<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 1994
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------
REGIONS FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------------
VIRGINIA L. MARTIN
LEGAL OFFICER
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7060
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------------
COPY TO:
CHARLES C. PINCKNEY
1700 FIRST ALABAMA BANK BUILDING
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: from time to time after this Registration Statement becomes effective as
the Registrant may determine.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check this box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. /X/
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT* OFFERING PRICE* REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
Debt Securities.............. $100,000,000 100% $100,000,000 $34,482.76
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for purposes of computing the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), SHALL
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PROSPECTUS
REGIONS FINANCIAL CORPORATION
DEBT SECURITIES
Regions Financial Corporation ("Regions") 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 Regions (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 by Regions. The names of any underwriters or agents of Regions
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 Regions 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
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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1994.
<PAGE> 3
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 Regions 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 Regions since such date.
AVAILABLE INFORMATION
Regions 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 7 World Trade Center, New York, New York 10048 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 Regions (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 Regions 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 Regions pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. Regions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
2. Regions' Quarterly Report on Form 10-Q for the quarter ended March
31, 1994.
3. Regions' Current Report on Form 8-K filed with the SEC and dated as
of December 31, 1993.
Regions' Annual Report on Form 10-K for the year ended December 31, 1993
incorporates by reference specific portions of Regions' 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 1993," "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 Regions 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 Stockholder
Assistance, Mr. Ronald C. Jackson, Regions Financial Corporation, P.O. Box 1448,
Montgomery, Alabama 36102. Telephone requests may be directed to (205) 832-8450.
2
<PAGE> 4
THE COMPANY
Regions, 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"). Regions was formed in 1971 under the name
First Alabama Bancshares, Inc. 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 March 31, 1994, Regions had total
consolidated assets of approximately $10.4 billion, total consolidated deposits
of approximately $8.8 billion and stockholders' equity of approximately $878
million and, based on March 31, 1994, was the third largest bank holding company
headquartered in Alabama.
Regions provides a diversified range of financial services, including
consumer, commercial and corporate lending, retail banking, trust, mortgage
banking and securities brokerage services, through six state-chartered bank
subsidiaries, a federal savings bank subsidiary (collectively, the "Subsidiary
Institutions") and four operating banking-related subsidiaries. At June 1, 1994,
through the Subsidiary Institutions, Regions operated 168 banking offices
throughout Alabama, 27 banking offices in the panhandle of Florida, 21 banking
offices in Louisiana, 24 banking offices in Tennessee, and three banking offices
in the Columbus, Georgia area. Regions' 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 March 31, 1994, serviced approximately
$8.7 billion in real estate mortgages and operated 23 loan production offices in
Alabama, Florida, Georgia, Mississippi, Tennessee and South Carolina.
In 1993, Regions recorded its 22nd consecutive year of increased earnings
and dividends. Regions' return on average assets has ranged for each of the last
five fiscal years from a low of 1.20% to a high of 1.40%. Return on average
assets for the three months ended March 31, 1994 was 1.30% 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 16.14%. Return on average
stockholders' equity for the three months ended March 31, 1994 was 15.55% on an
annualized basis.
At March 31, 1994, Regions had a leverage ratio and Tier 1 risk-based and
total risk-based capital ratios of 7.99%, 11.74% and 14.12%, respectively. In
addition, each of Regions' 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 five years, Regions increased its market presence through
acquisitions in several key markets. The most recent acquisitions marked Regions
entry into the Louisiana market. On December 31, 1993, Regions acquired Secor
Bank, Federal Savings Bank, with 42 offices in Louisiana, Alabama, and Florida.
In the second quarter of 1994, Regions acquired Guaranty Bank & Trust Company in
Louisiana, with six offices in the greater Baton Rouge area. Also in the second
quarter of 1994, Regions added six branch offices in Florida and Alabama, with
combined deposits of approximately $51 million, through transactions with the
Resolution Trust Corporation ("RTC") as receiver of two institutions.
