<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUSANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 1-7476
AMSOUTH BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 63-0591257
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
AMSOUTH--SONAT TOWER
1900 FIFTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
(205) 320-7151
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of May 2, 1997, AmSouth Bancorporation had 82,947,971 shares of common
stock outstanding.
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<PAGE>
AMSOUTH BANCORPORATION
FORM 10-Q
INDEX
PAGE
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition--March 31, 1997,
December 31, 1996, and March 31, 1996..................... 3
Consolidated Statement of Earnings--Three months ended
March 31, 1997 and 1996................................... 4
Consolidated Statement of Shareholders' Equity--Three months
ended March 31, 1997...................................... 5
Consolidated Statement of Cash Flows--Three months ended
March 31, 1997 and 1996................................... 6
Notes to Consolidated Financial Statements................... 7
Independent Accountants' Review Report....................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 9
Part II. Other Information
Item 1. Legal Proceedings............................................. 18
Item 6. Exhibits and Reports on Form 8-K.............................. 18
Signatures............................................................... 19
Exhibit Index............................................................ 20
Forward Looking Information. This Quarterly Report on Form 10-Q contains
certain forward looking statements with respect to the adequacy of the
allowance for loan losses and the effect of legal proceedings on AmSouth's
financial condition and results of operations. These forward looking
statements involve certain risks, uncertainties, estimates and assumptions by
management.
Various factors could cause actual results to differ materially from those
contemplated by such forward looking statements. With respect to the adequacy
of the allowance for loan losses, these factors include the rate of growth of
the economy, especially in the Southeast, the relative strength and weakness
in the consumer and commercial credit sectors and in the real estate markets
and the performance of the stock and bond markets. With regard to the effect
of legal proceedings, various uncertainties are discussed in "Item 1. Legal
Proceedings." Moreover, the outcome of litigation is inherently uncertain and
depends on judicial interpretations of law and the findings of judges and
juries.
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31 MARCH 31
1997 1996 1996
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks................. $ 585,108 $ 648,494 $ 587,278
Federal funds sold and securities pur-
chased under agreements to resell...... 2,275 15,000 1,600
Trading securities...................... 5,346 3,879 3,510
Available-for-sale securities........... 2,022,396 2,290,478 2,534,791
Held-to-maturity securities (market
value of $2,541,803, $2,649,481 and
$2,565,870, respectively).............. 2,567,247 2,644,706 2,574,911
Mortgage loans held for sale............ 41,822 60,582 121,672
Loans................................... 12,107,303 12,168,572 11,546,007
Less: Allowance for loan losses......... 179,049 179,049 177,930
Unearned income....................... 82,426 88,326 69,810
----------- ----------- -----------
Net loans........................... 11,845,828 11,901,197 11,298,267
Premises and equipment, net............. 311,158 301,592 279,218
Customers' acceptance liability......... 2,236 3,190 3,311
Accrued interest receivable and other
assets................................. 631,036 538,146 509,828
----------- ----------- -----------
$18,014,452 $18,407,264 $17,914,386
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing
liabilities:
Deposits:
Noninterest-bearing demand............ $ 1,907,841 $ 1,951,543 $ 1,795,572
Interest-bearing demand............... 3,531,330 3,599,987 3,819,011
Savings............................... 1,073,954 1,068,555 1,025,472
Time.................................. 5,071,932 5,073,387 5,739,433
Certificates of deposit of $100,000 or
more................................. 804,511 774,127 915,576
----------- ----------- -----------
Total deposits...................... 12,389,568 12,467,599 13,295,064
Federal funds purchased and securities
sold under agreements to repurchase... 1,165,664 1,872,286 1,898,094
Other borrowed funds................... 1,344,238 1,025,383 483,321
Long-term Federal Home Loan Bank ad-
vances................................ 1,073,436 1,023,729 234,195
Other long-term debt................... 411,910 411,946 426,301
----------- ----------- -----------
Total deposits and interest-bearing
liabilities........................ 16,384,816 16,800,943 16,336,975
Acceptances outstanding................. 2,236 3,190 3,311
Accrued expenses and other liabilities.. 251,107 207,302 204,546
----------- ----------- -----------
Total liabilities................... 16,638,159 17,011,435 16,544,832
----------- ----------- -----------
Shareholders' equity:
Preferred stock--no par value:
Authorized--2,000,000 shares; Issued
and outstanding--none................ -0- -0- -0-
Common stock--par value $1 a share:
Authorized--200,000,000 shares
Issued--90,033,326, 90,034,023 and
90,044,613 shares, respectively...... 90,033 90,034 90,045
Capital surplus........................ 562,320 562,459 559,974
Retained earnings...................... 887,247 858,329 812,767
Cost of common stock in treasury--
6,888,744, 5,997,737 and 5,375,898
shares, respectively.................. (160,361) (128,889) (105,479)
Deferred compensation on restricted
stock................................. (11,780) (10,400) (5,097)
Unrealized gains on available-for-sale
securities, net of deferred taxes..... 8,834 24,296 17,344
----------- ----------- -----------
Total shareholders' equity.......... 1,376,293 1,395,829 1,369,554
----------- ----------- -----------
$18,014,452 $18,407,264 $17,914,386
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
-------------------------------------
1997 1996
------------------ ------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
REVENUE FROM EARNING ASSETS
Loans.................................... $ 254,172 $ 250,828
Available-for-sale securities............ 37,456 38,472
Held-to-maturity securities.............. 44,231 40,221
Trading securities....................... 21 41
Mortgage loans held for sale............. 487 1,453
Federal funds sold and securities
purchased under agreements to resell.... 301 349
------------------ ------------------
Total revenue from earning assets.... 336,668 331,364
------------------ ------------------
INTEREST EXPENSE
Interest-bearing demand deposits......... 27,050 30,356
Savings deposits......................... 7,603 6,682
Time deposits............................ 69,585 83,372
Certificates of deposit of $100,000 or
more.................................... 11,209 13,348
Federal funds purchased and securities
sold under agreements to repurchase..... 19,290 21,805
Other borrowed funds..................... 12,954 7,585
Long-term Federal Home Loan Bank
advances................................ 14,149 2,411
Other long-term debt..................... 7,661 8,100
------------------ ------------------
Total interest expense............... 169,501 173,659
------------------ ------------------
NET INTEREST INCOME...................... 167,167 157,705
Provision for loan losses................ 17,717 15,120
------------------ ------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................. 149,450 142,585
------------------ ------------------
NONINTEREST REVENUES
Service charges on deposit accounts...... 24,331 23,122
Trust income............................. 14,795 13,481
Investment services income............... 5,338 3,488
Credit card income....................... 3,553 3,186
Interchange income....................... 2,667 1,683
Mortgage administration fees............. 1,284 1,122
Letters of credit income................. 2,223 2,034
Portfolio income......................... 2,564 1,875
Other operating revenues................. 6,927 5,027
------------------ ------------------
Total noninterest revenues........... 63,682 55,018
------------------ ------------------
NONINTEREST EXPENSES
Salaries and employee benefits........... 61,159 57,239
Net occupancy expense.................... 13,714 13,190
Equipment expense........................ 13,564 12,803
Marketing expense........................ 4,593 4,377
Postage and office supplies.............. 5,746 5,876
Telephone expense........................ 4,601 3,350
Professional fees........................ 2,604 2,225
FDIC premiums............................ 585 2,562
Foreclosed properties expense............ 213 453
Amortization expense..................... 4,545 4,238
Other operating expenses................. 17,300 16,458
------------------ ------------------
Total noninterest expenses........... 128,624 122,771
------------------ ------------------
INCOME BEFORE INCOME TAXES............... 84,508 74,832
Income taxes............................. 29,935 27,669
------------------ ------------------
NET INCOME........................... $ 54,573 $ 47,163
================== ==================
Average common shares outstanding*....... 83,789 85,532
Earnings per common share*............... $ 0.65 $ 0.55
</TABLE>
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* Restated for three-for-two common stock split.
