<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2000 Commission file number 1-7476
AmSouth Bancorporation
(Exact Name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 63-0591257
(State or other jurisdiction of
Incorporation or Organization) (I.R.S. Employer Identification No.)
AmSouth--Sonat Tower
1900 Fifth Avenue North
Birmingham, Alabama 35203
(Address of principal executive offices) (Zip Code)
</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, 2000, AmSouth Bancorporation had 392,862,566 shares of common
stock outstanding.
----------------------------------------------------------------------------
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<PAGE>
AMSOUTH BANCORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<C> <C> <S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition--March 31,
2000, December 31, 1999, and March 31, 1999.... 3
Consolidated Statement of Earnings--Three months
ended March 31, 2000 and 1999.................. 4
Consolidated Statement of Shareholders' Equity--
Three months ended March 31, 2000.............. 5
Consolidated Statement of Cash Flows--Three months
ended March 31, 2000 and 1999.................. 6
Notes to Consolidated Financial Statements........ 7
Independent Accountants' Review Report............ 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 12
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 effect of changes in
interest rates on net interest income, the adequacy of the allowance for loan
losses, the effect of legal proceedings on AmSouth's financial condition and
results of operations, 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. The factors related to the
effect of changes in interest rates on net interest income are discussed on
paqe 13. 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, and the
performance of the stock and bond markets. With regard to the effect of legal
proceedings, various uncertainties are discussed in "Part II, Item 1. Legal
Proceedings." Moreover, the outcome of litigation is inherently uncertain and
depends on judicial interpretations of law and the findings of judges and
juries.
2
<PAGE>
PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31 March 31
2000 1999 1999
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks................. $ 1,541,259 $ 1,563,335 $ 1,452,441
Time deposits in other banks............ -0- 2,474 4,655
----------- ----------- -----------
Total cash and cash equivalents........ 1,541,259 1,565,809 1,457,096
Federal funds sold and securities
purchased under agreements to resell... 57,843 132,683 119,931
Trading securities...................... 31,923 51,972 63,416
Available-for-sale securities........... 5,974,961 5,964,703 7,524,835
Held-to-maturity securities (market
value of $6,756,448, $6,849,344 and
$4,388,875, respectively).............. 6,969,210 7,050,562 4,381,355
Loans held for sale..................... 114,891 172,941 151,616
Other interest-earning assets........... 29,096 17,864 35,509
Loans................................... 26,912,786 26,436,359 24,911,804
Less: Allowance for loan losses......... 363,492 363,476 366,243
Unearned income........................ 295,315 169,600 227,286
----------- ----------- -----------
Net loans............................ 26,253,979 25,903,283 24,318,275
Premises and equipment, net............. 681,999 678,442 781,840
Customers' acceptance liability......... 6,180 8,617 18,604
Accrued interest receivable and other
assets................................. 2,019,124 1,859,678 1,553,327
----------- ----------- -----------
$43,680,465 $43,406,554 $40,405,804
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing
liabilities:
Deposits:
Noninterest-bearing demand............. $ 5,030,443 $ 4,739,077 $ 4,894,015
Interest-bearing demand................ 9,090,952 9,227,907 9,498,705
Savings................................ 2,372,458 2,349,793 2,067,486
Time................................... 7,666,950 7,574,119 7,851,340
Foreign time........................... 1,440,749 1,293,522 272,463
Certificates of deposit of $100,000 or
more.................................. 2,742,763 2,728,025 2,774,033
----------- ----------- -----------
Total deposits....................... 28,344,315 27,912,443 27,358,042
Federal funds purchased and securities
sold under agreements to repurchase... 3,515,886 4,095,747 3,806,369
Other borrowed funds................... 1,841,519 2,135,720 555,199
Long-term Federal Home Loan Bank
advances.............................. 5,417,765 4,612,686 3,650,701
Other long-term debt................... 980,913 990,800 1,091,170
----------- ----------- -----------
Total deposits and interest-bearing
liabilities......................... 40,100,398 39,747,396 36,461,481
Acceptances outstanding................. 6,180 8,617 18,604
Accrued expenses and other liabilities.. 564,743 691,336 679,618
----------- ----------- -----------
Total liabilities.................... 40,671,321 40,447,349 37,159,703
----------- ----------- -----------
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--750,000,000 shares;
Issued--416,948,890, 416,948,890 and
420,753,294 shares, respectively...... 416,949 416,949 420,753
Capital surplus........................ 690,954 690,820 778,523
Retained earnings...................... 2,533,827 2,482,477 2,495,069
Cost of common stock in treasury--
24,667,405, 25,574,778 and 25,891,161
shares, respectively.................. (355,574) (376,354) (393,887)
Deferred compensation on restricted
stock................................. (5,308) (5,838) (48,314)
Accumulated other comprehensive loss... (271,704) (248,849) (6,043)
----------- ----------- -----------
Total shareholders' equity........... 3,009,144 2,959,205 3,246,101
----------- ----------- -----------
$43,680,465 $43,406,554 $40,405,804
=========== =========== ===========
</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
-------------------
2000 1999
--------- ---------
(In thousands
except per share
data)
<S> <C> <C>
INTEREST INCOME
Loans..................................................... $ 562,307 $ 505,071
Available-for-sale securities............................. 100,615 115,343
Held-to-maturity securities............................... 115,055 65,236
Trading securities........................................ 743 1,038
Loans held for sale....................................... 2,604 3,883
Federal funds sold and securities purchased under
agreements to resell .................................... 917 1,807
Other interest-earning assets............................. 457 1,584
--------- ---------
Total interest income.................................... 782,698 693,962
--------- ---------
INTEREST EXPENSE
Interest-bearing demand deposits.......................... 71,725 66,260
Savings deposits.......................................... 16,589 10,926
Time deposits............................................. 101,244 104,159
Foreign time deposits..................................... 17,757 3,471
Certificates of deposit of $100,000 or more............... 38,260 34,559
Federal funds purchased and securities sold under
agreements to repurchase................................. 51,454 40,090
Other borrowed funds...................................... 26,611 4,195
Long-term Federal Home Loan Bank advances................. 73,956 45,381
Other long-term debt...................................... 16,529 16,132
--------- ---------
Total interest expense................................... 414,125 325,173
--------- ---------
NET INTEREST INCOME....................................... 368,573 368,789
Provision for loan losses................................. 25,400 18,734
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES....... 343,173 350,055
--------- ---------
NONINTEREST REVENUES
Consumer investment services income....................... 64,627 51,863
Service charges on deposit accounts....................... 56,853 57,553
Trust income.............................................. 27,485 26,980
Bank owned life insurance policies........................ 12,218 4,142
Interchange income........................................ 12,015 9,714
Mortgage income........................................... 10,067 12,576
Portfolio income.......................................... 4,129 8,115
Other noninterest revenues................................ 32,643 31,822
--------- ---------
Total noninterest revenues............................... 220,037 202,765
--------- ---------
NONINTEREST EXPENSES
Salaries and employee benefits............................ 150,583 155,158
Equipment expense......................................... 32,180 31,656
Subscribers' commissions.................................. 30,594 24,295
Net occupancy expense..................................... 29,949 26,651
Postage and office supplies............................... 12,311 13,319
Marketing expense......................................... 11,993 10,766
Amortization of intangibles............................... 9,957 10,109
Communications expense.................................... 9,560 9,917
Merger-related costs...................................... 21,954 3,274
Other noninterest expenses................................ 46,276 55,599
--------- ---------
Total noninterest expenses............................... 355,357 340,744
--------- ---------
INCOME BEFORE INCOME TAXES................................ 207,853 212,076
Income taxes.............................................. 68,916 75,280
--------- ---------
NET INCOME............................................... $ 138,937 $ 136,796
========= =========
Average common shares outstanding......................... 391,596 391,959
Earnings per common share................................. $ 0.35 $ 0.35
Diluted average common shares outstanding................. 394,502 398,174
Diluted earnings per common share......................... $ 0.35 $ 0.34
Cash dividends per common share........................... 0.20 0.17
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deferred
Compensation Accumulated
on Other
Common Capital Retained Treasury Restricted Comprehensive
Stock Surplus Earnings Stock Stock Loss Total
-------- -------- ---------- --------- ------------ ------------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
2000................... $416,949 $690,820 $2,482,477 $(376,354) $ (5,838) $ (248,849) $2,959,205
Comprehensive income:
Net income............. -0- -0- 138,937 -0- -0- -0- 138,937
Other comprehensive
loss, net of tax:
Unrealized losses on
available-for-sale
securities, net of
reclassification
adjustment............ -0- -0- -0- -0- -0- (22,855) (22,855)
----------
Comprehensive income.... 116,082
Cash dividends declared
($0.20 per common
share)................. -0- -0- (77,760) -0- -0- -0- (77,760)
Common stock
transactions:
Purchase of common
stock................. -0- 6 -0- (5,828) -0- -0- (5,822)
Benefit stock plans.... -0- 128 (9,374) 23,365 530 -0- 14,649
Dividend reinvestment
plan.................. -0- -0- (453) 3,243 -0- -0- 2,790
-------- -------- ---------- --------- -------- ---------- ----------
BALANCE AT MARCH 31,
2000................... $416,949 $690,954 $2,533,827 $(355,574) $ (5,308) $ (271,704) $3,009,144
======== ======== ========== ========= ======== ========== ==========
Disclosure of
reclassification
amount:
Unrealized holding
losses on available-
for-sale securities
arising during the
period................. $ (20,817)
Less: Reclassification
adjustment for gains
realized in net
income................. 2,038
----------
Net unrealized losses on
available-for-sale
securities, net of
tax.................... $ (22,855)
==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended March 31
------------------------
2000 1999
----------- -----------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................... $ 138,937 $ 136,796
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses.......................... 25,400 18,734
Depreciation and amortization of premises and
equipment......................................... 21,887 23,306
Amortization of premiums and discounts on held-to-
maturity securities and available-for-sale
securities........................................ 515 (1,940)
Noncash portion of merger-related costs............ 3,941 1,328
Net gain on branch sale............................ (4,983) -0-
Net decrease in loans held for sale................ 58,050 206,045
Net decrease (increase) in trading securities...... 19,537 (15,598)
Net gains on sales of available-for-sale
securities........................................ (3,266) (6,140)
Net increase in accrued interest receivable and
other assets...................................... (159,110) (22,327)
Net decrease in accrued expenses and other
liabilities....................................... (75,805) (87,207)
Provision for deferred income taxes................ 68,916 58,276
Amortization of intangible assets.................. 9,924 10,097
Other operating activities, net.................... 11,706 985
----------- -----------
Net cash provided by operating activities......... 115,649 322,355
----------- -----------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of
available-for-sale securities....................... 142,464 846,485
Proceeds from sales of available-for-sale
securities.......................................... 139,718 720,630
Purchases of available-for-sale securities........... (355,003) (1,589,256)
Proceeds from maturities, prepayments and calls of
held-to-maturity securities......................... 239,242 503,611
Purchases of held-to-maturity securities............. (159,177) (1,043,243)
Net decrease in federal funds sold and securities
purchased under agreements to resell................ 74,840 237,979
Net increase in other interest-earning assets........ (11,232) (6,233)
Net increase in loans................................ (412,113) (277,353)
Net purchases of premises and equipment.............. (25,579) (32,384)
Net cash from sales of branches, business operations,
subsidiaries and other assets....................... (28,240) (301)
----------- -----------
Net cash used by investing activities............. (395,080) (640,065)
----------- -----------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................. 473,466 (1,120,190)
Net (decrease) increase in federal funds purchased
and securities sold under agreements to repurchase.. (579,861) 336,107
Net (decrease) increase in other borrowed funds...... (294,201) 206,962
Issuance of long-term Federal Home Loan Bank advances
and other long-term debt............................ 2,625,000 424,231
Payments for maturing long-term debt................. (1,828,266) (77,881)
Cash dividends paid.................................. (151,612) (58,638)
Proceeds from employee stock plans and dividend
reinvestment plan................................... 16,183 11,679
Purchase of common stock............................. (5,828) (43,041)
----------- -----------
Net cash provided (used) by financing activities.. 254,881 (320,771)
----------- -----------
Decrease in cash and cash equivalents................ (24,550) (638,481)
Cash and cash equivalents at beginning of period..... 1,565,809 2,095,577
----------- -----------
Cash and cash equivalents at end of period........... $ 1,541,259 $ 1,457,096
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMSOUTH BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended March 31, 2000 and 1999
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 2000
presentation. These reclassifications had no effect on net income. The notes
included herein should be read in conjunction with the notes to consolidated
financial statements included in AmSouth Bancorporation's (AmSouth) 1999
annual report on Form 10-K.
