<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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, 1999 Commission file number 1-7476
AmSouth Bancorporation
(Exact Name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 63-0591257
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
AmSouth--Sonat Tower 35203
1900 Fifth Avenue North (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
</TABLE>
(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 30, 1999, AmSouth Bancorporation had 117,502,222 shares of
common stock outstanding on a pre-split basis, 176,253,333 on a post-split
basis.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
AMSOUTH BANCORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition--March 31, 1999, December 31,
1998, and March 31, 1998 ............................................ 3
Consolidated Statement of Earnings--Three months ended March 31, 1999
and 1998............................................................. 4
Consolidated Statement of Shareholders' Equity--Three months ended
March 31, 1999....................................................... 5
Consolidated Statement of Cash Flows--Three months ended March 31,
1999 and 1998........................................................ 6
Notes to Consolidated Financial Statements............................ 7
Independent Accountants' Review Report................................ 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 11
Part II. Other Information
Item 1. Legal Proceedings............................................... 22
Item 6. Exhibits and Reports on Form 8-K................................ 22
Signatures................................................................ 23
Exhibit Index............................................................. 24
</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, the effect of legal proceedings on AmSouth's
financial condition and results of operations, the Year 2000 issue, and with
respect to certain other issues. 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 of the economy and in the real
estate markets, the performance of the stock and bond markets, and the
potential effects of the Year 2000 issue. 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. The information regarding Year 2000 compliance is based on
management's current assessment. However, this is an ongoing process involving
continual evaluation and unanticipated problems could develop that could cause
compliance to be more difficult or costly than currently anticipated.
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
1999 1998 1998
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks.................... $ 573,898 $ 619,599 $ 604,244
Federal funds sold and securities purchased
under agreements to resell................ 8,250 5,609 825
Trading securities......................... 7,310 4,144 1,194
Available-for-sale securities.............. 3,086,960 3,029,372 3,049,531
Held-to-maturity securities (market value
of $2,033,070, $2,162,102 and $2,493,889,
respectively)............................. 2,025,004 2,147,044 2,480,571
Mortgage loans held for sale............... 89,424 148,461 110,460
Other interest-earning assets.............. 24,834 29,276 -0-
Loans...................................... 13,313,336 12,977,467 12,308,247
Less: Allowance for loan losses............ 176,595 176,075 179,347
Unearned income.......................... 119,614 107,604 101,305
----------- ----------- -----------
Net loans............................... 13,017,127 12,693,788 12,027,595
Premises and equipment, net................ 334,134 336,772 312,766
Customers' acceptance liability............ 10,088 3,947 4,262
Accrued interest receivable and other
assets.................................... 906,742 883,667 798,613
----------- ----------- -----------
$20,083,771 $19,901,679 $19,390,061
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand............... $ 2,159,278 $ 2,215,887 $ 2,139,111
Interest-bearing demand.................. 4,483,140 4,559,470 3,937,019
Savings.................................. 968,578 980,829 1,042,521
Time..................................... 4,396,250 4,553,666 4,847,027
Certificates of deposit of $100,000 or
more.................................... 937,738 973,952 1,024,050
----------- ----------- -----------
Total deposits.......................... 12,944,984 13,283,804 12,989,728
Federal funds purchased and securities
sold under agreements to repurchase...... 1,617,530 1,482,100 1,309,036
Other borrowed funds...................... 176,182 88,873 469,883
Long-term Federal Home Loan Bank
advances................................. 2,625,084 2,500,117 2,137,293
Other long-term debt...................... 888,916 739,642 740,170
----------- ----------- -----------
Total deposits and interest-bearing
liabilities............................ 18,252,696 18,094,536 17,646,110
Acceptances outstanding.................... 10,088 3,947 4,262
Accrued expenses and other liabilities..... 392,759 375,567 313,259
----------- ----------- -----------
Total liabilities....................... 18,655,543 18,474,050 17,963,631
----------- ----------- -----------
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--350,000,000 shares; Issued--
202,422,963, 202,425,450 and 202,494,192
shares, respectively.................... 202,423 202,425 202,494
Capital surplus........................... 454,744 448,620 448,885
Retained earnings......................... 1,171,260 1,133,046 1,018,738
Cost of common stock in treasury--
25,891,161, 25,048,731 and 20,819,202
shares, respectively..................... (393,887) (367,286) (257,128)
Deferred compensation on restricted
stock.................................... (12,971) (8,272) (10,141)
Accumulated other comprehensive income.... 6,659 19,096 23,582
----------- ----------- -----------
Total shareholders' equity.............. 1,428,228 1,427,629 1,426,430
----------- ----------- -----------
$20,083,771 $19,901,679 $19,390,061
=========== =========== ===========
</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
-----------------
1999 1998
-------- --------
(In thousands
except per share
data)
<S> <C> <C>
INTEREST INCOME
Loans....................................................... $270,785 $264,733
Available-for-sale securities............................... 49,016 48,447
Held-to-maturity securities................................. 33,540 41,051
Trading securities.......................................... 47 17
Mortgage loans held for sale................................ 1,236 1,067
Federal funds sold and securities purchased under agreements
to resell................................................... 73 167
Other interest-earning assets............................... 398 -0-
-------- --------
Total interest income...................................... 355,095 355,482
-------- --------
INTEREST EXPENSE
Interest-bearing demand deposits............................ 33,380 33,635
Savings deposits ........................................... 4,866 7,417
Time deposits............................................... 60,128 68,453
Certificates of deposit of $100,000 or more................. 12,203 13,592
Federal funds purchased and securities sold under agreements
to repurchase .............................................. 16,850 17,596
Other borrowed funds........................................ 1,601 8,397
Long-term Federal Home Loan Bank advances................... 32,367 24,038
Other long-term debt........................................ 12,588 10,687
-------- --------
Total interest expense .................................... 173,983 183,815
-------- --------
NET INTEREST INCOME 181,112 171,667
Provision for loan losses................................... 9,500 14,400
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES......... 171,612 157,267
-------- --------
NONINTEREST REVENUES
Service charges on deposit accounts......................... 26,751 26,059
Trust income................................................ 17,155 16,979
Consumer investment services income......................... 9,645 7,231
Mortgage income............................................. 6,796 3,938
Portfolio income............................................ 4,465 2,296
Bank owned life insurance policies.......................... 4,484 4,036
Other noninterest revenues.................................. 19,765 15,266
-------- --------
Total noninterest revenues................................. 89,061 75,805
-------- --------
NONINTEREST EXPENSES
Salaries and employee benefits.............................. 78,584 67,717
Net occupancy expense....................................... 14,413 13,875
Equipment expense........................................... 15,468 15,190
Marketing expense........................................... 5,361 5,008
Postage and office supplies................................. 6,329 5,459
Communications expense...................................... 5,851 5,675
Amortization expense........................................ 4,172 4,526
Other noninterest expenses.................................. 21,803 19,464
-------- --------
Total noninterest expenses................................. 151,981 136,914
-------- --------
INCOME BEFORE INCOME TAXES.................................. 108,692 96,158
Income taxes................................................ 38,361 34,135
-------- --------
NET INCOME................................................. $ 70,331 $ 62,023
======== ========
Average common shares outstanding........................... 176,028 181,464
Earnings per common share................................... $ 0.40 $ 0.34
Diluted average common shares outstanding................... 178,844 183,297
Diluted earnings per common share........................... $ 0.39 $ 0.34
</TABLE>
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,
1999................... $134,950 $516,095 $1,133,046 $(367,286) $ (8,272) $ 19,096 $1,427,629
Adjustment for the
effect of 3-for-2
common stock split..... 67,475 (67,475) -0- -0- -0- -0- -0-
-------- -------- ---------- --------- -------- -------- ----------
BALANCE AT JANUARY 1,
1999, RESTATED......... 202,425 448,620 1,133,046 (367,286) (8,272) 19,096 1,427,629
Comprehensive income:
Net income............. -0- -0- 70,331 -0- -0- -0- 70,331
Other comprehensive
income, net of tax:
Unrealized losses on
available-for-sale
securities, net of
reclassification
adjustment........... -0- -0- -0- -0- -0- (12,437) (12,437)
----------
Comprehensive income.... 57,894
Cash dividends declared
($0.17 per common
share)*................ -0- -0- (29,496) -0- -0- -0- (29,496)
Common stock
transactions:
Purchase of common
stock................. -0- -0- -0- (41,247) -0- -0- (41,247)
Benefit stock plans.... (2) 6,012 (2,621) 13,312 (4,699) -0- 12,002
Dividend reinvestment
plan.................. -0- 112 -0- 1,334 -0- -0- 1,446
-------- -------- ---------- --------- -------- -------- ----------
BALANCE AT MARCH 31,
1999................... $202,423 $454,744 $1,171,260 $(393,887) $(12,971) $ 6,659 $1,428,228
======== ======== ========== ========= ======== ======== ==========
Disclosure of
reclassification
amount:
Unrealized holding
losses on available-
for-sale securities
arising during the
period................. $(10,054)
Less: Reclassification
adjustment for gains
realized in net
income................. 2,383
--------
Net unrealized losses on
available-for-sale
securities, net of
tax.................... $(12,437)
========
</TABLE>
- --------
*Restated for three-for-two common stock split in May 1999
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
--------------------
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.............................................. $ 70,331 $ 62,023
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses.............................. 9,500 14,400
Depreciation and amortization of premises and
equipment............................................. 11,133 9,216
Amortization of premiums and discounts on held-to-
maturity securities and available-for-sale
securities............................................ 646 (1,060)
Net decrease (increase) in mortgage loans held for
sale.................................................. 59,037 (29,640)
Net (increase) decrease in trading securities.......... (3,166) 212
Net gains on sales of available-for-sale securities.... (3,803) (1,743)
Net decrease (increase) in accrued interest receivable
and other assets...................................... 36,948 (102,356)
Net (decrease) increase in accrued expenses and other
liabilities........................................... (12,755) 56,248
Provision for deferred income taxes.................... 13,910 8,000
Amortization of intangible assets...................... 4,088 4,129
Other operating activities, net........................ (369) 2,505
--------- ---------
Net cash provided by operating activities............. 185,500 21,934
--------- ---------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of available-
for-sale securities.................................... 293,618 128,661
Proceeds from sales of available-for-sale securities.... 178,901 167,955
Purchases of available-for-sale securities.............. (555,732) (792,994)
Proceeds from maturities, prepayments and calls of held-
to-maturity securities................................. 262,269 182,127
Purchases of held-to-maturity securities................ (162,942) (389,979)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell........ (2,641) 18,175
Net decrease in other interest-earning assets........... 4,442 -0-
Net increase in loans................................... (334,248) (9,988)
Net purchases of premises and equipment................. (8,495) (7,782)
--------- ---------
Net cash used by investing activities................. (324,828) (703,825)
--------- ---------
FINANCING ACTIVITIES
Net (decrease) increase in demand deposits and savings
accounts............................................... (145,190) 67,220
Net decrease in time deposits........................... (193,589) (22,622)
Net increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase......... 135,430 (126,889)
Net increase (decrease) in other borrowed funds......... 87,309 (516,035)
Issuance of long-term Federal Home Loan Bank advances
and other long-term debt............................... 299,231 1,295,120
Payments for maturing long-term debt.................... (24,937) (50,842)
Cash dividends paid..................................... (29,496) (24,021)
Cash payment for special rights and warrants on common
stock.................................................. -0- (355)
Proceeds from benefit and dividend reinvestment plans... 6,116 6,595
Purchase of common stock................................ (41,247) (536)
--------- ---------
Net cash provided by financing activities............. 93,627 627,635
--------- ---------
Decrease in cash and cash equivalents................... (45,701) (54,256)
Cash and cash equivalents at beginning of period........ 619,599 658,500
--------- ---------
Cash and cash equivalents at end of period.............. $ 573,898 $ 604,244
========= =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
Notes To Consolidated Financial Statements
(Unaudited)
Three Months Ended March 31, 1999 and 1998
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 1999 presentation. These
reclassifications had no effect on net income. All common share data presented
in the consolidated financial statements reflect a three-for-two stock split
which will be completed on May 24, 1999. The notes included herein should be
read in conjunction with the notes to consolidated financial statements
included in AmSouth Bancorporation's (AmSouth) 1998 annual report on Form 10-K.
