and trust operations. The accounting policies of 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.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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,
1995, 1994 and 1993, AmSouth paid interest of $663,834,000, $467,791,000 and
$313,593,000, respectively. For the years ended December 31, 1995, 1994, and
1993, noncash transfers from loans to foreclosed properties were $16,731,000,
$28,184,000 and $11,422,000, respectively. Noncash transfers from foreclosed
properties to loans for the years ended December 31, 1995, 1994, and 1993 were
$2,987,000, $3,773,000 and $16,384,000, respectively. Noncash transfers from
held-to-maturity securities to available-for-sale securities were $1,544,737,000
for the year ended December 31, 1995. For the year ended December 31, 1993,
noncash transfers from investment securities to securities held for sale were
$755,421,000. Transactions related to securities held for sale in 1993 have been
reclassified from operating activities to investing activities. For the year
ended December 31, 1995, a noncash transfer from loans to available-for-sale
securities of approximately $352,000,000 was made in connection with a mortgage
loan securitization.
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 secu-
52
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
rities 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 has from time to time utilized various off-balance sheet instruments
such as interest rate swaps and caps which are designated to hedge imbalances in
sensitivity to fluctuating interest rates for designated assets and liabilities.
To qualify as a hedge used to manage interest rate risk, the following criteria
must be met: (1) the asset or liability to be hedged exposes the institution, as
a whole, to the interest rate risk, (2) the instrument alters or reduces
sensitivity to interest rate changes and (3) the instrument is designated and
effective as a hedge. Accrual accounting is applied for off-balance sheet
investment products (caps and swaps) classified as a hedge. Any gains or losses
realized as a result of termination of an off-balance sheet investment product
are deferred and amortized as yield/rate adjustments of the hedged assets or
liabilities over the original life of the contract. If the designated asset or
liability being hedged is terminated, matures or is sold, any realized or
unrealized gain or loss from the related off-balance sheet investment product
would be recognized in income coincident with the extinguishment or termination.
If the balance of the related balance sheet item falls below that of the related
off-balance sheet investment product, the excess portion of the off-balance
sheet investment product is marked to market and the resulting gain or loss
included in income. If an off-balance sheet investment product does not satisfy
the criteria for a hedge, including those to be used in trading activities, it
is carried at market value. Any changes in market value are recognized in other
operating revenue.
AmSouth has purchased and sold interest rate cap agreements to modify the
interest characteristics of designated prime rate loans and federal funds
purchased and securities sold under agreements to repurchase (federal funds
purchased). The strike price of these agreements exceeded the current market
levels at the time they were entered into. The interest rate indices specified
by the agreements have been and are expected to be highly correlated with the
interest rates AmSouth incurs on its prime rate loans and federal funds
purchased. Amounts to be paid or received as a result of the specified interest
rate index exceeding the strike price are accrued in other liabilities or assets
and are recognized as an adjustment of interest income or interest expense
depending on the nature of the balance sheet item being hedged. The cost of
these agreements is included in other assets and amortized to interest income or
expense ratably during the life of the agreement.
AmSouth has entered into an interest rate swap agreement to modify the
interest characteristics of some of its subordinated debt. The interest rate
swap agreement is designated to a portion of the principal balance and term of a
specific debt obligation. This agreement involves the exchange of amounts based
on a fixed interest rate for amounts based on variable interest rates over the
life of the agreement without an exchange of the notional amount upon which the
payments are based. The differential to be paid or received as interest rates
change is accrued and recognized as an adjustment of interest expense related to
the debt. The related amount payable to or receivable from counterparties is
included in other liabilities or assets.
53
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
LOANS
Interest income on commercial and commercial 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.
Effective January 1, 1995, AmSouth adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures"
(Statement 114). Impairment of a loan within the scope of Statement 114 is to be
recognized and reported based on the present value of expected future cash flows
discounted at the loan's effective interest rate, at the loan's observable
market price, or the fair value of the collateral if the loan is collateral
dependent. Impaired loans are specifically reviewed loans for which it is
probable that the creditor will be unable to collect all amounts due according
to the terms of the loan agreement. A valuation allowance is required to the
extent that the measure of the impaired loans is less than the recorded
investment. A loan is not impaired during a period of delay in payment if the
ultimate collectibility of all amounts due is expected. Statement 114 does not
apply to larger groups of homogeneous loans such as consumer installment,
bankcard and residential real estate mortgage loans, which are collectively
evaluated for impairment. Impaired loans are therefore primarily commercial
loans and commercial real estate loans.
Payments received on impaired loans for which the ultimate collectibility of
principal is uncertain are generally applied first as principal reductions. No
material amount of interest income was recognized on impaired loans for the year
ended December 31, 1995. The impact of the adoption of Statement 114 was
immaterial to AmSouth's consolidated financial statements as of and for the year
ended December 31, 1995. In accordance with Statement 114, no retroactive
application of its provision has been made to the consolidated financial
statements for the periods prior to January 1, 1995.
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. As the
reserve is based on management's estimate of future losses, actual losses may
vary from the current estimate.
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 are carried at the lower of
54
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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, 1995, 1994, and 1993, a provision/(reduction) of $(322,000), $1,748,000, and
$(3,038,000) was charged/(credited) to expense and write downs of properties
charged to the allowance totaled $2,550,000, $2,018,000, and $3,097,000,
respectively. At December 31, 1995, 1994, and 1993, the allowance had a balance
of $766,000, $3,638,000, and $3,908,000, 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. AmSouth reviews on a regular basis
the carrying value of goodwill to determine if any impairment has occurred or if
the period of recoverability has changed. 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 period, AmSouth's carrying
value of the goodwill will be reduced by the estimated shortfall of such cash
flows. At December 31, 1995 and 1994, goodwill totaled $283,400,000 and
$286,394,000, respectively.
