<PAGE> 1
As Filed pursuant to Rule 424(b)(2)
Registration No. 33-45714
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 2, 1992)
$25,000,000
(LOGO)
REGIONS FINANCIAL CORPORATION
7.65% SUBORDINATED NOTES DUE 2001
------------------------------
Interest on the 7.65% Subordinated Notes Due 2001 (the "Notes") is payable
on February 15 and August 15 of each year commencing February 15, 1995. The
Notes will be represented by one or more global notes (the "Global Notes")
registered in the name of The Depository Trust Company (the "Depositary") or its
nominee. Beneficial interests in the Global Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. Except as described under "Description of the
Notes -- Book-Entry Procedures," Notes in definitive registered form will not be
issued. The Notes are not redeemable prior to maturity, and no sinking fund is
provided for the Notes. The Notes will mature on August 15, 2001.
The Notes are subordinate to all "Senior Indebtedness" of Regions Financial
Corporation, formerly known as First Alabama Bancshares, Inc. ("Regions"), as
described in the accompanying Prospectus under "Description of Debt
Securities -- Subordination," generally including (with certain exceptions) all
other indebtedness and other obligations of Regions to its creditors. Payment of
the principal of the Notes may be accelerated only in the case of certain events
involving bankruptcy, insolvency proceedings or reorganization of Regions. There
is no right of acceleration in the case of a default in the payment of principal
or interest on the Notes or in the performance of any other covenant of Regions
in the Indenture described herein. See "Description of Debt Securities --
Defaults and Limited Rights of Acceleration" in the accompanying Prospectus.
------------------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS
OR OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION BUT ARE
UNSECURED AND SUBORDINATED DEBT OBLIGATIONS OF REGIONS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................................. 100% .525% 99.475%
- ----------------------------------------------------------------------------------------------
Total.................................... $25,000,000 $131,250 $24,868,750
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July 21, 1994, to date of delivery.
(2) Regions has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting expenses payable by Regions, estimated at $100,000.
The Notes are offered by the Underwriter subject to prior sale when, as and
if delivered to and accepted by the Underwriter and subject to certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that the
Global Notes will be delivered in book-entry form only, on or about July 21,
1994, through the facilities of the Depositary.
------------------------------
BEAR, STEARNS & CO. INC.
JULY 18, 1994
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
Regions Financial Corporation, formerly known as First Alabama Bancshares,
Inc. ("Regions"), is a regional bank holding company headquartered in
Birmingham, Alabama which operated as of June 1, 1994, 243 banking offices in
Alabama, Florida, Georgia, Louisiana and Tennessee. At March 31, 1994, Regions
had total consolidated assets of approximately $10.4 billion, total consolidated
deposits of approximately $8.8 billion and total consolidated stockholders'
equity of approximately $878 million. Regions operates six state-chartered
commercial bank subsidiaries and one federal stock savings bank in the States of
Alabama, Florida, Georgia, Louisiana and Tennessee and four banking-related
subsidiaries engaged in mortgage banking, credit life insurance, leasing and
securities brokerage activities with offices in various Southeastern states.
Through its subsidiaries, Regions offers a broad range of banking and
banking-related services.
In Alabama, Regions operates through First Alabama Bank, which at March 31,
1994, had total consolidated assets of approximately $8.0 billion, total
consolidated deposits of approximately $6.9 billion and total consolidated
stockholders' equity of approximately $658 million. First Alabama Bank operates
168 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
March 31, 1994, had total consolidated assets of approximately $473 million,
total consolidated deposits of approximately $422 million and total consolidated
stockholders' equity of approximately $47 million. Regions Bank of Florida
operates 23 banking offices in the panhandle region of Florida.
In Georgia, Regions operates through Regions Bank of Georgia, which at
March 31, 1994, had total consolidated assets of approximately $106 million,
total consolidated deposits of approximately $96 million and total consolidated
stockholders' equity of approximately $9 million. Regions Bank of Georgia
operates three banking offices in Columbus, Georgia.
In Louisiana, Regions operates through Secor Bank, Federal Savings Bank
("Secor"), a federal savings bank which Regions acquired on December 31, 1993,
and Guaranty Bancorp, Inc. ("Guaranty"), which Regions acquired on May 31, 1994.
At March 31, 1994, Secor's 15 Louisiana branches had total assets of
approximately $1.3 billion and total deposits of approximately $828 million. At
May 31, 1994, Guaranty had total consolidated assets of approximately $187
million, total consolidated deposits of approximately $173 million and total
consolidated stockholders' equity of approximately $14 million. Secor and
Guaranty operate 21 banking offices in Louisiana.
In Tennessee, Regions operates through two banks, Regions Bank of Tennessee
and Franklin County Bank, which collectively at March 31, 1994, had total
combined assets of approximately $455 million, total combined deposits of
approximately $396 million and total combined stockholders' equity of
approximately $37 million. Such banks operate 24 banking offices in middle
Tennessee.
Regions was organized under the laws of the State of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. On May 2, 1994,
the name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation. All references to "First Alabama Bancshares, Inc.," "First Alabama"
or the "Company" in the accompanying Prospectus shall be deemed to be references
to Regions.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business combinations
involving cash, debt or equity securities can be expected. Any future business
combination or series of business combinations that Regions might undertake may
be material, in terms of assets acquired or liabilities assumed, to Regions'
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<PAGE> 3
financial condition. Recent business combinations in the banking industry
typically have involved the payment of a premium over book and market values.
This practice could result in dilution of book value and net income per share
for the acquirer.
RECENT DEVELOPMENTS
SECOND QUARTER 1994 OPERATING RESULTS
For the second quarter ended June 30, 1994, Regions had net income of
$35,446,000 or $.84 per share, representing a 27% increase in net income over
the same period of 1993. For the six months ended June 30, 1994, Regions had net
income of $69,220,000 or $1.65 per share, representing an 11% increase on a
per-share basis in net income over the first half of 1993. The annualized return
on average total assets for the first half of 1994 was 1.32%, and the annualized
return on average stockholders' equity was 15.82%. At June 30, 1994, the ratio
of stockholders' equity to total assets was 8.37%. As of June 30, 1994, Regions
had total consolidated assets of approximately $10.8 billion, total consolidated
deposits of approximately $8.8 billion and total consolidated stockholders'
equity of approximately $905 million.
RECENTLY COMPLETED ACQUISITIONS
Since December 31, 1993, Regions has consummated the acquisitions (referred
to as the "Recently Completed Acquisitions") of Guaranty located in Baton Rouge,
Louisiana, and First Fayette Bancshares, Inc., located in Fayette, Alabama,
certain aspects of which transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------
APPROXIMATE
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- ------------------------------------------------------- ---------- ----- ------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Guaranty Bancorp, Inc., and its subsidiary, Guaranty
Bank and Trust Company, located in Baton Rouge,
Louisiana............................................ $189 $28 Regions Pooling of
Common Interests
Stock
First Fayette Bancshares, Inc. and its subsidiary,
First Bank of Fayette, located in Fayette, Alabama... 77 17 Cash Purchase
------- ---- and
Notes
Totals....................................... $266 $45
======= ====
</TABLE>
Since December 31, 1993, Regions also has consummated certain transactions
with the Resolution Trust Corporation, as a result of which Regions acquired
four branch offices in Panama City, Florida, and one branch office in each of
Atmore and Brewton, Alabama with combined deposits of approximately $50 million.
PENDING ACQUISITIONS
As of the date of this Prospectus Supplement, Regions has pending four
additional acquisitions (referred to as the "Pending Acquisitions") in the
States of Alabama, Georgia and Louisiana, certain aspects of which transactions
are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
--------------
APPROXIMATE ANTICIPATED
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- -------------------------------------------------------- ---------- ----- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
American Bancshares, Inc. ("ABI") and its subsidiary,
First American Bank and Trust Company of Louisiana,
located in Monroe, Louisiana.......................... $ 304 $ 61 Regions Purchase
Common
Stock
BNR Bancshares, Inc. and its subsidiary, Bank of New
Roads, located in New Roads, Louisiana................ 143 26 Regions Pooling of
Common Interests
Stock
</TABLE>
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<TABLE>
<CAPTION>
CONSIDERATION
--------------
APPROXIMATE ANTICIPATED
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
- -------------------------------------------------------- ---------- ----- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
First Community Bancshares, Inc. and its subsidiary,
First Bank of Rome, located in Rome, Georgia.......... $ 124 $ 24 Regions Pooling of
Common Interests
Stock
Union Bank & Trust Company ("Union"), located in
Montgomery, Alabama................................... 455 65 Regions Purchase
------- ---- Common
Stock
Totals........................................ $1,026 $ 176
======= ====
</TABLE>
If the Recently Completed Acquisitions and all of the Pending Acquisitions
had been consummated on March 31, 1994, based on March 31, 1994 pro forma
financial information, Regions' total consolidated assets would have increased
by approximately $1.3 billion to approximately $11.7 billion; its total
consolidated deposits would have increased by approximately $1.2 billion to
approximately $9.9 billion; and its total consolidated stockholders' equity
would have increased by approximately $38 million to approximately $916 million.
See "Capitalization" and the related pro forma financial information in Regions'
current report on Form 8-K dated July 8, 1994. See "Documents Incorporated by
Reference" in the accompanying Prospectus.
Consummation of the Pending Acquisitions is subject to the approval of
certain regulatory agencies and of the stockholders of the institutions to be
acquired and to the effectiveness of the registration statements filed or to be
filed with the Securities and Exchange Commission. Moreover, the closing of each
transaction is subject to various contractual conditions precedent. No assurance
can be given that the conditions precedent to consummating the Pending
Acquisitions will be satisfied in a manner that will result in the consummation
of all of the Pending Acquisitions.
In connection with the acquisitions of ABI and Union, Regions has announced
that it may purchase, in the open market, an equivalent number of some or all of
the shares of the $.625 par value common stock of Regions ("Regions Common
Stock") to be issued in such transactions. As a result of the ABI and Union
transactions, Regions anticipates that it may purchase in the open market as
much as approximately $126 million of Regions Common Stock. The timing and
amount of such possible purchases will be determined based on the Regions Common
Stock price, capital needs and other factors. As of July 15, 1994, Regions had
purchased, in the open market, approximately $24.7 million of Regions Common
Stock pursuant to this repurchase program.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be approximately
$24,768,750, after deducting the underwriting discount and estimated offering
expenses. Such net proceeds will be used for general corporate purposes,
including the possible repurchase of shares of Regions Common Stock in the open
market to be issued in connection with the acquisition of ABI as described under
"Recent Developments -- Pending Acquisitions."