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 was originally
effective for fiscal years beginning after June 15, 1999. In June 1999, FASB
issued Statement of Financial Accounting Standard No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133", which defers the effective date of Statement 133
to fiscal years beginning after June 15, 2000. 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, 2000 and 1999, AmSouth
paid interest of $401,652,000 and $323,963,000, respectively, and income taxes
of $558,000 and $38,336,000, respectively. The difference in tax payments
between years was due to a difference in the timing of actual payments and
does not reflect a significant change in the overall tax liability. Noncash
transfers from loans to foreclosed properties for the three months ended March
31, 2000 and 1999, were $10,104,000 and $5,019,000, respectively, and noncash
transfers from foreclosed properties to loans were $164,000 and $124,000,
respectively. For the three months ended March 31, 2000, noncash transfers
from loans to available-for-sale securities and to other assets of
approximately $9,450,000 and $229,000, respectively, were made in connection
with the participation of loans to third-party conduits. 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.
Mergers and Acquisitions--On October 1, 1999, AmSouth issued 214.5 million
common shares to acquire First American Corporation (First American). AmSouth
exchanged 1.871 shares of its common stock for each share of First American
common stock. First American was a $22.2 billion asset financial services
holding company headquartered in Nashville, Tennessee, with banking offices in
Tennessee, Mississippi, Louisiana, Arkansas, Virginia, and Kentucky. The
transaction was accounted for as a pooling-of-interests, and, accordingly, the
consolidated financial statements have been restated to include the results of
First American for all periods presented.
7
<PAGE>
Net interest income, noninterest revenues and net income as previously
reported individually by AmSouth and First American and the combined company,
reflecting certain reclassifications to conform to the current presentation,
for the three months ended March 31, 1999, are presented in the table below:
<TABLE>
<CAPTION>
First
AmSouth American Combined
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Net interest income............................... $181,112 $185,800 $350,055
Noninterest revenues.............................. 89,061 116,701 202,765
Net income........................................ 70,331 66,464 136,796
</TABLE>
AmSouth recorded merger and integration costs of $18.0 million and $2.8
million during the three months ended March 31, 2000 and 1999, respectively.
In addition, AmSouth recorded other merger-related costs of $4.0 million and
$.5 million during the three months ended March 31, 2000 and 1999,
respectively. Merger-related costs during the three months ended March 31,
2000, were associated with the acquisition of First American. Merger-related
costs during the three months ended March 31, 1999, were associated with the
1998 acquisitions of Deposit Guaranty Corporation, Pioneer Bancshares, Inc.,
The Middle Tennessee Bank, CSB Financial Corporation and Peoples Bank. The
components of the costs are shown below:
<TABLE>
<CAPTION>
Three
Months
Ended
March 31
----------
2000 1999
----- ----
(In
millions)
<S> <C> <C>
Merger and integration costs:
Severance and personnel-related costs.......................... $ 4.4 $-0-
Investment banking and other transaction costs................. 0.5 -0-
Occupancy and equipment writedowns............................. 3.9 1.3
Systems and operations conversions............................. 9.2 1.5
----- ----
Total merger and integration costs........................... 18.0 2.8
Other merger-related charges..................................... 4.0 0.5
----- ----
Total merger-related costs................................... $22.0 $3.3
===== ====
</TABLE>
The following table presents a summary of activity with respect to
AmSouth's merger-related accrual:
<TABLE>
<CAPTION>
2000 1999
------ ------
(In millions)
<S> <C> <C>
Balance at January 1......................................... $ 70.7 $ 18.8
Provision charged to operating expense....................... -0- -0-
Cash outlays................................................. (40.1) (10.7)
Noncash writedowns and charges............................... -0- -0-
------ ------
Balance at March 31.......................................... $ 30.6 $ 8.1
====== ======
</TABLE>
The liability balance at March 31, 2000 of $30.6 million will be paid in
2000 and represents $28.7 million of severance and personnel-related costs,
$.9 million of occupancy and equipment writedowns and $1.0 million of other
merger-related charges. For the First American merger, approximately 1,400
positions are estimated to be eliminated, of which approximately 400 positions
are expected to be eliminated through attrition. Through March 31, 2000,
approximately 835 associates have entered the severance process.
Comprehensive Income--Total comprehensive income was $116,082,000 and
$118,717,000 for the three months ended March 31, 2000 and 1999, respectively.
Total comprehensive income consists of net income and the change in the
unrealized gains or losses on AmSouth's available-for-sale security portfolio
arising during the period.
8
<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
-----------------
2000 1999
-------- --------
(In thousands
except per share
data)
<S> <C> <C>
Earnings per common share computation:
Numerator:
Net income.............................................. $138,937 $136,796
Denominator:
Average common shares outstanding....................... 391,596 391,959
Earnings per common share................................ $ .35 $ .35
Diluted earnings per common share computation:
Numerator:
Net income.............................................. $138,937 $136,796
Denominator:
Average common shares outstanding....................... 391,596 391,959
Dilutive shares contingently issuable................... 2,906 6,215
-------- --------
Average diluted common shares outstanding............... 394,502 398,174
Diluted earnings per common share......................... $ .35 $ .34
</TABLE>
Shareholders' Equity--On April 20, 2000, AmSouth's Board of Directors
approved the repurchase by AmSouth of up to 35,000,000 shares of its
outstanding common stock over a two year period for the purpose of funding
employee benefit and dividend reinvestment plans and for general corporate
purposes.
9
<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, gains on sales of
fixed assets, merger-related costs, and corporate expenses such as corporate
overhead and goodwill amortization. The following is a summary of the segment
performance for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Consumer Commercial Capital Treasury
Banking Banking Management & Other Total
-------- ---------- ---------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Three Months Ended March 31,
2000
Net interest income from
external customers......... $103,617 $219,062 $ (162) $ 46,056 $368,573
Internal funding............ 128,244 (91,900) 576 (36,920) -0-
-------- -------- ------- -------- --------
Net interest income......... 231,861 127,162 414 9,136 368,573
Noninterest revenues........ 82,118 20,993 93,907 23,019 220,037
-------- -------- ------- -------- --------
Total revenues.............. 313,979 148,155 94,321 32,155 588,610
Provision for loan losses... 21,270 4,114 -0- 16 25,400
Noninterest expenses........ 176,824 44,733 77,576 56,224 355,357
-------- -------- ------- -------- --------
Income (loss) before income
taxes...................... 115,885 99,308 16,745 (24,085) 207,853
Income taxes................ 43,573 37,340 6,296 (18,293) 68,916
-------- -------- ------- -------- --------
Segment net income (loss)... $ 72,312 $ 61,968 $10,449 $ (5,792) $138,937
======== ======== ======= ======== ========
Three Months Ended March 31,
1999
Net interest income from
external customers......... $ 79,932 $203,608 $ (258) $ 85,507 $368,789
Internal funding............ 161,522 (88,698) 527 (73,351) -0-
-------- -------- ------- -------- --------
Net interest income......... 241,454 114,910 269 12,156 368,789
Noninterest revenues........ 82,538 22,404 80,328 17,495 202,765
-------- -------- ------- -------- --------
Total revenues.............. 323,992 137,314 80,597 29,651 571,554
Provision for loan losses... 15,923 10,323 -0- (7,512) 18,734
Noninterest expenses........ 192,798 49,938 63,970 34,038 340,744
-------- -------- ------- -------- --------
Income before income taxes.. 115,271 77,053 16,627 3,125 212,076
Income taxes................ 43,360 28,964 6,242 (3,286) 75,280
-------- -------- ------- -------- --------
Segment net income.......... $ 71,911 $ 48,089 $10,385 $ 6,411 $136,796
======== ======== ======= ======== ========
</TABLE>
10
<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, 2000 and 1999, and the
related consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 2000 and 1999, and the consolidated statement of
shareholders' equity for the three-month period ended March 31, 2000. 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 auditing standards generally accepted in the
United States, 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 accounting principles generally
accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated statement of condition of
AmSouth Bancorporation and subsidiaries as of December 31, 1999, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for the year then ended (not presented herein) and in our report dated
February 11, 2000, 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, 1999 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, 2000
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
On October 1, 1999, AmSouth merged with First American, with AmSouth the
surviving entity (Merger). AmSouth is a bank holding company whose principal
subsidiary is AmSouth Bank. All prior period financial information has been
restated as if the Merger had been in effect for all periods presented.
AmSouth reported diluted operating earnings per common share of $.39 and
$.35 for the three month periods ended March 31, 2000 and 1999, respectively.
Operating earnings, which exclude merger-related costs, totaled $152.4 million
for the three months ended March 31, 2000, a 9.4% increase over operating
earnings of $139.3 million for the same period of 1999. On an operating basis,
AmSouth's year-to-date earnings resulted in an annualized return on average
assets (ROA) of 1.41% and an annualized return on average equity (ROE) of
20.80% for 2000 compared to 1.41% and 17.66%, respectively, for the first
three months of 1999. Operating efficiency, excluding merger-related costs,
for the three months ended March 31, 2000 improved to 56.03% from 58.34% for
the prior year.
Including merger-related costs for both periods, diluted earnings per share
were $.35 and $.34 for the three months ended March 31, 2000 and 1999,
respectively. Year-to-date earnings totaled $138.9 million compared to $136.8
million for the prior year. AmSouth's annualized ROA and ROE were 1.28% and
18.96% for 2000 compared to 1.38% and 17.34%, respectively, for 1999.
Operating efficiency including merger-related costs was 59.71% for 2000
compared to 58.91% for 1999.
Total assets were $43.7 billion at quarter end, compared to 1999's quarter-
end assets of $40.4 billion. The increase was primarily the result of
continued loan growth over the past year. Loans net of unearned income at
March 31, 2000 increased $1.9 billion from March 31, 1999, to $26.6 billion.
On a managed basis, which includes commercial, dealer and residential mortgage
loans participated to third-party conduits, loans increased $3.6 billion to
$30.5 billion at quarter end. The increases in the loan portfolio occurred
primarily in home equity, indirect and commercial real estate loans. Growth in
the investment portfolio also contributed to the increase in total assets. The
investment portfolio at March 31, 2000 increased $1.0 billion from March 31,
1999 to $12.9 billion.
On the funding side of the balance sheet, total deposits at March 31, 2000
increased $986 million compared to March 31, 1999. Increases in foreign time
deposits (Eurodollar deposits), savings deposits and noninterest-bearing
demand deposits were partially offset by decreases in interest-bearing demand
deposits, time deposits and certificates of deposit of $100,000 or more.
AmSouth increased its use of treasury, tax and loan notes and short-term bank
notes as funding sources with increases of $441.4 million and $500.0 million,
respectively. Term federal funds purchased and securities sold under
agreements to repurchase were also used as a funding source totaling $540.0
million at March 31, 2000. AmSouth continued to increase its use of Federal
Home Loan Bank (FHLB) advances as a funding source. Long-term FHLB advances
increased to $5.4 billion at March 31, 2000, a 48.4% increase over 1999 first-
quarter end.
Net Interest Income
Net interest income on a fully taxable equivalent basis for the three
months ended March 31, 2000 was $375.1 million almost level with the March 31,
1999 total. Over the same period, the net interest margin decreased from 4.17%
to 3.77%. Several actions taken by AmSouth as a part of its merger strategy
benefited the company overall, while at the same time narrowing the net
interest margin. These items included leveraging the investment portfolio and
purchasing additional bank owned life insurance (BOLI) coverage. Continued
strong loan growth along with the leveraging of the investment portfolio
resulted in an increase in average interest-earning assets of $3.5 billion to
$40.0 billion. Earning asset growth was funded by an increase in higher cost,
market sensitive borrowed funds and foreign time deposits. Both noninterest-
bearing and interest-bearing core deposits decreased $236.7 million and $813.5
million, respectively, as compared to the first quarter of 1999. This
increased reliance on borrowed funds adversely impacted both net interest
income and the net interest margin. Management is actively working to increase
core deposits as a means of funding asset growth and reduce reliance on
borrowed funds.
12
<PAGE>
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. AmSouth accomplishes this process through the development and
implementation of lending, funding, pricing and hedging strategies designed to
maximize net interest income (NII) performance under varying interest rate
environments subject to 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 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's strategies, among other factors.