MORTGAGE SERVICING RIGHTS
In May 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 122 "Accounting for Mortgage Servicing
Rights, an amendment of FASB Statement No. 65" (Statement 122). FASB Statement
No. 65, "Accounting for Certain Mortgage Banking Activities," required separate
capitalization of purchased origination activities. Statement 122 will require
that purchased and originated mortgage servicing rights be accounted for in the
same manner. The impact of Statement 122, when adopted on January 1, 1996 is not
expected to have a material impact on AmSouth's financial condition or results
of operations. At December 31, 1994 purchased mortgage servicing rights were
$64,387,000. During 1995, AmSouth sold all of its purchased mortgage servicing
rights. Accordingly, as of December 31, 1995, AmSouth had no purchased mortgage
servicing rights. Purchased mortgage servicing rights are amortized over the
estimated average lives of the related loans.
IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, FASB issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," (Statement 121) which requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. Statement 121 also
addresses the accounting for long-lived assets that are expected to be disposed
of. AmSouth will adopt Statement 121 in the first quarter of 1996 and, based on
current estimates, does not believe the effect of adoption will be material to
AmSouth's financial condition or results of operations.
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. 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.
55
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
STOCK BASED COMPENSATION
In October 1995, FASB issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (Statement 123). Statement 123
establishes a "fair value" based method of accounting for stock-based
compensation plans and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation cost for those plans using
the intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees" (Opinion 25). Entities electing to
remain with the accounting in Opinion 25 must make proforma disclosures of net
income and earnings per share, as if the fair value based method of accounting
defined in Statement 123 had been applied. Under the fair value based method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value based method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. Under the intrinsic value based
method, compensation cost is the excess, if any, of the quoted market price of
the stock at grant date or other measurement date over the amount an employee
must pay to acquire the stock. This statement also applies to transactions in
which an entity issues its equity instruments to acquire goods or services from
nonemployees. AmSouth has decided to continue to follow Opinion 25 in accounting
for its stock based compensation awards.
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.
NOTE B - BUSINESS COMBINATIONS
On February 16, 1995, AmSouth completed the acquisition of Community Federal
Savings Bank (Community), headquartered in Fort Oglethorpe, Georgia. Under the
terms of the agreement, AmSouth paid $65.50 for each of the outstanding shares
of Community common stock for a total purchase price of approximately
$17,000,000. The transaction was accounted for using the purchase method of
accounting. Approximately $7,500,000 of goodwill resulting from the acquisition
is being amortized on a straight-line basis over 20 years. Due to the
immateriality of the transaction, pro forma information is not presented. The
operating results of Community are included in AmSouth's consolidated statement
of earnings since the date of the acquisition.
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 $144,600,000 in cash. AmSouth 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 $172,500,000 of
goodwill resulting from the acquisition is being amortized on a straight-line
basis over 20 years. The
56
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common
Consolidated Shares
(In thousands) Location Date Assets Issued
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Orange Banking Corporation................. Orlando, FL January $354,000 1,332
(Orange)
FloridaBank, A Federal Savings Bank........ Jacksonville, FL February 272,000 759
(FloridaBank)
Citizens National Corporation.............. Naples, FL April 313,000 1,604
(Citizens)
Parkway Bancorp, Inc....................... Fort Myers, FL April 130,000 629
(Parkway)
First Federal Savings Bank................. Calhoun, GA April 72,000 442
(Calhoun)
</TABLE>
operating results of Fortune are included in AmSouth's consolidated statement of
earnings since the date of acquisition.
During the year ended December 31, 1994, AmSouth completed business
combinations which were accounted for using the pooling-of-interests method of
accounting as shown in the chart above.
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.
NOTE C - CASH AND DUE
FROM BANKS
AmSouth's banking subsidiaries are required to maintain reserve balances with
the Federal Reserve Bank based on a percentage of deposits. The average amount
of those reserves was approximately $141,000,000 for each of the years ended
December 31, 1995 and 1994.
NOTE D - AVAILABLE-FOR-SALE SECURITIES
The following is a summary of available-for-sale securities at December 31:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------- ---------------------------------------------
Gross Gross Gross Gross
Amortized Unrealized Unrealized Carrying Amortized Unrealized Unrealized Carrying
(In thousands) Cost Gains Losses Amount Cost Gains Losses Amount
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities...... $ 480,690 $ 8,659 $ 560 $ 488,789 $150,829 $ 53 $ 631 $150,251
Mortgage-backed
securities...... 1,627,274 25,729 1,436 1,651,567 178,105 328 6,953 171,480
Equity securities.... 187,029 -0- -0- 187,029 56,614 150 -0- 56,764
Other debt
securities...... 150,966 1,462 -0- 152,428 4,793 2 251 4,544
--------------------------------------------------------------------------------------------
$2,445,959 $35,850 $1,996 $2,479,813 $390,341 $533 $7,835 $383,039
============================================================================================
</TABLE>
57
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The carrying amount and amortized cost of available-for-sale securities by
maturity at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
Amortized Carrying
(In thousands) Cost Amount
- ----------------------------------------------------
<S> <C> <C>
Due within 1 year............ $ 125,116 $ 125,923
Due after 1 year through
5 years..................... 309,098 316,708
Due after 5 years through
10 years.................... 151,834 152,953
Due after 10 years........... 45,608 45,633
Mortgage-backed securities... 1,627,274 1,651,567
Equity securities............ 187,029 187,029
----------------------
$2,445,959 $2,479,813
======================
</TABLE>
Sales of available-for-sale securities were $220,471,000 and $1,657,755,000,
during 1995 and 1994, respectively. Gross gains of $4,621,000 and $4,584,000 and
gross losses of $904,000 and $31,226,000 were realized on these sales for 1995
and 1994, respectively.
