<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 COMMISSION FILE NUMBER 1-7476
AMSOUTH BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0591257
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
AMSOUTH--SONAT TOWER 35203
1900 FIFTH AVENUE NORTH (ZIP CODE)
BIRMINGHAM, ALABAMA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(205) 320-7151
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
AS OF APRIL 17, 1998 AMSOUTH BANCORPORATION HAD 80,802,761 SHARES OF COMMON
STOCK OUTSTANDING ON A PRE-SPLIT BASIS, 121,204,142 ON A POST-SPLIT BASIS.
- -------------------------------------------------------------------------------
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<PAGE>
AMSOUTH BANCORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition--March 31, 1998,
December 31, 1997 and March 31, 1997................. 3
Consolidated Statement of Earnings--Three months ended
March 31, 1998 and 1997.............................. 4
Consolidated Statement of Shareholders' Equity--Three
months ended March 31, 1998.......................... 5
Consolidated Statement of Cash Flows--Three months
ended March 31, 1998 and 1997........................ 6
Notes to Consolidated Financial Statements............ 7
Independent Accountants' Review Report................ 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 10
Part II. Other Information
Item 1. Legal Proceedings..................................... 19
Item 6. Exhibits and Reports on Form 8-K...................... 19
Signatures.............................................................. 20
Exhibit Index........................................................... 21
</TABLE>
FORWARD LOOKING INFORMATION. This Quarterly Report on Form 10-Q contains
certain forward looking statements with respect to the adequacy of the
allowance for loan losses and the effect of legal proceedings on AmSouth's
financial condition and results of operations. These forward looking
statements involve certain risks, uncertainties, estimates and assumptions by
management.
Various factors could cause actual results to differ materially from those
contemplated by such forward looking statements. With respect to the adequacy
of the allowance for loan losses, these factors include the rate of growth in
the economy, especially in the Southeast, the relative strength and weakness
in the consumer and commercial credit sectors and in the real estate markets
and the performance of the stock and bond markets. With regard to the effect
of legal proceedings, various uncertainties are discussed in "Part II, Item 1.
Legal Proceedings." Moreover, the outcome of litigation is inherently
uncertain and depends on judicial interpretations of law and the findings of
judges and juries.
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31 MARCH 31
1998 1997 1997
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks................. $ 604,244 $ 658,500 $ 585,108
Federal funds sold and securities
purchased under agreements to resell... 825 19,000 2,275
Trading securities...................... 1,194 1,406 5,346
Available-for-sale securities........... 3,049,531 2,507,690 2,022,396
Held-to-maturity securities (market
value of $2,493,889, $2,287,004 and
$2,541,803, respectively).............. 2,480,571 2,272,154 2,567,247
Mortgage loans held for sale............ 110,460 80,820 41,822
Loans................................... 12,308,247 12,342,825 12,107,303
Less: Allowance for loan losses......... 179,347 179,197 179,049
Unearned income....................... 101,305 105,157 82,426
----------- ----------- -----------
Net loans............................. 12,027,595 12,058,471 11,845,828
Premises and equipment, net............. 312,766 314,200 311,158
Customers' acceptance liability......... 4,262 10,926 2,236
Accrued interest receivable and other
assets................................. 798,613 699,089 631,036
----------- ----------- -----------
$19,390,061 $18,622,256 $18,014,452
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing
liabilities:
Deposits:
Noninterest-bearing demand............ $ 2,139,111 $ 2,062,906 $ 1,907,841
Interest-bearing demand............... 3,937,019 3,960,968 3,531,330
Savings............................... 1,042,521 1,027,557 1,073,954
Time.................................. 4,847,027 5,000,535 5,071,932
Certificates of deposit of $100,000 or
more................................. 1,024,050 893,231 804,511
----------- ----------- -----------
Total deposits........................ 12,989,728 12,945,197 12,389,568
Federal funds purchased and securities
sold under agreements to repurchase... 1,309,036 1,435,925 1,165,664
Other borrowed funds................... 469,883 985,918 1,344,238
Long-term Federal Home Loan Bank
advances.............................. 2,137,293 1,198,146 1,073,436
Other long-term debt................... 740,170 435,078 411,910
----------- ----------- -----------
Total deposits and interest-bearing
liabilities.......................... 17,646,110 17,000,264 16,384,816
Acceptances outstanding................. 4,262 10,926 2,236
Accrued expenses and other liabilities.. 313,259 225,821 251,107
----------- ----------- -----------
Total liabilities..................... 17,963,631 17,237,011 16,638,159
----------- ----------- -----------
Shareholders' equity:
Preferred stock--no par value:
Authorized--2,000,000 shares;
Issued and outstanding--none.......... -0- -0- -0-
Common stock--par value $1 a share:
Authorized--200,000,000 shares
Issued--134,996,130, 135,031,989 and
135,049,989 shares, respectively..... 134,996 135,032 135,050
Capital surplus........................ 516,383 517,464 517,303
Retained earnings...................... 1,018,738 983,371 887,247
Cost of common stock in treasury--
13,879,469, 14,227,007 and 10,333,116
shares, respectively.................. (257,128) (268,019) (160,361)
Deferred compensation on restricted
stock................................. (10,141) (9,196) (11,780)
Accumulated other comprehensive
income................................ 23,582 26,593 8,834
----------- ----------- -----------
Total shareholders' equity............ 1,426,430 1,385,245 1,376,293
----------- ----------- -----------
$19,390,061 $18,622,256 $18,014,452
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
-----------------------
1998 1997
----------- -----------
(IN THOUSANDS
EXCEPT PER SHARE DATA)
<S> <C> <C>
REVENUE FROM EARNING ASSETS
Loans................................................. $ 264,733 $ 254,172
Available-for-sale securities......................... 48,447 37,456
Held-to-maturity securities........................... 41,051 44,231
Trading securities.................................... 17 21
Mortgage loans held for sale.......................... 1,067 487
Federal funds sold and securities purchased under
agreements to resell................................. 167 301
----------- -----------
Total revenue from earning assets................... 355,482 336,668
----------- -----------
INTEREST EXPENSE
Interest-bearing demand deposits...................... 33,635 27,050
Savings deposits...................................... 7,417 7,603
Time deposits......................................... 68,453 69,585
Certificates of deposit of $100,000 or more........... 13,592 11,209
Federal funds purchased and securities sold under
agreements to repurchase............................. 17,596 19,290
Other borrowed funds.................................. 8,397 12,954
Long-term Federal Home Loan Bank advances............. 24,038 14,149
Other long-term debt.................................. 10,687 7,661
----------- -----------
Total interest expense.............................. 183,815 169,501
----------- -----------
NET INTEREST INCOME................................... 171,667 167,167
Provision for loan losses............................. 14,400 17,717
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES... 157,267 149,450
----------- -----------
NONINTEREST REVENUES
Service charges on deposit accounts................... 26,059 24,331
Trust income.......................................... 16,979 14,795
Consumer investment services income................... 7,231 5,338
Other noninterest revenues............................ 25,536 19,218
----------- -----------
Total noninterest revenues.......................... 75,805 63,682
----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits........................ 67,717 61,159
Net occupancy expense................................. 13,875 13,714
Equipment expense..................................... 15,190 13,564
Marketing expense..................................... 5,008 4,593
Postage and office supplies........................... 5,459 5,746
Communications expense................................ 5,675 4,601
Amortization expense.................................. 4,526 4,545
Other noninterest expenses............................ 19,464 20,702
----------- -----------
Total noninterest expenses.......................... 136,914 128,624
----------- -----------
INCOME BEFORE INCOME TAXES............................ 96,158 84,508
Income taxes.......................................... 34,135 29,935
----------- -----------
NET INCOME.......................................... $ 62,023 $ 54,573
=========== ===========
Average common shares outstanding*.................... 120,976 125,683
Earnings per common share*............................ $ 0.51 $ 0.43
Diluted average common shares outstanding*............ 122,198 126,626
Diluted earnings per common share*.................... $ 0.51 $ 0.43
</TABLE>
- --------
* Restated for three-for-two common stock split in April 1998.
See notes to consolidated financial statements.
