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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER 1-7476
AMSOUTH BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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63-0591257
DELAWARE (I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION
OF 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)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C>
Common Stock, par value $1.00 per share New York Stock Exchange
Floating Rate Notes Due 1999 New York Stock Exchange
Stock Purchase Rights New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 28, 1997 was $2,792,291,000. (Note 1)
As of February 28, 1997 AmSouth Bancorporation had 55,798,282 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, 1996:
Part I, Part II
Proxy Statement for Annual Meeting to be held April 17, 1997: 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
February 28, 1997 by its directors and principal executive officers and voting
stock held by AmSouth's employee benefit plans; AmSouth has not treated
securities held by any of AmSouth's subsidiaries as pledgee or in a fiduciary
capacity as securities held by affiliates of AmSouth. AmSouth's response to
this item is not intended to be an admission that any person is an affiliate
of AmSouth for any purpose other than this response.
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AMSOUTH BANCORPORATION
FORM 10-K
INDEX
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PAGE
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PART I
Item 1. Business...................................................... 1
Item 2. Properties.................................................... 7
Item 3. Legal Proceedings............................................. 8
Item 4. Submission of Matters to a Vote of Security Holders........... 8
Executive Officers of the Registrant.................................... 8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters...................................................... 10
Item 6. Selected Financial Data....................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 12
Item 8. Financial Statements and Supplementary Data................... 12
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 12
PART III
Item 10. Directors and Executive Officers of the Registrant............ 12
Item 11. Executive Compensation........................................ 12
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 12
Item 13. Certain Relationships and Related Transactions................ 12
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.......................................................... 13
SIGNATURES.............................................................. 14
EXHIBIT INDEX........................................................... 16
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PART I
ITEM 1. BUSINESS
GENERAL
AmSouth Bancorporation (AmSouth) is a bank holding company which was
organized in 1970 as a corporation under the laws of Delaware and commenced
doing business in 1972. At December 31, 1996, AmSouth had total consolidated
assets of approximately $18.4 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, 1996,
AmSouth Alabama had total consolidated assets of approximately $10.4 billion
and total consolidated deposits of approximately $6.8 billion. AmSouth Alabama
is a full service bank with 123 banking offices located throughout Alabama at
December 31, 1996. Based upon total consolidated assets as of December 31,
1996, 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 and Business 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. One such subsidiary, AmSouth Leasing
Corporation, is a specialized lender providing equipment leasing. Brokerage
services and investment sales are provided by another subsidiary, AmSouth
Investment Services, Inc., a registered broker-dealer.
AmSouth Bank of Florida (AmSouth Florida) is headquartered in Tampa,
Florida. At December 31, 1996, AmSouth Florida had total consolidated assets
of approximately $7.0 billion and total consolidated deposits of approximately
$4.6 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, 1996, AmSouth Florida operated 117 banking offices in
Florida.
AmSouth Bank of Tennessee (AmSouth Tennessee) is headquartered in
Chattanooga, Tennessee. At December 31, 1996, AmSouth Tennessee had total
assets of approximately $1.1 billion and total deposits of approximately $755
million and was the eighth largest bank headquartered in Tennessee. AmSouth
Tennessee offers banking services similar to those of AmSouth Alabama. At
December 31, 1996, AmSouth Tennessee operated 23 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 28, 1997, AmSouth and its subsidiaries had 6,461 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 competition include prices,
interest rates, services and availability of products. AmSouth also competes
with the
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other bank holding companies headquartered in Alabama, Florida, Tennessee,
Georgia and other southeastern states for the acquisition of financial
institutions.
At December 31, 1996, of the bank holding companies headquartered in
Alabama, AmSouth was the third 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 have been 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 full effect of the IBBEA on AmSouth,
it is probable that the IBBEA will result in greater consolidation within the
banking industry.
AmSouth's subsidiary banks (the Subsidiary Banks) have filed applications
with the relevant regulatory authorities for the merger into AmSouth Bank
Alabama of all of the other Subsidiary Banks. The resulting bank would
continue to be a state member bank headquartered in Birmingham, Alabama, and
would operate under the name "AmSouth Bank". There can be no assurance that
all necessary regulatory approvals will be received or as to the timing of any
action with respect to the proposed mergers.
BUSINESS COMBINATIONS
AmSouth continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with them. As a
result, business combination discussions and, in some cases, negotiations
frequently take place, and transactions involving cash, debt or equity
securities can 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.
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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 Board of Governors of the Federal Reserve System (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.
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 and
supervision by both 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 nonbank 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. See "Capital Adequacy and Related Matters" below.
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 State Banking Department of Alabama for
the payment of 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.
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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, AmSouth Florida 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. AmSouth Florida may then declare a quarterly,
semiannual or annual dividend equal to the net profits for the period covered
by the dividend plus its retained net profits for the preceding two years.
AmSouth Florida 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. AmSouth Florida may not declare any
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 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 could exceed the total of (a) the bank's net profits (as
defined and interpreted by regulation) for that year, plus (b) the bank's
retained net profits (as defined and interpreted by regulation) for the
preceding two years, less any required transfers to surplus or a fund for the
retirement of preferred stock, if any is outstanding. Each Subsidiary Bank
also can pay dividends only to the extent that its 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. In addition, 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, 1996, 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 $188.4 million.
CAPITAL ADEQUACY AND RELATED MATTERS
Capital Guidelines
The Federal Reserve Board has adopted risk-based capital guidelines for bank
holding companies. The minimum guideline for the ratio of total regulatory
capital (Total Capital) to risk-weighted assets (including 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,
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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,
1996, AmSouth's consolidated Tier 1 Capital and Total Capital ratios were 7.87
percent and 11.54 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, 1996 was
6.20 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, 1996. 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.
Bank regulators have the authority generally to raise capital requirements
applicable to banking organizations beyond their current levels, and several
proposals are under consideration that would increase capital to address
particular issues. 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, a state member bank 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. A state member bank 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, a state member bank 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. A state member bank
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, 1996, 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, like AmSouth, 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 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, 1996.
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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. Because all the Subsidiary Banks were
well capitalized as of December 31, 1996, AmSouth believes the brokered
deposits regulation will have no material effect on the funding or liquidity
of any of the Subsidiary Banks.
HOLDING COMPANY STRUCTURE
There are various legal restrictions on the extent to which AmSouth and its
nonbank subsidiaries 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
single 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) from the affiliate, the acceptance of
securities issued by the affiliate as collateral for a loan and the issuance
of a guarantee, acceptance, or letter of credit on behalf of an affiliate.
Under Federal Reserve Board policy, AmSouth is expected to act as a source
of financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, AmSouth may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
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
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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.
FDIC DEPOSIT INSURANCE ASSESSMENTS
The Subsidiary Banks are subject to FDIC deposit insurance assessments
pursuant to two separate assessment schedules, one applicable to those
deposits insured by the Bank Insurance Fund (BIF) and another applicable to
those deposits insured by the Savings Association Insurance Fund (SAIF). The
FDIC reduced the assessments it charges on bank deposits insured by the BIF to
the statutory minimum of $2,000 for most well-capitalized banks, effective
January 1, 1996. Assessments applicable to deposits insured by the SAIF,
including savings association deposits acquired by banks, continued to be
assessed at a rate of between 23 cents and 31 cents per $100 of deposits.
On September 30, 1996, the Deposit Insurance Funds Act of 1996 (DIFA) was
enacted and signed into law. DIFA imposed a one-time special assessment on
deposits insured by the SAIF. The special assessments payable by AmSouth's
Subsidiary Banks pursuant to this provision totaled $24.2 million before
taxes, or $.27 per share after tax, and was accrued during the third quarter
of 1996. Furthermore, because the SAIF met its statutorily mandated designated
reserve ratio after giving effect to this special assessment, the FDIC reduced
the assessment rate for deposits subject to assessment by the SAIF to the
statutory minimum of $2,000 for most well-capitalized banks, effective January
1, 1997.
In addition, DIFA requires that depository institutions pay assessments to
pay for the cost of Financing Corporation or "FICO" bonds. The assessments to
be imposed on insured depository institutions for this purpose through January
1, 2000 are $1.30 per $100 with respect to deposits insured by the BIF and
$6.48 per $100 with respect to deposits insured by the SAIF. AmSouth currently
estimates assessments for this purpose may amount to up to $4.0 million in
1997, with similar assessments each year through 1999. Beginning January 1,
2000, the FICO-related assessment rates for BIF and SAIF deposits will both be
$2.43 per $100.
DEPOSITOR PREFERENCE
Under the FDI Act, an insured depository institution, such as each of the
Subsidiary Banks, can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC 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.
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 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, 1996, AmSouth and its subsidiaries had 285 offices
(principally bank buildings) of which 179 were owned and 106 were either
leased or subject to a ground lease.
7
<PAGE>
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's 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's 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 1996.
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 49 Chairman (September 1996 to date) and President and
Chief Executive Officer (January 1996 to date) of
AmSouth and AmSouth Alabama; 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), and Senior Executive Vice President of AmSouth
and Senior Executive Vice President and General
Banking Group Head of AmSouth Alabama (May 1991 to
July 1993).
Michael C. Baker 49 Senior Executive Vice President and Capital Management
Group Head of AmSouth and AmSouth Alabama (October
1995 to date). Formerly, President and Chief Executive
Officer of Barnett Banks Trust Co., N.A. (1989 to July
1995).
Sloan D. Gibson, IV 43 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), of Bank South N.A.
Kristen M. Hudak 45 Senior Executive Vice President and Chief Financial
Officer of AmSouth and AmSouth Alabama (April 1995 to
date). Formerly, Chief Operating Officer and a
Director of Consolidated Bank, N.A. (1992 to 1995).
</TABLE>
8
<PAGE>
<TABLE>
<C> <C> <S>
W. Charles Mayer, III 42 Senior Executive Vice President and Alabama
Banking Group Head of AmSouth and AmSouth Alabama
(October 1994 to date) 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 47 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) and Senior Vice President and
Director of Marketing, Bank One Texas (February
1991 to July 1994).
E. W. Stephenson, Jr. 50 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).
Alfred W. Swan, Jr. 54 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) and Senior Vice President of AmSouth
Alabama (November 1991 to March 1992).
David B. Edmonds 43 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).
O. B. Grayson Hall, Jr. 39 Executive Vice President (June 1994 to date) and
Operations Division Head (January 1993 to date) of
AmSouth and AmSouth Alabama. Formerly, Senior Vice
President and Manager of Bank Operations of
AmSouth Alabama (December 1988 to January 1993).
Stephen A. Yoder 43 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>
9
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AmSouth's common stock, par value $1.00 per share, is listed for trading on
the New York Stock Exchange under the symbol ASO. The following table sets
forth certain common stock data for the last five years.
<TABLE>
<CAPTION>
COMMON STOCK DATA 1996 1995 1994 1993 1992
- ----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Cash dividends declared............... $ 1.62 $ 1.54 $ 1.43 $ 1.22 $ 1.07
Book value............................ 24.91 24.16 22.57 21.48 18.63
Tangible book value................... 20.13 19.18 16.49 18.35 16.32
Market value at year end.............. 48.38 40.38 25.75 31.25 32.63
Market price range:
High................................ 50.88 41.38 34.88 35.88 32.63
Low................................. 34.38 25.75 25.38 27.38 21.38
Total trading volume (In thousands)... 24,671 33,044 20,965 21,059 12,363
Dividend yield at year end............ 3.47% 3.96% 5.90% 4.48% 3.56%
Dividend payout ratio................. 50.15 51.33 63.56 42.21 42.80
Price earnings ratio.................. 14.98X 13.46X 11.44X 10.81X 13.05X
Shareholders of record at year end.... 13,165 14,037 14,674 12,985 9,343
Average shares outstanding (In
thousands)........................... 56,605 58,262 56,527 50,848 46,684
</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 February 28, 1997, there were approximately 13,000 holders of record
of AmSouth's common stock.
Restrictions on AmSouth's Subsidiary Banks to transfer funds to the holding
company at December 31, 1996 are set forth in Note P of the Notes to
Consolidated Financial Statements, which are incorporated by reference into
Item 8 of this Form 10-K.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five
years.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Revenue from earning
assets................. $ 1,353,821 $ 1,272,939 $ 1,047,741 $ 840,617 $ 772,251
Interest expense........ 701,440 679,396 480,414 339,326 341,706
----------- ----------- ----------- ----------- -----------
Net interest income..... 652,381 593,543 567,327 501,291 430,545
Provision for loan
losses................. 65,171 40,139 30,103 27,966 38,581
----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses............ 587,210 553,404 537,224 473,325 391,964
Noninterest revenues.... 235,274 231,671 175,355 199,237 168,719
Noninterest expenses.... 534,232 509,898 519,239 453,999 396,113
----------- ----------- ----------- ----------- -----------
Income before income
taxes.................. 288,252 275,177 193,340 218,563 164,570
Income taxes............ 105,576 100,222 66,050 71,843 47,977
----------- ----------- ----------- ----------- -----------
Net income............ $ 182,676 $ 174,955 $ 127,290 $ 146,720 $ 116,593
=========== =========== =========== =========== ===========
PER COMMON SHARE
Net income.............. $ 3.23 $ 3.00 $ 2.25 $ 2.89 $ 2.50
Cash dividends
declared............... 1.62 1.54 1.43 1.22 1.07
Average common shares
outstanding............ 56,605 58,262 56,527 50,848 46,684
SELECTED YEAR END
BALANCES
Loans net of unearned
income................. $12,080,246 $11,743,273 $11,429,907 $ 8,540,412 $ 6,716,595
Assets.................. 18,407,264 17,738,795 16,777,951 13,469,621 11,116,327
Deposits................ 12,467,599 13,420,287 13,203,101 10,374,183 8,641,487
Long-term Federal Home
Loan Bank advances..... 1,023,729 15,014 103,092 1,745 -0-
Other long-term debt.... 411,946 425,885 275,581 163,446 130,986
Shareholders' equity.... 1,395,829 1,383,475 1,310,458 1,142,725 873,374
SELECTED AVERAGE
BALANCES
Loans net of unearned
income................. $11,694,849 $11,747,385 $ 9,918,274 $ 7,634,984 $ 6,334,313
Assets.................. 17,989,621 16,942,326 15,293,985 12,377,333 10,447,186
Deposits................ 12,926,343 13,304,092 11,572,725 9,543,705 8,352,595
Long-term Federal Home
Loan Bank advances..... 511,583 54,000 112,550 555 -0-
Other long-term debt.... 423,623 298,945 219,229 159,152 132,574
Shareholders' equity.... 1,380,532 1,357,336 1,243,151 1,031,373 836,202
SELECTED RATIOS
Return on average
assets................. 1.02% 1.03% 0.83% 1.19% 1.12%
Return on average
equity................. 13.23 12.89 10.24 14.23 13.94
Net interest margin..... 3.93 3.87 4.14 4.56 4.72
Operating efficiency.... 59.56 60.98 68.72 63.48 64.24
Allowance for loan
losses to loans net of
unearned income........ 1.48 1.52 1.50 1.54 1.48
Nonperforming assets to
loans net of unearned
income, foreclosed
properties and
repossessions.......... 0.78 0.98 1.16 1.00 1.71
Ending equity to ending
assets................. 7.58 7.80 7.81 8.48 7.86
Average equity to
average assets......... 7.67 8.01 8.13 8.33 8.00
WITHOUT SAIF ASSESSMENT
Net income.............. $ 197,895 $ 174,955 $ 127,290 $ 146,720 $ 116,593
Net income per common
share.................. 3.50 3.00 2.25 2.89 2.50
Return on average
asssets................ 1.10% 1.03% 0.83% 1.19% 1.12%
Return on average
equity................. 14.26 12.89 10.24 14.23 13.94
Operating efficiency.... 56.86 60.98 68.72 63.48 64.24
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of AmSouth's 1996 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 1996 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 17, 1997 (the Proxy Statement) is hereby
incorporated herein by reference. Information on AmSouth's executive officers
is included in Part I of this report.
Information regarding late filings under Section 16(a) of the Securities
Exchange Act of 1934 included at pages 12 and 13 of the Proxy Statement under
the caption "Section 16(a) Beneficial Ownership Reporting Compliance" 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 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
Relationships, Related Transactions and Legal Proceedings" at page 13 thereof
is hereby incorporated herein by reference.
12
<PAGE>
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 1996 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, 1996 and 1995
Consolidated Statement of Earnings--Years ended December 31, 1996, 1995 and
1994
Consolidated Statement of Shareholders' Equity--Years ended December 31,
1996, 1995 and 1994
Consolidated Statement of Cash Flows--Years ended December 31, 1996, 1995
and 1994
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
No reports on Form 8-K were filed during the fourth quarter of 1996.
(C) EXHIBITS
The exhibits listed in the Exhibit Index at page 16 of this Form 10-K are
filed herewith or are incorporated herein by reference.
13
<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
Chairman of the Board, President
and Chief Executive Officer
Date: March 24, 1997
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/ Kristen M. Hudak
By___________________________________ By___________________________________
C. DOWD RITTER KRISTEN M. HUDAK
Chairman of the Board, President Senior Executive Vice President
and Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Financial Officer)
Date: March 24, 1997
Date: March 24, 1997
/s/ Robert R. Windelspecht
By___________________________________
ROBERT R. WINDELSPECHT
Executive Vice President
Controller
(Principal Accounting Officer)
Date: March 24, 1997
14
<PAGE>
* *
By___________________________________ By___________________________________
J. HAROLD CHANDLER JAMES R. MALONE
A Director A Director
Date: March 24, 1997 Date: March 24, 1997
* *
By___________________________________ By___________________________________
RODNEY C. GILBERT CLAUDE B. NIELSEN
A Director A Director
Date: March 24, 1997 Date: March 24, 1997
* *
By___________________________________ By___________________________________
ELMER B. HARRIS BENJAMIN F. PAYTON, PH.D.
A Director A Director
Date: March 24, 1997 Date: March 24, 1997
* *
By___________________________________ By___________________________________
DONALD E. HESS HERBERT A. SKLENAR
A Director A Director
Date: March 24, 1997 Date: March 24, 1997
*
By___________________________________
RONALD L. KUEHN, JR.
A Director
Date: March 24, 1997
- --------
* 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
15
<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>
3-a Restated Certificate of Incorporation of AmSouth Bancorporation (1)
3-b Bylaws of AmSouth Bancorporation, as amended
4-a Instruments defining the rights of security holders (2)
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 (3)
4-c Certificate of Designation and Terms of Series A Preferred Stock of
AmSouth Bancorporation (4)
*10-a AmSouth Bancorporation Executive Incentive Plan (5)
*10-b AmSouth Bancorporation Relocation Policy for Executive Officers
*10-c AmSouth Bancorporation Supplemental Retirement Plan (6)
*10-d AmSouth Bancorporation Long Term Incentive Compensation Plan (7)
*10-e Amendment No. 1 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (8)
*10-f Amendment No. 2 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (9)
*10-g Amendment No. 3 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (10)
*10-h Amendment No. 4 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (11)
*10-i Amendment No. 5 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (12)
*10-j Amendment No. 6 to the AmSouth Bancorporation Long Term Incentive
Compensation Plan (13)
*10-k 1989 AmSouth Bancorporation Long Term Incentive Compensation Plan (14)
*10-l Amendment No. 1 to the 1989 AmSouth Bancorporation Long Term Incentive
Compensation Plan (15)
*10-m Amendment No. 2 to the 1989 AmSouth Bancorporation Long Term Incentive
Compensation Plan (16)
*10-n Director Restricted Stock Plan (17)
*10-o 1997 Performance Incentive Plan (18)
*10-p 1996 Long Term Incentive Compensation Plan
*10-q Amended and Restated Deferred Compensation Plan for Directors of
AmSouth Bancorporation
*10-r AmSouth Bancorporation Supplemental Thrift Plan (19)
*10-s Amendment Number One to the AmSouth Bancorporation Supplemental Thrift
Plan (20)
*10-t Employment Agreement for C. Dowd Ritter (21)
*10-u Amendment to Employment Agreement for C. Dowd Ritter (22)
*10-v Form of Executive Severance Agreement for certain Executive Officers
(23)
*10-w Letter Agreement with Kristen M. Hudak (24)
11 Statement Regarding Computation of Earnings per Share
13 AmSouth Bancorporation's 1996 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>
16
<PAGE>
NOTES TO EXHIBITS
<TABLE>
<C> <S>
(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) 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
(3) 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)
(4) 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)
(5) Filed as Appendix B to AmSouth's Proxy Statement, dated March 10, 1997,
for the Annual Meeting of Shareholders on April 17, 1997, incorporated
herein by reference
(6) Filed as Exhibit 10-c to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1995, incorporated herein by reference
(7) 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)
(8) 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)
(9) 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)
(10) 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)
(11) 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)
(12) Filed as Exhibit 10-i to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1994, incorporated herein by reference
(13) Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1995, incorporated herein by reference
(14) Filed as Exhibit 10 to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference
(15) Filed as Exhibit 10-k to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1994, incorporated herein by reference
(16) Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended September 30, 1995, incorporated herein by reference
(17) Filed as Exhibit 4.1 to AmSouth's Registration Statement on Form S-8
(Registration No. 33-58777), incorporated herein by reference
(18) Filed as Appendix A to AmSouth's Proxy Statement, dated March 10, 1997,
for the Annual Meeting of Shareholders on April 17, 1997, incorporated
herein by reference
(19) Filed as Exhibit 10-q to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1995, incorporated herein by reference
(20) Filed as Exhibit 10-r to AmSouth's Form 10-K Annual Report for the year
ended December 31, 1995, incorporated herein by reference
</TABLE>
17
<PAGE>
<TABLE>
<C> <S>
(21) Filed as Exhibit 10-a to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, incorporated herein by reference
(22) Filed as Exhibit 10-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1996, incorporated herein by reference
(23) Agreements in this form have been entered into with the following
Executive Officers: Michael C. Baker, David B. Edmonds, Sloan D. Gibson,
IV, O.B. Grayson Hall, Jr., Kristen M. Hudak, W. Charles Mayer, III,
Candice W. Rogers, E. W. Stephenson, Jr., Alfred W. Swan, Jr. and Stephen
A. Yoder
(24) Filed as Exhibit 10-c to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1995, incorporated herein by reference
</TABLE>
18
<PAGE>
Exhibit 3-b
AMSOUTH BANCORPORATION BYLAWS
ARTICLE 1 - OFFICES
-------------------
SECTION 1.1: PRINCIPAL EXECUTIVE OFFICE AND OTHER OFFICES
The principal executive office of the corporation shall be at such
place, either within or without the State of Alabama, as may be designated from
time to time by the Board of Directors. The corporation may have such other
offices, either within or without the State of Alabama, as the Board of
Directors may designate or as the business of the corporation may require from
time to time.
ARTICLE 2 - SHAREHOLDER MEETINGS
--------------------------------
SECTION 2.1: ANNUAL MEETING
The annual meeting of the shareholders of the corporation shall be held
on such date and at such time as may be fixed by resolution of the Board of
Directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the annual
meeting is a legal holiday in the state in which the meeting is to be held, the
meeting shall be held on the next succeeding business day. If the election of
directors shall not be held on the day fixed by the Board of Directors for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as convenient.
SECTION 2.2: SPECIAL MEETINGS
Special meetings of the shareholders, for any purpose or purposes, may
be called only as provided in the Restated Certificate of Incorporation.
<PAGE>
SECTION 2.3: PLACE OF MEETING
The place of meeting shall be the principal executive office of the
corporation unless some other place, either within or without the State of
Alabama, is designated by the Board of Directors.
SECTION 2.4: NOTICE OF MEETING: FORM; CONTENTS; DELIVERY METHOD; DELIVERY
TIME
Written notice stating (a) the place, day, and hour of the meeting and
(b) in the case of a special meeting, a meeting that is required by statute to
be held for any special purpose, or an annual meeting at which special action is
to be taken, the purpose or purposes for which the meeting is called, or the
special action proposed to be taken, shall be delivered either personally or by
mail, by or at the direction of the Board of Directors, the Chief Executive
Officer, the Secretary, or the persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to the
shareholder at the shareholder's address as it appears on the records of the
corporation, with postage thereon prepaid. Any such notice that relates to an
annual meeting of shareholders shall be delivered not less than ten (10) nor
more than sixty (60) days before the date of the meeting; and any such notice
that relates to any special meeting of shareholders shall be delivered as
provided in the Restated Certificate of Incorporation. An affidavit of the
Secretary or an Assistant Secretary or the transfer agent of the corporation
that notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
shareholders may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting.
Any shareholder may waive notice of any meeting in the manner provided
in Section 9.1 of these bylaws. Attendance of a shareholder at a meeting of
shareholders shall constitute a waiver of notice of such a meeting, except when
the shareholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened.
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Any previously scheduled meeting of the shareholders (other than a
meeting called by shareholders under Section VII(b) of the Restated Certificate
of Incorporation) may be postponed, and any special meeting of the shareholders
(other than a meeting called by shareholders of the corporation under Section
VII(b) of the Restated Certificate of Incorporation) may be cancelled, by
resolution of the Board of Directors upon public announcement (as defined in
Section 2.12(C)(2) of these bylaws) given prior to the time previously scheduled
for such meeting of shareholders.
SECTION 2.5: FIXING OF RECORD DATE
In order that the corporation may determine the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall be not more than sixty (60)
nor less than ten (10) days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining
shareholders entitled to notice of or to vote at a meeting of shareholders
shall be at the close of business on the date next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 2.6: VOTING LISTS
The officer having charge of the stock ledger for shares of the
corporation shall make, at least ten (10) days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address and the number of shares registered in the name of each shareholder,
which list, for a period of ten (10) days prior to such meeting, shall be kept
on file at the principal office of the corporation and shall be subject to
inspection by any shareholder, for any purpose germane to the meeting, at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting. The original stock ledger
shall be the only evidence as to who are the shareholders entitled to examine
such list or stock ledger or books of the corporation or to vote in person or by
proxy at any meeting of shareholders.
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SECTION 2.7: QUORUM
A majority of the outstanding shares of the corporation entitled to
vote, present in person or represented by proxy, shall constitute a quorum at a
meeting of shareholders. If less than a majority of the outstanding shares
entitled to vote are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted that might have been transacted at the meeting under
the original notice. The shareholders present at a duly organized meeting may
continue to transact business until the meeting is adjourned, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
SECTION 2.8: PROXIES
At all meetings of shareholders, a shareholder may vote by proxy in
writing executed by the shareholder or by the shareholder's duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy.
SECTION 2.9: VOTING OF SHARES
Each outstanding share entitled to vote shall be entitled to one (1)
vote upon each matter submitted to a vote at a meeting of the shareholders.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by a proxy at the meeting and entitled to vote on the
election of directors. In all matters other than the election of directors, the
affirmative vote of a majority of shares present in person or represented by a
proxy at the meeting and entitled to vote on the subject matter shall be the act
of the shareholders, except as otherwise provided in the Restated Certificate of
Incorporation or as otherwise required by Delaware law.
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Where a separate vote by class or classes is required, a majority of the
outstanding shares of such class or classes, present in person or represented
by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter, and the affirmative vote of a majority of the shares
of such class or classes present in person or represented by proxy at the
meeting shall be the act of such class, except as otherwise provided in the
Restated Certificate of Incorporation or as otherwise required by Delaware law.
The vote on all questions shall be taken in such manner as the Chairman
prescribes, provided, however, that all votes taken at any meeting of
shareholders, including, without limitation, votes taken with respect to the
election of directors, shall be by written ballot.
SECTION 2.10: VOTING OF SHARES BY CERTAIN HOLDERS
Except as provided in this paragraph, shares of the corporation standing
in the name of another corporation may be voted by such officer, agent, or proxy
as the bylaws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine. Shares
of its own capital stock belonging to the corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the corporation,
shall neither be entitled to vote nor to be counted for quorum purposes;
provided, however, that nothing in this section shall be construed as limiting
the right of any corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
Shares that have been called for redemption shall not be deemed to be
outstanding shares for the purpose of voting or determining the total number of
shares entitled to vote on any matter on and after the date on which written
notice of redemption has been sent to holders thereof and a sum sufficient to
redeem such shares has been irrevocably deposited or set aside to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
Shares held by an administrator, executor, guardian, or conservator may
be voted by such person, either in person or by proxy, without a transfer of
such shares into such person's name. Shares standing in the name of a trustee
may be voted by such trustee, either in person or by proxy; but no trustee shall
be entitled to vote shares held by such trustee without a transfer of such
shares into such trustee's name.
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Shares standing in the name of a receiver may be voted by such receiver,
and shares held or under the control of a receiver may be voted by such
receiver without the transfer thereof into such receiver's name if authority so
to do is contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer by the pledgor on the books of the corporation
the pledgor has expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or the pledgee's proxy, may represent such shares and vote
thereon.
If shares or other securities of the corporation having voting powers
stand of record in the names of two (2) or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two (2) or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary of the corporation
is given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(a) If only one (1) votes, the act of such person binds all;
(b) If more than one (1) vote, the act of the majority so voting
binds all;
(c) If more than one (1) vote, but the vote is evenly split on any
particular matter, each fraction may vote the securities in
question proportionately. If the instrument so filed shows that
any such tenancy is held in unequal interests, a majority or
even split for the purpose of this section shall be a majority
or even split in interest.
SECTION 2.11: INSPECTORS
Prior to any meeting of shareholders, the Board of Directors or the
Chief Executive Officer shall appoint one or more inspectors to act at the
meeting and make a written report thereof and may designate one or more persons
as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at the meeting of shareholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting. Inspectors may, but are not required to be, employees of the
corporation or of its subsidiaries. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
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The inspectors shall ascertain the number of shares outstanding and the
voting power of each, determine the shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors and certify their determination of
the number of shares represented at the meeting and their count of all votes
and ballots. The inspectors may appoint or retain other persons or entities to
assist them in the performance of their duties.
The date and time of the opening and closing of the polls for each
matter upon which the shareholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies, or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors after the closing of the
polls.
In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a shareholder who submits a
proxy by telegram, cablegram, or other electronic transmission from which it
can be determined that the proxy was authorized by the shareholder, ballots,
and the regular books and records of the corporation, except that the
inspectors may also consider other reliable information for the limited purpose
of reconciling proxies and ballots submitted by or on behalf of banks, brokers,
their nominees or similar persons which represent more votes than the holder of
a proxy is authorized by the record owner to cast or more votes than the
shareholder holds of record. If the inspectors consider other reliable
information for such purpose, they shall, at the time they make their
certification, specify the precise information considered by them, including
the person or persons from whom they obtained the information, when the
information was obtained, the means by which the information was obtained and
the basis for the inspectors' belief that such information is accurate and
reliable.
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SECTION 2.12: NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS
(A) Annual Meetings of Shareholders.
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(1) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the shareholders may
be made at an annual meeting of shareholders (a) pursuant to the corporation's
notice of meeting, (b) by or at the direction of the Board of Directors or (c)
by any shareholder of the corporation who was a shareholder of record at the
time of giving of notice provided for in this bylaw, who is entitled to vote at
the meeting and who complies with the notice procedures set forth in this
Section 2.12.
(2) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c) of paragraph
(A)(1) of this Section 2.12, the shareholder must have given timely notice
thereof in writing to the Secretary of the corporation, and such other business
must otherwise be a proper matter for shareholder action. To be timely, a
shareholder's notice shall be delivered to the Secretary at the principal
executive office of the corporation not later than the close of business on the
sixtieth (60th) day nor earlier than the close of business on the ninetieth
(90th) day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is more than thirty (30) days before or more than sixty (60) days after
such anniversary date, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a shareholder's notice as described above. Such shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
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amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such shareholder, as they appear on the corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the corporation
that are owned beneficially and of record by such shareholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Section 2.12 to the contrary, if the number of directors to be
elected to the Board of Directors of the corporation is increased and there is
no public announcement by the corporation naming all of the nominees for
director or specifying the size of the increased Board of Directors at least
seventy (70) days prior to the first anniversary of the preceding year's annual
meeting, a shareholder's notice required by this bylaw shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
office of the corporation not later than the close of business on the tenth
(10th) day following the day on which such public announcement is first made by
the corporation.
(B) Special Meetings of Shareholders. Only such business shall be
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conducted at a special meeting of shareholders as shall have been brought
before the meeting pursuant to the corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of shareholders at which directors are to be elected pursuant
to the corporation's notice of meeting (a) by or at the direction of the Board
of Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any shareholder of the
corporation who is a shareholder of record at the time of giving of notice
provided for in this bylaw, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this Section 2.12. If the
corporation calls a special meeting of shareholders for the purpose of electing
one or more directors to the Board of Directors, any such shareholder may
nominate a person or persons (as the case may be), for election to such
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position(s) as specified in the corporation's notice of meeting, if the
shareholder's notice required by paragraph (A)(2) of this Section 2.12 shall be
delivered to the Secretary at the principal executive offices of the
corporation not earlier than the close of business on the ninetieth (90th) day
prior to such special meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such special meeting or the tenth
(10th) day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a shareholder's notice as described above.