Available-for-sale securities with a carrying amount of $1,767,747,000 and
$173,556,000 at December 31, 1995 and 1994, respectively, were pledged for
collateral for public funds and trust deposits.
On November 15, 1995, the FASB staff issued a Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities." In accordance with provisions in that Special Report,
AmSouth chose to reclassify securities from held-to-maturity to available-for-
sale. At the date of transfer, the amortized cost of those securities was
$1,544,737,000 and the unrealized gain on those securities was $21,290,000 which
is included in shareholders' equity.
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>
1995 1994
------------------------------------------- --------------------------------------------
Gross Gross Gross Gross
Carrying Unrealized Unrealized Market Carrying Unrealized Unrealized Market
(In thousands) Amount Gains Losses Value Amount Gains Losses Value
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities....... $ 359,933 $ 4,704 $ 4,532 $ 360,105 $ 505,006 $ 255 $ 31,819 $ 473,442
State, county
and municipal
securities....... 224,742 12,298 13 237,027 293,248 10,633 631 303,250
Mortgage-backed
securities....... 1,579,931 24,576 10,540 1,593,967 2,531,753 213 145,607 2,386,359
Other securities...... 2,403 16 97 2,322 6,550 2 90 6,462
-----------------------------------------------------------------------------------------
$2,167,009 $41,594 $15,182 $2,193,421 $3,336,557 $11,103 $178,147 $3,169,513
=========================================================================================
</TABLE>
58
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The carrying amount and approximate market value of held-to-maturity
securities by maturity at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
Carrying Market
(In thousands) Amount Value
- ----------------------------------------------------
<S> <C> <C>
Due within 1 year............ $ 43,108 $ 43,912
Due after 1 year through
5 years.................... 467,448 474,103
Due after 5 years through
10 years................... 49,179 52,049
Due after 10 years........... 27,343 29,390
Mortgage-backed securities... 1,579,931 1,593,967
----------------------
$2,167,009 $2,193,421
======================
</TABLE>
There were no sales of held-to-maturity securities during 1995 and 1994. Gains
on calls of held-to-maturity securities were $741,000 and $354,000 in 1995 and
1994, respectively.
Held-to-maturity securities with a carrying amount of $1,588,262,000 and
$1,235,597,000 at December 31, 1995 and 1994, respectively, were pledged as
collateral for public funds and trust deposits.
NOTE F - LOANS
The major categories of loans at December 31 are summarized in the chart
below.
At December 31, 1995 and 1994, nonaccrual and/or restructured loans totaled
$96,246,000 and $102,748,000, respectively. The amount of interest income
actually recognized on these loans during 1995 and 1994 was $1,364,000 and
$733,000, respectively. The additional amount of interest income that would have
been recorded during 1995 and 1994 if the above amounts had been current in
accordance with their original terms was $8,681,000 and $6,174,000,
respectively.
At December 31, 1995, the recorded investment in loans that were considered to
be impaired under Statement 114 was $55,993,000 (primarily all of which were on
a nonaccrual basis). Collateral dependent loans, which were measured at the fair
value of the collateral, constituted approximately all of impaired loans at
December 31, 1995. The recorded investment in these loans approximated the fair
value of the collateral resulting in no material balance in the allowance for
loan losses specifically allocated to impaired loans at December 31, 1995. The
average
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
(Dollars in thousands) Amount Percent Amount Percent
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial............................. 3,111,722 26.3% $ 2,699,315 23.5%
Commercial real estate:
Commercial real estate mortgage... 1,523,284 12.9 1,370,877 11.9
Real estate construction.......... 525,985 4.5 540,722 4.7
----------------------------------------------
Total commercial real estate...... 2,049,269 17.4 1,911,599 16.6
----------------------------------------------
Consumer:
Residential first mortgages....... 3,801,713 32.2 4,275,570 37.2
Other residential mortgages....... 693,549 5.9 632,073 5.5
Dealer indirect................... 1,057,695 8.9 886,872 7.7
Revolving Credit.................. 477,201 4.0 350,231 3.1
Other consumer.................... 628,660 5.3 740,461 6.4
----------------------------------------------
Total consumer.................... 6,658,818 56.3 6,885,207 59.9
----------------------------------------------
$11,819,809 100.0% $11,496,121 100.0%
==============================================
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
recorded investment in impaired loans for the year ended December 31, 1995 was
approximately $60,475,000.
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 1995 and 1994. 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, 1995 and 1994 amounted to $73,587,000 and
$73,875,000, respectively. Activity during 1995 in loans to related parties
resulted in additions of $193,579,000 representing new loans, reductions of
$195,537,000 representing payments, and net additions of $1,670,000 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) 1995 1994 1993
- ---------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1........... $171,167 $131,509 $ 99,646
Loans charged-off.............. (47,282) (43,929) (36,369)
Recoveries of loans
previously charged-off.... 12,674 17,034 16,621
------------------------------
Net charge-offs................ (34,608) (26,895) (19,748)
Addition to allowance
charged to expense........ 40,139 30,103 27,966
Allowance acquired in
bank purchases............ 1,753 36,450 23,645
------------------------------
Balance at December 31......... $178,451 $171,167 $131,509
==============================
</TABLE>
Included in the loans charged-off for 1995 is approximately $7,755,000 of
impaired loans.