On January 1, 1999, AmSouth adopted Statement of Position 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use"
(SOP 98-1) as issued by the American Institute of Certified Public Accountants
(AICPA). SOP 98-1 identifies the characteristics of internal use computer
software and provides guidance on accounting for its costs. The provisions of
this SOP are to be applied to costs incurred for all projects, including those
in progress, upon initial application. The application of SOP 98-1 did not
have a material effect on AmSouth's financial condition or results of
operations.
On January 1, 1999, AmSouth also adopted Statement of Position 98-5,
"Reporting the Costs of Start-Up Activities" (SOP 98-5) as issued by the
AICPA. SOP 98-5 applies to all nongovernmental entities and requires that
costs of start-up activities and organization costs be expensed as incurred.
The adoption of SOP 98-5 did not have a material effect on AmSouth's financial
condition or results of operations.
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and for Hedging Activities," (Statement
133), was issued by the Financial Accounting Standards Board. Statement 133
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. It requires all derivatives
to be recorded on the balance sheet at fair value and establishes unique
accounting treatment for the following three different types of hedges: hedges
of changes in the fair value of assets, liabilities or firm commitments,
referred to as fair value hedges; hedges of the variable cash flows of
forecasted transactions, referred to as cash flow hedges; and hedges of
foreign currency exposures of net investments in foreign operations. The
accounting for each of the three types of hedges results in recognizing
offsetting changes in value or cash flows of both the hedge and the hedged
item in earnings in the same period. Changes in the fair value of derivatives
that do not meet the criteria of one of these three types of hedges are
included in earnings in the period of change. Statement 133 is effective for
fiscal years beginning after June 15, 1999. The impact of adopting Statement
133 on AmSouth's financial condition or results of operations has not been
determined at this time.
Cash Flows--For the three months ended March 31, 1999 and 1998, AmSouth paid
interest of $175,037,000 and $168,736,000, respectively. AmSouth paid income
taxes of $1,015,000 for the three months ended March 31, 1999, and received a
refund of income taxes of $6,303,000 for the three months ended March 31,1998.
Noncash transfers from loans to foreclosed properties for the three months
ended March 31, 1999 and 1998 were $3,350,000 and $2,504,000, respectively,
and noncash transfers from foreclosed properties to loans were $124,000 and
$241,000, respectively. For the three months ended March 31, 1999, noncash
transfers from loans to available-for-sale securities and to other assets of
approximately $2,862,000 and $104,000, respectively, were made in connection
with the participation of mortgages to third-party conduits. 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
mortgage loan securitizations.
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
-----------------
1999 1998
-------- --------
(In thousands
except per share
data)
<S> <C> <C>
Earnings per common share computation:
Numerator:
Net income................................................. $ 70,331 $ 62,023
Denominator:
Average common shares outstanding.......................... 176,028 181,464
Earnings per common share.................................... $ .40 $ .34
Diluted earnings per common share computation:
Numerator:
Net income................................................. $ 70,331 $ 62,023
Denominator:
Average common shares outstanding.......................... 176,028 181,464
Dilutive shares contingently issuable...................... 2,816 1,833
-------- --------
Average diluted common shares outstanding................. 178,844 183,297
Diluted earnings per common share............................ $ .39 $ .34
</TABLE>
Shareholders' Equity--On March 20, 1997, AmSouth's Board of Directors
approved the repurchase by AmSouth of up to 13,500,000 shares of its common
stock for the purpose of funding employee benefit and dividend reinvestment
plans and for general corporate purposes. AmSouth purchased 5,859,000 shares
at a cost of $110,267,000 during 1997, 5,297,000 shares at a cost of
$136,514,000 during 1998 and 1,352,000 shares at a cost of $41,247,000 during
the first three months of 1999 under this authorization. The authorization for
the remaining 992,000 shares expired in March 1999.
On April 15, 1999, AmSouth's shareholders approved an increase in the common
stock authorized to be issued by AmSouth to 350,000,000 shares. This new
authorized amount has been reflected in AmSouth's Consolidated Statement of
Condition as of March 31, 1999.
On April 15, 1999, a three-for-two common stock split in the form of a 50
percent common stock dividend was announced. The stock dividend will be paid
May 24 to shareholders of record as of April 30.
On April 15, 1999, AmSouth's Board of Directors approved the repurchase of
approximately 13,100,000 shares of the Company's outstanding common stock for
the purpose of funding employee benefit and dividend reinvestment plans and
for general corporate purposes.
8
<PAGE>
Business Segment Information--AmSouth has three reportable segments:
Consumer Banking, Commercial Banking, and Capital Management. Treasury & Other
is comprised of balance sheet management activities that include the
investment portfolio, nondeposit funding and off-balance sheet financial
instruments. Treasury & Other also includes BOLI income and corporate expenses
such as corporate overhead and goodwill amortization. All revenues and
expenses related to the bond administration and stock transfer businesses,
sold in 1998, are included in Treasury and Other for 1998. The following is a
summary of the segment performance for the first quarter of 1999 and 1998:
<TABLE>
<CAPTION>
Consumer Commercial Capital Treasury
Banking Banking Management & Other Total
-------- ---------- ---------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
1999
Net interest income from
external customers......... $ 59,859 $ 93,754 $ (258) $ 27,757 $181,112
Internal funding............ 59,310 (37,566) 578 (22,322) -0-
-------- -------- ------- -------- --------
Net interest income......... 119,169 56,188 320 5,435 181,112
Noninterest revenues........ 39,455 12,277 26,804 10,525 89,061
-------- -------- ------- -------- --------
Total revenues.............. 158,624 68,465 27,124 15,960 270,173
Provision for loan losses... 8,795 184 -0- 521 9,500
Noninterest expenses........ 88,511 25,555 18,489 19,426 151,981
-------- -------- ------- -------- --------
Income before income taxes.. 61,318 42,726 8,635 (3,987) 108,692
Income taxes................ 23,074 16,057 3,237 (4,007) 38,361
-------- -------- ------- -------- --------
Segment net income.......... $ 38,244 $ 26,669 $ 5,398 $ 20 $ 70,331
======== ======== ======= ======== ========
1998
Net interest income from
external customers......... $ 50,023 $ 94,525 $ (967) $ 28,086 $171,667
Internal funding............ 57,252 (43,035) 1,595 (15,812) -0-
-------- -------- ------- -------- --------
Net interest income......... 107,275 51,490 628 12,274 171,667
Noninterest revenues........ 36,140 8,305 22,976 8,384 75,805
-------- -------- ------- -------- --------
Total revenues.............. 143,415 59,795 23,604 20,658 247,472
Provision for loan losses... 12,937 1,312 -0- 151 14,400
Noninterest expenses........ 80,376 23,617 15,689 17,232 136,914
-------- -------- ------- -------- --------
Income before income taxes.. 50,102 34,866 7,915 3,275 96,158
Income taxes................ 18,816 13,095 3,087 (863) 34,135
-------- -------- ------- -------- --------
Segment net income.......... $ 31,286 $ 21,771 $ 4,828 $ 4,138 $ 62,023
======== ======== ======= ======== ========
</TABLE>
9
<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, 1999 and 1998, and the
related consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 1999 and 1998, and the consolidated statement of
shareholders' equity for the three-month period ended March 31, 1999. 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, 1998, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for the year then
ended (not presented herein) and in our report dated January 29, 1999, except
for Note 22 as to which the date is March 1, 1999, 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, 1998 is fairly stated, in all material respects, in
relation to the consolidated statement of condition from which it has been
derived.