4
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON CAPITAL RETAINED TREASURY DEFERRED COMPREHENSIVE
STOCK SURPLUS EARNINGS STOCK COMPENSATION INCOME TOTAL
-------- -------- ---------- --------- ------------ ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1998................... $ 90,021 $562,475 $ 983,371 $(268,019) $ (9,196) $26,593 $1,385,245
Adjustment for the
effect of 3-for-2
common stock split..... 45,011 (45,011) -0- -0- -0- -0- -0-
-------- -------- ---------- --------- -------- ------- ----------
BALANCE AT JANUARY 1,
1998 RESTATED.......... 135,032 517,464 983,371 (268,019) (9,196) 26,593 1,385,245
-------- -------- ---------- --------- -------- ------- ----------
Comprehensive income:
Net income............. -0- -0- 62,023 -0- -0- -0- 62,023
Other comprehensive
income,
net of tax:
Unrealized losses on
available-for-sale
securities, net of
reclassification
adjustment............ -0- -0- -0- -0- -0- (3,011) (3,011)
----------
Other comprehensive
income................ (3,011)
----------
Comprehensive income.... 59,012
Cash dividends declared
($0.20 per common
share)*................ -0- -0- (24,021) -0- -0- -0- (24,021)
Common stock
transactions:
Special rights and
warrants.............. -0- (355) -0- -0- -0- -0- (355)
Purchase of common
stock................. -0- -0- -0- (536) -0- -0- (536)
Employee stock plans... (36) (877) (2,635) 10,298 (945) -0- 5,805
Dividend reinvestment.. -0- 151 -0- 1,129 -0- -0- 1,280
-------- -------- ---------- --------- -------- ------- ----------
BALANCE AT MARCH 31,
1998................... $134,996 $516,383 $1,018,738 $(257,128) $(10,141) $23,582 $1,426,430
======== ======== ========== ========= ======== ======= ==========
DISCLOSURE OF
RECLASSIFICATION
AMOUNT:
Unrealized holding
losses on available-
for-sale securities
arising during the
period................. $(1,923)
Less: reclassification
adjustment for gains
realized in net
income................. 1,088
-------
Net unrealized losses on
available-for-sale
securities, net of
tax.................... $(3,011)
=======
</TABLE>
- --------
* Restated for three-for-two common stock split in April 1998.
See notes to consolidated financial statements.
5
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
--------------------
1998 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................... $ 62,023 $ 54,573
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses............................... 14,400 17,717
Depreciation and amortization of premises and
equipment.............................................. 9,216 8,123
Amortization of premiums and discounts on held-to-
maturity securities and available-for-sale securities.. (1,060) (402)
Net (increase) decrease in mortgage loans held for
sale................................................... (29,640) 18,760
Net decrease (increase) in trading securities........... 212 (1,504)
Net gains on sales of available-for-sale securities..... (1,743) (2,406)
Net increase in accrued interest receivable and other
assets................................................. (102,356) (94,707)
Net increase in accrued expenses and
other liabilities...................................... 56,248 34,675
Provision for deferred income taxes..................... 8,000 3,139
Amortization of intangible assets....................... 4,129 4,141
Other operating activities, net......................... 2,505 1,974
--------- ---------
Net cash provided by operating activities.............. 21,934 44,083
--------- ---------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of available-
for-sale securities..................................... 128,661 68,070
Proceeds from sales of available-for-sale securities..... 167,955 378,435
Purchases of available-for-sale securities............... (792,994) (185,150)
Proceeds from maturities, prepayments and calls of held-
to-maturity securities.................................. 182,127 77,726
Purchases of held-to-maturity securities................. (389,979) -0-
Net decrease in federal funds sold and securities
purchased under agreements to resell.................... 18,175 12,725
Net (increase) decrease in loans......................... (9,988) 33,652
Net purchases of premises and equipment.................. (7,782) (17,689)
--------- ---------
Net cash (used) provided by investing activities....... (703,825) 367,769
--------- ---------
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits and savings
accounts................................................ 67,220 (106,960)
Net (decrease) increase in time deposits................. (22,622) 29,142
Net decrease in federal funds purchased and securities
sold under agreements to repurchase..................... (126,889) (706,622)
Net (decrease) increase in other borrowed funds.......... (516,035) 293,759
Issuance of long-term Federal Home Loan Bank advances and
other long-term debt.................................... 1,295,120 75,000
Payments for maturing long-term debt..................... (50,842) (261)
Cash dividends paid...................................... (24,021) (23,604)
Cash payment for special rights and warrants on stock.... (355) -0-
Proceeds from employee stock plans and dividend
reinvestment plan....................................... 6,595 6,778
Purchase of common stock................................. (536) (42,470)
--------- ---------
Net cash provided (used) by financing activities....... 627,635 (475,238)
--------- ---------
Decrease in cash and cash equivalents.................... (54,256) (63,386)
Cash and cash equivalents at beginning of period......... 658,500 648,494
--------- ---------
Cash and cash equivalents at end of period............... $ 604,244 $ 585,108
========= =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
General--The consolidated financial statements conform to generally accepted
accounting principles and to general industry practices. The accompanying
interim financial statements are unaudited; however, in the opinion of
management, all adjustments necessary for the fair presentation of the
consolidated financial statements have been included. All such adjustments are
of a normal recurring nature. Certain amounts in the prior year's financial
statements have been reclassified to conform with the 1998 presentation. These
reclassifications had no effect on net income. All common share data presented
reflect a three-for-two stock split which will be completed April 30, 1998.
The notes included herein should be read in conjunction with the notes to
consolidated financial statements included in AmSouth Bancorporation's
(AmSouth) 1997 annual report on Form 10-K.
On January 1, 1998, AmSouth adopted the provisions of Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," (Statement 125),
relating to repurchase agreements, securities lending and other similar
transactions and pledged collateral, which had been delayed until after
December 31, 1997 by Statement of Financial Accounting Standards No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB Statement No.
125, an amendment of FASB Statement No. 125," (Statement 127). Statement 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on a consistent
application of a "financial-components approach" that focuses on control.
Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities
it has incurred, derecognizes financial assets when control has been
surrendered and derecognizes liabilities when extinguished. Statement 125
provides standards for consistently distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. The adoption
of the additional provisions of Statement 125 as amended by Statement 127
resulted in no material impact on AmSouth's financial condition or results of
operations.
On January 1, 1998, AmSouth also adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement
establishes standards for reporting the components of comprehensive income and
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be included in a financial
statement that is displayed with the same prominence as other financial
statements. Comprehensive income includes net income as well as certain items
that are reported directly within a separate component of shareholders' equity
and bypass net income. The adoption of Statement 130 did not have a material
impact on AmSouth's financial condition or results of operations.
In February 1998, the Financial Accounting Standards Board issued Statement
132, "Employers' Disclosures about Pension and Other Postretirement Benefits--
an amendment of FASB Statements No. 87, 88, and 106." This Statement revises
employers' disclosures about pension and other postretirement benefit plans,
but does not change the measurement or recognition of those plans. It
standardizes the disclosure requirements to the extent practicable, requires
additional information on changes in the benefit obligations and fair values
of plan assets that will facilitate financial analysis and eliminates certain
disclosures that are no longer as useful as they were when Statements 87, 88
and 106 were issued. This Statement is effective for fiscal years beginning
after December 15, 1997. These disclosure requirements will have no material
impact on AmSouth's financial position or results of operations.
7
<PAGE>
Earnings Per Common Share--The following table sets forth the computation of
earnings per common share and diluted earnings per common share:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
---------------------
1998 1997
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Earnings per common share computation:
Numerator:
Net income............................................. $ 62,023 $ 54,573
Denominator:
Average common shares outstanding...................... 120,976 125,683
Earnings per common share................................ $ 0.51 $ 0.43
Diluted earnings per common share computation:
Numerator:
Net income............................................. $ 62,023 $ 54,573
Denominator:
Average common shares outstanding...................... 120,976 125,683
Dilutive stock options................................. 1,222 943
---------- ----------
Diluted average common shares outstanding.............. 122,198 126,626
Diluted earnings per common share...................... $ 0.51 $ 0.43
</TABLE>
Cash Flows--For the three months ended March 31, 1998 and 1997, AmSouth paid
interest of $168,736,000 and $159,048,000, respectively. Amsouth received a
refund of income taxes of $6,303,000 for the three months ended March 31, 1998
and paid income taxes of $629,000 for the three months ended March 31, 1997.
Noncash transfers from loans to foreclosed properties for the three months
ended March 31, 1998 and 1997 were $2,504,000 and $3,432,000, respectively,
and noncash transfers from foreclosed properties to loans were $241,000 and
$331,000, respectively. For the three months ended March 31, 1998, a noncash
transfer from loans to available-for-sale securities of approximately
$22,481,000 was made in connection with a mortgage loan securitization.
Shareholders' Equity--On March 19, 1998, AmSouth's Board of Directors
approved a three-for-two common stock split in the form of a 50 percent common
stock dividend. The stock dividend will be paid April 30 to shareholders of
record as of April 3.