NOTE H - PREMISES AND
EQUIPMENT
Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ----------------------------------------------
<S> <C> <C>
Land...................... $ 53,757 $ 54,543
Buildings................. 144,397 163,917
Furniture and fixtures.... 55,440 56,080
Equipment................. 147,956 146,572
Leasehold improvements.... 65,207 40,070
-------------------
466,757 461,182
Less allowances for
depreciation and
amortization......... 190,331 179,087
-------------------
$276,426 $282,095
===================
</TABLE>
NOTE I - DEPOSITS
The aggregate amounts of time deposits of $100,000 or more, excluding
certificates of deposit of $100,000 or more, in domestic bank offices at
December 31, 1995 and 1994 were $56,851,000 and $92,065,000, respectively.
NOTE J - OTHER BORROWED FUNDS
Other borrowed funds at December 31 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- --------------------------------------------------
<S> <C> <C>
Treasury, tax and loan notes... $256,790 $129,221
Federal Home Loan
Bank advances............. 204,500 257,200
Eurodollars purchased.......... 11,456 136,039
Commercial paper............... 1,851 1,786
Term federal funds
purchased................. -0- 124,000
Current portion of
long-term debt............ 452 253
Other short-term debt.......... 8,244 7,618
------------------
$483,293 $656,117
==================
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
At December 31, 1995, AmSouth had lines of credit arrangements for short-term
debt with two banks enabling the parent company to borrow up to $26,000,000
subject to such terms as AmSouth and the banks may mutually agree. The
arrangements are reviewed annually for renewal of the credit lines. AmSouth
pays commitment fees of 1/4% per annum on $1,000,000 of these lines, which is
available solely to support commercial paper borrowings. The lines of credit
were not in use at December 31, 1995.
The interest rate on the treasury, tax and loan notes at December 31, 1995 was
4.73%. Short-term advances from the Federal Home Loan Bank had interest rates
ranging from 4.51% to 9.30% at December 31, 1995. All other borrowed funds at
December 31, 1995, had interest rates ranging from 3.00% to 7.06%, and
substantially all of these balances had interest rates at or below 5.00%.
NOTE K - LONG-TERM DEBT
Long-term debt at December 31 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ---------------------------------------------------
<S> <C> <C>
6 3/4% Subordinated
Debentures Due 2025...... $149,827 $ -0-
7 3/4% Subordinated
Notes Due 2004........... 149,229 149,137
Subordinated Capital
Notes Due 1999........... 99,569 99,440
Federal Home Loan
Bank advances............ 15,014 103,093
Floating Rate Notes
Due 1999................. 6,899 7,474
7 1/2% Convertible
Subordinated Debentures.. 4,042 3,819
Long-term notes payable....... 23,218 23,184
-------------------
$447,798 $386,147
===================
</TABLE>
The 6 3/4% Subordinated Debentures Due November 1, 2025 were issued November 6,
1995 at a discounted price of 99.883%. The net proceeds to AmSouth after
commissions totaled $148,900,000. The debentures will mature on November 1,
2025 and may be redeemed on November 1, 2005 at the option of the registered
holders thereof. AmSouth purchased an interest rate swap in the notional amount
of $150,000,000 to hedge these debentures. The swap requires AmSouth to pay a
variable rate based on the 30 day London Interbank Borrowing Rate (LIBOR) while
receiving a fixed rate. This swap effectively converts the fixed rate debt to
floating rate.
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.
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.
Advances from the Federal Home Loan Bank had maturities ranging from 1997 to
2013 and interest rates ranging from 3.00% to 7.06%.
The average outstanding balance and average interest rate for 1995 on the
Floating Rate Notes Due 1999 were $7,143,000 and 6.48%, 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, 1996 is 6.50%. 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 debenture holders 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.
61
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Long-term notes payable at December 31, 1995 included $23,068,000 of notes
maturing from 1997 to 2017 with interest rates ranging from 5.20% to 5.75%. The
remaining $150,000 of notes will mature in 1997 with an interest rate of 9.00%.
The aggregate maturities, in thousands, of long-term debt outstanding at
December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
1996.............................. $ 452
1997.............................. 13,787
1998.............................. 315
1999.............................. 106,791
2000.............................. 139
Thereafter........................ 326,766
--------
448,250
Less current portion of long-term.debt 452
--------
$447,798
========
</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.
Trading and dealer activities in aggregate are not material to AmSouth and are
not separately disclosed.
The following table identifies the gross contract or notional amounts of off-
balance sheet financial instruments at December 31:
<TABLE>
<CAPTION>
(In millions) 1995 1994
- -------------------------------------------------------
<S> <C> <C>
Forward contracts-commitments
to sell.......................... $ 44.1 $ 77.5
Notional amount of interest
rate swaps:
Receive fixed rate............... 177.4 27.8
Receive variable rate............ 27.4 27.8
Notional amount of interest
rate caps and floors............. 1,116.5 448.2
Forward foreign exchange contracts:
Commitments to purchase.......... 15.6 24.3
Commitments to sell.............. 17.1 26.9
Written options sold.................. 25.0 30.0
Written options purchased............. 23.0 23.6
</TABLE>
62
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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) 1995 1994
- -----------------------------------------------------
<S> <C> <C>
Loans................................... $1,000 $ 300
Federal funds purchased and
securities sold under agreements
to repurchase...................... 90 90
Deposits................................ 20 50
Long-term debt.......................... 150 -0-
-------------
$1,260 $ 440
=============
</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 $26,500,000. The
amortization of deferred loss related to closed interest rate contracts and
included in net interest income was $10,296,000 and $2,400,000 in 1995 and 1994,
respectively. The amount of amortized deferred loss to be recognized over the
remaining lives of the contracts is $6,559,000 and $292,000 for 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,
1995, 1994 and 1993 was $34,121,000, $32,693,000 and $24,893,000, respectively.
There were no material contingent rental expenses for 1995, 1994, or 1993.