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<PAGE> 5
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of and for the five
years ended December 31, 1993, are derived from the consolidated financial
statements of Regions which have been audited by Ernst & Young, independent
auditors. The financial data as of and for the three months ended March 31, 1994
and 1993, are derived from unaudited consolidated financial statements. The
unaudited consolidated financial statements include all adjustments, consisting
of normal recurring accruals, that Regions considers necessary for a fair
presentation of its financial position and the results of its operations as of
such dates and for such periods. Results for the three months ended March 31,
1994 and 1993, are not necessarily indicative of the results which might be
expected for any other interim period or for the year as a whole. The data
should be read in conjunction with the consolidated financial statements,
related notes and other financial information incorporated by reference herein.
See "Documents Incorporated by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
INCOME STATEMENT DATA:
Total interest income............ $ 170,906 $ 135,719 $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense........... 73,539 51,875 213,614 224,068 292,017 297,613 292,687
Net interest income.............. 97,367 83,844 342,053 312,679 264,804 222,140 203,705
Provision for loan losses........ 4,326 7,300 21,533 27,072 24,005 24,208 15,800
Net interest income after loan
loss provision................. 93,041 76,544 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains
(losses)....................... 36,516 30,582 131,949 119,130 101,964 94,730 71,976
Security gains (losses).......... 32 47 78 (53) (507) (982) 506
Total noninterest expense........ 80,145 66,091 287,026 264,659 230,340 195,611 176,707
Income tax expense............... 16,292 13,656 53,476 44,977 33,660 27,175 21,046
Net income....................... $ 33,152 $ 27,426 $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
PER SHARE:
Net income....................... $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends................... 0.30 0.26 1.04 0.91 0.87 0.84 0.76
Book value....................... 21.39 18.09 20.73 17.62 15.76 14.54 13.48
OTHER INFORMATION:
Average number of shares
outstanding.................... 41,059 37,290 37,205 36,532 36,191 36,097 36,331
BALANCE SHEET DATA (PERIOD END):
Total assets..................... $10,436,704 $7,836,913 $10,476,348 $7,881,026 $6,745,053 $6,344,406 $5,549,612
Securities....................... 2,478,939 1,637,036 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income.... 6,848,701 5,187,903 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits................... 8,766,995 6,723,462 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt................... 449,665 141,718 462,862 136,990 18,782 19,707 45,343
Stockholders' equity............. 878,239 674,923 850,965 656,655 572,971 524,132 489,441
PERFORMANCE RATIOS:
Return on average assets(1)...... 1.30% 1.45% 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders'
equity(1)...................... 15.55 16.71 16.14 15.64 14.27 13.64 13.25
Net interest margin(1)........... 4.25 4.98 4.82 4.98 4.78 4.67 4.65
Efficiency(2).................... 58.71 56.47 59.24 59.87 60.77 59.22 60.68
Dividend payout.................. 37.04 35.14 34.55 35.00 40.28 43.98 44.19
EARNINGS TO FIXED CHARGES(3):
Excluding interest on deposits... 6.50x 11.80x 10.90x 15.15x 10.04x 6.88x 4.01x
Including interest on deposits... 1.67 1.79 1.77 1.62 1.38 1.32 1.28
ASSET QUALITY RATIOS:
Net charge-offs (recovery) to
average loans, net of unearned
income(1)...................... 0.10% (0.03)% 0.19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate(4)........... 0.80 0.79 0.84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans
and other real estate(5)....... 0.86 0.88 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to
loans, net of unearned
income......................... 1.51 1.57 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets(5)........ 175.45 176.98 143.05 175.92 126.32 98.18 110.71
</TABLE>
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<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ---------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to average
assets.................................... 8.35% 8.67% 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average deposits........... 78.23 77.08 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital(6)................ 11.74 11.99 11.13 11.68 11.85 11.31 n/a
Total risk-based capital(6)................. 14.12 14.75 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage(6).......................... 7.99 8.30 10.11 8.44 8.40 7.65 8.36
</TABLE>
- ---------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(tax-equivalent basis) and non-interest income net of gains (losses) from
security transactions.
(3) Earnings represent net income plus applicable income taxes and fixed
charges. Fixed charges represent interest expense (exclusive of interest on
deposits in one case and inclusive of such interest in the other), and
one-third (the amount deemed to represent an appropriate interest factor)
of net rent expense under all lease commitments.
(4) Problem assets include loans on a nonaccrual basis, restructured loans and
foreclosed properties.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due and foreclosed properties.
(6) The required minimum Tier 1 and total risk-based capital ratios are 4.0% and
8.0%, respectively. The minimum leverage ratio of Tier 1 capital to total
adjusted assets is 3.0% to 5.0%, depending on the risk profile of the
institution and other factors.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements and modifies the description of the general terms and
provisions of the Notes (which are referred to in the accompanying Prospectus as
the "Debt Securities") set forth in the accompanying Prospectus under
"Description of Debt Securities," to which description reference is hereby made.
Capitalized terms not defined herein have the respective meanings assigned to
such terms in the Prospectus.
GENERAL
The Notes are to be issued under the Indenture (the "Indenture"), dated as
of December 1, 1992, between the Company and Bankers Trust Company, as trustee
(the "Trustee"). The Notes will bear interest at 7.65% per annum and be limited
to $25,000,000 in aggregate principal amount. Interest on the Notes will accrue
from July 21, 1994, or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semi-annually on February 15 and
August 15 of each year commencing February 15, 1995, to the person in whose name
the Note is registered at the close of business on the next preceding February 1
or August 1, as the case may be. Principal of and interest on the Notes will be
payable, and the transfer of Notes will be registrable, through the Depositary
as described below under "Book-Entry Procedures." The Notes will be sold in
denominations of $1,000 and integral multiples thereof. The Notes will not be
redeemable by Regions, in whole or in part, prior to their final stated maturity
and do not provide for any sinking fund. The Notes will mature on August 15,
2001.
The Notes are subordinate to all Senior Indebtedness of Regions as
described in the accompanying Prospectus under "Description of Debt
Securities -- Subordination," generally including (with certain exceptions) all
other indebtedness and other obligations of Regions to its creditors. The
Indenture does not
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<PAGE> 7
limit or prohibit the incurrence of additional Senior Indebtedness. As of March
31, 1994, there was an aggregate of approximately $584.4 million in borrowed
funds of Regions outstanding, approximately $449.6 million of which represented
long-term debt and $134.8 million of which represented short-term borrowings,
including $114.6 million of federal funds purchased and securities sold subject
to agreements to repurchase, all of which is included in the definition of
"Senior Indebtedness." Senior Indebtedness also includes other liabilities, such
as accounts payable. Because of the inclusion of short-term components, the
amount of Senior Indebtedness outstanding is subject to significant fluctuation
over even short periods of time. Also as of March 31, 1994, Regions had
outstanding $75 million of unsecured subordinated indebtedness designated 7.80%
Subordinated Notes Due 2002 (the "7.80% Subordinated Notes") which qualify as
Subordinated Debt Securities as described in the accompanying Prospectus under
"Description of Debt Securities -- Subordination." The 7.80% Subordinated Notes
were issued under the Indenture.
Payment of the principal of the Notes may be accelerated only in the case
of certain events involving bankruptcy, insolvency proceedings or reorganization
of Regions. There is no right of acceleration in the case of a default in the
payment of principal or interest on the Notes or in the performance of any other
covenant of Regions in the Indenture. See "Description of Debt
Securities -- Defaults and Limited Rights of Acceleration" in the accompanying
Prospectus.
BOOK-ENTRY PROCEDURES
Upon issuance, all Notes will be represented by one or more Global Notes.
Each such Global Note will be deposited with, or on behalf of, The Depository
Trust Company, as Depositary, and registered in the name of the Depositary or a
nominee thereof. Unless and until it is exchanged in whole or in part for Notes
in definitive form, no Global Note may be transferred, except as a whole, by the
Depositary to a successor depositary or between such Depositary or successor
depositary and any nominee of either.
The Depositary has advised Regions as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers (including the Underwriter), banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the Depositary's book-entry system is also
available to others, such as banks, securities brokers and dealers, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Notes under the Depositary's book-entry system must be made by
or through Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of
securities, including the Notes ("Beneficial Owner"), is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Notes are
to be accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Notes, except in the event that use of
the book-entry system for the Notes is discontinued.
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<PAGE> 8
To facilitate subsequent transfers, all securities deposited by
Participants with the Depositary, including the Notes, are registered in the
name of the Depositary's partnership nominee, Cede & Co. The deposit of
securities with the Depositary and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge of the
actual Beneficial Owners of the Notes; the Depositary's records reflect only the
identity of the Direct Participants to whose accounts such Notes are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
securities, including the Notes. Under its usual procedures, the Depositary
mails an omnibus proxy to the issuer as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the securities are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on payable date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of the Depositary, the Agent, or the Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to the Depositary is the responsibility of Regions or the
paying agent, disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
The information in this section concerning the Depositary and its
book-entry system has been obtained from sources that Regions believes to be
reliable, but Regions takes no responsibility for the accuracy thereof.
If (i) the Depositary is at any time unwilling or unable to continue as
Depositary, or the Depositary ceases to be a clearing agency registered or in
good standing under the Exchange Act, and Regions does not appoint a successor
depositary within 90 days of notice of such condition or (ii) Regions determines
that the Notes shall no longer be represented by a Global Note, the Global Notes
will be transferable or exchangeable, in whole but not in part, for Notes in
definitive registered form of like tenor and of an equal aggregate principal
amount, in denominations of $1,000 and integral multiples thereof. Such
definitive Notes shall be registered in such name or names and in such
authorized denominations as the Depositary shall instruct the Trustee. It is
expected that such instructions may be based upon directions received by the
Depositary from Participants with respect to ownership of beneficial interests
in such Global Notes.
The Indenture provides that Regions may designate a successor depositary
under certain circumstances. In that event Regions anticipates that such
successor depositary would implement record-keeping and clearing procedures
comparable to those described above.
S-8
<PAGE> 9
CAPITALIZATION
The following table sets forth the consolidated capitalization of Regions
at March 31, 1994, and as adjusted as of such date to give effect to the sale of
the Notes offered hereby, and as further adjusted to reflect the consummation of
the Recently Completed Acquisitions and the Pending Acquisitions. The table
should be read in conjunction with the unaudited pro forma financial information
included in Regions' current report on Form 8-K dated July 8, 1994. For
additional information relating to specific transactions within the scope of the
Recently Completed Acquisitions and the Pending Acquisitions, see "Recent
Developments."