(C) General.
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(1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 2.12 shall be eligible to serve as
directors, and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 2.12. Except as otherwise provided by
law, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 2.12 and, if any proposed nomination or business is not in
compliance with this Section 2.12, to declare that such defective proposal or
nomination shall be disregarded.
(2) For purposes of this Section 2.12, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section
2.12, a shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.12. Nothing in this section shall be deemed
(a) to affect any rights (i) of shareholders to request inclusion of proposals
in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act or (ii) of the holders of any series of preferred stock of the corporation
to elect directors under specified circumstances or (b) to grant to any
shareholder any right to nominate persons for election to the Board of
Directors, or to propose business to be considered by the shareholders, that
such shareholder would not have had in the absence of this Section 2.12, it
being the intent of this section only to provide for the procedure for making
such nominations or proposals of business to be considered.
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ARTICLE 3 - BOARD OF DIRECTORS
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SECTION 3.1: GENERAL POWERS
The business and affairs of the corporation shall be managed under the
direction of its Board of Directors.
SECTION 3.2: NUMBER, TENURE, AND QUALIFICATIONS
(a) Subject to the provisions of Paragraph (5) of Section XI of the
Restated Certificate of Incorporation relating to the rights of the holders of
any class or series of Preferred Stock, as defined in Section IV of the
Restated Certificate of Incorporation, to elect under specified circumstances
by separate class vote additional directors, the number of directors of the
corporation shall be fixed from time to time by the affirmative vote of
two-thirds of the total number of directors then in office who have been
elected by the holders of the capital stock of the corporation entitled to vote
generally for the election of directors. No decrease in the number of
directors shall shorten the term of any incumbent director.
(b) Directors need not be residents of Alabama or Delaware nor
shareholders of the corporation.
(c) (i) Any director who has reached the age of 70 years shall
retire from the Board of Directors effective as of the date
of such 70th birthday.
(ii) Any director who has retired or otherwise become
permanently separated from the business or professional
position that he or she held at the time of his or her
election to the Board of Directors shall submit a written
letter of resignation to the Secretary of the corporation
effective as of the effective date of such retirement or
permanent separation. Such letter of resignation shall be
considered by the Director Affairs Committee and the Board
of Directors as provided in subsection (f) below.
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(d) Any director who has become disabled to the extent that (in the
judgment of a majority of the remaining outside directors) he or she is unable
to perform the duties of a director of the corporation on an ongoing basis shall
be deemed to have retired on the date on which the remaining outside directors
have determined that such director is so disabled. For purposes of these bylaws
a director will not be considered an "outside" director if he or she is, at the
time of determination, an employee of the corporation or any of its
subsidiaries.
(e) Any director who is an officer of the corporation, or of any
subsidiary thereof, shall resign as a director effective on the earliest date on
which he or she is neither an officer of the corporation nor an officer of any
subsidiary thereof.
(f) On recommendation of the Director Affairs Committee, the Board of
Directors may elect not to accept the resignation of a director described in
subsection (c)(ii) or (e) above, and may advise such director that he or she may
serve out the remainder of his or her three-year term, or any portion thereof,
as may be specified by the Board of Directors on recommendation of the Director
Affairs Committee. Any such director shall also be eligible for renomination as
a member of the Board of Directors, in the event that he or she is still a
director at the expiration of his or her term, for one additional three-year
term, or portion thereof, as may be specified by the Board of Directors on
recommendation of the Director Affairs Committee. In the case of any
determination by the Board of Directors to permit a director to serve less than
all of a three-year term or remaining portion thereof, the Board may
periodically extend the permitted service period for one or more additional
periods up to the end of the applicable term. Notwithstanding any determination
to permit continued service by a director as provided in this subsection (f),
such director shall resign on his or her 70th birthday as provided in subsection
c(i) above.
(g) Any director may resign at any time upon written notice to the
corporation. Any director or the entire Board of Directors may be removed at any
time, but only for cause and only as provided in the Restated Certificate of
Incorporation.
SECTION 3.3: REGULAR MEETINGS
A regular meeting of the Board of Directors shall be held without other
notice than this bylaw at 1:00 p.m., local time, on the third Thursday of
January, March, April, June, July, October, and December (unless such date
shall fall on a holiday observed by AmSouth Bank of Alabama, in which event the
meeting shall be held on the next succeeding business day and at the same hour
or at such other hour as may be designated by the Board of Directors). Regular
meetings of the Board of Directors shall be held at the principal executive
office of the corporation or such other location as may be determined by the
Board of Directors or as permitted by law. The Board of Directors may provide,
by resolution, the time and place, either within or without the State of
Alabama, for the holding of additional or substitute regular meetings without
other notice than such resolution.
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SECTION 3.4: SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by or at the
request of the Chief Executive Officer or any three (3) directors. A special
meeting of the Board of Directors shall be held at the principal office of the
corporation unless all directors agree in advance and in writing that it be
held at another place, either within or without the State of Alabama.
SECTION 3.5: PARTICIPATION BY CONFERENCE TELEPHONE
Members of the Board of Directors, or of any committee thereof, may
participate in any meeting of the Board of Directors or of any such committee
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other; and
participation in a meeting in such manner shall constitute presence in person
at the meeting.
SECTION 3.6: ACTION BY CONSENT WITHOUT A MEETING
Any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
SECTION 3.7: NOTICE
At least one (1) day's notice of any special meeting of the Board of
Directors or of any meeting of a committee of the Board of Directors shall be
given to all directors or committee members, as the case may be, unless, in the
opinion of the officer or directors calling the meeting, an emergency exists
that requires less than one (1) day's notice; in that event, only such notice
need be given as such officer or directors shall direct. Any director may
waive notice of any meeting, as provided in Section 9 of these bylaws. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
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SECTION 3.8: FEES
By resolution of the Board of Directors, the directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or
any committee thereof and may be paid a fixed sum for attendance at each such
meeting or a stated salary as director, or both.
SECTION 3.9: QUORUM
Except as otherwise provided in Section XI of the Restated Certificate
of Incorporation, a majority of the sum of (i) the number of directors
determined pursuant to Paragraph (2) of Section XI of the Restated Certificate
of Incorporation and Section 3.2(a) of these bylaws, and (ii) the number of
directors, if any, elected under specified circumstances by a separate class
vote of the holders of any class or series of Preferred Stock, as defined in
Section IV of the Restated Certificate of Incorporation, shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors;
but, if less than such quorum is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice.
SECTION 3.10: MANNER OF ACTING
Except as provided in Sections VIII and XI of the Restated Certificate
of Incorporation and Section 3.2(a) and Section 3.12 of these bylaws, the act of
the majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 3.11: VACANCIES
Any vacancy occurring in the Board of Directors and any directorship to
be filled by reason of an increase in the number of directorships or any other
reason shall be filled according to the provisions of Section XI of the Restated
Certificate of Incorporation.
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SECTION 3.12: COMMITTEES OF THE BOARD
The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, which, to the
extent provided in such resolution or resolutions, shall have, and may during
intervals between the meetings of the Board of Directors exercise, all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers that may require it. Each such
committee or committees shall consist of one or more of the directors of the
corporation and shall have such name or names as may be determined from time to
time by resolution or resolutions adopted by the Board of Directors. The
designation of any such committee or committees and the delegation thereto of
authority shall not operate to relieve the Board of Directors, nor any member
thereof, of any responsibility imposed upon it, him, or her by law.
SECTION 3.13: EMERITUS BOARD OF DIRECTORS
The Board of Directors may designate an "Emeritus Board of Directors",
which shall consist of directors of the corporation who have retired, either by
reason of age or because of being retired or otherwise permanently separated
from the business or professional position that he or she held at the time of
his or her election to the Board of Directors. If the Board of Directors
designates an Emeritus Board of Directors, it will also specify the frequency
of the meetings thereof, eligibility for continued service thereon, and
compensation for service thereon.
ARTICLE 4 - OFFICERS
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SECTION 4.1: GENERAL
(a) NUMBER. The officers of the corporation shall consist of a
Chairman of the Board of Directors, a President, one or more Vice Presidents
(one or more of whom may be designated by the Board of Directors as Senior
Executive Vice President, Executive Vice President, Senior Vice President, or
such other title as the Board of Directors may determine), a Chief Accounting
Officer, and a Corporate Secretary and may also include such other officers as
the Board of Directors may from time to time determine, including, but not
limited to, one or more Vice Chairmen and one or more Assistant Secretaries.
Either the Chairman of the Board or the President shall be designated by the
Board of Directors as the Chief Executive Officer of the corporation; the
President, a Vice Chairman, or one of the Vice Presidents may be designated by
the Board as the Chief Operating Officer of the corporation; and, other officers
may be designated by other titles such as "Chief Compliance Officer", "Chief
Financial Officer", "Chief Credit Officer", and the like.
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(b) EXECUTIVE OFFICERS; ORDER OF AUTHORITY. As used in these
bylaws, the term "Executive Officers" shall include the Chairman of the Board
(if, but only if, he or she also is the Chief Executive Officer), the President
(regardless of whether he or she is the Chief Executive Officer), any Vice
Chairman of the Board, the Senior Executive Vice Presidents, and the Executive
Vice Presidents; provided, however, that nothing herein contained is intended to
have any bearing on whether or not an officer of the corporation is an
"executive officer" of the corporation for any purpose other than for convenient
reference in these bylaws, including but not limited to the purpose of
determining whether or not any officer of the corporation is an "officer" within
the meaning of (S) 16 of the Exchange Act or an "executive officer" under
Regulation O of the Federal Reserve Board. Their "order of authority" shall be
the order designated by resolution of the Board of Directors or, if not so
designated by the Board of Directors, as designated by the Chief Executive
Officer.
(c) DUAL OFFICES. Any two or more offices in the corporation may,
except where prohibited by law, be held by the same individual. In cases where
an individual holds more than one office, that person shall have the authority
of all offices so held and shall occupy the "order of authority" provided in
these bylaws for the more or most senior of the offices held.
(d) MANNER OF ELECTION; TERM OF OFFICE. Except as provided below,
all officers shall be elected annually by the Board of Directors at their first
meeting next following the Annual Meeting of Shareholders of the corporation, or
as soon thereafter as is practicable; and their terms of office shall be for one
(1) year, commencing upon election, or until their successors are elected and
qualified, whichever occurs later.
The Board of Directors may, at any time and for any reason sufficient to
them, elect such other officers as they may deem desirable.
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Each of the two (2) Executive Officers having the highest order of
authority shall have the power to elect or appoint, or delegate to any other
officer of the corporation the power to elect or appoint, all employees and all
officers holding a title at or below that of Senior Vice President.
(e) RESIGNATION; REMOVAL FROM OFFICE. Each officer shall hold his
or her office until his or her successor is elected and qualified or until his
or her earlier resignation or removal. Any officer may resign at any time upon
written notice to the corporation. All officers and employees serve at the will
of this corporation and may be removed from office and employment at any time,
with or without cause.
Only the Board of Directors or its Executive Committee may remove from
office the Chief Executive Officer, the Chairman of the Board, or the President.
All other officers and employees may be removed from office by either of
the two (2) Executive Officers having the highest order of authority or by any
person authorized so to do by the personnel policies of the corporation; and,
unless one of the said two (2) Executive Officers acts directly in a particular
instance, removal from office or employment shall be as provided in the
personnel policies of the corporation, as they may from time to time be
adopted, amended, and modified.
(f) VACANCIES. Vacancies in offices above the level of Senior Vice
President becoming vacant may be filled by the Board of Directors or the
Executive Committee. In the event of a vacancy in any of the offices of the
Executive Officers, any of the other Executive Officers remaining may be
elected to fill the vacancy in such office for such period as the Board of
Directors may determine or until further action by the Board.
SECTION 4.2: CHIEF EXECUTIVE OFFICER
Subject to the direction of the Board of Directors, of the Executive
Committee, and of other committees of the Board having authority, the Chief
Executive Officer shall be vested with authority to act for the corporation in
all matters to the extent that such delegation of authority may not be contrary
to law; shall have general charge of the corporation and of its business and
affairs, including authority over the operations of the corporation and over
its employees; and, subject to the limitations stated, shall have full power
and authority to do and perform in the name of the corporation all acts
necessary or proper in his or her opinion to be done and performed and to
execute for and in the name of the corporation all instruments, agreements, and
deeds which may be authorized to be executed on behalf of the corporation or
which may be required by law.
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SECTION 4.3: CHAIRMAN OF THE BOARD
The Chairman of the Board, or in his or her absence, the President or
other Executive Officers, in their order of authority, shall preside at all
regular, called, or special meetings of the Board of Directors, the Executive
Committee, and the shareholders, and at adjournments thereof.
SECTION 4.4: PRESIDENT
The President shall, subject to the direction of the Board of Directors,
the Executive Committee, other committees of the Board of Directors having
authority (and, if he or she is not the Chief Executive Officer, then also
subject to the direction of the Chief Executive Officer), be vested with
authority to act for the corporation in all matters to the extent that such
delegation of authority may not be contrary to law. The President, regardless
of whether he or she is also the Chief Executive Officer, shall have the same
power to sign for the corporation as is prescribed in these bylaws for the
Chief Executive Officer. The President shall perform all duties incidental to
the office and shall perform such other duties as may be assigned from time to
time by the Board of Directors or the Chief Executive Officer.
SECTION 4.5: OTHER EXECUTIVE OFFICERS
Each of the Executive Officers shall (subject to the direction of the
Board of Directors and of the committees of the Board having authority and to
the direction of the Chief Executive Officer) have and may exercise authority to
act for the corporation in all matters to the extent that such delegation of
authority may not be contrary to law and, in general, to discharge the functions
and to exercise the authority vested in the Chief Executive Officer in matters
not otherwise acted upon by the Chief Executive Officer or by other Executive
Officers senior in the order of authority. Subject to the limitations stated
above, the authority of each Executive Officer shall include authority over the
operations of the corporation within his or her assigned areas of responsibility
and over assigned employees, and authority to do and perform in the name of the
corporation all acts necessary or proper in his or her opinion to be done and
performed and to execute for and in the name of the corporation all instruments,
agreements, and deeds which may be authorized to be executed on behalf of the
corporation or required by law.
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SECTION 4.6: VICE PRESIDENTS
Any Vice President shall have the authority to execute in the name of
the corporation transfers, conveyances, certificates, releases, satisfactions,
authentications, options, proxies, leases, including oil, gas, and other mineral
leases, agreements, including but not limited to agreements relating to
depository accounts of the corporation, or other instruments pertaining to
investment, assets or operations of the corporation or powers held or controlled
by the corporation. The Vice Presidents shall have such other powers as are from
time to time conferred upon them by the Board of Directors, committees of the
Board, and the Executive Officers.
SECTION 4.7: CHIEF ACCOUNTING OFFICER OR CONTROLLER
An officer of the corporation shall be appointed "Chief Accounting
Officer" or "Controller" and shall have custody of the corporation's general
accounting records, shall prepare financial statements, tax returns, profit
plans and reports to regulatory authorities, and shall have such other duties as
the Chief Executive Officer or other Executive Officer may assign him from time
to time.
SECTION 4.8: THE SECRETARY
The Secretary shall: (a) keep the minutes of the shareholders' and of
the Board of Directors' meetings in one (1) or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and affix, or cause to be
affixed, the seal of the corporation to all documents the execution of which on
behalf of the corporation under its seal is appropriate; (d) keep a record of
the post office address of each shareholder, which shall be furnished to the
Secretary by such shareholder; (e) have general charge of the stock transfer
books of the corporation; and (f) in general perform all duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him or her by these bylaws, by the Chief Executive Officer, or by the Board
of Directors. The Secretary may, from time to time, delegate to other officers
of the corporation, including but not limited to Assistant Secretaries, any or
all of the duties and powers of the Secretary hereunder.
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SECTION 4.9: EXERCISE OF AUTHORITY OF CHIEF EXECUTIVE OFFICER BY OTHER
EXECUTIVE OFFICERS
In case of the disqualification, disability, death, resignation, or
removal of the Chief Executive Officer, and until the Board of Directors has
filled the vacancy, the Executive Officers, in their order of authority, shall
act as such Chief Executive Officer and with his full authority.
SECTION 4.10: MANAGEMENT COMMITTEE
There shall be an officers' committee of the corporation (the
"Management Committee"), which shall consist of such officers of the corporation
and its subsidiaries as may be appointed to sit thereon by the Chief Executive
Officer. The chairman of the committee shall be the Chief Executive Officer, and
the committee shall meet at the chairman's call.
The Management Committee shall develop, publish, and implement policies
and procedures for the operation of the corporation and its subsidiaries and
affiliates. The Board of Directors shall have the right to amend or revoke
actions of the Management Committee. The Management Committee may amend, make
additions to, or deletions from, or revoke such policies and procedures, to the
extent the committee deems such actions to be necessary and desirable. In
addition to the duties prescribed above, the Management Committee shall have
such other and further duties and responsibilities as may from time to time be
assigned to it by the Board of Directors or the Chief Executive Officer.
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ARTICLE 5 - SHARES; PROXIES
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SECTION 5.1: CERTIFICATES FOR SHARES
Certificates shall be issued only for whole shares and no certificate
will be issued for a fractional share. Certificates representing whole shares of
the corporation shall be in such form as shall be determined by the Board of
Directors and shall be signed in the manner provided by the General Corporation
Law of Delaware by the Chairman or Vice-Chairman of the Board of Directors, or
by the President or any Vice-President, and by the Treasurer or an Assistant
Treasurer, or by the Secretary or an Assistant Secretary. Such signatures may be
in facsimile form. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be canceled, and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that the
corporation may issue a new certificate of stock in place of any certificate
theretofore issued by it, alleged to have been lost, stolen, or destroyed, and
the corporation may require the owner of the lost, stolen, or destroyed
certificate, or such owner's legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft, or destruction of any such certificate or
the issuance of such new certificate, as the Board of Directors may prescribe.
SECTION 5.2: TRANSFER OF SHARES
Transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation by the holder of record thereof or by such
holder's legal representative, who shall furnish proper evidence of authority
to transfer, or by such holder's attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
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SECTION 5.3: PROXIES
Unless otherwise provided by resolution of the Board of Directors, the
Chief Executive Officer may cast, or from time to time appoint an attorney or
agent of the corporation to cast, the votes that the corporation may be
entitled to cast as the holder of stock or other securities in any other
corporation any of the stock or other securities of which may be held by the
corporation, at meetings of the holders of the stock or other securities of
such other corporation, or to consent in writing, in the name and on behalf of
the corporation as such holder, to any action by such other corporation, and
may instruct the person or persons so appointed as to the manner of casting
such votes or giving such consent, and may execute or cause to be executed, in
the name and on behalf of the corporation and under its corporate seal or
otherwise, all such written proxies or other instruments as the Chief Executive
Officer may deem necessary or proper in the premises.
ARTICLE 6 - FISCAL YEAR
-----------------------
SECTION 6.1: The fiscal year of the corporation shall begin on January 1 and
end on December 31 in each year.
ARTICLE 7 - DIVIDENDS; RECORD DATE
----------------------------------
SECTION 7.1: The Board of Directors or the Executive Committee may from time
to time declare, and the corporation may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions provided by law.
SECTION 7.2: In order that the corporation may determine the shareholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the shareholders entitled to exercise any rights with respect
to any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
shareholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts a resolution relating thereto.
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ARTICLE 8 - SEAL
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SECTION 8.1: The corporate seal of the corporation shall be a circular die
around which shall be the words "AmSouth Bancorporation."
ARTICLE 9 - WAIVERS OF NOTICE
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SECTION 9.1: Whenever any notice is required to be given to any shareholder
or director of the corporation under the provisions of these bylaws, the
Restated Certificate of Incorporation, or the provisions of law, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the shareholders, directors, or
members of a committee of directors need be specified in any written waiver of
notice except as required by the Restated Certificate of Incorporation or these
bylaws.
ARTICLE 10 - AMENDMENTS TO BYLAWS
---------------------------------
SECTION 10.1: POWER OF DIRECTORS TO AMEND
The Board of Directors shall have the power to alter, amend, and repeal
the bylaws of the corporation or adopt new bylaws for the corporation at any
regular or special meeting of the Board.
SECTION 10.2: POWER OF SHAREHOLDERS TO AMEND
(a) The shareholders may alter, amend, or repeal the bylaws of the
corporation or adopt new bylaws for the corporation at any annual meeting or at
a special meeting called for the purpose, and all bylaws made by the directors
may be altered, amended, or repealed by the shareholders; provided, however,
that:
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(1) the affirmative vote of the holders of sixty-seven
percent (67%) of the combined voting power of the then outstanding shares of
capital stock of the corporation entitled to vote generally for the election of
directors, voting together as a single class, shall be required for the
shareholders to alter, amend, or repeal Section VII of the Restated Certificate
of Incorporation of the corporation, or to adopt any provision of these bylaws
that would cause these bylaws to be inconsistent with the provisions of Section
VII of the Restated Certificate of Incorporation of the corporation;
(2) the affirmative vote of the holders of eighty percent
(80%) of the combined voting power of the then outstanding shares of capital
stock of the corporation entitled to vote generally for the election of
directors, voting together as a single class, shall be required for the
shareholders to alter, amend, or repeal Section XI of the Restated Certificate
of Incorporation of the corporation or to adopt any provision of these bylaws
that would cause these bylaws to be inconsistent with the provisions of Section
XI of the Restated Certificate of Incorporation of the corporation;
(3) the affirmative vote of the holders of eighty percent
(80%) of the combined voting power of the then outstanding shares of capital
stock of the corporation entitled to vote generally for the election of
directors, voting together as a single class, shall be required for the
shareholders to alter, amend, or repeal any provision of Paragraph (a) of
Section 3.2 of these bylaws or to adopt any provision of these bylaws that would
cause these bylaws to be inconsistent with the provisions of Paragraph (a) of
Section 3.2 of these bylaws; and
(4) the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding shares of the voting stock and the
affirmative vote of the holders of not less than sixty-seven percent (67%) of
the voting stock held by shareholders other than an Interested Stockholder (as
defined in Section VIII of the Restated Certificate of Incorporation) shall be
required for the shareholders to alter, amend, or repeal Section VIII of the
Restated Certificate of Incorporation of the corporation, or to adopt any
provision of these bylaws that would cause these bylaws to be inconsistent with
the provisions of Section VIII of the Restated Certificate of Incorporation of
the corporation.
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(b) The affirmative vote of the holders of sixty-seven percent
(67%) of the combined voting power of the then outstanding shares of capital
stock of the corporation entitled to vote generally for the election of
directors, voting together as a single class, shall be required for the
shareholders to alter, amend, or repeal Paragraph (a) (1) of this Section 10.2
of these bylaws or to adopt any provision of these bylaws that would cause these
bylaws to be inconsistent with Paragraph (a) (1) of this Section 10.2 of these
bylaws.
(c) The affirmative vote of the holders of eighty percent (80%) of
the combined voting power of the then outstanding shares of capital stock of the
corporation entitled to vote generally for the election of directors, voting
together as a single class, shall be required for the shareholders to alter,
amend, or repeal Paragraph (a) (2) or (a) (3) of this Section 10.2 of these
bylaws or to adopt any provision of these bylaws inconsistent with Paragraph (a)
(2) or (a) (3) of this Section 10.2 of these bylaws.
(d) The affirmative vote of the holders of not less than eighty
percent (80%) of the outstanding shares of the voting stock and the affirmative
vote of the holders of not less than sixty-seven percent (67%) of the voting
stock held by shareholders other than an Interested Stockholder (as defined in
Section VIII of the Restated Certificate of Incorporation) shall be required for
the shareholders to alter, amend, or repeal Paragraph (a) (4) of this Section
10.2 or to adopt any provision of these bylaws that would cause these bylaws to
be inconsistent with Paragraph (a) (4) of this Section 10.2 of these bylaws.
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EXHIBIT 10-b
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LEVEL 3
RELOCATION POLICY
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(EXECUTIVE OFFICERS)
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PURPOSE
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This policy is written as a guideline for both the transferring employee and the
management of AmSouth.
It is intended to fairly address those issues and concerns that a transferring
employee may have while maintaining costs at a reasonable level for AmSouth. It
is also intended to minimize the stress, both emotionally and financially, to
the transferring employee and family.
The guidelines are written from the understanding that the transferring employee
and AmSouth are involved in a partnership.
ADMINISTRATION
This policy will be administered by the Relocation Services Division of Johnson-
Rast & Hays (JRH), a Birmingham based real estate firm. They will be your
primary contact for all relocation related services.
Ruth Farris, CRP - Director/Manager or Marilee Cade, CRP - Referral Coord.
--
Johnson-Rast & Hays Real Estate
Suite 2450, SouthTrust Tower
Birmingham, AL 35203
Telephone: (205) 322-7500
JRH, who is responsible for administering our policy, retains the services of a
private relocation management company, MRI Relocation Management (MRI) to help
provide assistance to you and your family. The Corporate Staffing Department
will contact you and JRH simultaneously to begin the process. Included in this
packet of materials is a section describing the details and procedures of the
services.
ELIGIBILITY
Provisions of this policy are available to you if you are an employee or new
hire who has been requested to relocate to a new location. Eligibility for
coverage under this policy continues for up to six (6) months following your
official date of transfer. Extension of this time period may be authorized due
to special circumstances, with the approval of your division manager and
Corporate Human Resources.
<PAGE>
RECORD KEEPING
The tax ramifications involved with relocation require very careful record
keeping by both you and AmSouth. Various home sale and other expenses will be
paid through JRH. For other expenses, you must submit a Relocation Expense
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Report (See Attachment 1) within a reasonable time, with original receipts, to
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Ruth Farris at JRH.
EXPENSES NOT COVERED BY THE POLICY
AmSouth recognizes that special circumstances and contingencies may occur in a
relocation. No one plan such as this can cover every conceivable situation. If
you encounter an unusual problem or a circumstance which does not seem to be
adequately covered in this policy, please contact Corporate Human Resources to
discuss. All policy exceptions must be requested in writing and require
approval of the appropriate Management Committee member and the Director of
Human Resources. Any such requests should be forwarded to Human Resources with
approvals. Human Resources would inform JRH of any approved exceptions.
TERMINATION OF EMPLOYMENT
Upon termination of your employment for any reason, all remaining Relocation
Policy benefits will cease. In the event of a voluntary termination of
employment within a twelve (12) month period following a relocation, a prorated
portion of relocation benefits that have been paid may be subject to repayment
to AmSouth.
SELLING YOUR HOME
-----------------
HOME BUY-OUT ASSISTANCE PLAN
If you are not able to sell your home within a designated period of time,
special arrangements have been made with MRI to purchase your present residence
at its appraised market value as defined in the following section. This home
purchase program extends to your home if it is a one family dwelling that is
your primary residence. This includes condominiums, but excludes mobile homes,
vacation, income or investment property, apartment buildings, secondary tracts
of land (such as adjacent building lots) and farm property. Many costs
associated with selling the home then become the responsibility of MRI without
creating taxable compensation to the employee, providing all procedures are
properly followed.
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DETERMINING THE APPRAISED VALUE OF YOUR HOME
MRI will offer to purchase your home based on its appraised value, as determined
by two independent appraisers selected by you from an approved list of
appraisers provided by MRI. If the appraisals are within 5% of each other, they
will be averaged to determine your appraised value offer. If the two appraisals
are not within 5%, you will be asked to choose a third appraiser and all three
appraisals will be averaged to determine your appraised value offer. You will
have the right to inspect any (or all) of the appraisals conducted to assess the
market value of your property.
You will also be able to supply sales data on area homes to the appraisers. If
there are area sales of comparable homes you would like the appraisers to
consider, you may list the properties on a form provided by MRI Relocation and
give a copy to each of the appraisers during their appointment to view your
home. The appraisers may or may not include these sales in your appraisal.
However, if a provided sale is not included, the appraiser must provide a reason
in the final written report.
An appraisal is not a statement of fact, but an opinion. For any property there
will be a range of value. Whereas a buyer, in part based on emotional factors,
may very likely give you the highest and best price for your property, the
appraisers have no emotional involvement and will tend to be conservative in
their estimation. Although the process used to determine property value on a
relocation appraisal is essentially the same as a finance appraisal, there is
one differing factor which may affect the final result - time. Unlike a typical
buyer, a corporation begins incurring expenses immediately upon a property's
purchase, without the benefit of using the home as a residence. Consequently,
time is an important factor. As per company guidelines, a time factor of up to
120 days will be considered when determining the appraised value. This four
month factor is considered when evaluating the time-on-market for comparable
sales and listings. If the comparable properties sold within 120 days of
initial listing and no market change is evident on current listings, the time
factor is mute and will not affect the property valuation.
Your offer, based on the appraisal process described above, is to be considered
your safety net. You have every opportunity to better your guarantee through
pre-marketing efforts. If you obtain a valid purchase agreement from a
qualified buyer at a price higher than your guarantee, the guarantee will be
amended to the outside offer amount. You are encouraged to market your property
to obtain your best possible offer.
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INITIATING THE HOME BUY-OUT ASSISTANCE PLAN
The Home Buy-Out Assistance Plan should be initiated as soon as practical
following your acceptance of our offer of employment, but not later than six (6)
months following your hire or transfer date. If you have not been contacted by
JRH to initiate the process within three days of your acceptance of employment,
please call your employment representative (the person who hired you) in
Corporate Staffing. Initiating this process quickly will start the appraisal
process of your home in order to provide you with a market value "benchmark"
upon which to base your list price.
MAINTAINING TWO HOMES
The Home Buy-Out Assistance Plan should enable you to arrange closing on your
new home to coincide with vacating your old home. Therefore, AmSouth will not
normally reimburse for the duplicate carrying costs or the costs associated with
maintaining two homes.
CONDITION OF HOME PRIOR TO BUY OUT OFFER
Prior to an offer being made to purchase your home by MRI for the appraised
value, the following conditions of the home must be met:
[ ] Typical and mandatory (if any) inspections will be ordered on your home.
Inspections that may be conducted include, but are not limited to,
general home, pest, radon, well, septic, roof, pool, etc. All inspections
will be reviewed and it will be the responsibility of the transferee to
make all recommended repairs.
[ ] If the employee elects to complete repairs prior to the buyout, proof of
completion must be submitted to MRI. If repairs are not completed, a
repair adjustment/allowance will be made at the time of buyout based on
acceptable bids. (MRI will proceed with repairs after vacancy.)
ACCEPTING THE RELOCATION MANAGEMENT COMPANY'S BUY OUT OFFER
Under the Home Buy-Out Assistance Plan, you will have 60 days from the date of
offer to either accept the offer price or arrange a sale on your own at a higher
price and assign it to the relocation company for closing. We expect all
homeowners to aggressively and realistically market their properties.
MARKETING ASSISTANCE
The most desirable alternative is for the employee to secure a qualified buyer
for his or her home. Marketing assistance will be provided by JRH to assist in
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this effort. At least two broker interviews will be arranged. You may advise
JRH of the two brokers of your choice or JRH will recommend two brokers that
have proven listing track records for your area. The selected brokers will work
closely with you, JRH and MRI in the marketing of your home. You will receive a
reduced selling commission of 6%, two opinions of value as well as two marketing
plans. This program is designed to provide quality service in the sale of your
home and insure the best long term financial interest of you and AmSouth Bank.
During the period of the marketing assistance program, JRH will coordinate with
MRI either the amended value sales closing or the MRI offer to purchase.
INCENTIVE TO SELL
In order to support the employee in his or her effort to find an outside buyer
for the home prior to the expiration of the MRI offer period, AmSouth will
provide the employee a 2% sales incentive if the employee generates an
amended/closeable sale that is accepted and closed by MRI. The incentive is
based on 2% of the gross sales price of the home.
An accepted amended/closeable sale is defined as one in which MRI has received
written confirmation that the buyer has received adequate financing to complete
the purchase at the offered price, all inspections have been completed, reviewed
and accepted by the buyer (or the appropriate renegotiations have been completed
between buyer and seller), and all other contingencies have been removed. The
employee is responsible for all repairs requested/negotiated by the buyer. The
sales incentive will then be payable upon the successful closing of the
transaction by MRI.
The sales incentive will be reported as income to the employee. It will not be
grossed-up for taxes by AmSouth.
SALE BELOW APPRAISED VALUE
Since it is AmSouth's and the employee's mutual goal that the employee's home
sell under the amended/closeable option, AmSouth will provide an additional
benefit to assist the employee in the event the employee receives an offer from
an outside buyer which is below the appraised value offer amount provided to the
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employee under the MRI program.