Future minimum payments in thousands, 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, 1995:
<TABLE>
<CAPTION>
<S> <C>
1996 ......... $ 28,165
1997 ......... 23,005
1998 ......... 20,082
1999 ......... 16,897
2000 ......... 15,359
Thereafter ... 128,853
--------
$232,361
========
</TABLE>
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 risk for loan commitments
(unfunded loans and unused lines of credit), and standby letters of credit, at
December 31, 1995 was as follows (in millions):
Commitments to extend credit .. $5,343.9
Standby letters of credit ..... 618.6
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 AmSouth's credit policies. Collateral is obtained based on
management's assessment of the customer.
During 1994, AmSouth entered into a transaction to sell and leaseback certain
property in conjunction with the construction of an office complex in the
Birmingham, Alabama area. The future minimum rental payments are included in the
table above. AmSouth has a contract with a related party to construct the
office complex. This contract represents approximately $62,000,000 of the
estimated total construction cost of $92,000,000. AmSouth made payments on the
contract of approximately $27,000,000 and $23,000,000 during 1995 and 1994,
respectively.
63
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Various legal proceedings are pending against AmSouth and its subsidiaries. Some
of these proceedings seek relief on alleged damages that are substantial. The
actions arise in the ordinary course of AmSouth's business and include actions
relating to its lending, collections, servicing, investment, trust and other
activities. Because some of these actions are complex and for other reasons, it
may take a number of years to finally resolve them. Based upon legal counsel's
opinion, management considers that any liability resulting from the 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 $76.67, 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.
On October 19, 1995, AmSouth's Board of Directors approved the repurchase by
AmSouth of up to an aggregate of 2,265,000 shares of its common stock through
December 31, 1998. During 1995, AmSouth purchased 1,265,000 shares of its common
stock under this approval at a cost of $49,019,000. The shares will be used for
the sole purpose of satisfying requirements of employee benefit, dividend
reinvestment and other stock issuance plans.
During 1994, AmSouth purchased and retired 1,000,000 shares of its 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, 1995, there were 793,394 shares reserved for issuance under the
Dividend Reinvestment and Common Stock Purchase Plan, 2,154,098 shares reserved
for issuance under stock compensation plans (1,286,635 shares represent stock
options outstanding) and 99,576 shares reserved for issuance under the employee
stock purchase plan for a total of 3,047,068 shares.
NOTE O - LONG-TERM INCENTIVE COMPENSATION PLANS
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
1993, 1994 and 1995:
64
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Option Price per Share
- ---------------------------------------------------------------------------------
<S> <C> <C>
Balance at January 1, 1993................... 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
Options exercised............................ (340,736) 4.53 - 30.75
Options forfeited............................ (41,659) 6.96 - 32.25
Options granted.............................. 454,550 28.75 - 40.00
---------
Balance at December 31, 1995................. 1,286,635 $ 6.96 - $40.00
=========
</TABLE>
The option period for the stock options is generally ten years. Of the options
outstanding at December 31, 1995, those granted during 1995 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
generally ranging from three to five years at the same or a higher level.
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.
During 1995, 101,891 restricted shares were awarded, 44,784 shares of restricted
stock awards were forfeited and the restrictions were removed on 22,743 shares.
Also, during 1995, 29,192 shares of restricted stock awards were granted to and
400 shares were forfeited by non-employee members of the Boards of Directors of
AmSouth and its subsidiaries. At December 31, 1995, AmSouth had 296,208 shares
of common stock outstanding representing restricted stock awards.
At December 31, 1995, 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, 1995, approximately $197,900,000 of the subsidiary banks' net
assets were available for dividends without prior regulatory approval.
Substantially all of the parent company's retained earnings at December 31, 1995
and 1994 represented undistributed earnings of its banking subsidiaries.
NOTE Q - PENSION AND OTHER EMPLOYEE BENEFIT PLANS
As of December 31, 1995, 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.
65
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Net periodic pension expense includes the following components:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
(In thousands) 1995 1994 1993
- --------------------------------------------------------------
<S> <C> <C> <C>
Service cost of the
current period........... $ 5,104 $ 5,556 $ 4,332
Interest cost on the
projected benefit
obligation............... 11,590 11,098 9,690
Actual (return) loss on
assets held in the plan.. (32,527) 2,321 (16,549)
Net amortization of
transition asset and
net gain (loss).......... 20,360 (14,536) 4,699
Expense for enhanced
retirement benefit
offering................. -0- -0- 11,400
------------------------------
Pension expense............... $ 4,527 $ 4,439 $ 13,572
==============================
</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) 1995 1994
- -------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated plan benefits:
Vested........................... $ 140,745 $ 118,372
Nonvested........................ 6,649 4,428
---------------------
Accumulated benefit obligation........ $ 147,394 $ 122,800
=====================
Actuarial present value
of projected benefit obligation
for service rendered to date..... $(165,608) $(135,969)
Plan assets at fair value,
primarily listed stocks and
bonds and U.S. obligations....... 167,431 134,913
---------------------
Plan assets greater (less) than
projected benefit obligation..... 1,823 (1,056)
Recognition of transfer of plan
assets in excess of projected
benefit obligation............... 4,903 5,003
Unrecognized net gain from
past experience different
from that assumed and
effects of changes in
assumptions...................... (20,185) (16,335)
Unrecognized net
transition asset................. (2,814) (4,470)
---------------------
Accrued pension cost included
in other liabilities............. $ (16,273) $ (16,858)
=====================
</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 7.50% and 4.50%, respectively, at December 31,
1995, 8.50% and 4.50%, respectively, at December 31, 1994, and 7.50% and 5.00%,
respectively, at December 31, 1993. The average expected long-term rate of
return on plan assets is approximately 8.50% at December 31, 1995, 1994, and
1993. At December 31, 1995, the plan assets included AmSouth common stock with a
market value of $9,714,000.