<TABLE>
<CAPTION>
AT MARCH 31, 1994
---------------------------------------------
AS ADJUSTED
FOR OFFERING,
RECENTLY COMPLETED
AS ADJUSTED ACQUISITIONS AND
FOR PENDING
ACTUAL OFFERING ACQUISITIONS
---------- ----------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
8 3/4% debentures due 1998.......................... $ 5,600 $ 5,600 $ 5,600
Mortgage notes payable.............................. 5,205 5,205 5,205
Federal Home Loan Bank notes........................ 333,338 333,338 333,338
Other notes payable................................. 30,522 30,522 32,200
7.80% subordinated notes due 2002................... 75,000 75,000 75,000
7.65% subordinated notes due 2001................... -- 25,000 25,000
---------- ----------- ------------------
Total long-term debt........................... 449,665 474,665 476,343
Stockholders' equity:
Common stock, $.625 par value; authorized
120,000,000 shares;
issued (including treasury stock) 42,538,946;
42,538,946; and 44,808,814, respectively......... 26,587 26,587 28,006
Surplus............................................. 376,200 376,200 393,643
Undivided profits................................... 483,113 483,113 503,153
Treasury stock at cost -- 1,474,579 shares.......... (12,441) (12,441) (12,441)
Unearned restricted stock........................... (1,409) (1,409) (1,409)
Unrealized gain on securities available for sale.... 6,189 6,189 5,371
---------- ----------- ------------------
Total stockholders' equity..................... 878,239 878,239 916,323
---------- ----------- ------------------
Total long-term debt and stockholders'
equity...................................... $1,327,904 $ 1,352,904 $1,392,666
========= ========= ==============
</TABLE>
S-9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement relating to the Notes, Regions has agreed to sell to
the Underwriter, and the Underwriter has agreed to purchase, $25,000,000 in
aggregate principal amount of the Notes. The Underwriting Agreement provides
that the obligation of the Underwriter is subject to certain terms and
conditions. The Underwriter is committed to purchase all of the Notes if any are
purchased.
The Underwriter has advised Regions that it proposes to offer all or part
of the Notes directly to the public at the initial public offering price set
forth on the cover page of this Prospectus Supplement and to certain securities
dealers at such price, less a concession not in excess of .35% of the principal
amount of the Notes. The Underwriter may allow, and such dealers may reallow, to
certain brokers and dealers a concession not in excess of .25% of the principal
amount of the Notes. After the Notes are released for sale to the public, the
offering price and other selling terms may be varied from time to time.
The Notes are a new issue of securities with no established trading market.
Regions does not intend to apply for listing of the Notes on a national
securities exchange. Regions has been advised by the Underwriter that it intends
to make a market in the Notes, but is not obligated to do so and may discontinue
such market-making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the Notes.
Regions has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to certain payments the Underwriter may be required to make in
respect thereof.
The Underwriter and its affiliates may be customers of, engage in
transactions with and perform services for Regions and its subsidiaries in the
ordinary course of business.
LEGAL MATTERS
Certain legal matters will be passed upon for the Underwriter by Alston &
Bird, Washington, D.C. From time to time, Alston & Bird provides, and may in the
future continue to provide, legal services to Regions and its subsidiaries. As
to matters of Delaware law, Alston & Bird will rely upon the opinion of Lange,
Simpson, Robinson & Somerville, counsel to Regions.
S-10
<PAGE> 11
PROSPECTUS
FIRST ALABAMA BANCSHARES, INC.
DEBT SECURITIES
First Alabama Bancshares, Inc. ("First Alabama" or the "Company") intends
to offer from time to time in one or more series up to $100,000,000 in aggregate
initial offering price of its unsecured notes, debentures, bonds or other
evidences of indebtedness (the "Debt Securities"), which may be either senior
(the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities"). The Debt Securities may be offered, separately or together, in
separate series, in amounts, at prices and on terms to be determined at the time
of sale and set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement"), which will be delivered to the offerees.
The Subordinated Debt Securities will be subordinated in right of payment
to all Senior Indebtedness of the Company (as described herein). The Prospectus
Supplement will set forth the terms of such Debt Securities, including the
specific designation, whether senior or subordinated, aggregate principal
amount, authorized denominations, any premium, interest rate (which may be fixed
or variable), if any, interest payment dates, if any, maturity, any optional or
mandatory redemption terms, any sinking fund provisions, any conversion terms,
the initial public offering price and any other terms of the offering.
The Debt Securities may be sold (i) to or through underwriters or dealers,
on a negotiated or competitive bid basis, such underwriters or dealers to be
designated at the time of sale, (ii) through agents designated from time to time
or (iii) directly. The names of any underwriters or agents of the Company
involved in the sale of the Debt Securities, and any applicable commissions or
discounts, will be set forth in the corresponding Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in the
corresponding Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION BUT ARE DEBT OBLIGATIONS OF
THE COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 2, 1992.
<PAGE> 12
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR THE CORRESPONDING PROSPECTUS SUPPLEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THIS
PROSPECTUS NOR THE CORRESPONDING PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND
THE CORRESPONDING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
AVAILABLE INFORMATION
First Alabama is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Copies of such reports, proxy
statements and other information can be obtained, at prescribed rates, from the
SEC by addressing written requests for such copies to the Public Reference
Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 75 Park Place, Room 1228, New York, New York
10007 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
This Prospectus constitutes part of the Registration Statement on Form S-3
of First Alabama (including any exhibits and amendments thereto, the
"Registration Statement") filed with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the Debt Securities offered
hereby. This Prospectus does not include all of the information in the
Registration Statement, certain portions of which have been omitted pursuant to
the rules and regulations of the SEC. For further information about First
Alabama and the Debt Securities offered hereby, reference is made to the
Registration Statement. The Registration Statement may be inspected and copied,
at prescribed rates, at the SEC's public reference facilities at the addresses
set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by First Alabama
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. First Alabama's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991.
2. First Alabama's Quarterly Reports on Form 10-Q for the three-month
periods ended March 31, 1992, June 30, 1992 and September 30, 1992.
First Alabama's Annual Report on Form 10-K for the year ended December 31,
1991 incorporates by reference specific portions of First Alabama's Annual
Report to Stockholders for that year ("Annual Report to Stockholders"), but does
not incorporate other portions of the Annual Report to Stockholders. Only those
portions of the Annual Report to Stockholders captioned "Financial Summary &
Review 1991," "Financial Statements and Notes" and "Historical Financial
Summary" are incorporated herein. Other portions of the Annual Report to
Stockholders are NOT incorporated herein and are not a part of the Registration
Statement.
All documents filed by First Alabama pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein or in any subsequently filed document which
also is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part hereof, except as so modified or superseded.
Copies of documents incorporated herein by reference, excluding exhibits
not specifically incorporated into the information incorporated herein, are
available without charge upon written or telephone request to Mr. L. Burton
Barnes, III, Corporate Secretary, First Alabama Bancshares, Inc., P.O. Box 1448,
Montgomery, Alabama 36102. Telephone requests may be directed to Mr. Barnes at
(205) 832-8450.
2
<PAGE> 13
THE COMPANY
First Alabama, a Delaware corporation headquartered in Birmingham, Alabama,
is a bank holding company registered with the Board of Governors of the Federal
Reserve System (the "Federal Reserve") under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). First Alabama was formed in 1971 and became
the first bank holding company in Alabama with the consolidation of three
Alabama banks with, at that time, approximately $600 million in assets. At
September 30, 1992, First Alabama had total consolidated assets of approximately
$7.4 billion, deposits of approximately $6.3 billion and stockholders' equity of
approximately $620 million and, based on assets, was the third largest bank
holding company headquartered in Alabama.
First Alabama provides a diversified range of financial services, including
consumer, commercial and corporate lending, retail banking, trust, mortgage
banking and securities brokerage services, through three state-chartered bank
subsidiaries and four operating banking-related subsidiaries. First Alabama's
lead bank, First Alabama Bank, operates 162 offices throughout Alabama and had
total assets of approximately $7.0 billion at September 30, 1992. First
Alabama's market area also extends to the panhandle of Florida and the Columbus,
Georgia area through, respectively, Sunshine Bank, which operates 15 offices and
had total assets of approximately $288 million at September 30, 1992, and First
Alabama Bank of Columbus, which operates three offices and had assets of
approximately $108 million at September 30, 1992. In addition, First Alabama
currently has pending an acquisition which would represent its initial entry
into Tennessee. If consummated, that acquisition will result in a fourth state
bank subsidiary, to be named First Security Bank of Tennessee, with 20 offices
in Middle Tennessee and approximately $400 million in assets. First Alabama's
banking-related subsidiaries are engaged in mortgage banking, credit life
insurance, leasing and securities brokerage activities. The largest
banking-related subsidiary, Real Estate Financing, Inc., is a mortgage banking
subsidiary that, at September 30, 1992, serviced approximately $6.2 billion in
real estate mortgages and operated 18 loan production offices in Alabama,
Florida, Georgia, Mississippi, Tennessee and South Carolina.
First Alabama has incurred relatively modest losses in its loan portfolio
relative to its peer institutions, with net charge-offs to average loans ranging
from a low of .35% to a high of .44% for each of the last five fiscal years. For
the nine months ended September 30, 1992, net charge-offs to average loans were
.20% on an annualized basis. Similarly, nonperforming assets as a percentage of
loans and other real estate owned have ranged at the end of each of the last
five fiscal years from a low of .94% to a high of 1.22%. At September 30, 1992,
nonperforming assets as a percentage of loans and other real estate owned
equaled .83%. Also as of that date, First Alabama had an allowance for loan
losses of $68 million, or 1.45% of total loans and 284% of nonperforming loans.
In 1991, First Alabama recorded its 20th consecutive year of increased
earnings and dividends. The Company's return on average assets has ranged for
each of the last five fiscal years from a low of 1.20% to a high of 1.31%.
Return on average assets for the nine months ended September 30, 1992 was 1.35%
on an annualized basis. Return on average stockholders' equity has ranged for
each of the last five fiscal years from a low of 13.25% to a high of 14.27%.
Return on average stockholders' equity for the nine months ended September 30,
1992 was 15.78% on an annualized basis.
At September 30, 1992, First Alabama had a leverage ratio and fully
phased-in Tier I risk-based and total risk-based capital ratios of 7.93%, 11.59%
and 12.95%, respectively. In addition, each of First Alabama's subsidiary banks
has the requisite capital level to qualify as "well capitalized" under the
prompt corrective action regulations promulgated by the federal banking agencies
pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"). See "Supervision and Regulation -- Capital Adequacy."
During the last three years, First Alabama increased its market presence
through acquisitions in several key markets. The most recent acquisition, in the
first quarter of 1992, added $48 million in deposits and five offices in Alabama
markets not previously served by First Alabama. In 1991, three banking offices
with deposits of $107 million were acquired in Columbus, Georgia and five
banking offices with deposits of $146 million were added in Pensacola, Florida.