Based on the results of the simulation model as of March 31, 2000, AmSouth
would expect NII to decrease $36.9 million and increase $35.6 million if
interest rates gradually increase or decrease, respectively, from current
rates by 100 basis points over a 12-month period. A gradual increase or
decrease is assumed, under the model, to occur evenly over the 12-month
period. This level of interest rate risk is well within the Company's policy
guidelines. If the increase in interest rates is more pronounced or occurs
within a shorter time period, the impact on net interest income will likely be
greater. Prior to the Merger, market risk exposure was managed by each of the
previously separate companies. Separate risk management models and assumptions
were used in accordance with each company's unique market profile.
Accordingly, prior period amounts have not been presented as such amounts were
based on the risk profiles of the previously separate companies and are not
comparable to current period amounts.
AmSouth, from time to time, utilizes various off-balance sheet instruments
such as interest rate swaps, caps and floors to assist in managing interest
rate risk. During the first quarter of 2000, AmSouth entered into additional
interest rate swaps in the notional amount of $305 million. There were no
maturities, calls or terminations of interest rate swaps during the first
quarter of 2000. At March 31, 2000, AmSouth had interest rate swaps, all of
which receive fixed rates, totaling a notional amount of $3.6 billion. The
swaps added in 2000 as hedges were designated to certain deposits and
commercial loans of AmSouth Bank. At March 31, 2000, 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, 2000, the allowance for loan losses was $363.5 million, or 1.37%
of loans net of unearned income, compared to $366.2 million, or
13
<PAGE>
1.48%, for the prior year. The coverage ratio of the allowance for loan losses
to nonperforming loans decreased from 326.05% at March 31, 1999, to 297.06% at
March 31, 2000.
Net charge-offs for the quarter ended March 31, 2000, were $25.4 million
compared to $26.2 million a year earlier. Annualized net charge-offs to
average loans net of unearned income were 0.38% and 0.43%, respectively, for
the three months ended March 31, 2000 and 1999. The decrease in net charge-
offs occurred primarily in AmSouth's commercial portfolio, which decreased
$3.1 million. Commercial net charge-offs for the three months ended March 31,
1999 included a $7.9 million charge-off of one credit. Annualized net charge-
offs for the commercial portfolio decreased 16 basis points to 0.30% at March
31, 2000. In addition, net charge-offs for the revolving credit portfolio
decreased $1.0 million. These decreases were partially offset by increases of
$2.0 million and $1.6 million, respectively, in net charge-offs in the dealer
indirect and other residential mortgage portfolios. Annualized net charge-offs
for the consumer loan portfolio remained relatively unchanged at 0.61% of
average consumer loans for the three months ended March 31, 2000 compared to
0.58% for the same period of 1999. The provision for loan losses for the
three-month periods ended March 31, 2000 and 1999 was $25.4 million and $18.7
million, respectively. The 2000 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, 2000, nonperforming assets as a percentage
of loans net of unearned income, foreclosed properties and repossessions
remained almost flat at 0.55% compared to 0.53% at March 31, 1999. The level
of nonperforming assets increased $14.3 million during the same period.
At December 31, 1999, AmSouth decided to exit the portion of its commercial
loan portfolio related to loans to Medicare dependent long-term care
providers. The decision was based primarily on the adverse effects of the
implementation by the United States government of the Prospective Payment
System for the Medicare system. This and other changes in the Medicare program
resulted in significantly lower Medicare revenues for healthcare service
providers. As a result of the decision, loans totaling $149.3 million were
transferred from the commercial loan portfolio to assets held for accelerated
disposition (AHAD) during the fourth quarter of 1999. A transfer of $71.0
million was also made from the allowance for loan losses to AHAD to reflect a
net realizable value of $78.3 million for these loans. At March 31, 2000, net
AHAD totaled $46.8 million and included nonperforming loans of $29.2 million.
Included in nonperforming assets at March 31, 2000 and 1999, was $58.3
million and $61.2 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 a majority of these impaired loans. At March 31, 2000 and 1999,
there was $21.2 million and $8.2 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, 2000 and 1999,
was $63.7 million and $59.1 million, respectively. AmSouth recorded no
material interest income on its impaired loans during the three months ended
March 31, 2000.
Noninterest Revenues and Noninterest Expenses
Year-to-date noninterest revenues totaled $220.0 million at March 31, 2000,
compared to $202.8 million for the prior-year period, an 8.5% increase. The
largest contributors to this growth were consumer investment services income
and income from bank owned life insurance policies. Consumer investment
services income increased $12.8 million primarily due to higher sales volume
at IFC Holdings, Inc. (IFC), a subsidiary third-party marketer of investment
and insurance products through banks and other financial services providers.
Income from BOLI increased $8.1 million as a result of normal increases in
cash surrender value on policies purchased in prior years by AmSouth and on
policies purchased since March 31, 1999. Partially offsetting these increases
were decreases of $2.5 million in mortgage income and $4.0 million in
portfolio income. The decrease in mortgage income was primarily due to a
decrease in net servicing income due to the sale of AmSouth's third-party
servicing portfolio in the third quarter of 1999. Portfolio income declined
due to fewer sales of available-for-sale securities.
14
<PAGE>
Year-to-date noninterest expenses excluding merger-related costs decreased
1.2% to $333.4 million at March 31, 2000, compared to $337.5 million for the
prior year. The largest increase in noninterest expenses was a $6.3 million
increase in subscribers' commissions. Subscribers' commissions are fees paid
on sales of investment products marketed through IFC and are paid to
subscribing (client) institutions. This increase is directly related to the
IFC increase in consumer investment services income. Net occupancy expense
increased $3.3 million due to the addition of new leased facilities and annual
rent increases. Salaries and employee benefits decreased $4.6 million when
compared to the same period a year ago. This decrease reflects synergies
achieved as a result of the merger partially offset by merit increases and
higher insurance benefits and payroll taxes. Other noninterest expenses
decreased $9.3 million reflecting a reduction in the use of temporary and
contract personnel and lower noncredit losses.
Capital Adequacy
At March 31, 2000, shareholders' equity totaled $3.0 billion or 6.89% of
total assets. Since December 31, 1999, shareholders' equity increased $49.9
million primarily as a result of net income for the quarter of $138.9 million
offset by dividends of $77.8 million and additional unrealized losses on
available-for-sale securities of $22.9 million.
Table 9 presents the capital amounts and risk-adjusted capital ratios for
AmSouth and AmSouth Bank at March 31, 2000 and 1999. At March 31, 2000,
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, 2000.
15
<PAGE>
Table 1--Financial Summary
<TABLE>
<CAPTION>
March 31
------------------------ %
2000 1999 Change
----------- ----------- ------
(In thousands)
<S> <C> <C> <C>
Balance sheet summary
End-of-period balances:
Loans net of unearned income................. $26,617,471 $24,684,518 7.8%
Total assets................................. 43,680,465 40,405,804 8.1
Total deposits............................... 28,344,315 27,358,042 3.6
Shareholders' equity......................... 3,009,144 3,246,101 (7.3)
Year-to-date average balances:
Loans net of unearned income................. $26,681,345 $24,497,545 8.9%
Total assets................................. 43,584,863 40,076,476 8.8
Total deposits............................... 27,830,850 27,595,980 0.9
Shareholders' equity......................... 2,947,234 3,198,577 (7.9)
<CAPTION>
Three Months
Ended March 31
------------------------ %
2000 1999 Change
----------- ----------- ------
(In thousands except per share
data)
<S> <C> <C> <C>
Operating earnings summary (1)
Net income................................... $ 152,434 $ 139,284 9.4%
Earnings per common share.................... 0.39 0.36 8.3
Diluted earnings per common share............ 0.39 0.35 11.4
Return on average assets (annualized)........ 1.41% 1.41%
Return on average equity (annualized)........ 20.80 17.66
Operating efficiency......................... 56.03 58.34
Earnings summary as reported
Net income................................... $ 138,937 $ 136,796 1.6%
Earnings per common share.................... 0.35 0.35 0.0
Diluted earnings per common share............ 0.35 0.34 2.9
Return on average assets (annualized)........ 1.28% 1.38%
Return on average equity (annualized)........ 18.96 17.34
Operating efficiency......................... 59.71 58.91
Selected ratios
Average equity to assets..................... 6.76% 7.98%
End-of-period equity to assets............... 6.89 8.03
End-of-period tangible equity to assets...... 6.00 6.99
Allowance for loan losses to loans net of
unearned income............................. 1.37 1.48
Common stock data
Cash dividends declared...................... $ 0.20 $ 0.17
Book value at end of period.................. 7.67 8.22
Market value at end of period................ 14.94 30.33
Average common shares outstanding............ 391,596 391,959
Average common shares outstanding-diluted.... 394,502 398,174
</TABLE>
- --------
(1) Excludes merger-related costs
16
<PAGE>
Table 2--Quarterly Yields Earned on Average Interest-Earning Assets and Rates
Paid on Average Interest-Bearing Liabilities
<TABLE>
<CAPTION>
2000
----------------------------
First Quarter
----------------------------
Average Revenue/ Yield/
Balance Expense Rate
----------- -------- ------
(Taxable equivalent basis-
dollars in thousands)
<S> <C> <C> <C>
Assets
Interest-earning
assets:
Loans net of
unearned income... $26,681,345 $563,191 8.49%
Available-for-sale
securities:
Taxable......... 6,014,598 100,290 6.71
Tax-free........ 65,763 1,183 7.24
----------- --------
Total available-
for-sale
securities...... 6,080,361 101,473 6.71
----------- --------
Held-to-maturity
securities:
Taxable........... 6,612,916 112,836 6.86
Tax-free.......... 387,092 6,962 7.23
----------- --------
Total held-to-
maturity
securities........ 7,000,008 119,798 6.88
----------- --------
Total investment
securities...... 13,080,369 221,271 6.80
Other interest-
earning assets..... 270,785 4,721 7.01
----------- --------
Total interest-
earning assets.. 40,032,499 789,183 7.93
Cash and other
assets............. 4,138,693
Allowance for loan
losses............. (365,223)
Market valuation on
available-for-sale
securities......... (221,106)
-----------
$43,584,863
===========
Liabilities and
Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.. 9,086,434 71,725 3.17
Savings deposits. 2,352,997 16,589 2.84
Time deposits.... 7,619,385 101,244 5.34
Foreign time
deposits......... 1,296,318 17,757 5.51
Certificates of
deposit of
$100,000 or more. 2,778,322 38,260 5.54
Federal funds
purchased and
securities sold
under agreements
to repurchase.... 4,044,026 51,454 5.12
Other interest-
bearing
liabilities...... 8,166,443 117,096 5.77
----------- --------
Total interest-
bearing
liabilities.... 35,343,925 414,125 4.71
--------
Net interest
spread............. 3.22%
Noninterest-bearing
demand deposits.... 4,697,394
Other liabilities.. 596,310
Shareholders'
equity............. 2,947,234
-----------
$43,584,863
===========
Net interest
income/margin on a
taxable equivalent
basis.............. 375,058 3.77%
====
Taxable equivalent
adjustment:
Loans............ 884
Available-for-sale
securities....... 858
Held-to-maturity
securities....... 4,743
Trading
securities....... 0
--------
Total taxable
equivalent
adjustment..... 6,485
--------
Net interest
income....... $368,573
========
<PAGE>
<CAPTION>
1999
-----------------------------------------------------------
Fourth Quarter Third Quarter
----------------------------- -----------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
------------ -------- ------- ------------ -------- -------
(Taxable equivalent basis-dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning
assets:
Loans net of
unearned income.... $26,554,884 $563,564 8.42% $25,716,024 $540,535 8.34%
Available-for-sale
securities:........