AmSouth also maintains a thrift plan and an employee stock purchase plan which
cover substantially all regular full-time employees. For each employee, during
1995, AmSouth made matching contributions of 50% of the first 5% of base pay
that each employee contributed to the thrift plan. Beginning January 1, 1996,
AmSouth will match pre-tax contributions dollar for dollar on the first 6% of
base pay that each employee contributes to the thrift plan. After-tax
contributions to the thrift plan will continue to be matched at 50 cents for
every dollar contributed by an employee but will be matched through the first 6%
of base pay. Employees may make both pre-tax and after-tax contributions, but no
matching contributions are made on any employee contributions above 6%, with
pre-tax contributions being matched first. In addition, beginning January 1,
1996, all future company matching contributions will no longer be self directed
by the employee but instead will be allocated to the AmSouth stock investment
option. The cost of the thrift plan for the years ended December 31, 1995,
1994, and 1993 was $2,379,000, $2,350,000, and $2,075,000, 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.
66
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
AmSouth also sponsors other postretirement benefit plans. In accordance with
Statement of Financial Accounting Standards No. 106, "Employers Accounting for
Postretirement Benefits Other than Pensions," the effect of these plans did not
have a material impact on the financial condition or results of operations of
AmSouth for the years ended December 31, 1995, 1994 and 1993.
NOTE R - INCOME TAXES
The provisions for income taxes charged to earnings are summarized as follows:
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------
(In thousands) 1995 1994 1993
- -------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal..................... $ 86,138 $41,309 $71,660
State....................... 11,486 5,060 9,839
--------------------------
97,624 46,369 81,499
--------------------------
Deferred tax expense/(benefit):
Federal..................... 2,455 16,459 (8,200)
State....................... 143 3,222 (1,456)
--------------------------
2,598 19,681 (9,656)
--------------------------
$100,222 $66,050 $71,843
==========================
</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
were as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
(In thousands) 1995 1994 1993
- -----------------------------------------------------------
<S> <C> <C> <C>
Tax at federal income
tax rate.............. $ 96,312 $ 67,669 $ 76,469
State and local
income taxes, net of
federal tax benefits.. 7,559 5,383 5,484
Goodwill amortization...... 5,540 3,911 2,353
Tax exempt interest........ (9,032) (10,437) (12,485)
Other...................... (157) (476) 22
------------------------------
$100,222 $ 66,050 $ 71,843
==============================
</TABLE>
The significant temporary differences which create deferred tax assets and
liabilities at December 31 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- -----------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Employee benefits..................... $ 9,610 $ 10,267
Basis differences in acquisitions..... 5,186 9,428
Accrued expenses...................... 12,718 1,584
Loan loss reserves.................... 66,979 64,240
Interest income on nonaccruing loans.. 2,898 3,872
Other................................. 8,793 12,703
-------------------
106,184 102,094
-------------------
Deferred tax liabilities:
Leasing activities.................... (19,224) (2,089)
Depreciation.......................... (8,217) (10,366)
Discount accretion.................... (4,899) (1,178)
Recapture tax loan loss reserves...... (14,820) (18,301)
Statement 115 equity adjustment....... (12,921) 2,751
Deferred loss on notional
principal contracts.............. (2,566) (6,413)
Other................................. (7,968) (10,506)
-------------------
(70,615) (46,102)
-------------------
Net deferred tax asset........... $ 35,569 $ 55,992
===================
</TABLE>
During 1995, the net deferred tax asset decreased by $15,700,000 due to fair
market value adjustments recorded in equity under Statement 115. Management
believes that AmSouth will fully realize the net deferred tax asset as of
December 31, 1995 based on AmSouth's refundable taxes from carryback years, as
well as AmSouth's current level of operating income.
Income taxes paid were $79,405,000, $66,979,000, and $72,546,000 for the years
ended December 31, 1995, 1994, and 1993, respectively. Applicable income tax
expense (benefit) of $279,000, ($9,884,000), and $5,508,000 on securities gains
and losses for the years ended December 31, 1995, 1994, and 1993, respectively,
is included in the provision for income taxes.
67
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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) 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Other operating revenues:
Gains (losses) on sale of
mortgage servicing................. $ 29,826 $ 23,766 $ (20)
Credit card income.................. 14,684 12,663 13,277
Gains(losses) on sale of
available-for-sale
securities......................... 3,717 (26,642) 13,057
Gains on held-to-maturity
securities......................... 741 354 1,591
Other portfolio
income (losses).................... 436 (14,451) 3,910
Other............................... 29,038 32,974 33,203
-----------------------------------
Total............................... $ 78,442 $ 28,664 $ 65,018
===================================
Other operating expenses:
Postage and office
supplies........................... $ 23,399 $ 22,718 $ 19,825
Marketing........................... 17,299 13,758 9,579
Professional fees................... 12,886 12,501 10,728
Amortization of intangibles......... 21,402 26,537 16,894
Other............................... 85,932 97,754 84,083
-----------------------------------
Total............................... $ 160,918 $ 173,268 $ 141,109
===================================
</TABLE>
NOTE T - CONDENSED PARENT COMPANY INFORMATION
Statement of Condition
<TABLE>
<CAPTION>
December 31
----------------------
(In thousands) 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
Assets
Investment in subsidiaries.................... $1,635,283 $1,495,497
Loans......................................... 20,400 28,400
Securities purchased under
agreements to resell..................... 9,500 216
Other earning assets.......................... 110,000 26,900
Other assets.................................. 23,404 26,217
----------------------
$1,798,587 $1,577,230
======================
Liabilities and Shareholders' Equity
Commercial paper.............................. $ 1,851 $ 1,786
Subordinated debt............................. 402,667 248,577