Through the acquisition of deposits and branch offices from
3
<PAGE> 14
three thrift institutions in 1990, 13 offices were added in the Birmingham area,
five in the Montgomery area and three in the Mobile area. The 1990 acquisitions
added approximately $563 million in deposits and $114 million in loans.
Management intends to review further acquisition opportunities offered by the
Resolution Trust Corporation (the "RTC") and the Federal Deposit Insurance
Corporation (the "FDIC"). In addition, First Alabama continues to pursue the
acquisition of strategically located branch offices and whole institutions in
unassisted transactions, focusing on selected situations which management
believes would provide adequate return on investment. The difficult economic and
regulatory environment of the last few years has resulted in structural changes
and consolidation in the banking and thrift industries which have presented
opportunities for banks to acquire deposit franchises at attractive prices.
Management views its acquisition activity as an opportunity to improve First
Alabama's competitive position and financial performance. The acquisition
strategy seeks "fill-in" franchises in First Alabama's existing markets or, as
in the case of the pending acquisition in Tennessee described above, franchises
in adjacent markets. Each opportunity is evaluated independently and for its
effect on the Company as a whole.
The executive offices of First Alabama are located at 417 North 20th
Street, Birmingham, Alabama 35203, and its telephone number at such address is
(205) 326-7060.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including the Company's working capital needs,
possible acquisition of other financial institutions or their assets, possible
acquisitions of failed financial institutions by arrangements with regulatory
authorities, possible acquisitions of other businesses of a type eligible for
bank holding companies and possible reduction or repayment of outstanding
indebtedness. Pending such uses, the Company may temporarily invest such
proceeds. If the Company elects at the time of issuance of Debt Securities to
make definite or more specific use of proceeds other than as set forth herein,
such use of proceeds will be described in the corresponding Prospectus
Supplement.
4
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of and for the five
years ended December 31, 1991, are derived from the consolidated financial
statements of First Alabama which have been audited by Ernst & Young,
independent auditors. The financial data as of and for the nine months ended
September 30, 1992 and 1991, are derived from unaudited consolidated financial
statements. The unaudited consolidated financial statements include all
adjustments, consisting of normal recurring accruals, that First Alabama
considers necessary for a fair presentation of its financial position and the
results of its operations as of such dates and for such periods. Results for the
nine months ended September 30, 1992 are not necessarily indicative of the
results which might be expected for any other interim period or for the year as
a whole. The data should be read in conjunction with the consolidated financial
statements, related notes and other financial information incorporated by
reference herein. See "Documents Incorporated by Reference."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1992 1991 1991 1990 1989 1988 1987
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income statement data:
Interest income.......... $ 403,067 $ 418,868 $ 556,821 $ 519,753 $ 496,392 $ 404,625 $ 347,985
Interest expense......... 172,514 223,220 292,017 297,613 292,687 219,942 178,239
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income...... 230,553 195,648 264,804 222,140 203,705 184,683 169,746
Provision for loan
losses................. 20,100 16,500 24,005 24,208 15,800 10,790 8,605
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
loan loss provision.... 210,453 179,148 240,799 197,932 187,905 173,893 161,141
Non-interest income
excluding security
gains (losses)......... 87,824 75,214 102,230 93,706 70,698 69,195 66,003
Security gains
(losses)............... (17) (444) (507) (982) 506 48 700
Non-interest expense..... 193,901 170,097 230,606 194,587 175,429 167,330 154,568
Income tax expense....... 33,979 25,349 33,660 27,175 21,046 17,571 17,070
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............... $ 70,380 $ 58,472 $ 78,256 $ 68,894 $ 62,634 $ 58,235 $ 56,206
========== ========== ========== ========== ========== ========== ==========
Per share:
Net income............... $ 2.12 $ 1.78 $ 2.38 $ 2.10 $ 1.90 $ 1.77 $ 1.71
Cash dividends........... 0.75 0.72 0.96 0.92 0.84 0.80 0.76
Book value............... 18.64 17.04 17.34 15.99 14.83 13.80 12.80
Other information:
Average number of shares
outstanding............ 33,153 32,857 32,901 32,815 33,028 32,983 32,948
Balance sheet data (period
end):
Total assets............. $7,367,095 $6,499,425 $6,745,053 $6,344,406 $5,549,612 $5,173,609 $4,390,861
Investment securities.... 1,663,776 1,499,696 1,575,725 1,489,200 1,133,087 1,222,368 1,077,558
Loans, net of unearned
income................. 4,706,344 4,134,856 4,274,958 4,092,262 3,552,082 3,123,331 2,675,240
Total deposits........... 6,301,362 5,694,120 5,917,028 5,353,211 4,744,364 4,331,715 3,728,600
Long-term debt........... 61,444 19,321 18,782 19,707 45,343 20,611 68,466
Stockholders' equity..... 620,012 560,895 572,971 524,132 489,441 455,595 417,814
Performance ratios:
Return on average
assets(1).............. 1.35% 1.25% 1.23% 1.23% 1.20% 1.24% 1.31%
Return on average
stockholders'
equity(1).............. 15.78 14.42 14.27 13.64 13.25 13.29 13.81
Net interest margin(1)... 4.98 4.79 4.78 4.67 4.65 4.79 5.01
Efficiency(2)............ 59.45 60.68 60.79 59.10 60.51 61.81 59.65
Dividend payout.......... 35.38 40.45 40.34 43.81 44.21 45.20 44.44
Earnings to fixed
charges(3):
Excluding interest on
deposits............... 16.54x 9.33x 10.04x 6.88x 4.01x 5.10x 5.15x
Including interest on
deposits............... 1.60 1.37 1.38 1.32 1.28 1.34 1.41
</TABLE>
5
<PAGE> 16
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1992 1991 1991 1990 1989 1988 1987
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Asset quality ratios:
Net charge-offs to
average loans, net of
unearned income(1)..... 0.20% 0.25% 0.35% 0.44% 0.42% 0.38% 0.35%
Problem assets to
net loans and other
real estate(4)......... 0.72 0.88 0.89 0.98 0.72 0.70 1.02
Nonperforming assets to
net loans and other
real estate(5)......... 0.83 1.05 1.01 1.12 0.94 1.00 1.22
Allowance for loan losses
to loans, net of
unearned income........ 1.45 1.30 1.28 1.10 1.05 1.12 1.25
Allowance for loan losses
to nonperforming
assets................. 173.70 123.96 126.32 98.18 110.71 112.28 101.94
Liquidity and capital
ratios:
Average stockholders'
equity to average
assets................. 8.53% 8.63% 8.63% 9.03% 9.06% 9.31% 9.48%
Average loans to average
deposits............... 71.66 73.93 73.40 76.67 75.23 71.33 69.98
Tier I risk-based
capital(6)............. 11.59 11.95 11.85 11.31 N/A N/A N/A
Total risk-based
capital(6)............. 12.95 13.32 13.19 12.51 N/A N/A N/A
Tier I leverage(6)....... 7.93 8.04 7.93 7.65 8.36 8.29 9.01
</TABLE>
- ---------------
(1) Interim period ratios are annualized.
(2) Non-interest expense divided by the sum of net interest income
(tax-equivalent basis) and non-interest income net of gains (losses) from
security transactions.
(3) Earnings represent net income plus applicable income taxes and fixed
charges. Fixed charges represent interest expense (exclusive of interest on
deposits in one case and inclusive of such interest in the other), and
one-third (the amount deemed to represent an appropriate interest factor)
of net rent expense under all lease commitments.
(4) Problem assets include loans on a nonaccrual basis, restructured loans and
foreclosed properties.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due and foreclosed properties.
(6) The risk-based capital ratios are based upon fully phased-in 1992 risk-based
capital guidelines. Under those guidelines, the required minimum Tier I and
total risk-based capital ratios are 4% and 8%, respectively. The minimum
leverage ratio of Tier I capital to total adjusted assets is 3% to 5%. See
"Summary Financial Review -- Capital Resources" and "Supervision and
Regulation -- Capital Adequacy."
6
<PAGE> 17
SUMMARY FINANCIAL REVIEW
The following summary information should be read in conjunction with and is
qualified by the Consolidated Financial Statements of First Alabama and the
related Management's Discussion and Analysis of Financial Condition and Results
of Operations included in First Alabama's Quarterly Report on Form 10-Q for the
nine months ended September 30, 1992 and Annual Report on Form 10-K for the year
ended December 31, 1991, which are incorporated herein by reference. See
"Documents Incorporated by Reference."
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1992. Net income for the first nine months
of 1992 was $70.4 million, a 20% increase over the $58.5 million net income
earned in the first nine months of 1991. On a per share basis, net income
increased 19% to $2.12 from $1.78.
Net interest income for the nine months increased 18% to $230.6 million
from $195.6 million for the corresponding 1991 period. On a taxable-equivalent
basis, the net interest margin was 4.98% for the nine months ended September 30,
1992, up 19 basis points from 4.79% during the same period in 1991.
Non-interest income totalled $87.8 million, an increase of 17% from 1991's
$74.8 million. This increase resulted primarily from higher trust fees, deposit
account fees and charges, mortgage servicing and origination fees and trading
account fees and commissions.
Non-interest expense for the first nine months of 1992 increased 14% to
$193.9 million, due primarily to increases in personnel expense, advertising
costs, amortization of mortgage servicing rights and excess purchase price and
FDIC deposit insurance premiums. The FDIC has adopted further increases in
deposit insurance premiums for 1993. See "Supervision and Regulation."
YEAR ENDED DECEMBER 31, 1991. In 1991, net income increased $9.4 million,
or 14%, to $78.3 million from $68.9 million in 1990. On a per share basis, net
income was $2.38, 13% higher than the $2.10 earned in 1990.
Net interest income was $264.8 million for 1991, compared to $222.1 million
for 1990, reflecting a 19% increase. On a taxable-equivalent basis, the net
interest margin rose 11 basis points from 4.67% to 4.78%. The increase in net
interest income and the improvement in the margin were attributable to higher
levels of earning assets and generally lower funding costs.
Non-interest income was $101.7 million for 1991, 10% higher than the $92.7
million realized in 1990. The higher 1991 non-interest income resulted from
increases in trust fees, deposit account fees and charges and mortgage servicing
and origination fees. Other non-interest income declined in 1991 primarily
because of the receipt in 1990 of an $8.1 million non-recurring insurance
settlement.
Non-interest expense totalled $230.6 million for 1991, representing an
increase of 19% over the $194.6 million for the previous year. Increases in
personnel expense, occupancy and equipment expense, FDIC deposit insurance
premiums, foreclosed property expense and amortization of mortgage servicing
rights, accounted for most of the increase in other non-interest expense.