Taxable........... 6,674,819 106,565 6.33 7,822,171 126,722 6.43
Tax-free.......... 114,849 1,959 6.77 209,093 2,867 5.44
------------ -------- ------------ --------
Total available-
for-sale
securities........ 6,789,668 108,524 6.34 8,031,264 129,589 6.40
------------ -------- ------------ --------
Held-to-maturity
securities:
Taxable........... 5,930,758 99,565 6.66 4,524,385 74,955 6.57
Tax-free.......... 332,685 6,262 7.47 224,628 4,636 8.19
------------ -------- ------------ --------
Total held-to-
maturity
securities........ 6,263,443 105,827 6.70 4,749,013 79,591 6.65
------------ -------- ------------ --------
Total investment
securities...... 13,053,111 214,351 6.52 12,780,277 209,180 6.49
Other interest-
earning assets..... 243,857 3,503 5.70 336,785 5,239 6.17
------------ -------- ------------ --------
Total interest-
earning assets.. 39,851,852 781,418 7.78 38,833,086 754,954 7.71
Cash and other
assets............. 4,154,211 4,217,786
Allowance for loan
losses............. (366,218) (365,636)
Market valuation on
available-for-sale
securities......... (202,257) (65,350)
------------ ------------
$43,437,588 $42,619,886
============ ============
Liabilities and
Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.... $ 9,054,153 68,926 3.02 $ 9,101,838 65,533 2.86
Savings deposits... 2,348,024 16,158 2.73 2,265,805 14,629 2.56
Time deposits...... 7,717,934 100,506 5.17 7,701,634 98,570 5.08
Foreign time
deposits........... 1,189,238 15,468 5.16 716,723 8,784 4.86
Certificates of
deposit of
$100,000 or more... 2,919,684 38,962 5.29 2,946,034 38,164 5.14
Federal funds
purchased and
securities sold
under agreements
to repurchase...... 4,278,534 52,550 4.87 4,013,532 47,561 4.70
Other interest-
bearing
liabilities........ 7,367,364 101,509 5.47 7,189,087 95,421 5.27
------------ -------- ------------ --------
Total interest-
bearing
liabilities....... 34,874,931 394,079 4.48 33,934,653 368,662 4.31
-------- --------
Net interest
spread............. 3.30% 3.40%
Noninterest-bearing
demand deposits.... 4,948,282 4,799,827
Other liabilities.. 606,553 621,397
Shareholders'
equity............. 3,007,822 3,264,009
------------ ------------
$43,437,588 $42,619,886
============ ============
Net interest
income/margin on a
taxable equivalent
basis.............. 387,339 3.86% 386,292 3.95%
===== ====
Taxable equivalent
adjustment:
Loans.............. 1,090 1,156
Available-for-sale
securities......... 1,192 1,751
Held-to-maturity
securities......... 3,767 3,006
Trading
securities......... 28 32
-------- --------
Total taxable
equivalent
adjustment........ 6,077 5,945
-------- --------
Net interest
income.......... $381,262 $380,347
======== ========
<PAGE>
<CAPTION>
1999
------------------------------------------------------------
Second Quarter First Quarter
----------------------------- -----------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate
------------ -------- ------- ------------ -------- -------
(Taxable equivalent basis-dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning
assets:
Loans net of
unearned income.... $25,091,429 $522,542 8.35% $24,497,545 $506,342 8.38%
Available-for-sale
securities:........
Taxable........... 7,156,589 114,322 6.41 6,834,032 111,962 6.64
Tax-free.......... 291,853 5,028 6.91 370,352 6,485 7.10
------------ -------- ------------ --------
Total available-
for-sale
securities........ 7,448,442 119,350 6.43 7,204,384 118,447 6.67
------------ -------- ------------ --------
Held-to-maturity
securities:
Taxable........... 4,304,455 69,672 6.49 3,887,758 63,945 6.67
Tax-free.......... 200,868 4,160 8.31 171,323 3,749 8.87
------------ -------- ------------ --------
Total held-to-
maturity
securities........ 4,505,323 73,832 6.57 4,059,081 67,694 6.76
------------ -------- ------------ --------
Total investment
securities...... 11,953,765 193,182 6.48 11,263,465 186,141 6.70
Other interest-
earning assets..... 377,859 5,290 5.62 739,518 8,358 4.58
------------ -------- ------------ --------
Total interest-
earning assets.. 37,423,053 721,014 7.73 36,500,528 700,841 7.79
Cash and other
assets............. 4,007,052 3,924,467
Allowance for loan
losses............. (367,762) (373,784)
Market valuation on
available-for-sale
securities......... 3,199 25,265
------------ ------------
$41,065,542 $40,076,476
============ ============
Liabilities and
Shareholders'
Equity
Interest-bearing
liabilities:
Interest-bearing
demand deposits.... $ 9,335,877 65,435 2.81 $ 9,594,487 66,260 2.80
Savings deposits... 2,127,753 12,221 2.30 2,020,184 10,926 2.19
Time deposits...... 7,772,480 99,340 5.13 8,100,517 104,159 5.21
Foreign time
deposits........... 578,874 6,539 4.53 319,143 3,471 4.41
Certificates of
deposit of
$100,000 or more... 2,850,452 34,737 4.89 2,627,529 34,559 5.33
Federal funds
purchased and
securities sold
under agreements
to repurchase...... 4,203,663 47,745 4.56 3,704,180 40,090 4.39
Other interest-
bearing
liabilities........ 5,395,184 70,872 5.27 4,939,358 65,708 5.40
------------ -------- ------------ --------
Total interest-
bearing
liabilities....... 32,264,283 336,889 4.19 31,305,398 325,173 4.21
-------- --------
Net interest
spread............. 3.54% 3.58%
Noninterest-bearing
demand deposits.... 4,897,183 4,934,120
Other liabilities.. 632,920 638,381
Shareholders'
equity............. 3,271,156 3,198,577
------------ ------------
$41,065,542 $40,076,476
============ ============
Net interest
income/margin on a
taxable equivalent
basis.............. 384,125 4.12% 375,668 4.17%
==== ====
Taxable equivalent
adjustment:
Loans.............. 1,321 1,271
Available-for-sale
securities......... 2,364 3,104
Held-to-maturity
securities......... 2,845 2,458
Trading
securities......... 46 46
-------- --------
Total taxable
equivalent
adjustment........ 6,576 6,879
-------- --------
Net interest
income.......... $377,549 $368,789
======== ========
</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-earnings, marketable equity securities.
17
<PAGE>
Table 3--Maturities and Interest Rates Exchanged on Swaps
<TABLE>
<CAPTION>
Mature During
---------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2008 2009 Total
------ ----- ----- ----- ----- ----- ----- ----- ------
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional amount....... $1,319 $ 499 $ 865 $ 305 $ 135 $ 150 $ 175 $ 175 $3,623
Receive rate.......... 6.68% 6.44% 6.51% 6.30% 5.89% 6.25% 6.13% 6.22% 6.48%
Pay rate.............. 6.04% 5.75% 6.06% 6.02% 6.01% 5.91% 5.99% 5.91% 5.99%
</TABLE>
- --------
NOTE: The interest rates exchanged are calculated assuming that interest rates
remain unchanged from March 31, 2000. Call option expiration date is
used as maturity date until the option expires. The information
presented could change as LIBOR rates change and call options are
exercised or expire.
Table 4 - Loans and Credit Quality
<TABLE>
<CAPTION>
Net Charge-offs
Loans* Nonperforming Loans** Three Months Ended
March 31 March 31 March 31
----------------------- --------------------- --------------------
2000 1999 2000 1999 2000 1999
----------- ----------- ---------- ---------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial:
Commercial &
industrial........... $ 8,203,477 $ 7,878,506 $ 35,021 $ 41,785 $ 7,129 $ 10,676
Commercial loans--
secured by
real estate.......... 1,976,573 1,903,159 38,247 18,863 463 59
----------- ----------- ---------- ---------- --------- ---------
Total commercial..... 10,180,050 9,781,665 73,268 60,648 7,592 10,735
----------- ----------- ---------- ---------- --------- ---------
Commercial real estate:
Commercial real estate
mortgages............ 2,375,465 2,305,248 15,948 15,075 (113) 427
Real estate
construction......... 2,295,830 1,898,255 6,160 4,741 (60) (136)
----------- ----------- ---------- ---------- --------- ---------
Total commercial real
estate.............. 4,671,295 4,203,503 22,108 19,816 (173) 291
----------- ----------- ---------- ---------- --------- ---------
Consumer:
Residential first
mortgages............ 1,638,740 2,445,780 13,099 21,987 317 406
Other residential
mortgages............ 4,179,034 3,124,660 10,198 9,011 2,381 816
Dealer indirect....... 4,153,408 3,230,761 682 168 9,191 7,176
Revolving credit...... 467,470 465,438 253 -0- 3,425 4,442
Other consumer........ 1,327,474 1,432,711 2,757 698 2,651 2,380
----------- ----------- ---------- ---------- --------- ---------
Total consumer....... 11,766,126 10,699,350 26,989 31,864 17,965 15,220
----------- ----------- ---------- ---------- --------- ---------
$26,617,471 $24,684,518 $ 122,365 $ 112,328 $ 25,384 $ 26,246
=========== =========== ========== ========== ========= =========
</TABLE>
- --------
* Net of unearned income.
** Exclusive of accruing loans 90 days past due and $29.2 million of
nonperforming assets classified as held for accelerated disposition at
March 31, 2000.
18
<PAGE>
Table 5--Allowance for Loan Losses
<TABLE>
<CAPTION>
2000 1999
----------- -----------------------------------------------
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period................. $363,476 $365,427 $365,869 $366,243 $373,756
Loans charged off....... (40,377) (39,358) (41,202) (28,885) (38,842)
Recoveries of loans
previously charged
off.................... 14,993 12,707 10,157 9,922 12,595
-------- -------- -------- -------- --------
Net charge-offs......... (25,384) (26,651) (31,045) (18,963) (26,247)
Addition to allowance
charged to expense..... 25,400 97,700 30,603 18,589 18,734
Allowance
sold/transferred....... -0- (73,000) -0- -0- -0-
-------- -------- -------- -------- --------
Balance at end of
period................. $363,492 $363,476 $365,427 $365,869 $366,243
======== ======== ======== ======== ========
Allowance for loan
losses to loans net of
unearned income........ 1.37% 1.38% 1.39% 1.44% 1.48%
Allowance for loan
losses to nonperforming
loans*................. 297.06% 257.54% 225.79% 294.76% 326.05%
Allowance for loan
losses to nonperforming
assets*................ 249.86% 225.00% 196.12% 252.81% 279.11%
Net charge-offs to
average loans net of
unearned income
(annualized)........... 0.38% 0.40% 0.48% 0.30% 0.43%
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due and $29.2 million and $38.1
million of nonperforming assets classified as held for accelerated
disposition at March 31, 2000 and December 31, 1999, respectively.
Table 6--Nonperforming Assets
<TABLE>
<CAPTION>
2000 1999
-------- -------------------------------------------
March 31 December 31 September 30 June 30 March 31
-------- ----------- ------------ -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans........ $122,365 $141,134 $161,843 $124,123 $112,328
Foreclosed properties... 19,839 17,767 22,991 18,898 17,988
Repossessions........... 3,274 2,644 1,496 1,701 904
-------- -------- -------- -------- --------
Total nonperforming
assets*............... $145,478 $161,545 $186,330 $144,722 $131,220
======== ======== ======== ======== ========
Nonperforming assets* to
loans net of unearned
income, foreclosed
properties and
repossessions.......... 0.55% 0.61% 0.71% 0.57% 0.53%
Accruing loans 90 days
past due............... $ 66,375 $ 61,050 $ 44,644 $ 65,324 $ 65,737
</TABLE>
- --------
* Exclusive of accruing loans 90 days past due and $29.2 million and $38.1
million of nonperforming assets classified as held for accelerated
disposition at March 31, 2000 and December 31, 1999, respectively.
19
<PAGE>
Table 7--Investment Securities
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
--------------------- ---------------------
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....................... $5,200,882 $5,025,562 $3,042,132 $3,042,740
State, county and municipal
securities....................... 381,312 374,726 203,140 206,214
Other securities.................. 1,387,016 1,356,160 1,136,083 1,139,921
---------- ---------- ---------- ----------
$6,969,210 $6,756,448 $4,381,355 $4,388,875
========== ========== ========== ==========
Available-for-sale:
U.S. Treasury and federal agency
securities....................... $5,067,236 $6,192,496
State, county and municipal
securities....................... 73,829 362,390
Other securities.................. 833,896 969,949
---------- ----------
$5,974,961 $7,524,835
========== ==========
</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, 2000, were approximately 6.7 years and 6.64%,
respectively. Included in the combined portfolios was $11.3 billion of
mortgage-backed securities, $507 million of which were variable rate. The
weighted-average remaining life and the weighted-average yield of mortgage-
backed securities at March 31, 2000, were approximately 6.4 years and
6.64%, respectively. The duration of the combined portfolios, which
considers the repricing frequency of variable rate securities, is
approximately 4.0 years.
2. The available-for-sale portfolio included net unrealized losses of $227.2
million and $10.2 million at March 31, 2000 and 1999, respectively.