3
<PAGE> 5
Regions also has entered into definitive agreements to acquire the
following financial institutions in the States of Alabama, Georgia, and
Louisiana (collectively referred to in this Proxy Statement/Prospectus as the
"Other Pending Acquisitions"):
<TABLE>
<CAPTION>
CONSIDERATIONS
----------------------------
ASSET APPROXIMATE
INSTITUTION SIZE VALUE TYPE
------------------------------------------------ ------ ----------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
First Fayette Bancshares, Inc. and its
subsidiary, First Bank of Fayette, Fayette,
Alabama....................................... $ 74 Undisclosed Cash
First Community Bancshares, Inc. and its
subsidiary, First Bank of Rome, Rome,
Georgia....................................... $126 $24 Regions
Common Stock
American Bancshares, Inc. and its subsidiary
First American Bank and Trust Company of
Louisiana of Monroe, Louisiana................ $304 $61 Regions
Common Stock
</TABLE>
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies and of the stockholders of the institutions to be
acquired and, in instances where stock is to be issued as consideration, to the
effectiveness of the registration statement filed or to be filed with the SEC.
Moreover, closing of each transaction is subject to various contractual
conditions precedent.
Regions 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 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 Regions' competitive position and financial performance.
The acquisition strategy seeks "fill-in" franchises in Regions' existing markets
or, as in the case of the recent acquisitions in Tennessee and Louisiana,
franchises in adjacent markets. Each opportunity is evaluated independently and
for its effect on Regions as a whole. 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' financial condition.
Recent business combinations in the banking industry have typically 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.
The executive offices of Regions are located at 417 North 20th Street,
Birmingham, Alabama 35203, and its telephone number at such address is (205)
326-7100.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including Regions' 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, Regions may temporarily invest such proceeds.
If Regions 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> 6
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."
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(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... 6.50 11.80 10.90 15.15 10.04 6.88 4.01
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>
5
<PAGE> 7
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
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) 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 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.
SUMMARY FINANCIAL REVIEW
The following summary information should be read in conjunction with and is
qualified by the Consolidated Financial Statements of Regions and the related
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in Regions' Quarterly Report on Form 10-Q for the three
months ended March 31, 1994 and Annual Report on Form 10-K for the year ended
December 31, 1993, which are incorporated herein by reference. See "Documents
Incorporated by Reference."
RESULTS OF OPERATIONS
Three Months Ended March 31, 1994. Net income for the first three months
of 1994 was $33.2 million, a 21% increase over the $27.4 million net income
earned in the first three months of 1993. On a per share basis for the
comparable periods, net income increased 9% to $0.81 from $0.74.
Net interest income for the three months increased 16% to $97.4 million
from $83.8 million for the corresponding 1993 period. The increased net interest
income resulted from a higher level of earning assets, partially offset by lower
spreads on those earning assets. On a taxable equivalent basis, the net interest
margin was 4.25% for the three months ended March 31, 1994, down 73 basis points
from 4.98% during the same period in 1993.
Non-interest income totalled $36.5 million, an increase of 19% from 1993's
$30.6 million. This increase resulted primarily from higher trust fees, deposit
account fees and charges, mortgage servicing and origination fees, a $2.3
million gain on the sale of mortgage servicing rights, and increases in
insurance, credit card and international department fees.
Non-interest expense for the first three months of 1994 increased 21% to $
80.1 million, due primarily to expenses added by the 1993 acquisitions,
increased business activity in several divisions and inflation.
Year Ended December 31, 1993. In 1993, net income increased $17.0 million,
or 18%, to $112.0 million from $95.0 million in 1992. On a per share basis, net
income was $3.01, 16% higher than the $2.60 earned in 1992.
6
<PAGE> 8
Net interest income was $342.1 million for 1993, compared to $312.7 million
for 1992, reflecting a 9% increase. On a taxable equivalent basis, the net
interest margin fell 16 basis points from 4.98% to 4.82%. The increase in net
interest income was primarily attributable to higher levels of earning assets,
coupled with a more favorable mix of earning assets into higher yielding
categories, partially offset by narrower spreads on those earning assets.