BALANCE SHEET
SEPTEMBER 30, 1992. Total assets at September 30, 1992 were $7.4 billion,
an increase of 9% from December 31, 1991 and 13% from September 30, 1991. Total
loans at September 30, 1992 were $4.7 billion, or 10% and 14% higher than at
year-end 1991 and September 30, 1991, respectively, reflecting growth in most
major loan categories. Total deposits were $6.3 billion at September 30, 1992,
an increase of 11% from September 30, 1991. Approximately 8% of this increase
resulted from internal growth in most categories of deposits (excluding
certificates of deposit), with the remaining 3% increase attributable to the
purchase of deposits of two thrift institutions. Since year-end 1991, total
deposits increased 6%. Stockholders' equity at September 30, 1992 was $620
million, or 8.4% of total assets, $59 million higher than one year earlier when
stockholders' equity was 8.6% of total assets. Stockholders' equity (book value)
per share grew 9% from $17.04 at September 30, 1991 to $18.64 at September 30,
1992.
7
<PAGE> 18
DECEMBER 31, 1991. Total assets at December 31, 1991 were $6.7 billion, 6%
greater than the prior year-end level. Total loans increased a modest 4% to $4.3
billion, reflecting reduced loan demand due to weaker economic conditions
throughout the year. Total deposits grew 11% to $5.9 billion, including
approximately $253 million in deposits purchased from the RTC. Stockholders'
equity at December 31, 1991 was $573 million, or 8.5% of total assets, $49
million higher than year-end 1990. Stockholders' equity (book value) per share
was $17.34 versus $15.99 at the end of 1990, an increase of 8%.
The following table summarizes the composition of the loan portfolio at the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------------------------------
LOAN PORTFOLIO 1992 1991 1990
-------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Commercial...................... $1,382,389 29% $1,301,732 30% $1,368,619 34%
Commercial mortgages............ 909,376 19 819,904 19 713,131 17
Residential mortgages........... 1,008,224 22 891,742 21 851,853 21
Consumer........................ 937,999 20 844,437 20 785,070 19
Construction.................... 229,130 5 194,306 5 154,964 4
Home equity..................... 154,144 3 133,797 3 129,759 3
Credit cards.................... 85,082 2 89,040 2 88,866 2
---------- --- ---------- --- ---------- ---
Total loans........... $4,706,344 100% $4,274,958 100% $4,092,262 100%
========= === ========= === ========= ===
</TABLE>
The Company's deposits consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------------------------------
DEPOSITS 1992 1991 1990
-------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Non-interest-bearing............ $ 929,117 15% $ 874,671 15% $ 851,870 16%
Interest-bearing:
Interest-bearing checking..... 691,882 11 641,276 11 559,548 10
Savings....................... 493,772 8 424,665 7 351,933 7
Money market.................. 1,039,327 16 812,306 14 611,592 11
Certificates of deposit of
$100,000 or more........... 450,684 7 431,315 7 562,912 11
Certificates of deposit of
less than $100,000......... 1,465,152 23 1,612,992 27 1,485,998 28
Other interest-bearing
deposits................... 1,231,428 20 1,119,803 19 929,358 17
---------- --- ---------- --- ---------- ---
Total interest-bearing
deposits................. 5,372,245 85 5,042,357 85 4,501,341 84
---------- --- ---------- --- ---------- ---
Total deposits........ $6,301,362 100% $5,917,028 100% $5,353,211 100%
========= === ========= === ========= ===
</TABLE>
ASSET QUALITY
SEPTEMBER 30, 1992. Nonperforming assets (including loans ninety days or
more past due) at September 30, 1992 were $39.3 million or .83% of loans and
other real estate, compared to $43.4 million or 1.01% of loans and other real
estate at December 31, 1991, and $43.4 million or 1.05% of loans and other real
estate at September 30, 1991.
The allowance for loan losses at September 30, 1992 was $68.2 million or
1.45% of loans, compared to $54.8 million or 1.28% of loans at year-end 1991,
and $53.8 million or 1.30% of loans at September 30, 1991. Net charge-offs for
the nine months ended September 30, 1992 were $6.6 million or .20% of average
loans on an annualized basis, compared to $7.7 million for the nine months ended
September 30, 1991 or .25% of average loans on an annualized basis.
The allowance for loan losses represents management's estimate of an amount
adequate in relation to the risk of future losses inherent in the loan
portfolio. In assessing the adequacy of the allowance, management
8
<PAGE> 19
relies predominantly on its ongoing review of the loan portfolio, which is
undertaken both to ascertain probable losses to be charged off and to assess the
risk characteristics of the portfolio in the aggregate. Among other factors,
management considers the Company's loan loss experience, growth in the loan
portfolio, composition of the loan portfolio, the amount of past due and
nonperforming loans, current and anticipated economic conditions and the
estimated current values of collateral securing loans in assessing the level of
the allowance for loan losses.
While it is the Company's policy to charge off in the current period loans
in which a loss is considered probable, there are additional risks of future
losses which cannot be quantified precisely or attributed to particular loans or
classes of loans. Because these risks include the state of the economy as well
as conditions affecting individual borrowers, management's judgment of the
allowance is necessarily approximate and imprecise. It is also subject to
regulatory examinations and determinations as to adequacy, which may take into
account such factors as the methodology used to calculate the allowance for loan
losses and the size of the allowance for loan losses in comparison to a peer
group identified by the regulatory agencies.
DECEMBER 31, 1991. Nonperforming assets at December 31, 1991 were $43.4
million or 1.01% of loans and other real estate, compared to $45.8 million or
1.12% of loans and other real estate at December 31, 1990.
At December 31, 1991, the allowance for loan losses was $54.8 million or
1.28% of loans, compared to $45.0 million or 1.10% of loans at December 31,
1990. The increase in the allowance resulted from a provision of $24.0 million
to the allowance, less net charge-offs of $14.2 million during the year. Net
charge-offs during 1991 represented .35% of average loans, a decrease of $2.1
million from the previous year, when the ratio was .44% of average loans.
The following table presents information on nonperforming assets at the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -----------------
NONPERFORMING ASSETS 1992 1991 1990
------------------------------------------------------- ------------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Nonaccrual loans:
Commercial........................................... $11,768 $12,039 $ 7,891
Real estate.......................................... 8,549 9,839 19,660
Installment.......................................... 2,342 3,135 3,737
------------- ------- -------
Total nonaccrual loans....................... 22,659 25,013 31,288
Other real estate...................................... 9,996 11,911 7,657
Restructured loans..................................... 1,330 1,396 1,225
------------- ------- -------
Total problem assets......................... 33,985 38,320 40,170
Loans 90 days past due................................. 5,292 5,036 5,648
------------- ------- -------
Total nonperforming assets................... $39,277 $43,356 $45,818
========== ======= =======
Nonperforming assets to loans and other real estate.... 0.83% 1.01% 1.12%
Allowance to nonaccrual and restructured loans......... 284.39 207.39 138.36
Allowance to nonperforming assets...................... 173.70 126.32 98.18
</TABLE>
9
<PAGE> 20
The following table shows, for the periods indicated, activity in the
allowance for loan losses:
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, -----------------
ALLOWANCE FOR LOAN LOSSES 1992 1991 1990
------------------------------------------------------- ------------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Beginning balance...................................... $54,769 $44,984 $37,136
Net charge-offs:
Commercial........................................... 2,733 5,484 5,978
Real estate.......................................... 210 1,275 2,033
Installment.......................................... 3,703 7,461 8,349
------------- ------- -------
Total........................................ 6,646 14,220 16,360
Provision charged to expense........................... 20,100 24,005 24,208
------------- ------- -------
Ending balance......................................... $68,223 $54,769 $44,984
========== ======= =======
Net charge-offs to average loans....................... 0.20%(1) 0.35% 0.44%
Allowance for loan losses to loans (at period end)..... 1.45 1.28 1.10
</TABLE>
- ---------------
(1) Annualized.
CAPITAL RESOURCES
The Company's risk-based capital and leverage ratios exceeded all
regulatory minimum guidelines at September 30, 1992. The Company is required to
maintain a level of capital equal to at least 7.25% of risk-weighted assets,
with Tier I capital (primarily stockholders' equity less goodwill) comprising at
least half of that amount. Beginning December 31, 1992, the minimum qualifying
ratio will be 8%, of which at least 4% must consist of Tier I capital.
Risk-weighted assets include recorded assets and certain off-balance sheet
obligations, adjusted by specified factors designed to measure varying degrees
of risk.
In addition to risk-based capital ratios, the Company is required to
maintain a minimum leverage ratio of 3%, plus an additional cushion of 1% to 2%
depending upon the risk profile of the institution and other factors. The
leverage ratio is defined as the ratio of Tier I capital to total adjusted
assets. See "Supervision and Regulation -- Capital Adequacy."
10
<PAGE> 21
The following table shows the Company's risk-based capital (on a fully
phased-in basis), leverage capital and capital ratios at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------------------
1992 1991 1990
------------- ---------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
RISK-BASED CAPITAL
Tier I capital:
Stockholders' equity................................ $ 620,012 $ 572,971 $ 524,132
Less nonqualifying intangibles...................... 38,786 41,122 41,883
------------- ---------- ----------
Total Tier I................................... 581,226 531,849 482,249
Tier II capital:
Allowable allowance for loan losses................. 62,746 54,769 44,984
Allowable long-term debt............................ 5,200 5,200 6,130
------------- ---------- ----------
Total Tier II.................................. 67,946 59,969 51,114
------------- ---------- ----------
Total risk-based capital.............................. $ 649,172 $ 591,818 $ 533,363
========== ========= =========
Total risk-weighted assets............................ $ 5,014,165 $4,487,759 $4,263,497
LEVERAGE CAPITAL
Total Tier I.......................................... $ 581,226 $ 531,849 $ 482,249
Total adjusted assets................................. 7,328,309 6,703,931 6,302,523
CAPITAL RATIOS
Tier I risk-based capital............................. 11.59% 11.85% 11.31%
Total risk-based capital.............................. 12.95 13.19 12.51
Leverage.............................................. 7.93 7.93 7.65
</TABLE>
In addition, each of First Alabama's subsidiary banks has the requisite
capital level to qualify as "well capitalized" under the prompt corrective
action regulations promulgated by the federal banking agencies pursuant to the
provisions of FDICIA. See "Supervision and Regulation -- Capital Adequacy."