Table 8--Other Interest-Bearing Liabilities
<TABLE>
<CAPTION>
March 31
---------------------
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
Other borrowed funds:
Short-term Federal Home Loan Bank advances.............. $ -0- $ 260,313
Treasury, tax and loan notes............................ 608,083 166,692
Short-term bank notes................................... 550,000 50,000
Term Federal Funds purchased............................ 540,000 -0-
Commercial paper........................................ 10,821 9,872
Other short-term debt................................... 132,615 68,322
---------- ----------
Total other borrowed funds............................. $1,841,519 $ 555,199
========== ==========
Other long-term debt:
6.45% Subordinated Notes Due 2018....................... $ 303,896 $ 304,393
6.125% Subordinated Notes Due 2009...................... 174,387 174,243
6.75% Subordinated Debentures Due 2025.................. 149,902 149,884
7.75% Subordinated Notes Due 2004....................... 149,618 149,526
7.25% Senior Notes Due 2006............................. 99,548 99,511
6.875% Subordinated Notes Due 2003...................... 49,895 49,871
6.625% Subordinated Notes Due 2005...................... 49,709 49,672
Subordinated Capital Notes.............................. -0- 99,989
Other long-term debt.................................... 5,379 14,081
---------- ----------
Total other long-term debt............................. $ 982,334 $1,091,170
========== ==========
</TABLE>
20
<PAGE>
Table 9--Capital Amounts and Ratios
<TABLE>
<CAPTION>
March 31
-----------------------------------
2000 1999
----------------- ----------------
Amount Ratio Amount Ratio
----------- ----- ---------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Tier 1 capital:
AmSouth.................................. $ 2,850,335 7.75% $2,795,187 8.54%
AmSouth Bank............................. 3,412,791 9.21 3,216,520 9.79
Total capital:
AmSouth.................................. $ 4,037,456 10.98% $3,855,813 11.61%
AmSouth Bank............................. 4,076,283 11.00 3,878,350 10.88
Leverage:
AmSouth.................................. $ 2,850,335 6.59% $2,795,187 7.05%
AmSouth Bank............................. 3,412,791 7.91 3,216,520 7.74
</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. The actions are similar to others that have
been brought in recent years against financial institutions in that they seek
punitive damage awards in transactions involving relatively small amounts of
actual damages. A disproportionately higher number of the lawsuits against
AmSouth have been filed in Alabama and Mississippi relative to the amount of
deposits held by AmSouth in those states. Legislation was recently enacted in
Alabama that is designed to limit the potential amount of punitive damages
that can be recovered in individual cases in the future. However, AmSouth
cannot predict the exact effect of the legislation at this time.
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
One report on Form 8-K was filed by AmSouth during the period January 1,
2000 to March 31, 2000:
A report was filed on January 20, 2000 to report AmSouth's preliminary
results of operations for the fourth quarter of 1999 and for the fiscal
year ended December 31, 1999.
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, 2000 By: _________________________________
C. Dowd Ritter
President and
Chief Executive Officer
May 12, 2000 /s/ Robert R. Windelspecht
By: _________________________________
Robert R. Windelspecht
Executive Vice President,
Chief Accounting Officer
and Controller
23
<PAGE>
EXHIBIT INDEX
The following is a list of exhibits including items incorporated by
reference.
2 Agreement and Plan of Merger, dated May 31, 1999 (1)
3-a Restated Certificate of Incorporation of AmSouth Bancorporation (2)
3-b By-Laws of AmSouth Bancorporation (3)
10-a Agreement with Thomas E. Hoaglin
10-b AmSouth Bancorporation Deferred Compensation Plan
15 Letter Re: Unaudited Interim Financial Information
27 Financial Data Schedule
NOTES TO EXHIBITS
(1) Filed as Exhibit 2.1 to AmSouth's Report on Form 8-K filed June 8, 1999,
incorporated herein by reference.
(2) Filed as Exhibit 3.1 to AmSouth's Report on Form 8-K filed October 15,
1999, incorporated herein by reference.
(3) 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 10-a
[AMSOUTH LETTERHEAD]
December 13, 1999
Personal and Confidential
- -------------------------
Thomas E. Hoaglin
101 East Columbus Street
Columbus, OH 43206
Via Facsimile 614-449-2182
Dear Tom:
This will confirm our offer to you to become Vice Chairman of AmSouth
Bancorporation and AmSouth Bank.
Position
Your title would be Vice Chairman of AmSouth Bancorporation and of AmSouth
Bank. You would report to C. Dowd Ritter, President and Chief Executive
Officer. You would become a member of our Management Committee, the senior most
management group at AmSouth. Our three geographic state heads who now report to
Dowd, as well as the three heads of our lines of business who also now report to
Dowd, would report to you. All other members of the Management Committee who
now report to Dowd would continue to report to him. Dowd would recommend to the
boards of directors of AmSouth Bancorporation and AmSouth Bank that you be
elected to such boards at the meetings of those boards which immediately precede
your first day of employment. In addition, Dowd would recommend to those boards
that you be designated as the highest ranking officer after Dowd, in accordance
with the bylaws.
Compensation
Base Salary. Your base salary would be $600,000. You would be eligible
for a merit increase in January 2001, which is the time that merit increases are
normally made for our senior-most managers.
<PAGE>
Annual Bonus. You would participate in AmSouth's annual bonus plan for its
senior-most managers, the Executive Incentive Plan. Each participant in the EIP
has a "base opportunity", expressed as a percentage of base pay, which is
associated with the achievement of goals. Your base bonus opportunity percentage
would be 85%. The actual payout percentage, however, can range from 0% to 200%
of the base bonus opportunity as determined by an evaluation of performance
results against goals. In the case only of your EIP bonus for 2000, payable in
2001, we would guarantee that such bonus would be at least equal to your base
bonus opportunity percentage times your base salary.
Long Term Incentive Plan. You would participate in the AmSouth 1996 Long
Term Incentive Plan, a copy of which follows this letter. You would be granted
options on 400,000 shares of AmSouth Bancorporation common stock, with an
exercise price equal to the fair market value of such stock on the date of
grant. Such shares would become exercisable in three equal installments on the
first, second and third anniversaries of the date of grant, and would remain
exercisable until the tenth anniversary of the date of grant. Such options
would be granted under the terms of the LTIP.
Retirement Plans. AmSouth has both a qualified defined benefit retirement
plan as well as a non qualified supplemental defined benefit retirement plan,
each of which has a five years of service vesting requirement. AmSouth also has
both a qualified defined contribution retirement plan, the AmSouth Thrift Plan,
as well as a supplemental defined contribution retirement plan. Under the
latter two plans, you may defer up to 15% of your base salary per pay period.
Under the terms of the Thrift Plan, AmSouth will match your pretax deferrals at
a rate of 100%, up to 6% of your gross base salary.
Executive Severance Agreement. You would receive an Executive Severance
Agreement which upon a change in control followed within two years by a "good
reason" departure by you or involuntary termination without cause would provide
you with a lump sum cash payment in an amount equal to three times: (a) your
highest annual base salary prior to departure or termination; (b) your highest
recent annual bonus; and (c) the value of an independently determined
competitive annual long term incentive grant. Your ESA would provide you with a
continuation of all welfare plan benefits for three years, outplacement services
for three years as well as reimbursement for the reasonable cost of relocation
of your primary residence. Finally, in your ESA or otherwise we would provide
you with written assurance that if, within one year of your first day of
employment by AmSouth, your employment is be terminated other than for cause or
other than due to your death or disability, then you would receive a one-time
lump sum payment equal to the sum of (x) your base bonus opportunity times your
base salary (but you would not receive a bonus under the EIP) plus (y) one times
your base salary. In addition, AmSouth would pay the reasonable cost of
relocating your primary residence should you decide to leave the Birmingham area
in such circumstances. Finally, we would also agree that in such circumstances
one-third of the stock options granted to you as described above would vest as
of your last day of employment.
<PAGE>
Other Benefits. In addition to the foregoing, you would be eligible for
the other AmSouth benefit plans and perquisite programs which are available for
the senior executives of the company, including the following:
. Medical, dental and other health and welfare benefits under AmSouth's general
health and welfare benefit plans.
. Full relocation benefits including home purchase and one-time $125,000
relocation bonus.
. Opportunity to defer payment of EIP bonuses.
. Financial planning services at AmSouth expense, through AYCO Companies, LLP.
. Reimbursement for country club and Summit Club (private dining club in
AmSouth-Harbert Plaza) initiation fees and monthly dues.
. Home security system.
*****
Tom, we believe that the above is both a professionally and financially
rewarding opportunity for you. We would very much like to become your colleague
and have you as a senior member of the AmSouth management team.
Very truly yours,
/s/ David B. Edmonds
cc: C. Dowd Ritter
Stephen A. Yoder
<PAGE>
[AMSOUTH LETTERHEAD]
February 15, 2000
Thomas E. Hoaglin
Vice Chairman
AmSouth Bancorporation
1901 Sixth Avenue North
Birmingham, Alabama 35202
Re: AmSouth Bancorporation ("AmSouth") Truncated Stock Options
Dear Tom:
Our letter of December 13, 1999 (the "Offer Letter") provided that you would
receive options on 400,000 shares of AmSouth common stock, which options would
be exercisable over a ten year period. AmSouth has now finalized the terms of a
new type of stock option (a "Truncated Option") which could require an exercise
period substantially shorter than 10 years. AmSouth intends to grant Truncated
Options to certain senior executives in the first quarter of this year.
You have requested, and AmSouth agrees, that you should receive the same type of
options as other AmSouth senior executives. However, a Truncated Option has a
somewhat lower value than the type of option described in the Offer Letter
because the Truncated Options could require a much shorter exercise period.
In order to bring the value of your Truncated Options into parity with the
options promised you in the Offer Letter, AmSouth has agreed to increase the
number of your Truncated Options as described below.
AmSouth will grant to you in the first quarter of this year Truncated Options on
568,338 shares of AmSouth common stock. The Truncated Options will substantially
conform to the attached term sheet. If one-third of your Truncated Options vest
in accordance with the section of the Offer Letter entitled "Executive Severance
Agreement", the exercise period for such Truncated Options will be ten years
from date of grant. The grant of Truncated Options described in this letter
will be in place of the options on 400,000 shares described in the section of
the Offer Letter entitled "Long Term Incentive Plan", which no longer
apply.
Very truly yours,
/s/ David B. Edmonds
<PAGE>
Exhibit 10-b
AmSouth Bancorporation
Deferred Compensation Plan
Amended and Restated
Effective January 1, 2000
<PAGE>
ARTICLE 1
Establishment
- -------------
AmSouth Bancorporation, a Delaware corporation (hereinafter referred to as the
"Company"), established a deferred compensation plan to be known as the "AmSouth
Bancorporation Deferred Compensation Plan" (hereinafter referred to as the
"Plan") originally effective as of October 2, 1997, and amended and restated as
of January 1, 2000. This document constitutes the provisions of the Plan. The
Company sponsors the Plan on behalf of its affiliates and shall be the agent for
all such entities. This Plan is intended to be an unfunded, deferred
compensation plan for a select group of management or highly compensated
employees, as described in sections 201(2), 301(a)(3), and 401(a)(1) of the
Employee Retirement Income Security Act of 1974 ("ERISA").
ARTICLE 2
Definitions
- -----------
The following sections of this ARTICLE 2 provide basic definitions of terms used
throughout the Plan, and whenever used herein in a capitalized form, except as
otherwise expressly provided, the terms shall be deemed to have the following
meanings:
2.1 "Account" means the record of a Participant's interest under the Plan
composed of (a) Deferrals made prior to the Original Effective Date
pursuant to the EIP and\or the MIP, (b) Deferrals posted on or after the
Original Effective Date, (c) any dividends, income and gains deemed
credited to, and all losses charged to, such account and (d) all
distributions charged to such account.
2.2 "Affiliate" means any corporation, partnership, association, limited
liability company, joint-stock company, trust, unincorporated association
or other person or entity (other than the Company) that directly or
indirectly controls, is controlled by, or is under common control with,
the Company; provided, however, that IFC Holdings, Inc. (f/k/a INVEST
Financial Corporation) shall not be considered an Affiliate for purposes
of this Plan.
2.3 "Beneficiary" means, with respect to the balance of a Participant's Account
as of the death of such Participant, each person designated by the
Participant on his or her most recent beneficiary designation form
approved by the Committee or its designee; provided that if a Participant
fails to designate a Beneficiary on a beneficiary designation form or if
all such designated persons have predeceased the Participant without the
Participant's completing a new, approved beneficiary
2
<PAGE>
designation form, then Beneficiary means any person designated by the
Participant (actually or by default) to receive the balance of any of his
or her accounts which are payable with respect to the death of such
Participant under the Company's Thrift Plan. A Beneficiary's participation
continues until the related Account is distributed.