/s/ ERNST & YOUNG LLP
May 10, 1999
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
AmSouth reported net income of $70.3 million for the three months ended
March 31, 1999, a 13.4% increase over net income of $62.0 million for the same
period of 1998. Diluted earnings per common share, restated for the three-for-
two stock split payable May 24, 1999, was $0.39 for the first quarter of 1999,
a 14.7% increase over 1998's $0.34. AmSouth's return on average assets (ROA)
was 1.44% for the quarter just ended versus 1.33% one year ago. Return on
average equity (ROE) was 20.06%, up from 17.97% in the first quarter of 1998.
Total assets were $20.1 billion at quarter end, compared to 1998's quarter-
end assets of $19.4 billion. The increase was primarily the result of
continued loan growth over the past year. Loans net of unearned income at
March 31, 1999, increased $1.0 billion from March 31, 1998, to $13.2 billion.
On a managed basis, which includes commercial and residential loans
participated to third-party conduits, loans increased $2.8 billion to $15.4
billion at quarter end. The increases in the managed loan portfolio occurred
primarily in commercial and industrial, commercial real estate, home equity,
and indirect lending.
On the funding side of the balance sheet, total deposits at March 31, 1999,
remained relatively unchanged from March 31, 1998, with decreases in time
deposits and certificates of deposit greater than $100,000 offsetting a 9.5%
increase in lower cost deposits. AmSouth continued to increase its use of
Federal Home Loan Bank (FHLB) advances as a funding source. FHLB advances
increased to $2.6 billion at March 31, 1999, a 22.8% increase over 1998 first-
quarter end. AmSouth also issued $175 million of 6.125% Subordinated Notes due
2009 during the first quarter of 1999.
Net Interest Income
Net interest income on a fully taxable equivalent basis for the three months
ended March 31, 1999, was $182.5 million, a 5.3% increase over the same period
of 1998. The increase can be attributed to lower funding costs and a shift in
the mix of AmSouth's earning assets from investment securities to higher
yielding loans. This resulted in a widening of the net interest margin to
4.08% from 4.04% in the first quarter of 1998. Lower borrowing and deposit
rates across all categories of deposits contributed to the lower funding
costs. The improvement was further enhanced by a shift in the deposit mix from
higher cost consumer CDs to noninterest-bearing demand and lower cost interest
checking and money market deposit accounts.
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 and in compliance with specific liquidity and interest rate risk
guidelines.
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, 1999, AmSouth
would expect decreases in NII of approximately $700,000 and $400,000 if
interest rates gradually increase or decrease, respectively, from
11
<PAGE>
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. Based on
March 31, 1998, simulation model results, AmSouth would have expected an
increase of $1.4 million and a decrease of $4.3 million if interest rates had
gradually increased or decreased from the rates in effect at the time by 100
basis points over a 12-month period.
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 1999, AmSouth entered into additional interest rate swaps in
the notional amount of $375.0 million. There have been no maturities or
terminations of interest rate swaps in 1999. Interest rate swaps in the
notional amount of $285.0 million were called during the first three months of
1999. At March 31, 1999, AmSouth had interest rate swaps, all of which receive
fixed rates, totaling a notional amount of $969.0 million. The swaps added in
1999 as hedges were designated to certain deposits and indebtedness of AmSouth
Bank. At March 31, 1999, 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.
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 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 presented to and subsequently approved
by senior management and reviewed by the Audit and Community Responsibility
Committee of the Board of Directors.
Table 5 presents a five-quarter analysis of the allowance for loan losses.
At March 31, 1999, the allowance for loan losses was $176.6 million, or 1.34%
of loans net of unearned income, compared to $179.3 million, or 1.47%, for the
prior year. The coverage ratio of the allowance for loan losses to
nonperforming loans increased from 202.06% at March 31, 1998, to 265.24% at
March 31, 1999. Over the same period, the level of nonperforming loans
decreased $22.2 million.
Net charge-offs for the quarter ended March 31, 1999, were $9.0 million, a
decrease of $5.3 million or 37.0% from $14.3 million a year earlier.
Annualized net charge-offs to average loans net of unearned income were .28%
for the three months ended March 31, 1999, compared to .47% for the same
period of the prior year. The decrease in net charge-offs occurred primarily
in AmSouth's revolving credit portfolio, which decreased $5.3 million in the
quarter versus the first quarter of 1998. The decline in revolving credit net
charge-offs reflects the sale of approximately $170.0 million of under-
performing credit card loans in the second quarter of 1998. In addition, net
charge-offs for the direct consumer-lending portfolio in the first quarter of
1999 when compared to the first quarter of 1998 decreased $956.0 thousand.
This decrease was offset by a $1.1 million increase in net charge-offs in
AmSouth's indirect lending portfolio. Annualized net charge-offs for the
consumer loan portfolio fell to .53% of average consumer loans for the three
months ended March 31, 1999, compared to .88% for the prior year. Net charge-
offs of impaired loans for the three months ended March 31, 1999, totaled $1.1
million compared to $1.5 million for the same period in 1998. The provision
for loan losses for the three months ended March 31, 1999, was $9.5 million
compared to $14.4 million for the year-earlier period. The 1999 provision
reflects loan loss exposure related to the overall growth in the loan
portfolio and the change in the mix of the loan portfolio.
Table 6 presents a five-quarter comparison of the components of
nonperforming assets. At March 31, 1999, nonperforming assets as a percentage
of loans net of unearned income, foreclosed properties and repossessions,
decreased 23 basis points to .59% compared to March 31, 1998. The level of
nonperforming assets decreased $22.3 million during the same period.
12
<PAGE>
Included in nonperforming assets at March 31, 1999 and 1998, was $39.0
million and $57.2 million, respectively, in loans that were considered to be
impaired, substantially all of which were on a nonaccrual basis. Collateral-
dependent loans, which were measured at the fair value of the collateral,
constituted approximately all of these impaired loans. At March 31, 1999 and
1998, there was $8.2 million and $9.7 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, 1999 and 1998,
was $37.9 million and $49.1 million, respectively. AmSouth recorded no
material interest income on its impaired loans in the first quarter of 1999
and 1998.
Noninterest Revenues and Noninterest Expenses
Year-to-date noninterest revenues totaled $89.1 million at March 31, 1999,
compared to $75.8 million for the prior-year period. Growth occurred in most
major categories, including consumer investment services income, mortgage
income and income from bank owned life insurance. Consumer investment services
income increased $2.4 million primarily as a result of a higher sales volume
of annuity products. Mortgage income increased $2.9 million primarily as a
result of gains on the sale of residential mortgage loans to third-party
conduits partially offset by a decrease in gains on sale of servicing. Other
noninterest revenues increased $4.5 million primarily due to an increase in
income from commercial loan conduit activity.
Year-to-date noninterest expenses increased 11.0% to $152.0 million at March
31, 1999, compared to $136.9 million for the prior year. Salaries and employee
benefits increased $10.9 million when compared to the same period a year ago.
The increase is primarily due to an increased number of employees associated
with new revenue initiatives, annual merit increases and incentives associated
with AmSouth's stronger financial performance. Costs associated with new
revenue initiatives were the primary reason for the $2.3 million increase in
other noninterest expenses.
Capital Adequacy
At March 31, 1999, shareholders' equity totaled $1.4 billion or 7.11% of
total assets. Since December 31, 1998, shareholders' equity increased $599
thousand as dividends of $29.5 million and the purchase of 1,352,000 shares of
AmSouth common stock for $41.2 million offset the increase from net income of
$70.3 million.
Table 9 presents the capital amounts and risk-adjusted capital ratios for
AmSouth and AmSouth Bank at March 31, 1999 and 1998. At March 31, 1999,
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, 1999.
Year 2000 Project
The following information that appears in this section constitutes Year 2000
Readiness Disclosure, pursuant to the Year 2000 Information and Readiness
Disclosure Act.
The Year 2000 issue is the result of computer systems using a two-digit
format, as opposed to four digits, to indicate the year. Any of AmSouth's
computer programs or hardware that have date-sensitive software or embedded
chips may not appropriately interpret dates beyond the year 1999. This could
result in a system failure, miscalculation or other computer errors causing
disruptions of operations. AmSouth believes that it has an effective program
in place to resolve the Year 2000 issue in a timely manner and that it is
unlikely that the Year 2000 issue will cause any significant problems with
customer service or otherwise have a material adverse impact on AmSouth's
operations or financial performance.
A Year 2000 project team, consisting of professionals from all areas of
AmSouth, was created in 1997 to plan and oversee AmSouth's Year 2000 efforts.
A plan was developed which involves the following five phases: awareness,
assessment, remediation, testing, and implementation. The plan also included
communicating with
13
<PAGE>
external service providers to ensure that they are taking appropriate action
to remedy any Year 2000 issues. To date, AmSouth has fully completed its
assessment phase of all systems that could be affected by the Year 2000. As
part of the assessment phase, systems that have the greatest impact on the
operations of AmSouth were designated as mission critical systems. The
remediation and testing phases for all internal mission critical systems are
100% complete, and implementation is nearing completion. AmSouth has
implemented 97 percent of its remediated mission critical systems, well ahead
of the June 30, 1999, regulatory deadline. Even after testing and
implementation, AmSouth will continue testing throughout 1999 to reaffirm the
Year 2000 compliance of mission critical systems.
A small number of mission critical systems are provided by third parties on
a service bureau basis, such as credit card processing and services supporting
securities brokerage businesses. All such third-party providers of mission
critical services have certified their Year 2000 readiness and all completed
their testing by March 31, 1999, as required by federal banking regulations.