SUPERVISION AND REGULATION
Bank holding companies and banks are regulated extensively under both
federal and state law. The following discussion highlights certain laws and
regulations affecting First Alabama and its subsidiary banks and should be read
in conjunction with the more detailed information incorporated by reference
herein. See "Documents Incorporated by Reference." Supervision, regulation and
examination of banks by the bank regulatory agencies are intended primarily for
the protection of depositors rather than holders of Debt Securities.
GENERAL
First Alabama is subject to the supervision, examination and reporting
requirements contained in the BHC Act and regulations of the Federal Reserve. As
state banks that are not members of the Federal Reserve System, the subsidiary
banks of First Alabama are also subject to the supervision, examination and
reporting requirements of the FDIC. First Alabama subsidiary banks' customer
deposits are insured by the FDIC in accordance with applicable law.
The BHC Act generally requires the prior approval of the Federal Reserve
where a bank holding company proposes to acquire direct or indirect ownership or
control of more than 5% of the voting shares of any bank or otherwise to acquire
control of a bank or to merge or consolidate with any other bank holding
company. The BHC Act generally prohibits the Federal Reserve from approving an
application by a bank holding company to acquire a bank located in another
state, unless such an acquisition is specifically authorized by statute of the
state in which the bank to be acquired is located. Alabama has adopted
reciprocal interstate banking legislation permitting Alabama-based bank holding
companies to acquire banks and bank holding companies in other states and
allowing bank holding companies located in Arkansas, the District of Columbia,
Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina,
South Carolina, Tennessee, Texas, Virginia and West Virginia to acquire Alabama
banks and bank holding companies.
11
<PAGE> 22
A bank holding company is generally prohibited under the BHC Act from
acquiring voting shares of any company which is not a bank, and from engaging in
any activities other than those of banking or of managing or controlling banks
or furnishing services to or performing services for its subsidiaries. An
exception to those prohibitions permits a bank holding company to engage in, or
to acquire an interest in a company which engages in, activities that the
Federal Reserve has determined are so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
First Alabama is a legal entity separate and distinct from its subsidiary
banks and its other subsidiaries. Various legal limitations restrict the
subsidiary banks from lending or otherwise supplying funds to First Alabama or
its nonbank subsidiaries, generally limiting such transactions with any
affiliate to 10% of the bank's capital and surplus and limiting all such
transactions to 20% of the bank's capital and surplus. Such transactions,
including extensions of credit, sales of securities or assets and provision of
services, also must be on terms and conditions consistent with safe and sound
banking practices, including credit standards, that are substantially the same
or at least as favorable to the bank as prevailing at the time for transactions
with unaffiliated companies.
Federal Reserve policy requires a bank holding company to act as a source
of financial strength to each of its bank subsidiaries and to take measures,
including possible loans to its subsidiaries in the form of capital notes or
other instruments, to preserve and protect bank subsidiaries in situations where
additional investments in a troubled bank may not otherwise be warranted. In
addition, where a bank holding company has more than one subsidiary depository
institution, the bank holding company's other subsidiary depository institutions
are responsible under a cross-guarantee for any losses to the FDIC as a result
of the failure of a subsidiary depository institution. However, any loans from
the holding company to a subsidiary depository institution likely would be
unsecured and subordinated to such institution's depositors and certain other
creditors.
Federal and state banking laws and regulations govern all areas of the
operations of First Alabama's subsidiary banks, including reserves, loans,
mortgages, capital, issuances of securities, payment of dividends and
establishment of branches. Federal and state bank regulatory agencies also have
the general authority to limit the dividends paid by insured banks and bank
holding companies if such payments may be deemed to constitute an unsafe and
unsound practice. As the primary federal regulator of the subsidiary banks, the
FDIC has authority to impose penalties, initiate civil and administrative
actions and take other steps intended to prevent the banks from engaging in
unsafe or unsound practices.
Federally insured banks are subject, with certain exceptions, to certain
restrictions on extensions of credit to their parent holding companies or other
affiliates as described above, on investments in the stock or other securities
of affiliates and on the taking of such stock or securities as collateral from
any borrower. In addition, such banks are prohibited from engaging in certain
tie-in arrangements in connection with any extension of credit or the providing
of any property or service.
Banks are also subject to the provisions of the Community Reinvestment Act
of 1977, which require the appropriate federal bank regulatory agency, in
connection with its regular examination of a bank, to assess the bank's record
in meeting the credit needs of the community serviced by the bank, including
low-and moderate-income neighborhoods. The regulatory agency's assessment of the
bank's record is made available to the public. Further, such assessment is
required of any bank which has applied to, among other things, establish a new
branch office that will accept deposits, relocate an existing office or merge or
consolidate with, or acquire the assets or assume the liabilities of, a
federally regulated financial institution.
CAPITAL ADEQUACY
First Alabama and its subsidiary banks are required to comply with the
capital adequacy standards established by the Federal Reserve and the FDIC.
Currently, there are two basic measures of capital adequacy: a risk-based
measure and a leverage measure. All applicable capital standards must be
satisfied for an institution to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure
12
<PAGE> 23
and to minimize disincentives for holding liquid assets. Assets and off-balance
sheet items are assigned to broad risk categories, each with appropriate
weights. The resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
When the risk-based rules are fully phased in at the end of 1992, the
minimum standard for the ratio of capital to risk-weighted assets (including
certain off-balance sheet obligations, such as standby letters of credit) will
be 8%. At least 50% of that capital level must consist of common equity,
retained earnings and noncumulative perpetual preferred stock, less goodwill and
certain other intangibles ("Tier I capital"). The remainder ("Tier II capital")
may consist of a limited amount of other preferred stock, mandatory convertible
securities, qualifying subordinated debt and a limited amount of loan loss
reserves. The sum of Tier I capital and Tier II capital is "total risk-based
capital." The Federal Reserve and the FDIC have recently proposed to add an
interest rate risk component to their existing risk-based capital requirements.
At September 30, 1992, First Alabama had Tier I and total risk-based capital
ratios of 11.59% and 12.95%, respectively, based upon the fully phased-in
risk-based capital requirements applicable at the end of 1992.
On August 28, 1992, the Federal Reserve issued an interpretation of its
risk-based capital guidelines to clarify the criteria for qualifying the
subordinated debt of a bank holding company as Tier II capital. The
interpretation, among other things, requires that subordinated debt which
qualifies as Tier II capital of a bank holding company must be unsecured and
subordinated in right of payment to the claims of all of the bank holding
company's general creditors, and not, as previously permitted, to the claims of
holders of senior indebtedness alone. In addition, qualifying subordinated debt
must state clearly on its face that it is not a deposit and is not insured by a
federal agency; must have a minimum average maturity of not less than five
years; must contain no provisions permitting debtholders to accelerate payment
of principal prior to maturity except in the event of bankruptcy of the bank
holding company; must contain no covenants, terms or restrictions that are
inconsistent with safe and sound banking practice (i.e., in general, provisions
that could adversely affect liquidity or unduly restrict management's
flexibility to run the organization, or that could limit a regulator's ability
to resolve problem bank situations); must include no credit sensitive features
that tie payments on the subordinated debt to the financial condition of the
bank holding company; and must not exceed 50% of the amount of the bank holding
company's Tier I capital (this includible amount must be discounted on a
straight line basis beginning five years from maturity). Qualifying subordinated
debt may be redeemed prior to stated maturity only after consultation with the
Federal Reserve.
The Federal Reserve and the FDIC also have adopted regulations which
supplement the risk-based guidelines to include a minimum leverage ratio of 3%
Tier I capital to total assets less goodwill (the "leverage ratio"). The Federal
Reserve and FDIC emphasized that the 3% leverage ratio constitutes a minimum
requirement for well-run banking organizations having diversified risk,
including no undue interest rate risk exposure, excellent asset quality, high
liquidity, good earnings and a composite regulatory rating of 1 under the
regulatory rating system for banks. Banking organizations experiencing or
anticipating significant growth, as well as those organizations which do not
satisfy the criteria described above, will be required to maintain a minimum
leverage ratio ranging generally from 4% to 5%. At September 30, 1992, First
Alabama had a leverage ratio of 7.93%.
The Federal Reserve also continues to consider a "tangible Tier I leverage
ratio" in evaluating proposals for expansion or new activities. The tangible
Tier I leverage ratio is the ratio of a banking organization's Tier I capital,
less deductions for intangibles otherwise includable in Tier I capital, to total
tangible assets. At September 30, 1992, First Alabama's tangible Tier I leverage
ratio was 7.46%.
13
<PAGE> 24
As of September 30, 1992, the risk-based capital (on a fully phased-in
basis) and leverage ratios of First Alabama's banking subsidiaries, First
Alabama Bank, Sunshine Bank and First Alabama Bank of Columbus, were as follows:
<TABLE>
<CAPTION>
FIRST ALABAMA SUNSHINE FIRST ALABAMA
CAPITAL RATIOS BANK BANK BANK OF COLUMBUS
----------------------------------------------- ------------- -------- ----------------
<S> <C> <C> <C>
Tier I risk-based capital...................... 11.37% 14.04% 46.66%
Total risk-based capital....................... 12.62 15.30 47.91
Leverage....................................... 7.89 7.12 7.04
</TABLE>
Bank regulators continue to indicate their desire to raise capital
requirements applicable to the banking industry beyond current levels. However,
the Company is unable to predict whether or when higher capital requirements
would be imposed.
An institution which fails to meet minimum capital requirements may be
subject to a capital directive which is enforceable in the same manner and to
the same extent as a final cease and desist order, and must submit a capital
plan within 60 days to the FDIC. If the leverage ratio falls to 2% or less, the
bank may be deemed to be operating in an unsafe or unsound condition, allowing
the FDIC to take various enforcement actions, including possible termination of
insurance or placing the institution into receivership.
DIVIDENDS
Dividends from its subsidiary banks constitute the major source of funds
for First Alabama. The amount of dividends payable by the banks to the Company
depends upon the banks' earnings and capital position, and is limited by federal
and state law, regulations and policies. As state nonmember banks, the
subsidiary banks are subject to the respective laws and regulations of the
States of Alabama, Georgia and Florida and to the regulations of the FDIC. At
September 30, 1992, the banks had $121.8 million of undivided profits legally
available for the payment of dividends. Federal law further provides that no
insured depository institution may make any capital distribution (which would
include a cash dividend) if, after making the distribution, the institution
would not satisfy one or more of its minimum capital requirements. Moreover, the
federal bank regulatory agencies also have the general authority to limit the
dividends paid by insured banks if such payments may be deemed to constitute an
unsafe and unsound practice.