2.4 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.
2.5 "Board of Directors" or "Board" means the Board of Directors of the
Company.
2.6 "Bonus Award" means the amount of bonus, incentive or commission
compensation payable to a Participant for service during the Plan Year.
2.7 "Change in Control" of the Company shall have the meaning set forth in the
Company's Executive Severance Agreements as such agreements may be amended
from time to time.
2.8 "Committee" means the Executive Compensation Committee of the Board of
Directors or such other committee or individual to whom the Executive
Compensation Committee has delegated the responsibility to administer this
Plan. In the absence of an appointment, the Board shall be the Committee.
2.9 "Company" means AmSouth Bancorporation.
2.10 "Company Stock" or "Common Stock" means the common stock, par value $1.00
per share, of AmSouth Bancorporation.
2.11 "Conversion Date" means the date as of which the cash values posted to an
Account are credited with the number of shares of Company Stock (or other
units) as determined by the Committee pursuant to the Plan.
2.12 "Deferrals" or "Bonus Deferrals" means amounts deferred by a Participant
based upon the Participant's Deferral Election to defer some or all of his
or her Bonus Award.
2.13 "Deferral Amount" means the dollar amount of a Participant's Bonus Award
for the relevant period which is to be deferred and posted to a
Participant's Account pursuant to this Plan.
2.14 "Deferral Election" or "Election" means an irrevocable election (as to the
Participant) made by a Participant (a) to reduce his or her Bonus Award
for a Plan Year by an amount equal to the product of his or her Deferral
Percentage
3
<PAGE>
and his or her Bonus Award subject to the Deferral Election; and (b) to
select a Payment Date for those Deferrals. A Participant's Deferral
Election shall constitute the Participant's agreement to and acceptance of
the terms of this Plan. A Deferral Election may include an election by the
Participant entered into prior to the Original Effective Date.
2.15 "Deferral Percentage" means the percentage of a Participant's Bonus Award
for the relevant period which is to be deferred and posted pursuant to
this Plan.
2.16 "Effective Date" means January 1, 2000, the date of this Amendment and
Restatement.
2.17 "EIP" means the AmSouth Bancorporation Executive Incentive Plan as from
time to time amended, or any successor thereto identified by the
Committee.
2.18 "Employee" means any person, including an officer of the Employer (whether
or not he or she is also a Director thereof), who is employed by the
Employer.
2.19 "Employer" means the Company and any Affiliate whose Employees are
eligible to participate in the Plan; provided, however, that IFC Holdings,
Inc. (f/k/a INVEST Financial Corporation) shall not be considered an
Affiliate for purposes of this Plan.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.21 "Fair Market Value" means the Fair Market Value of the Company Stock as
determined by the Committee or under procedures determined by the
Committee. Unless otherwise determined by the Committee, the Fair Market
Value per share of the Company Stock as of any date shall be determined on
the basis of the closing sale price on the principal securities exchange
on which the shares of Company Stock are traded or, if there is no such
sale on the relevant date, then on the last previous day on which a sale
was reported. The Committee shall not be under any obligation to take
into account non-public information regarding the Company or the Company
Stock.
2.22 "Insider" means a Participant who is subject to the reporting requirements
of Section 16 of the Exchange Act as a result of his or her position with
the Company or any Affiliate.
2.23 "Internal Revenue Code" or "Code" means the Internal Revenue Code of 1986,
as amended, and subsequent Internal Revenue Code and final Treasury
Regulations. If there is a subsequent Internal Revenue Code, any
references herein to Internal Revenue Code sections shall be deemed to
refer to comparable sections of any subsequent Internal Revenue Code.
4
<PAGE>
2.24 "MIP" means the AmSouth Bancorporation Management Incentive Plan as from
time to time amended, or any successor thereto identified by the
Committee.
2.25 "Notice Date" means the date established as the deadline for the receipt
of a Deferral Election or any other notification with respect to an
administrative matter in order to be effective under this Plan. The
Notice Date with respect to receipt of a Deferral Election shall be
December 31 of the year prior to the Plan Year to which the deferral
relates unless a different date is established by the Committee.
2.26 "Original Effective Date" means October 2, 1997, the date upon which the
original provisions of this document became effective.
2.27 "Participant" means an Employee who participates in the Plan or a former
Employee who has been paid all of his or her Deferrals or Prior Deferrals.
2.28 "Payment Date" means the earliest of:
(a) the date designated by the Participant for the distribution or
commencement of distribution of his or her Account, which date shall not
be earlier than the third anniversary of the first day of the Plan Year to
which the Deferral Election relates (i.e. a deferral of a Bonus Award
which is compensation for the 1998 Plan Year may be distributed after
December 31, 2000);
(b) the Participant's Termination of Employment (notwithstanding a later
Payment Date designated under Section 2.28(a));
(c) the date of the Plan's termination; and
(d) the date of a Change in Control of the Company, unless the Plan is
maintained on substantially the same terms after the Change in Control.
A Participant's Payment Date under (c) or (d) shall apply notwithstanding
a later Payment Date under (a).
2.29 "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Section 13(d) and 14(d) thereof, including
a "group" as defined in Section 13(d) thereof.
2.30 "Plan" means the AmSouth Bancorporation Deferred Compensation Plan, as set
forth herein and as hereafter may be amended from time to time.
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2.31 "Plan Year" means the annual accounting period of the Plan which ends on
each December 31.
2.32 "Prior Deferrals" means deferrals made by a Participant under the EIP
and/or MIP prior to the Original Effective Date.
2.33 "Thrift Plan" means the AmSouth Bancorporation Thrift Plan as from time to
time amended, or any successor thereto identified by the Committee.
2.34 "Termination of Employment" occurs when a person ceases to be an Employee
as determined by the personnel policies of the Employer. A transfer of
employment from the Company or an Affiliate to the Company or another
Affiliate shall not constitute a Termination of Employment for purposes of
this Plan.
ARTICLE 3
Participation
- -------------
3.1 Eligibility. Each Employee (i) who is eligible to defer receipt of a
bonus payment pursuant to the terms of the EIP or MIP or (ii) who is a
highly compensated Employee with an annual base salary of $75,000 or more
and who is eligible to receive bonus, incentive or commission payments
pursuant to any plan or arrangement with an Employer shall be eligible to
participate in this Plan. Provided, however, that no Employee shall
participate in the Plan if such Employee is not a member of a select group
of management or highly compensated Employees. A person shall continue as
a Participant (subject to Section 3.2) until the earlier of the
Participant's death or the date the Participant's Account has no value.
3.2 Continuing Deferrals. The Committee shall have discretion to determine
whether an Employee is eligible to participate in the Plan and whether a
Participant is eligible to make a Deferral Election in or with respect to
any Plan Year.
ARTICLE 4
Participant Deferrals
- ---------------------
4.1 Deferral Election.
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(a) Subject to Committee discretion, for each Plan Year, a Participant
who is an Employee and who desires to have a Bonus Deferral made on his or
her behalf shall file a Deferral Election pursuant to procedures
specifying his or her Deferral Percentage which shall be not less than 25%
nor more than 100% (stated as a whole integer percentage) and authorizing
his or her Bonus Award payable for a Plan Year to be reduced and deferred
hereunder to such Participant's Payment Date. Participants who are paid
bonuses, incentives or commissions more frequently than annually must
designate an amount of the bonus, incentive or commission that the
Participant is to earn in the Plan Year in excess of which the deferral is
to apply.
(b) Notwithstanding the foregoing subsection (a) hereof, for any Plan
Year the Committee may, without amending this Plan, determine that the
minimum or maximum Deferral Percentage with respect to any Participant
shall be greater or lesser than the percentages set forth in subsection
(a). Otherwise, the minimum and maximum Deferral Percentages as provided
in subsection (a) hereof shall apply. The Committee may, without amending
this Plan, determine that the minimum or maximum Deferral Amount with
respect to any Participant shall be greater or lesser that the amount set
forth in subsection (a).
(c) The amount of any Bonus Award to be deferred shall be reduced by any
taxes or other payment to be made or distributed in respect of or on
behalf of a Participant. Any Deferral Election which has not been
properly completed will be deemed not to have been received and will be
void. A Participant's Deferral Election shall be effective only if
received by the Committee on or before the Notice Date for a Plan Year.
4.2 Election Procedures. If properly received by the Committee, a Deferral
Election will be effective only with respect to a Bonus Award paid for the
Plan Year to which the Deferral Election applies and only with respect to
a Bonus Award paid after the Notice Date for the Deferral Election.
Consistent with the above, the Committee may establish rules and
procedures governing when a Deferral Election will be effective and what
Bonus Award will be deferred by the Deferral Election; provided such rules
and procedures are not more permissive than the terms and provisions of
this Plan.
4.3 Coordination with Thrift Plan. Notwithstanding a Participant's Deferral
Election, if a Participant makes a "401(k) hardship" withdrawal from the
Thrift Plan during a Plan Year, the "401(k) hardship" withdrawal rules
of such plan are incorporated by reference herein and made a part hereof,
but only to the extent required by Treasury Regulation (S)1.401(k)-l, in
order for the Thrift Plan to be a qualified cash or deferred arrangement.
4.4 Prior Deferrals. A Participant's Account shall include Prior Deferrals
which shall be treated as follows:
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(a) In the case of a Participant whose Termination of Employment
occurred prior to January 1, 1997 or in the case of a Participant who
elected effective January 1, 1997 to have all or part of his or her Prior
Deferrals deemed to be invested at the Prime Time/PFS time deposit fixed
rate (30 month) in effect at the beginning of each calendar year, such
Prior Deferrals for such Participant shall on and after the Original
Effective Date continue to be deemed to be so invested and,
notwithstanding anything to the contrary in this Plan, shall not be deemed
to be converted into shares of Company Stock. Furthermore, such Prior
Deferrals shall be paid in cash at the time specified in the Participant's
original Deferral Election.
(b) In the case of a Participant who elected prior to the Original
Effective Date to have all or part of his Prior Deferrals deemed to be
invested in "phantom" shares of Company Stock, such Participant shall be
entitled to make a one-time written election to either (i) continue to
have such Prior Deferrals deemed to be invested in phantom shares and
receive at the appropriate time a cash payment of such deferrals or (ii)
have such Prior Deferrals deemed to be classified as deferred shares of
Company Stock and receive (at the appropriate time) payment for such Prior
Deferrals in shares of Company Stock. If a Participant elects to have his
or her Prior Deferrals deemed to be classified as shares of Company Stock,
the provisions of Section 2.28(d) shall be applicable to such Prior
Deferrals notwithstanding the Participant's original deferral election.
The provisions of Section 2.28(d) shall not apply with respect to any
Prior Deferrals unless such Prior Deferrals are deemed to be converted
into shares of Company Stock and are payable solely in shares of Company
Stock.
ARTICLE 5
Deferrals and Posting
- ---------------------
Bonus Deferral. Subject to the limits of this Plan and to the Committee's
authority to limit Deferrals under the terms of this Plan, for each period for
which a Deferral Election is in effect with respect to a Bonus Award, the
Employer shall post to this Plan on behalf of each Participant an amount equal
to the amount designated by the Participant as a Bonus Deferral on his or her
Deferral Election. The Bonus Deferral shall be posted to the Account of such
Participant as of the date such Bonus Award would otherwise have been paid to
the Participant.
ARTICLE 6
Participants' Accounts
- ----------------------
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6.1 Individual Participant Accounting.
(a) The Committee shall cause the Account for each Participant to
reflect amounts posted to the Account based on the Deferral Election, and
the deemed investment thereof in Company Stock. As of each Conversion Date
that a cash amount of Bonus Award or other amount is credited to a
Participant's Account (other than in connection with a Payment Date), such
cash amount shall be deemed to be converted into the number of shares of
Company Stock equal to the amount of cash so credited (and not previously
converted) divided by the Fair Market Value of a share of Company Stock on
the Conversion Date. A fractional share shall be rounded to the next
higher whole number of shares. The amount of cash so converted shall be
charged to the Account, and the number of shares of Company Stock into
which the cash has been deemed to have been converted under the preceding
sentence shall be credited to the Account. Dividends, or other returns or
adjustments in respect of the Company Stock, if any, shall be reinvested
in deferred stock in the same manner provided above, except that in the
case of dividends the number of shares shall be determined based on the
Fair Market Value of a share of Company Stock on the last business day of
the quarter immediately preceding the date the dividend is paid. Account
values may be maintained in shares, units, or dollars (as determined by
the Committee). In the absence of a determination by the Committee,
Account values shall be maintained in shares. The Committee may maintain
more than one Account for any Participant. The Committee is responsible
for determining the dollar value of deferrals, and the share or unit value
of Company Stock.