Other long-term debt.......................... 7,049 15,742
Other borrowed funds.......................... 150 150
Accrued interest payable
and other liabilities.................... 3,395 517
----------------------
Total liabilities....................... 415,112 266,772
Shareholders' equity.......................... 1,383,475 1,310,458
----------------------
$1,798,587 $1,577,230
======================
</TABLE>
Statement of Earnings
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Income
Dividends from
subsidiaries................. $ 103,643 $ 97,025 $ 69,807
Interest and other............. 3,662 2,827 4,658
-----------------------------------
107,305 99,852 74,465
-----------------------------------
Expenses
Interest....................... 23,942 17,607 10,835
Other.......................... 5,074 4,307 5,233
-----------------------------------
29,016 21,914 16,068
-----------------------------------
Income before income
taxes and equity in
undistributed earnings
of subsidiaries................ 78,289 77,938 58,397
Income tax credit................... 8,582 6,163 3,780
-----------------------------------
Income before equity in
undistributed earnings
of subsidiaries................ 86,871 84,101 62,177
Equity in undistributed
earnings of
subsidiaries................... 88,084 43,189 84,543
-----------------------------------
Net income.......................... $ 174,955 $ 127,290 $ 146,720
===================================
</TABLE>
68
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------
(In thousands) 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income................................................ $174,955 $127,290 $146,720
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of goodwill................................ 2,386 2,386 2,386
Other amortization...................................... 1,243 1,107 1,772
Net decrease (increase) in accrued interest
receivable and other assets........................... 1,535 (908) 115
Net increase in accrued expenses and other liabilities.. 2,934 922 590
Equity in undistributed earnings of subsidiaries........ (88,084) (43,189) (84,543)
--------------------------------
Net cash provided by operating activities........... 94,969 87,608 67,040
--------------------------------
Investing activities
Net increase in advances to subsidiaries................ -0- -0- (8,600)
Net (increase) decrease in short-term investments....... (92,535) 3,339 48,902
Capital contributions to subsidiaries................... -0- -0- (3,000)
Net purchases of premises and equipment................. -0- (218) (5,405)
Net cash used for acquisitions.......................... (17,069) (138,007) (44,119)
--------------------------------
Net cash used by investing activities............... (109,604) (134,886) (12,222)
--------------------------------
Financing activities
Net increase (decrease) in commercial paper............. 65 (182) (1,161)
Issuance of long-term debt.............................. 149,827 149,084 -0-
Payments on long-term debt.............................. (4,875) (628) (1,338)
Cash dividends paid..................................... (89,906) (80,823) (58,922)
Proceeds from employee benefit plans.................... 8,837 6,745 6,616
Purchase of treasury stock.............................. (49,019) (30,047) -0-
--------------------------------
Net cash provided (used) by financing activities.... 14,929 44,149 (54,805)
--------------------------------
Increase (decrease) in cash................................. 294 (3,129) 13
Cash at beginning of year................................... 33 3,058 1,865
Beginning cash balances of immaterial pooling-of-interest
entities.................................................. -0- 104 1,180
--------------------------------
Cash at end of year................................. $ 327 $ 33 $ 3,058
================================
</TABLE>
69
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTE U - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Selected quarterly results of operations for the
four quarters ended December 31, are as follows:
1995 1994
--------------------------------------------- ---------------------------------------------
Fourth Third Second First Fourth Third Second First
(In thousands except per share data) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from earning assets.......... $326,376 $319,515 $318,504 $310,668 $295,059 $295,331 $237,311 $220,040
Interest expense..................... 172,731 169,706 172,382 164,577 151,550 142,137 100,951 85,776
Net interest income.................. 153,645 149,809 146,122 146,091 143,509 153,194 136,360 134,264
Provision for loan losses............ 10,090 9,398 12,307 8,344 20,149 4,773 2,974 2,207
Income (loss) before income taxes.... 75,038 73,305 64,531 62,303 (185) 69,271 64,414 59,840
Net income........................... 47,892 46,095 40,858 40,110 1,355 44,061 42,900 38,974
Per common share:
Net income................... .82 .79 .70 .69 .02 .75 .78 .72
Cash dividends declared...... .40 .38 .38 .38 .38 .35 .35 .35
Market price range:
High................. 41 3/8 39 3/8 34 1/2 33 31 7/8 34 7/8 33 1/8 32
Low.................. 37 1/2 32 3/8 30 5/8 25 3/4 25 3/8 30 1/2 29 5/8 29 1/4
Note: The total of quarterly net income per common share does not equal annual amounts due to rounding.
</TABLE>
NOTE V - FAIR VALUE OF FINANCIAL INSTRUMENTS
For 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 balance sheet lines captioned cash 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.
The carrying amount and estimated fair values of other financial
instruments as December 31 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------- ----------------------------------
Carrying Estimated Carrying Estimated
(In thousands) Amount Fair Value Amount Fair Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Held-to-maturity securities............ $ 2,167,009 $ 2,193,421 $ 3,336,557 $ 3,169,513
Mortgage loans held for sale........... 62,017 62,017 130,223 130,223
Net loans.............................. 11,564,822 11,747,723 11,258,740 11,206,062
Financial liabilities:
Deposits............................... 13,408,831 13,352,408 13,067,062 13,053,924
Long-term debt......................... 447,798 483,291 386,147 378,340
Off-balance sheet:
Off-balance sheet financial instruments
(net receivable position)...... -0- (2,966) -0- 4,802
Commitments to extend credit and
standby letters of credit.............. -0- (3,226) -0- (2,427)
</TABLE>
70
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value off 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:
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
71
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 account 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.
72
<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.