If, during the 60 day offer period, the employee is successful in negotiating an
offer which is at least 97% of the appraised value offer the employee received
from MRI, and meets the requirements of an amended/closeable sale, the employee
should turn the sale over to MRI. MRI will execute the original buy out offer
made to the employee.
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For example, if the appraised value offer from MRI was $100,000, the employee
could accept an offer of $97,000 for his or her home that would also meet the
requirements of an amended/closeable sale. MRI would execute the $100,000
appraised value offer with the employee while closing on the $97,000 contract.
In effect, AmSouth would absorb the $3,000 loss on this transaction. You would
also receive the 2% sales incentive as described in the preceding paragraph.
EQUITY PAYMENT
Your equity will be paid to you by the relocation company on a mutually agreed
date, provided all required contracts and legal documents have been signed, and
the title search and inspections have been satisfactorily completed.
VACATING YOUR HOME
You have up to 30 days following the buyout date to vacate your home. The
prorations for taxes and mortgage interest will be based on your vacancy date
(if later than the buyout date). All utilities should be placed into the
listing broker's name (not MRI).
SELLER'S CLOSING COSTS
A real estate agent commission which is customary for the area will be paid by
AmSouth in the selling of your current home.
Other closing costs which are normally paid by the buyer will not be reimbursed
by AmSouth.
RENTER POLICY
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LEASE CANCELLATION POLICY
Rental or lease cancellation penalties will be reimbursed (at your old location)
up to two months' rent subject to prior approval and proper documentation of
such expenses. Damages withheld by rental management will not be reimbursed.
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PURCHASING A NEW HOME
---------------------
POLICY TIME PERIOD
Closing costs on the purchase of your new home will be reimbursed (as detailed
in this section) provided they are submitted within six months of the effective
date of your transfer, unless the deferral of your home purchase has been
previously approved.
HOME SEARCH COUNSELING
JRH is prepared to provide comprehensive home search counseling for homeowners
in all locations. This counseling will aid you and your family in selecting the
new community, neighborhood, and home in the most efficient manner best suited
to your family needs. You will be provided a list of approved real estate
agents, acting as buyer agents to assist you in finding a new home. You may
select one of these agents or any other real estate agent of your choice. In
any case, JRH will work with you and your agent of choice to provide the best
possible service.
MORTGAGE FINANCING ASSISTANCE
One of the major complexities of purchasing a home at your new location is
securing attractive mortgage financing. Therefore, we have arranged financing
assistance to you directly through AmSouth's Mortgage Banking Division. A
mortgage loan through AmSouth includes a waiver of up to 1% origination fee and
two discount points. For each loan, all normal credit qualifications must be
met. The mortgage will include a non-transferability clause and will specify no
prepayment penalty. You may also look for more competitive rates in the market.
In the case of a non-AmSouth mortgage loan, we will reimburse up to a 1%
origination fee and two discount points.
NORMAL CLOSING COSTS ON A NEW HOME
AmSouth will reimburse you for normal closing costs covering those items which
by local custom are normally paid by the buyer. Typical costs may include
mortgage insurance (only if required by lender), attorney's fees, appraisals,
recording fees, state transfer taxes, and fee (owner's) title insurance. See
Attachment 2 for a listing of those closing costs which are both reimbursable
and non-reimbursable.
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HOME INSPECTION
You will be reimbursed for one termite and one structural inspection associated
with the purchase of your new home.
HOUSEHUNTING
------------
TRIP GUIDELINES
House hunting is normally intended for the employee and spouse only.
2 househunting trips - 8 day total limit
Coach airfare - most direct route
Mileage - prevailing rate (most direct route)
Car rental - full size
Reasonable meal expenses
Reasonable parking & tolls
8 nights lodging
CHILD CARE
AmSouth will reimburse documented child care fees incurred at prevailing market
rate, during your househunting trip(s) not to exceed $50 total per day.
RECEIPTS FOR EXPENSES
All receipts must be submitted for househunting trips along with the AmSouth
Bancorporation Relocation Expense Report to Ruth Farris at Johnson-Rast & Hays
for reimbursement. Whenever possible, prepayment of major expenses such as air
travel, hotels, etc. will be arranged through JRH.
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TRAVEL EXPENSES FROM YOUR OLD RESIDENCE TO YOUR NEW RESIDENCE
-------------------------------------------------------------
TRANSPORTATION OF EMPLOYEE AND FAMILY
Reasonable expenses incurred while transporting your family to the new location
are reimbursable. These costs will include one way transportation or mileage
reimbursement to the new job location. Air travel (coach) and mileage
reimbursement will be based on the most direct route and AmSouth's travel
policy.
AUTO RENTAL
If you do not have access to your automobile when you arrive in your new
location, AmSouth will reimburse you for up to ten (10) days' auto rental for
one car.
RECEIPTS FOR EXPENSES
All receipts must be submitted along with the AmSouth Bancorporation Relocation
Expense Report to Ruth Farris at Johnson-Rast & Hays for reimbursement.
Whenever possible, prepayment of major expenses such as air travel, hotels, etc.
will be arranged through JRH.
TEMPORARY LIVING
----------------
Temporary living for the employee starts with the first day at the new location
and continues for designated period (homeowner - 90 days, renters - 30 days).
Temporary living is designed to reimburse the employee while he/she is
maintaining expenses at the old and new location.
TEMPORARY LIVING AT NEW LOCATION
Temporary living is necessary as a result of 1) AmSouth's need for the employee
to report to the new location prior to a new home purchase or rental or 2) the
new residence or rental is not available but disposal of the old residence has
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occurred. Reimbursable temporary living expenses for the employee at the new
location will include a maximum of up to 90 days expenses for reasonable lodging
and dinner meals expense. Receipts are necessary. Costs which would normally
have been incurred as part of a usual business day (transportation to job,
lunch, dry cleaning) will not be reimbursable.
If circumstances require, temporary living expenses for the family at the new
location will be covered for 30 days and will include full reimbursement for
actual, reasonable food and lodging expenses. Additional days may be granted at
the discretion of AmSouth management. The transferring employee, through
careful planning and coordination of the disposal of the old residence and
purchase of the new, should minimize the number of days needed for temporary
living.
Should it become necessary for the transferring employee to move to the new
location before the family can move, the transferring employee will be
reimbursed for return visits every other week-end. Reimbursement will include
round-trip economy airfare or mileage and tolls at the appropriate rate. Meals
will not be considered reimbursable en route.
Temporary lodging expenses will normally be prepaid by JRH.
MOVING EXPENSES
---------------
MOVING COMPANY
To obtain assistance in moving your household an personal effects, contact JRH
three weeks in advance of the move. They will initiate moving services through
company designated carriers.
HOUSEHOLD GOODS
AmSouth will provide for insurance (at replacement value), full packing,
shipment and unpacking of all normal household goods. The following items will
not be moved or insured at AmSouth's expense.
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. Recreational Motor Vehicles or airplanes (that can be driven or towed,
motorcycles excluded).
. Boats (too big for regular shipment along with household goods)
. Patio slate
. Fertilizer
. Cement
. Frozen Foods
. Shrubbery
. Firewood
. Lumber or other building material
. Sand
. Animals larger than a cat or a dog.
. Portable swimming pools/hot tubs
. Live plants
. Jewelry, precious stones, valuable collections, legal documents, money in any
form (cash, securities, bonds, notes).
It is expected that you use discretion concerning the moving of those
possessions which are of little value in relation to the cost of moving.
TRANSPORTATION OF AUTOMOBILES
AmSouth will arrange to ship one of your personal automobiles via the most
efficient method (i.e., loading on the moving van, drive-away service, auto
carrier service, etc.). If you wish to drive rather than fly to the new
location, AmSouth will reimburse related expenses under the "Transportation of
Employee and Family" section of this policy.
STORAGE OF GOODS
If needed, AmSouth will reimburse for storage of goods for a period not to
exceed 90 days from the date of vacating in the event it is impossible to move
into a newly acquired home in the new location. Only those items on the
original moving van receipt are eligible for storage at AmSouth expense.
APPLIANCE SERVICE
The cost for dismantling, moving and installing your major household appliances
will be covered provided the appliance were installed at your old residence.
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MISCELLANEOUS EXPENSES
----------------------
RELOCATION ALLOWANCE
As there may be other miscellaneous expenses arising as a result of relocation,
homeowners will be provided an allowance of a full month's salary at their new
rate of pay, less appropriate taxes. Renters will be provided an allowance of
1/2 month's salary at their new rate of pay, less appropriate taxes. This
miscellaneous allowance is intended to pay for (but is not limited to) the
following items:
. Driver's license/automobile tag transfer
. Carpet alteration/cleaning
. Drapery cleaning or replacement
. Telephone installation
. Other babysitting fees beyond those permitted as part of the home search trips
. TV antennas/cable hook-ups
. Housecleaning trash removal
. Tuition reimbursement loss
. Other unforeseen expenses
. Minimal tax liability which may not be fully covered by the gross up formula.
You will receive this relocation allowance in your first pay deposit following
your start date.
RELOCATION TAX ASSISTANCE
-------------------------
INCOME TAX REGULATIONS
The Internal Revenue Code requires that all AmSouth relocation plan
reimbursements be reported in gross income as "compensation," except for the
following exclusions:
1. Transportation and storage of household goods and
personal effects.
2. Travel and lodging (but not meals) payments for
expenses of your final move from the old to new
home for you and your family.
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To be eligible for these exclusions, it is necessary that your new principal
place of employment be a minimum of 35 miles farther from your former residence
than was your former principal place of work. Additionally, you must continue
employment in the general location for a minimum of 39 weeks following your
move. These regulations are subject to change without notice.
TAX REPORTING
MRI will prepare a final "Employee Moving Expense" form (IRS Form 4782) at the
end of each year in which you receive a summary of that year's taxable
reimbursements related to relocation. All relocation expenses must be incurred
within one year of start date of new position. Expenses billed and paid prior
to October 31st will be included in the current tax year.
"GROSS-UP" ASSISTANCE
For all non-excludable reimbursements considered compensation by the IRS extra
income will be provided to compensate for tax obligations incurred. The
following is a summary of reimbursements to be "grossed-up":
. Home selling and purchasing expenses
. Miscellaneous reimbursements relating to househunting trips, temporary living,
and disposition of rented residence
The following is a summary of reimbursements that will not be "grossed-up":
. Excludable expenses noted above
. Relocation allowance - Withholding will be applied at 28% for federal, and as
appropriate for FICA, state and local taxes.
The gross-up will be determined on all applicable relocation expenses incurred
during a period which extends from October 31st of the current calendar year
back to November 1st of the prior calendar year. This calculation will be made
during the fourth quarter of the current year and will be entered into payroll
prior to year end. The gross-up calculation will be based on the following:
. Your annualized AmSouth federal and state (if applicable) taxable income for
the current calendar year
. The federal income tax bracket applicable for this level of income
. Applicable state taxes
. Your IRS filing status
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The calculation does not consider the following:
. Any other income you may have from other sources during the calendar year
. Your spouse's income
AmSouth's gross-up procedure is intended to assist you in paying the large
majority of any additional taxes associated with your relocation. It is not
intended to address this additional expense to the exact dollar.
TAX WITHHOLDING
AmSouth will report taxable income for federal and state (if applicable)
purposes which will include imputed income representing your non-excludable
reimbursements and the supplemental payment representing the gross-up for taxes.
Withholding will be applied at a level which will coincide with the gross-up
amount, and thus, the net effect of this reporting and withholding will be zero
net pay. In other words, the gross-up amounts will cover the withholding
applied. You will receive a separate payslip detailing these transactions.
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EXHIBIT 10-p
AMSOUTH BANCORPORATION
1996 LONG TERM INCENTIVE COMPENSATION PLAN
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Article 1. Establishment, Objectives, and Duration........................ A-2
Article 2. Definitions.................................................... A-2
Article 3. Administration................................................. A-4
Article 4. Shares Subject to the Plan and Maximum Awards.................. A-4
Article 5. Eligibility and Participation.................................. A-5
Article 6. Stock Options.................................................. A-5
Article 7. Stock Appreciation Rights...................................... A-6
Article 8. Restricted Stock............................................... A-6
Article 9. Performance Measures........................................... A-7
Article 10. Beneficiary Designation........................................ A-8
Article 11. Deferrals...................................................... A-8
Article 12. Rights of Employees............................................ A-8
Article 13. Change in Control.............................................. A-8
Article 14. Amendment, Modification, and Termination....................... A-8
Article 15. Withholding.................................................... A-9
Article 16. Indemnification................................................ A-9
Article 17. Successors..................................................... A-9
Article 18. Legal Construction............................................. A-9
</TABLE>
A-1
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ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. AmSouth Bancorporation, a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "AmSouth Bancorporation 1996
Long Term Incentive Compensation Plan" (hereinafter referred to as the
"Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, and Restricted Stock.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 18, 1996 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are
consistent with the Company's objectives and which link the interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants
to share in the success of the Company.
1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after April 18, 2006.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, or Restricted Stock.
2.2. "AWARD AGREEMENT" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.5. "CAUSE" shall be determined by the Committee, in exercise of good faith
and reasonable judgment, and shall mean the occurrence of any one or more of
the following:
(i) The willful and continued failure by the Participant to substantially
perform his duties (other than any such failure resulting from the
Participant's Disability), after a written demand for substantial
performance is delivered by the Committee to the Participant that
specifically identifies the manner in which the Committee believes that
the Participant has not substantially performed his duties, and the
Participant has failed to remedy the situation within thirty (30)
calendar days of receiving such notice; or
(ii) The Participant's conviction for committing an act of fraud,
embezzlement, theft, or another act constituting a felony; or
(iii) The willful engaging by the Participant in gross misconduct materially
and demonstrably injurious to the Company, as determined by the
Committee. However, no act or failure to act, on the Participant's part
shall be considered "willful" unless done, or omitted to be done, by
the Participant not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company.
2.6. "CHANGE IN CONTROL" of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions shall have
been satisfied:
(a) Any Person (other than those Persons in control of the Company as of the
Effective Date, or other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company) becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of
the combined voting power of the Company's then outstanding securities;
or
(b) During any period of two (2) consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of such
period constitute the Board (and any new Director, whose election by the
Company's stockholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination for election
was so approved), cease for any reason to constitute at least sixty percent
(60%) thereof; or
(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all the Company's assets; or (iii) a
merger, consolidation, or reorganization of the Company with
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or involving any other corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), at least sixty percent (60%) of the combined voting
power of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to the Participant, if the Participant is part of a purchasing
group which consummates the Change-in-Control transaction. The Participant
shall be deemed "part of a purchasing group" for purposes of the preceding
sentence if the Participant is an equity participant in the purchasing
company or group (except for: (i) passive ownership of less than three
percent (3%) of the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which is otherwise
not significant, as determined prior to the Change in Control by a majority
of the nonemployee Directors who were Directors prior to the transaction,
and who continue as Directors following the transaction).
2.7. "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.8. "COMMITTEE" means the Executive Compensation and Benefits Committee of
the Board, as specified in Article 3 herein, or such other Committee appointed
by the Board to administer the Plan with respect to grants of Awards.
2.9. "COMPANY" means AmSouth Bancorporation, and also means any corporation
of which a majority of the voting capital stock is owned directly or
indirectly by AmSouth Bancorporation or by any of its Subsidiaries, and any
other corporation designated by the Committee as being a Company hereunder
(but only during the period of such ownership or designation).
2.10. "COVERED EMPLOYEE" means a Participant who, as of the date of vesting
and/or payout of an Award, as applicable, is one of the group of "covered
employees," as defined in the regulations promulgated under Code Section
162(m), or any successor statute.
2.11. "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.12. "DISABILITY" as applied to a Participant, means that the Participant
(i) has established to the satisfaction of the Committee that the Participant
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
last for a continuous period of not less than 12 months (all within the
meaning of Section 22(e) (3) of the Code), and (ii) has satisfied any
requirement imposed by the Committee in regard to evidence of such disability.
2.13. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.14. "EMPLOYEE" means any key officer or employee of the Company. Directors
who are not employed by the Company shall not be considered Employees under
this Plan.
2.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.16. "FAIR MARKET VALUE" shall be determined on the basis of the closing
sale price on the principal securities exchange on which the Shares are traded
or, if there is no such sale on the relevant date, then on the last previous
day on which a sale was reported.
2.17. "FREESTANDING SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
2.18. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
2.19. "INSIDER" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.20. "NONEMPLOYEE DIRECTOR" means an individual who is a member of the Board
of Directors of the Company but who is not an Employee of the Company.
2.21. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.22. "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.23. "OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.24. "PARTICIPANT" means an Employee who has outstanding an Award granted
under the Plan. The term "Participant" shall not include Nonemployee
Directors.
2.25. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.26. "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance objectives, or upon the occurrence of
other events as determined by the Committee, at its discretion), and the
Shares of Restricted Stock are subject to a substantial risk of forfeiture, as
provided in Article 8 herein.
2.27. "PERSON" shall have the meaning ascribed to such
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term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d) thereof.
2.28. "RESTRICTED STOCK" means an Award granted to a Participant pursuant to
Article 8 herein.
2.29. "RETIREMENT" as applied to a Participant, means the Participant's
termination of employment in a manner which qualifies the Participant to
receive immediately payable retirement benefits under the AmSouth
Bancorporation Retirement Plan, under the successor or replacement of such
Retirement Plan if it is then no longer in effect, or under any other
retirement plan maintained or adopted by the Company which is determined by
the Committee to be the functional equivalent of such Retirement Plan.
2.30. "SHARES" means common stock of AmSouth Bancorporation, par value $1.00
per share.
2.31. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.32. "SUBSIDIARY" means any corporation, partnership, joint venture or other
entity in which the Company has a majority voting interest.
2.33. "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when
a Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3. ADMINISTRATION
3.1. THE COMMITTEE. The Plan shall be administered by the Committee of the
Board, or by any other Committee appointed by the Board, which Committee shall
satisfy the "disinterested administration" rules of Rule 16b-3 under the
Exchange Act, or any successor provision. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors.
3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, including Section 3.4, the Committee shall have full power
to select Employees who shall participate in the Plan; determine the sizes and
types of Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan; construe and interpret the Plan and any agreement or
instrument entered into under the Plan as they apply to Employees; establish,
amend, or waive rules and regulations for the Plan's administration as they
apply to Employees; and (subject to the provisions of Article 14 herein) amend
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan.
Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan, as the Plan applies
to Employees. As permitted by law, the Committee may delegate its authority as
identified herein.
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all
persons, including the Company, its stockholders, Employees, Participants, and
their estates and beneficiaries.
3.4. GRANTS TO NON-INSIDERS BY CHIEF EXECUTIVE OFFICER. To the extent
permissible under governing rules and regulations, and, in particular, Section
141(c) of the General Corporation Law of Delaware, the Chief Executive Officer
of the Company shall have the authority to make and administer grants of
Awards under this Plan to non-Insiders upon such terms and conditions as the
Chief Executive Officer shall determine; provided, however, that the total
number of Awards granted by the Chief Executive Officer each year shall be
subject to approval by the Committee.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided
in Section 4.3 herein, the number of Shares hereby reserved for issuance to
Participants under the Plan shall be two million, seven hundred fifty thousand
(2,750,000).
Notwithstanding the foregoing, the maximum number of Shares of Restricted
Stock granted pursuant to Article 8 herein shall be an amount equal to thirty
percent (30%) of the total number of Shares reserved for issuance under the
Plan.
Unless and until the Committee determines that an Award to a Covered Employee
shall not be designed to comply with the Performance-Based Exception, the
maximum aggregate number of Shares that may be granted or that may vest, as
applicable, pursuant to any Award granted in any one fiscal year to any single
Covered Employee shall be two hundred fifty thousand (250,000).
4.2. LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem
SAR), any Shares subject to such Award again shall be available for the grant
of an Award under the Plan.
4.3. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in
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the number and class of Shares which may be delivered under Section 4.1, in
the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, and in the Award limits set forth in Section 4.1, as
may be determined to be appropriate and equitable by the Committee, in its
sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a
whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in this Plan include all
Employees of the Company, including Employees who are members of the Board.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
ARTICLE 6. STOCK OPTIONS
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.
6.2. AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as
the Committee shall determine. The Award Agreement also shall specify whether
the Option is intended to be an ISO within the meaning of Code Section 422, or
an NQSO whose grant is intended not to fall under the provisions of Code
Section 422.
6.3. OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
6.4. DURATION OF OPTIONS. Each Option granted to an Employee shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5. DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents in
connection with Options granted under this Plan. Such dividend equivalents may
be payable in cash or in Shares, upon such terms as the Committee, in its sole
discretion, deems appropriate.
6.6. EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, which need not be the same
for each grant or for each Participant.
6.7. PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) if permitted in the
governing Award Agreement, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price, or (c) if permitted in the governing Award Agreement, by a combination of
(a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.8. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.9. TERMINATION OF EMPLOYMENT. Each Option, to the extent it has not been
previously exercised, shall terminate upon the earliest to occur of: (i) the
expiration of the Option period set forth in the Option Award Agreement; (ii)
for ISOs, the expiration of three (3) months following the Participant's
Retirement (following the Participant's Retirement, NQSOs shall terminate upon
the expiration of the Option period set forth in the Option Award Agreement);
(iii) the expiration of twelve (12) months following the Participant's death
or Disability; (iv) immediately upon termination for Cause; or (v) the
expiration of thirty (30) days following the Participant's termination of
employment for any reason other than Cause, Change in Control, death,
Disability, or Retirement. Upon a termination of employment related to a
Change in Control, Options shall be treated in the manner set forth in Article
13.
6.10. NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.
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(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in a Participant's Award Agreement, all NQSOs granted to
a Participant under this Article 6 shall be exercisable during his or her
lifetime only by such Participant.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may
be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares subject to
the ISO exceeds the Option Price of the ISO.
7.3. EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4. SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5. TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7. RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR
(including, without limitation, the right of the Committee to limit the time
of exercise to specified periods) as may be required to satisfy the
requirements of Section 16 of the Exchange Act (or any successor rule).
7.8. TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall
be included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of employment.
7.9. NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime
only by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine. Without limiting the generality of the foregoing, Restricted Shares
may be granted in connection with payouts under other compensation programs of
the Company.
8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock granted,
and such other provisions as the Committee shall determine.
8.3. TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Restricted Stock Award Agreement, or upon earlier
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<PAGE>
satisfaction of any other conditions, as specified by the Committee in its
sole discretion and set forth in the Restricted Stock Award Agreement. All
rights with respect to the Restricted Stock granted to a Participant under the
Plan shall be available during his or her lifetime only to such Participant.
8.4. OTHER RESTRICTIONS. Subject to Article 9 herein, the Committee shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price
for each Share of Restricted Stock, restrictions based upon the achievement of
specific performance objectives (Company-wide, business unit, and/or
individual), time-based restrictions on vesting following the attainment of
the performance objectives, and/or restrictions under applicable federal or
state securities laws.
At the discretion of the Committee, the Company may retain the certificates
representing Shares of Restricted Stock in the Company's possession until such
time as all conditions and/or restrictions applicable to such Shares have been
satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5. VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying
Shares while they are so held. Such dividends may be paid currently, accrued
as contingent cash obligations, or converted into additional shares of
Restricted Stock, upon such terms as the Committee establishes.
The Committee may apply any restrictions to the dividends that the Committee
deems appropriate. Without limiting the generality of the preceding sentence,
if the grant or vesting of Restricted Shares granted to a Covered Employee is
designed to comply with the requirements of the Performance-Based Exception,
the Committee may apply any restrictions it deems appropriate to the payment
of dividends declared with respect to such Restricted Shares, such that the
dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7. TERMINATION OF EMPLOYMENT. Upon a Participant's death, Disability, or
Retirement, all Restricted Shares shall vest immediately subject to any
limitations under Code Section 162(m). Each Restricted Stock Award Agreement
shall set forth the extent to which the Participant shall have the right to
retain unvested Restricted Shares following termination of the Participant's
employment with the Company in all other circumstances. Such provisions shall
be determined in the sole discretion of the Committee, shall be included in
the Award Agreement entered into with each Participant, need not be uniform
among all Shares of Restricted Stock issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of employment;
provided, however, that, except in the cases of terminations connected with a
Change in Control and terminations by reason of death or Disability, the
vesting of Shares of Restricted Stock which qualify for the Performance-Based
Exception and which are held by Covered Employees shall occur at the time they
otherwise would have, but for the employment termination.
ARTICLE 9. PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and stockholders
approve a change in the general performance measures set forth in this Article
9, the attainment of which may determine the degree of payout and/or vesting
with respect to Awards to Covered Employees which are designed to qualify for
the Performance-Based Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among the following alternatives:
(a) Net Income;
(b) Return on Equity;
(c) Earnings per Share;
(d) Return on Assets;
(e) Total Shareholder Return; and
(f) Return on Investment.
Subject to the terms of the Plan, each of these measures shall be defined by
the Committee on a corporation or subsidiary basis or in comparison with peer
group performance, and may include or exclude specified extraordinary items,
as determined by the Company's auditors.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance objectives; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Covered Employees, may not be adjusted upward
(the Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining
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stockholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards which shall not qualify for the
Performance-Based Exception, the Committee may make such grants without
satisfying the requirements of Code Section 162(m).
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke
all prior designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the Participant in
writing with the Company during the Participant's lifetime. In the absence of
any such designation, benefits remaining unpaid at the Participant's death
shall be paid to the Participant's estate.
ARTICLE 11. DEFERRALS
The Committee may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant by virtue of the exercise of an Option or SAR, the
lapse or waiver of restrictions with respect to Restricted Stock, or the
satisfaction of any requirements or objectives with respect to Performance
Units/Shares. If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for
such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
12.2. PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
13.1. TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become immediately
exercisable, and shall remain exercisable throughout their entire term;
and
(b) Any restriction periods and restrictions imposed on Shares of Restricted
Stock shall lapse; provided, however, that the degree of vesting
associated with Restricted Stock which has been conditioned upon the
achievement of performance conditions pursuant to Section 8.4 herein
shall be determined in the manner set forth in Section 8.7 herein.
13.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 13 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to said Participant's
outstanding Awards.
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION
14.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 13.2
herein, the Board may at any time and from time to time, alter, amend, suspend
or terminate the Plan in whole or in part; provided, however, that no
amendment which requires stockholder approval in order for the Plan to
continue to comply with Rule 16b-3 under the Exchange Act, including any
successor to such Rule, shall be effective unless such amendment shall be
approved by the requisite vote of stockholders of the Company entitled to vote
thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
14.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual
or nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Covered Employees, may only be adjusted to
the extent permissible under Code Section 162(m).
14.3. AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
14.4. COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not
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desired with respect to any Award or Awards available for grant under the
Plan, then compliance with Code Section 162(m) will not be required. In
addition, in the event that changes are made to Code Section 162(m) to permit
greater flexibility with respect to any Award or Awards available under the
Plan, the Committee may, subject to this Article 14, make any adjustments it
deems appropriate.
ARTICLE 15. WITHHOLDING
15.1. TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.
15.2. SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restriction on restricted Stock,
or upon any other taxable Participants may elect to satisfy the withholding
requirement, in whole or in part by having the Company withhold Shares having a
Fair Market Value on the date the tax is to be determined up to the maximum
statutory federal tax which could be withheld on the transaction. All such
elections shall be made in writing, signed by Participant, and shall to any
restrictions or limitations that age Committee, in its sole discretion, deems
appropriate.
ARTICLE 16. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him or her in settlement
thereof, with the Company's approval, or paid by him or her in satisfaction of
any judgement in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may
be entitled under the Company's Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
ARTICLE 17. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation, or otherwise.
ARTICLE 18. LEGAL CONSTRUCTION
18.1. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
18.2. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
18.3. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4. SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
or its successors under the Exchange Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee.
18.5. GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the state of Alabama.
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EXHIBIT 10-q
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
FOR DIRECTORS OF
AMSOUTH BANCORPORATION
ARTICLE I
Purpose: Status of Deferred Compensation
----------------------------------------
1.1 Purpose. The Plan provides a method of deferring payment to a
-------
Director of certain compensation to which such person would otherwise be
entitled under applicable resolutions of the Board of Directors of AmSouth
Bancorporation ("AmSouth") in force from time to time and provides for
distribution of all sums so deferred with earnings thereon in the manner and at
the time hereinafter set forth.
1.2 Any sums due under the Plan to or for the benefit of a Participant
shall not be funded by AmSouth or any subsidiary thereof nor shall any asset of
AmSouth or any subsidiary thereof be otherwise pledged for, subjected to legal
or equitable lien or encumbrance to secure, or set aside for, the payment of
any sums hereunder. Sums due hereunder shall be payable solely from the general
assets of AmSouth.
ARTICLE II
Effective Date; Manner of Participation
---------------------------------------
2.1 Effective Date. The Plan shall go into effect on July 1, 1986.
--------------
2.2 Participation. A Director becomes a Participant in the Plan by
-------------
delivering to the Administrator a duly executed election form in the form
attached hereto. For Directors who submit election forms prior to July 1, 1986,
participation shall be effective July 1, 1986. For Directors who submit
election forms at any time on or after July 1, 1986, participation shall begin
on the first day of the calendar quarter following receipt of the election form
by the Administrator.
2.3 Termination of Participation. A Director may terminate participation
----------------------------
in the Plan by delivering a signed written notice to that effect to the
Administrator. Termination shall become effective at the end of the calendar
quarter in which the Administrator receives the notice. Termination of
<PAGE>
participation in the Plan shall not affect amounts previously deferred; said
amounts shall continue to be deferred and shall be paid in accordance with the
initial election form and the terms of the Plan.
2.4 Participation after Termination. In no event shall a Director who
-------------------------------
has terminated participation in the Plan be entitled again to participate in the
Plan for a period of three years after the termination became effective. Such a
Director may then again participate in the manner described in Section 2.2,
provided, however, that the Director may not alter the payment options selected
pursuant to Sections 5.1 and 5.2 in his or her initial election form.
ARTICLE III
Deferred Compensation
---------------------
3.1 Amounts Available for Deferral. A Director who is a Participant may
------------------------------
choose to defer under the Plan:
(a) all or any specified portion of the retainer (if any) earned by
him or her from AmSouth from time to time, or
(b) all (but not a portion of) meeting fees paid to him or her by
AmSouth,
or both. The amount chosen from time to time by a Director to be deferred is
referred to in this Plan as "Deferred Compensation."
3.2 Manner of Specifying Amount. A Director shall, in the first election
---------------------------
form submitted by him or her, specify the amount to be deferred within the
limits set forth in Section 3.1.
3.3 Changing the Amount to be Deferred. A Director may, at any time,
----------------------------------
submit to the Administrator a new election form changing, within the limits
specified in Section 3.1, the amounts to be deferred, provided that the
specified changes shall become effective at the beginning of the calendar
quarter next following receipt of said election form by the Administrator.
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<PAGE>
ARTICLE IV
Deferred Compensation Accounts
------------------------------
4.1 Earnings on Deferred Compensation. The Administrator shall maintain
---------------------------------
on its books and records an accurate account of all Deferred Compensation in a
separate Account for each Participant, which shall be invested in "phantom"
shares of AmSouth common stock. For internal accounting purposes, each Account
will be valued on the last business day of each calendar quarter. "Phantom"
dividends will be reinvested in additional "phantom" stock as of the relevant
dividend payment date. Each Account will be valued based on the average of the
closing prices of AmSouth common stock on the 10 business days ending two
business days before the date a payment is due.
4.2 Statements of Account. The Administrator shall, during the third
---------------------
quarter of each calendar year beginning in 1987, prepare and distribute to each
Participant a report reflecting the amounts in such Account as of June 30 of
that year.
ARTICLE V
Payment of Deferred Compensation
--------------------------------
5.1 Commencement of Payment. In the first election form submitted by a
-----------------------
Director to the Administrator, a Director may choose between the following times
for payment of Benefits (which shall consist of all Deferred Compensation and
all accumulated earnings thereon) to begin:
(a) on January 15 of the year following the year in which the Director
retires from or his or her service is otherwise terminated from the Board of
AmSouth, or
(b) on January 15 of the year in which the Director attains any age
selected by him or her in said first election form.
The choice so made shall be final and binding on the Director and may not be
changed on any subsequently submitted election form or otherwise. Payment shall
commence on the date specified in accordance with this Section 5.1 or as soon
as reasonably practicable thereafter.
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5.2 Period for Payment. In the first election form submitted by a
------------------
Director to the Administrator, a Director may choose between the following time
periods for payment of Deferred Compensation:
(a) in a lump sum on the January 15 specified in accordance with the
provisions of Section 5.1, or
(b) in any specified number of annual installments commencing with the
January 15 specified in accordance with the provisions of Section 5.1.