8
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
AmSouth Bancorporation
We have reviewed the accompanying consolidated statement of condition of
AmSouth Bancorporation and subsidiaries as of March 31, 1998 and 1997, and the
related consolidated statement of earnings for the three-month periods ended
March 31, 1998 and 1997, the consolidated statement of cash flows for the
three-month periods ended March 31, 1998 and 1997 and the consolidated
statement of shareholders' equity for the three-month period ended March 31,
1998. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of condition of AmSouth Bancorporation
and subsidiaries as of December 31, 1997, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for the year then
ended (not presented herein) and in our report dated February 10, 1998, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
statement of condition as of December 31, 1997, is fairly stated, in all
material respects, in relation to the consolidated statement of condition from
which it has been derived.
/s/ ERNST & YOUNG LLP
April 24, 1998
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
AmSouth reported net income of $62.0 million for the three months ended
March 31, 1998, a 13.7% increase over net income of $54.6 million for the same
period of 1997. Diluted earnings per common share, restated for the three-for-
two stock split, were $.51 and $.43 for the three month periods ended March
31, 1998 and 1997, respectively. Year-to-date earnings resulted in an
annualized return on average assets of 1.33% and an annualized return on
average equity of 17.97% for 1998 compared to 1.23% and 15.94%, respectively,
for the first three months of 1997. AmSouth's 1998 year-to-date operating
efficiency ratio improved to 54.97% compared to 55.24% for the prior year.
Net Interest Income
Net interest income on a fully taxable equivalent basis for the three months
ended March 31, 1998 was $173.2 million, a 2.4% increase over the same period
of 1997. The higher rate paid on average interest-bearing liabilities, which
was partially offset by a higher rate earned on average earning assets,
resulted in an eight basis point decrease in the net interest margin and a
nine basis point decrease in the incremental interest spread. The decrease was
primarily the result of increased rates paid across almost all categories of
interest-bearing liabilities. The decrease was partially offset by a 16 basis
point increase in the yield earned on net loans.
Asset/Liability Management
AmSouth maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. The company accomplishes this process through the development
and implementation of lending, funding and pricing strategies designed to
maximize net interest income performance under varying interest rate
environments subject to specific liquidity and interest rate risk guidelines.
A number of measures are used to monitor and manage interest rate risk,
including earnings simulation and interest sensitivity (gap) analysis. An
earnings simulation model is the primary tool used to assess the direction and
magnitude of changes in net interest income (NII) resulting from changes in
interest rates. Key assumptions in the model include prepayment speeds on
mortgage-related assets; cash flows and maturities of derivatives and other
financial instruments held for purposes other than trading; changes in market
conditions, loan volumes and pricing; deposit sensitivity; customer
preferences and management's financial and capital plans. These assumptions
are inherently uncertain and, as a result, the model cannot precisely estimate
NII or precisely predict the impact of higher or lower interest rates on NII.
Actual results will differ from simulated results due to timing, magnitude and
frequency of interest rate changes and changes in market conditions and
management strategies, among other factors.
Based on the results of the simulation model as of March 31, 1998, AmSouth
would expect an increase in NII of $1.4 million and a decrease in NII of $4.3
million if interest rates gradually increase or decrease, respectively, from
current rates by 100 basis points over a 12-month period. This level of
interest rate risk is well within the company's policy guidelines.
During the quarter AmSouth extended the maturities of its borrowings by
increasing its level of long-term Federal Home Loan Bank debt by $939.1
million. This increase enhanced NII while creating a better match of
maturities with an increased level of investment securities.
AmSouth, from time to time, utilizes various off-balance sheet instruments
such as interest rate swaps, caps and floors to assist in managing interest
rate risk. During the first three months of 1998, AmSouth entered into
additional interest rate swaps in the notional amount of $315.0 million. There
were no maturities or terminations of interest rate swaps in the first three
months of 1998. Additionally, interest rate swaps in the notional amount of
$90.0 million were called. See Table 3. The swaps added in 1998 as hedges were
designated to certain commercial loans, available-for-sale securities and bank
debt. At March 31, 1998, AmSouth also held other off-balance sheet instruments
to provide customers and AmSouth a means of managing the risks of changing
interest and foreign exchange rates. These other off-balance sheet instruments
were immaterial.
10
<PAGE>
Credit Quality
AmSouth maintains an allowance for loan losses which management believes is
adequate to absorb losses inherent in the loan portfolio. A formal review is
prepared quarterly to assess the risk in the portfolio and to determine the
adequacy of the allowance for loan losses. The review includes analyses of
historical performance, the level of nonperforming and adversely rated loans,
specific analyses of certain problem loans, loan activity since the previous
quarter, reports prepared by the Loan Review Department, consideration of
current economic conditions, and other pertinent information. The level of
allowance to net loans outstanding will vary depending on the overall results
of this quarterly review. The review is presented to and subsequently approved
by senior management and the Audit and Community Responsibility Committee of
the Board of Directors.
Table 6 presents a five quarter analysis of the allowance for loan losses.
At March 31, 1998, the allowance for loan losses was $179.3 million, or 1.47%
of loans net of unearned income, compared to $179.0 million, or 1.49%, for the
prior year. The coverage ratio of the allowance for loan losses to
nonperforming loans decreased from 225.31% at March 31, 1997 to 202.06% for
the same period in 1998 as the level of nonperforming loans increased $9.3
million.
For the three months ended March 31, 1998, net charge-offs were $14.3
million, a decrease of $3.5 million compared to the same period of 1997.
Decreases occurred primarily in dealer indirect, revolving credit and other
consumer segments of the loan portfolio. Consumer annualized net charge-offs
fell to .88% of average consumer loans at March 31, 1998 compared to 1.12% for
the prior year. Centralization and significant changes in underwriting over
the past two years have contributed to the decrease in net charge-offs in the
consumer loan portfolio. Annualized net charge-offs to average loans net of
unearned income for the three months ended March 31, 1998 was .47% compared to
.60% for the same period of the prior year. The provision for loan losses for
the three months ended March 31, 1998 was $14.4 million and approximated net
charge-offs. Net charge-offs of impaired loans for the three months ended
March 31, 1998 and 1997 totaled $1.5 million and $816 thousand, respectively.
Table 7 presents a five quarter comparison of the components of
nonperforming assets. As a percentage of loans net of unearned income,
foreclosed properties and repossessions, nonperforming assets increased from
.78% at March 31, 1997 to .82% at March 31, 1998. The level of nonperforming
assets increased $5.4 million during the same period, primarily due to a
single large commercial loan that was placed on nonaccrual status during the
first quarter of 1998.
Included in nonperforming assets at March 31, 1998 and 1997 was $57.2
million and $43.1 million, respectively, in loans that were considered to be
impaired, substantially all of which were on a nonaccrual basis. Collateral
dependent loans, which were measured at the fair value of the collateral,
constituted approximately all of these impaired loans. At March 31, 1998 and
1997, there was $9.7 million and $9.5 million, respectively, in the allowance
for loan losses specifically allocated to these impaired loans. The average
balance of impaired loans for the three months ended March 31, 1998 and 1997
was $49.1 million and $41.7 million, respectively. AmSouth recorded no
material interest income on its impaired loans during the three months ended
March 31, 1998.
Noninterest Revenues and Noninterest Expenses
Year-to-date noninterest revenues totaled $75.8 million at March 31, 1998
compared to $63.7 million for the prior year. Trust income increased $2.2
million primarily due to new employee benefit plan administration and personal
trust accounts and selected fee increases. Consumer investment services income
increased $1.9 million primarily as a result of a higher sales volume of
mutual funds and annuity products. Other noninterest revenues increased $6.3
million primarily due to income generated from bank-owned life insurance
policies and increases in mortgage income.
11
<PAGE>
Year-to-date noninterest expenses increased 6.4% to $136.9 million at March
31, 1998 compared to $128.6 million for the prior year. Salaries and employee
benefits increased $6.6 million primarily due to merit increases, bonuses and
incentives. Equipment expense increased $1.6 million primarily reflecting the
costs of investments in technology for the consumer and commercial lines of
business. Communications expense increased $1.1 million primarily due to
increasing expenses associated with the wide area network to support the
technology for the consumer and commercial lines of business.
Capital Adequacy
At March 31, 1998, shareholders' equity totaled $1.4 billion or 7.36% of
total assets. Since December 31, 1997, shareholders' equity has increased
$41.2 million primarily as the result of $62.0 million of net income, which
was partially offset by dividends of $24.0 million.