RECENT LEGISLATION AND REGULATORY DEVELOPMENTS
With the enactment of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") and FDICIA, Congress enacted comprehensive
legislation affecting the commercial banking and thrift industries. FIRREA,
among other things, abolished the Federal Savings and Loan Insurance Corporation
and established two new insurance funds under the jurisdiction of the FDIC: the
Bank Insurance Fund ("BIF"), which insures most commercial banks, including
First Alabama's subsidiary banks, and the Savings Association Insurance Fund,
which insures most thrift institutions. In addition to effecting far-reaching
restructuring of the thrift industry, FIRREA provided for a phased-in increase
in the rate of annual insurance assessments paid by insured depository
institutions. FDICIA provides increased funding for the BIF and expanded
regulation of depository institutions and their affiliates, including parent
holding companies. A significant portion of the additional BIF funding will be
in the form of borrowings to be repaid by insurance premiums assessed on BIF
members. These premium increases would be in addition to the increases in
deposit premiums made during 1991. FDICIA provides for an increase in the BIF's
ratio of reserves to insured deposits to 1.25% within the next 15 years, also to
be financed by insurance premiums. The result of these provisions could be a
significant increase in the assessment rate on deposits of BIF members over the
next 15 years. FDICIA provides authority for special assessments against insured
deposits and for the development of a system of assessing deposit insurance
premiums based upon the institution's risk.
In September 1992, the FDIC adopted a new transitional risk-based premium
schedule which increases the assessment rates for depository institutions. Under
the new schedule, which will take effect for the assessment period beginning
January 1, 1993, premiums initially will range from $.23 to $.31 for every $100
of deposits. Each financial institution will be assigned to one of three capital
groups -- well capitalized,
14
<PAGE> 25
adequately capitalized or undercapitalized, as defined in the regulations
implementing the prompt corrective action provisions of FDICIA -- and further
assigned to one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and, if applicable,
state supervisors and other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution will depend upon the risk
assessment classification so assigned to the institution by the FDIC.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of banks that do not meet minimum capital
requirements. FDICIA establishes five capital tiers: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized." Under the implementing regulations recently
adopted by the Federal Reserve, the FDIC and the other federal depository
institution regulatory agencies, a depository institution is: (i) well
capitalized if it has total risk-based capital of 10% or more, Tier I capital of
6% or more and a leverage ratio of 5% or more; (ii) adequately capitalized if it
has total risk-based capital of 8% or more, Tier I capital of 4% or more and a
leverage ratio of 4% or more; (iii) undercapitalized if it has total risk-based
capital of less than 8%, Tier I capital of less than 4% or a leverage ratio of
less than 4%; (iv) significantly undercapitalized if it has total risk-based
capital of less than 6%, Tier I capital of less than 3% or a leverage ratio of
less than 3%; and (v) critically undercapitalized if it has tangible equity of
less than 2%. An institution may be deemed to be in a capitalization category
that is lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
If a depository institution fails to meet regulatory capital requirements,
regulatory agencies can require submission and funding of a capital restoration
plan by the institution, place limits on its activities, require the raising of
additional capital and, ultimately, require the appointment of a conservator or
receiver for the institution. Under FDICIA, a bank holding company must
guarantee that a subsidiary bank meet its capital restoration plan, subject to
certain limitations. The obligation of a controlling bank holding company under
FDICIA to fund a capital restoration plan is limited to the lesser of 5% of an
undercapitalized subsidiary's assets or the amount required to meet regulatory
capital requirements. If the controlling bank holding company fails to fulfill
its obligations under FDICIA and files (or has filed against it) a petition
under the federal Bankruptcy Code, the FDIC's claim may be entitled to a
priority in such bankruptcy proceeding over third-party creditors of the bank
holding company.
Undercapitalized depository institutions may be subject to growth
limitations and are required to submit a capital restoration plan. The federal
banking agencies may not accept a capital plan without determining, among other
things, that the plan is based on realistic assumptions, is likely to succeed in
restoring the depository institution's capital and is guaranteed by the parent
holding company. If a depository institution fails to submit an acceptable plan,
it will be treated as if it were significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized and requirements to reduce total
assets and to cease receiving deposits from correspondent banks. Critically
undercapitalized institutions are subject to appointment of a receiver or
conservator. An institution that is not well capitalized is generally prohibited
from accepting brokered deposits and offering interest rates on deposits higher
than the prevailing rate in its market; in addition, "pass-through" insurance
coverage may not be available for certain employee benefit accounts.
An insured depository institution may not pay management fees to any person
having control of the institution nor may an institution, except under certain
circumstances and with prior regulatory approval, make any capital distribution
if, after making such payment or distribution, the institution would be
undercapitalized. FDICIA also restricts the acceptance of brokered deposits by
insured depository institutions and contains a number of consumer banking
provisions, including disclosure requirements and substantive contractual
limitations with respect to deposit accounts.
FDICIA contains numerous other provisions, including new reporting
requirements, termination of the "too big to fail" doctrine except in special
cases, limitations on the FDIC's payment of deposits at foreign branches and
revised regulatory standards for, among other things, real estate lending and
capital adequacy.
15
<PAGE> 26
Many FDICIA provisions will not become effective until December, 1992. In
addition, many provisions will be implemented through the adoption of
regulations that have been or will be proposed by the various federal banking
agencies and, therefore, the full effect on the Company and the subsidiary banks
cannot be assessed at this time.
Because of concerns relating to the competitiveness and the safety and
soundness of the industry, the Congress is considering, even after the enactment
of FIRREA and FDICIA, a number of wide-ranging proposals for altering the
structure, regulation and competitive relationships of the nation's financial
institutions. Among such bills are proposals to prohibit banks and bank holding
companies from conducting certain types of activities, to subject banks to
increased disclosure and reporting requirements, to eliminate the present
restriction on interstate branching by banks, to alter the statutory separation
of commercial and investment banking and to further expand the powers of banks,
bank holding companies and competitors of banks. It cannot be predicted whether
or in what form any of these proposals will be adopted or the extent to which
the business of First Alabama may be affected thereby.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities.
The Debt Securities are to be issued under an Indenture (the "Indenture"),
to be entered into between the Company and Bankers Trust Company, as trustee
(the "Trustee"), and, if applicable, any supplemental indenture which may be
adopted incident thereto. The form of Indenture is included as an exhibit to the
Registration Statement of which this Prospectus is a part. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to and qualified in its entirety by reference to the provisions of the
Indenture. Whenever particular sections or defined terms of the Indenture are
referred to, it is intended that such sections or defined terms shall be
incorporated herein by reference. Unless otherwise indicated, capitalized terms
shall have the meanings ascribed to them in the Indenture.
GENERAL
Although the amount of Debt Securities offered by this Prospectus will be
limited to the aggregate initial offering price described on the cover page of
this Prospectus, the Indenture does not include any limitations on the amount of
debt securities that may be issued thereunder from time to time in one or more
series. (Section 301).
The Senior Debt Securities will be unsecured and will rank equally with all
unsecured Senior Indebtedness of the Company (as described below). The
Subordinated Debt Securities will be unsecured and will be subordinate and
junior in right of payment to the prior payment in full of the Senior
Indebtedness of the Company (as described below). (Sections 101, 1502). The
Company has issued and outstanding no unsecured, subordinated indebtedness.
Principal, premium, if any, and interest on the Debt Securities will be
payable and the Debt Securities may be transferable or exchangeable, without
payment of any service charge, other than any tax or governmental charge payable
in connection therewith, at the principal Corporate Trust Office of the Trustee
and at any other office or agency maintained by the Company for such purposes,
except that at the option of the Company, interest may be paid by mailing a
check to the address of the person entitled thereto as it appears on the
Security Register. (Sections 307, 1002). The Debt Securities may be sold at a
substantial discount below their stated principal amount, bearing no interest or
interest at a rate which at the time of issuance is below market rates. (Section
502). Special federal income tax consequences and other considerations
applicable to any such Debt Securities will be described in the corresponding
Prospectus Supplement relating thereto.
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Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Debt Securities offered hereby, to
participate in any distribution of the assets of any subsidiary of the Company
upon the latter's liquidation or recapitalization will be subject to the prior
claims of such subsidiary's creditors (including, in the case of a subsidiary
bank, its depositors), except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiary. Claims on subsidiaries
of the Company by creditors other than the Company include claims with respect
to long-term debt and substantial obligations with respect to deposit
liabilities, federal funds purchased, securities sold under repurchase
agreements and other short-term borrowings. See "The Company" and "Supervision
and Regulation."
Reference is made to the Prospectus Supplement for the specific terms of
the Debt Securities offered hereby, including: (i) the specific title of the
Debt Securities; (ii) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (iii) the aggregate principal amount of the Debt
Securities offered hereby; (iv) the denominations in which the Debt Securities
are authorized to be issued and whether the Debt Securities will be issued in
registered form, without coupons or in global book-entry registered form; (v)
any sinking fund provisions; (vi) the percentage of the principal amount at
which the Debt Securities will be issued; (vii) the date on which the Debt
Securities will mature; (viii) the rate or rates per annum or the method for
determining such rate or rates, if any, at which the Debt Securities will bear
interest (which may be fixed or variable); (ix) any premium payments; (x) the
times at which any such interest will be payable; (xi) any provisions relating
to optional or mandatory redemption of the Debt Securities at the option of the
Company or the holders of the Debt Securities or pursuant to sinking fund or
analogous provisions; (xii) any terms by which such Debt Securities may be
convertible into Common Stock or other securities of the Company; (xiii) any
provisions relating to the conversion or exchange of the Debt Securities into
Debt Securities of another series; (xiv) the place or places at which the
Company will make payments of principal (and premium, if any) and interest, if
any, and the method of such payment; (xv) any additional covenants and Events of
Default (as described below) and the remedies with respect thereto not currently
set forth in the Indenture; and (xvi) any other specific terms of the Debt
Securities.
SUBORDINATION
The Subordinated Debt Securities are subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
(Section 1502). "Senior Indebtedness" is defined for this purpose by the
Indenture to include all indebtedness and other obligations of the Company to
its creditors, whether outstanding on the date of execution of the Indenture or
thereafter created, assumed or incurred, including, but not limited to, (i) the
principal of, any premium, if any, and interest on all indebtedness for money
borrowed, (ii) all obligations to make payment pursuant to the terms of
financial instruments (including securities contracts, derivative instruments,
option contracts and similar financial instruments), (iii) any indebtedness or
obligations of others of the kind described in either (i) or (ii) above for the
payment of which the Company is responsible or liable as guarantor or otherwise,
and (iv) any deferrals, renewals or extensions of any such Senior Indebtedness,
other than the Subordinated Debt Securities and any other obligations expressly
made subordinate in right of payment to Senior Indebtedness. (Section 101). The
Senior Debt Securities are Senior Indebtedness of the Company. As of September
30, 1992, there was an aggregate of approximately $355.7 million in borrowed
funds of the Company outstanding, approximately $61.4 million of which
represented long-term debt and $294.3 million of which represented short-term
borrowings, including $271.3 million of federal funds purchased and securities
sold subject to agreements to repurchase, all of which is included in the
definition of "Senior Indebtedness." Senior Indebtedness also includes other
liabilities, such as accounts payable. Because of the inclusion of short-term
components, the amount of Senior Indebtedness outstanding is subject to
significant fluctuation over even short periods of time. The Indenture does not
limit the amount of Senior Debt Securities or Subordinated Debt Securities that
the Company may incur. (Section 301).