See notes to consolidated financial statements.
4
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
COMMON CAPITAL RETAINED TREASURY DEFERRED GAINS/(LOSSES)
STOCK SURPLUS EARNINGS STOCK COMPENSATION ON SECURITIES TOTAL
------- -------- -------- --------- ------------ -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1997................... $60,023 $592,470 $858,329 $(128,889) $(10,400) $ 24,296 $1,395,829
Adjustment for the
effect of 3-for-2
common stock split..... 30,011 (30,011) -0- -0- -0- -0- -0-
------- -------- -------- --------- -------- -------- ----------
BALANCE AT JANUARY 1,
1997 RESTATED.......... 90,034 562,459 858,329 (128,889) (10,400) 24,296 1,395,829
Net income.............. -0- -0- 54,573 -0- -0- -0- 54,573
Cash dividends declared
($0.28 per common
share)*................ -0- -0- (23,604) -0- -0- -0- (23,604)
Common stock
transactions:
Purchase of common
stock................. -0- -0- -0- (42,470) -0- -0- (42,470)
Employee stock plans... (1) (150) (2,051) 9,739 (1,380) -0- 6,157
Dividend reinvestment.. -0- 11 -0- 1,259 -0- -0- 1,270
Unrealized losses on
available-for-sale
securities, net of
deferred taxes......... -0- -0- -0- -0- -0- (15,462) (15,462)
------- -------- -------- --------- -------- -------- ----------
BALANCE AT MARCH 31,
1997................... $90,033 $562,320 $887,247 $(160,361) $(11,780) $ 8,834 $1,376,293
======= ======== ======== ========= ======== ======== ==========
</TABLE>
- --------
* Restated for three-for-two common stock split.
See notes to consolidated financial statements.
5
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................... $ 54,573 $ 47,163
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses............................... 17,717 15,120
Provision for foreclosed property losses................ 171 -0-
Depreciation and amortization of premises and equipment. 8,123 6,799
Amortization of premiums and discounts on held-to-
maturity securities
and available-for-sale securities...................... (402) (1,043)
Net decrease (increase) in mortgage loans held for sale. 18,760 (59,655)
Net increase in trading securities...................... (1,504) (532)
Net gains on sales of available-for-sale securities..... (2,406) (1,339)
Net gains on calls of held-to-maturity securities....... -0- (118)
Net (increase) decrease in accrued interest receivable
and other assets....................................... (94,707) 20,835
Net increase in accrued expenses and other liabilities.. 34,675 49,247
Provision for deferred income taxes..................... 3,139 5,545
Amortization of intangible assets....................... 4,141 4,167
Other................................................... 1,803 451
--------- ---------
Net cash provided by operating activities............ 44,083 86,640
--------- ---------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of available-
for-sale securities..................................... 68,070 203,677
Proceeds from sales of available-for-sale securities..... 378,435 303,731
Purchases of available-for-sale securities............... (185,150) (299,836)
Proceeds from maturities, prepayments and calls of held-
to-maturity securities.................................. 77,726 124,525
Purchases of held-to-maturity securities................. -0- (532,154)
Net decrease in federal funds sold and securities
purchased under agreements to resell.................... 12,725 175
Net decrease (increase) in loans......................... 33,652 (20,342)
Net purchases of premises and equipment.................. (17,689) (9,591)
--------- ---------
Net cash provided (used) by investing activities..... 367,769 (229,815)
--------- ---------
FINANCING ACTIVITIES
Net decrease in demand deposits and savings accounts..... (106,960) (112,056)
Net increase (decrease) in time deposits................. 29,142 (44,025)
Net (decrease) increase in federal funds purchased and
securities sold under agreements to repurchase.......... (706,622) 37,004
Net increase in other borrowed funds..................... 293,759 36,008
Issuance of long-term Federal Home Loan Bank advances and
other long-term debt.................................... 75,000 220,000
Payments for maturing long-term debt..................... (261) (850)
Cash dividends paid...................................... (23,604) (22,566)
Proceeds from employee stock plans and dividend
reinvestment plan....................................... 6,778 4,702
Purchase of common stock................................. (42,470) (39,405)
--------- ---------
Net cash (used) provided by financing activities..... (475,238) 78,812
--------- ---------
Decrease in cash and cash equivalents.................... (63,386) (64,363)
Cash and cash equivalents at beginning of period......... 648,494 651,641
--------- ---------
Cash and cash equivalents at end of period............... $ 585,108 $ 587,278
========= =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
General--The consolidated financial statements conform to generally accepted
accounting principles and to general industry practices. The accompanying
interim financial statements are unaudited; however, in the opinion of
management, all adjustments necessary for the fair presentation of the
consolidated financial statements have been included. All such adjustments are
of a normal recurring nature. Certain amounts in the prior year's financial
statements have been reclassified to conform with the 1997 presentation. These
reclassifications had no effect on net income. All common share data presented
reflect a three-for-two stock split completed in April 1997. The notes
included herein should be read in conjunction with the notes to consolidated
financial statements included in AmSouth Bancorporation's (AmSouth) 1996
annual report on Form 10-K.