Table 10 presents the capital amounts and risk-adjusted capital ratios for
AmSouth and AmSouth Bank at March 31, 1998 and 1997. At March 31, 1998,
AmSouth exceeded the regulatory minimum required risk-adjusted Tier 1 Capital
Ratio of 4.00% and risk-adjusted Total Capital Ratio of 8.00%. In addition,
the risk-adjusted capital ratios for AmSouth Bank were above the regulatory
minimums and the bank was well-capitalized at March 31, 1998.
12
<PAGE>
TABLE 1--FINANCIAL SUMMARY
<TABLE>
<CAPTION>
MARCH 31
-------------------------------- %
1998 1997 CHANGE
--------------- --------------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET SUMMARY
End-of-period balances:
Loans net of unearned income...... $ 12,206,942 $ 12,024,877 1.5%
Total investment securities *..... 5,492,081 4,576,077 20.0
Total assets...................... 19,390,061 18,014,452 7.6
Total deposits.................... 12,989,728 12,389,568 4.8
Shareholders' equity.............. 1,426,430 1,376,293 3.6
Year-to-date average balances:
Loans net of unearned income...... $ 12,197,427 $ 11,924,065 2.3%
Total investment securities *..... 5,095,110 4,663,404 9.3
Total assets...................... 18,882,051 17,972,254 5.1
Total deposits.................... 12,791,102 12,349,726 3.6
Shareholders' equity.............. 1,400,141 1,388,819 0.8
<CAPTION>
THREE MONTHS ENDED MARCH 31
-------------------------------- %
1998 1997 CHANGE
--------------- --------------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
EARNINGS SUMMARY
Net income........................ $ 62,023 $ 54,573 13.7%
Per common share **............... 0.51 0.43 18.6
Per common share-diluted **....... 0.51 0.43 18.6
SELECTED RATIOS
Return on average assets
(annualized)..................... 1.33% 1.23%
Return on average equity
(annualized)..................... 17.97 15.94
Average equity to assets.......... 7.42 7.73
End of period equity to assets.... 7.36 7.64
End of period tangible equity to
assets........................... 6.16 6.27
Allowance for loan losses to loans
net of unearned income........... 1.47 1.49
Efficiency ratio.................. 54.97 55.24
COMMON STOCK DATA **
Cash dividends declared........... $ 0.20 $ 0.19
Book value at end of period....... 11.78 11.03
Market value at end of period..... 39.38 21.45
Average common shares outstand-
ing.............................. 120,976 125,683
Average common shares outstanding-
diluted.......................... 122,198 126,626
</TABLE>
- --------
*Excludes adjustment for market valuation on available-for-sale securities.
**Restated for three-for-two common stock split in April 1998.
13
<PAGE>
TABLE 2--QUARTERLY YIELDS EARNED ON AVERAGE EARNING ASSETS AND RATES PAID ON
AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
1998 1997
---------------------------- ------------------------------------------------------------
FIRST QUARTER FOURTH QUARTER THIRD QUARTER
---------------------------- ----------------------------- -----------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- -------- ------ ------------ -------- ------- ------------ -------- -------
(TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans net of
unearned income.. $12,197,427 $265,129 8.82% $12,168,038 $268,361 8.75% $12,056,663 $267,195 8.79%
Available-for-
sale securities.. 2,694,502 48,447 7.29 2,202,087 40,488 7.29 2,026,440 37,867 7.41
Held-to-maturity
securities:
Taxable.......... 2,286,392 38,659 6.86 2,151,095 36,486 6.73 2,272,106 38,416 6.71
Tax-free......... 114,216 3,572 12.68 123,758 3,376 10.82 136,758 3,693 10.71
----------- -------- ------------ -------- ------------ --------
Total held-to-
maturity
securities....... 2,400,608 42,231 7.13 2,274,853 39,862 6.95 2,408,864 42,109 6.94
----------- -------- ------------ -------- ------------ --------
Total investment
securities...... 5,095,110 90,678 7.22 4,476,940 80,350 7.12 4,435,304 79,976 7.15
Other earning
assets........... 89,915 1,251 5.64 93,150 987 4.20 67,961 757 4.42
----------- -------- ------------ -------- ------------ --------
Total earning
assets.......... 17,382,452 357,058 8.33 16,738,128 349,698 8.29 16,559,928 347,928 8.34
-------- -------- --------
Cash and other
assets............ 1,634,825 1,541,105 1,479,162
Allowance for loan
losses............ (180,050) (179,095) (179,827)
Market valuation
on available-for-
sale securities... 44,824 45,118 41,515
----------- ------------ ------------
$18,882,051 $18,145,256 $17,900,778
=========== ============ ============
Liabilities and
Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.. $ 3,905,855 33,635 3.49 $ 3,871,949 32,925 3.37 $ 3,901,202 34,373 3.50
Savings
deposits......... 1,034,900 7,417 2.91 1,029,337 7,455 2.87 1,029,446 7,398 2.85
Time deposits.... 4,946,323 68,453 5.61 5,050,259 70,969 5.58 5,060,864 70,736 5.55
Certificates of
deposit of
$100,000 or
more............. 968,818 13,592 5.69 907,105 12,978 5.68 846,684 12,105 5.67
Federal funds
purchased and
securities sold
under agreements
to repurchase.... 1,351,583 17,596 5.28 1,497,408 20,083 5.32 1,408,515 19,050 5.37
Other interest-
bearing
liabilities...... 3,059,910 43,122 5.72 2,284,497 33,784 5.87 2,223,116 33,159 5.92
----------- -------- ------------ -------- ------------ --------
Total interest-
bearing
liabilities...... 15,267,389 183,815 4.88 14,640,555 178,194 4.83 14,469,827 176,821 4.85
-------- ----- -------- ------- -------- -------
INCREMENTAL
INTEREST SPREAD... 3.45% 3.46% 3.49%
===== ======= =======
Noninterest-
bearing demand
deposits.......... 1,935,206 1,867,575 1,835,568
Other
liabilities....... 279,315 274,620 240,772
Shareholders'
equity............ 1,400,141 1,362,506 1,354,611
----------- ------------ ------------
$18,882,051 $18,145,256 $17,900,778
=========== ============ ============
NET INTEREST
INCOME/MARGIN ON A
TAXABLE EQUIVALENT
BASIS............. 173,243 4.04% 171,504 4.07% 171,107 4.10%
===== ======= =======
Taxable equivalent
adjustment:
Loans............ 396 364 417
Securities....... 1,180 1,118 1,228
-------- -------- --------
Total taxable
equivalent
adjustment....... 1,576 1,482 1,645
-------- -------- --------
Net interest
income.......... $171,667 $170,022 $169,462
======== ======== ========
<CAPTION>
1997
-----------------------------------------------------------
SECOND QUARTER FIRST QUARTER
----------------------------- ----------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------------ -------- ------- ------------ -------- -------
(TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C
ASSETS
Earning assets:
Loans net of
unearned income.. $12,085,579 $263,645 8.75% $11,924,065 $254,640 8.66%
Available-for-
sale securities.. 2,163,439 39,789 7.38 2,060,299 37,456 7.37
Held-to-maturity
securities:
Taxable.......... 2,366,941 40,138 6.80 2,434,686 41,098 6.85
Tax-free......... 155,744 4,240 10.92 168,419 4,679 11.27
------------ -------- ------------ --------
Total held-to-
maturity
securities....... 2,522,685 44,378 7.06 2,603,105 45,777 7.13
------------ -------- ------------ --------
Total investment
securities...... 4,686,124 84,167 7.20 4,663,404 83,233 7.24
Other earning
assets........... 59,722 709 4.76 69,198 809 4.74
------------ -------- ------------ --------
Total earning
assets.......... 16,831,425 348,521 8.31 16,656,667 338,682 8.25
-------- --------
Cash and other
assets............ 1,475,669 1,464,118
Allowance for loan
losses............ (179,075) (180,643)
Market valuation
on available-for-
sale securities... 21,917 32,112
------------ ------------
$18,149,936 $17,972,254
============ ============
Liabilities and
Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.. $ 3,606,363 29,238 3.25 $ 3,526,430 27,050 3.11
Savings
deposits......... 1,048,497 7,471 2.86 1,073,866 7,603 2.87
Time deposits.... 5,155,529 70,548 5.49 5,171,390 69,585 5.46
Certificates of
deposit of
$100,000 or
more............. 885,565 12,444 5.64 806,641 11,209 5.64
Federal funds
purchased and
securities sold
under agreements
to repurchase.... 1,493,231 20,037 5.38 1,515,388 19,290 5.16
Other interest-
bearing
liabilities...... 2,559,769 37,257 5.84 2,499,857 34,764 5.64
------------ -------- ------------ --------
Total interest-
bearing
liabilities...... 14,748,954 176,995 4.81 14,593,572 169,501 4.71
-------- ------- -------- -------
INCREMENTAL
INTEREST SPREAD... 3.50% 3.54%
======= =======
Noninterest-
bearing demand
deposits.......... 1,805,781 1,771,399
Other
liabilities....... 221,575 218,464
Shareholders'
equity............ 1,373,626 1,388,819
------------ ------------
$18,149,936 $17,972,254
============ ============
NET INTEREST
INCOME/MARGIN ON A
TAXABLE EQUIVALENT
BASIS............. 171,526 4.09% 169,181 4.12%
======= =======
Taxable equivalent
adjustment:
Loans............ 463 468
Securities....... 1,437 1,546
-------- --------
Total taxable
equivalent
adjustment....... 1,900 2,014
-------- --------
Net interest
income.......... $169,626 $167,167
======== ========
</TABLE>
- ----
NOTE: The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate and has given effect to the disallowance of
interest expense, for federal income tax purposes, related to certain
tax-free assets. Loans net of unearned income includes nonaccrual loans
for all periods presented.