AmSouth expects the Year 2000 compliant versions of all third-party mission
critical systems to be fully implemented by June 30, 1999.
While AmSouth's greatest focus and efforts to date have been on preparing
mission critical systems for the Year 2000, 93 percent of noncritical systems
have been remediated, tested and implemented as of April 30, 1999. All
noncritical systems are expected to be Year 2000 compliant and in operation
during 1999.
In addition, AmSouth is in the process of assessing the Year 2000 readiness
of its significant customers, suppliers and counterparties. In the fourth
quarter of 1997, AmSouth began researching the issue of Year 2000 and the
possible impact of Year 2000 on its loan customers' liquidity and their
ability to repay their loans. Early last year, AmSouth established an
education and assessment program for all of its commercial loan customers with
credit exposure of $100,000 or more. Meetings were held with these customers
to assess their risk of Year 2000 problems as well as their understanding and
progress toward preparing their systems to operate in the Year 2000. AmSouth
plans to continue to assess and evaluate the impact of Year 2000 in its credit
analysis of current and future loan customers throughout 1999 and 2000.
AmSouth has also used a survey process to review its exposure with respect
to counterparties to various transactions. In domestic securities
transactions, AmSouth only enters into transactions with recognized dealers
that are monitored by U.S. regulators. AmSouth plans to suspend trading with
any domestic dealers who cannot demonstrate their Year 2000 compliance by the
fourth quarter of 1999. Annual lines with international securities dealers
were reviewed before the end of 1998, all with satisfactory results.
AmSouth has contacted all of its essential suppliers regarding their Year
2000 compliance and has completed an analysis of the possible impact of
noncompliance on their ability to fulfill their commitments to AmSouth. To
date, AmSouth is not aware of any external supplier with a Year 2000 issue
that would materially impact AmSouth's results of operations, liquidity, or
capital resources.
The potential impact of the Year 2000 issue on AmSouth's responsibilities
when it acts in a fiduciary capacity is also being considered. Assets will be
reviewed with the degree of emphasis varying based on the risk profile of the
asset. This will be combined with a review of accounts above a predetermined
dollar amount. Consideration of Year 2000 issues will be a part of ongoing
activities, including investment selection and acceptance of new accounts.
In recent years, AmSouth has invested heavily in new technology to improve
service and competitiveness. In addition, AmSouth utilizes common operating
systems company-wide. As a result, AmSouth estimates that the total
incremental cost of Year 2000 compliance, which excludes the cost to upgrade
and replace systems in the ordinary course of business, will not exceed $10.0
million, the majority of which has already been expensed, and will not be
material to AmSouth's financial performance. This cost estimate does not
include salaries and employee benefits of AmSouth employees working on the
Year 2000 project, as these costs are not separately tracked.
14
<PAGE>
As noted above, AmSouth believes that it has an effective program in place
to resolve the Year 2000 issue. However, if appropriate modifications and
conversions are not completed in a timely manner for some unexpected reason,
the Year 2000 issue could impact AmSouth's operations. In addition,
disruptions in the economy generally resulting from Year 2000 issues could
also materially impact AmSouth. There can also be no guarantee that the
systems of other companies on which AmSouth's systems rely will be converted
in a timely manner and not have any adverse impact on AmSouth's systems.
While AmSouth has no reason to conclude that a failure will occur, the most
likely worst-case Year 2000 scenarios entail those items over which AmSouth
has no control, including (1) unpredictable actions resulting from irrational
public demand even if the Year 2000 computer issue presents no problems, and
(2) a scenario where a disruption or failure of AmSouth's power suppliers or
voice and data transmission suppliers impacts AmSouth, its customers, vendors,
and the public infrastructure. If such public reaction or a failure were to
occur, AmSouth would implement a contingency plan. While it is impossible to
quantify the impact of such scenarios, the most reasonably likely worst-case
scenario would entail liquidity issues related to increased customer
withdrawals or the diminishment of service levels, resulting in customer
inconvenience, and additional costs associated with the implementation of
contingency plans.
AmSouth has comprehensive contingency plans in place to address these
scenarios and other possible system and service failures that could occur
outside of AmSouth's control in an effort to minimize the impact on AmSouth of
other organizations' failures to properly remediate their systems. These plans
include having back-up power and telecommunication sources, and sufficient
resources to deal with possible increased liquidity demands. Additionally,
AmSouth is finalizing its event plans and outlining responsibilities for the
days immediately preceding and including the date change.
15
<PAGE>
Table 1--Financial Summary
<TABLE>
<CAPTION>
March 31
----------------------- %
1999 1998 Change
----------- ----------- ------
(In thousands)
<S> <C> <C> <C>
Balance sheet summary
End-of-period balances:
Loans net of unearned income.................... $13,193,722 $12,206,942 8.1%
Total assets.................................... 20,083,771 19,390,061 3.6
Total deposits.................................. 12,944,984 12,989,728 (0.3)
Shareholders' equity............................ 1,428,228 1,426,430 0.1
Year-to-date average balances:
Loans net of unearned income.................... $13,064,656 $12,197,427 7.1%
Total assets.................................... 19,804,867 18,882,051 4.9
Total deposits.................................. 13,011,734 12,791,102 1.7
Shareholders' equity............................ 1,421,681 1,400,141 1.5
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31
-------------------------------- %
1999 1998 Change
--------------- --------------- -------
(In thousands except per share data)
<S> <C> <C> <C>
Earnings summary
Net income......................... $ 70,331 $ 62,023 13.4%
Per common share*.................. 0.40 0.34 17.6
Per common share--diluted*......... 0.39 0.34 14.7
Selected ratios
Return on average assets
(annualized)...................... 1.44% 1.33%
Return on average equity
(annualized)...................... 20.06 17.97
Average equity to assets........... 7.18 7.42
End of period equity to assets..... 7.11 7.36
End of period tangible equity to
assets............................ 6.03 6.16
Allowance for loan losses to loans
net of unearned income............ 1.34 1.47
Efficiency ratio................... 55.97 54.97
Common stock data*
Cash dividends declared............ $ 0.17 $ 0.13
Book value at end of period........ 8.09 7.85
Market value at end of period...... 30.33 26.25
Average common shares outstanding.. 176,028 181,464
Average common shares outstanding--
diluted........................... 178,844 183,297
</TABLE>
- --------
* Restated for three-for-two common stock split in May 1999.
16
<PAGE>
Table 2--Quarterly Yields Earned on Average Interest-Earning Assets and Rates
Paid on Average Interest-Bearing Liabilities
<TABLE>
<CAPTION>
1999 1998
---------------------------- -------------------------------------------------------------------------------
First Quarter Fourth Quarter Third Quarter Second Quarter
---------------------------- ---------------------------- ---------------------------- ---------------------
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/
Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense
----------- -------- ------ ----------- -------- ------ ----------- -------- ------ ----------- --------
(Taxable equivalent basis--dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning
assets:
Loans net of
unearned income.. $13,064,656 $271,204 8.42% $12,787,915 $276,196 8.57% $12,605,379 $275,905 8.68% $12,303,518 $270,372
Available-for-
sale securities.. 2,864,766 49,016 6.94 3,044,713 52,318 6.82 3,271,460 56,958 6.91 3,101,694 54,860
Held-to-maturity
securities:
Taxable.......... 1,913,794 31,644 6.71 2,079,172 34,403 6.56 2,217,506 37,154 6.65 2,391,211 39,829
Tax-free......... 127,462 2,857 9.09 114,211 2,672 9.28 113,616 2,834 9.90 102,976 2,712
----------- -------- ----------- -------- ----------- -------- ----------- --------
Total held-to-
maturity
securities....... 2,041,256 34,501 6.85 2,193,383 37,075 6.71 2,331,122 39,988 6.81 2,494,187 42,541
----------- -------- ----------- -------- ----------- -------- ----------- --------
Total investment
securities...... 4,906,022 83,517 6.90 5,238,096 89,393 6.77 5,602,582 96,946 6.87 5,595,881 97,401
Other interest-
earning assets... 150,425 1,754 4.73 138,838 1,615 4.61 122,408 1,470 4.76 126,453 1,825
----------- -------- ----------- -------- ----------- -------- ----------- --------
Total interest-
earning assets... 18,121,103 356,475 7.98 18,164,849 367,204 8.02 18,330,369 374,321 8.10 18,025,852 369,598
Cash and other
assets............ 1,835,590 1,768,281 1,653,319 1,665,235
Allowance for loan
losses............ (176,554) (176,519) (175,160) (172,135)
Market valuation
on available-for-
sale securities... 24,728 39,685 40,383 37,000
----------- ----------- ----------- -----------
$19,804,867 $19,796,296 $19,848,911 $19,555,952
=========== =========== =========== ===========
Liabilities and Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.. $ 4,445,859 33,380 3.04 $ 4,340,072 36,582 3.34 $ 4,132,755 37,924 3.64 $ 3,955,644 35,003
Savings
deposits......... 973,896 4,866 2.03 981,293 6,107 2.47 1,002,891 7,343 2.90 1,034,423 7,528
Time deposits.... 4,521,253 60,128 5.39 4,641,398 64,825 5.54 4,787,203 67,869 5.62 4,848,525 67,964