(b) The Committee may correct any errors or omissions in the
administration of this Plan by restoring or charging any Participant's
Account with the amount that would have been credited or charged to the
Account had no error or omission been made; provided, however, that a
Participant's Account will be deemed to be correct unless the Participant
notifies the Committee or its designee of an error or omission within 30
days after receipt of the first statement on which the error or omission
is reflected.
(c) In the event of any Company Stock dividend, stock split, combination
or exchange of shares, recapitalization or other change in the capital
structure of the Company, corporate separation or division of the Company
(including, but not limited to, a split-up, spin-off, split-off, or
distribution to Company stockholders other than a normal cash dividend),
sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization,
rights offering, a partial or complete liquidation, or any other corporate
transaction, Company share offering or event involving the Company and
having an effect similar to any of the foregoing, the Committee may adjust
the number of shares of Common Stock credited to an
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Account, as the Committee may determine is equitable, and any other
characteristics or terms as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to the
Participant; provided however, that any fractional shares resulting from
such adjustment shall be eliminated by rounding to the next higher whole
number of shares.
6.2 Investment Not Required. Notwithstanding any other provision of this
Plan, including the foregoing provisions of this ARTICLE 6, the Employer
need not make an actual investment in shares of Company Stock. If the
Employer, in its discretion, should from time to time make such
investment, such investment shall be solely for the Employer's own account
and the Participant shall have no right, title, or interest in any such
investment. In all events the benefits payable to Participants hereunder
shall be the value of and earnings or losses on the amounts credited or
charged to each Participant's Account. If and to the extent shares of
Company Stock shall be held or purchased, the Committee, in its sole
discretion, shall exercise all voting or tender rights without any
fiduciary obligation or other obligation to a Participant or Beneficiary
if such stock has voting rights.
ARTICLE 7
Vesting and Forfeitures
- -----------------------
A Participant shall be fully vested and have a non-forfeitable right to his or
her Account at all times.
ARTICLE 8
Distributions
- -------------
Benefits payable under this Plan shall be paid in the form and time prescribed
below.
8.1 Accounts.
(a) Form of Payment. Except as may have been elected by a Participant
with respect to Prior Deferrals, the form of payment of the balance of a
Participant's Account will be shares of Common Stock equal to the number
of deferred shares in the Participant's Account. For each Deferral Amount
which a Participant elects to defer to the Participant's Termination of
Employment, the Participant may choose to have shares of Common Stock
distributed in either (i) one lump sum distribution, (ii) 5 annual
installments, or (iii) 10 annual installments. For each such Participant
there shall be established three
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distribution subaccounts: the Lump Sum Subaccount, the 5-year Subaccount
and the 10-year Subaccount. Deferral Amounts which a Participant chooses
to defer to a point in time prior to the Participant's Termination of
Employment shall automatically be credited to the Participant's Lump Sum
Subaccount and the Participant shall not be able to elect installment
distributions with respect to such Deferral Amounts.
As soon as administratively feasible after a Payment Date (other than a
Payment Date described in Section 2.28(a), (c) or (d)) the Company shall
distribute to a Participant (i) the number of shares of Common Stock, if
any, posted to the Participant's Lump Sum Subaccount; plus (ii) one-fifth
of the number of shares of Common Stock, if any, posted to the
Participant's 5-year Subaccount; plus (iii) one-tenth of the number of
shares of Common Stock, if any, posted to the Participant's 10-year
Subaccount. Subsequent annual distributions, if any, shall consist of the
applicable portion of the 5-year Subaccount (1/4, 1/3, 1/2 and all,
respectively) and the applicable portion of the 10-year Subaccount (1/9,
1/8, 1/7 and so forth, respectively). Notwithstanding the foregoing, if
at any time the number of shares in the Participant's 5-year Subaccount
and 10-year Subaccount total 1,000 shares or less in the aggregate, the
total number of shares in such Subaccounts shall be distributed to the
Participant in a lump sum distribution.
In the case of a Payment Date described in Section 2.28(a) the Company
shall distribute to the Participant as soon as administratively feasible
in one lump sum distribution such number of shares of Common Stock in the
Participant's Lump Sum Subaccount as corresponds to the Deferral Amount
with respect to which the Participant elected the particular Payment Date.
In the case of a Payment Date described in Section 2.28(c) or (d) the
Company shall distribute to the Participant as soon as administratively
feasible in one lump sum distribution the total number of shares of Common
Stock in the Participant's Account without regard to any Subaccounts.
(b) Time of Payment. Except as may have been elected by a Participant
with respect to Prior Deferrals, the time of payment of a Participant's
Account shall be the Payment Date.
8.2 Death Benefit of Accounts. Notwithstanding anything in Section 8.1, upon
the death of a Participant, the remaining balance in his or her Account
shall be paid to the Participant's Beneficiary in a single distribution of
Common Stock as soon as administratively possible after the Participant's
death.
8.3 Limitation. Except for a Payment Date under Section 2.28(d), if any
payment that would be made would result in any portion of the payment (or
any other amount paid to a Participant or Beneficiary during the same Plan
Year) not
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being deductible by the Company by reason of Code Section 162(m), the
Committee may defer payment to a later Payment Date designated by it;
provided that the Committee reasonably determines that either the
Participant will cease to be a "covered employee" (as defined in Section
162(m) of the Code) or that a delay in the Payment Date of not more than
12 months will mitigate the effect of Section 162(m) of the Code.
ARTICLE 9
Amendment and Termination Claims Procedure
- ------------------------------------------
9.1 Amendment and Termination. The Company by action of its Board of
Directors reserves the right to amend this Plan from time to time or to
terminate this Plan at any time; provided, however, without the written
consent of each Participant and Beneficiary, no such action may reduce or
relieve any Employer of any obligation to pay the balance of an Account
maintained under this Plan as of the date of such amendment or termination
except to the extent the Committee determines such action is advisable to
avoid liability under the Exchange Act. Upon termination of this Plan, all
Account balances shall be paid immediately in a single distribution of
Common Stock to the Participants or Beneficiaries thereof, unless the
Participant and the Committee have agreed to a later Payment Date.
Notwithstanding the preceding, the Chief Executive Officer of the Company
shall have the power to amend or terminate this Plan on behalf of the
Company.
9.2 Claim for Distribution. Any Participant who has a dispute regarding the
distribution of an Account (a "Claimant") must submit his or her claim for
distribution to the Committee or its agent in writing. Such claim shall
be filed no later than 60 days after the date the Participant first knew
or had reason to know of such claim. A Claimant shall have no right to
seek review of a denial of distribution, or to bring any action in any
court to enforce a claim for distribution, prior to his or her filing a
claim for distribution and exhausting his or her rights hereunder. Any
claim for distribution shall be evaluated and the Claimant shall be
notified by the Committee or its agent of its approval or denial within
ninety (90) days after the receipt of such claim unless special
circumstances require an extension of time for processing the claim. If
the Committee or its agent does not respond within ninety (90) days after
receipt of such claim, the claim shall be deemed to be denied. If a claim
is denied, in whole or in part, the Claimant shall be given written notice
which shall contain
(i) the specific reasons for the denial;
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<PAGE>
(ii) references to pertinent Plan provisions upon which the denial is
based;
(iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary; and
(iv) the Claimant's rights to seek review of the denial.
9.3 Review of Claim Denial. If a claim is denied, in whole or in part (or if
within the time periods prescribed for in the initial claim, the Committee
or its agent has not furnished the Claimant with a denial and the claim is
therefore deemed denied), the Claimant shall have the right to request
that the Committee review the denial, provided that the Claimant files a
written request for review with the Committee within sixty (60) days after
the date on which the Claimant received written notification of the denial
(or the date the claim was deemed to be denied). A Claimant (or his or
her duly authorized representative) may review pertinent documents and
submit issues and comments in writing to the Committee. Within sixty (60)
days after a request for review is received, the review shall be made and
the Claimant shall be advised in writing by the Committee of the decision
on review, unless special circumstances require an extension of time for
processing the review, in which case the Claimant shall be given a written
notification by the Committee within such initial sixty (60) day period
specifying the reasons for the extension and when such review shall be
completed (provided that such review shall be completed within one hundred
and twenty (120) days after the date on which the request for review was
filed). The decision on review shall be forwarded to the Claimant by the
Committee or its agent in writing and shall include specific reasons for
the decision and references to Plan provisions upon which the decision is
based. A decision on review shall be final and binding on all persons for
all purposes. If a Claimant shall fail to file a request for review in
accordance with the procedures described in this Section, such Claimant
shall have no right to review and shall have no right to bring action in
any court and the denial of the claim shall become final and binding on
all persons for all purposes.
ARTICLE 10
Miscellaneous Provisions
- ------------------------
10.1 Administration. This Plan shall be administered by the Committee which
shall be comprised of one or more persons. The Committee may authorize any
one or more if its members or an officer of the Company to execute and
deliver
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<PAGE>
documents on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan. The
Committee may allocate among one or more of its members, or may delegate
to one or more of its agents, such duties and responsibilities as it
determines.
Among other things, the Committee shall have the authority, subject to the
terms of this Plan:
(a) to select those persons who will be Participants;
(b) to determine the amount and time of Deferrals hereunder;
(c) to determine the number of shares of Company Stock to be credited to
an Account hereunder;
(d) to provide the forms to be utilized in connection with this Plan;
(e) to determine whether and with what effect a Participant has a
Termination of Employment;
(f) to determine what securities law requirements are applicable to this
Plan and to require of a Participant that appropriate action be taken with
respect to such requirements;
(g) to require the withholding from a Participant of the amount of any
federal, state or local taxes as may be necessary in order for the Company
or an Affiliate to obtain a deduction;
(h) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of this Plan; and
(i) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of this Plan (and any agreement) and to otherwise supervise the
administration of this Plan. The Committee's policies and procedures may
differ with respect to different times or to different Participants.
Any determination made by the Committee pursuant to the provisions of this
Plan shall be made in its sole discretion. All decisions made by the
Committee pursuant to the provisions of this Plan shall be final and
binding on all persons,
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<PAGE>
including the Company and Participants. Any determination shall not be
subject to de novo review if challenged in court.
-------
10.2 Finality of Determination. The determination of the Committee as to any
disputed questions arising under this Plan, including questions of
construction and interpretation shall be final, binding, and conclusive
upon all persons.
10.3 Indemnification and Exculpation. The Company shall indemnify and hold
harmless the members of the Committee, the Company's agents, officers,
directors and employees (other than in their capacity as a Participant or
Beneficiary) and directors and employees of each Employer (other than in
their capacity as a Participant or Beneficiary) from and against any and
all loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by them in connection with or resulting from any
claim, action, suit, or proceeding to which they may be a party or in
which they may be involved by reason of any action taken or failure to
act under this Plan from and against any and all amounts paid by them in
settlement (with the Company's written approval) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The
foregoing provision shall not be applicable to any person if the loss,
cost, liability or expense is due to such person's gross negligence or
willful misconduct. This indemnification shall be in addition to, and not
a limitation upon, any other indemnification to which such persons may be
entitled pursuant to the Certificate of Incorporation or Bylaws of the
Company or otherwise.
10.4 Funding. The obligation of this Plan is an unsecured obligation of the
Employer. While all benefits payable under this Plan constitute general
corporate obligations, the Company may establish a separate irrevocable
grantor trust for the benefit of all Participants, which trust shall be
subject to the claims of the general creditors of the Employer in the
event of the Employer's insolvency, to be used as a reserve for the
discharge of the Employer's obligations under this Plan to such
Participants. Any payments made to a Participant under the separate trust
for his or her benefit shall reduce the amount payable to the Participant
from the general assets of the Employer. The amounts payable under this
Plan shall be reflected on the accounting records of the Employer but
shall not be construed to create or require the creation of a trust,
custodial, or escrow account, except as described above in this section.
No Participant (or Beneficiary of a Participant) shall have any right,
title, or interest whatever in or to any investment reserves, accounts, or
funds that the Employer may purchase, establish, or accumulate to aid in
providing benefits under this Plan. Nothing contained in this Plan, and
no action taken pursuant to its provisions, shall create a trust or
fiduciary relationship of any kind between any Employer, the Committee and
a Participant, Beneficiary or any other person. Neither a Participant nor
a Beneficiary shall acquire any interest greater than that of an unsecured
creditor.