14
<PAGE>
TABLE 3--INTEREST RATE SWAPS
<TABLE>
<CAPTION>
RECEIVE
FIXED RATE
SWAPS
-------------
(IN MILLIONS)
<S> <C>
Balance at January 1, 1998........................................ $ 895
Additions....................................................... 315
Maturities...................................................... -0-
Calls........................................................... (90)
Terminations.................................................... -0-
------
Balance at March 31, 1998......................................... $1,120
======
</TABLE>
TABLE 4--MATURITIES AND INTEREST RATES EXCHANGED ON SWAPS
<TABLE>
<CAPTION>
MATURE DURING
--------------------------
1998 1999 2000 2008 TOTAL
----- ----- ----- ----- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional amount........................... $ 295 $ 600 $ 75 $ 150 $1,120
Receive rate.............................. 6.64% 6.64% 6.69% 6.11% 6.57%
Pay rate.................................. 5.66% 5.67% 5.63% 5.65% 5.66%
</TABLE>
- --------
NOTE: The maturities and interest rates exchanged are calculated assuming that
interest rates remain unchanged from March 31, 1998 rates. The
information presented could change as future interest rates increase or
decrease.
TABLE 5--LOANS AND CREDIT QUALITY
<TABLE>
<CAPTION>
NET CHARGE-OFFS
LOANS* NONPERFORMING LOANS** THREE MONTHS ENDED
MARCH 31 MARCH 31 MARCH 31
----------------------- --------------------- --------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ---------- ---------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial.............. $ 3,595,908 $ 3,620,446 $ 39,099 $ 15,561 $ 1,597 $ 322
Commercial real estate:
Commercial real estate
mortgages............ 1,665,618 1,683,402 15,548 23,854 (4) 492
Real estate
construction......... 1,065,964 622,490 1,680 1,665 (117) 2
----------- ----------- ---------- ---------- --------- ---------
Total commercial
real estate........ 2,731,582 2,305,892 17,228 25,519 (121) 494
----------- ----------- ---------- ---------- --------- ---------
Consumer:
Residential first
mortgages............ 2,566,273 2,961,672 24,715 26,380 414 381
Other residential
mortgages............ 1,135,881 929,753 5,366 5,106 373 398
Dealer indirect....... 1,272,241 1,205,451 1,332 5,148 2,357 3,753
Revolving credit...... 426,075 461,208 -0- -0- 7,593 8,554
Other consumer........ 478,982 540,455 1,020 1,755 2,037 3,815
----------- ----------- ---------- ---------- --------- ---------
Total consumer...... 5,879,452 6,098,539 32,433 38,389 12,774 16,901
----------- ----------- ---------- ---------- --------- ---------
$12,206,942 $12,024,877 $ 88,760 $ 79,469 $ 14,250 $ 17,717
=========== =========== ========== ========== ========= =========
</TABLE>
- --------
* Net of unearned income.
** Exclusive of accruing loans 90 days past due.
15
<PAGE>
TABLE 6--ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1998 1997
----------- -----------------------------------------------
1ST QUARTER 4TH QUARTER 3RD QUARTER 2ND QUARTER 1ST QUARTER
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $179,197 $179,126 $179,081 $179,049 $179,049
Loans charged off....... (20,880) (22,864) (24,280) (24,209) (22,632)
Recoveries of loans
previously charged
off.................... 6,630 7,155 8,223 6,441 4,915
-------- -------- -------- -------- --------
Net charge-offs......... (14,250) (15,709) (16,057) (17,768) (17,717)
Addition to allowance
charged to expense..... 14,400 15,780 16,102 17,800 17,717
-------- -------- -------- -------- --------
Balance at end of
period................. $179,347 $179,197 $179,126 $179,081 $179,049
======== ======== ======== ======== ========
Allowance for loan
losses to loans net of
unearned income........ 1.47% 1.46% 1.48% 1.48% 1.49%
Allowance for loan
losses to nonperforming
loans.................. 202.06% 251.12% 265.83% 245.17% 225.31%
Allowance for loan
losses to nonperforming
assets................. 179.68% 214.81% 224.16% 201.53% 189.69%
Net charge-offs to
average loans net of
unearned income
(annualized)........... 0.47% 0.51% 0.53% 0.59% 0.60%
</TABLE>
TABLE 7--NONPERFORMING ASSETS
<TABLE>
<CAPTION>
1998 1997
-------- ------------------------------------------
MARCH 31 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
-------- ----------- ------------ ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans........... $88,760 $71,358 $67,384 $73,044 $79,469
Foreclosed properties...... 9,902 11,433 11,518 13,546 12,890
Repossessions.............. 1,154 632 1,008 2,272 2,030
------- ------- ------- ------- -------
Total nonperforming
assets*................. $99,816 $83,423 $79,910 $88,862 $94,389
======= ======= ======= ======= =======
Nonperforming assets* to
loans net of unearned
income, foreclosed
properties and
repossessions............. 0.82% 0.68% 0.66% 0.73% 0.78%
Accruing loans 90 days past
due....................... $32,363 $37,797 $33,466 $42,918 $32,535
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due.
16
<PAGE>
TABLE 8--INVESTMENT SECURITIES
<TABLE>
<CAPTION>
MARCH 31, 1998 MARCH 31, 1997
--------------------- ---------------------
CARRYING MARKET CARRYING MARKET
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY:
U.S. Treasury and federal agency
securities...................... $2,145,884 $2,156,232 $2,159,255 $2,131,235
State, county and municipal
securities...................... 108,117 111,508 162,941 168,413
Other securities................. 226,570 226,149 245,051 242,155
---------- ---------- ---------- ----------
$2,480,571 $2,493,889 $2,567,247 $2,541,803
========== ========== ========== ==========
AVAILABLE-FOR-SALE:
U.S. Treasury and federal agency
securities...................... $2,843,550 $1,831,993
Other securities................. 205,981 190,403
---------- ----------
$3,049,531 $2,022,396
========== ==========
</TABLE>
- --------
NOTES:
1. The weighted average remaining life, which reflects the amortization on
mortgage related and other asset-backed securities, and the weighted
average yield on the combined held-to-maturity and available-for-sale
portfolios at March 31, 1998 were approximately 3.6 years and 6.95%,
respectively. Included in the combined portfolios was $4.8 billion of
mortgage-backed securities, $718 million of which were variable rate. The
weighted average remaining life and the weighted average yield of mortgage-
backed securities at March 31, 1998 were approximately 3.7 years and 6.95%,
respectively. The duration of the combined portfolios which considers the
repricing frequency of variable rate securities is approximately 1.9 years.
2. The available-for-sale portfolio included net unrealized gains of $38.0
million and $13.6 million at March 31, 1998 and 1997, respectively.