Certificates of
deposit of
$100,000 or
more............. 938,864 12,203 5.27 1,021,557 14,126 5.49 1,111,031 15,969 5.70 1,037,385 14,702
Federal funds
purchased and
securities sold
under agreements
to repurchase.... 1,535,469 16,850 4.45 1,478,217 17,693 4.75 1,520,284 20,048 5.23 1,261,245 16,484
Other interest-
bearing
liabilities...... 3,493,989 46,556 5.40 3,436,194 47,407 5.47 3,577,479 50,202 5.57 3,702,694 51,980
----------- -------- ----------- -------- ----------- -------- ----------- --------
Total interest-
bearing
liabilities...... 15,909,330 173,983 4.44 15,898,731 186,740 4.66 16,131,643 199,355 4.90 15,839,916 193,661
-------- ----- -------- ---- -------- ---- --------
Net interest
spread............ 3.54% 3.36% 3.20%
===== ==== ====
Noninterest-
bearing demand
deposits.......... 2,131,862 2,143,062 1,969,029 2,000,507
Other
liabilities....... 341,994 335,663 326,336 294,212
Shareholders'
equity............ 1,421,681 1,418,840 1,421,903 1,421,317
----------- ----------- ----------- -----------
$19,804,867 $19,796,296 $19,848,911 $19,555,952
=========== =========== =========== ===========
Net interest
income/margin on a
taxable equivalent
basis............. 182,492 4.08% 180,464 3.94% 174,966 3.79% 175,937
===== ==== ====
Taxable equivalent
adjustment:
Loans............ 419 410 522 428
Securities....... 961 887 930 887
-------- -------- -------- --------
Total taxable
equivalent
adjustment....... 1,380 1,297 1,452 1,315
-------- -------- -------- --------
Net interest
income.......... $181,112 $179,167 $173,514 $174,622
======== ======== ======== ========
<CAPTION>
First Quarter
-----------------------------
Yield/ Average Revenue/ Yield/
Rate Balance Expense Rate
------- ------------ -------- -------
<S> <C> <C> <C> <C>
Assets
Interest-earning
assets:
Loans net of
unearned income.. 8.81% $12,197,427 $265,129 8.82%
Available-for-
sale securities.. 7.09 2,694,502 48,447 7.29
Held-to-maturity
securities:
Taxable.......... 6.68 2,286,392 38,659 6.86
Tax-free......... 10.56 114,216 3,572 12.68
------------ --------
Total held-to-
maturity
securities....... 6.84 2,400,608 42,231 7.13
------------ --------
Total investment
securities...... 6.98 5,095,110 90,678 7.22
Other interest-
earning assets... 5.79 89,915 1,251 5.64
------------ --------
Total interest-
earning assets... 8.22 17,382,452 357,058 8.33
Cash and other
assets............ 1,634,825
Allowance for loan
losses............ (180,050)
Market valuation
on available-for-
sale securities... 44,824
------------
$18,882,051
============
Liabilities and Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.. 3.55 $ 3,905,855 33,635 3.49
Savings
deposits......... 2.92 1,034,900 7,417 2.91
Time deposits.... 5.62 4,946,323 68,453 5.61
Certificates of
deposit of
$100,000 or
more............. 5.68 968,818 13,592 5.69
Federal funds
purchased and
securities sold
under agreements
to repurchase.... 5.24 1,351,583 17,596 5.28
Other interest-
bearing
liabilities...... 5.63 3,059,910 43,122 5.72
------------ --------
Total interest-
bearing
liabilities...... 4.90 15,267,389 183,815 4.88
------- -------- -------
Net interest
spread............ 3.32% 3.45%
======= =======
Noninterest-
bearing demand
deposits.......... 1,935,206
Other
liabilities....... 279,315
Shareholders'
equity............ 1,400,141
------------
$18,882,051
============
Net interest
income/margin on a
taxable equivalent
basis............. 3.91% 173,243 4.04%
======= =======
Taxable equivalent
adjustment:
Loans............ 396
Securities....... 1,180
--------
Total taxable
equivalent
adjustment....... 1,576
--------
Net interest
income.......... $171,667
========
</TABLE>
- ----
NOTE: The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate and has given effect to the disallowance of
interest expense, for federal income tax purposes, related to certain
tax-free assets. Loans net of unearned income includes nonaccrual loans
for all periods presented. Available-for-sale securities excludes
certain noninterest-earning, marketable equity securities.
17
<PAGE>
Table 3--Maturities and Interest Rates Exchanged on Swaps
<TABLE>
<CAPTION>
Mature During
--------------------------
1999 2000 2008 2009 Total
----- ----- ----- ----- -----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional amount............................ $ 340 $ 329 $ 200 $ 100 $ 969
Receive rate............................... 6.68% 6.12% 6.05% 6.10% 6.30%
Pay rate................................... 4.89% 4.94% 5.25% 4.97% 4.99%
</TABLE>
- --------
NOTE: The interest rates exchanged are calculated assuming that interest rates
remain unchanged from March 31, 1999 rates and using call dates of swaps
where applicable. The information presented could change as future
interest rates increase or decrease.
Table 4--Loans and Credit Quality
<TABLE>
<CAPTION>
Net Charge-
offs Three
Loans* Nonperforming Loans** Months Ended
March 31 March 31 March 31
----------------------- --------------------- ---------------
1999 1998 1999 1998 1999 1998
----------- ----------- ---------- ---------- ------ -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial &
industrial........... $ 3,622,151 $ 3,595,908 $ 17,906 $ 39,099 $1,122 $ 1,597
Commercial loans--
secured by real
estate............... 613,835 643,506 6,252 8,397 74 44
----------- ----------- ---------- ---------- ------ -------
Total commercial.... 4,235,986 4,239,414 24,158 47,496 1,196 1,641
----------- ----------- ---------- ---------- ------ -------
Commercial real estate:
Commercial real estate
mortgages............ 1,566,989 1,024,014 11,093 7,151 10 (48)
Real estate
construction......... 1,406,319 1,064,062 2,811 1,680 (61) (117)
----------- ----------- ---------- ---------- ------ -------
Total commercial
real estate........ 2,973,308 2,088,076 13,904 8,831 (51) (165)
----------- ----------- ---------- ---------- ------ -------
Consumer:
Residential first
mortgages............ 1,418,577 2,140,862 19,801 24,715 369 301
Other residential
mortgages............ 1,850,336 1,561,292 8,395 5,366 656 486
Dealer indirect....... 2,017,416 1,272,241 168 1,332 3,490 2,357
Revolving credit...... 254,821 426,075 -0- -0- 2,288 7,593
Other consumer........ 443,278 478,982 154 1,020 1,032 2,037
----------- ----------- ---------- ---------- ------ -------
Total consumer...... 5,984,428 5,879,452 28,518 32,433 7,835 12,774
----------- ----------- ---------- ---------- ------ -------
$13,193,722 $12,206,942 $ 66,580 $ 88,760 $8,980 $14,250
=========== =========== ========== ========== ====== =======
</TABLE>
- --------
* Net of unearned income.
** Exclusive of accruing loans 90 days past due.
18
<PAGE>
Table 5--Allowance for Loan Losses
<TABLE>
<CAPTION>
1999 1998
----------- -----------------------------------------------
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $176,075 $175,046 $174,079 $179,347 $179,197
Loans charged off....... (13,939) (16,553) (12,584) (19,248) (20,880)
Recoveries of loans
previously charged
off.................... 4,959 5,282 5,551 5,446 6,630
-------- -------- -------- -------- --------
Net charge-offs......... (8,980) (11,271) (7,033) (13,802) (14,250)
Addition to allowance
charged to expense..... 9,500 12,300 8,000 23,434 14,400
Allowance sold.......... -0- -0- -0- (14,900) -0-
-------- -------- -------- -------- --------
Balance at end of
period................. $176,595 $176,075 $175,046 $174,079 $179,347
======== ======== ======== ======== ========
Allowance for loan
losses to loans net of
unearned income........ 1.34% 1.37% 1.40% 1.40% 1.47%
Allowance for loan
losses to nonperforming
loans.................. 265.24% 266.49% 236.10% 230.57% 202.06%
Allowance for loan
losses to nonperforming
assets................. 227.85% 228.26% 207.57% 206.51% 179.68%
Net charge-offs to
average loans net of
unearned income
(annualized)........... 0.28% 0.35% 0.22% 0.45% 0.47%
</TABLE>
19
<PAGE>
Table 6--Nonperforming Assets
<TABLE>
<CAPTION>
1999 1998
-------- -----------------------------------------
March
March 31 December 31 September 30 June 30 31
-------- ----------- ------------ ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans.......... $66,580 $66,072 $74,141 $75,501 $88,760
Foreclosed properties..... 10,020 10,237 9,225 8,035 9,902
Repossessions............. 904 828 967 761 1,154
------- ------- ------- ------- -------
Total nonperforming
assets*.................. $77,504 $77,137 $84,333 $84,297 $99,816
======= ======= ======= ======= =======
Nonperforming assets* to
loans net of unearned
income, foreclosed
properties and
repossessions............ 0.59% 0.60% 0.67% 0.68% 0.82%
Accruing loans 90 days
past due................. $26,077 $23,832 $29,586 $25,701 $32,363
</TABLE>
- --------
*Exclusive of accruing loans 90 days past due.
Table 7--Investment Securities
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
--------------------- ---------------------
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....................... $1,657,829 $1,664,875 $2,145,884 $2,156,232
State, county and municipal
securities....................... 151,914 153,294 108,117 111,508
Other securities.................. 215,261 214,901 226,570 226,149
---------- ---------- ---------- ----------
$2,025,004 $2,033,070 $2,480,571 $2,493,889
========== ========== ========== ==========
Available-for-sale:
U.S. Treasury and federal agency
securities....................... $2,739,586 $2,843,550
Other securities.................. 347,374 205,981
---------- ----------
$3,086,960 $3,049,531
========== ==========
</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, 1999, were approximately 5.2 years and 6.79%,
respectively. Included in the combined portfolios was $4.4 billion of
mortgage-backed securities, $447 million of which were variable rate. The
weighted-average remaining life and the weighted-average yield of mortgage-
backed securities at March 31, 1999, were approximately 4.9 years and 6.75%
respectively. The duration of the combined portfolios, which considers the
repricing frequency of variable rate securities, is approximately 2.8
years.