On January 1, 1997, AmSouth adopted Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," (Statement 125). Statement 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a consistent application of
a "financial-components approach" that focuses on control. Under that
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered and
derecognizes liabilities when extinguished. Statement 125 provides standards
for consistently distinguishing transfers of financial assets that are sales
from transfers that are secured borrowings. The adoption of Statement 125
resulted in no material impact on AmSouth's financial condition or results of
operations.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which AmSouth is required to adopt on December
31, 1997. At that time, AmSouth will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact of Statement 128
on the calculation of primary and fully diluted earnings per share for the
three months ended March 31, 1997 and 1996 is not expected to be material.
Cash Flows--For the three months ended March 31, 1997 and 1996, AmSouth paid
interest of $159,048,000 and $169,773,000, respectively, and income taxes of
$629,000 and $4,782,000, respectively. Noncash transfers from loans to
foreclosed properties for the three months ended March 31, 1997 and 1996 were
$3,432,000 and $5,105,000, respectively, and noncash transfers from foreclosed
properties to loans were $331,000 and $91,000, respectively. For the three
months ended March 31, 1996, noncash transfers from loans to available-for-
sale securities of approximately $266,814,000 were made in connection with
mortgage loan securitizations.
Shareholders' Equity--During the first quarter of 1997, AmSouth purchased
1,200,000 shares of its common stock at a cost of $42,470,000 for the purpose
of funding employee benefit and dividend reinvestment plans and for general
corporate purposes. This repurchase was part of a plan approved in July 1996.
Approximately 525,000 shares remain to be purchased under this plan.
On March 20, 1997, AmSouth's Board of Directors approved a three-for-two
common stock split in the form of a 50 percent common stock dividend. The
stock dividend was paid on April 30 to shareholders of record as of April 4.
The Board of Directors also authorized a new plan to repurchase up to
6,000,000 shares of AmSouth's common stock over the next two years.
7
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
AmSouth Bancorporation
We have reviewed the accompanying consolidated statement of condition of
AmSouth Bancorporation and subsidiaries as of March 31, 1997 and 1996, and the
related consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 1997 and 1996, and the consolidated statement of
shareholders' equity for the three-month period ended March 31, 1997. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of condition of AmSouth Bancorporation
and subsidiaries as of December 31, 1996, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for the year then
ended (not presented herein) and in our report dated January 31, 1997, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
statement of condition as of December 31, 1996, is fairly stated, in all
material respects, in relation to the consolidated statement of condition from
which it has been derived.
/s/ ERNST & YOUNG LLP
May 9, 1997
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
AmSouth reported net income of $54.6 million for the three months ended
March 31, 1997, a 15.7% increase over net income of $47.2 million for the same
period of 1996. On a per common share basis, restated for the three-for-two
stock split, earnings were $.65 and $.55, respectively. First quarter earnings
resulted in an annualized return on average assets of 1.23% and an annualized
return on average equity of 15.94% compared to 1.07% and 13.78%, respectively,
for the first quarter of 1996. AmSouth's 1997 first quarter operating
efficiency ratio improved to 55.24% compared to 57.03% for the prior year.
NET INTEREST INCOME
Net interest income on a fully taxable equivalent basis for the three months
ended March 31, 1997 was $169.2 million, a 5.6% increase over the same period
of 1996. The improvement in net interest income was primarily the result of an
increase in the yield earned on average earning assets, primarily investment
securities, combined with a decrease in the rate paid on interest-bearing
liabilities, primarily time deposits. The net interest margin increased 21
basis points to 4.12% .
Average earning assets increased $159.8 million primarily due to an increase
in average loans net of unearned income. Exclusive of residential first
mortgages, average loans net of unearned income increased $1.0 billion, or
12.9%, primarily in commercial, commercial real estate, other residential and
dealer indirect loans. Average interest-bearing liabilities increased $214.2
million. Significant changes included increases of $870.2 million in Federal
Home Loan Bank advances, $279.0 million in treasury, tax and loan notes and
$164.4 million in short-term bank notes partially offset by a decrease in
interest-bearing deposits of $932.6 million.
ASSET/LIABILITY MANAGEMENT
AmSouth maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. This is accomplished through the development and implementation
of lending, funding and pricing strategies designed to maximize net interest
income performance under varying interest rate environments subject to
specific liquidity and interest rate risk guidelines.
The primary tool used by AmSouth to measure interest rate risk is an
earnings simulation model which evaluates the impact of different interest
rate scenarios on the corporation's projected business plan over a 12 to 24
month horizon. Management feels that a more traditional interest sensitivity
gap analysis does not provide a complete picture of AmSouth's exposure to
interest rate changes since static gap models are a point-in-time measurement
and, therefore, do not incorporate the effects of future balance sheet trends,
changes in the relationship between yields earned and rates paid, patterns of
rate movements in general or changes in prepayment speeds due to changes in
rates. AmSouth's earnings simulation model incorporates the effect of these
factors in addition to the impact of certain embedded interest rate caps and
floors on certain assets and liabilities while also reflecting management's
anticipated action under varying interest rate environments.
Interest rate scenarios are simulated on a regular basis to determine the
range of interest rate risk. Net interest income performance is measured under
scenarios ranging from plus or minus 100 basis points to plus or minus 300
basis points over 12 months compared to a stable interest rate environment.
The net interest income differential is expressed as a percent of net interest
income over twelve months if interest rates are unchanged. As of March 31,
1997, the earnings simulation model results indicated that the corporation was
in a relatively neutral interest rate risk position with the net interest
income differential, in a plus or minus 200 basis point scenario, being less
than two percent when compared to net interest income in a stable interest
rate scenario. This level of interest rate risk is well within the company's
policy guidelines. A very important factor in determining this interest rate
risk position is the extent to which pricing on administered rate deposit
products, including interest checking, savings and money market accounts,
would be affected under varying interest rate scenarios. At AmSouth, pricing
for these products is assumed to be more variable in rising rate scenarios
than in declining rate scenarios. While these assumptions are somewhat
subjective, management reviews the anticipated pricing for these products on a
regular basis and alters these assumptions whenever trends or market
conditions dictate.
9
<PAGE>
AmSouth, from time to time, utilizes various off-balance sheet instruments
such as interest rate swaps, caps and floors to assist in managing interest
rate risk. During the first quarter of 1997, AmSouth entered into additional
interest rate swaps in the notional amount of $200.0 million. See Table 3.