TABLE 9--OTHER INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
MARCH 31
-------------------
1998 1997
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
OTHER BORROWED FUNDS:
Treasury, tax and loan notes............................. $175,879 $ 849,730
Short-term Federal Home Loan Bank advances............... -0- 185,000
Short-term bank notes.................................... 275,000 200,000
Other short-term debt.................................... 19,004 109,508
-------- ----------
Total other borrowed funds............................. $469,883 $1,344,238
======== ==========
OTHER LONG-TERM DEBT:
6.75% Subordinated Debentures Due 2025................... $149,867 $ 149,849
6.45% Subordinated Notes Due 2018........................ 305,032 -0-
7.75% Subordinated Notes Due 2004........................ 149,435 149,343
Subordinated Capital Notes Due 1999...................... 99,860 99,731
Long-term notes payable.................................. 35,976 12,987
-------- ----------
Total other long-term debt............................. $740,170 $ 411,910
======== ==========
</TABLE>
17
<PAGE>
TABLE 10--CAPITAL AMOUNTS AND RATIOS
<TABLE>
<CAPTION>
MARCH 31
----------------------------------
1998 1997
---------------- ----------------
AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
TIER 1 CAPITAL:
AmSouth................................... $1,155,302 7.22% $1,103,443 7.82%
AmSouth Bank.............................. 1,467,730 9.18 1,423,293 10.12
TOTAL CAPITAL:
AmSouth................................... $1,953,923 12.21% $1,619,015 11.47%
AmSouth Bank.............................. 1,947,077 12.18 1,599,138 11.37
LEVERAGE:
AmSouth................................... $1,155,302 6.20% $1,103,443 6.23%
AmSouth Bank.............................. 1,467,730 7.87 1,423,293 8.05
</TABLE>
18
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Several of AmSouth's subsidiaries are defendants in legal proceedings
arising in the ordinary course of business. Some of these proceedings seek
relief or damages that are substantial. The actions relate to AmSouth's
lending, collections, servicing, investment, trust and other activities.
Among the actions which are pending against AmSouth subsidiaries are actions
filed as class actions in the State of Alabama. The actions are similar to
others that have been brought in recent years in Alabama against financial
institutions in that they seek punitive damage awards in transactions
involving relatively small amounts of actual damages. In recent years, juries
in Alabama state courts have made large punitive damage awards in such cases.
Legislation which would limit these lawsuits has been proposed from time to
time in the Alabama legislature but has not been enacted into law. AmSouth
cannot predict whether any such legislation will be enacted.
It may take a number of years to finally resolve some of these legal
proceedings pending against AmSouth subsidiaries, due to their complexity and
for other reasons. It is not possible to determine with any certainty at this
time the corporation's potential exposure from the proceedings. At times,
class actions are settled by defendants without admission or even an actual
finding of wrongdoing but with payment of some compensation to purported class
members and large attorney's fees to plaintiff class counsel. Nonetheless,
based upon the advice of legal counsel, AmSouth's management is of the opinion
that the ultimate resolution of these legal proceedings will not have a
material adverse effect on AmSouth's financial condition or results of
operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
ITEM 6(A) -- EXHIBITS
The exhibits listed in the Exhibit Index at page 21 of this Form 10-Q are
filed herewith or are incorporated by reference herein.
ITEM 6(B) -- REPORTS ON FORM 8-K
Two reports on Form 8-K were filed by AmSouth during the period January 1,
1998 to March 31, 1998:
(a) A report was filed on January 30, 1998 to report AmSouth's preliminary
results of operations for the fourth quarter of 1997 and for the fiscal year
ended December 31, 1997.
(b) A report was filed on March 31, 1998 to report that AmSouth's Board of
Directors had approved a three-for-two stock split with respect to the
company's common stock with a record date of April 3, 1998 and a payable date
of April 30, 1998.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, AmSouth
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
April 24, 1998 /s/ C. Dowd Ritter
By: _________________________________
C. Dowd Ritter
Chairman of the Board, President
and
Chief Executive Officer
April 24, 1998 /s/ Robert R. Windelspecht
By: _________________________________
Robert R. Windelspecht
Executive Vice President and
Controller
20
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference.
<TABLE>
<C> <S>
3-a Restated Certificate of Incorporation of AmSouth Bancorporation(1)
3-b By-Laws of AmSouth Bancorporation(2)
*10-a Life Insurance Agreement
*10-b Supplemental Long-Term Disability Plan
11 Statement Re: Computation of Earnings per Share
15 Letter Re: Unaudited Interim Financial Information
27 Financial Data Schedule
</TABLE>
NOTES TO EXHIBITS
(1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31, 1993, incorporated herein by reference.
(2) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1997, incorporated herein by reference.
21
<PAGE>
EXHIBIT 10-A
AMSOUTH BANCORPORATION
LIFE INSURANCE AGREEMENT
1. RECITALS
WHEREAS, C. Dowd Ritter (the "Participant) has been and continues to be a
valued key employee of AmSouth Bancorporation (the "Company"), and
WHEREAS, the Company has agreed to provide the Participant with an
insurance death benefit payable on the death of the last survivor of the
Participant and Susan B. Ritter, the Participant's spouse ("His Spouse");
and
WHEREAS, in exchange for such death benefit, the Participant has agreed to
waive his rights to participate in certain group term life insurance plans
maintained by the Company; and
WHEREAS, the Participant has agreed that he and His Spouse will provide
any medical history information to the insurance company or submit to any
medical exams or tests as required by the insurance company for the
coverage to be issued; and
WHEREAS, the Participant has agreed that the right to designate a
beneficiary for such insurance death benefit, as well as the ability to
assign such right, shall be irrevocably assigned from inception to William
D. Ritter and Elaine B. Ritter (the "Assignees").
NOW, THEREFORE, in consideration of the promises and representations of
the parties as herein recited, and in recognition of other good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, the Participant, by and through his Assignees, and the
Company hereby agree as follows, effective April 1, 1998.
2. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings set
forth below:
2.01 ALTERNATIVE DEATH BENEFIT means a Company-paid death benefit
paid by the Company to each Assignee's beneficiary(ies)
pursuant to an Alternative Death Benefit Election made by an
Assignee under Section 7 of this Agreement.
2.02 ALTERNATIVE DEATH BENEFIT AMOUNT means an amount that, after
subtracting any Company federal, state, and local income tax
savings resulting from the deductibility of the payment for
corporate tax purposes, is equal to the Participant's
Coverage Amount. The
1
<PAGE>
Alternative Death Benefit Amount shall be determined at the
time the payment is to be made, based on the Company's
federal, state and local income tax rate (calculated at the
highest marginal tax rate then applicable to the Company,
but net of any federal deduction for state and local taxes)
at the time of the payment.
2.03 Alternative Death Benefit Election means an election made by
the Assignees pursuant to Section 7 of the Agreement.
2.04 Assignee means, with respect to one-half of the
Participant's Coverage Amount, William D. Ritter, and with
respect to the other one-half of the Participant's Coverage
Amount, Elaine B. Ritter, or the person or entity to which
an Assignee assigns his or her interest under the Agreement.
2.05 Change in Control means a change in control of the Company,
as such term is defined in the AmSouth Bancorporation
Employment Agreement for C. Dowd Ritter, as in effect from
time to time, or if none is in effect, the last such
agreement in effect;
2.06 Company means AmSouth Bancorporation.
2.07 Company Death Benefit means the portion of the Policy's
death benefit payable to Company as provided in Section 6.
2.08 Effective Date means April 1, 1998.
2.09 His Spouse means Susan B. Ritter
2.10 Insurer means American General Life Insurance Company.
2.11 Participant means C. Dowd Ritter.
2.12 Participant's Coverage Amount means the portion of the
Policy's death benefit payable to the beneficiary(ies) of
the Assignees, which shall equal an aggregate of $3,339,795.
2.13 Policy means the life insurance policy acquired on the lives
of the Participant and the Participant's spouse which is
subject to the terms of this Agreement, which is American
General Life Insurance Company policy number A10170987L.
2.14 Policy Owner means the Company.
2.15 Premium means the amount the Company is obligated to pay to
the Insurer with respect to the Policy.
2
<PAGE>
3. AMOUNT AND TYPE OF COVERAGE
3.01 Type of Policy and Coverage Amount. The Policy shall provide
for a Participant Coverage Amount of $3,339,795. The Policy
shall insure the Participant and His Spouse, with the death
benefit payable at the death of the last survivor of the
Participant and His Spouse.
3.02 Benefits Under Group Term Life Plan. In recognition of the
insurance coverage provided under this Agreement, the
Participant's coverage under the group term life plan
maintained by the Company shall be limited to $50,000, and
shall be paid for by the Company.
4. PAYMENT OF PREMIUMS
4.01 Company Payments. Within thirty (30) days after the initial
annual policy Premium is billed, the Company shall pay the
first annual Policy Premium of $40,887. Thereafter, the
Company shall pay an annual Policy Premium of $40,887 on
each of the next fourteen (14) Policy anniversary dates,
unless the Company's obligation to pay Premiums for the
Policy terminates pursuant to the provisions of this
Agreement; any such Premium shall be paid by the Company
within thirty (30) days of the Policy anniversary date. A
portion of the Policy Premium payable by the Company shall
be collected by the Company from the Participant, as
provided in Section 4.02.