Name Jurisdiction Where Organized
---- ----------------------------
AmSouth Bank of Alabama Alabama
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
AmSouth Insurance Agency, Inc. Florida
AmSouth Retirement Services, Inc. Florida
Fortune Mortgage Corporation Florida
Service Mortgage and Insurance
Agency, Inc. Florida
AmSouth Bank of Georgia Georgia
AmSouth Bank of Tennessee Tennessee
FMLS, Inc. Tennessee
AmSouth Bank of Walker County Alabama
MSF Management Corp. Florida
Trivest Enterprises, Inc. Florida
Fortune Equity Corporation Florida
First Clearwater Corporation Florida
<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, 1996, 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, 1995:
Form S-8 No. 33-58777 pertaining to the Director Restricted Stock Plan;
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 22, 1996
<PAGE>
EXHIBIT 24
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
22nd day of February, 1996.
/s/ Barney B. Burks, Jr.
-------------------------------------
BARNEY B. BURKS, JR.
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
20th day of March, 1996.
/s/ Joseph M. Farley
-------------------------------------
JOSEPH M. FARLEY
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
20th day of March, 1996.
/s/ Rodney C. Gilbert
-------------------------------------
RODNEY C. GILBERT
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
22nd day of February, 1996.
/s/ Elmer B. Harris
-------------------------------------
ELMER B. HARRIS
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
26th day of February, 1996.
/s/ Donald E. Hess
-------------------------------------
DONALD E. HESS
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
24th day of February, 1996.
/s/ Ronald L. Kuehn, Jr.
-------------------------------------
RONALD L. KUEHN, JR.
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
21st day of February, 1996.
/s/ James R. Malone
-------------------------------------
JAMES R. MALONE
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
26th day of February, 1996.
/s/ Claude B. Nielsen
-------------------------------------
CLAUDE B. NIELSEN
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
27th day of February, 1996.
/s/ Z. Cartter Patten, III
-------------------------------------
Z. CARTTER PATTEN, III
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
22nd day of February, 1996.
/s/ Benjamin F. Payton
-------------------------------------
BENJAMIN F. PAYTON
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint Stephen
A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them, his true
and lawful attorney-in-fact and agent, for him and in his name, place and stead,
to execute and sign the Annual Report on Form 10-K for the year ended December
31, 1995 to be filed by the Company with the Securities and Exchange Commission,
and, further, to execute and sign any and all amendments to such Form 10-K and
any and all other documents in connection therewith, and to cause any and all
such documents to be filed with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said attorney-in-
fact and agent which he may lawfully do in the premises or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
26th day of February, 1996.
/s/ John W. Woods
---------------------------------------
JOHN W. WOODS
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint
Stephen A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them,
his true and lawful attorney-in-fact and agent, for him and in his name, place
and stead, to execute and sign the Annual Report on Form 10-K for the year
ended December 31, 1995 to be filed by the Company with the Securities and
Exchange Commission, and, further, to execute and sign any and all amendments
to such Form 10-K and any and all other documents in connection therewith, and
to cause any and all such documents to be filed with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all the acts of said attorney-in-fact and agent which he may
lawfully do in the premises or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
21st day of February, 1996.
/s/ Herbert A. Sklenar
-------------------------------------
HERBERT A. SKLENAR
<PAGE>
DIRECTOR'S
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of AmSouth
Bancorporation, a Delaware corporation ("Company"), by his execution hereof or
upon an identical counterpart hereof, does hereby constitute and appoint Stephen
A. Yoder, Carl L. Gorday or William H. Caughran, Jr. and any of them, his true
and lawful attorney-in-fact and agent, for him and in his name, place and stead,
to execute and sign the Annual Report on Form 10-K for the year ended December
31, 1995 to be filed by the Company with the Securities and Exchange Commission,
and, further, to execute and sign any and all amendments to such Form 10-K and
any and all other documents in connection therewith, and to cause any and all
such documents to be filed with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said attorney-in-
fact and agent which he may lawfully do in the premises or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this
26th day of February, 1996.
/s/ J. Harold Chandler
---------------------------
J. HAROLD CHANDLER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF CONDITION AND THE CONSOLIDATED STATEMENT OF EARNINGS
OF ITEM 8, AND TABLES 3, 16, 20 AND 21 OF ITEM 7 OF THE AMSOUTH BANCORPORATION
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 651,641
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,775
<TRADING-ASSETS> 2,978
<INVESTMENTS-HELD-FOR-SALE> 2,479,813
<INVESTMENTS-CARRYING> 2,167,009
<INVESTMENTS-MARKET> 2,193,421
<LOANS> 11,819,809
<ALLOWANCE> 178,451
<TOTAL-ASSETS> 17,738,795
<DEPOSITS> 13,408,831
<SHORT-TERM> 2,344,383
<LIABILITIES-OTHER> 154,308
<LONG-TERM> 447,798
0
0
<COMMON> 60,030
<OTHER-SE> 1,323,445
<TOTAL-LIABILITIES-AND-EQUITY> 17,738,795
<INTEREST-LOAN> 1,013,444
<INTEREST-INVEST> 255,046
<INTEREST-OTHER> 6,573
<INTEREST-TOTAL> 1,275,063
<INTEREST-DEPOSIT> 549,470
<INTEREST-EXPENSE> 679,396
<INTEREST-INCOME-NET> 595,667
<LOAN-LOSSES> 40,139
<SECURITIES-GAINS> 741
<EXPENSE-OTHER> 512,129
<INCOME-PRETAX> 275,177
<INCOME-PRE-EXTRAORDINARY> 275,177
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174,955
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 0
<YIELD-ACTUAL> 3.88
<LOANS-NON> 96,246
<LOANS-PAST> 39,618
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 171,167
<CHARGE-OFFS> 47,282
<RECOVERIES> 12,674
<ALLOWANCE-CLOSE> 178,451
<ALLOWANCE-DOMESTIC> 152,547
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 25,904
</TABLE>