These swaps are being used to hedge designated investment securities. At March
31, 1997, AmSouth also held other off-balance sheet instruments to provide
customers and AmSouth a means of managing the risks of changing interest and
foreign exchange rates. These other off-balance sheet instruments were
immaterial. At March 31, 1997, no off-balance sheet instruments were held for
trading purposes.
CREDIT QUALITY
AmSouth maintains an allowance for loan losses which it believes is adequate
to absorb losses inherent in the loan portfolio. A formal review is prepared
quarterly to assess the risk in the portfolio and to determine the adequacy of
the allowance for loan losses. The review includes analyses of historical
performance, the level of nonperforming and adversely rated loans, specific
analyses of certain problem loans, loan activity since the previous quarter,
reports prepared by the Loan Review Department, consideration of current
economic conditions, and other pertinent information. The level of allowance
to net loans outstanding will vary depending on the overall results of this
quarterly review. The review is presented to and subsequently approved by
senior management and the Audit and Community Responsibility Committee of the
Board of Directors.
Table 6 presents a five quarter analysis of the allowance for loan losses.
At March 31, 1997, the allowance for loan losses was $179.0 million, or 1.49%
of loans net of unearned income, compared to $177.9 million, or 1.55%, for the
prior year. The coverage ratio of the allowance for loan losses to
nonperforming loans increased from 195.70% at March 31, 1996 to 225.31% for
the same period in 1997 as the level of nonperforming loans decreased $11.5
million.
For the three months ended March 31, 1997, net charge-offs were $17.7
million, an increase of $2.1 million compared to the same period of 1996.
Increases occurred in both the consumer, primarily revolving credit, and
commercial loan portfolios. Consumer net charge-offs rose to 1.11% of average
consumer loans at March 31, 1997 compared to .97% for the prior year.
Declining trends in credit quality in the consumer sector of the economy
contributed to the increase in net charge-offs. Commercial net charge-offs
increased to .06% of average commercial loans as net charge-offs for the first
quarter of 1996 included a higher than normal level of recoveries. Total
annualized net charge-offs to average loans net of unearned income for the
three months ended March 31, 1997 was .60% compared to .54% for the same
period of the prior year. The provision for loan losses for the three months
ended March 31, 1997 was $17.7 million and equaled net charge-offs. Net
charge-offs of impaired loans for the three months ended March 31, 1997
totaled $322 thousand.
Table 7 presents a five quarter comparison of the components of
nonperforming assets. As a percentage of loans net of unearned income,
foreclosed properties and repossessions, nonperforming assets improved from
.95% at March 31, 1996 to .78% at March 31, 1997. The level of nonperforming
assets decreased $14.7 million during the same period.
Included in nonperforming assets at March 31, 1997 and 1996 was $43.1
million and $53.2 million, respectively, in loans that were considered to be
impaired, substantially all of which were on a nonaccrual basis. Collateral
dependent loans, which were measured at the fair value of the collateral,
constituted approximately all of these impaired loans. There was $9.5 million
in the allowance for loan losses specifically allocated to these impaired
loans. The average balance of impaired loans for the three months ended March
31, 1997 and 1996 was $41.7 million and $55.2 million, respectively. AmSouth
recorded no material interest income on its impaired loans during the three
months ended March 31, 1997.
NONINTEREST REVENUES AND NONINTEREST EXPENSES
Noninterest revenues totaled $63.7 million at March 31, 1997 compared to
$55.0 million for the same period of the prior year. Compared to the prior
year, service charges on deposit accounts increased $1.2 million due to
10
<PAGE>
increased account activity and decreased fee waivers. Trust income increased
$1.3 million primarily from new employee benefit plan administration and
personal trust accounts. Investment services income increased $1.9 million as
a result of a higher sales volume of annuity products. The expansion of
AmSouth's ATM network was the primary reason for a 58.5% increase in
interchange income. Included in other operating revenues in 1997 is income of
$2.2 million generated from bank owned life insurance policies.
Noninterest expenses increased 4.7% to $128.6 million at March 31, 1997
compared to $122.8 million for the same period of the prior year. Salaries and
employee benefits increased $3.9 million primarily due to merit increases and
increases in staffing in income producing areas. Net occupancy expense
increased $524 thousand primarily due to a lease in a new office complex.
Equipment expense increased $761 thousand primarily reflecting the costs of
investments in technology for the consumer and commercial lines of business.
Telephone expense increased $1.3 million as the network was established for
the consumer and commercial technology projects. FDIC premiums decreased $2.0
million as a result of the Federal Deposit Insurance Corporation reducing the
premium rate on deposits insured by the Savings Association Insurance Fund
from $.23 to $.06 per $100 of deposits beginning January 1997.
CAPITAL ADEQUACY
At March 31, 1997, shareholders' equity totaled $1.4 billion or 7.64% of
total assets. Since December 31, 1996, shareholders' equity has decreased
$19.5 million as the increase from net income of $54.6 million was offset by
dividends of $23.6 million and the purchase of 1,200,000 shares of AmSouth
common stock for $42.5 million. Shareholders' equity was further reduced by a
$15.5 million decrease in the unrealized gains on available-for-sale
securities, net of deferred taxes.
Table 10 presents the capital amounts and risk-adjusted capital ratios for
AmSouth and its significant banking subsidiaries at March 31, 1997 and 1996.
At March 31, 1997, AmSouth exceeded the regulatory minimum required risk-
adjusted Tier 1 Capital Ratio of 4.00% and risk-adjusted Total Capital Ratio
of 8.00%. In addition, the risk-adjusted capital ratios for AmSouth's banking
subsidiaries were above the regulatory minimums and each subsidiary was well-
capitalized at March 31, 1997.
INTERSTATE BANKING
AmSouth currently owns five subsidiary banks (the Subsidiary Banks) located
in the states of Alabama, Florida, Georgia and Tennessee. AmSouth has received
regulatory approval for the merger into AmSouth Bank of Alabama of each of the
other Subsidiary Banks. The resulting bank would continue to be a state member
bank with its headquarters in Birmingham, Alabama and would operate under the
name "AmSouth Bank". AmSouth currently plans to effect the mergers on or about
July 1, 1997.