The following limitations shall apply to the administration of any election
under this Subsection (b):
(i) each annual installment will be a minimum of $5,000 even if the
minimum payment amount shortens the number of annual installments otherwise
elected (for example, if the Benefits totaled $35,500 and the Director had
elected to be paid in eight annual installments, the Director will receive six
installments of $5,000 and a final seventh installment of $5,500, all
installments plus earnings as provided in Section 5.4),
(ii) if at the time payment is due to commence, the amount of the
Benefits is $25,000 or less, the entire amount shall be paid in a lump sum, and
(iii) the provisions of Section 5.3 concerning death of the Director
shall apply.
5.3 Effect of Death of a Participant. Despite any provision of the Plan
--------------------------------
or any election or other instruction of a Participant, all sums due to be paid
under the Plan shall be paid to the legal representative of a Participant in a
lump sum as soon as practicable following receipt by the Administrator of
written notice of the death of the Participant. Earnings on said sums, computed
under Section 4.1, shall be credited to a date within ten days of the date of
payment to the legal representative.
5.4 Calculation of Installment Payments. When annual installments are
-----------------------------------
due to commence under this Article V, the Administrator shall calculate the
total amount of the Benefits as of December 31 of the previous year and divide
said total by the number of annual installments elected by the Participant to
derive the Participant's Annual Payment amount. On each January 15 until said
4
<PAGE>
total is completely paid, the Administrator shall pay to the Participant the
Annual Payment plus earnings computed on the unpaid portion of said total in
accordance with the rate determined pursuant to Section 4.1. In all cases, the
limitations provided in Section 5.2(b) shall apply.
ARTICLE VI
Miscellaneous
-------------
6.1 Other than the Participant and the legal representative of his or her
estate, no person, whether a creditor or assignee of a Participant or of the
estate of a Participant or otherwise, shall have an interest in the Plan, or the
Deferred Compensation or earnings thereon; and no person, including the
Participant and estates of participant, shall have the right to demand or be
entitled to payment of any sums under the Plan prior to the time payments are
due in strict accordance with the terms of the Plan nor to a form of payment not
otherwise due strictly in accordance with the provisions of Article V of the
Plan. In amplification but not in limitation of the foregoing, before a
Participant or estate of a deceased Participant actually receives any payment of
any sum hereunder, no Participant or estate has the right to assign, pledge,
grant a security interest in, transfer or otherwise dispose of any interest
under the Plan.
6.2 No Director will acquire any rights or entitlement to continue as such
or to any other office by or as a result or consequence, directly or indirectly,
of the establishment or operation of the Plan.
6.3 The Board of Directors of AmSouth may, prospectively, amend or modify
the Plan from time to time or terminate the Plan. However no amendment or
termination of the Plan shall adversely affect the rights of Participants and
their estates to Benefits as of the date of such amendment or termination as
expressly set forth in the Plan prior to such amendment or termination.
6.4 The Plan is governed by and construed in accordance with the laws of
the State of Alabama.
6.5 If, and to the extent that, any provision of the election form
attached hereto or submitted by a Director is inconsistent with any provision of
the Plan, the Plan provision shall be final and binding.
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6.6 The Plan and the obligation to pay Benefits in accordance with its
terms shall be and remain the obligation of AmSouth and its successors by
operation of law, merger, consolidation or other reorganization or purchase of
all or substantially all of its assets.
ARTICLE VII
Definitions
-----------
Some of the terms used herein are defined in this Article; others are
defined in context in the Plan.
7.1 "Administrator" means the Controller of AmSouth Bank of Alabama,
unless and until the Board of Directors or Director Affairs Committee of
AmSouth Bancorporation shall designate another to act as Administrator.
7.2 "Director" means any director of AmSouth Bancorporation or its
successors and assigns provided, however, that the term shall not include any
officer or employee thereof nor any advisory director by whatever name such
advisory position may be known.
7.3 "Plan" means this Deferred Compensation Plan as the same may be
hereafter amended from time to time and shall, as to a specific Director, be
deemed to include that person's election form (provided for in Section 2.2
hereof), unless otherwise expressly provided to the contrary herein.
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The foregoing Amended and Restated Deferred Compensation Plan for Directors
of AmSouth Bancorporation is approved as of December 19, 1997.
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EXHIBIT 10-v
EXECUTIVE SEVERANCE AGREEMENT
FOR
-----------------------
AmSouth Bancorporation
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
- --------------------------------------------------------------------------------
PAGE
<S> <C>
Article 1. Definitions 2
Article 2. Severance Benefits 7
Article 3. Form and Timing of Severance Benefits 10
Article 4. Excise Tax Gross-Up 10
Article 5. The Company's Payment Obligations 12
Article 6. Term of Agreement 13
Article 7. Legal Remedies 13
Article 8. Successors 13
Article 9. Miscellaneous 14
</TABLE>
<PAGE>
AMSOUTH BANCORPORATION
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of _____,
____, by and between AmSouth Bancorporation, a Delaware corporation (hereinafter
referred to as the "Company") and _______ (hereinafter referred to as the
"Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved the Company
entering into severance agreements with certain key executives of the Company
and its subsidiaries;
WHEREAS, the Executive is a key executive of the Company or of its
subsidiary;
WHEREAS, should the possibility of a Change in Control of the Company
arise, the Board believes it imperative that the Company and the Board should
be able to rely upon the Executive to continue in his position, and that the
Company should be able to receive and rely upon the Executive's advice, if
requested, as to the best interests of the Company and its shareholders without
concern that the Executive might be distracted by the personal uncertainties
and risks created by the possibility of a Change in Control; and
WHEREAS, should the possibility of a Change in Control arise, in
addition to his regular duties, the Executive may be called upon to assist in
the assessment of such possible Change in Control, advise management and the
Board as to whether such Change in Control would be in the best interests of the
Company and its shareholders, and to take such other actions as the Board might
determine to be appropriate.
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NOW THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat, or occurrence of a Change in Control
of the Company, and to induce the Executive to remain in the employ of the
Company, and for other good and valuable consideration, the Company and the
Executive agree as follows:
ARTICLE 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "Agreement" means this Executive Severance Agreement.
(b) "Base Salary" means the salary of record paid to the Executive as
annual salary, excluding amounts received under incentive or other
bonus plans, whether or not deferred.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(d) "Beneficiary" means the persons or entities designated or deemed
designated by the Executive pursuant to Section 9.2 herein.
(e) "Board" means the Board of Directors of the Company.
(f) "Cause" shall be determined by the Committee, in exercise of good
faith and reasonable judgment, and shall mean the occurrence of any
one or more of the following:
(i) The willful and continued failure by the Executive to
substantially perform his duties (other than any such failure
resulting from the Executive's Disability), after a written
demand for substantial performance is delivered by the
Committee to the Executive that specifically identifies the
manner in which the Committee believes that the Executive has
not substantially performed his duties, and the Executive has
failed to remedy the situation within thirty (30) calendar
days of receiving such notice; or
(ii) The Executive's conviction for committing an act of fraud,
embezzlement, theft, or other act constituting a felony; or
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(iii) The willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Company, as
determined by the Committee. However, no act or failure to
act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(g) "Change in Control" of the Company shall be deemed to have occurred
as of the first day that any one or more of the following
conditions shall have been satisfied:
(i) Any Person (other than those Persons in control of the
Company as of the Effective Date, or other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or a corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company), who becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute
the Board (and any new Director, whose election by the
Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose
election or nomination for election was so approved), cease
for any reason to constitute at least sixty percent (60%)
thereof; or
(iii) The stockholders of the Company approve: (A) a plan of
complete liquidation of the Company; or (B) an agreement for
the sale or disposition of all or substantially all the
Company's assets; or (C) a merger, consolidation, or
reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), at
least sixty percent (60%) of the combined voting power of the
voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
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However, in no event shall a Change in Control be deemed to have
occurred, with respect to the Executive, if the Executive is part
of a purchasing group which consummates the Change-in-Control
transaction. The Executive shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Executive is
an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than three percent (3%) of the
stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is otherwise
not significant, as determined prior to the Change in Control by a
majority of the nonemployee Directors who were Directors prior to
the transaction, and who continue as Directors following the
transaction).
(h) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(i) "Committee" means the Executive Compensation and Benefits Committee
of the Board, or any other committee appointed by the Board to
perform the functions of the Executive Compensation and Benefits
Committee.
(j) "Company" means AmSouth Bancorporation, a Delaware corporation
(including any and all subsidiaries), or any successor thereto as
provided in Article 8 herein.
(k) "Disability" means permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the Committee in
the exercise of good faith and reasonable judgment, upon receipt of
and in reliance on sufficient competent medical advice from one or
more individuals, selected by the Committee, who are qualified to
give professional medical advice.
(l) "Effective Date" is _______.
(m) "Effective Date of Termination" means the date on which a
Qualifying Termination occurs which triggers the payment of
Severance Benefits hereunder.
(n) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
(o) "Executive" means _______.
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(p) "Good Reason" means, without the Executive's express written
consent, the occurrence after a Change in Control of the Company of
any one or more of the following:
(i) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including titles and reporting
requirements) as an officer of the Company, or a material
reduction or alteration in the nature or status of the
Executive's authorities, duties, or responsibilities from
those in effect as of ninety (90) days prior to the Change in
Control, other than an insubstantial and inadvertent act that
is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) The Company's requiring the Executive to be based at a
location in excess of thirty-five (35) miles from the
location of the Executive's principal job location or office
immediately prior to the Change in Control; except for
required travel on the Company's business to an extent
substantially consistent with the Executive's present
business obligations;
(iii) A reduction by the Company of the Executive's Base Salary as
in effect on the Effective Date, or as the same shall be
increased from time to time;
(iv) An intentional, material reduction by the Company of the
Executive's aggregate incentive opportunities under the
Company's short- and long-term incentive programs, as such
opportunities exist on the Effective Date, or as such
opportunities may be increased after the Effective Date. For
this purpose, a reduction in the Executive's incentive
opportunities shall be deemed to have occurred in the event
his annualized base bonus and targeted long-term incentive
award opportunities and/or the degree of probability of
attainment of such annualized award opportunities, are
materially diminished from the levels and probability of
attainment that existed as of the Effective Date;
(v) The failure of the Company to maintain the Executive's
relative level of coverage under the Company's employee
benefit or retirement plans, policies, practices, or
arrangements in which the Executive participates as of the
Effective Date, both in terms of the amount of benefits
provided and the relative level of the executive's
participation. For this purpose, the Company may eliminate
and/or modify existing programs
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<PAGE>
and coverage levels; provided, however, that the Executive's
level of coverage under all such programs must be at least as
great as is such coverage provided to executives who have the
same or lesser levels of reporting responsibilities within
the Company's organization;
(vi) The failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to
perform the Company's obligations under this Agreement, as
contemplated in Article 8 herein; and
(vii) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 2.8
herein, and for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate employment for Good Reason shall
not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
(q) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(r) "Qualifying Termination" means any of the events described in
Section 2.3 herein, the occurrence of which triggers the payment of
Severance Benefits hereunder.
(s) "Severance Benefits" means the payment of severance compensation as
provided in Section 2.4 herein.
(t) "Severance Multiplier" means the lesser of: (i) _________
(________); or (ii) a fraction, the numerator of which is the
number of full months between the effective date of the Executive's
Qualifying Termination and the Executive's sixty-fifth (65th)
birthday, and the denominator of which is twelve (12). For this
purpose, the Severance Multiplier following the attainment of age
sixty-five (65) shall be zero (0) in all cases.
(u) "Total Payments" means the sum of the Executive's Severance
Benefits and all other payments and benefits provided to the
Executive by the Company which constitute "excess parachute
payments" within the meaning of Code Section 280G(b)(1). Without
limiting the generality of the foregoing, Total Payments shall
include any and all excess parachute payments associated with
outstanding long-term incentive grants (to include, but not be
limited to, early vesting of stock options or restricted stock).
(v) "Window Period" means the time period commencing upon a Change in
Control, as defined in Section (g) of this Article 1, and ending
twenty-four months after the latter to occur of: (i) any of the
events defined as a Change in Control in Section 1(g); or
(ii) final consummation of the liquidation, sale or disposition of
assets, or the merger, consolidation or reorganization of the
Company as described in Section 1(g)(iii).
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ARTICLE 2. SEVERANCE BENEFITS
2.1. RIGHT TO SEVERANCE BENEFITS. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Section 2.4 herein,
if there has been a Change in Control of the Company and if, within the Window
Period, the Executive's employment with the Company shall end for any reason
specified in Section 2.3 herein.
The Executive shall not be entitled to receive Severance Benefits if he
is terminated for Cause, or if his employment with the Company ends due to
death, Disability, retirement on or after early retirement age (as defined under
the then established rules of the Company's tax-qualified retirement plan
applicable to the Executive), or due to a voluntary termination of employment by
the Executive without Good Reason.
2.2. SERVICES DURING CERTAIN EVENTS. In the event a Person begins a
tender or exchange offer, circulates a proxy to shareholders of the Company, or
takes other steps seeking to effect a Change in Control, the Executive agrees
that he will not voluntarily leave the employ of the Company and will render
services until such Person has abandoned or terminated his or its efforts to
effect a Change in Control, or until six (6) months after a Change in Control
has occurred; provided, however, that the Company may terminate the Executive
for Cause at any time, and the Executive may terminate his employment any time
after the Change in Control for Good Reason.
2.3. QUALIFYING TERMINATION. The occurrence of any one or more of the
following events within the Window Period shall trigger the payment of
Severance Benefits to the Executive under this Agreement:
(a) An involuntary termination of the Executive's employment by
the Company for reasons other than Cause;
(b) A voluntary termination of employment by the Executive for
Good Reason;
(c) A successor company fails or refuses to assume the Company's
obligations under this Agreement, as required by Article 8
herein; or
(d) The Company or any successor company breaches any of the
provisions of this Agreement.
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2.4. DESCRIPTION OF SEVERANCE BENEFITS. In the event that the
Executive becomes entitled to receive Severance Benefits, as provided in
Sections 2.1 and 2.3 herein, the Company shall pay to the Executive and provide
him with the following:
(a) An amount equal to the Severance Multiplier times the highest
rate of the Executive's annual Base Salary in effect at any
time up to and including the Effective Date of Termination.
(b) An amount equal to the Severance Multiplier times the greater
of: (i) the Executive's average annual bonus earned over the
three (3) full fiscal years prior to the Effective Date of
Termination; or (ii) the Executive's base bonus opportunity
established under the AmSouth Bancorporation _______ Incentive
Plan or its successor, for the bonus plan year in which the
Executive's Effective Date of Termination occurs.
(c) An amount equal to the Severance Multiplier times the sum of:
(i) the Executive's annual club dues bonus; plus (ii) the
Executive's annual automobile allowance, for the year in which
the Executive's Effective Date of Termination occurs.
(d) An amount equal to the Executive's unpaid Base Salary, a pro
rata portion of the Executive's base bonus opportunity for the
bonus plan year in which termination occurs (to be determined
at the discretion of the Compensation Committee), and accrued
vacation pay through the Effective Date of Termination.
(e) A continuation of all benefits pursuant to any and all welfare
benefit plans under which the Executive and/or the Executive's
family is eligible to receive benefits and/or coverage as of
the effective date of the Change in Control, including, but
not limited to, group life insurance, hospitalization,
disability, medical and dental plans. Such benefits shall be
provided to the Executive at the same premium cost, and at the
same coverage level, as in effect as of the Executive's
Effective Date of Termination.
The welfare benefits described in this Subsection 2.4(e) shall
continue following the Effective Date of Termination for the
number of years equal to the Severance Multiplier; provided,
however, that such benefits shall be discontinued prior to the
end of such period in the event the Executive receives
substantially similar benefits from a subsequent employer, as
determined by the Committee.
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(f) A lump sum cash payment of the actuarial present value
equivalent of the aggregate benefits accrued by the Executive
as of the Effective Date of Termination under the terms of the
Supplemental Retirement Plan. For this purpose, the
Executive's interest under the Supplemental Retirement plan
shall be fully vested as of the effective date of the Change
in Control and such benefits shall be calculated under the
assumption that the Executive's employment continued following
the Effective Date of Termination for the number of years
equal to the Severance Multiplier (i.e., additional years of
service credits shall be added), provided, however, that for
purposes of determining "final average pay" under the benefit
calculation, the Executive's actual pay history as of the
Effective Date of Termination shall be used.
(g) A lump sum cash payment of the aggregate benefits accrued by
the Executive as of the Effective Date of Termination under
the terms of the Supplemental Thrift Plan. The payment
provided under this Subsection 2.4(g) shall be made in lieu
of, and shall completely supersede and replace the Executive's
benefits payable under the AmSouth Bancorporation Supplemental
Thrift Plan.
(h) A lump sum cash payment of the entire balance of the
Executive's compensation which has been deferred under the
AmSouth Bancorporation _______ Incentive Plan or its successor
together with all interest that has been credited with respect
to such deferred compensation balance.
(i) A lump sum cash payment of any relocation benefits accrued by
the Executive under the relocation policy of the Company or
its successor as are available to employees in the same class
or category as the Executive immediately prior to the Change
in Control.
2.5. TERMINATION FOR TOTAL AND PERMANENT DISABILITY. Following a
Change in Control of the Company, if the Executive's employment is terminated
due to Disability, the Executive shall receive his Base Salary through the
Effective Date of Termination, at which point in time the Executive's benefits
shall be determined in accordance with the Company's retirement, insurance, and
other applicable plans and programs then in effect.
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2.6. TERMINATION FOR RETIREMENT OR DEATH. Following a Change in Control
of the Company, if the Executive's employment is terminated by reason of his
retirement (as defined under the then-established rules of the Company's tax-
qualified retirement plan), or death, the Executive's benefits shall be
determined in accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable programs of the Company then in effect.
2.7. TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR GOOD
REASON. Following a Change in Control of the Company, if the Executive's
employment is terminated either: (i) by the Company for Cause; or (ii) by the
Executive other than for Good Reason, the Company shall pay the Executive his
full Base Salary and accrued vacation through the Effective Date of Termination,
at the rate then in effect, plus all other amounts to which the Executive is
entitled under any compensation plans of the Company, at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement.
2.8. NOTICE OF TERMINATION. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
ARTICLE 3. FORM AND TIMING OF SEVERANCE BENEFITS
3.1. FORM AND TIMING OF SEVERANCE BENEFITS. The Severance Benefits
described in Sections 2.4(a), 2.4(b), 2.4(c), 2.4(d), 2.4(f), 2.4(g), 2.4(h),
and 2.4(i) herein shall be paid in cash to the Executive in a single lump sum as
soon as practicable following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date.
3.2. WITHHOLDING OF TAXES. The Company shall be entitled to withhold
from any amounts payable under this Agreement all taxes as legally shall be
required (including, without limitation, any United States Federal taxes, and
any other state, city, or local taxes).
ARTICLE 4. EXCISE TAX GROSS-UP
4.1 EQUALIZATION PAYMENT. In the event that the Executive becomes
entitled to Severance Benefits, if any of the Executive's Total Payments will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or
any similar tax that may hereafter be imposed), the Company shall pay to the
Executive in cash an additional amount (the "Gross-up Payment") such that the
net amount retained by the Executive after deduction of any Excise Tax on the
Total Payments and any federal, state, and local income tax and Excise Tax upon
the Gross-up Payment provided for by this Section 4.1, shall be equal to the
Total Payments. Such payment shall be made by the Company to the Executive as
soon as practicable following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date.
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4.2 TAX COMPUTATION. For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amounts of such
Excise Tax:
(a) Any other payments or benefits received or to be received by
the Executive in connection with a Change in Control of the
Company or the Executive's termination of employment (whether
pursuant to the terms of this Plan or any other plan,
arrangement, or agreement with the Company, or with any Person
whose actions result in a Change in Control of the Company or
any Person affiliated with the Company or such Persons) shall
be treated as "parachute payments" within in the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) shall be
treated as subject to the excise tax, unless in the opinion of
tax counsel selected by the Company's independent auditors and
acceptable to the Executive, such other payments or benefits
(in whole or in part) do not constitute parachute payments, or
unless such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the
excise tax;
(b) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of: (i)
the total amount of the Total Payments; or (ii) the amount
of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (a) above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent
auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
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For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive's residence on the
Effective Date of Termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.
4.3 SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service adjusts the computation of the Company under Section 4.2 herein, so that
the Executive did not receive the greatest net benefit, the Company shall
reimburse the Executive for the full amount necessary to make the Executive
whole, plus an appropriate market rate of interest, as determined by the
Company's independent auditors.
ARTICLE 5. THE COMPANY'S PAYMENT OBLIGATION
5.1 PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to make
the payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and the
Company shall not seek to recover all or any part of such payment from the
Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.
The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except to the extent
provided in Section 2.4(e) herein.
5.2 CONTRACTUAL RIGHTS TO BENEFITS. This Agreement establishes and
vests in the Executive a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall require or be deemed
to require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.
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ARTICLE 6. TERM OF AGREEMENT
This Agreement will commence on the Effective Date and shall terminate
on ________; provided however that this Agreement shall be extended
automatically for one (1) additional year at the end of this initial term and at
the end of each additional year thereafter, unless the Committee delivers
written notice twelve (12) months prior to the end of such term, or extended
term, to the Executive, that the Agreement will not be extended. In such case,
the Agreement will terminate at the end of the term, or extended term, then in
progress.
However, in the event a Change in Control occurs during the original or
any extended term, this Agreement will remain in effect for the longer of:
(i) the duration of the Window Period; or (ii) until all obligations of the
Company hereunder have been fulfilled, and until all benefits required hereunder
have been paid to the Executive.
ARTICLE 7. LEGAL REMEDIES
7.1 PAYMENT OF LEGAL FEES. To the extent permitted by law, the
Company shall pay all legal fees, costs of litigation, prejudgment interest, and
other expenses incurred in good faith by the Executive as a result of the
Company's refusal to provide the Severance Benefits to which the Executive
becomes entitled under this Agreement, or as a result of the Company's
contesting the validity, enforceability, or interpretation of this Agreement, or
as a result of any conflict between the parties pertaining to this Agreement.
7.2 ARBITRATION. The Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three (3) arbitrators sitting in a location selected by the Executive
within fifty (50) miles from the location of his job with the Company, in
accordance with the rules of the American Arbitration Association then in
effect.
Judgment may be entered on the award of the arbitrator in any court
having proper jurisdiction. All expenses of such arbitration, including the fees
and expenses of the counsel for the Executive, shall be borne by the Company.
ARTICLE 8. SUCCESSORS
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) of all or substantially all of
the business and/or assets of the Company or of any division or subsidiary
thereof to expressly assume and agree to perform the Company's obligations under
this Agreement in the same manner and to the same extent that the Company would
be required to perform them if no such succession had taken place. Failure of
the Company to obtain such assumption and agreement prior to the effective date
of any such succession shall be a breach of this
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Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as he would be entitled to hereunder if he
had terminated his employment with the Company voluntarily for Good Reason. The
date on which any such succession becomes effective shall be deemed the
Effective Date of Termination.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive should
die while any amount would still be payable to him hereunder had he continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement, to the Executive's Beneficiary. If
the Executive has not named a Beneficiary, then such amounts shall be paid to
the Executive's devisee, legatee, or other designee, or if there is no such
designee, to the Executive's estate.
ARTICLE 9. MISCELLANEOUS
9.1 EMPLOYMENT STATUS. The Executive and the Company acknowledge
that, except as may be provided under any other agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will,"
and, prior to the effective date of a Change in Control, may be terminated by
either the Executive or the Company at any time, subject to applicable law. Upon
a termination of the Executive's employment prior to the effective date of a
Change in Control, there shall be no further rights under this Agreement;
provided, however, that if such an employment termination shall arise in
connection with, or in anticipation of, a Change in Control, then the
Executive's rights shall be the same as if the termination had occurred within
two (2) years following a Change in Control.
9.2 BENEFICIARIES. The Executive may designate one or more persons
or entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Executive under this Agreement. Such designation must be
in the form of a signed writing acceptable to the Committee. The Executive may
make or change such designation at any time.
9.3 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
9.4 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular, and the singular shall include the plural.
14
<PAGE>
9.5 SEVERABILITY. In the event any provision of this Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
9.6 MODIFICATION. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Executive and by an authorized member of the
Committee, or by the respective parties' legal representatives and successors.
9.7 APPLICABLE LAW. To the extent not preempted by the laws of the
United States, the laws of the state of Alabama shall be the controlling law in
all matters relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
________ day of _________, 1995.
AMSOUTH BANCORPORATION EXECUTIVE
By:____________________________ _________________________
JOHN W. WOODS
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
Attest:________________________
15
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
------------------- -----------------
1996 1995 1996 1995
--------- --------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income.............................. $ 51,615 $ 47,892 $182,676 $174,955
========= ========= ======== ========
Average shares of common stock
outstanding............................ 54,775 58,231 56,605 58,262
========= ========= ======== ========
Earnings per common share............... $ 0.92 $ 0.82 $ 3.23 $ 3.00
========= ========= ======== ========
</TABLE>
<PAGE>
EXHIBIT 13
AMSOUTH BANCORPORATION'S 1996 ANNUAL REPORT
TO SHAREHOLDERS, EXCLUDING THE PORTIONS THEREOF
NOT INCORPORATED BY REFERENCE IN THIS FORM 10-K
FINANCIALS
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 1996 of $3.23
compared to $3.00 per share for 1995 and $2.25 per share in 1994. Net income for
the same periods totaled $182.7 million, $175.0 million and $127.3 million,
respectively. Included in net income for 1996 was a one-time, pre-tax charge of
$24.2 million, or $.27 per share after tax, required by federal legislation
passed during the third quarter to recapitalize the Savings Association
Insurance Fund (SAIF). Net income in 1996, without the effect of the SAIF
assessment, was $197.9 million or $3.50 per share.
The increase in earnings for 1996 was due primarily to higher net interest
income and an increase in noninterest revenues. These improvements were offset,
in part, by a higher provision for loan losses and an increase in noninterest
expenses.
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.
Two key measures of profitability in the banking industry are return on
average equity (ROE) and return on average assets (ROA). ROE was 13.23 percent
in 1996 versus 12.89 percent in 1995 and 10.24 percent in 1994. ROA was 1.02
percent in 1996 compared to 1.03 percent in 1995 and .83 percent in 1994.
Excluding the one-time SAIF charge in 1996, ROE reached 14.26 percent and ROA
rose to 1.10 percent. See graphs below.
[BAR GRAPHS APPEAR HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Earnings Per Share Return on Average Equity Return on Average Assets
<S> <C> <C> <C> <C> <C>
92 $2.50 92 13.94% 92 1.12%
93 2.89 93 14.23 93 1.19
94 2.25 94 10.24 94 0.83
95 3.00 95 12.89 95 1.03
96* 3.50 96* 14.26 96* 1.10
* 1996 excludes one-time SAIF assessment
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Table 1
Composition of Earning Assets
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995 1994
=================================================================================================================================
Average Percent of Average Percent of Average Percent of
Balance Total Balance Total Balance Total
<S> <C> <C> <C> <C> <C> <C>
Loans net of unearned income..... $ 11,694,849 69.6% $ 11,747,385 75.0% $ 9,918,274 70.5%
Held-to-maturity securities...... 2,621,070 15.6 3,275,545 20.9 2,830,036 20.1
Available-for-sale securities.... 2,391,748 14.2 538,133 3.4 979,974 7.0
Other earning assets............. 107,352 0.6 101,918 0.7 335,122 2.4
--------------------------------------------------------------------------------------
$ 16,815,019 100.0% $ 15,662,981 100.0% $ 14,063,406 100.0%
======================================================================================
Note: Available-for-sale securities are net of market valuation.
=================================================================================================================================
</TABLE>
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.
Forward Looking Information This Annual Report to Shareholders contains certain
forward looking information with respect to the financial condition, results of
operations and business of AmSouth including statements relating to: (A) the
ability to achieve certain financial goals; (B) the net interest margin; (C)
noninterest revenues; (D) loan losses; (E) various expenses, including
occupancy, equipment and employee benefits; (F) a decrease in Federal Deposit
Insurance Corporation premiums; (G) legal proceedings; (H) growth in various
categories of loans; (I) sources of funding for asset growth; and (J) AmSouth's
ability to achieve certain strategic goals.
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) the outcome of
litigation involving AmSouth, which depends on judicial interpretations of law
and findings of juries; (7) the strength of the real estate markets; (8) whether
levels of consumer confidence remain high; (9) the success of AmSouth's
marketing and sales efforts; and (10) the performance of the stock and bond
markets.
Earnings Analysis
Net Interest Income Net interest income (NII), defined as the amount of revenue
generated by earning assets less the interest cost of funding those assets, is
the principal source of earnings for AmSouth, constituting 73.8 percent of total
net revenues in 1996, 72.3 percent in 1995 and 76.8 percent in 1994.
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, NII has been adjusted to a fully
taxable equivalent basis for certain tax-exempt loans and investments included
in earning assets. Earning assets have been presented as averages.
NII for 1996 was $661.7 million, an increase of 9.2 percent from the $605.9
million reported for 1995. In 1995, NII grew 4.1 percent from the $581.9 million
reported for 1994. In 1996, NII increased due to a higher volume of average
15
<PAGE>
FINANCIALS
Table 2
Volume and Yield/Rate Variances
<TABLE>
<CAPTION>
1996 Compared to 1995 1995 Compared to 1994
(Taxable equivalent basis - in thousands) Change Due to Change Due to
===================================================================================================================================
Yield/ Yield/
Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
REVENUE EARNED ON:
Loans net of unearned income................ $ (4,528) $ (3,048) $ (7,576) $ 154,780 $ 62,488 $ 217,268
Trading securities.......................... (93) (82) (175) (1,908) (360) (2,268)
Available-for-sale securities............... 127,495 (1,056) 126,439 (27,930) 13,959 (13,971)
Held-to-maturity securities:
Taxable.................................. (39,686) 5,200 (34,486) 32,753 4,711 37,464
Tax-free................................. (7,066) 829 (6,237) (6,079) (769) (6,848)
-----------------------------------------------------------------------------------
Total held-to-maturity securities........... (46,752) 6,029 (40,723) 26,674 3,942 30,616
-----------------------------------------------------------------------------------
Total securities............................ 80,650 4,891 85,541 (3,164) 17,541 14,377
Federal funds sold and securities purchased
under agreements to resell............... 403 (277) 126 (3,206) 1,665 (1,541)
Mortgage loans held for sale................ 62 (351) (289) (8,580) 1,449 (7,131)
-----------------------------------------------------------------------------------
Total earning assets........................ 76,587 1,215 77,802 139,830 83,143 222,973
-----------------------------------------------------------------------------------
INTEREST PAID ON:
Interest-bearing demand deposits............ (7,677) (16,985) (24,662) 2,316 18,586 20,902
Savings deposits............................ 2,096 (1,164) 932 1,166 2,073 3,239
Time deposits............................... (10,133) (1,436) (11,569) 76,413 61,135 137,548
Certificates of deposit of $100,000 or more. (3,717) (1,250) (4,967) 8,067 12,460 20,527
Federal funds purchased and securities sold
under agreements to repurchase........... 32,408 (7,802) 24,606 (15,823) 17,996 2,173
Other borrowed funds........................ 9,632 (2,951) 6,681 3,914 7,377 11,291
Long-term Federal Home Loan Bank advances... 24,569 (1,184) 23,385 (3,897) 1,280 (2,617)
Subordinated Capital Notes Due 1999......... 12 6 18 12 (21) (9)
6 3/4% Subordinated Debentures Due 2025..... 7,747 (91) 7,656 1,489 -0- 1,489
7 3/4% Convertible Notes Due 2004........... 35 (56) (21) 4,641 29 4,670
7 1/2% Convertible Subordinated Debentures.. (126) (133) (259) 23 (23) -0-
Other long-term debt........................ (32) 276 244 (100) (131) (231)
-----------------------------------------------------------------------------------
Total interest-bearing liabilities.......... 54,814 (32,770) 22,044 78,221 120,761 198,982
-----------------------------------------------------------------------------------
Net interest income on a taxable
equivalent basis......................... $ 21,773 $ 33,985 55,758 $ 61,609 $ (37,618) 23,991
========================= ========================
Add taxable equivalent adjustment........... 3,080 2,225
---------- ----------
Net interest income......................... $ 58,838 $ 26,216
========== ==========
</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>
earning assets. Average earning assets in 1996 increased 7.4 percent over
1995 levels. Available-for-sale securities were purchased to more effectively
manage interest rate risk and to take advantage of attractive opportunities in
the financial markets. Average loans, excluding residential first mortgages,
grew 13.0 percent in 1996 compared to the prior year.