2. The available-for-sale portfolio included net unrealized gains of $10.7
million and $38.0 million at March 31, 1999 and 1998, respectively.
20
<PAGE>
Table 8--Other Interest-Bearing Liabilities
<TABLE>
<CAPTION>
March 31
-----------------
1999 1998
-------- --------
(In thousands)
<S> <C> <C>
Other borrowed funds:
Treasury, tax and loan notes................................ $105,254 $175,879
Short-term bank notes....................................... 50,000 275,000
Other short-term debt....................................... 20,928 19,004
-------- --------
Total other borrowed funds................................. $176,182 $469,883
======== ========
Other long-term debt:
6.75% Subordinated Debentures Due 2025...................... $149,884 $149,867
6.45% Subordinated Notes Due 2018........................... 304,393 305,032
6.125% Subordinated Notes Due 2009.......................... 174,243 -0-
7.75% Subordinated Notes Due 2004........................... 149,527 149,435
Subordinated Capital Notes Due 1999......................... 99,989 99,860
Long-term notes payable..................................... 10,880 35,976
-------- --------
Total other long-term debt................................. $888,916 $740,170
======== ========
</TABLE>
Table 9--Capital Amounts and Ratios
<TABLE>
<CAPTION>
March 31
------------------------------------
1999 1998
---------------- ------------------
Amount Ratio Amount Ratio
---------- ----- ----------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Tier 1 capital:
AmSouth................................. $1,188,505 6.53% $1,155,302 7.22%
AmSouth Bank............................ 1,495,878 8.25 1,467,730 9.18
Total capital:
AmSouth................................. $1,960,199 10.78% $1,953,923 12.21%
AmSouth Bank............................ 1,972,473 10.88 1,947,077 12.18
Leverage:
AmSouth................................. $1,188,505 6.07% $1,155,302 6.20%
AmSouth Bank............................ 1,495,878 7.66 1,467,730 7.87
</TABLE>
21
<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, loan servicing, deposit taking, 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 that 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 24 of this Form 10-Q are
filed herewith or are incorporated by reference herein.
Item 6(b)--Reports on Form 8-K
Three reports on Form 8-K were filed by AmSouth during the period January 1,
1999 to March 31, 1999.
(a) A report was filed on February 23, 1999, to report AmSouth's
preliminary results of operations for the fourth quarter of 1998 and for
the fiscal year ended December 31, 1998.
(b) A report was filed on March 1, 1999, with respect to certain
documents related to the issuance and sale of AmSouth's 6.125% Subordinated
Notes due 2009.
(c) A report was filed on April 23, 1999, to report that AmSouth's
Board of Directors had approved (i) a three-for-two stock split with
respect to the Company's common stock with a record date of April 30, 1999,
and a payable date of May 24, 1999, and (ii) the repurchase of up to
approximately 8.7 million shares of outstanding AmSouth common stock
(approximately 13.1 million shares on a post-split basis) over a two-year
period.
22
<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.
/s/ C. Dowd Ritter
May 12, 1999 By: _________________________________
C. Dowd Ritter
Chairman of the Board, President and
Chief Executive Officer
May 12, 1999 /s/ Robert R. Windelspecht
By: _________________________________
Robert R. Windelspecht
Executive Vice President and
Controller
23
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference.
3-a Restated Certificate of Incorporation of AmSouth Bancorporation
3-b By-Laws of AmSouth Bancorporation (1)
15 Letter Re: Unaudited Interim Financial Information
27 Financial Data Schedule
NOTES TO EXHIBITS
(1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended June 30, 1997, incorporated herein by reference.
24
<PAGE>
Exhibit 3-a
AmSouth Bancorporation
Restated Certificate of Incorporation
Section I: Name
The name of the corporation is AmSouth Bancorporation.
Section II: Registered Office and Agent
The address of its registered office in the State of Delaware is
100 West 10th Street, in the City of Wilmington, County of
Newcastle. The name of its registered agent at such address is The
Corporation Trust Company.
Section III: Purposes
The purposes of the corporation are to engage in any lawful acts or
activities for which corporations may be organized under the
general corporation law of Delaware.
Section IV: Capital Stock
(a) The total number of shares of all classes of capital stock
which the corporation shall have authority to issue is three
hundred and fifty-two million (352,000,000), of which three
hundred and fifty million (350,000,000) shares of the par
value of $1.00 per share are to be of a class designated
"Common Stock," and two million (2,000,000) shares without par
value are to be of a class designated "Preferred Stock." The
Preferred Stock may be issued from time to time as a class
without series, or if so determined by the Board of Directors,
either in whole or in part in one (1) or
<PAGE>
more series. There is hereby expressly granted to and vested
in the Board of Directors authority to fix and determine by
resolution the voting powers, full or limited, or no voting
powers, and such designations, preferences and relative,
participating, optional or other special rights, if any, and
the qualifications, limitations or restrictions thereof, if
any, including specifically, but not limited to, the dividend
rights, conversion rights, redemption rights, and liquidation
preferences, if any, of any wholly unissued series of
Preferred Stock (or of the entire class of Preferred Stock if
none of such shares have been issued), the number of shares
constituting any such series and the terms and conditions of
the issue thereof. A certificate setting forth a copy of each
such resolution or resolutions and the number of shares of
stock of each such class or series may be executed,
acknowledged, filed, and recorded in accordance with Delaware
General Corporation Law. Unless otherwise provided in any such
resolution or resolutions, the number of shares of stock of
any such class or series so set forth in such resolution or
resolutions may thereafter be increased or decreased (but not
below the number of shares thereof then outstanding), by a
certificate likewise executed, acknowledged, filed, and
recorded setting forth a statement that a specified increase
or decrease therein had been authorized and directed by a
resolution or resolutions likewise adopted by the Board of
Directors. In case the number of such shares shall be
decreased, the number of shares so specified in the
certificate shall resume the status which they had prior to
the adoption of the first resolution or resolutions.
(b) The number of authorized shares of any class, including
Preferred Stock, may be increased or decreased by the
affirmative vote of the holders of a majority of the
outstanding shares of the corporation entitled to vote without
the separate vote of holders of Preferred Stock voting as a
class.
Section V: By-Laws
The By-Laws may be made, altered, amended or repealed by the Board
of Directors. The books of the corporation (subject to the provisions
of the laws of the State of Delaware) may be kept outside of the
State of Delaware at such places as from time to time may be
designated by the Board of Directors.
<PAGE>
Section VI: Indemnification of Directors, Officers, Employees and Agents
(1) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative,
including appeals (other than an action by or in the right of
the corporation), by reason of the fact that he or she is or
was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
(2) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, partner, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all circumstances of the case, such
person
<PAGE>
is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall
deem proper.
(3) To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
paragraphs (1) and (2) of this Section VI, or in defense of any
claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith, not-
withstanding that he or she has not been successful on any
other claim, issue or matter in any such action, suit or
proceeding.
(4) Any indemnification under paragraphs (1), (2), and (3) of this
Section VI (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in
those paragraphs. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or (c) by
the stockholders.
(5) Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by
the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he
or she is not entitled to be indemnified by the corporation as
authorized in this Section VI.
(6) The indemnification and advancement of expenses provided by, or
granted pursuant to, other paragraphs of this Section VI shall
not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be
entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity
while holding such office.
(7) For purposes of this Section VI, references to the
"corporation" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving
corporation so that any
<PAGE>
person who is or was a director, officer, employee or agent of
such a constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer,
partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Section
VI with respect to the resulting or surviving corporation as
he or she would if he or she had served the resulting or
surviving corporation in the same capacity.
(8) By action of its Board of Directors, notwithstanding any
interest of the Directors in the action, the corporation may
purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the
corporation as a director, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity or arising
out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her
against such liability under the provisions of this Section VI
or of the General Corporation Law of the State of Delaware.
(9) For purposes of this Section VI, references to the "other
enterprises" shall include employee benefit plans; references
to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to
"serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of
the corporation" as referred to in this Section VI.
(10) The indemnification and advancements of expense provided by, or
granted pursuant to, this Section VI shall, unless otherwise
provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
<PAGE>
Section VII: Stockholders Meetings
(a) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the corporation
may be taken without such a meeting, and the power of the
stockholders to consent in writing, without such a meeting, to
the taking of any action is specifically denied; provided,
however, that nothing contained in this Certificate of
Incorporation shall be deemed to restrict the power of the
Board of Directors or of any of its committees to take any
action required or permitted to be taken by them without a
meeting, in accordance with applicable provisions of law.
(b) Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide, but special
meetings of the stockholders for any purpose or purposes may
be called, upon not less than 10 days' advance written notice,
by resolution of the Board of Directors or by the chief
executive officer of the corporation or, upon not less than 60
days' advance written notice, by holders of Common Stock
entitled to be voted for directors in an amount not less than
a majority of the number of shares of Common Stock of the
corporation issued, outstanding and entitled to vote.
(c) Elections of directors need not be by written ballot unless
the by-laws so provide.
(d) Notwithstanding any provision of the Certificate of
Incorporation or the by-laws of the corporation (and
notwithstanding the fact that a lesser percentage may be
specified by law, this certificate of incorporation or the by-
laws of the corporation), the affirmative vote of the holders
of 67 percent of the outstanding shares of capital stock of
the corporation entitled to vote for the election of directors
shall be required to amend or repeal any provision of this
Section VII or to adopt any provision inconsistent with this
Section VII.