11
<PAGE>
TABLE 1--FINANCIAL SUMMARY
<TABLE>
<CAPTION>
MARCH 31
------------------------------ %
1997 1996 CHANGE
-------------- -------------- -------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
BALANCE SHEET SUMMARY
End-of-period balances:
Loans net of unearned income....... $12,024,877 $11,476,197 4.8%
Total investment securities........ 4,576,077* 5,082,755* (10.0)
Total assets....................... 18,014,452 17,914,386 0.6
Total deposits..................... 12,389,568 13,295,064 (6.8)
Shareholders' equity............... 1,376,293 1,369,554 0.5
Year-to-date average balances:
Loans net of unearned income....... $11,924,065 $11,673,313 2.1%
Total investment securities........ 4,663,404* 4,713,189* (1.1)
Total assets....................... 17,972,254 17,683,545 1.6
Total deposits..................... 12,349,726 13,226,866 (6.6)
Shareholders' equity............... 1,388,819 1,376,686 0.9
<CAPTION>
THREE MONTHS
ENDED MARCH 31
------------------------------ %
1997 1996 CHANGE
-------------- -------------- -------------
<S> <C> <C> <C>
EARNINGS SUMMARY
Net income......................... $54,573 $47,163 15.7%
Per common share **................ 0.65 0.55 18.2
SELECTED RATIOS
Return on average assets
(annualized)...................... 1.23% 1.07%
Return on average equity
(annualized)...................... 15.94 13.78
Average equity to assets........... 7.73 7.79
End of period equity to assets..... 7.64 7.64
End of period tangible equity to
assets............................ 6.27 6.17
Allowance for loan losses to loans
net of unearned income............ 1.49 1.55
Efficiency ratio................... 55.24 57.03
COMMON STOCK DATA **
Cash dividends declared............ $ 0.28 $ 0.27
Book value at end of period........ 16.55 16.17
Market value at end of period...... 32.17 25.92
Average common shares outstanding.. 83,789 85,532
</TABLE>
- --------
* Excludes adjustment for market valuation on available-for-sale securities.
** Restated for three-for-two common stock split in April 1997.
12
<PAGE>
TABLE 2--QUARTERLY YIELDS EARNED ON AVERAGE EARNING ASSETS AND RATES PAID ON
AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
1997 1996
---------------------------- ----------------------------------------------------------
FIRST QUARTER FOURTH QUARTER THIRD QUARTER
---------------------------- ---------------------------- ----------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- -------- ------ ----------- -------- ------ ----------- -------- ------
(TAXABLE EQUIVALENT BASIS--DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of
unearned income... $11,924,065 $254,640 8.66% $11,802,480 $254,051 8.56% $11,726,594 $252,951 8.58%
Available-for-
sale securities... 2,060,299 37,456 7.37 2,324,417 42,081 7.20 2,468,474 43,008 6.93
Held-to-maturity
securities:
Taxable.......... 2,434,686 41,098 6.85 2,502,510 42,208 6.71 2,566,379 43,162 6.69
Tax-free......... 168,419 4,679 11.27 183,722 5,590 12.10 191,680 5,106 10.60
----------- -------- ----------- -------- ----------- --------
Total held-to-
maturity
securities 2,603,105 45,777 7.13 2,686,232 47,798 7.08 2,758,059 48,268 6.96
----------- -------- ----------- -------- ----------- --------
Total investment
securities...... 4,663,404 83,233 7.24 5,010,649 89,879 7.14 5,226,533 91,276 6.95
Other earning
assets............ 69,198 809 4.74 60,354 742 4.89 102,270 1,578 6.14
----------- -------- ----- ----------- -------- ----- ----------- -------- -----
Total earning
assets........... 16,656,667 338,682 8.25 16,873,483 344,672 8.13 17,055,397 345,805 8.07
-------- ----- -------- ----- -------- -----
Cash and other
assets............ 1,464,118 1,321,914 1,332,692
Allowance for loan
losses............ (180,643) (178,725) (178,764)
Market valuation
on available-for-
sale securities... 32,112 33,873 13,767
----------- ----------- -----------
$17,972,254 $18,050,545 $18,223,092
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing
demand deposits... $ 3,526,430 27,050 3.11 $ 3,552,445 27,480 3.08 $ 3,587,581 28,305 3.14
Savings deposits.. 1,073,866 7,603 2.87 1,059,981 7,557 2.84 1,044,721 7,294 2.78
Time deposits..... 5,171,390 69,585 5.46 5,292,106 72,724 5.47 5,586,176 79,029 5.63
Certificates of
deposit of
$100,000 or more.. 806,641 11,209 5.64 777,307 11,066 5.66 853,058 12,296 5.73
Federal funds
purchased and
securities sold
under agreements
to repurchase..... 1,515,388 19,290 5.16 1,771,740 23,146 5.20 1,870,288 24,365 5.18
Other interest-
bearing
liabilities....... 2,499,857 34,764 5.64 2,170,005 31,138 5.71 1,894,780 27,251 5.72
----------- -------- ----- ----------- -------- ----- ----------- -------- -----
Total interest-
bearing
liabilities...... 14,593,572 169,501 4.71 14,623,584 173,111 4.71 14,836,604 178,540 4.79
-------- ----- -------- ----- -------- -----
INCREMENTAL
INTEREST SPREAD. 3.54% 3.42% 3.28%
===== ===== =====
Noninterest-
bearing demand
deposits.......... 1,771,399 1,804,129 1,781,474
Other liabilities. 218,464 234,204 216,683
Shareholders'
equity............ 1,388,819 1,388,628 1,388,331
----------- ----------- -----------
$17,972,254 $18,050,545 $18,223,092
=========== =========== ===========
NET INTEREST
INCOME/MARGIN ON
A TAXABLE
EQUIVALENT
BASIS........... 169,181 4.12% 171,561 4.04% 167,265 3.90%
===== ===== =====
Taxable equivalent
adjustment:
Loans............. 468 474 528
Securities........ 1,546 1,621 1,682
-------- -------- --------
Total taxable
equivalent
adjustment....... 2,014 2,095 2,210
-------- -------- --------
Net interest
income.......... $167,167 $169,466 $165,055
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1996