The funding for the increase in average earning assets in 1996 was provided
by a combination of short and long-term borrowings. This was necessary because
of a decrease in average deposits between years of 2.8 percent or $377.7
million. The decline in deposits in 1996 was primarily due to a shift in
customers' investment preferences because of the strong financial and stock
markets during the year, coupled with a program in the third quarter to lower
the cost and restructure the maturities of $1.6 billion of consumer certificates
of deposit (CD). This program resulted in the run-off of approximately $400
million of high cost CD's from single service households in 1996.
The improvement in NII for 1995 and 1994 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.
As contrasted with 1996, the growth in average earning assets in 1995 was
funded by an increase in deposits. Total average deposits increased 15.0 percent
to $13.3 billion and funded 84.9 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 quarter of 1995.
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
3.93 percent in 1996 compared to 3.87 percent during 1995 and 4.14 percent in
1994. Contributing to the increase in the NIM in 1996 was a widening 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 1996 was 3.31 percent
versus 3.23 percent in 1995. The generally declining interest rate environment
throughout most of 1996 combined with proactive pricing of deposits and a change
in the mix of interest-bearing liabilities to lower cost funds were the primary
reasons for the improvement as the rates paid on interest-bearing liabilities
decreased 18 basis points between years. The decline in the NIM in 1995 compared
to 1994 can be attributed to a lower net interest spread of 3.23 percent
reflecting the repricing and rate sensitivity characteristics of AmSouth's
balance sheet during that time.
Management anticipates a stable to modest widening of the NIM in 1997,
provided the economy continues to grow at a moderate pace, interest rates remain
relatively stable and the composition of earning assets does not change
significantly. In addition, competitive pressures adversely affecting AmSouth's
ability to set deposit and loan pricing could prevent such a widening from
occurring.
Provision for Loan Losses The provision for loan losses in 1996 totaled $65.2
million, a $25.1 million increase from the $40.1 million reported in 1995 and
$35.1 million higher than the $30.1 million reported in 1994. At the same time,
net charge-offs increased in 1996 to $64.6 million from $34.6 million in 1995
and $26.9 million in 1994. The large increase during 1996 in net charge-offs,
and, consequently, the provision for loan losses, was concentrated in consumer
loans. Total consumer loan losses, net of recoveries, rose to $61.3 million in
1996 from $28.4 million the previous year. Losses were higher in every consumer
loan category. The increases can be primarily attributed to an increase in
delinquencies and rising bankruptcies throughout the year, a reflection of the
weakness
17
<PAGE>
FINANCIALS
<TABLE>
<CAPTION>
Table 3
Yields Earned on Average Earning Assets and Rates
Paid on Average Interest-Bearing Liabilities
(Taxable equivalent basis - dollars in thousands) 1996
=======================================================================================================================
Average Revenue/ Yield/
Balance Expense Rate
ASSETS
<S> <C> <C> <C>
Earning assets:
Loans net of unearned income ........................ $ 11,694,849 $ 1,006,712 8.61 %
Trading securities .................................. 4,124 144 3.49
Available-for-sale securities ....................... 2,391,748 164,473 6.88
Held-to-maturity securities:
Taxable ........................................... 2,422,940 163,159 6.73
Tax-free .......................................... 198,130 22,204 11.21
----------- ---------
Total held-to-maturity securities ............... 2,621,070 185,363 7.07
----------- ---------
Total securities .............................. 5,016,942 349,980 6.98
Federal funds sold and securities purchased
under agreements to resell ........................ 22,307 1,221 5.47
Mortgage loans held for sale ........................ 80,921 5,189 6.41
----------- --------- -----
Total earning assets ............................. 16,815,019 1,363,102 8.11
--------- -----
Cash and other assets ................................. 1,327,974
Less allowance for loan losses ........................ (178,592)
Market valuation on available-for-sale securities ..... 25,220
-----------
$ 17,989,621
LIABILITIES AND SHAREHOLDERS' EQUITY ===========
Interest-bearing liabilities:
Interest-bearing demand deposits .................... $ 3,671,241 115,192 3.14
Savings deposits .................................... 1,036,240 28,432 2.74
Time deposits ....................................... 5,591,950 318,410 5.69
Certificates of deposit of $100,000 or more ......... 859,468 49,311 5.74
Federal funds purchased and securities sold
under agreements to repurchase .................... 1,771,305 91,788 5.18
Other borrowed funds ................................ 754,369 39,500 5.24
Long-term Federal Home Loan Bank advances ........... 511,583 27,210 5.32
Subordinated Capital Notes Due 1999 ................. 99,634 9,513 9.55
6 3/4% Subordinated Debentures Due 2025 ............. 149,836 9,145 6.10
7 3/4% Subordinated Notes Due 2004 .................. 149,274 11,696 7.84
7 1/2% Convertible Subordinated Debentures .......... 2,390 145 6.07
Other long-term debt ................................ 22,489 1,098 4.88
----------- --------- -----
Total interest-bearing liabilities ............. 14,619,779 701,440 4.80
--------- -----
Net interest spread .......................... 3.31 %
Noninterest-bearing demand deposits ................... 1,767,444 =====
Other liabilities ..................................... 221,866
Shareholders' equity .................................. 1,380,532
-----------
$ 17,989,621
===========
Net interest margin on a taxable equivalent basis 661,662 3.93 %
Taxable equivalent adjustment: ====
Loans ............................................... 2,178
Held-to-maturity securities ......................... 7,103
Other earning assets ................................ -0-
---------
Total taxable equivalent adjustment .............. 9,281
---------
Net interest income .......................... $ 652,381
=========
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
=======================================================================================================================
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
1995 1994
=======================================================================================================================
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C>
$ 11,747,385 $ 1,014,288 8.63 % $ 9,918,274 $ 797,020 8.04 %
6,331 319 5.04 43,089 2,587 6.00
538,133 38,034 7.07 979,974 52,005 5.31
3,014,160 197,645 6.56 2,512,922 160,181 6.37
261,385 28,441 10.88 317,114 35,289 11.13
--------------- ----------- --------------- ----------
3,275,545 226,086 6.90 2,830,036 195,470 6.91
--------------- ----------- --------------- ----------
3,820,009 264,439 6.92 3,853,099 250,062 6.49
15,590 1,095 7.02 84,234 2,636 3.13
79,997 5,478 6.85 207,799 12,609 6.07
--------------- ----------- ---- --------------- --------- -----
15,662,981 1,285,300 8.21 14,063,406 1,062,327 7.55
1,453,599 ----------- ---- 1,391,553 ---------- ------
(176,695) (148,801)
2,441 (12,173)
--------------- ---------------
$ 16,942,326 $ 15,293,985
=============== ===============
$ 3,893,721 139,854 3.59 $ 3,820,580 118,952 3.11
960,969 27,500 2.86 918,132 24,261 2.64
5,769,819 329,979 5.72 4,291,777 192,431 4.48
923,866 54,278 5.88 762,403 33,751 4.43
1,158,196 67,182 5.80 1,476,696 65,009 4.40
573,921 32,819 5.72 492,965 21,528 4.37
54,000 3,825 7.08 112,550 6,442 5.72
99,505 9,495 9.54 99,376 9,504 9.56
22,987 1,489 6.48 -0- -0- ---
149,182 11,717 7.85 90,281 7,047 7.81
3,931 404 10.28 3,709 404 10.89
23,340 854 3.66 25,863 1,085 4.20
--------------- ----------- ------ --------------- --------- -----
13,633,437 679,396 4.98 12,094,332 480,414 3.97
----------- ------ --------- -----
3.23 % 3.58 %
===== =====
1,755,717 1,779,833
195,836 176,669
1,357,336 1,243,151
--------------- ---------------
$ 16,942,326 $ 15,293,985
=============== ===============
605,904 3.87 % 581,913 4.14 %
===== =====
2,968 3,064
9,383 11,485
10 37
--------------- ------------
12,361 14,586
--------------- ------------
$ 593,543 $ 567,327
=============== ============
purposes, related to certain tax-free assets. Loans net of unearned income
includes nonaccrual loans for all years presented.
=======================================================================================================================
</TABLE>
19
<PAGE>
FINANCIALS
in the consumer sector of the economy during 1996. Aggressive direct marketing
initiatives in prior years to develop new business, particularly in credit
cards, also contributed to the increase in consumer net charge-offs in 1996, in
as much as the accounts resulting from such marketing initiatives experienced
higher charge-off rates than other parts of the portfolio. For additional
details on net charge-offs, see Tables 17 and 20.
Measured as a percentage of average net loans, net charge-offs have
increased during the previous three years. Management expects loan losses to
continue to rise in 1997 both in absolute terms and measured as a percentage of
average net 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. Another factor includes anticipated further increases in
consumer loan delinquencies and charge-offs, industry-wide during 1997.
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 increased 1.6
percent to $235.3 million from the $231.7 million reported for 1995. Other
operating revenues in 1995 included a $25.0 million gain from AmSouth's sale of
its third-party mortgage servicing portfolio. Excluding this amount from 1995,
total noninterest revenues in 1996 rose 13.8 percent.
The largest category of noninterest revenues, service charges on deposit
accounts, increased $9.7 million or 11.4 percent in 1996. The principal reasons
for the increase were higher prices for services, fewer waived fees and
increased account activity.
Trust income in 1996 increased $7.1 million, or 14.1 percent, compared to
the prior year. The improvement can be attributed to an increase in the number
of employee benefit plan administration and personal trust accounts and higher
fees.
Investment services income was up $9.6 million or 131.3 percent in 1996.
One of the primary reasons for the increase was higher sales volume due to an
expansion of the sales force in late 1995 and early 1996. During this period,
the number of salespersons increased by 20 positions, or 44.4 percent. Another
factor was the continued strong performance of the financial and stock markets
during 1996. Also, the introduction of a new proprietary fixed annuity product
in the second quarter of 1996 contributed to the increase.
Credit card income increased $1.6 million or 12.0 percent in 1996. This was
due primarily to an increase in the number of cardholder accounts from direct
mail marketing campaigns conducted in 1995 and 1996.
Interchange income, the fees derived from debit card and ATM transactions,
grew $3.2 million or 56.3 percent in 1996. The primary reasons for the
improvement include an increase in the number of activated debit card accounts
year over year and an expansion in the ATM network to 612 machines at the end of
the year from 275 at year-end 1995.
Mortgage administration fees declined $5.5 million or 64.0 percent in 1996
due to the sale of third-party mortgage servicing during 1995.
Other operating revenues in 1996 reached $39.2 million,
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Provision for Loan Losses and
Net Charge-Offs to Average Loans
(Dollars in millions)
92 93 94 95 96
<S> <C> <C> <C> <C> <C>
Provision $38.6 $28.0 $30.1 $40.1 $65.2
Net Charge-Offs .54% .26% .27% . 29% .55%
- -----------------------------------------------------------
</TABLE>
20
<PAGE>
an increase of $2.8 million or 7.7 percent over 1995 levels, after excluding the
$25.0 million gain recorded during 1995 from the sale of third-party mortgage
servicing. The primary reason for the increase in this category was an increase
in portfolio income, as the financial markets provided attractive opportunities
throughout the year to profitably restructure the securities portfolio.
Other operating revenues in 1994 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 and the $25.0 million gain from the sale of the
third-party mortgage servicing portfolio during 1995, total noninterest revenues
increased 12.0 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 $16.3
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 which automated 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.
Investment services income of $7.3 million in 1995 grew $2.0 million or
37.8 percent over 1994 levels. The improvement was due to higher sales volume
and a strong stock market during the year.
Credit card income also contributed to the overall increase in noninterest
revenues with an increase in 1995 of $1.8 million or 15.1 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 in 1995
was a decline in mortgage administration fees. This category decreased $13.9
million due to the sale of third-party mortgage servicing during 1995.
Management expects on a recurring basis, total noninterest revenues in 1997
to exceed the levels reported in 1996 provided the economy continues to grow at
a moderate pace and management is able to improve sales and service quality and
to develop new products which generate noninterest revenues. Performance of the
stock and bond markets will also influence management's ability to achieve its
noninterest revenue goals.
Each of the major categories of noninterest revenues for 1991 through 1996,
with a five year compound growth rate for each component, is shown in Table 4.
Noninterest Expenses Total noninterest expenses increased to $534.2 million in
1996, an increase of $24.3 million or 4.8 percent over the levels incurred in
1995. Excluding the one-time SAIF assessment in 1996 and the $22.2 million in
nonrecurring productivity initiatives expenses in 1995, total noninterest
expenses increased approximately 4.6 percent in 1996.
Salaries and employee benefits expense, the largest category of noninterest
expenses, increased $5.8 million, or 2.5 percent in 1996. Excluding the $6.7
million of expenses related to business and branch consolidations in 1995,
personnel expense in 1996 increased $12.5 million or 5.7 percent. The primary
reasons for the increase were a higher company match of employee thrift plan
contributions, enhancements to employee life insurance benefits, additional
personnel and higher incentive compensation.
In 1996, net occupancy expense increased $293 thousand or less than one
percent. Netting out $5.5 million of nonrecurring costs related to branch
consolidations in 1995, occupancy expense increased in 1996 by $5.8 million or
12.0 percent. This increase was primarily related to increases in lease and
leasehold improvement costs associated with the occupation of new office space
during 1996 previously contracted for in 1994.
Equipment costs in 1996 rose $4.8 million or 9.5 percent. Adjusting 1996
for a $2.5 million accrual for the write-off of software and equipment
anticipated to become obsolete with
21
<PAGE>
FINANCIALS
the implementation of technology projects and 1995 for $4.7 million of systems
development costs and the write-off of equipment leases, equipment expense in
1996 increased $7.0 million or 15.3 percent. The principal reason for the
increase was the investment in several technology projects, the largest of which
are for the consumer and commercial lines of business. These expenses are
expected to continue to grow at a significant rate in the future as further
investments in technology are made in support of the lines of business and in
order to remain competitive with organizations having larger capacities to make
technology investments.
Excluding the one-time SAIF charge of $24.2 million in 1996, as previously
discussed, FDIC premiums expense declined $12.5 million in 1996. These costs
were lower as a result of the FDIC reducing the premium rate on deposits insured
by the Bank Insurance Fund (BIF) to zero beginning in 1996. A further reduction
in this expense category of approximately $4.0 million is expected to occur in
1997 with the lowering of the SAIF deposit premium rate, which accompanied the
one-time assessment during 1996.
Foreclosed properties expense was $980 thousand higher in 1996 than 1995
due to an increase in operating costs associated with the sale of repossessed
assets.
Adjusting 1995 for $4.5 million of nonrecurring initiatives expense, other
operating expenses in 1996 increased $5.4 million or 3.5 percent between years.
The primary cause of the increase was an increase in telephone expense related
to the establishment of the network to support technology projects.
Noninterest expenses for 1995 were $509.9 million compared to $519.2
million the previous year, a decrease of $9.3 million or 1.8 percent. Excluding
the one-time productivity initiatives expenses of $22.2 million charged to
earnings in the second quarter of 1995, total noninterest expenses in 1995
compared to 1994 declined $31.5 million or 6.1 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 rights, 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 function within the correspondent banking area, and
the reduction of deposit insurance premiums by the FDIC.
Salaries and employee benefits expense declined in 1995 to $226.3 million
or 2.5 percent from the level reported the prior year. Excluding the one-time
costs associated with the business and branch consolidations, salaries and
employee benefits in 1995 decreased $12.4 million or 5.4 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.
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 branch consolidation initiatives.
Without those costs, net occupancy expense increased 3.5 percent between years,
primarily from higher rental costs.
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.
FDIC premiums declined $4.3 million or 17.6 percent in 1995. This reflected
the reduction in insurance premium rates from 23 cents to 4 cents per $100 of
deposits for those deposits insured by the BIF.
Foreclosed properties expense decreased $4.3 million in 1995 compared to
1994. This decline directly reflected 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 $158.7 million compared to $169.6
million in 1994, a decrease of $10.9 million or 6.4 percent. The decrease
included $4.5 million of expense related to 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.
22
<PAGE>
Each of the major categories of noninterest expenses for 1991 through 1996,
with a five year compound growth rate for each component, is shown in Table 4.
Operating Efficiency Productivity in the banking industry is commonly measured
by the operating efficiency ratio. It measures the amount of expense dollars
utilized to generate a dollar of revenue. The ratio is calculated by dividing
total noninterest expenses by the sum of NII and total noninterest revenues. In
1996, AmSouth's operating efficiency ratio was 59.56 percent compared to 60.98
percent in 1995 and 68.72 percent in 1994. Excluding the SAIF assessment in
1996, the ratio was 56.86 percent. The improvements in efficiency the last three
years reflect the strong growth in NII and noninterest revenues, coupled with
tight control of expenses. Management's ability to continue the improvement in
operating efficiency during 1997 will depend upon its ability to continue
similar trends in revenues and expenses incurred the previous two years.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Operating Efficiency Ratio
92 93 94 95 96*
<S> <C> <C> <C> <C> <C>
Operating Efficiency Ratio 64.24% 63.48% 68.72% 60.98% 56.86%
* 1996 excludes one-time
SAIF assessment
- ------------------------------------------------------------------------
</TABLE>
Table 4
Noninterest Revenues and
Noninterest Expenses
<TABLE>
<CAPTION>
Compound
(Dollars in thousands) Years Ended December 31 Growth Rate
===================================================================================================================================
1996 1995 1994 1993 1992 1991 1996/1991
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest revenues:
Service charges on deposit accounts... $ 94,765 $ 85,085 $ 68,780 $ 60,541 $ 53,670 $ 51,243 13.08%
Trust income.......................... 57,354 50,272 46,121 41,659 40,069 37,891 8.64
Investment services income............ 16,944 7,325 5,314 485 6,167 2,844 42.90
Credit card income.................... 14,915 13,316 11,565 12,115 10,132 9,156 10.25
Interchange income.................... 8,982 5,747 2,719 1,435 279 197 114.67
Mortgage administration fees.......... 3,087 8,572 22,518 18,178 17,392 17,227 (29.10)
Other operating revenues.............. 39,227 61,354 18,338 64,824 41,010 50,821 (5.05)
-------------------------------------------------------------------------
$ 235,274 $ 231,671 $ 175,355 $ 199,237 $ 168,719 $ 169,379 6.79 %
=========================================================================
Noninterest expenses:
Salaries and employee benefits........ $ 232,076 $ 226,317 $ 232,050 $ 222,756 $ 181,766 $ 160,483 7.66 %
Net occupancy expense................. 54,211 53,918 46,770 36,537 32,524 26,956 15.00
Equipment expense..................... 55,044 50,289 41,432 39,213 32,548 30,882 12.25
FDIC premiums......................... 7,814 20,315 24,664 21,413 18,868 16,834 (14.23)
SAIF assessment....................... 24,196 -0- -0- -0- -0- -0- ----
Foreclosed properties expense (income) 1,352 372 4,721 (2,197) 22,426 36,933 (48.39)
Other operating expenses.............. 159,539 158,687 169,602 136,277 107,981 93,036 11.39
-------------------------------------------------------------------------
$ 534,232 $ 509,898 $ 519,239 $ 453,999 $ 396,113 $ 365,124 7.91%
=========================================================================
===================================================================================================================================
</TABLE>
23
<PAGE>
F I N A N C I A L S
Income Taxes AmSouth's income tax expense was $105.6 million in 1996, $100.2
million in 1995, and $66.1 million in 1994. The increases in income tax expense
in 1996 and 1995 were due primarily to increases in pre-tax income. The
effective tax rate for 1996 was 36.6 percent compared to 36.4 percent in 1995,
and 34.2 percent in 1994. The 1996 increase resulted from a continued decrease
in tax-exempt income. Detail of the deferred tax assets and liabilities is
included in Note R of the Notes to Consolidated Financial Statements.
Balance Sheet Analysis
At December 31, 1996, AmSouth reported total assets of $18.4 billion compared to
$17.7 billion at the end of 1995. Average total assets were $18.0 billion in
1996 versus $16.9 billion in 1995.
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Average Earning Assets as a
Percentage of Average Assets
92 93 94 95 96
<S> <C> <C> <C> <C> <C>
Average Earning Assets To
Average Assets 91.4% 92.0% 92.0% 92.4% 93.5%
Other Earning Assets 4.4% 4.6% 2.4% 0.7% 0.6%
Investment Securities 29.3% 28.3% 27.1% 24.3% 29.8%
Loans 66.3% 67.1% 70.5% 75.0% 69.6%
- -------------------------------------------------------------------------------------------------------
</TABLE>
Table 5
Securities
<TABLE>
<CAPTION>
(In millions) December 31
=============================================================================================================
1996 1995 1994
<S> <C> <C> <C>
Trading securities:
U.S. Treasury and federal agency securities............... $ -0- $ -0- $ -0-
Other securities.......................................... 4 3 4
-----------------------------------------
Total taxable.......................................... 4 3 4
State, county and municipal securities.................... -0- -0- 2
-----------------------------------------
4 3 6
-----------------------------------------
Available-for-sale securities:
U.S. Treasury and federal agency securities............... 2,001 2,138 322
Other securities.......................................... 289 342 61
-----------------------------------------
2,290 2,480 383
-----------------------------------------
Held-to-maturity securities:
U.S. Treasury and federal agency securities............... 2,211 1,842 3,037
Other securities.......................................... 255 101 7
-----------------------------------------
Total taxable.......................................... 2,466 1,943 3,044
State, county and municipal securities.................... 179 224 293
-----------------------------------------
2,645 2,167 3,337
-----------------------------------------
$ 4,939 $ 4,650 $ 3,726
=========================================
=============================================================================================================
</TABLE>
24
<PAGE>
Table 6
Available-for-Sale Securities and Held-to-Maturity Securities
Relative Contractual Maturities and Weighted-Average Yields
<TABLE>
<CAPTION>
(Taxable equivalent basis- Due Within Due After One but Due After Five but Due After
dollars in thousands) One Year Within Five Years Within Ten Years Ten Years
===============================================================================================================================
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 ........... $ 63,902 7.79% $ 318,060 6.58% $ 358,221 6.82% $ 1,225,377 7.47%
Other securities ............... -0- -- -0- -- 57,423 7.04 56,427 7.22
--------------------------------------------------------------------------------------
$ 63,902 7.79% $ 318,060 6.58% $ 415,644 6.85% $ 1,281,804 7.46%
======================================================================================
Percentage of total portfolio .... 3.07% 15.30% 19.99% 61.64%
Held-to-maturity securities:
U.S. Treasury and federal
agency securities ........... $ 28,268 6.82% $ 331,774 6.27% $ 358,761 6.64% $ 1,491,986 7.11%
State, county and
municipal obligations ....... 47,811 11.60 84,124 11.48 30,422 10.88 16,602 10.44
Other securities ............... -0- -- 1,127 8.09 150 6.85 253,681 6.75
--------------------------------------------------------------------------------------
$ 76,079 9.83% $ 417,025 7.32% $ 389,333 6.97% $ 1,762,269 7.09%
======================================================================================
Percentage of total portfolio .... 2.88% 15.77% 14.72% 66.63%
Taxable equivalent adjustment
for calculation of yield ...... $ 1,941 $ 3,381 $ 1,158 $ 606
</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 $259 million of mortgage-backed securities, and
those indicated as maturing after ten years includes $1.3 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 five years.
3. The amount of held-to-maturity securities indicated as maturing after five
but within ten years includes $193 million of mortgage-backed securities, and
those indicated as maturing after ten years includes $1.5 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 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.
================================================================================
Earning Assets In banking, the predominant 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 1996, earning assets were 93.5 percent of
total average assets compared to 92.4 percent in 1995. The increase in 1996 was
primarily a reflection of the increase in loans and investment securities during
the year as well as management's attention to reducing nonearning assets.
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 unre-
25
<PAGE>
FINANCIALS
alized gains and losses included in other operating revenues. Available-for-sale
securities are also carried at market value with unrealized gains and losses,
net of deferred taxes, reported as a separate component of shareholders' equity.
At December 31, 1996, available-for-sale securities totaled $2.3 billion
and represented 46.4 percent of the total portfolio compared to $2.5 billion or
53.3 percent in available-for-sale securities at the end of 1995. These
securities at year-end 1996 consisted of U.S. Treasury securities, variable and
fixed rate mortgage-backed securities, other private asset-backed securities and
equities. The average life of the portfolio is estimated to be 4.1 years with a
duration of 1.9 years. Total realized gains of $9.3 million from the sale of
available-for-sale securities were included in other operating revenues for
1996, compared to $3.7 million of realized gains in 1995. Unrealized gains on
the securities of $24.3 million, net of deferred taxes, were included as an
addition to shareholders' equity on December 31, 1996.
Held-to-maturity securities were $2.6 billion at the end of 1996 compared
to $2.2 billion at year-end 1995. Securities classified as held-to-maturity at
the end of 1996 consisted primarily of collateralized mortgage obligations,
federal agency securities, mortgage-backed securities and state, county and
municipal obligations. The average life of these securities is estimated to be
3.6 years with a duration of 2.2 years. At December 31, 1996, the
held-to-maturity portfolio had an unrealized gain of $4.8 million. Trading
securities are primarily held to provide a short-term inventory of securities
for sale to customers of AmSouth's investment services. The balance at December
31, 1996 increased to $4.0 million from $3.0 million at the end of 1995. 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 89.6
percent of the portfolio at December 31, 1996. Approximately 82.0 percent of
state, county and local municipal securities at year-end 1996 were rated either
single A or above by the rating agencies or were escrowed in U.S. Treasury
obligations.
Loans Loans are the single largest category of earning assets for AmSouth and
produce the highest level of revenues. At December 31, 1996, loans, net of
unearned income, totaled $12.1 billion, an increase of 2.9 percent from the
$11.7 billion reported at the end of 1995. The growth in loans during 1996 would
have been greater, except for management's decision to reduce the proportion of
residential first mortgages held in the loan portfolio. To accomplish this
objective, approximately $705 million of residential first mortgages were
securitized and reclassified to securities; residential first mortgages
continued to be originated but, for the most part, sold into the secondary
market; and the existing portfolio was allowed to run-off through normal
pay-downs, maturities and prepayments. All of these elements in 1996 combined to
reduce residential first mortgages to $3.0 billion at the end of the year from
$3.8 billion at year-end 1995. Excluding residential first mortgages, total
loans, net of unearned income, increased $1.2 billion or 14.7 percent at
December 31, 1996 from the level reported at the end of 1995. Table 7 provides a
five year trend of major loan categories. At December 31, 1996, 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 1996,
commercial loans represented 30.1 percent of the total portfolio, commercial
real estate loans were 19.3 percent, while consumer loans, excluding residential
first mortgages, were 26.2 percent and residential first mortgages comprised
24.4 percent. This compares with 26.3 percent, 17.4 percent, 24.1 percent, and
32.2 percent at the end of 1995 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 other consumer, commercial and commercial real estate
loans.
Commercial loans at the end of 1996 were $3.7 billion compared to $3.1
billion at December 31, 1995, an increase of
26
<PAGE>
Table 7
Major Loan Categories
<TABLE>
<CAPTION>
(In millions) December 31
========================================================================================================================
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Commercial .............................. $ 3,668 $ 3,112 $ 2,699 $ 2,461 $ 2,345
Commercial real estate:
Commercial real estate mortgages ..... 1,653 1,523 1,371 1,217 1,050
Real estate construction ............. 693 526 541 416 288
----------------------------------------------------------------------
Total commercial real estate ...... 2,346 2,049 1,912 1,633 1,338
----------------------------------------------------------------------
Consumer:
Residential first mortgages .......... 2,971 3,802 4,276 2,488 1,291
Other residential mortgages .......... 872 693 632 512 450
Dealer indirect ...................... 1,225 1,058 887 599 496
Revolving credit ..................... 522 477 350 341 358
Other consumer ....................... 564 629 740 578 509
----------------------------------------------------------------------
Total consumer .................... 6,154 6,659 6,885 4,518 3,104
----------------------------------------------------------------------
12,168 11,820 11,496 8,612 6,787
Less unearned income .................... 88 77 66 72 70
----------------------------------------------------------------------
$ 12,080 $ 11,743 $ 11,430 $ 8,540 $ 6,717
======================================================================
========================================================================================================================
</TABLE>
[PIE CHART APPEARS HERE]
Loan Composition
<TABLE>
<CAPTION>
1995 1996
- -------------------------------------------
<S> <C> <C>
Consumer 24.1% 26.2%
Commercial Real Estate 17.4% 19.3%
Residential 32.2% 24.4%
Commercial 26.3% 30.1%
- -------------------------------------------
</TABLE>
17.9 percent. The strong growth was primarily a function of management's
strategy, formulated several years ago, to apply targeted sales efforts and
relationship banking concepts across all lines of business. In 1996, 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 this industry increased approximately $85.0
million in 1996, reflecting the generally strong growth in the industry and
demand from the large number of healthcare providers and related businesses in
AmSouth's primary markets. Another area of emphasis is equipment lease
financing, which expanded significantly in 1996 and contributed approximately
$100.0 million of growth during the year. The increase was centered in the
transportation, communication and utilities industry groups with most
counterparties rated investment grade. Finally, increases were also experienced
in the manufacturing and trade industries during 1996.
27
<PAGE>
FINANCIALS
Table 8
Selected Loan Maturities and Sensitivity to
Change in Interest Rates
<TABLE>
<CAPTION>
Due in One
(In millions) Year or Less Due After One But Within Five Years Due After Five Years
====================================================================================================================================
Fixed Variable Fixed Variable
Rate Rate Total Rate Rate Total Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial......................... $ 1,913 $ 582 $ 601 $ 1,183 $ 408 $ 164 $ 572 $ 3,668
Commercial real estate mortgages... 263 461 299 760 423 207 630 1,653
Real estate construction........... 335 85 136 221 62 75 137 693
--------------------------------------------------------------------------------------------
$ 2,511 $ 1,128 $ 1,036 $ 2,164 $ 893 $ 446 $ 1,339 $ 6,014
============================================================================================
====================================================================================================================================
</TABLE>
Management expects further growth in commercial loans in 1997 due to new
business development, expansion of healthcare lending and equipment lease
financing 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 for loan demand to be sufficient to meet the company's goals. In
addition, management must be able to provide satisfactory sales and service
quality and develop new products in the commercial lending area.
Commercial real estate loans are comprised of two primary categories;
commercial real estate mortgages and real estate construction loans. In 1996,
commercial real estate mortgage loans increased $130.0 million or 8.5 percent.
Real estate construction loans also increased in 1996 to $693.0 million from
$526.0 million reported at the end of 1995, an increase of $167.0 million or
31.7 percent. The increases reflect the strength of the real estate markets in
AmSouth's four state area of the southeastern U.S., particularly Florida.
On a combined basis, owner occupied properties totaled $781.0 million or
33.3 percent of total commercial real estate loans in 1996, while nonowner
occupied properties were $1.6 billion or 66.7 percent of the total. This
compares with $776.0 million or 37.8 percent of owner occupied properties and
$1.3 billion or 62.2 percent of nonowner occupied properties at the end of 1995.
Management anticipates both categories of commercial real estate loans to
increase during 1997, provided the economy and AmSouth's real estate markets
remain strong, sales goals are met and credit quality can be maintained.
Consumer loans, excluding residential first mortgages, include primarily
dealer indirect, other residential mortgages including second mortgage
installment loans and home equity lines of credit, revolving credit, and other
consumer loans. Dealer indirect loans reached $1.2 billion at the end of 1996,
an increase of $167.0 million or 15.8 percent from the $1.1 billion of loans
outstanding at the end of 1995. These loans consist primarily of loans made to
individuals to finance the purchase of new and used automobiles. The increase in
1996 was a direct result of a new office opened in Atlanta, Georgia during the
first quarter combined with a generally strong economy.
Other residential mortgages increased $179.0 million during 1996 to $872.0
million at the end of the year from $693.0 million at the prior year-end. The
increase was primarily the result of new customers acquired in 1996 from direct
mail marketing promotions and the cross selling of home equity lines of credit.
Revolving credit, which consists primarily of bankcard outstandings, at the
end of 1996 increased $45.0 million or 9.4 percent above the level reported at
year-end 1995. The reason for the increase was an increase in the number of
cardholders from 367,000 accounts in 1995 to 453,000 accounts in 1996, a result
of several targeted, direct marketing campaigns conducted during the year. Other
consumer loans decreased in 1996 primarily due to the sale of approximately
$50.5 million of government guaranteed student loans, reflecting management's
decision to exit this business.