Section VIII: Certain Business Combinations
(1) Any other provision of this certificate of incorporation to
the contrary notwithstanding, the affirmative vote of the
holders of not less than 80 percent of the outstanding shares
of capital stock of the corporation entitled to vote generally
(the "voting stock") and the affirmative vote of the holders
of not less than 67 percent of the voting stock held by
<PAGE>
stockholders other than the Interested Stockholder (as
hereinafter defined) involved in the Business Combination (as
hereinafter defined) shall be required for the approval or
authorization of any Business Combination, or of any series of
related transactions which, if taken together, would constitute
a Business Combination, with any Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage
may be specified, by law or in any agreement with any national
securities exchange or otherwise. In addition, in any Business
Combination of a Subsidiary (as hereinafter defined) with an
Interested Stockholder the voting provisions contained
hereinabove shall apply in order for the corporation to cause
the Subsidiary to approve or authorize such Business
Combination.
(2) The provisions of paragraph (1) of this Section VIII shall not
be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote
as is required by law and any other provision of this
certificate of incorporation, if all of the conditions
specified in either of the following subparagraphs (a) or (b)
are met:
(a) A Majority of the Continuing Directors (as hereinafter
defined) of the corporation (i) has expressly approved in
advance the acquisition of voting stock of the corporation
that caused the Interested Stockholder involved in the
Business Combination to become an Interested Stockholder,
or (ii) has approved the Business Combination; or
(b) All of the following conditions shall have been met:
(i) The aggregate amount of (I) cash and (II) the Fair
Market Value (as hereinafter defined), as of the
date of the consummation of the Business
Combination, of consideration other than cash to be
received per share by holders of Common Stock of the
corporation in such Business Combination shall be at
least equal to the highest amount determined under
the following subclauses (A) through (G), inclusive
(taking into account all recapitalizations, stock
dividends, stock splits, and like distributions):
(A) The highest per share price (including any
brokerage commissions, transfer taxes, and
soliciting dealers' fees) ("Purchase Price")
paid by the Interested Stockholder for any
share of Common Stock acquired by it (whether
or not an Interested Stockholder at the time of
acquisition)
<PAGE>
within the two-year period immediately prior to
the first public announcement of the proposal
of the Business Combination (the "Announcement
Date");
(B) The highest Purchase Price paid by the
Interested Stockholder in the transaction or
transactions by which it became an Interested
Stockholder;
(C) The highest Purchase Price paid by the
Interested Stockholder on the Announcement Date;
(D) The highest Purchase Price paid by the
Interested Stockholder during the period from
the Announcement Date through the date of
consummation of the Business Combination;
(E) The highest Fair Market Value per share of the
Common Stock of the corporation on the
Announcement Date;
(F) The highest Fair Market Value per share of the
Common Stock of the corporation on the date on
which the Interested Stockholder first became an
Interested Stockholder; or
(G) The book value per share of the Common Stock of
the corporation on the last day of the month
coinciding with or immediately prior to the
Announcement Date.
As used above in this paragraph (2)(b)(i), the term
"consideration other than cash to be received" shall
include, without limitation, in the event of a
Business Combination in which the corporation is the
surviving corporation, Common Stock or other voting
stock of the corporation retained by its stockholders
of record immediately prior to the consummation of
the Business Combination who are not the Interested
Stockholder involved in the Business Combination. In
addition, assignments or transfers of Common Stock of
the corporation between Associates or Affiliates (as
those terms are hereinafter defined) prior to a
Business Combination involving one of them as an
Interested Stockholder shall not be construed to
reduce the highest Purchase Price paid by the
Interested Stockholder involved in the Business
Combination in
<PAGE>
acquiring any holdings of the corporation's Common
Stock.
(ii) The consideration to be received by holders of
outstanding Common Stock of the corporation shall be
in cash or in the same form as the Interested
Stockholder has previously paid for shares of such
Common Stock. If the Interested Stockholder has paid
for shares of Common Stock with varying forms of
consideration, the form of consideration for such
Common Stock shall be either cash or the form used to
acquire the largest number of shares of Common Stock
previously acquired by it.
(iii) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation
of such Business Combination, except as approved by a
Majority of the Continuing Directors, there shall
have been (A) no reduction in the annual rate of
dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common
Stock), and (B) an increase in such annual rate of
dividends as necessary to reflect any
reclassification, reorganization, or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock.
(iv) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the corporation or any of its
Subsidiaries, whether in anticipation of or in
connection with such Business Combination or
otherwise.
(v) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall be mailed to holders of the Common
Stock of the corporation at least 30 days prior to
the meeting at which the Business Combination will be
voted upon (whether or not such proxy or
<PAGE>
information statement is required to be mailed
pursuant to such Act or subsequent provisions). The
proxy or information statement shall contain on the
cover page thereof a statement as to how members of
the Board of Directors of the corporation voted on
the proposal in question and any recommendation as to
the advisability or inadvisability of the Business
Combination that any director wishes to make, and
shall also contain the opinion of a reputable
national investment banking firm as to the fairness
of the terms of the Business Combination, from the
point of view of the holders of Common Stock other
than the Interested Stockholder (such investment
banking firm to be engaged solely on behalf of the
said holders, to be paid a reasonable fee for its
services by the corporation upon receipt of such
opinion and to be an investment banking firm which
has not previously been associated with the
Interested Stockholder).
(3) For purposes of this Section VIII:
(a) "Affiliate", used to indicate a relationship with any
person, means a person that directly, or through one or
more intermediaries, controls, or is controlled by, or is
under common control with, the person specified. The term
shall be construed in accordance with Rule 12b-2 under the
Securities Exchange Act of 1934 and interpretations thereof
as of February 16, 1984 ("Rule 12b-2").
(b) "Associate", used to indicate a relationship with any
person, means (1) any firm, corporation or other entity
(other than the corporation or any Subsidiary) of which
such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any
class of equity securities, (2) any trust or other estate
in which such person has a substantial beneficial interest
or as to which such person serves as trustee or in a
similar fiduciary capacity, and (3) any relative or spouse
of such person, or any relative of such spouse, who has the
same home as such person. The term shall be construed in
accordance with Rule 12b-2.
(c) "Beneficial Owner" means, as applied to Common Stock of the
corporation, that the person is deemed to "beneficially
own", as defined on February 16, 1984, in Rule 13d-3 under
the Securities Exchange Act of 1934, all shares:
<PAGE>
(i) which such person or any of his, her, or its
Affiliates or Associates beneficially owns, directly
or indirectly; or
(ii) which such person or any of his, her, or its
Affiliates or Associates has, directly or indirectly,
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement, or
understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of
his, her or its Affiliates or Associates has any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing or
any shares of Common Stock.
(d) "Business Combination" means (i) any Reorganization (as
hereinafter defined) of the corporation or a Subsidiary with
or into an Interested Stockholder, or any other person
(whether or not itself an Interested Stockholder) which is,
or after such Reorganization would be, an Affiliate of an
Interested Stockholder, (ii) any sale, lease, exchange,
transfer or other disposition, including without limitation
a pledge, mortgage or any other security device, (in one
transaction or a series of transactions) of all or any
Substantial Part (as hereinafter defined) of the assets
either of the corporation or of a Subsidiary, or both, to an
Interested Stockholder or any Affiliate of any Interested
Stockholder, (iii) any Reorganization of an Interested
Stockholder or any other person (whether or not itself an
Interested Stockholder) which is, or after such
Reorganization would be, an Affiliate of an Interested
Stockholder, with or into the corporation or a Subsidiary,
(iv) any sale, lease, exchange, transfer, or other
disposition of all or any Substantial Part of the assets of
an Interested Stockholder or any Affiliate of any Interested
Stockholder to the corporation or a Subsidiary, (v) the
issuance of any securities of the corporation or a
Subsidiary to an Interested Stockholder or any Affiliate of
any Interested Stockholder except if such issuance were a
stock split, stock dividend or other distribution pro rata
to all holders of the same class of voting stock, (vi) any
reclassification of securities (including
<PAGE>
a reverse stock split) or any other recaptialization that
would have the effect of increasing the voting power of an
Interested Stockholder or any Affiliate of any Interested
Stockholder, (vii) the adoption of any plan or proposal for
the liquidation or dissolution of the corporation or any
Subsidiary proposed by or on behalf of an Interested
Stockholder and (viii) any agreement, contract, plan or
other arrangement providing for any of the transactions
described in this definition of Business Combination.
(e) "Continuing Director" means a director of the corporation
at the time of the vote or determination provided for in
paragraphs (2)(a), (3)(f) or (3)(1), who was a member of
the Board of Directors of the corporation immediately prior
to the earliest time that (i) any Interested Stockholder
involved in a Business Combination or (ii) any Interested
Stockholder who is (A) a Predecessor (as hereinafter
defined) to such Interested Stockholder or (B) an assignor
of beneficial ownership in the corporation to such an
Interested Stockholder or to its Predecessor or
Predecessors, became an Interested Stockholder.
(f) "Fair Market Value" means (i) in the case of stock, the
closing sales price of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on the Composite Tape on the
New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or if such stock is not
listed on any such exchange, the closing sales price or the
average of the bid and asked prices reported with respect to
a share of such stock on the National Association of
Securities Dealers, Inc. Automatic Quotation System or any
system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of
such stock as determined by a Majority (as hereinafter
defined) of the Continuing Directors; and (ii) in the case
of property other than cash or stock, the fair market value
of such property on the date in question as determined by a
Majority of the Continuing Directors.
(g) "Interested Stockholder" means any person other than (i)
the corporation, (ii) any Subsidiary (unless the stock
thereof not owned by the corporation is owned by an
Interested Stockholder), (iii) any employee benefit plan of
the
<PAGE>
corporation or of any Subsidiary or the trustees or
fiduciaries of such a plan acting in that capacity, or (iv)
either the corporation or any Subsidiary acting as trustee
or in a similar fiduciary capacity who or which:
(i) is the Beneficial Owner, directly or indirectly, of
more than 10% of the then outstanding Common Stock; or
(ii) is an Affiliate of the corporation and at any time
within the two-year period immediately prior to
the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the then
outstanding Common Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Common Stock which were at any time within
the two-year period immediately prior to the date
in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series
of transactions not involving a public offering within
the meaning of the Securities Act of 1933.