------------------------------------------------------------
SECOND QUARTER FIRST QUARTER
---------------------------- ----------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- -------- ------ ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of
unearned income... $11,575,473 $248,225 8.62% $11,673,313 $251,430 8.66%
Available-for-
sale securities... 2,419,311 40,912 6.80 2,354,687 38,472 6.57
Held-to-maturity
securities:
Taxable.......... 2,477,564 41,531 6.74 2,142,855 36,259 6.81
Tax-free......... 201,702 5,594 11.15 215,647 5,912 11.03
----------- -------- ----------- --------
Total held-to-
maturity
securities 2,679,266 47,125 7.07 2,358,502 42,171 7.19
----------- -------- ----------- --------
Total investment
securities...... 5,098,577 88,037 6.94 4,713,189 80,643 6.88
Other earning
assets............ 156,952 2,446 6.27 110,407 1,843 6.71
----------- -------- ----- ----------- -------- -----
Total earning
assets........... 16,831,002 338,708 8.09 16,496,909 333,916 8.14
-------- ----- -------- -----
Cash and other
assets............ 1,324,032 1,333,274
Allowance for loan
losses............ (178,475) (178,402)
Market valuation
on available-for-
sale securities... 21,508 31,764
----------- -----------
$17,998,067 $17,683,545
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing
demand deposits... $ 3,700,373 29,051 3.16 $ 3,846,397 30,356 3.17
Savings deposits.. 1,025,627 6,899 2.71 1,014,277 6,682 2.65
Time deposits..... 5,771,320 83,283 5.80 5,721,948 83,372 5.86
Certificates of
deposit of
$100,000 or more.. 880,157 12,602 5.76 928,322 13,348 5.78
Federal funds
purchased and
securities sold
under agreements
to repurchase..... 1,767,378 22,473 5.11 1,674,720 21,805 5.24
Other interest-
bearing
liabilities....... 1,492,290 21,822 5.88 1,193,692 18,096 6.10
----------- -------- ----- ----------- -------- -----
Total interest-
bearing
liabilities...... 14,637,145 176,130 4.84 14,379,356 173,659 4.86
-------- ----- -------- -----
INCREMENTAL
INTEREST SPREAD. 3.25% 3.28%
===== =====
Noninterest-
bearing demand
deposits.......... 1,767,696 1,715,922
Other liabilities. 219,469 211,581
Shareholders'
equity............ 1,373,757 1,376,686
----------- -----------
$17,998,067 $17,683,545
=========== ===========
NET INTEREST
INCOME/MARGIN ON
A TAXABLE
EQUIVALENT
BASIS........... 162,578 3.89% 160,257 3.91%
===== =====
Taxable equivalent
adjustment:
Loans............. 574 602
Securities........ 1,849 1,950
-------- --------
Total taxable
equivalent
adjustment....... 2,423 2,552
-------- --------
Net interest
income.......... $160,155 $157,705
======== ========
</TABLE>
- ----
NOTE: The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate.
13
<PAGE>
TABLE 3--INTEREST RATE SWAPS, CAPS AND FLOORS
<TABLE>
<CAPTION>
RECEIVE
FIXED RATE CAPS
SWAPS & FLOORS TOTAL
---------- -------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Balance at January 1, 1997.......................... $370 $1,077 $1,447
Additions......................................... 200 -0- 200
Maturities........................................ -0- -0- -0-
Calls............................................. -0- -0- -0-
Terminations...................................... -0- -0- -0-
---- ------ ------
Balance at March 31, 1997........................... $570 $1,077 $1,647
==== ====== ======
</TABLE>
TABLE 4--MATURITIES ON CAPS AND INTEREST RATES EXCHANGED ON SWAPS
<TABLE>
<CAPTION>
MATURE DURING
--------------------------
1997 1998 1999 2000 TOTAL
---- ----- ----- ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
RECEIVE FIXED RATE SWAPS:
Notional amount........................... $215 $ 275 $ 80 $ -0- $ 570
Receive rate.............................. 6.46% 6.73% 6.82% 0.00% 6.64%
Pay rate.................................. 5.53% 5.54% 5.58% 0.00% 5.54%
CAPS:
Notional amount........................... $ 77 $ -0- $ -0- $1,000 $1,077
</TABLE>
- --------
NOTE: The maturities and interest rates exchanged are calculated assuming that
interest rates remain unchanged from average March 1997 rates. The
information presented could change as future interest rates increase or
decrease.
TABLE 5--LOANS AND CREDIT QUALITY
<TABLE>
<CAPTION>
NET CHARGE-OFFS
LOANS* NONPERFORMING LOANS** THREE MONTHS ENDED
MARCH 31 MARCH 31 MARCH 31
----------------------- --------------------- -------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial.............. $ 3,582,878 $ 3,049,679 $ 15,561 $ 17,096 $ 322 $ (553)
----------- ----------- ---------- ---------- --------- ---------
Commercial real estate:
Commercial real estate
mortgages............. 1,683,402 1,565,544 23,854 35,377 492 573
Real estate construc-
tion:................. 622,490 586,903 1,665 1,950 2 (246)
----------- ----------- ---------- ---------- --------- ---------
Total commercial real
estate............... 2,305,892 2,152,447 25,519 37,327 494 327
----------- ----------- ---------- ---------- --------- ---------
Consumer:
Residential first mort-
gages................. 2,961,672 3,416,763 26,380 31,141 381 784
Other residential mort-
gages................. 929,753 700,934 5,106 980 398 24
Dealer indirect........ 1,205,451 1,055,321 5,148 3,384 3,753 5,565
Revolving credit....... 498,776 471,741 -0- -0- 8,554 6,388
Other consumer......... 540,455 629,312 1,755 991 3,815 3,106
----------- ----------- ---------- ---------- --------- ---------
Total consumer....... 6,136,107 6,274,071 38,389 36,496 16,901 15,867
----------- ----------- ---------- ---------- --------- ---------
$12,024,877 $11,476,197 $ 79,469 $ 90,919 $ 17,717 $ 15,641
=========== =========== ========== ========== ========= =========
</TABLE>
- --------
* Net of unearned income.