Management anticipates in 1997 that consumer loans,
28
<PAGE>
Table 9
Average Deposits
<TABLE>
<CAPTION>
(In thousands) December 31
==================================================================================================================================
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand ........ $ 1,767,444 $ 1,755,717 $ 1,779,833 $ 1,611,428 $ 1,304,787
Interest-bearing demand ........... 3,671,241 3,893,721 3,820,580 3,263,054 3,033,034
Savings ........................... 1,036,240 960,969 918,132 773,131 575,082
Time:
Retail ......................... 4,442,109 4,652,502 3,343,936 2,359,352 2,085,556
Individual retirement accounts . 926,633 928,901 784,736 639,866 517,227
Other .......................... 223,208 188,416 163,105 168,668 149,395
---------------------------------------------------------------------------------------
Total time .................. 5,591,950 5,769,819 4,291,777 3,167,886 2,752,178
---------------------------------------------------------------------------------------
Certificates of deposit of
$100,000 or more ............... 859,468 923,866 762,403 728,206 687,514
---------------------------------------------------------------------------------------
$ 12,926,343 $ 13,304,092 $ 11,572,725 $ 9,543,705 $ 8,352,595
=======================================================================================
==================================================================================================================================
</TABLE>
excluding residential mortgages, will continue to grow, provided the economy
remains stable or grows and consumer borrowing patterns remain at least stable.
Whether growth will be achieved will also depend on the success of management's
planned direct mail marketing campaigns and on the success of its continued
emphasis on cross selling and service quality.
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. Average federal funds sold and resell agreements in 1996 were $22.3
million, an increase of $6.7 million from 1995. Mortgage loans held for sale
averaged approximately $80.0 million in both 1996 and 1995.
Deposits Deposits are AmSouth's primary source of funding and their cost is the
largest category of interest expense. Average total deposits were $12.9 billion
in 1996, representing a decrease of $377.7 million or 2.8 percent from total
average deposits in 1995 of $13.3 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 43.3 percent of the total in 1996.
These deposits, which consist primarily of consumer certificates of deposits,
declined to $5.6 billion on average in 1996 from $5.8 billion in 1995, a
decrease of $177.9 million or 3.1 percent. This decline was anticipated because
management, during 1996, as part of an overall program to restructure the
balance sheet, repriced and restructured the maturities of the portfolio. The
result was the run-off of approximately $400 million of mostly high cost, single
service household consumer certificates of deposit of approximately $1.6 billion
maturing during the third and fourth quarters. Approximately 70 percent of the
accounts were retained while costs, on average, were lowered by 1.25 percent and
the maturities were more widely dispersed.
The second largest category of deposits, interest-bearing demand,
represented 28.4 percent of total average deposits in 1996. This compares with
29.3 percent of total average deposits in 1995. These deposits in 1996 averaged
$3.7 bil-
29
<PAGE>
FINANCIALS
[PIE CHART APPEARS HERE]
Deposit Composition
<TABLE>
<CAPTION>
- ------------------------------------------------
1995 1996
<S> <C> <C>
CDs greater than $100M 6.9% 6.6%
Interest-Bearing Demand 29.3% 28.4%
Noninterest-Bearing Demand 13.2% 13.7%
Savings 7.2% 8.0%
Time 43.4% 43.3%
- ------------------------------------------------
</TABLE>
lion, a decrease of $222.5 million or 5.7 percent from 1995 levels, reflecting
customers' preference for alternative investments due to the strong performance
of the financial and stock markets.
Another deposit category is certificates of deposit of $100,000 or more.
These accounts comprised 6.6 percent of total average deposits in 1996. They
declined $64.4 million on average during the year. These deposits, for the most
part, are competitively bid and fluctuate based on the level of interest rates
and management's determination of the need for such deposits from time to time.
The primary reason for the decline was the lower interest rate environment
throughout 1996 and the strong performance of the financial and stock markets.
Partially offsetting the declines experienced in these deposit categories
were increases in noninterest-bearing demand and savings accounts. Noninterest-
bearing demand deposits, which comprised 13.7 percent of total average deposits
in 1996, increased during the year $11.7 million on average or less than one
percent. Savings deposits, representing 8.0 percent of total average deposits,
increased to $1.0 billion on average in 1996, or $75.3 million, an increase of
7.8 percent between years. This deposit category increased across all of
AmSouth's markets but did particularly well in Florida.
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 increased in 1996 to $1.8 billion or 52.9 percent from the
$1.2 billion averaged in 1995. Other borrowed funds, which include master notes,
commercial paper, short-term Federal Home Loan Bank (FHLB) advances, the current
portion of long-term debt, and treasury, tax and loan notes, increased in 1996
to average $754.4 million versus $573.9 million in 1995, an increase of 31.4
percent. The principal reason for the increases was to fund earning asset growth
in 1996.
At December 31, 1996, 1995 and 1994, federal funds purchased and
repurchased agreements totaled $1.9 billion, $1.9 billion and $1.2 billion,
respectively, with weighted-average interest rates of 6.00%, 4.93% and 5.48%,
respectively. The maximum amount outstanding at any month end during each of the
last three years was $2.3 billion, $1.9 billion and $2.4 billion, respectively.
The average daily balance and average interest rates for each year are presented
in Table 3.
Long-term debt consists of subordinated capital notes due 1999, FHLB
advances, 6 3/4% subordinated debentures due 2025, 7 3/4% subordinated notes due
2004 and long-term notes payable. The only significant increase in long-term
funding during 1996 was in FHLB advances. The long-term FHLB advances increased
to $511.6 million on average in 1996 from $54.0 million in 1995. These funds
were utilized in 1996 because of their relatively low cost and the ability to
match their maturities with those of the assets being funded.
In November 1995, AmSouth Bancorporation issued $150 million of 6 3/4%
subordinated debentures due in the year 2025, which may be redeemed by the
holder after ten
30
<PAGE>
Table 10
Maturity of Time Deposits of $100,000 or More
(In thousands)
<TABLE>
<CAPTION>
December 31
==========================================================================================
1996 1995 1994
<S> <C> <C> <C>
Three months or less............... $ 360,894 $ 493,848 $ 233,282
Over three through six months...... 123,449 131,062 102,370
Over six through twelve months..... 167,509 254,626 127,775
Over twelve months................. 163,800 171,958 435,971
------------------------------------------------------
$ 815,652 $ 1,051,494 $ 899,398
======================================================
==========================================================================================
</TABLE>
years. The proceeds of these funds have been used to purchase shares of AmSouth
common stock under plans approved by AmSouth's Board of Directors. During 1996,
2.7 million shares were purchased.
Shareholders' Equity At December 31, 1996, shareholders' equity totaled $1.4
billion, an increase of $12.4 million from year-end 1995. The sources of growth
in shareholders' equity during 1996 were the retention of net income, issuances
of common stock under the various stock-based employee benefits plans and a $2.6
million increase in unrealized gains on available-for-sale securities.
Offsetting the increases were cash dividends declared of $91.4 million and the
purchase of 2.7 million shares of AmSouth common stock for $113.9 million to
provide shares for dividend reinvestment, employee benefit plans and other
corporate purposes. Information on prior years may be found in the Consolidated
Statement of Shareholders' Equity on page 48 of this report. Also, see Note N of
the Notes to Consolidated Financial Statements.
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, 1996, 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 and Note P of the Notes
to Consolidated Financial Statements 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 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
31
<PAGE>
FINANCIALS
Table 11
Capital Ratios
<TABLE>
<CAPTION>
(Dollars in thousands) December 31
==================================================================================================================================
1996 1995
<S> <C> <C>
Risk-based capital:
Shareholders' equity........................................................ $ 1,395,829 $ 1,383,475
Unrealized gains on available-for-sale securities (net of deferred taxes)... (24,296) (21,705)
Less certain intangible assets.............................................. (268,139) (284,707)
--------------------------------------
Tier I capital........................................................... 1,103,394 1,077,063
--------------------------------------
Adjusted allowance for loan losses.......................................... 175,346 171,294
Qualifying long-term debt................................................... 339,045 358,797
--------------------------------------
Tier II capital.......................................................... 514,391 530,091
--------------------------------------
Total capital......................................................... $ 1,617,785 $ 1,607,154
======================================
Risk-adjusted assets.............................................................. $ 14,023,996 $ 13,687,977
======================================
Capital ratios:
Tier I capital to total risk-adjusted assets................................ 7.87% 7.87%
Total capital to total risk-adjusted assets................................. 11.54 11.74
Leverage.................................................................... 6.20 6.38
Ending equity to assets..................................................... 7.58 7.80
Ending tangible equity to assets............................................ 6.22 6.29
==================================================================================================================================
</TABLE>
specific liquidity and interest rate risk guidelines.
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 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 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, 1996, 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 2 percent when
compared to net interest income under stable rates. This level of interest rate
risk is well within the company's
32
<PAGE>
Table 12
Interest Sensitivity Analysis
(Dollars in thousands)
<TABLE>
<CAPTION>
======================================================================================================================
0-30 31-60 61-90 91-180
Days Days Days Days
<S> <C> <C> <C> <C>
ASSETS
Earning assets:
Federal funds sold and securities
purchased under agreements to
resell............................. $ 15,000 $ -0- $ -0- $ -0-
Trading securities.................. 3,879 -0- -0- -0-
Available-for-sale securities....... 337,809 62,521 52,477 170,943
Held-to-maturity securities......... 38,284 35,570 27,097 89,011
Mortgage loans held for sale........ 30,290 30,292 -0- -0-
Loans net of unearned income........ 3,709,388 1,319,517 443,006 683,391
-----------------------------------------------------------------------
Total earning assets............. 4,134,650 1,447,900 522,580 943,345
Cash and other assets................. -0- -0- -0- -0-
Less allowance for loan losses........ -0- -0- -0- -0-
Market valuation on
available-for-sale securities...... -0- -0- -0- -0-
-----------------------------------------------------------------------
$ 4,134,650 $ 1,447,900 $ 522,580 $ 943,345
=======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits.... $ 2,290,885 $ 36,475 $ 15,837 $ 47,511
Savings deposits.................... 329,962 8,914 8,914 26,742
Time deposits....................... 399,482 266,550 298,943 731,554
Certificates of deposit of
$100,000 or more................... 195,221 61,767 69,486 116,344
Federal funds purchased and
securities sold under agreements
to repurchase...................... 1,872,286 -0- -0- -0-
Other borrowed funds................ 1,010,041 5,000 10,000 246
Long-term Federal Home
Loan Bank advances................. 750,053 53 215,054 50,162
Other long-term debt................ -0- -0- -0- -0-
-----------------------------------------------------------------------
Total interest-bearing liabilities.. 6,847,930 378,759 618,234 972,559
Noninterest-bearing demand
deposits............................ 146,355 21,937 21,937 65,812
Other liabilities..................... -0- -0- -0- -0-
Shareholders' equity.................. -0- -0- -0- -0-
-----------------------------------------------------------------------
$ 6,994,285 $ 400,696 $ 640,171 $ 1,038,371
=======================================================================
Off-balance sheet
financial instruments............... $ (290,000) $ (30,000) $ (50,000) $ -0-
=======================================================================
Rate sensitivity gap:
Dollar amount...................... $ (3,149,635) $ 1,017,204 $ (167,591) $ (95,026)
Percent of total earning assets.... (18.5)% 6.0% (1.0)% (0.6)%
Cumulative dollar amount........... $ (3,149,635) $ (2,132,431) $ (2,300,022) $ (2,395,048)
Note: Certain interest-sensitive assets and liabilities are included in the
table based on historical experience rather than contractual maturities.
======================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
181-365 Over One and Over Five Total
Days Less Than Years
Five
Years
<S> <C> <C> <C> <C>
ASSETS
Earning assets:
Federal funds sold and securities
purchased under agreements to
resell............................. $ -0- $ -0- $ -0- $ 15,000
Trading securities.................. -0- -0- -0- 3,879
Available-for-sale securities....... 517,591 671,578 439,329 2,252,248
Held-to-maturity securities......... 210,726 1,626,402 617,616 2,644,706
Mortgage loans held for sale........ -0- -0- -0- 60,582
Loans net of unearned income........ 1,254,722 3,972,359 697,863 12,080,246
-----------------------------------------------------------------------
Total earning assets............. 1,983,039 6,270,339 1,754,808 17,056,661
Cash and other assets................. -0- -0- 1,491,422 1,491,422
Less allowance for loan losses........ -0- -0- (179,049) (179,049)
Market valuation on
available-for-sale securities...... -0- -0- 38,230 38,230
-----------------------------------------------------------------------
$ 1,983,039 $ 6,270,339 $ 3,105,411 $ 18,407,264
=======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits.... $ 95,021 $ 678,020 $ 436,238 $ 3,599,987
Savings deposits.................... 53,484 388,256 252,283 1,068,555
Time deposits....................... 1,176,234 2,190,504 10,120 5,073,387
Certificates of deposit of
$100,000 or more................... 167,509 163,599 201 774,127
Federal funds purchased and
securities sold under agreements
to repurchase...................... -0- -0- -0- 1,872,286
Other borrowed funds................ 96 -0- -0- 1,025,383
Long-term Federal Home
Loan Bank advances................. 440 3,112 4,855 1,023,729
Other long-term debt................ -0- 100,081 311,865 411,946
-----------------------------------------------------------------------
Total interest-bearing liabilities.. 1,492,784 3,523,572 1,015,562 14,849,400
Noninterest-bearing demand
deposits............................ 131,623 957,812 606,067 1,951,543
Other liabilities..................... -0- -0- 210,492 210,492
Shareholders' equity.................. -0- -0- 1,395,829 1,395,829
-----------------------------------------------------------------------
$ 1,624,407 $ 4,481,384 $ 3,227,950 $ 18,407,264
=======================================================================
Off-balance sheet
financial instruments............... $ -0- $ 370,000 $ -0- $ -0-
=======================================================================
Rate sensitivity gap:
Dollar amount...................... $ 358,632
Percent of total earning assets.... 2.1%
Cumulative dollar amount........... $ (2,036,416)
======================================================================================================================
</TABLE>
33
<PAGE>
FINANCIALS
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, 1996, AmSouth had $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 interest rates in a rising rate environment. If interest rates
increased immediately by 200 basis points at the beginning of 1997 and assuming
no change in the spread between the federal funds rate and prime rate at
December 31, 1996, the earnings impact of these caps would be immaterial. An
immediate decrease of 200 basis points would have no impact as the rates would
be below the caps. Assuming that the current market spread between the prime
rate and the federal funds rate widens by 50 basis points, AmSouth would incur
an additional loss of $2.5 million for the year. 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,
1996 in the notional amount of $370.0 million. One of the interest rate swaps
was purchased to hedge the cost of $150.0 million of 6 3/4% 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. The
other interest rate swaps consist of a $155 million notional amount purchased to
hedge variable rate securities held in the available-for-sale portfolio and $65
million of notional amount purchased to hedge fixed rate consumer CD's. Assuming
a 200 basis point immediate increase in rates as of the beginning of January
1997, AmSouth would recognize a loss in earnings of approximately $3.6 million
for the year from these swaps. Conversely, a 200 basis point decrease in rates
would result in approximately $6.8 million of income for the year.
As of December 31, 1996, AmSouth held other off-balance sheet instruments
as hedges as well as futures and forward contracts 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 was 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 was $6.6 million and in 1997, when it will be fully amortized, is $292
thousand.
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 1996, 1995 and 1994.
Table 14 summarizes the expected maturities on all of AmSouth's off-balance
sheet positions at December 31, 1996 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 1996 rates. The information presented could change as future
rates increase or decrease. See Note L of the Notes to Consolidated Financial
Statements.
34
<PAGE>
Table 13
Interest Rate Swaps, Caps and Floors
<TABLE>
<CAPTION>
Swaps Caps &
(In millions) Receive fixed Pay fixed Basis Other Floors Total
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 ........ $ 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
Additions ....................... 220 -0- -0- -0- -0- 220
Maturities ...................... -0- -0- -0- -0- (33) (33)
Calls ........................... -0- -0- -0- -0- -0- -0-
Terminations .................... -0- -0- -0- -0- -0- -0-
---------------------------------------------------------------------------
Balance at December 31, 1996 ...... $ 370 $ -0- $ -0- $ -0- $ 1,077 $ 1,447
===========================================================================
==================================================================================================================
</TABLE>
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, 1996, 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 as well as the ability to securitize certain assets. 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
35
<PAGE>
FINANCIALS
Table 14
Maturities on Caps and Interest Rates Exchanged on Swaps
<TABLE>
<CAPTION>
(Dollars in millions) Mature During
==========================================================================================
1997 1998 1999 2000 Total
<S> <C> <C> <C> <C> <C>
Receive fixed rate swaps:
Notional amount ........ $ 215 $ 115 $ 40 $ -0- $ 370
Receive rate ........... 6.46% 6.66% 6.70% -- 6.55%
Pay rate ............... 5.61% 5.58% 5.53% -- 5.59%
Caps:
Notional amount ........ $ 77 $ -0- $ -0- $ 1,000 $ 1,077
==========================================================================================
</TABLE>
wholesale funding sources such as Eurodollar deposits, certificates of deposit,
commercial paper, and lines of credit. All bank subsidiaries also have the
ability to borrow from the 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 with a commitment 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, 1996.
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
Table 15
Credit Ratings
<TABLE>
<CAPTION>
Standard &
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-2 TBW-1
Certificates of deposit ........................ AA3* A -
Short-term counterparty ........................ P-1* A-1 -
Long-term counterparty ........................ AA3* A -
* AmSouth Bank of Alabama
=======================================================================================================
</TABLE>
36
<PAGE>
Table 16
Nonperforming Assets
<TABLE>
<CAPTION>
(Dollars in thousands) December 31
==================================================================================================================
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Nonaccrual loans................... $ 78,048 $ 96,246 $ 89,545 $ 53,020 $ 57,213
Restructured loans................. -0- -0- 13,203 2,420 4,924
--------------------------------------------------------------------
Nonperforming loans.............. 78,048 96,246 102,748 55,440 62,137
--------------------------------------------------------------------
Foreclosed properties.............. 14,445 16,150 28,263 29,273 52,771
Repossessions...................... 1,822 3,114 2,079 1,081 1,196
--------------------------------------------------------------------
Total nonperforming assets*...... $ 94,315 $ 115,510 $ 133,090 $ 85,794 $ 116,104
====================================================================
Nonperforming assets*
to loans net of unearned income,
foreclosed properties
and repossessions................ 0.78% 0.98% 1.16% 1.00% 1.71%
====================================================================
Accruing loans 90 days past due.... $ 36,382 $ 39,618 $ 34,246 $ 20,917 $ 18,007
====================================================================
*Exclusive of accruing loans 90 days past due
==================================================================================================================
</TABLE>
Table 17
Nonperforming Loans and Net Charge-offs
<TABLE>
<CAPTION>
(In thousands) Nonperforming Loans*
==============================================================================================
% of % of
December 31 Average December 31 Average
1996 Loans** per 1995 Loans** per
Category Category
<S> <C> <C> <C> <C>
Commercial............................ $ 14,853 0.47% $ 16,301 0.57%
-----------------------------------------------
Commercial real estate:
Commercial real estate mortgages... 21,796 1.37 36,617 2.58
Real estate construction........... 1,693 0.27 3,075 0.60
-----------------------------------------------
Total commercial real estate.. 23,489 1.06 39,692 2.05
-----------------------------------------------
Consumer:
Residential first mortgages........ 28,527 0.87 30,459 0.71
Other residential mortgages........ 4,311 0.56 1,011 0.16
Dealer indirect.................... 4,273 0.38 6,486 0.69
Revolving credit................... 165 0.03 0 --
Other consumer..................... 2,430 0.39 2,297 0.35
-----------------------------------------------
Total consumer................ 39,706 0.63 40,253 0.58
-----------------------------------------------
$ 78,048 0.67% $ 96,246 0.82%
===============================================
==============================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Charge-offs
==============================================================================================
% of % of
December 31 Average December 31 Average
1996 Loans** per 1995 Loans** per
Category Category
<S> <C> <C> <C> <C>
Commercial......................... $ 3,830 0.12% $ 4,595 0.16%
-----------------------------------------------
Commercial real estate:
Commercial real estate mortgages (193) (0.01) 1,397 0.10
Real estate construction...... (404) (0.06) 185 0.04
-----------------------------------------------
Total commercial real estate (597) (0.03) 1,582 0.08
-----------------------------------------------
Consumer:
Residential first mortgages.... 2,742 0.08 726 0.02
Other residential mortgages.... 567 0.07 (153) (0.02)
Dealer indirect................ 14,057 1.26 7,599 0.80
Revolving credit............... 29,904 6.08 15,401 3.99
Other consumer................. 14,070 2.26 4,858 0.75
-----------------------------------------------
Total consumer.......... 61,340 0.97 28,431 0.41
-----------------------------------------------
$ 64,573 0.55% $ 34,608 0.29%
===============================================
* Exclusive of accruing loans 90 days past due
** Net of unearned income
==============================================================================================
</TABLE>
37
<PAGE>
FINANCIALS
Committee or the Board of Directors of the 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 and Community
Responsibility 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 and Community Responsibility 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 special
assets 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.
Nonperforming Assets Management closely monitors loans and other assets which
are classified as nonperforming assets. Nonperforming assets include 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 the 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 1996 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
$21.2 million, or 18.3 percent, during 1996. This follows a $17.6 million, or
13.2 percent, decrease during 1995. 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.
38
<PAGE>
Table 18
Composition of
Foreclosed Properties
(Dollars in thousands)
<TABLE>
<CAPTION>
================================================================
Carrying Percent of
Value Total
<S> <C> <C>
Residential.................... $ 7,361 47.0%
Commercial buildings........... 5,744 36.6
Land/lots...................... 2,568 16.4
--------------------
15,673 100.0%
=====
Allowance for foreclosed
property losses............. (1,228)
---------
$ 14,445
=========
================================================================
</TABLE>
The decline in nonperforming assets in 1996, compared to 1995, was the
result of a decrease in nonperforming loans. Nonperforming loans were $78.0
million at the end of the year, a decline of $18.2 million or 18.9 percent.
Commercial and commercial real estate nonperforming loans were lower in 1996, on
a combined basis, by $17.7 million, while total nonperforming consumer loans
were lower by $547 thousand. The improvement in the levels of nonperforming
commercial and commercial real estate loans during 1996 is attributable to a
combination of lower interest rates, relatively strong real estate markets
throughout AmSouth's service areas and continued aggressive collection efforts.
Table 17 presents nonperforming loans and year-to-date net charge-offs and
each as a percentage of average net loans by category for December 31, 1996 and
1995.
For the year ended December 31, 1996, the level of foreclosed properties
improved from the level reported at year-end 1995. The improvement was due to a
combination of an improved economic environment and continued aggressive efforts
to dispose of these properties. Table 18 presents foreclosed properties by type
of property and their carrying values at December 31, 1996.
Table 19 is a summary of the allowance for foreclosed property losses for
1996, 1995 and 1994.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Nonperforming
Assets Trend
(Dollars in millions)
92 93 94 95 96
<S> <C> <C> <C> <C> <C>
Nonperforming Assets $ 116 $ 86 $ 133 $116 $ 94
Nonperforming Assets/Loans 1.71% 1.00% 1.16% .98% .78%
- ----------------------------------------------------------------
</TABLE>
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
analyzes of historical performance, the level of nonperforming
Table 19
Allowance for Foreclosed
Property Losses
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
==========================================================================
<S> <C> <C> <C>
Balance at January 1.............. $ 766 $ 3,638 $ 3,908
Net recoveries (write-downs)...... 161 (2,550) (2,018)
Addition (reduction)
to allowance
charged (credited)
to expense..................... 301 (322) 1,748
------------------------------
Balance at December 31............ $ 1,228 $ 766 $ 3,638
==============================
==========================================================================
</TABLE>
39
<PAGE>
FINANCIALS
Table 20
Allowance for Loan Losses
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995 1994 1993 1992
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at January 1........................... $ 178,451 $ 171,167 $ 131,509 $ 99,646 $ 95,392
Loans charged off:
Commercial.................................. (8,348) (7,991) (13,304) (8,492) (16,276)
Commercial real estate mortgages............ (2,455) (3,474) (3,869) (2,581) (12,992)
Commercial real estate construction......... (88) (455) (154) (178) (537)
Residential first mortgages................. (2,977) (854) (2,724) (932) (1,394)
Other residential mortgages................. (596) (127) (68) (263) (299)
Dealer indirect............................. (20,203) (10,385) (4,270) (3,557) (4,612)
Revolving credit............................ (32,145) (17,203) (14,810) (15,449) (5,196)
Other consumer.............................. (16,467) (6,793) (4,730) (4,917) (4,734)
-------------------------------------------------------------------------
Total charge-offs........................ (83,279) (47,282) (43,929) (36,369) (46,040)
-------------------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial.................................. 4,518 3,396 7,420 4,464 3,252
Commercial real estate mortgages............ 2,648 2,077 3,639 6,749 305
Commercial real estate construction......... 492 270 224 217 3,828
Residential first mortgages................. 235 128 227 329 286
Other residential mortgages................. 29 280 107 28 1
Dealer indirect............................. 6,146 2,786 1,702 1,760 1,572
Revolving credit............................ 2,241 1,802 1,470 1,009 781
Other consumer.............................. 2,397 1,935 2,245 2,065 1,688
-------------------------------------------------------------------------
Total recoveries......................... 18,706 12,674 17,034 16,621 11,713
-------------------------------------------------------------------------
Net charge-offs................................ (64,573) (34,608) (26,895) (19,748) (34,327)
-------------------------------------------------------------------------
Addition to allowance charged to expense....... 65,171 40,139 30,103 27,966 38,581
Allowance acquired in bank purchases........... -0- 1,753 36,450 23,645 -0-
-------------------------------------------------------------------------
Balance at December 31......................... $ 179,049 $ 178,451 $ 171,167 $ 131,509 $ 99,646
=========================================================================
Loans net of unearned income,
outstanding at end of period................ $ 12,080,246 $ 11,743,273 $ 11,429,907 $ 8,540,412 $ 6,716,595
Average loans net of unearned income,
outstanding for the period.................. $ 11,694,849 $ 11,747,385 $ 9,918,274 $ 7,634,984 $ 6,334,313
Ratios:
Allowance at end of period to loans
net of unearned income................... 1.48% 1.52% 1.50% 1.54% 1.48%
Allowance at end of period to average
loans net of unearned income............. 1.53 1.52 1.73 1.72 1.57
Allowance at end of period to
nonperforming loans * ................... 229.41 185.41 166.59 237.21 160.36
Allowance at end of period to
nonperforming assets * .................. 189.41 154.49 128.61 153.28 85.82
Net charge-offs to average loans
net of unearned income................... 0.55 0.29 0.27 0.26 0.54
Net charge-offs to allowance
at end of period......................... 36.06 19.39 15.71 15.02 34.45
Recoveries to prior year charge-offs........ 39.56 28.85 46.84 36.10 19.14
* Exclusive of accruing loans 90 days past due
===============================================================================================================================
</TABLE>
40
<PAGE>
and adversely rated loans, specific analyzes of certain problem loans, loan
activity since the previous quarter, reports prepared by the Credit 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 and Community
Responsibility Committee of the Board of Directors.
At December 31, 1996, the allowance for loan losses to loans, net of
unearned income, was 1.48 percent while coverage of nonperforming loans was
229.4 percent. This compares with an allowance for loan losses, net of unearned
income, at the end of 1995 of 1.52 percent and to nonperforming loans for the
same period of 185.4 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, 1996 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 21
Allocation of the Allowance for Loan Losses
<TABLE>
<CAPTION>
(Dollars in thousands) December 31, 1996 December 31, 1995
==============================================================================================================
Percentage of Percentage of
Loans* in Each Loans* in Each
Allowance Category to Allowance Category to
Allocation Total Loans* Allocation Total Loans*
<S> <C> <C> <C> <C>
Commercial............................ $ 24,919 29.6% $ 30,125 26.0%
------------------------------------------------------------
Commercial real estate:
Commercial real estate mortgages... 21,243 13.7 29,177 13.0
Real estate construction........... 8,677 5.7 5,302 4.5
------------------------------------------------------------
Total commercial real estate.... 29,920 19.4 34,479 17.5
------------------------------------------------------------
Consumer:
Residential first mortgages........ 4,538 24.6 18,699 32.4
Other residential mortgages........ 1,766 7.3 4,188 6.0
Dealer indirect.................... 14,701 10.1 13,809 8.8
Revolving credit................... 41,824 4.3 23,837 4.1
Other consumer..................... 19,214 4.7 16,845 5.2
------------------------------------------------------------
Total consumer.................. 82,043 51.0 77,378 56.5
------------------------------------------------------------
Unfunded commitments.................. 7,144 -- 6,685 --
Standby letters of credit............. 1,963 -- 3,880 --
Unallocated........................... 33,060 -- 25,904 --
------------------------------------------------------------
$ 179,049 100.0% $ 178,451 100.0%
============================================================
<CAPTION>
December 31, 1994 December 31, 1993
==============================================================================================================
Percentage of Percentage of
Loans* in Each Loans* in Each
Allowance Category to Allowance Category to
Allocation Total Loans Allocation Total Loans
<S> <C> <C> <C> <C>
Commercial............................ $ 29,184 23.6% $ 37,868 29.9%
------------------------------------------------------------
Commercial real estate:
Commercial real estate mortgages... 30,464 12.0 21,385 13.3
Real estate construction........... 12,021 4.7 5,901 4.3
------------------------------------------------------------
Total commercial real estate.... 42,485 16.7 27,286 17.6
------------------------------------------------------------
Consumer:
Residential first mortgages........ 18,514 37.4 4,076 28.5
Other residential mortgages........ 2,289 5.6 719 6.2
Dealer indirect.................... 7,916 7.2 6,108 6.7
Revolving credit................... 12,441 3.1 16,099 4.0
Other consumer..................... 9,381 6.4 4,514 7.1
------------------------------------------------------------
Total consumer.................. 50,541 59.7 31,516 52.5
------------------------------------------------------------
Unfunded commitments.................. 7,241 -- 5,650 --
Standby letters of credit............. 1,825 -- 1,660 --
Unallocated........................... 39,891 -- 27,529 --
------------------------------------------------------------
$ 171,167 100.0% $ 131,509 100.0%
============================================================
* Net of unearned income
==============================================================================================================
</TABLE>
41
<PAGE>
F I N A N C I A L S
Supplemental Financial Statements
AmSouth Bancorporation and Subsidiaries
Consolidated Statement of Condition
December 31, 1986-1996
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994 1993 1992
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks................... $ 648,494 $ 651,641 $ 616,639 $ 614,698 $ 589,084
Temporary investments..................... 2,369,939 2,546,583 672,170 1,896,220 806,257
Held-to-maturity securities............... 2,644,706 2,167,009 3,336,557 1,823,317 2,607,748
Loans net of unearned income.............. 12,080,246 11,743,273 11,429,907 8,540,412 6,716,595
Less allowance for loan losses............ 179,049 178,451 171,167 131,509 99,646
------------------------------------------------------------------------
Net loans............................. 11,901,197 11,564,822 11,258,740 8,408,903 6,616,949
Premises and equipment.................... 301,592 276,426 282,095 234,155 182,305
Other assets.............................. 541,336 532,314 611,750 492,328 313,984
------------------------------------------------------------------------
Total assets.......................... $ 18,407,264 $ 17,738,795 $ 16,777,951 $ 13,469,621 $ 11,116,327
========================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits.................................. $ 12,467,599 $ 13,420,287 $ 13,203,101 $ 10,374,183 $ 8,641,487
Federal funds purchased and
repurchase agreements................. 1,872,286 1,861,090 1,212,723 793,177 989,790
Other interest-bearing liabilities........ 2,461,058 919,635 906,225 829,266 494,649
------------------------------------------------------------------------
Total deposits and
interest-bearing liabilities........ 16,800,943 16,201,012 15,322,049 11,996,626 10,125,926
Acceptances outstanding................... 3,190 2,007 6,979 6,264 6,005
Accrued expenses and other liabilities.... 207,302 152,301 138,465 324,006 111,022
------------------------------------------------------------------------
Total liabilities..................... 17,011,435 16,355,320 15,467,493 12,326,896 10,242,953
Shareholders' equity...................... 1,395,829 1,383,475 1,310,458 1,142,725 873,374
------------------------------------------------------------------------
Total liabilities and
shareholders' equity................ $ 18,407,264 $ 17,738,795 $ 16,777,951 $ 13,469,621 $ 11,116,327
========================================================================
</TABLE>
Consolidated Statement of Earnings
Years Ended December 31, 1986-1996
<TABLE>
<CAPTION>
(In thousands except per share data) 1996* 1995 1994 1993 1992
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Revenue from earning assets............... $ 1,353,821 $ 1,272,939 $ 1,047,741 $ 840,617 $ 772,251
Interest expense.......................... 701,440 679,396 480,414 339,326 341,706
------------------------------------------------------------------------
Net interest income....................... 652,381 593,543 567,327 501,291 430,545
Provision for loan losses................. 65,171 40,139 30,103 27,966 38,581
------------------------------------------------------------------------
Net interest income after provision
for loan losses........................ 587,210 553,404 537,224 473,325 391,964
Noninterest revenues...................... 235,274 231,671 175,355 199,237 168,719
Noninterest expenses...................... 534,232 509,898 519,239 453,999 396,113
------------------------------------------------------------------------
Income before income taxes................ 288,252 275,177 193,340 218,563 164,570
Income taxes.............................. 105,576 100,222 66,050 71,843 47,977
------------------------------------------------------------------------
Net income................................ $ 182,676 $ 174,955 $ 127,290 $ 146,720 $ 116,593
========================================================================
Average common shares outstanding......... 56,605 58,262 56,527 50,848 46,684
Earnings per common share................. $3.23 $3.00 $2.25 $2.89 $2.50
Cash dividends declared per
common share......................... $1.62 $1.54 $1.43 $1.22 $1.07
</TABLE>
* Excluding the one-time, pre-tax third quarter charge of $24,196,000 or $.27
per share after tax, required under federal legislation to recapitalize the
Savings Association Insurance Fund (SAIF), net income for 1996 was
$197,895,000 or $3.50 per share. Excluding SAIF, the ten-year compound growth
rate for net income and earnings per share was 10.21% and 6.97%,
respectively.