4.02 Participant Payments. The Participant shall pay a portion of
the Policy Premium through semi-monthly payroll deducted
payments to the Company. For each pay period, the amount
payable by the Participant shall be determined by
multiplying the Participant's current annual base salary, as
then in effect, by 0.0003 and dividing the result by 2.
The Participant's semi-monthly contribution for the coverage
shall continue until the earliest to occur of: the
Participant's termination of employment with the Company;
the Participant's death; or, the termination of this
Agreement.
3
<PAGE>
4.03 Termination Events. The Company's obligation to pay Premiums
with respect to the Policy shall terminate:
a. Automatically upon the death of the last survivor of the
Participant and His Spouse; or
b. Upon the mutual written agreement of Company and the
Assignees.
5. POLICY OWNERSHIP
5.01 Ownership. The Company shall be the owner of the Policy and
shall be entitled to exercise the rights of ownership,
except that the following rights shall be exercisable by
each Assignee: (i) the right to designate the
beneficiary(ies) to receive payment of that portion of the
death benefit under such Policy equal to the Participant's
Coverage Amount unless there is an election for an
Alternative Death Benefit in effect; and (ii) the right to
assign any part or all of the Assignees' rights under the
policy to any person, entity or trust. The Company shall not
borrow from, hypothecate, withdraw cash value from,
surrender in whole or in part, cancel, or in any other
manner encumber the Policy without the prior written consent
of the Assignees. The Company shall not take any other
action with respect to the Policy that may reduce the
Participant's Coverage Amount without the prior written
consent of the Assignees.
5.02 Possession of Policy. The Company shall keep possession of
the Policy. The Company agrees to make the Policy available
to the Assignees or to the Insurer at such times, and on
such terms as the Company determines for the sole purposes
of endorsing or filing any change of beneficiary or
assignment on the Policy.
6. DEATH BENEFIT
Upon the death of the last survivor of the Participant and His Spouse, the
death benefit under the Policy shall be divided as follows:
a. The beneficiary(ies) of the Assignees shall be entitled to receive
the Participant's Coverage Amount.
b. The Company shall be entitled to receive as the Company Death
Benefit an amount equal to the excess, if any, of the Policy's death
benefit over the Participant's Coverage Amount.
The Company agrees to execute an endorsement to the Policy issued to it by
4
<PAGE>
the Insurer providing for the division of the Policy death benefit in
accordance with the provisions of this Section.
Notwithstanding the provisions of this Section, if the Policy death
benefit becomes payable while there is an Alternative Death Benefit
Election in effect pursuant to Section 7, then the entire Policy death
benefit shall be paid to the Company.
7. ALTERNATIVE DEATH BENEFIT ELECTION.
Each Assignee may elect an Alternative Death Benefit under this Agreement
in lieu of the insurance benefit provided under the Policy. Any such
election shall be filed with the Company in such form as may be prescribed
by the Company. The Alternative Death Benefit shall be paid by the Company
from the general funds of the Company, and shall not constitute an
insurance benefit. It shall be paid by the Company to each Assignee's
beneficiary(ies) at the time the Participant's insurance death benefit
would have been paid (at the death of the survivor of the Participant and
His Spouse). The amount of the payment shall be equal to the Alternative
Death Benefit Amount. As long as an Alternative Death Benefit Election is
in effect, the beneficiary(ies) of each Assignee shall receive only the
Alternative Death Benefit, and shall not be entitled to receive any
portion of any death benefits that would become payable under the Policy,
and the Assignees shall cooperate with Company in effecting a change of
beneficiary of the Policy to achieve such result. An Alternative Death
Benefit Election (or an election to revoke such an election) shall be
effective when any necessary documentation is submitted to and accepted by
the Insurer. The Company will promptly submit any required forms or
documents to the Insurer when an Alternative Death Benefit Election is
made or revoked.
8. CHANGE IN CONTROL
If there is Change in Control:
a. this Agreement and the Company's obligation to pay Policy Premiums
hereunder shall become irrevocable at the time of the Change in
Control;
b. the Company immediately shall transfer the ownership of the Policy to
an irrevocable trust to: (i) pay any Premiums projected to be payable
on the Policy after the Change in Control and (ii) pay any
Alternative Death Benefit that becomes payable under Section 7 of
this Agreement;
c. the Company immediately shall fund such irrevocable trust with an
amount sufficient to pay all necessary projected future Premiums for
the Policy; and
d. the provisions of Sections 4.02 and 4.03 shall continue to apply as
if there had been no Change in Control.
The occurrence of a Change in Control shall not preclude an Assignee from
thereafter making (or
5
<PAGE>
revoking) an Alternative Death Benefit Election pursuant to Section 7.
Notwithstanding the creation and funding of an irrevocable trust in
accordance with the provisions of this Section, the Company or its
successor shall continue to be responsible for the Premium costs
associated with the Policy and any Alternative Death Benefits payable
under Section 7, if such amounts are not paid by the trust for any reason,
or if the trust's assets become insufficient to pay any required amounts.
9. COMPANY DEFAULT
9.01 Company Default. A Company Default shall be deemed to have occurred
with respect to the Policy if the Company fails to pay a Premium on
the Policy as required under the terms of the Agreement within sixty
(60) days after the due date for such Premium, or if the Company
processes or attempts to process a policy loan, or a complete or
partial surrender, or a cash value withdrawal without prior written
approval from the Assignees.
9.02 Rights Under Company Default. In the event of a Company Default as
described in Section 9.01, the Assignees shall have the right to
require the Company to cure the Company Default by notifying the
Company in writing within sixty (60) days after the Company Default
occurs, or if later, within thirty (30) days after the Assignees
become aware of the Company Default. If the Company fails to cure
the Company Default within sixty (60) days after being notified by
the Assignees of the Company Default, the Assignees shall have the
right to require the Company to transfer its interest in the
Participant's Policy to the Assignees. The Assignees may exercise
this right by notifying the Company, in writing, within sixty (60)
days after the end of the sixty (60) day period following the
Assignees' notification to the Company of the Company Default. Upon
receipt of such notice, the Company shall immediately transfer its
rights in the Policy to the Assignees and the Company shall
thereafter have no rights with respect to such Policy. The
Assignees' failure to exercise their rights under this Section shall
not be deemed to release the Company from any of its obligations
under the Agreement, and shall not preclude the Assignees from
seeking other remedies with respect to the Company Default. Also,
the Assignees' failure to exercise their rights under this Section
will not preclude the Assignees from exercising such rights upon a
later Company Default.
6
<PAGE>
10. GOVERNING LAWS AND NOTICES
10.01 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of Alabama without giving effect
to the choice of law rules of Alabama.
10.02 Notices. All notices hereunder shall be in writing and sent by first
class mail with postage prepaid. Any notice to the Company shall be
addressed to the attention of the Human Resources Director, AmSouth
Bancorporation at the principal office of the Company at 1901 6th
Avenue North, 9th Floor, Birmingham, AL 35203. Any notice to an
Assignee shall be addressed to the Assignee at the address following
such party's signature on this Agreement. Any party may change its
address by giving written notice of such change to the other parties
pursuant to this Section.
11. MISCELLANEOUS PROVISIONS
11.01 This Agreement shall not be deemed to constitute a contract of
employment between the Participant and the Company, nor shall any
provision restrict the right of the Company to discharge the
Participant, or to restrict the right of the Participant to
terminate services.
11.02 The masculine pronoun includes the feminine and the singular
includes the plural where appropriate for valid construction.
11.03 If the Participant or His Spouse commits suicide within two years of
the Policy issue, or if the Participant or His Spouse made any
material misstatement of information or nondisclosure of medical
history pertaining to the Policy issue and dies within two years of
the Policy issue, then no benefits shall be payable to the
beneficiary(ies) of the Assignees.
11.04 In the event of any inconsistency between the terms of this
Agreement and the terms of the Policy purchased hereunder, the terms
of the Policy shall be controlling as to the Participant, the
Assignees, a successor-in-interest (if any), and the beneficiary or
beneficiaries.
11.05 The terms and conditions of this Agreement shall inure to the
benefit of and bind the Company, the Participant, the Assignees and
their successors and representatives. The Company shall have the
right to absolutely and irrevocably assign its rights, title and
interest in a Policy without the consent of the Assignees.
7
<PAGE>
11.06 In the event that this Agreement is considered to be a welfare
benefit plan under the Employee Retirement Income Security Act of
1974, as amended, the named fiduciary responsible for administering
the Agreement shall be the Human Resources Division of AmSouth Bank
(the "Administrator").