** Exclusive of accruing loans 90 days past due.
14
<PAGE>
TABLE 6--ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1997 1996
----------- -----------------------------------------------
1ST QUARTER 4TH QUARTER 3RD QUARTER 2ND QUARTER 1ST QUARTER
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $179,049 $179,350 $178,724 $177,930 $178,451
Loans charged off....... (22,632) (23,009) (21,202) (18,442) (20,626)
Recoveries of loans pre-
viously charged off.... 4,915 4,211 4,323 5,187 4,985
-------- -------- -------- -------- --------
Net charge-offs......... (17,717) (18,798) (16,879) (13,255) (15,641)
Addition to allowance
charged to expense..... 17,717 18,497 17,505 14,049 15,120
-------- -------- -------- -------- --------
Balance at end of peri-
od..................... $179,049 $179,049 $179,350 $178,724 $177,930
======== ======== ======== ======== ========
Allowance for loan
losses to loans net of
unearned income........ 1.49% 1.48% 1.52% 1.55% 1.55%
Allowance for loan
losses to nonperforming
loans.................. 225.31% 229.41% 221.40% 213.83% 195.70%
Allowance for loan
losses to nonperforming
assets................. 189.69% 189.84% 183.67% 182.29% 163.06%
Net charge-offs to aver-
age loans net of un-
earned income
(annualized)........... 0.60% 0.63% 0.57% 0.46% 0.54%
</TABLE>
TABLE 7--NONPERFORMING ASSETS
<TABLE>
<CAPTION>
1997 1996
-------- -------------------------------------------
MARCH 31 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
-------- ----------- ------------ -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans........ $ 79,469 $ 78,048 $ 81,007 $ 83,583 $ 90,919
Foreclosed properties... 12,890 14,445 13,874 12,845 14,764
Repossessions........... 2,030 1,822 2,769 1,614 3,439
-------- -------- -------- -------- --------
Total nonperforming as-
sets*................. $ 94,389 $ 94,315 $ 97,650 $ 98,042 $109,122
======== ======== ======== ======== ========
Nonperforming assets* to
loans net of unearned
income, foreclosed
properties and
repossessions.......... 0.78% 0.78% 0.82% 0.85% 0.95%
Accruing loans 90 days
past due............... $ 32,535 $ 36,382 $ 39,535 $ 39,944 $ 40,110
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due.
15
<PAGE>
TABLE 8--INVESTMENT SECURITIES
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
--------------------- ---------------------
CARRYING MARKET CARRYING MARKET
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY:
U.S. Treasury and federal agency
securities...................... $2,159,255 $2,131,235 $2,109,300 $2,093,261
State, county and municipal secu-
rities.......................... 162,941 168,413 208,929 219,273
Other securities................. 245,051 242,155 256,682 253,336
---------- ---------- ---------- ----------
$2,567,247 $2,541,803 $2,574,911 $2,565,870
========== ========== ========== ==========
AVAILABLE-FOR-SALE:
U.S. Treasury and federal agency
securities...................... $1,831,993 $2,299,853
Other securities................. 190,403 234,938
---------- ----------
$2,022,396 $2,534,791
========== ==========
</TABLE>
- --------
NOTES:
1. The weighted average remaining life, which reflects the amortization on
mortgage related and other asset- backed securities, and the weighted
average yield on the combined held-to-maturity and available-for-sale
portfolios at March 31, 1997 were approximately 4.1 years and 7.06%,
respectively. Included in the balance was $3.5 billion of mortgage-backed
securities, $851 million of which were variable rate. The weighted average
remaining life and the weighted average yield of mortgage-backed securities
at March 31, 1997 were approximately 4.4 years and 7.04%, respectively. The
duration of the combined portfolios, which considers the repricing
frequency of variable rate securities, is approximately 2.4 years.
2. The available-for-sale portfolio included net unrealized gains of $13.6
million and $26.9 million at March 31, 1997 and 1996, respectively.
TABLE 9 - OTHER INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
MARCH 31
-------------------
1997 1996
---------- --------
(IN THOUSANDS)
<S> <C> <C>
OTHER BORROWED FUNDS:
Treasury, tax and loan notes............................. $ 849,730 $283,690
Short-term Federal Home Loan Bank advances............... 185,000 183,000
Short-term bank notes.................................... 200,000 -0-
Other short-term debt.................................... 109,508 16,631
---------- --------
Total other borrowed funds............................. $1,344,238 $483,321
========== ========
OTHER LONG-TERM DEBT:
6 3/4% Subordinated Debentures Due 2025.................. $ 149,849 $149,832
7 3/4% Subordinated Notes Due 2004....................... 149,343 149,252
Subordinated Capital Notes Due 1999...................... 99,731 99,602
Long-term notes payable.................................. 12,987 27,615
---------- --------
Total other long-term debt............................. $ 411,910 $426,301
========== ========
</TABLE>
16
<PAGE>
TABLE 10--CAPITAL AMOUNTS AND RATIOS
<TABLE>
<CAPTION>
MARCH 31
----------------------------------
1997 1996
---------------- ----------------
AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
TIER 1 CAPITAL:
AmSouth................................... $1,103,443 7.82% $1,071,654 7.98%
AmSouth Bank of Alabama................... 845,507 9.64 795,953 9.45
AmSouth Bank of Florida................... 425,978 9.91 414,195 9.93
AmSouth Bank of Tennessee................. 103,191 12.68 100,265 14.26
TOTAL CAPITAL:
AmSouth................................... $1,619,015 11.47% $1,598,413 11.91%
AmSouth Bank of Alabama................... 937,007 10.68 884,371 10.50
AmSouth Bank of Florida................... 479,954 11.16 466,570 11.19
AmSouth Bank of Tennessee................. 113,386 13.94 109,094 15.51
LEVERAGE:
AmSouth................................... $1,103,443 6.23% $1,071,654 6.16%
AmSouth Bank of Alabama................... 845,507 8.52 795,953 8.27
AmSouth Bank of Florida................... 425,978 6.27 414,195 6.05
AmSouth Bank of Tennessee................. 103,191 9.26 100,265 9.29
</TABLE>
17
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Several of AmSouth's subsidiaries are defendants in legal proceedings
arising in the ordinary course of business. Some of these proceedings seek
relief or damages that are substantial. The actions relate to AmSouth's
lending, collections, servicing, investment, trust and other activities.
Among the actions which are pending against AmSouth subsidiaries are actions
filed as class actions in the State of Alabama. The actions are similar to
others that have been brought in recent years in Alabama against financial
institutions in that they seek punitive damage awards in transactions
involving relatively small amounts of actual damages. In recent years, juries
in Alabama state courts have made large punitive damage awards in such cases.
Legislation which would limit these lawsuits has been proposed from time to
time in the Alabama legislature but has not been enacted into law. AmSouth
cannot predict whether any such legislation will be enacted.
It may take a number of years to finally resolve some of these legal
proceedings pending against AmSouth subsidiaries, due to their complexity and
for other reasons. It is not possible to determine with any certainty at this
time the corporation's potential exposure from the proceedings. However, based
upon the advice of legal counsel, AmSouth's management is of the opinion that
the ultimate resolution of these legal proceedings will not have a material
adverse effect on AmSouth's financial condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
ITEM 6(A)--EXHIBITS
The exhibits listed in the Exhibit Index at page 20 of this Form 10-Q are
filed herewith or are incorporated by reference herein.