42
<PAGE>
F I N A N C I A L S
Supplemental Financial Statements
AmSouth Bancorporation and Subsidiaries
Consolidated Statement of Condition
December 31, 1986-1996
<TABLE>
<CAPTION>
Ten-Year
Compound
Growth Rate
(In thousands) 1991 1990 1989 1988 1987 1986 1996/1986
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks............... $ 560,249 $ 623,744 $ 495,013 $ 511,666 $ 463,219 $ 511,124 2.41%
Temporary investments................. 676,604 178,944 221,231 160,202 195,161 224,959 26.55
Held-to-maturity securities........... 2,780,821 2,214,608 2,166,410 2,185,972 1,887,610 1,529,605 5.63
Loans net of unearned income.......... 6,293,509 6,382,299 6,316,472 5,873,735 5,426,186 4,424,240 10.57
Less allowance for loan losses........ 95,392 92,946 96,142 75,945 72,895 61,668 11.25
-----------------------------------------------------------------------------------------
Net loans......................... 6,198,117 6,289,353 6,220,330 5,797,790 5,353,291 4,362,572 10.56
Premises and equipment................ 160,984 154,761 143,638 142,545 153,968 126,613 9.07
Other assets.......................... 363,214 382,196 371,159 408,220 400,590 347,604 4.53
-----------------------------------------------------------------------------------------
Total assets...................... $ 10,739,989 $ 9,843,606 $ 9,617,781 $ 9,206,395 $ 8,453,839 $ 7,102,477 9.99%
=========================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits.............................. $ 8,538,296 $ 8,086,234 $ 7,613,948 $ 7,328,081 $ 6,563,364 $ 5,483,180 8.56%
Federal funds purchased and
repurchase agreements............. 572,970 828,903 1,079,951 883,237 964,187 822,348 8.58
Other interest-bearing liabilities.... 367,833 164,059 175,953 223,290 180,817 124,836 34.73
-----------------------------------------------------------------------------------------
Total deposits and
interest-bearing liabilities.... 9,479,099 9,079,196 8,869,852 8,434,608 7,708,368 6,430,364 10.08
Acceptances outstanding............... 3,498 22,245 24,422 90,123 104,166 103,803 (29.41)
Accrued expenses and other liabilities 463,349 82,378 94,465 86,372 93,681 92,052 8.46
-----------------------------------------------------------------------------------------
Total liabilities................. 9,945,946 9,183,819 8,988,739 8,611,103 7,906,215 6,626,219 9.89
Shareholders' equity.................. 794,043 659,787 629,042 595,292 547,624 476,258 11.35
-----------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity............ $ 10,739,989 $ 9,843,606 $ 9,617,781 $ 9,206,395 $ 8,453,839 $ 7,102,477 9.99%
=========================================================================================
</TABLE>
Consolidated Statement of Earnings
Years Ended December 31, 1986-1996
<TABLE>
<CAPTION>
Ten - Year
Compound
Growth Rate
(In thousands except per share data) 1991 1990 1989 1988 1987 1986 1996/1986
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue from earning assets........... $ 852,251 $ 880,032 $ 871,102 $ 747,511 $ 600,865 $ 531,491 9.80%
Interest expense...................... 486,848 556,404 570,359 469,216 347,459 294,187 9.08
-----------------------------------------------------------------------------------------
Net interest income................... 365,403 323,628 300,743 278,295 253,406 237,304 10.64
Provision for loan losses............. 48,647 45,407 47,766 19,611 42,416 21,698 11.63
-----------------------------------------------------------------------------------------
Net interest income after provision
for loan losses...................... 316,756 278,221 252,977 258,684 210,990 215,606 10.54
Noninterest revenues.................. 169,379 136,619 130,863 128,714 121,167 106,252 8.27
Noninterest expenses.................. 365,124 311,658 294,356 274,398 247,587 227,796 8.90
-----------------------------------------------------------------------------------------
Income before income taxes............ 121,011 103,182 89,484 113,000 84,570 94,062 11.85
Income taxes.......................... 31,785 24,734 17,185 25,128 16,825 19,229 18.57
-----------------------------------------------------------------------------------------
Net income............................ $ 89,226 $ 78,448 $ 72,299 $ 87,872 $ 67,745 $ 74,833 9.33%
=========================================================================================
Average common shares outstanding..... 43,652 41,956 43,095 43,002 42,360 41,935 3.05%
Earnings per common share............. $2.04 $1.87 $1.68 $2.04 $1.60 $1.78 6.11%
Cash dividends declared per
common share....................... $0.98 $0.94 $0.89 $0.84 $0.79 $0.71 8.60%
</TABLE>
43
<PAGE>
FINANCIALS
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 and Community Responsibility Committee of
the Board of Directors.
The Audit and Community Responsibility 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 and Community Responsibility 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 and Community Responsibility 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/ Kristen M. Hudak
- ----------------------- -------------------------------
C. Dowd Ritter Kristen M. Hudak
Chairman, President and Senior Executive Vice President
Chief Executive Officer Chief Financial Officer
44
<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, 1996 and 1995, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. 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, 1996 and 1995 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
- ---------------------
Ernst & Young LLP
Birmingham, Alabama
January 31, 1997
45
<PAGE>
FINANCIALS
Consolidated Financial Statements
AmSouth Bancorporation and Subsidiaries
Consolidated Statement of Condition
<TABLE>
<CAPTION>
(Dollars in thousands) December 31
=========================================================================================================================
1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks................................................... $ 648,494 $ 651,641
Federal funds sold and securities purchased under agreements to resell.... 15,000 1,775
Trading securities........................................................ 3,879 2,978
Available-for-sale securities............................................. 2,290,478 2,479,813
Held-to-maturity securities (market value of $2,649,481
and $2,193,421, respectively)........................................... 2,644,706 2,167,009
Mortgage loans held for sale.............................................. 60,582 62,017
Loans..................................................................... 12,168,572 11,819,809
Less: Allowance for loan losses.......................................... 179,049 178,451
Unearned income.................................................... 88,326 76,536
-------------------------------
Net loans.......................................................... 11,901,197 11,564,822
Premises and equipment, net............................................... 301,592 276,426
Customers' acceptance liability........................................... 3,190 2,007
Accrued interest receivable and other assets.............................. 538,146 530,307
-------------------------------
$ 18,407,264 $ 17,738,795
===============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand.......................................... $ 1,951,543 $ 1,834,853
Interest-bearing demand............................................. 3,599,987 3,912,506
Savings............................................................. 1,068,555 1,005,099
Time................................................................ 5,073,387 5,672,586
Certificates of deposit of $100,000 or more......................... 774,127 995,243
-------------------------------
Total deposits................................................... 12,467,599 13,420,287
Federal funds purchased and securities sold under
agreements to repurchase............................................. 1,872,286 1,861,090
Other borrowed funds................................................... 1,025,383 478,736
Long-term Federal Home Loan Bank advances.............................. 1,023,729 15,014
Other long-term debt................................................... 411,946 425,885
-------------------------------
Total deposits and interest-bearing liabilities.................. 16,800,943 16,201,012
Acceptances outstanding................................................... 3,190 2,007
Accrued expenses and other liabilities.................................... 207,302 152,301
-------------------------------
Total liabilities................................................ 17,011,435 16,355,320
-------------------------------
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 -- 60,022,682 and 60,030,242 shares, respectively............. 60,023 60,030
Capital surplus......................................................... 592,470 590,882
Retained earnings....................................................... 858,329 788,170
Cost of common stock in treasury -- 3,998,491
and 2,765,000 shares, respectively................................... (128,889) (73,192)
Deferred compensation on restricted stock............................... (10,400) (4,120)
Unrealized gains on available-for-sale securities,
net of deferred taxes................................................. 24,296 21,705
-------------------------------
Total shareholders' equity........................................ 1,395,829 1,383,475
-------------------------------
$ 18,407,264 $ 17,738,795
===============================
=========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
46
<PAGE>
Amsouth Bancorporation and Subsidiaries
Consolidated Statement of Earnings
<TABLE>
<CAPTION>
(In thousands except per share data) Years Ended December 31
=========================================================================================
1996 1995 1994
<S> <C> <C> <C>
REVENUE FROM EARNING ASSETS
Loans............................................. $1,004,534 $1,011,320 $ 793,956
Securities:
Trading securities.............................. 144 309 2,550
Available-for-sale securities................... 164,473 38,034 52,005
Held-to-maturity securities..................... 178,260 216,703 183,985
------------------------------------
Total securities.............................. 342,877 255,046 238,540
Mortgage loans held for sale...................... 5,189 5,478 12,609
Federal funds sold and securities purchased
under agreements to resell...................... 1,221 1,095 2,636
------------------------------------
Total revenue from earning assets............. 1,353,821 1,272,939 1,047,741
------------------------------------
INTEREST EXPENSE
Interest-bearing demand deposits.................. 115,192 139,854 118,952
Savings deposits.................................. 28,432 27,500 24,261
Time deposits..................................... 318,410 329,979 192,431
Certificates of deposit of $100,000 or more....... 49,311 54,278 33,751
Federal funds purchased and securities sold
under agreements to repurchase.................. 91,788 67,182 65,009
Other borrowed funds.............................. 39,500 32,818 21,528
Long-term Federal Home Loan Bank advances......... 27,210 3,825 6,442
Other long-term debt.............................. 31,597 23,960 18,040
------------------------------------
Total interest expense.......................... 701,440 679,396 480,414
------------------------------------
NET INTEREST INCOME............................... 652,381 593,543 567,327
Provision for loan losses......................... 65,171 40,139 30,103
------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES..................................... 587,210 553,404 537,224
------------------------------------
NONINTEREST REVENUES
Service charges on deposit accounts............... 94,765 85,085 68,780
Trust income...................................... 57,354 50,272 46,121
Investment services income........................ 16,944 7,325 5,314
Credit card income................................ 14,915 13,316 11,565
Interchange income................................ 8,982 5,747 2,719
Mortgage administration fees...................... 3,087 8,572 22,518
Other operating revenues.......................... 39,227 61,354 18,338
------------------------------------
Total noninterest revenues.................... 235,274 231,671 175,355
------------------------------------
NONINTEREST EXPENSES
Salaries and employee benefits.................... 232,076 226,317 232,050
Net occupancy expense............................. 54,211 53,918 46,770
Equipment expense................................. 55,044 50,289 41,432
FDIC premiums..................................... 7,814 20,315 24,664
SAIF assessment................................... 24,196 -0- -0-
Foreclosed properties expense..................... 1,352 372 4,721
Other operating expenses.......................... 159,539 158,687 169,602
------------------------------------
Total noninterest expenses.................... 534,232 509,898 519,239
INCOME BEFORE INCOME TAXES........................ 288,252 275,177 193,340
Income taxes...................................... 105,576 100,222 66,050
------------------------------------
NET INCOME.................................... $ 182,676 $ 174,955 $ 127,290
====================================
Average common shares outstanding................. 56,605 58,262 56,527
Earnings per common share......................... $3.23 $3.00 $2.25
</TABLE>
See notes to consolidated financial statements.
47
<PAGE>
FINANCIALS
AmSouth Bancorporation and Subsidiaries
Consolidated Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Common Capital Retained Treasury Deferred
(In thousands) Stock Surplus Earnings Stock Compensation
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994.......................... $ 54,708 $ 469,669 $ 645,465 $ (24,173) $ (2,944)
Balance at beginning of period for immaterial
pooling-of-interest entities..................... 1,070 9,192 11,231 -0- -0-
Net income.......................................... -0- -0- 127,290 -0- -0-
Cash dividends declared ($1.43 per share)........... -0- -0- (80,865) -0- -0-
Common stock transactions:
Employee stock plans............................. 304 8,402 -0- -0- (87)
Acquisition of Fortune Bancorp, Inc.............. 4,474 121,363 -0- -0- -0-
Purchase and retirement of common stock.......... (1,000) (29,047) -0- -0- -0-
Unrealized losses on available-for-sale securities,
net of deferred taxes............................ -0- -0- -0- -0- -0-
---------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994........................ 59,556 579,579 703,121 (24,173) (3,031)
Net income.......................................... -0- -0- 174,955 -0- -0-
Cash dividends declared ($1.54 per share)........... -0- -0- (89,906) -0- -0-
Common stock transactions:
Employee stock plans............................. 474 11,303 -0- -0- (1,089)
Purchase of common stock......................... -0- -0- -0- (49,019) -0-
Unrealized gains on available-for-sale securities,
net of deferred taxes............................ -0- -0- -0- -0- -0-
---------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995........................ 60,030 590,882 788,170 (73,192) (4,120)
Net income.......................................... -0- -0- 182,676 -0- -0-
Cash dividends declared ($1.62 per share)........... -0- -0- (91,378) -0- -0-
Common stock transactions:
Employee stock plans............................. (7) 1,483 (8,796) 36,538 (6,280)
Dividend reinvestment plan....................... -0- 105 (106) 5,274 -0-
Purchase of common stock......................... -0- -0- -0- (113,877) -0-
Retirement of debt............................... -0- -0- (12,237) 16,368 -0-
Unrealized gains on available-for-sale securities,
net of deferred taxes............................ -0- -0- -0- -0- -0-
---------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996........................ $ 60,023 $ 592,470 $ 858,329 $ (128,889) $ (10,400)
=====================================================================
<CAPTION>
Unrealized
Gains/
(Losses) on
(In thousands) Securitites Total
================================================================================
<S> <C> <C>
BALANCE AT JANUARY 1, 1994.......................... $ -0- $ 1,142,725
Balance at beginning of period for immaterial
pooling-of-interest entities..................... -0- 21,493
Net income.......................................... -0- 127,290
Cash dividends declared ($1.43 per share)........... -0- (80,865)
Common stock transactions:
Employee stock plans............................. -0- 8,619
Acquisition of Fortune Bancorp, Inc.............. -0- 125,837
Purchase and retirement of common stock.......... -0- (30,047)
Unrealized losses on available-for-sale securities,
net of deferred taxes............................ (4,594) (4,594)
-------------------------
BALANCE AT DECEMBER 31, 1994........................ (4,594) 1,310,458
Net income.......................................... -0- 174,955
Cash dividends declared ($1.54 per share)........... -0- (89,906)
Common stock transactions:
Employee stock plans............................. -0- 10,688
Purchase of common stock......................... -0- (49,019)
Unrealized gains on available-for-sale securities,
net of deferred taxes............................ 26,299 26,299
-------------------------
BALANCE AT DECEMBER 31, 1995........................ 21,705 1,383,475
Net income.......................................... -0- 182,676
Cash dividends declared ($1.62 per share)........... -0- (91,378)
Common stock transactions:
Employee stock plans............................. -0- 22,938
Dividend reinvestment plan....................... -0- 5,273
Purchase of common stock......................... -0- (113,877)
Retirement of debt............................... -0- 4,131
Unrealized gains on available-for-sale securities,
net of deferred taxes............................ 2,591 2,591
-------------------------
BALANCE AT DECEMBER 31, 1996........................ $ 24,296 $ 1,395,829
=========================
</TABLE>
See notes to consolidated financial statements.
48
<PAGE>
AmSouth Bancorporation and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
===================================================================================================================================
1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income......................................................................... $ 182,676 $ 174,955 $ 127,290
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses..................................................... 65,171 40,139 30,103
Provision for foreclosed property losses (recoveries)......................... 301 (322) 1,748
Depreciation and amortization of premises and equipment....................... 27,696 27,825 24,714
Amortization of premiums and discounts on held-to-maturity securities
and available-for-sale securities.......................................... (3,802) (5,172) (1,446)
Net decrease in mortgage loans held for sale.................................. 1,435 68,275 221,642
Net (increase) decrease in trading securities................................. (901) 5,300 89,281
Net (gains) losses on sales of available-for-sale securities.................. (7,530) (3,717) 26,642
Net gains on calls of held-to-maturity securities............................. (307) (741) (354)
Net (increase) decrease in accrued interest receivable and other assets....... (933) 73,841 155,597
Net increase (decrease) in accrued expenses and other liabilities............. 2,000 16,990 (293,437)
Provision for deferred income taxes........................................... 54,806 2,598 19,681
Amortization of intangible assets............................................. 16,642 21,402 26,537
Other......................................................................... 4,479 (2,012) (1,528)
----------------------------------------------
Net cash provided by operating activities.................................. 341,733 419,361 426,470
----------------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of
available-for-sale securities.................................................... 512,102 64,561 332,288
Proceeds from sales of available-for-sale securities............................... 1,678,997 225,546 1,650,528
Purchases of available-for-sale securities......................................... (1,282,598) (496,766) (545,757)
Proceeds from maturities, prepayments and calls of
held-to-maturity securities...................................................... 407,397 353,823 348,144
Purchases of held-to-maturity securities........................................... (883,502) (692,966) (1,481,636)
Net (increase) decrease in federal funds sold and securities
purchased under agreements to resell............................................. (13,225) 150,750 32,245
Net increase in loans.............................................................. (1,132,183) (612,821) (1,347,994)
Net purchases of premises and equipment............................................ (52,862) (20,473) (39,916)
Net cash used for acquisitions..................................................... -0- (13,221) (109,351)
----------------------------------------------
Net cash used by investing activities...................................... (765,874) (1,041,567) (1,161,449)
----------------------------------------------
FINANCING ACTIVITIES
Net (decrease) increase in demand deposits and savings accounts.................... (133,073) (150,913) 91,767
Net (decrease) increase in time deposits........................................... (819,362) 288,685 894,603
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase............................... 11,196 648,367 (59,603)
Net increase (decrease) in other borrowed funds.................................... 486,757 (60,118) (104,543)
Issuance of long-term Federal Home Loan Bank advances
and other long-term debt......................................................... 1,245,000 150,592 149,084
Payments for maturing long-term debt............................................... (186,655) (89,317) (138,488)
Cash dividends paid................................................................ (91,378) (89,906) (80,823)
Proceeds from employee stock plans and dividend reinvestment plan.................. 22,386 8,837 6,745
Purchase of common stock........................................................... (113,877) (49,019) (30,047)
----------------------------------------------
Net cash provided by financing activities.................................. 420,994 657,208 728,695
----------------------------------------------
(Decrease) increase in cash and cash equivalents................................... (3,147) 35,002 (6,284)
Cash and cash equivalents at beginning of period................................... 651,641 616,639 614,698
Beginning consolidated cash balances of immaterial pooling-of-interests entities... -0- -0- 8,225
----------------------------------------------
Cash and cash equivalents at end of period......................................... $ 648,494 $ 651,641 $ 616,639
==============================================
</TABLE>
See notes to consolidated financial statements.
49
<PAGE>
FINANCIALS
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 years 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. Certain amounts in the
prior years financial statements have been reclassified to conform with the 1996
presentation. These reclassifications are immaterial and had no effect on net
income.
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, 1996, 1995 and 1994, AmSouth paid interest of $703,449,000,
$663,834,000 and $467,791,000, respectively. For the years ended December 31,
1996, 1995 and 1994, noncash transfers from loans to foreclosed properties were
$20,469,000, $16,731,000 and $28,184,000, respectively. Noncash transfers from
foreclosed properties to loans for the years ended December 31, 1996, 1995 and
1994 were $1,284,000, $2,987,000 and $3,773,000, 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 years ended
December 31, 1996 and 1995, noncash transfers from loans to available-for-sale
securities of approximately $704,525,000 and $352,000,000 were made in
connection with mortgage loan securitizations. In addition, $5,309,000 of
noncash transfers were made from loans to other assets in connection with
mortgage loan securitizations. For the year ended December 31,1996, a $4,131,000
transfer from long-term debt to shareholders' equity was made due to the
redemption of convertible debt.
Securities Securities are classified as either held-to-maturity,
available-for-sale or trading. 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-
50
<PAGE>
to-maturity securities. Available-for-sale securities are carried at fair value.
Unrealized holding gains or losses, net of deferred taxes, on available-for-sale
securities are excluded from earnings and reported as a separate component of
shareholders' equity. AmSouth determines the appropriate classification of debt
securities at the time of purchase. The cost of securities is based on the
specific identification method.
Mortgage Loans Held For Sale Mortgage loans held for sale are carried at the
lower of aggregate cost or market value. 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 classified as a hedge. Under accrual accounting, 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 revenues.
AmSouth has purchased and sold interest rate cap agreements to modify the
interest characteristics of designated prime rate loans, deposits 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 date of inception. 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, deposits and federal
funds purchased. Payments 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 (the accrual accounting method described above) 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 interest rate swap agreements to modify the
interest characteristics of some of its subordinated debt and mortgage-backed
securities held in its available-for-sale portfolio. These interest rate swap
agreements are designated to hedge a portion or all of the principal balance and
term of a specific debt obligation or mortgage-backed security. These agreements
involve 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 or interest income related to
the mortgage-backed securities (the accrual accounting method described above).
The related amounts payable to or receivable from counterparties are included in
other liabilities or assets.
Loans Interest income on commercial and real estate loans is accrued daily based
upon the outstanding principal amounts except for those classified as nonaccrual
loans. Interest
51
<PAGE>
FINANCIALS
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
years ended December 31, 1996 and 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 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,
1996, 1995 and 1994, a provision/(reduction) of $301,000, $(322,000) and
$1,748,000 was charged/(credited) to expense and (recoveries)/write downs of
properties (credited)/charged to the allowance totaled $(161,000), $2,550,000
and $2,018,000, respectively. At December 31, 1996, 1995 and 1994, the allowance
had a balance of $1,228,000, $766,000 and $3,638,000, respectively.
Intangible Assets Intangible assets, primarily goodwill, 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
52
<PAGE>
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,
1996 and 1995, goodwill totaled $267,157,000 and $283,400,000, respectively.
Mortgage Servicing Rights Effective January 1, 1996, AmSouth adopted
prospectively Statement of Financial Accounting Standards No. 122, "Accounting
for Mortgage Servicing Rights, an amendment of FASB Statement No. 65" (Statement
122). Statement 122 requires entities that sell or securitize mortgage loans
with servicing rights retained to allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loan based on their relative fair
values. The resulting capitalized mortgage servicing rights are assessed for
impairment periodically based on fair value with any impairment recognized
through a valuation allowance. Mortgage servicing rights are amortized as
noninterest expense in proportion to, and over the period of, estimated net
servicing income based on the historical and projected prepayments of the
underlying loans. The adoption of Statement 122 did not have a material impact
on AmSouth's earnings, liquidity or capital resources.
Impairment of Long-Lived Assets In January 1996, AmSouth adopted 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 market value or the
undiscounted cash flows estimated to be generated by those assets is less than
the assets' carrying amount. In addition, Statement 121 also requires that
long-lived assets to be disposed of be reported in the balance sheet at the
lower of their carrying amount or fair value less cost to sell. The adoption of
Statement 121 resulted in no material impact on 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 recorded 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.
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, the Financial Accounting Standards
Board (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). AmSouth has elected to
follow Opinion 25 and related interpretations in accounting for its employee
stock options because, as discussed below, the alternative fair value accounting
provided for under Statement 123 requires use of option valuation models that
were not developed for use in valuing employee stock options. Under Opinion 25,
because the exercise price of AmSouth's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.
53
<PAGE>
FINANCIALS
Statement 123 requires the disclosure of pro forma net income and earnings
per share determined as if AmSouth had accounted for its employee stock options
under the fair value method of that statement. The fair value for these options
was estimated at the date of grant using a Black-Scholes option pricing model.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
AmSouth's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options. See Note O for a
further description of the assumptions used for preparing the pro forma
disclosures.
Earnings Per Common Share Earnings per common share are based on the average
outstanding shares of common stock. The effects of stock options outstanding and
convertible debentures are immaterial to the calculation of earnings per common
share.
Transfer of Assets and Liabilities In June 1996, FASB issued 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
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. AmSouth will adopt Statement 125 on
January 1, 1997, and based on current estimates, management does not believe the
effect of adoption will be material to AmSouth's financial condition or results
of operations.
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 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 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 with five other institutions whose total assets were approximately
$1,141,000,000. AmSouth issued 4,766,000 shares of common stock in these
transactions which were accounted for using the pooling-of-interests method of
accounting.
54
<PAGE>
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 $61,000,000 and $141,000,000 for the years
ended December 31, 1996 and 1995, respectively.
Note D - Available for-Sale Securities
The following is a summary of available-for-sale securities at December 31:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
====================================================================================================================================
Gross Gross Gross Gross
Amortized Unrealized Unrealized Carrying Amortized Unrealized Unrealized Carrying
Cost Gains Losses Amount Cost Gains Losses Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities........ $ 323,420 $ 2,984 $ 2,297 $ 324,107 $ 480,690 $ 8,659 $ 560 $ 488,789
Mortgage-backed
securities........ 1,673,594 37,565 2,068 1,709,091 1,627,274 25,729 1,436 1,651,567
Equity securities.... 172,838 -0- -0- 172,838 187,029 -0- -0- 187,029
Other debt securities 82,396 2,046 -0- 84,442 150,966 1,462 -0- 152,428
-----------------------------------------------------------------------------------------------------------
$ 2,252,248 $ 42,595 $ 4,365 $ 2,290,478 $ 2,445,959 $ 35,850 $ 1,996 $ 2,479,813
===========================================================================================================
====================================================================================================================================
</TABLE>
The carrying amount and amortized cost of available-for-sale securities by
maturity at December 31, 1996, were as follows:
<TABLE>
<CAPTION>
Amortized Carrying
(In thousands) Cost Amount
=====================================================================
<S> <C> <C>
Due within 1 year............ $ 63,902 $ 64,719
Due after 1 year through
5 years................... 160,269 160,002
Due after 5 years through
10 years.................. 156,672 157,550
Due after 10 years........... 24,973 26,278
Mortgage-backed securities... 1,673,594 1,709,091
Equity securities............ 172,838 172,838
--------------------------------
$ 2,252,248 $ 2,290,478
================================
=====================================================================
</TABLE>
Sales of available-for-sale securities were $1,671,010,000 and $220,471,000
during 1996 and 1995, respectively. Gross gains of $9,977,000 and $4,621,000 and
gross losses of $2,447,000 and $904,000 were realized on these sales for 1996
and 1995, respectively.
Available-for-sale securities with a carrying amount of $1,908,228,000 and
$1,767,747,000 at December 31, 1996 and 1995, respectively, were pledged to
secure short-term borrowings, public deposits, trust funds and for other
purposes as required or permitted by law.
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-
55
<PAGE>
FINANCIALS
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 was 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>
(In thousands) 1996 1995
===================================================================================================================================
Gross Gross Gross Gross
Carrying Unrealized Unrealized Market Carrying Unrealized Unrealized Market
Amount Gains Losses Value Amount Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
federal agency
securities...... $ 470,899 $ 1,594 $ 1,260 $ 471,233 $ 359,933 $ 4,704 $ 4,532 $ 360,105
State, county and
municipal
securities...... 178,959 6,998 31 185,926 224,742 12,298 13 237,027
Mortgage-backed
securities...... 1,993,571 16,490 18,929 1,991,132 1,579,931 24,576 10,540 1,593,967
Other securities... 1,277 6 93 1,190 2,403 16 97 2,322
-------------------------------------------------------------------------------------------------------------
$ 2,644,706 $ 25,088 $ 20,313 $ 2,649,481 $ 2,167,009 $ 41,594 $ 15,182 $ 2,193,421
=============================================================================================================
===================================================================================================================================
</TABLE>
The carrying amount and approximate market value of held-to-maturity
securities by maturity at December 31, 1996, were as follows:
<TABLE>
<CAPTION>
Carrying Market
(In thousands) Amount Value
====================================================================
<S> <C> <C>
Due within 1 year............... $ 47,811 $ 48,537
Due after 1 year through
5 years...................... 390,321 393,589
Due after 5 years through
10 years..................... 196,401 198,852
Due after 10 years.............. 16,602 17,371
Mortgage-backed securities...... 1,993,571 1,991,132
---------------------------------
$ 2,644,706 $ 2,649,481
=================================
====================================================================
</TABLE>
There were no sales of held-to-maturity securities during 1996 and 1995.
Gains on calls of held-to-maturity securities were $307,000 and $741,000 in 1996
and 1995, respectively.
Held-to-maturity securities with a carrying amount of $2,410,132,000 and
$1,588,262,000 at December 31, 1996 and 1995, respectively, were pledged to
secure short-term borrowings, public deposits, trust funds and for other
purposes as required or permitted by law.
Note F - Loans
The major categories of loans at December 31 are summarized as follows:
56
<PAGE>
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995
=====================================================================================================================
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Commercial............................... $ 3,668,226 30.1% $ 3,111,722 26.3%
-------------------------------------------------------------------------
Commercial real estate:
Commercial real estate mortgages.... 1,652,990 13.6 1,523,284 12.9
Real estate construction............ 693,417 5.7 525,985 4.5
-------------------------------------------------------------------------
Total commercial real estate... 2,346,407 19.3 2,049,269 17.4
-------------------------------------------------------------------------
Consumer:
Residential first mortgages......... 2,971,250 24.4 3,801,713 32.2
Other residential mortgages......... 872,067 7.2 693,549 5.9
Dealer indirect..................... 1,224,549 10.1 1,057,695 8.9
Revolving credit.................... 522,217 4.3 477,201 4.0
Other consumer...................... 563,856 4.6 628,660 5.3
-------------------------------------------------------------------------
Total consumer................. 6,153,939 50.6 6,658,818 56.3
-------------------------------------------------------------------------
$ 12,168,572 100.0% $ 11,819,809 100.0%
=========================================================================
=====================================================================================================================
</TABLE>
At December 31, 1996 and 1995, nonaccrual loans totaled $78,048,000 and
$96,246,000, respectively. The amount of interest income actually recognized on
these loans during 1996 and 1995 was $1,467,000 and $1,364,000, respectively.
The additional amount of interest income that would have been recorded during
1996 and 1995 if the above amounts had been current in accordance with their
original terms was $6,720,000 and $8,681,000, respectively.
At December 31, 1996 and 1995, the recorded investment in loans that were
considered to be impaired under Statement 114 was $41,104,000 and $55,993,000,
respectively (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, 1996. There was
approximately $6,100,000 and $6,807,000 at December 31, 1996 and 1995,
respectively, in the allowance for loan losses specifically allocated to these
loans. The average recorded investment in impaired loans for the years ended
December 31, 1996 and 1995 was approximately $48,133,000 and $60,475,000,
respectively.
Certain directors of AmSouth and its significant subsidiaries, including
their immediate families and companies in which they are principal owners, were
loan customers of AmSouth during 1996 and 1995. 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, 1996 and 1995 amounted to $109,793,000
and $73,587,000, respectively. Activity during 1996 in loans to related parties
resulted in additions of $434,214,000 representing new loans, reductions of
$427,454,000 representing payments, and net additions of $29,446,000
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) 1996 1995 1994
==========================================================================
<S> <C> <C> <C>
Balance at January 1........... $ 178,451 $ 171,167 $ 131,509
Loans charged-off.............. (83,279) (47,282) (43,929)
Recoveries of loans
previously charged-off....... 18,706 12,674 17,034
-----------------------------------------
Net charge-offs................ (64,573) (34,608) (26,895)
Addition to allowance
charged to expense........... 65,171 40,139 30,103
Allowance acquired in
bank purchases............... -0- 1,753 36,450
-----------------------------------------
Balance at December 31......... $ 179,049 $ 178,451 $ 171,167
=========================================
==========================================================================
</TABLE>
57
<PAGE>
FINANCIALS
Included in the loans charged-off for 1996 and 1995 were impaired loans of
approximately $10,713,000 and $7,755,000, respectively.