For the purposes of determining whether a person is an
Interested Stockholder, the number of shares of Common Stock
deemed to be outstanding shall include shares deemed owned
through application of paragraph (3)(c)(ii)(A) but shall not
include any other shares of Common Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or
otherwise.
(h) "Majority", as applied to Continuing Directors, means that
number which constitutes a majority of the members of the
Board of Directors of the corporation immediately prior to
the earliest time that (i) any Interested Stockholder
involved in the Business Combination or (ii) any
Interested Stockholder who is (A) a Predecessor to such
Interested Stockholder or (B) an assignor of beneficial
ownership in the corporation to such an Interested
Stockholder or to its Predecessor or Predecessors, became
an Interested Stockholder.
(i) the term "person" means any individual, corporation,
partnership, association, trust or other entity.
(j) "Predecessor" means each person or other entity (i) to
which the subject Interested Stockholder is a successor by
merger,
<PAGE>
consolidation, sale and purchase of substantially all of
the assets thereof, or other reorganization or (ii) which
assigned or transferred beneficial ownership of voting
stock of the corporation to the subject Interested
Stockholder, directly or indirectly, whether through
successive transactions or otherwise.
(k) "Reorganization" means a merger, consolidation, plan of
exchange, sale of all or substantially all of the assets
or other form of corporate reorganization pursuant to
which shares of voting stock, or other securities of the
subject corporation, are to be converted or exchanged into
cash or other property, securities or other consideration.
(l) "Substantial Part" means more than 20 percent of the fair
market value of the total assets of the corporation or
person in question, as determined in good faith by a
Majority of the Continuing Directors, as of the end of its
most recent fiscal year ending prior to the time the
determination is being made.
(m) "Subsidiary" means any corporation, national banking
association or other entity of which a majority of any
class of equity security is owned, directly or indirectly,
by the corporation unless owned solely as trustee or in
some other similar fiduciary capacity.
(4) Nothing contained in this Section VIII shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
or duty of fairness imposed by law or to adversely affect the
rights of stockholders who are not Interested Stockholders under
applicable principles of law and equity, including without
limitation, those rights under the laws of the states of domicile
of such stockholders, federal securities or other applicable
laws, or the laws and regulations applicable to any banking
subsidiaries of the corporation.
(5) Notwithstanding any provisions of this certificate of
incorporation of the by-laws of the corporation (and
notwithstanding the fact that a lesser percentage may be
specified by law, this certificate of incorporation or the by-
laws of the corporation), the affirmative vote of the holders of
not less than 80 percent of the outstanding shares of the voting
stock and the affirmative vote of the holders of not less than 67
percent of the voting stock held by stockholders other than an
Interested Stockholder shall be required to amend or repeal any
provision of this Section VIII or to adopt any provision
inconsistent with this Section VIII.
<PAGE>
Section IX: Reservation of Right to Amend
Except as may be otherwise provided in Sections VII, VIII or XI
hereof, the corporation reserves the right to amend, alter, change
or repeal any provision contained in this Restated Certificate of
Incorporation in the manner now or hereinafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
Section X: Limitation of Director Liability
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper
personal benefit.
Section XI: Board of Directors
(1) Commencing with the election of directors at the annual meeting
of shareholders in 1988, the Directors shall be divided, with
respect to the terms for which they severally hold office, into
three classes (I, II and III) and, as determined by the
Board of Directors, each such class, as nearly as possible,
shall have the same number of directors. At the annual meeting
of shareholders in 1988, Directors of Class I shall be elected
to hold officer for a term expiring at the 1989 annual meeting
of shareholders; Directors of Class II shall be elected to hold
office for a term expiring at the 1990 annual meeting of
shareholders; and Directors of Class III shall be elected to
hold office for a term expiring at the 1991 annual meeting of
shareholders. At each annual meeting of the shareholders held
after 1988, the directors elected to succeed those whose terms
have expired at such annual meeting, other than those directors
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 then be identified as being of the same
class as the directors they succeed and shall be elected by the
shareholders for a term expiring at the third succeeding annual
meeting after such election. In all cases, directors shall hold
office until their respective successors are elected and
<PAGE>
qualified. No decrease in the number of directors shall shorten
the term of any incumbent Director.
(2) Subject to the provisions of paragraph (5) of this Section XI
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 additional directors under
specified circumstances by a separate class vote, the number of
directors of the corporation shall be fixed from time to time by
or pursuant to the by-laws of the corporation.
(3) Subject to the provisions of paragraph (5) of this Section XI:
(a) newly created directorships resulting from an increase in
the number of directors shall be filled by the affirmative
vote of the majority of the 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, although less than a quorum or, in the event that
there is only one such director, by such sole remaining
director. The Board shall specify the class for which a
director elected to fill a newly created directorship shall
serve, and a director so elected shall hold office for the
full term of the class of directors in which the new
directorship was created and until his successor shall be
elected and qualified;
(b) vacancies resulting from resignation, retirement,
disqualification, removal from office or other cause may be
filled by the affirmative vote of a majority of the directors
then remaining 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, although less than a
quorum or, in the event that there is only one such director,
by such sole remaining director. A director elected to fill
such a vacancy shall hold office for the full term of the
class in which the vacancy occurred and until his successor
shall be elected and qualified.
(4) Notwithstanding any other provisions of this Restated Certificate
of Incorporation or the by-laws of the corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law), any director or the entire Board of Directors
of the corporation may be removed at any time, but only for cause
and only by the affirmative vote of the holders of 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;
provided,
<PAGE>
however, that this paragraph shall not apply to directors 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.
(5) In the event that the holders of any class or series of Preferred
Stock, as defined in Section IV of the Restated Certificate of
Incorporation, are entitled, under specified circumstances by a
separate class vote, to elect directors pursuant to the terms of
such class or series, then the provisions of such class or series
of Preferred Stock with respect to such rights of election shall
apply to the election of such directors. The number of directors
that may be elected by the holders of any class or series of such
Preferred Stock shall be in addition to the number fixed by or
pursuant to Paragraph (2) of this Section XI. Except as otherwise
expressly provided in the terms of such class or series of such
Preferred Stock, the number of directors that may be so elected
by the holders of any such class or series of such Preferred
Stock shall be elected for terms expiring at the next annual
meeting of shareholders and without regard to the classification
of the remaining members of the Board of Directors, and vacancies
among directors so elected under specified circumstances by a
separate class vote of any such class or series of such Preferred
Stock shall be filled by the affirmative vote of a majority of
the remaining directors elected by such class or series, or, in
the event that there is only one such director, by such sole
remaining director, or, if there are no such remaining directors,
by the holders of such class or series in the same manner in
which such class or series initially elected directors.
If at any meeting for the election of directors, more than one class
of stock, voting separately as classes, shall be entitled to elect
one or more directors and there shall be a quorum of only one such
class of stock, that class of stock shall be entitled to elect its
quota of directors notwithstanding the absence of a quorum of the
other class or classes of stock.
(6) Notwithstanding any other provisions of this Restated Certificate
of Incorporation or the by-laws of the corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law), the affirmative vote of the holders of 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 to alter, amend or repeal any provisions
within this Section or adopt any provisions in this Restated
Certificate of Incorporation inconsistent with this Section.
<PAGE>
EXHIBIT 15
Exhibit 15--Letter Re: Unaudited Interim Financial Information
Board of Directors
AmSouth Bancorporation
We are aware of the incorporation by reference in the following Registration
Statements and in their related Prospectuses, of our report dated May 10, 1999
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, 1999:
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. 33-2927 (as amended) pertaining to the Employee Stock Purchase
Plan;
Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common
Stock Purchase 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;
Form S-3 No. 333-44263 pertaining to the AmSouth Bancorporation Shelf
Registration Statement; and
Form S-8 No. 333-76283 pertaining to the Stock Option Plan for Outside
Directors.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Sections 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG LLP
May 5, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
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, 5 and
6 of Item 2 of Part I of the AmSouth Bancorporation Form 10-Q for the quarterly
period ended March 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 573,898
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,250
<TRADING-ASSETS> 7,310
<INVESTMENTS-HELD-FOR-SALE> 3,086,960
<INVESTMENTS-CARRYING> 2,025,004
<INVESTMENTS-MARKET> 2,033,070
<LOANS> 13,193,722
<ALLOWANCE> 176,595
<TOTAL-ASSETS> 20,083,771
<DEPOSITS> 12,944,984
<SHORT-TERM> 1,793,712
<LIABILITIES-OTHER> 402,847
<LONG-TERM> 3,514,000
0
0
<COMMON> 202,423
<OTHER-SE> 1,225,805
<TOTAL-LIABILITIES-AND-EQUITY> 20,083,771
<INTEREST-LOAN> 270,785
<INTEREST-INVEST> 82,556
<INTEREST-OTHER> 1,754
<INTEREST-TOTAL> 355,095
<INTEREST-DEPOSIT> 110,577
<INTEREST-EXPENSE> 173,983
<INTEREST-INCOME-NET> 181,112
<LOAN-LOSSES> 9,500
<SECURITIES-GAINS> 3,803
<EXPENSE-OTHER> 151,981
<INCOME-PRETAX> 108,692
<INCOME-PRE-EXTRAORDINARY> 108,692
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,331
<EPS-PRIMARY> .40
<EPS-DILUTED> .39
<YIELD-ACTUAL> 4.08
<LOANS-NON> 66,580
<LOANS-PAST> 26,077
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 176,075
<CHARGE-OFFS> 13,939
<RECOVERIES> 4,959
<ALLOWANCE-CLOSE> 176,595
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