ITEM 6(B)--REPORTS ON FORM 8-K
One report on Form 8-K was filed by AmSouth during the period January 1,
1997 to March 31, 1997. The report was filed on March 28, 1997 and reported
that AmSouth's Board of Directors had approved (1) a three-for-two stock split
with respect to the company's common stock and (2) the repurchase of up to
4,000,000 shares of the company's common stock (6,000,000 shares on a post-
split basis).
18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AMSOUTH
HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED.
May 12, 1997 /s/ C. Dowd Ritter
By: _________________________________
C. DOWD RITTER
Chairman of the Board, President
and Chief Executive Officer
May 12, 1997 /s/ Robert R. Windelspecht
By: _________________________________
ROBERT R. WINDELSPECHT
Executive Vice President
Controller
19
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference.
<TABLE>
<C> <S>
3-a Restated Certificate of Incorporation of AmSouth Bancorporation (1)
3-b By-Laws of AmSouth Bancorporation (2)
11 Statement Re: Computation of Earnings per Share
15 Letter Re: Unaudited Interim Financial Information
21 List of Subsidiaries of AmSouth Bancorporation
27 Financial Data Schedule
</TABLE>
NOTES TO EXHIBITS
(1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference.
(2) Filed as Exhibit 3-b to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1996, incorporated herein by reference.
20
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------
1997 1996
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net income ............................................ $54,573 $ 47,163
========== ==========
Average shares of common stock outstanding*............ 83,789 85,532
========== ==========
Earnings per common share* ............................ $ 0.65 $ 0.55
========== ==========
</TABLE>
- --------
* Restated for three-for-two common stock split.
<PAGE>
EXHIBIT 15
Exhibit 15--Letter Re: Unaudited Interim Financial Information
Board of Directors
AmSouth Bancorporation
We are aware of the incorporation by reference in the following Registration
Statements and in their related Prospectuses, of our report dated May 9, 1997
relating to the unaudited consolidated financial statements of AmSouth
Bancorporation and subsidiaries which are included in its Form 10-Q for the
quarter ended March 31, 1997:
Form S-3 No. 33-55683 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-52243 pertaining to the assumption by AmSouth
Bancorporation of FloridaBank Stock Option Plan and FloridaBank Stock
Option Plan-1993;
Form S-8 No. 33-52113 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-8 No. 33-35218 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-8 No. 33-37905 pertaining to the AmSouth Bancorporation Thrift Plan;
Form S-8 No. 33-9368 pertaining to the Long Term Incentive Compensation
Plan;
Form S-8 No. 33-2927 (as amended) pertaining to the Employee Stock Purchase
Plan;
Form S-8 No. 2-97464 pertaining to the Long Term Incentive Compensation
Plan;
Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-19016 pertaining to the Long Term Incentive Compensation
Plan;
Form S-8 No. 33-58777 pertaining to the Director Restricted Stock Plan;
Form S-8 No. 333-02099 pertaining to the AmSouth Bancorporation Thrift
Plan;
Form S-3 No. 333-06641 pertaining to the AmSouth Bancorporation 7 1/2%
Convertible Subordinated Debentures; and
Form S-8 No. 333-05631 pertaining to the 1996 Long Term Incentive
Compensation Plan.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Sections 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG LLP
May 9, 1997
<PAGE>
EXHIBIT 21
AMSOUTH BANCORPORATION
LIST OF SUBSIDIARIES
The following is a list of all subsidiaries of AmSouth Bancorporation and the
jurisdiction in which they were organized. Each subsidiary does business under
its own name.
<TABLE>
<CAPTION>
NAME JURISDICTION WHERE ORGANIZED
---- ------------------------------
<S> <C>
AmSouth Bank of Alabama................... Alabama
AmSouth Leasing Corporation.............. Alabama
AmSouth Investment Services, Inc......... Alabama
AmSouth Riverchase, Inc.................. Alabama
Fifth Avenue Realty Company.............. (unincorporated joint venture)
First Gulf Insurance Agency, Inc......... Alabama
Five Points Capital Advisors, Inc........ Alabama
National Properties and Mining Company,
Inc..................................... Delaware
Rockhaven Asset Management, LLC.......... Delaware
Alabanc Properties, Inc................... Delaware
AmSouth Bank of Florida................... Florida
AmSouth Insurance Agency, Inc............ Florida
AmSouth Real Estate Holdings, Inc........ Alabama
AmSouth Real Estate Management, Inc..... Alabama
AmSouth Retirement Services, Inc......... Florida
Fortune Mortgage Corporation............. Florida
Service Mortgage and Insurance Agency,
Inc..................................... Florida
AmSouth Bank of Georgia................... Georgia
AmSouth Bank of Tennessee................. Tennessee
FMLS, Inc................................ Tennessee
AmSouth Bank of Walker County............. Alabama
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF CONDITION, THE CONSOLIDATED STATEMENT OF EARNINGS, AND
TABLES 2, 6 AND 7 OF ITEM 2 OF THE AMSOUTH BANCORPORATION FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 585,108
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,275
<TRADING-ASSETS> 5,346
<INVESTMENTS-HELD-FOR-SALE> 2,022,396
<INVESTMENTS-CARRYING> 2,567,247
<INVESTMENTS-MARKET> 2,541,803
<LOANS> 12,107,303
<ALLOWANCE> 179,049
<TOTAL-ASSETS> 18,014,452
<DEPOSITS> 12,389,568
<SHORT-TERM> 2,509,902
<LIABILITIES-OTHER> 253,343
<LONG-TERM> 1,485,346
0
0
<COMMON> 90,033
<OTHER-SE> 1,286,260
<TOTAL-LIABILITIES-AND-EQUITY> 18,014,452
<INTEREST-LOAN> 254,172
<INTEREST-INVEST> 81,687
<INTEREST-OTHER> 809
<INTEREST-TOTAL> 336,668
<INTEREST-DEPOSIT> 115,447
<INTEREST-EXPENSE> 169,501
<INTEREST-INCOME-NET> 167,167
<LOAN-LOSSES> 17,717
<SECURITIES-GAINS> 2,406
<EXPENSE-OTHER> 128,624
<INCOME-PRETAX> 84,508
<INCOME-PRE-EXTRAORDINARY> 84,508
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,573
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
<YIELD-ACTUAL> 4.12
<LOANS-NON> 79,469
<LOANS-PAST> 32,535
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 179,049
<CHARGE-OFFS> 22,632
<RECOVERIES> 4,915
<ALLOWANCE-CLOSE> 179,049
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