11.07 Any claim for benefits under this Agreement shall be made to the
Administrator. If the Administrator denies the claim in whole or in
part, the Administrator shall, within thirty (30) days of receipt of
the claim, write a letter to the claimant setting forth the reasons
for denial with specific reference to provisions of the Agreement,
describing any additional material or information necessary for the
claimant to perfect the claim (explaining why such is needed), and
explaining the necessary steps for appeal. In the event there are
special circumstances delaying the Administrator's determination of
a claim, the Administrator shall notify the claimant in writing
within thirty (30) days explaining the special circumstances and
stating that an answer will be provided within thirty (30) days from
the date of such letter. If the claimant does not receive an answer
to his or her claim within thirty (30) days of filing or receipt of
such extension notice, whichever is later, the claim will be deemed
to have been denied and the claimant shall be entitled to proceed
with an appeal as if the claim was denied and such letter of denial
was received on such 30th day.
Any claimant may within sixty (60) days after receipt of the letter
referred to in the immediately preceding paragraph, appeal to the
Administrator and request a review of the denial of benefit with
opportunity to appear in person or, at claimant's option, to submit
his or her position in writing only. Appeals not timely filed shall
be barred. The claimant shall have the opportunity to submit written
or oral evidence and arguments in support of his or her claim. At
the hearing (or prior thereto upon five (5) business days written
notice to the Plan Administrator) the claimant or his or her
representative shall have an opportunity to review all documents in
the possession of the Administrator that are pertinent to the claim
at issue and to disallowance of the claim. The Administrator's
decision shall be made promptly, and shall not ordinarily be made
later than 60 days after the receipt of the request for review by
the Administrator. However, if special circumstances exist (such as
the need to hold a hearing) such decision shall be rendered as soon
as possible, but not later than 120 days after receipt of the
request for review. If a claimant does not receive a written
decision by such time, the claim, the denial of which was the basis
of the appeal, shall be deemed to have been finally denied.
8
<PAGE>
_______________________ ________________________
Signature Signature
Elaine B. Ritter William D. Ritter
202 Fox Hall Road 781 Euclid Circle
Birmingham, AL 35213 Birmingham, AL 35213
AMSOUTH BANCORPORATION
By:
__________________________________
Signature
Henry D. Rumble
- ----------------------------------
Name
SVP, Human Resources Administration
- -----------------------------------
Title
Consent and Acknowledgment of Participant:
The undersigned Participant has read and understands the terms of this
Agreement, consents to the terms of this Agreement and agrees to be bound by and
subject to the terms of this Agreement to the same extent as if Participant had
been a party to this Agreement. Further, the Participant agrees that the
insurance benefits provided under this Agreement satisfy the Company's
obligation to provide insurance benefits pursuant to Section 4.5 of the
Employment Agreement between the Participant and the Company.
__________________________
C. Dowd Ritter
9
<PAGE>
EXHIBIT 10-B
SUMMARY*
OF
AMSOUTH BANCORPORATION
SUPPLEMENTAL LONG TERM DISABILITY PLAN
OBJECTIVE: The objective of this plan is to help close the gap in disability
insurance coverage for employees who receive incentive compensation above a
certain level by providing 60% income replacement for incentive earnings in
addition to the 60% income replacement for base salary earnings provided by the
AmSouth Bancorporation Group Long Term Disability Plan.
ELIGIBILITY: To become eligible in a given current year for coverage to become
effective on January 1 of the following year, an employee must meet the
following requirements:
. Have gross earning of $50,000 or higher in the preceding year;
. Be a participant in a formal incentive plan in the preceding year earning a
minimum of $6,000 in incentive pay; and
. Be a participant in a formal incentive plan in the current year.
COST: Premiums for participants who are Division Heads or Area Executives and
above will be paid by AmSouth and imputed as income to each participant. All
other participants will pay one half of the premium through payroll deduction
and AmSouth will pay the other half of the premium. The AmSouth paid portion
will be imputed as income to the participants.
* There is no formal plan document
<PAGE>
EXHIBIT 11
AMSOUTH BANCORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------
1998 1997
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net income............................................... $ 62,023 $ 54,573
========== ==========
Average shares of common stock outstanding*.............. 120,976 125,683
========== ==========
Earnings per common share*............................... $ 0.51 $ 0.43
========== ==========
Diluted average shares of common stock outstanding*...... 122,198 126,626
========== ==========
Diluted earnings per common share*....................... $ 0.51 $ 0.43
========== ==========
</TABLE>
- --------
*Restated for three-for-two common stock split in April 1998.
<PAGE>
EXHIBIT 15
Exhibit 15--Letter Re: Unaudited Interim Financial Information
Board of Directors AmSouth Bancorporation
We are aware of the incorporation by reference in the following Registration
Statements and in their related Prospectuses, of our report dated April 24,
1998 relating to the unaudited consolidated financial statements of AmSouth
Bancorporation and subsidiaries which are included in its Form 10-Q for the
quarter ended March 31, 1998:
Form S-3 No. 33-55683 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-52243 pertaining to the assumption by AmSouth
Bancorporation of FloridaBank Stock Option Plan and FloridaBank Stock
Option Plan-1993;
Form S-8 No. 33-52113 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-8 No. 33-35218 pertaining to the 1989 Long Term Incentive
Compensation Plan;
Form S-8 No. 33-37905 pertaining to the AmSouth Bancorporation Thrift Plan;
Form S-8 No. 33-9368 pertaining to the Long Term Incentive Compensation
Plan;
Form S-8 No. 33-2927 (as amended) pertaining to the Employee Stock Purchase
Plan;
Form S-8 No. 2-97464 pertaining to the Long Term Incentive Compensation
Plan;
Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common
Stock Purchase Plan;
Form S-8 No. 33-19016 pertaining to the Long Term Incentive Compensation
Plan;
Form S-8 No. 33-58777 pertaining to the Director Restricted Stock Plan;
Form S-8 No. 333-02099 pertaining to the AmSouth Bancorporation Thrift
Plan;
Form S-8 No. 333-05631 pertaining to the AmSouth Bancorporation 1996 Long
Term Incentive Compensation Plan;
Form S-8 No. 333-27107 pertaining to the AmSouth Bancorporation Employee
Stock Purchase Plan;
Form S-8 No. 333-41599 pertaining to the AmSouth Bancorporation Deferred
Compensation Plan and the Amended and Restated Deferred Compensation Plan
for Directors of AmSouth Bancorporation; and
Form S-3 No. 333-44263 pertaining to the AmSouth Bancorporation Shelf
Registration Statement.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Sections 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
April 24, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of condition, the consolidated statement of earnings, the
consolidated statement of cash flows of Item 1 of Part I and tables 2, 6 and 7
of Item 2 of Part I of the AmSouth Bancorporation Form 10-Q for the quarterly
period ended March 31, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 604,244
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 825
<TRADING-ASSETS> 1,194
<INVESTMENTS-HELD-FOR-SALE> 3,049,531
<INVESTMENTS-CARRYING> 2,480,571
<INVESTMENTS-MARKET> 2,493,889
<LOANS> 12,206,942
<ALLOWANCE> 179,347
<TOTAL-ASSETS> 19,390,061
<DEPOSITS> 12,989,728
<SHORT-TERM> 1,778,919
<LIABILITIES-OTHER> 317,521
<LONG-TERM> 2,877,463
0
0
<COMMON> 134,996 <F1>
<OTHER-SE> 1,291,434 <F1>
<TOTAL-LIABILITIES-AND-EQUITY> 19,390,061
<INTEREST-LOAN> 264,733
<INTEREST-INVEST> 89,498
<INTEREST-OTHER> 1,251
<INTEREST-TOTAL> 355,482
<INTEREST-DEPOSIT> 123,097
<INTEREST-EXPENSE> 183,815
<INTEREST-INCOME-NET> 171,667
<LOAN-LOSSES> 14,400
<SECURITIES-GAINS> 1,743
<EXPENSE-OTHER> 136,914
<INCOME-PRETAX> 96,158
<INCOME-PRE-EXTRAORDINARY> 96,158
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,023
<EPS-PRIMARY> .51 <F1>
<EPS-DILUTED> .51 <F1>
<YIELD-ACTUAL> 4.04
<LOANS-NON> 88,760
<LOANS-PAST> 32,363
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 179,197
<CHARGE-OFFS> 20,880
<RECOVERIES> 6,630
<ALLOWANCE-CLOSE> 179,347
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> All common stock and per share amounts reflect a three-for-two stock
split payable April 30, 1998. Prior financial data schedules have not been
adjusted to reflect this split.
</FN>
</TABLE>