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10.5 Corporate Action. Any action required of or permitted by the Company
under this Plan may be by resolution of the Committee or by the action of
the Chief Executive Officer of the Company or his designee. The Plan and
actions taken pursuant to the Plan are subject to the Certificate of
Incorporation and Bylaws of the Company and all applicable law.
10.6 Interests Not Transferable. The interests of the Participants and their
Beneficiaries under this Plan are not subject to the claims of their
creditors (or any other sort of claimant) and may not be voluntarily or
involuntarily transferred, assigned, alienated, encumbered, sold,
pledged, conveyed, gifted, hypothecated, alienated, or otherwise disposed
of by them.
10.7 Effect on Other Benefit Plans. Whether amounts credited or paid under
this Plan shall be considered to be compensation for the purposes of any
other employee benefit plan or arrangement, shall be determined pursuant
to the provisions of such other plan or arrangement.
10.8 Distribution. The Employer shall deduct from the amount to be distributed
such amount as the Employer, in its sole discretion, deems proper to
protect the Employer against liability in respect of the Participant, and
out of money so deducted, the Employer may discharge any such liability
and pay the amount remaining to the Participant, the Beneficiary, or the
deceased Participant's estate, as the case may be.
10.9 Withholding. The Employer may withhold whatever taxes (including FICA,
local, state or federal taxes, domestic or foreign) it, in its sole
discretion, deems proper to protect the Employer against liability for the
payment of such withholding taxes and out of the money so deducted, the
Employer may discharge any such liability. Withholding for this purpose
may come from any wages due to the Participant or, if none, from the
Participant's Account hereunder. Participants may elect to satisfy the
withholding requirement, in whole or in part, by having the Company
withhold shares of Company Stock valued at the Fair Market Value on the
date the tax is to be determined. All such elections shall be made in
writing, signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole discretion,
deems appropriate.
10.10 Representation. The Committee shall establish such procedures as it
deems appropriate for a Participant to designate a Beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid.
10.11 Controlling Law. This Plan and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Alabama (other than its law respecting choice of law), except to the
extent the General Corporation Law of the State of Delaware would be
applicable. This Plan shall be construed
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<PAGE>
to comply with all applicable law, and to avoid liability to the Company,
an Affiliate or a Participant, including, without limitation, under
Section 16(b) of the Exchange Act.
10.12 Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any Common Stock, cash or other thing of value under this Plan to be
transferred to the Participant, and no Common Stock, cash or other thing
of value under this Plan shall be transferred unless and until all
disputes between the Company and the Participant have been fully and
finally resolved and the Participant has waived all claims to such against
the Company or an Affiliate.
10.13 Fail-Safe. With respect to an Insider, transactions under this Plan are
intended to comply with all applicable conditions of Section 16(b) of the
Exchange Act (the "Act"). To the extent any provision of the Plan or
action by the Committee or Participant fails to so comply and would result
in liability under the Act, such provision or action shall be deemed null
and void, to the extent deemed advisable by the Committee. Moreover, in
the event the Plan does not include a provision, or the Committee has
not formally taken any action necessary, to avoid liability under Section
16 of the Exchange Act, such provision shall be deemed to be incorporated
by reference into the Plan with respect to Insiders or deemed to have been
taken by the Committee with respect to Insiders.
10.14 Right to Capitalize. The grant of a Bonus Award shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets
10.15 Mitigation of Excise Tax. Subject to any other agreement between the
Participant and the Company or an Affiliate with respect to excise taxes,
if any payment or right accruing to a Participant under this Plan (without
the application of this Section 10.15), either alone or together with
other payments or rights accruing to the Participant from the Company or
an Affiliate ("Total Payments") would constitute a "parachute payment" (as
defined in Section 280G of the Code regulations thereunder or under any
law with a similar purpose), such payment or right shall be reduced to the
largest amount or greatest right that will result in no portion of the
amount payable or right accruing under this Plan being subject to an
excise tax under Section 4999 of the Code, or under any law with a similar
purpose or being disallowed as a deduction under Section 280G of the Code
or under any law with a similar purpose. The determination of whether any
reduction in the rights or payments under this Plan is to apply shall be
made by the Committee in good faith after consultation with the
Participant, and such determination shall be conclusive and binding on the
Participant. The Participant shall cooperate in good faith
17
<PAGE>
with the Committee in making such determination and providing the
necessary information for this purpose. The foregoing provisions of this
Section 10.15 shall apply with respect to any person only if after
reduction for any applicable federal excise tax imposed by Section 4999 of
the Code, or under any law with a similar purpose, and federal income tax
imposed by the Code, the Total Payments accruing to such person would be
less than the amount of the Total Payments as reduced, if applicable,
under the foregoing provisions of this Plan and after reduction for only
federal income taxes. Notwithstanding the foregoing, in the event the
Participant is entitled to indemnification in respect of excise taxes
imposed under the Code, the foregoing provisions of this Section 10.15
regarding reduction of any payment or right accruing to such Participant
shall not apply.
10.16 Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed
to constitute a contract of employment between the Company or an Affiliate
and a Participant. The Company or an Affiliate and each of the
Participants continue to have the right to terminate the employment or
service relationship at any time for any reason, except as provided in a
written contract. The Company or an Affiliate shall have no obligation to
retain the Participant in its employ or service as a result of this Plan.
There shall be no inference as to the length of employment or service
herein, and the Company or an Affiliate reserves the same rights to
terminate the Participant's employment or service as existed prior to the
individual becoming a Participant in this Plan.
10.17 Termination by Affiliate. Any Affiliate may, by resolution of the board
of directors of such Affiliate, with the consent of the Board of Directors
and subject to such conditions as may be imposed by the Board of
Directors, terminate its participation in this Plan.
10.18 Delay. If on the Payment Date the Participant is an Insider, any time
period provided for under this Plan or a Deferral Election shall be
suspended and delayed to the extent necessary to avoid the imposition of
liability on the Participant under any law. The Company shall have the
right to suspend or delay any time period described in this Plan if the
Committee shall determine that the action may constitute a violation of
any law or result in liability under any law to the Company, an Affiliate
or a stockholder of the Company until such time as the action required or
permitted shall not constitute a violation of law or result in liability
to the Company, an Affiliate or a stockholder of the Company. The
Committee shall have the discretion to suspend the application
18
<PAGE>
of the provisions of this Plan to comply with Rule 16b-3 if the Committee
shall determine that Rule 16b-3 does not apply to this Plan or one or more
Participants.
10.19 Pooling. Notwithstanding anything in the Plan to the contrary, if any
right under this Plan would cause a transaction to be ineligible for
pooling of interest accounting that would, but for the right hereunder, be
eligible for such accounting treatment, the Committee may modify or adjust
the right so that pooling of interest accounting shall be available.
10.20 Facility of Payment. If a Participant or Beneficiary is declared
incompetent or is a minor, or a conservator, guardian, or other person
legally charged with his or her care has been appointed, any benefits to
which such Participant or Beneficiary is entitled shall be payable to such
conservator, guardian, or other person legally charged with his or her
care. The decision of the Committee in such matters shall be final,
binding, and conclusive upon all Employers and upon each Participant,
Beneficiary, and every other person or party interested or concerned. The
Company and the Committee shall not be under any duty to see to the proper
application of such payments.
10.21 Successor. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform the Company's obligations under this
Plan in the same manner and to the same extent that the Company would be
required to perform them if no such succession had taken place. Failure
of the Company to obtain such assumption and agreement prior to the
effective date of any such succession will be a breach of its obligations
hereunder and will entitle the Participant to compensation from the
Company in the same amount and on the same terms as the Participant would
be entitled to hereunder if a Change in Control had taken place.
10.22 Gender and Number. Except when the context indicates to the contrary,
when used herein, masculine terms shall be deemed to include the feminine,
and singular the plural.
10.23 Invalidity of Certain Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provisions hereof and this Plan shall be construed
and enforced as if such provisions, to the extent invalid or
unenforceable, had not been included.
19
<PAGE>
10.24 Headings. The headings or articles are included solely for convenience
of reference, and if there is any conflict between such headings and the
text of this Plan, the text shall control.
10.25 Notice and Information Requirements. Except as otherwise provided in this
Plan or as otherwise required by law, the Employer shall have no duty or
obligation to affirmatively disclose to any Participant or Beneficiary,
nor shall any Participant or Beneficiary have any right to be advised of,
any material information regarding the Employer, at any time prior to,
upon or in connection with any crediting or debiting (or decision
regarding the crediting or debiting) of any Company Stock to any Account.
10.26 Expenses. The expenses of administering the Plan shall be borne by the
Company, except that the Committee may cause expenses or charges in
respect of Company Stock to be charged to the Accounts.
IN WITNESS WHEREOF this Deferred Compensation Plan Amended and Restated
Effective January 1, 2000, is executed this 14th day of December, 1999 to be
effective as of the Effective Date.
AMSOUTH BANCORPORATION
By: /s/ C. DOWD RITTER
-------------------------------------
President and Chief Executive Officer
ATTEST:
/s/ DIANE S. MASTERS
- ---------------------
Secretary
20
<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,
2000, 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, 2000:
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.
Form S-8 No. 333-89451 pertaining to the First American Corporation 1993
Non-Employee Director Stock Option Plan;
Form S-8 No. 333-89455 pertaining to the First American Corporation 1999
Broad-Based Employee Stock Option Plan;
Form S-8 No. 333-89457 pertaining to the First American Corporation Star
Award Plan;
Form S-8 No. 333-89459 pertaining to the Deposit Guaranty Corporation Long
Term Incentive Plans;
Form S-8 No. 333-89461 pertaining to the First American Corporation 1991
Employee Stock Incentive Plan;
Form S-8 No. 333-89463 pertaining to the Heritage Federal Bankshares, Inc.
1994 Stock Option Plan for Non-Employee Directors and 1992 Stock
Option Plan and Incentive Compensation Plan for Non-Employee
Directors; and
Form S-8 No. 333-89633 pertaining to the First American Corporation First
Incentives Reward Savings Thrift Plan.
<PAGE>
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 10, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF CONDITION, THE CONSOLIDATED STATEMENT OF EARNINGS, THE
CONSOLIDATED STATEMENT OF CASH FLOWS OF ITEM 1 OF PART I AND TABLES 2, 5, 6 AND
7 OF ITEM 2 OF PART I OF THE AMSOUTH BANCORPORATION FORM 10-Q FOR THE THREE
MONTHS ENDED MARCH 31, 2000.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 1,541,259 1,452,441
<INT-BEARING-DEPOSITS> 0 4,655
<FED-FUNDS-SOLD> 57,843 119,931
<TRADING-ASSETS> 31,923 63,416
<INVESTMENTS-HELD-FOR-SALE> 5,974,961 7,524,835
<INVESTMENTS-CARRYING> 6,969,210 4,381,355
<INVESTMENTS-MARKET> 6,756,448 4,388,875
<LOANS> 26,617,471 24,684,518
<ALLOWANCE> 363,492 366,243
<TOTAL-ASSETS> 43,680,465 40,405,804
<DEPOSITS> 28,344,315 27,358,042
<SHORT-TERM> 5,357,405 4,361,568
<LIABILITIES-OTHER> 570,923 698,222
<LONG-TERM> 6,398,678 4,741,871
0 0
0 0
<COMMON> 416,949 420,753
<OTHER-SE> 2,592,195 2,825,348
<TOTAL-LIABILITIES-AND-EQUITY> 43,680,465 40,405,804
<INTEREST-LOAN> 562,307 505,071
<INTEREST-INVEST> 215,670 180,579
<INTEREST-OTHER> 4,721 8,312
<INTEREST-TOTAL> 782,698 693,962
<INTEREST-DEPOSIT> 245,575 219,375
<INTEREST-EXPENSE> 414,125 325,173
<INTEREST-INCOME-NET> 368,573 368,789
<LOAN-LOSSES> 25,400 18,734
<SECURITIES-GAINS> 3,266 6,154
<EXPENSE-OTHER> 355,357 340,744
<INCOME-PRETAX> 207,853 212,076
<INCOME-PRE-EXTRAORDINARY> 207,853 212,076
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 138,937 136,796
<EPS-BASIC> 0.35 0.35
<EPS-DILUTED> 0.35 0.34
<YIELD-ACTUAL> 3.77 4.17
<LOANS-NON> 122,365 112,328
<LOANS-PAST> 66,375 65,737
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 363,476 373,756
<CHARGE-OFFS> 40,377 38,842
<RECOVERIES> 14,993 12,595
<ALLOWANCE-CLOSE> 363,492 366,243
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