No payment on account of principal of or interest, if any, on the
Subordinated Debt Securities shall be made, and no Subordinated Debt Securities
shall be purchased, either directly or indirectly, by the Company or any of its
subsidiaries, if any default or Event of Default with respect to any Senior
Indebtedness shall have occurred and be continuing. (Section 1502).
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<PAGE> 28
Upon any receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, whether or not pursuant to bankruptcy laws, sale
of all or substantially all of the assets, dissolution, liquidation or other
marshaling of the assets and liabilities of the Company, no amount shall be paid
by the Company, in respect of the principal, premium, if any, or interest on the
Subordinated Debt Securities unless and until all Senior Indebtedness shall have
been paid in full together with all interest thereon and all other amounts
payable in respect thereof. (Section 1502).
In the event that any payment or distribution of any character, whether in
cash or other property, shall be received by the Trustee or any Holder of
Subordinated Debt Securities in contravention of any of the subordination terms
thereof, such payment or distribution shall be received in trust for the benefit
of, and shall be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. (Section 1502). In the event of the failure of the Trustee
or any Holder to endorse or assign any such payment, distribution or security,
each holder of Senior Indebtedness is hereby irrevocably authorized to endorse
or assign the same. (Section 1502). Notwithstanding the foregoing, Holders of
Subordinated Debt Securities may receive securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in the subordination
provisions of the Subordinated Debt Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization.
Upon the payment in full of all Senior Indebtedness, the Holders of
Subordinated Debt Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which, by its express terms, ranks on
a parity with the Subordinated Debt Securities and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness until the Subordinated Debt Securities shall be paid in full.
(Section 1502).
COVENANTS
In the Indenture the Company agrees not to merge or consolidate with
another entity or to sell its properties or assets as an entirety unless the
successor entity expressly assumes the obligations of the Company with respect
to the Debt Securities and the covenants of the Company under the Indenture.
(Section 801). The Indenture does not restrict the Company from incurring,
assuming or becoming liable for any type of debt nor from creating, assuming,
incurring or permitting any mortgage, pledge, encumbrance, lien or charge on its
property. In addition, the Indenture does not include any covenant or any other
provision which would provide any recourse or other protection to the holders of
the Debt Securities in the event of any decline in credit rating or other
indicia of credit quality, no matter how sudden or significant, resulting from
any cause, including from a merger, consolidation, change in control,
recapitalization or similar restructuring.
The Indenture does not restrict the Company's ability to sell, encumber or
otherwise dispose of the stock of its subsidiaries, including the stock of First
Alabama Bank.
MODIFICATION OF THE INDENTURE
The Indenture includes provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of all series of such Debt Securities to be affected at the
time outstanding under the Indenture (voting as one class), to modify, by
supplemental indenture, the Indenture or the rights of the Holders of such Debt
Securities, except that without the consent of each Holder of each outstanding
Debt Security affected thereby, no such modification shall: (i) extend the fixed
maturity, reduce the principal amount or redemption premium, if any, or reduce
the rate or extend the time of payment of interest on any Debt Security; (ii)
reduce the percentage in principal amount of the outstanding Debt Securities,
the consent of whose Holders is required to approve any such modification or to
waive any default or other waivable requirement of the indenture; (iii) change
the obligation of the Company
18
<PAGE> 29
to maintain an office or agent for payment; or (iv) modify any applicable
subordination provisions in a manner adverse to the holder of any of the Debt
Securities. (Section 902).
DEFAULTS AND LIMITED RIGHTS OF ACCELERATION
An Event of Default is defined in the Indenture as (i) a default in the
payment of principal or premium thereon at maturity or in the deposit of any
sinking fund payment when and as due by the terms of Debt Securities of a
series, (ii) a default in the payment of interest at the due date thereof and
the continuance of such default for a period of 30 days, (iii) a default in the
performance of or breach of any other covenant therein by the Company and
continuance of such default or breach for a period of 60 days after notice
thereof to the Company by the Trustee or the holders of 15% in principal amount
of the affected series, or (iv) certain events of bankruptcy, insolvency
proceedings or reorganization of the Company. (Section 501).
Payment of principal of the Debt Securities may be accelerated only in the
case of an "Acceleration Event," which is defined in the Indenture as including
only the bankruptcy, insolvency proceedings or reorganization events with
respect to the Company that constitute an Event of Default. (Sections 101, 501).
There is no right of acceleration in the case of a default in the payment of
principal, any premium or interest on the Debt Securities or the performance of
any other covenant of the Company in the Indenture.
In the event an Acceleration Event shall have occurred and shall be
continuing, either the Trustee or the Holders of 25% in principal amount of
those affected series of Debt Securities then outstanding under the Indenture
may declare the principal amount of all of such series of Debt Securities to be
due and payable immediately. (Section 502). Upon certain conditions a
declaration of an Event of Default may be annulled and past defaults may be
waived by the Holders of a majority in principal amount of the Debt Securities
then outstanding. (Section 502).
The Company is obligated to furnish the Trustee annually a statement as to
the compliance by the Company with all conditions and covenants under the
Indenture. (Section 704).
COLLECTION OF INDEBTEDNESS
The Indenture also provides that in the event of a failure by the Company
to make payment of principal of, or applicable premium or sinking fund
installment or interest on, the Debt Securities (and, in the case of payment of
interest, such failure to pay shall have continued for 30 days) the Company
will, upon demand of the Trustee, pay to it, for the benefit of the Holders of
the Debt Securities, the whole amount then due and payable on the Debt
Securities for principal and any premium, sinking fund installment and interest,
including, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and premium, on any sinking fund
installment and on any overdue interest, computed from the date of default in
the payment of such interest, at the rate or rates prescribed therefor in such
Debt Securities. (Section 503). The Indenture further provides that if the
Company fails to pay such amount forthwith upon such demand, the Trustee may,
among other things, institute a judicial proceeding for the collection thereof.
(Section 503). The Indenture includes limitations on the right of any Holder of
the Debt Securities to institute judicial proceedings in respect thereto.
(Section 507). However, the Indenture provides that notwithstanding any other
provision of the Indenture, the Holder of any Debt Security shall have the right
to institute suit for the enforcement of any payment of principal of and
interest on such Debt Security on the respective stated maturities expressed in
such Debt Security and that such right shall not be impaired without the consent
of such Holder. (Section 508).
The Holders of a majority in principal amount of the Debt Securities then
outstanding under the Indenture shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under that Indenture, subject to certain exceptions. (Section 512). The
Indenture requires the annual filing by the Company with the Trustee of a
certificate as to the absence of default and as to compliance with the terms of
that Indenture. (Section 1004).
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<PAGE> 30
CONCERNING THE TRUSTEE
The Company and Bankers Trust Company have from time to time engaged in
customary banking transactions in the ordinary course of business.
PLAN OF DISTRIBUTION
First Alabama may sell the Debt Securities on a negotiated or competitive
bid basis to or through underwriters or dealers, and may also sell the Debt
Securities directly to other purchasers or through agents. The distribution of
the Debt Securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Prospectus Supplement corresponding
to such Debt Securities will set forth the terms of the offering of the Debt
Securities of such series, including the name or names of any underwriters, the
purchase price and the proceeds to the Company from such sales, any underwriting
discounts, agency fees and other items constituting underwriters' compensation,
the initial public offering price, any discounts or concessions to be allowed or
reallowed or paid to dealers and the securities exchange, if any, on which such
Debt Securities may be listed.
If underwriters are used in the sale, the Debt Securities may be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The Debt
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
all of which underwriters in either case will be designated in the Prospectus
Supplement with respect to such offering. Unless otherwise set forth in the
Prospectus Supplement, under the terms of the underwriting agreement, the
obligations of the underwriters to purchase the Debt Securities will be subject
to certain conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities if any are purchased.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Debt Securities with respect to which this Prospectus is delivered
will be named, and any commission payable by the Company to such agent will be
set forth, in the corresponding Prospectus Supplement. Unless otherwise
indicated in such Prospectus Supplement, any such agent will be acting on a
best-efforts basis for the period of its appointment.
The Debt Securities will be newly issued securities with no established
market. No assurance can be given as to the liquidity of the trading market, if
any, for any of the Debt Securities.
Underwriters and agents may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters or agents may be required to make in respect
thereof. Underwriters and agents also may be customers of, engage in
transactions with or perform other services for the Company in the ordinary
course of business.
EXPERTS
The consolidated financial statements of First Alabama for the year ended
December 31, 1991, incorporated by reference in First Alabama's Annual Report
(Form 10-K) have been audited by Ernst & Young, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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<PAGE> 31
LEGAL OPINIONS
Certain legal matters with respect to the Debt Securities offered hereby
will be passed upon for the Company by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama, and for the underwriters by Alston & Bird, Washington, D.C.
Henry E. Simpson and M. Louis Salmon, partners in the law firm of Lange,
Simpson, Robinson & Somerville, are directors of First Alabama. Attorneys of
that firm beneficially own, directly or indirectly, an aggregate of 180,648
shares of First Alabama common stock.
21
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY REGIONS OR THE UNDERWRITER. NEITHER THIS PROSPECTUS
SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF REGIONS SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................ S-2
Recent Developments................ S-3
Use of Proceeds.................... S-4
Selected Consolidated Financial
Data............................. S-5
Description of the Notes........... S-6
Capitalization..................... S-9
Underwriting....................... S-10
Legal Matters...................... S-10
PROSPECTUS
Available Information.............. 2
Documents Incorporated by
Reference........................ 2
The Company........................ 3
Use of Proceeds.................... 4
Selected Consolidated Financial
Data............................. 5
Summary Financial Review........... 7
Supervision and Regulation......... 11
Description of Debt Securities..... 16
Plan of Distribution............... 20
Experts............................ 20
Legal Opinions..................... 21
</TABLE>
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$25,000,000
(LOGO)
REGIONS
7.65% SUBORDINATED
NOTES DUE 2001
----------------------------
PROSPECTUS
SUPPLEMENT
----------------------------
BEAR, STEARNS & CO. INC.
JULY 18, 1994
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