Note H - Premises and Equipment
Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
==========================================================================
<S> <C> <C>
Land................................. $ 51,112 $ 53,757
Buildings............................ 138,466 144,397
Furniture and fixtures............... 61,439 55,440
Equipment............................ 179,583 147,956
Leasehold improvements............... 64,340 65,207
------------------------------
494,940 466,757
Less allowances for
depreciation and amortization..... 193,348 190,331
------------------------------
$ 301,592 $ 276,426
==============================
==========================================================================
</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, 1996 and 1995 were $41,525,000 and $56,851,000, respectively.
At December 31, 1996, the aggregate maturities, in thousands, of time
deposits are summarized as follows:
<TABLE>
================================================================
<S> <C>
1997........................................ $ 3,421,968
1998........................................ 1,358,439
1999........................................ 560,914
2000........................................ 397,293
2001 and thereafter......................... 108,900
------------
$ 5,847,514
============
================================================================
</TABLE>
Note J - Other Borrowed Funds
Other borrowed funds at December 31 are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
================================================================
<S> <C> <C>
Treasury, tax and loan notes... $ 732,712 $ 256,790
Short-term Federal Home
Loan Bank advances........... 150,000 204,500
Short-term bank notes.......... 125,000 -0-
Commercial paper............... 6,800 1,851
Floating Rate Notes
due 1999.................... 6,769 6,899
Current portion of
long-term debt.............. 341 452
Other short-term debt.......... 3,761 8,244
---------------------------
$ 1,025,383 $ 478,736
===========================
================================================================
</TABLE>
At December 31, 1996, AmSouth had a line of credit arrangement for
short-term debt enabling the parent company to borrow up to $25,000,000 subject
to such terms as AmSouth and the bank may mutually agree. The arrangement is
reviewed annually for renewal of the credit line. The line is available to
support commercial paper borrowings and was not in use at December 31, 1996.
The interest rate on the treasury, tax and loan notes at December 31, 1996
was 6.01%. Short-term advances from the Federal Home Loan Bank had interest
rates ranging from 5.15% to 5.60% at December 31, 1996. The short-term bank
notes had an average rate of 5.46% at December 31, 1996. All other borrowed
funds at December 31, 1996 had interest rates ranging from 3.50% to 9.00%, and
substantially all of these balances had interest rates below 6.10%.
58
<PAGE>
Note K - Long-Term Debt
Long-term debt at December 31 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
================================================================
<S> <C> <C>
Long-term Federal
Home Loan Bank advances...... $ 1,023,729 $ 15,014
----------------------------
Other long-term debt:
6 3/4% Subordinated
Debentures Due 2025....... 149,845 149,827
7 3/4% Subordinated
Notes Due 2004............ 149,320 149,229
Subordinated Capital
Notes Due 1999............ 99,699 99,569
7 1/2% Convertible
Subordinated Debentures... -0- 4,042
Long-term notes payable...... 13,082 23,218
----------------------------
Total other long-term debt...... 411,946 425,885
----------------------------
$ 1,435,675 $ 440,899
============================
================================================================
</TABLE>
Advances from the Federal Home Loan Bank (FHLB) had maturities ranging from
1998 to 2013 and interest rates ranging from 3.00% to 7.06%. Of the balances
outstanding at December 31, 1996, $875,000,000 is callable by the FHLB during
the first quarter of 1997. Under the Blanket Agreement for Advances and Security
Agreement with the FHLB, residential mortgage loans are pledged as collateral
for the FHLB advances outstanding.
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.
The 7 1/2% Convertible Subordinated Debentures, due 2001, were called on
August 1, 1996. All of the debentures were redeemed in the 30 day period
following the call. The debentures were redeemed for 413,449 shares of AmSouth
common stock and approximately $8,000 cash.
Long-term notes payable at December 31, 1996 included notes maturing from
1999 to 2017 with interest rates ranging from 3.20% to 5.33%.
The aggregate stated maturities, in thousands, of long-term debt
outstanding at December 31, 1996 are summarized as follows:
<TABLE>
================================================================
<S> <C>
1997......................................... $ 341
1998......................................... 90,191
1999......................................... 499,890
2000......................................... -0-
2001......................................... 525,000
Thereafter................................... 320,594
------------
1,436,016
Less current portion of long-term debt....... 341
------------
$ 1,435,675
============
================================================================
</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 to 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 com-
59
<PAGE>
FINANCIALS
mitments 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. The present value of
purchased caps and floors in a gain position represents the potential credit
risk to AmSouth.
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.
AmSouth requires collateralization by a counter-party on credit exposure above a
specified credit limit. Trading and dealer activities in the aggregate are not
material to AmSouth and are not separately disclosed.
The following table identifies the gross contract or notional amount of
off-balance sheet financial instruments at December 31:
<TABLE>
<CAPTION>
(In millions) 1996 1995
=====================================================================
<S> <C> <C>
Forward contracts-commitments
to sell............................ $ 42.9 $ 44.1
Notional amount of interest rate swaps:
Receive fixed rate................. 395.7 177.4
Receive variable rate.............. 25.7 27.4
Notional amount of interest
rate caps and floors............... 1,077.0 1,116.5
Forward foreign exchange contracts:
Commitments to purchase............ 17.5 15.6
Commitments to sell................ 20.6 17.1
Written options sold.................... 2.0 25.0
Written options purchased............... 2.0 23.0
=====================================================================
</TABLE>
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) 1996 1995
================================================================
<S> <C> <C>
Loans.................................... $1,000 $1,000
Securities............................... 155 -0-
Federal funds purchased and
securities sold under agreements
to repurchase......................... 77 90
Deposits................................. 65 20
Long-term debt........................... 150 150
-----------------
$1,447 $1,260
=================
================================================================
</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 1994 fourth quarter realized loss
of $16,372,000 which was 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 these closed interest rate contracts
and included in net interest income was $6,559,000, $10,296,000 and $2,400,000
in 1996, 1995 and 1994, respectively. The remaining amount of deferred loss is
$292,000 and will be recognized in 1997.
60
<PAGE>
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, 1996, 1995 and 1994 was $38,379,000, $34,121,000 and $32,693,000,
respectively. There were no material contingent rental expenses for 1996, 1995
or 1994.
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, 1996:
<TABLE>
======================================================
<S> <C>
1997........................... $ 32,215
1998........................... 28,862
1999........................... 25,706
2000........................... 24,064
2001........................... 23,098
Thereafter..................... 203,062
------------
$ 337,007
============
======================================================
</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, 1996 was as follows (in millions):
<TABLE>
======================================================
<S> <C>
Commitments to extend credit....... $ 5,481.4
Standby letters of credit.......... 631.6
======================================================
</TABLE>
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 contracted with a related party to construct the office
complex. These contracts represent approximately $63,000,000 of the estimated
total construction cost of $93,000,000. AmSouth made payments on the contracts
of approximately $3,000,000, $27,000,000 and $23,000,000 during 1996, 1995 and
1994, respectively.
Various legal proceedings are pending against AmSouth and its subsidiaries.
Some of these proceedings seek relief or allege 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.
61
<PAGE>
FINANCIALS
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 remaining 1,000,000
shares of this program were purchased March 1, 1996 at a cost of $39,592,000.
The shares will be used for the purpose of satisfying requirements of employee
benefit, dividend reinvestment and other stock issuance plans.
On July 18, 1996, AmSouth's Board of Directors authorized a new plan to
repurchase up to five percent of AmSouth's outstanding shares of common stock as
of June 30, 1996, or approximately 2,800,000 shares, from time to time. The
shares will be used to issue stock under AmSouth's dividend reinvestment and
employee benefit plans or for general corporate purposes. Under this plan,
AmSouth purchased 1,650,000 shares at cost of $74,285,000 during 1996.
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, 1996, there were 693,171 shares reserved for issuance under
the Dividend Reinvestment and Common Stock Purchase Plan, 4,160,802 shares
reserved for issuance under stock compensation plans (1,067,361 shares represent
stock options outstanding) and 53,002 shares reserved for issuance under the
employee stock purchase plan for a total of 4,906,975 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. Generally, the terms of these plans stipulate that the
exercise price of options may not be less than the fair market value of
AmSouth's common stock at the date the options are granted. Options granted
generally vest one year from the date of the grant. Options granted generally
expire not later than ten years from the date of the grant.
FASB Statement 123 requires pro forma information regarding net income and
earnings per share. This pro forma information has been determined as if AmSouth
had accounted for its employee stock options under the fair value method of that
statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1996: a risk-free interest rate of 5.57%; a dividend yield of
4.01%; a volatility factor of 19.00%; and a weighted-average expected life of
the option of seven years. The weighted-average fair value of options granted
during 1996 was $7.21.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. AmSouth's pro
forma information follows (in thousands except for earnings per share
information):
<TABLE>
<CAPTION>
1996 1995
============================================================
<S> <C> <C>
Net income:
As reported........... $ 182,676 $ 174,955
Pro forma............. 181,064 173,924
Earnings per share:
As reported........... $ 3.23 $ 3.00
Pro forma............. 3.20 2.99
============================================================
</TABLE>
The following table summarizes AmSouth's stock option activity and related
information during 1994, 1995 and 1996:
62
<PAGE>
<TABLE>
<CAPTION>
Number Weighted-Average
of Shares Option Price per Share Option Price
=============================================================================================================
<S> <C> <C> <C> <C>
Balance at January 1, 1994......................... 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 $ 25.09
Options exercised.................................. (564,549) 6.96 - 40.38 24.04
Options forfeited.................................. (14,925) 28.75 - 40.38 35.76
Options granted.................................... 360,200 38.75 - 47.63 40.47
----------
Balance at December 31, 1996....................... 1,067,361 $ 6.96 - $ 47.63 $ 30.69
==========
Exercisable at December 31, 1996................... 748,911 $ 6.96 - $ 40.00 $ 26.53
==========
=============================================================================================================
</TABLE>
Of the options outstanding at December 31, 1996, those granted since
January 1, 1996, have a one year restriction period from the date of grant. All
other options outstanding were exercisable. Options outstanding at December 31,
1996, had a weighted-average contractual life of seven years and two months.
AmSouth also has issued common stock as restricted stock awards to key
officers with the restriction that they remain employed with AmSouth for periods
of three years or longer. During 1994, 115,777 restricted shares were awarded,
62,525 restricted shares were forfeited and the restrictions were removed on
17,975 shares. During 1995, 101,891 restricted shares were awarded, 44,784
restricted shares were forfeited and the restrictions were removed on 22,743
shares. During 1996, 182,180 restricted shares were awarded with a
weighted-average fair value of $47.89, 7,875 restricted shares were forfeited
and the restrictions were removed on 94,560 shares. During 1995, 29,192
restricted shares were also granted to, and 400 restricted shares were forfeited
by, non-employee members of the Boards of Directors of AmSouth and its
subsidiaries. During 1996, 2,450 restricted shares with a weighted-average fair
value of $38.52 were granted to non-employee members of the Boards of Directors
of AmSouth and its subsidiaries. The restrictions were removed from 6,142 shares
held by non-employee members of the Boards of Directors. There were no
forfeitures by non-employee members of the Boards of Directors during 1996. At
December 31, 1996, AmSouth had 372,262 shares of common stock outstanding
representing restricted stock awards.
At December 31, 1996, there were no stock appreciation rights outstanding.
Note P - Regulatory Capital
Requirements and Restrictions
Capital is the primary tool used by regulators to monitor the financial health
of insured banks and savings institutions. The Federal Reserve Board and the
Federal Deposit Insurance Corporation have historically had common capital
adequacy guidelines involving minimum leverage capital and risk-based capital
requirements. Based on the risk-based capital rules and definitions prescribed
by the banking regulators, should an institution's capital ratios decline below
predetermined levels, it would become subject to a series of increasingly
restrictive regulatory actions. All banks are required to have core capital
(Tier 1) of at least 4% of risk-weighted
63
<PAGE>
F I N A N C I A L S
assets, total capital of 8% of risk-weighted assets and a leverage ratio of 3%
of adjusted quarterly average assets. Tier 1 capital consists primarily of
shareholders' equity, excluding unrealized gains and losses on securities
available-for-sale, less goodwill and certain other intangibles. Total capital
consists of Tier 1 capital plus certain debt instruments and the reserve for
credit losses, subject to limitation. The regulations also define well
capitalized levels of Tier 1, total capital and leverage as ratios of 6%, 10%
and 5%, respectively. AmSouth and its significant banking subsidiaries had Tier
1, total capital and leverage ratios above the well capitalized levels at
December 31, 1996 and 1995. These ratios and capital amounts are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995
=================================================================================================================
Amount Ratio Amount Ratio
Tier 1 capital:
<S> <C> <C> <C> <C>
AmSouth......................... $ 1,103,394 7.87% $ 1,077,063 7.87%
AmSouth Bank of Alabama......... 836,984 9.54 786,067 9.06
AmSouth Bank of Florida......... 444,794 10.39 407,321 9.97
AmSouth Bank of Tennessee....... 102,387 13.31 100,330 14.32
---------------------------------------------------------------------
Total capital:
AmSouth......................... $ 1,617,785 11.54% $ 1,607,154 11.74%
AmSouth Bank of Alabama......... 928,975 10.59 873,590 10.07
AmSouth Bank of Florida......... 498,534 11.64 458,679 11.22
AmSouth Bank of Tennessee....... 112,026 14.57 109,126 15.58
---------------------------------------------------------------------
Leverage:
AmSouth......................... $ 1,103,394 6.20% $ 1,077,063 6.38%
AmSouth Bank of Alabama......... 836,984 8.21 786,067 8.46
AmSouth Bank of Florida......... 444,794 6.49 407,321 6.26
AmSouth Bank of Tennessee....... 102,387 9.37 100,330 9.27
---------------------------------------------------------------------
=================================================================================================================
</TABLE>
Certain restrictions exist regarding the ability of banking subsidiaries to
transfer funds to the parent company as loans, advances or dividends. At
December 31, 1996, approximately $188,400,000 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, 1996
and 1995, represented undistributed earnings of its banking subsidiaries.
Note Q - Pension and Other
Employee Benefit Plans
As of December 31, 1996, 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 funding policy is to contribute an amount
that meets the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, plus such additional amounts as the corporation
determines to be appropriate.
64
<PAGE>
Net periodic pension expense includes the following components:
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
=======================================================================
1996 1995 1994
<S> <C> <C> <C>
Service cost of the
current period.............. $ 6,010 $ 5,104 $ 5,556
Interest cost on the
projected benefit
obligation.................. 12,073 11,590 11,098
Actual (return) loss on
assets held in the plan..... (19,635) (32,527) 2,321
Net amortization of
transition asset and
net gain(loss).............. 3,648 20,360 (14,536)
----------------------------------
Pension expense............... $ 2,096 $ 4,527 $ 4,439
==================================
=======================================================================
</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) 1996 1995
================================================================================
<S> <C> <C>
Actuarial present value of
accumulated plan benefits:
Vested.................................... $ 143,268 $ 140,745
Nonvested................................. 6,887 6,649
------------------------
Accumulated benefit obligation................... $ 150,155 $ 147,394
========================
Actuarial present value of projected benefit
obligation for service rendered to date........ $ (166,997) $ (165,608)
Plan assets at fair value, primarily listed
stocks and bonds and U.S. obligations.......... 182,439 167,431
------------------------
Plan assets greater than
projected benefit obligation................... 15,442 1,823
Recognition of transfer of plan assets in
excess of projected benefit obligation......... 4,803 4,903
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions......................... (25,285) (20,185)
Unrecognized net transition asset................ (1,159) (2,814)
------------------------
Accrued pension cost included
in other liabilities........................... $ ( 6,199) $ (16,273)
========================
================================================================================
</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 7.75% and 4.50%, respectively, at December 31,
1996, 7.50% and 4.50%, respectively, at December 31, 1995, and 8.50% and 4.50%,
respectively, at December 31, 1994. The average expected long-term rate of
return on plan assets is approximately 9.00% at December 31, 1996 and 8.50% at
December 31, 1995 and 1994. At December 31, 1996, the plan assets included
180,600 shares of AmSouth common stock with a market value of $8,737,000. The
plan received $288,700 in dividends on AmSouth stock during the year ended
December 31, 1996.
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 began matching 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 continue to be matched at 50 cents
for every dollar contributed by an employee but are 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 company matching contributions are no longer self directed by the
employee but instead are allocated to the AmSouth stock investment option. The
cost of the thrift plan for the years ended December 31, 1996, 1995 and 1994 was
$5,632,000, $2,379,000 and $2,350,000, 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 may be made on an
unmatched basis with no administrative or brokerage fees charged. Under the
employee stock purchase plan, 46,574 shares of AmSouth common stock were
purchased during 1996 with a weighted-average fair value of $41.21.
65
<PAGE>
FINANCIALS
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, 1996, 1995 and 1994.
Note R - Income Taxes
The provisions for income taxes charged to earnings are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
========================================================================
1996 1995 1994
<S> <C> <C> <C>
Current tax expense:
Federal........................ $ 47,262 $ 86,138 $ 41,309
State.......................... 3,508 11,486 5,060
-----------------------------------
50,770 97,624 46,369
-----------------------------------
Deferred tax expense:
Federal....................... 49,388 2,455 16,459
State......................... 5,418 143 3,222
-----------------------------------
54,806 2,598 19,681
-----------------------------------
$105,576 $100,222 $ 66,050
===================================
========================================================================
</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>
(In thousands) Years Ended December 31
========================================================================
1996 1995 1994
<S> <C> <C> <C>
Tax at federal income tax rate..... $ 100,888 $ 96,312 $ 67,669
State and local income taxes,
net of federal tax benefits... 5,802 7,559 5,383
Goodwill amortization.............. 5,558 5,540 3,911
Tax exempt interest................ (6,169) (9,032) (10,437)
Other.............................. (503) (157) (476)
-----------------------------------
$ 105,576 $ 100,222 $ 66,050
===================================
========================================================================
</TABLE>
The significant temporary differences which create deferred tax assets and
liabilities at December 31 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
================================================================================
<S> <C> <C>
Deferred tax assets:
Basis differences in acquisitions........... $ 2,615 $ 5,186
Accrued expenses............................ 12,220 12,718
Loan loss reserves.......................... 68,312 66,979
Interest income on nonaccruing loans........ 3,118 2,898
Other....................................... 5,762 8,793
-----------------------
92,027 96,574
-----------------------
Deferred tax liabilities:
Employee benefits........................... (2,822) 9,610
Leasing activities.......................... (64,246) (19,224)
Depreciation................................ (8,928) (8,217)
Discount accretion.......................... (6,077) (4,899)
Recapture tax loan loss reserves............ (10,602) (14,820)
Statement 115 equity adjustment............. (14,511) (12,921)
Deferred loss on notional
principal contracts...................... (313) (2,566)
Other....................................... (6,953) (7,968)
-----------------------
(114,452) (61,005)
-----------------------
Net deferred tax (liability) asset...... $ (22,425) $ 35,569
=======================
================================================================================
</TABLE>
Income taxes paid were $59,054,000, $79,405,000 and $66,979,000, for the
years ended December 31, 1996, 1995 and 1994, respectively. Applicable income
tax expense (benefit) of $115,000, $279,000 and $(9,884,000), on securities
gains and losses for the years ended December 31, 1996, 1995 and 1994,
respectively, is included in the provision for income taxes.
66
<PAGE>
Note S - Other Operating Revenues and Other
Operating Expenses
The components of other operating revenues and other operating expenses are as
follows:
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
================================================================================
1996 1995 1994
<S> <C> <C> <C>
Other operating revenues:
Gains on sales of
mortgage servicing............... $ -0- $ 29,826 $ 23,766
Gains (losses) on sales of
available-for-sale securities.... 7,530 3,717 (26,642)
Gains on calls of
held-to-maturity securities...... 307 741 354
Other portfolio income (losses).... 1,416 328 (18,118)
Other.............................. 29,974 26,742 38,978
--------------------------------------
$ 39,227 $ 61,354 $ 18,338
======================================
Other operating expenses:
Postage and office supplies........ $ 23,072 $ 23,399 $ 22,718
Marketing.......................... 16,755 17,299 13,758
Telephone.......................... 16,466 12,984 11,834
Professional fees.................. 12,580 12,886 12,501
Amortization of intangibles........ 16,642 21,402 26,537
Other.............................. 74,024 70,717 82,254
--------------------------------------
$ 159,539 $ 158,687 $ 169,602
======================================
================================================================================
</TABLE>
Note T - Condensed Parent Company Information
Statement of Condition
<TABLE>
<CAPTION>
(In thousands) December 31
================================================================================
1996 1995
<S> <C> <C>
ASSETS
Investment in subsidiaries.......... $ 1,714,962 $ 1,635,283
Loans............................... -0- 20,400
Securities purchased
under agreements to resell....... 21,845 9,500
Other earning assets................ 54,852 110,000
Other assets........................ 20,947 23,404
-------------------------------
$ 1,812,606 $ 1,798,587
===============================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Commercial paper.................... $ 6,800 $ 1,851
Subordinated debt................... 398,864 402,667
Other long-term debt................ -0- 150
Other borrowed funds................ 6,919 7,049
Accrued interest payable
and other liabilities............ 4,194 3,395
-------------------------------
Total liabilities............. 416,777 415,112
Shareholders' equity................ 1,395,829 1,383,475
-------------------------------
$ 1,812,606 $ 1,798,587
===============================
================================================================================
</TABLE>
Statement of Earnings
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
================================================================================
1996 1995 1994
<S> <C> <C> <C>
INCOME
Dividends from subsidiaries.... $ 125,809 $ 103,643 $ 97,025
Interest and other............. 5,761 3,662 2,827
-----------------------------------
131,570 107,305 99,852
-----------------------------------
EXPENSES
Interest....................... 31,059 23,942 17,607
Other.......................... 4,922 5,074 4,307
-----------------------------------
35,981 29,016 21,914
-----------------------------------
Income before income
taxes and equity in
undistributed earnings
of subsidiaries................ 95,589 78,289 77,938
Income tax credit................... 10,462 8,582 6,163
-----------------------------------
Income before equity in
undistributed earnings
of subsidiaries................ 106,051 86,871 84,101
Equity in undistributed
earnings of subsidiaries....... 76,625 88,084 43,189
-----------------------------------
NET INCOME.......................... $ 182,676 $ 174,955 $ 127,290
===================================
================================================================================
</TABLE>
67
<PAGE>
FINANCIALS
Statement of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Years Ended December 31
=================================================================================================================================
1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income...................................................... $ 182,676 $ 174,955 $ 127,290
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of goodwill................................... 2,386 2,386 2,386
Other amortization and depreciation........................ 1,375 1,243 1,107
Net decrease (increase) in accrued interest
receivable and other assets............................. 1,116 1,535 (908)
Net increase in accrued expenses and other liabilities..... 4,243 2,934 922
Equity in undistributed earnings of subsidiaries........... (76,625) (88,084) (43,189)
--------------------------------------------------
Net cash provided by operating activities................ 115,171 94,969 87,608
--------------------------------------------------
INVESTING ACTIVITIES
Net decrease (increase) in short-term investments............... 63,203 (92,535) 3,339
Net purchases of premises and equipment......................... -0- -0- (218)
Net cash used for acquisitions.................................. -0- (17,069) (138,007)
--------------------------------------------------
Net cash provided (used) by investing activities......... 63,203 (109,604) (134,886)
--------------------------------------------------
FINANCING ACTIVITIES
Net increase (decrease) in commercial paper..................... 4,949 65 (182)
Net decrease in other borrowed funds............................ (130) (575) (477)
Issuance of long-term debt...................................... -0- 149,827 149,084
Payments on long-term debt...................................... (150) (4,300) (151)
Cash dividends paid............................................. (91,378) (89,906) (80,823)
Proceeds from employee stock plans and
dividend reinvestment plan................................... 22,386 8,837 6,745
Purchase of common stock........................................ (113,877) (49,019) (30,047)
--------------------------------------------------
Net cash (used) provided by financing activities.......... (178,200) 14,929 44,149
--------------------------------------------------
Increase (decrease) in cash.......................................... 174 294 (3,129)
Cash at beginning of period.......................................... 327 33 3,058
Beginning cash balances of immaterial
pooling-of-interests entities..................................... -0- -0- 104
--------------------------------------------------
Cash at end of period................................................ $ 501 $ 327 $ 33
==================================================
=================================================================================================================================
</TABLE>
68
<PAGE>
Note U - Quarterly Results
of Operations (Unaudited)
Selected quarterly results of operations for the four quarters ended December 31
are as follows:
<TABLE>
<CAPTION>
(In thousands except per share data) 1996 1995
====================================================================================================================================
Fourth Third Second First Fourth Third Second First
Quarter Quarter* Quarter Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from earning assets..$ 342,577 $343,595 $336,285 $331,364 $325,937 $318,971 $317,970 $310,061
Interest expense............. 173,111 178,540 176,130 173,659 172,731 169,706 172,382 164,577
Net interest income.......... 169,466 165,055 160,155 157,705 153,206 149,265 145,588 145,484
Provision for loan losses.... 18,497 17,505 14,049 15,120 10,090 9,398 12,307 8,344
Income before income taxes... 80,496 55,658 77,266 74,832 75,038 73,305 64,531 62,303
Net income................... 51,615 35,193 48,705 47,163 47,892 46,095 40,858 40,110
Per common share:
Net income................ .92 .62 .86 .83 .82 .79 .70 .69
Cash dividends declared... .42 .40 .40 .40 .40 .38 .38 .38
Market price range:
High................. 50.88 44.50 40.13 41.25 41.38 39.38 34.50 33.00
Low.................. 42.88 34.38 36.00 36.75 37.50 32.38 30.63 25.75
</TABLE>
* Excluding the one-time, pre-tax third quarter charge of $24,196,000, or $.27
per share after tax, required under federal legislation to recapitalize the
Savings Association Insurance Fund, net income for the third quarter 1996 was
$50,412,000 or $.89 per share.
================================================================================
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 statement of condition lines captioned cash and due from banks,
federal funds sold and securities purchased under agreements to resell,
customers' acceptance liability, federal funds purchased and securities sold
under agreements to repurchase, other borrowed funds, and acceptances
outstanding.
The carrying amount and estimated fair values of other financial
instruments at December 31 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
====================================================================================================================
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Financial assets:
Net loans.................................... $ 11,901,197 $ 11,877,655 $ 11,564,822 $ 11,747,723
Mortgage loans held for sale................. 60,582 60,582 62,017 62,017
Financial liabilities:
Deposits..................................... 12,467,599 12,449,605 13,420,287 13,363,864
Long-term FHLB advances...................... 1,023,729 1,046,752 15,014 14,461
Other long-term debt......................... 411,946 422,696 425,885 461,378
Off-balance sheet:
Off-balance sheet financial instruments
(net receivable position)................ ---- 3,746 ---- (2,966)
Commitments to extend credit
and standby letters of credit........... ---- (1,842) ---- (3,226)
====================================================================================================================
</TABLE>
69
<PAGE>
FINANCIALS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" (Statement 107), requires the disclosure of
estimated fair values for all financial instruments, both assets and liabilities
on and off-balance sheet, for which it is practicable to estimate their value
along with pertinent information on those financial instruments for which such
values are not available.
Fair value estimates are made at a specific point in time and are based on
relevant market information which is continuously changing. Because no quoted
market prices exist for a significant portion of AmSouth's financial
instruments, fair values for such instruments are based on management's
assumptions with respect to future economic conditions, estimated discount
rates, estimates of the amount and timing of future cash flows, expected loss
experience, and other factors. These estimates are subjective in nature
involving uncertainties and matters of significant judgment; therefore, they
cannot be determined with precision. Changes in the assumptions could
significantly affect the estimates.
Statement 107 fair value estimates include certain on and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. For example, AmSouth has a substantial trust department
that contributes net fee income annually. The trust department is not considered
a financial instrument, and its value has not been incorporated into the fair
value estimates. Other significant assets and liabilities that are not
considered financial assets or liabilities include the mortgage banking
operation, brokerage network, premises and equipment, core deposit intangible
and goodwill. In addition, the tax ramifications related to the realization of
the unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates. As a result, the
Statement 107 fair value disclosures should not be considered an indication of
the fair value of the corporation taken as a whole.
The following methods and assumptions were used by AmSouth in estimating
its fair value disclosures for financial instruments:
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.
For credit card loans and equity lines of credit, the carrying value reduced by
an estimate of credit losses inherent in the portfolio is a reasonable estimate
of fair value. 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.
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.
Commitments to extend credit and Standby letters of credit The fair value of
commitments to extend credit is estimated based on the amount of unamortized
deferred loan commitment fees. The fair value of letters of credit is based on
the amount of unearned fees plus the estimated cost to terminate the letters of
credit.
Off-balance sheet instruments The fair value of interest rate swaps, financial
futures, and interest rate caps and floors are obtained from dealer quotes.
These values represent the esti-
70
<PAGE>
mated amount the corporation would receive or pay to terminate the contracts or
agreements, taking into account current interest rates and, when appropriate,
the current creditworthiness of the counterparties.
Deposit liabilities The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, savings accounts, and money market and
interest-bearing checking accounts is, by definition, equal to the amount
payable on demand (carrying amount). The fair values for variable rate
fixed-term money market accounts and certificates of deposit approximate their
carrying amounts. Fair values for fixed rate certificates of deposit are
estimated using a discounted cash flow calculation that applies interest rates
currently being offered on certificates of deposit to a schedule of aggregated
expected monthly maturities on time deposits.
Long-term borrowings The fair values of long-term borrowings (other than
deposits) are estimated using discounted cash flow analyses, based on AmSouth's
current incremental borrowing rates for similar types of borrowing arrangements.
71
<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
Trivest Enterprises, Inc. Florida
</TABLE>
<PAGE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements of AmSouth Bancorporation and in the related Prospectuses of our
report dated January 31, 1997, with respect to the consolidated financial
statements of AmSouth Bancorporation and subsidiaries incorporated by reference
in this Annual Report (Form 10K) for the year ended December 31, 1996:
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 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 AmSouth Bancorporation 1996
Long Term Incentive Compensation Plan.
/s/ Ernst & Young, LLP
------------------------
Birmingham, Alabama
March 20, 1997
<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, 1996 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 , 1997.
- -------- -------------------
/s/ J. Harold Chandler
----------------------------------
J. Harold Chandler
<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, 1996 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 , 1997.
- -------- -------------------
/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, 1996 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 , 1997.
- -------- -------------------
/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, 1996 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 , 1997.
- -------- -------------------
/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, 1996 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 , 1997.
- -------- -------------------
/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, 1996 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
23rd day of February , 1997.
- -------- -------------------
/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, 1996 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 , 1997.
- -------- -------------------
/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, 1996 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
6th day of March , 1997.
- -------- -------------------
/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, 1996 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 , 1997.
- -------- -------------------
/s/ Herbert A. Sklenar
----------------------------------
Herbert A. Sklenar
<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, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 648,494
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,000
<TRADING-ASSETS> 3,879
<INVESTMENTS-HELD-FOR-SALE> 2,290,478
<INVESTMENTS-CARRYING> 2,644,706
<INVESTMENTS-MARKET> 2,649,481
<LOANS> 12,168,572
<ALLOWANCE> 179,049
<TOTAL-ASSETS> 18,407,264
<DEPOSITS> 12,467,599
<SHORT-TERM> 2,897,669
<LIABILITIES-OTHER> 210,492
<LONG-TERM> 1,435,675
0
0
<COMMON> 60,023
<OTHER-SE> 1,335,806
<TOTAL-LIABILITIES-AND-EQUITY> 18,407,264
<INTEREST-LOAN> 1,004,534
<INTEREST-INVEST> 342,877
<INTEREST-OTHER> 6,410
<INTEREST-TOTAL> 1,353,821
<INTEREST-DEPOSIT> 511,345
<INTEREST-EXPENSE> 701,440
<INTEREST-INCOME-NET> 652,381
<LOAN-LOSSES> 65,171
<SECURITIES-GAINS> 7,837
<EXPENSE-OTHER> 534,232
<INCOME-PRETAX> 288,252
<INCOME-PRE-EXTRAORDINARY> 288,252
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182,676
<EPS-PRIMARY> 3.23
<EPS-DILUTED> 3.23
<YIELD-ACTUAL> 3.93
<LOANS-NON> 78,048
<LOANS-PAST> 36,382
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 178,451
<CHARGE-OFFS> 83,279
<RECOVERIES> 18,706
<ALLOWANCE-CLOSE> 179,049
<ALLOWANCE-DOMESTIC> 145,989
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 33,060
</TABLE>