Non-interest income was $132.0 million for 1993, 11% higher than the $119.1
million earned in 1992. The higher 1993 non-interest income resulted primarily
from increases in trust income and mortgage servicing and origination fees.
Non-interest expense totalled $287.0 million for 1993, representing an
increase of 8% over the $264.7 million for the previous year. Increases in
personnel expense, occupancy and equipment expense, and amortization of mortgage
servicing rights, accounted for most of the increase in other noninterest
expense.
BALANCE SHEET
March 31, 1994. Total assets at March 31, 1994 were $10.4 billion, a
slight decrease from December 31, 1993 and a 33% increase from March 31, 1993.
Comparisons with the March 31, 1993, balance sheet are significantly affected by
four acquisitions during 1993 that were accounted for as purchases, and added
approximately $2.1 billion in assets. Total loans at March 31, 1994 were $6.8
billion, or .2% and 32% higher than at year-end 1993 and March 31, 1993,
respectively. The four 1993 acquisitions accounted for a 23% increase in loans
since March 1993, with the remaining 9% increase attributable to internal
growth, primarily in consumer and one-to-four family residential mortgage loans.
Total deposits were $8.8 billion at March 31, 1994, an increase of 30% from
March 31, 1993. Approximately 24% of this increase resulted from the four 1993
acquisitions, with the remainder resulting from internal growth in deposits,
primarily in money market, savings and interest bearing transaction accounts.
Since year-end 1993, total deposits have remained relatively unchanged.
Stockholders' equity at March 31, 1994 was $878 million, or 8.4% of total
assets, $203 million higher than one year earlier when stockholders' equity was
also 8.6% of total assets. Stockholders' equity (book value) per share grew 18%
from $18.09 at March 31, 1993 to $21.39 at March 31, 1994.
December 31, 1993. Total assets at December 31, 1993 were $10.5 billion,
33% greater than the prior year-end level, reflecting the approximately $2.1
billion in assets added by four acquisitions, and internal growth in assets.
Total loans increased 33% to $6.9 billion. Approximately $1.2 billion in loans
was added by the four 1993 acquisitions with the remaining increase attributable
to internal growth, primarily in consumer and one-to-four family residential
mortgage loans. Total deposits grew 31% to $8.8 billion, including approximately
$1.6 billion in deposits added by the four 1993 acquisitions. Stockholders'
equity at December 31, 1993 was $851 million, or 8.1% of total assets, $194
million higher than year-end 1992. Stockholders' equity (book value) per share
was $20.73 versus $17.62 at the end of 1992, an increase of 18%.
The following table summarizes the composition of the loan portfolio at the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------------------------
1994 1993 1992
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN
THOUSANDS)
LOAN PORTFOLIO
Commercial.............................. $1,425,038 21% $1,430,739 21% $1,443,273 28%
Commercial mortgages.................... 1,133,074 17% 1,146,156 17% 960,319 19%
Residential mortgages................... 2,470,628 36% 2,459,389 36% 1,254,536 24%
Consumer................................ 1,260,948 18% 1,220,088 18% 975,208 19%
Construction............................ 252,074 4% 262,918 4% 257,180 5%
Home equity............................. 223,892 3% 224,872 3% 161,233 3%
Credit cards............................ 83,047 1% 89,084 1% 90,782 2%
---------- --- ---------- --- ---------- ---
Total loans................... $6,848,701 100% $6,833,246 100% $5,142,531 100%
========= === ========= === ========= ===
</TABLE>
7
<PAGE> 9
Regions' deposits consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------------------------
1994 1993 1992
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
DEPOSITS
Non-interest-bearing.................... $1,133,105 13% $1,196,685 14% $1,041,987 16%
Interest-bearing:
Interest-bearing transaction.......... 1,303,308 15% 1,326,469 15% 1,111,370 17%
Savings............................... 787,549 9% 751,862 9% 573,946 8%
Money market.......................... 1,435,437 16% 1,426,048 16% 1,048,428 16%
Certificates of deposit of $100,000 or
more............................... 603,895 7% 574,492 6% 430,397 6%
Certificates of deposit of less than
$100,000........................... 2,591,454 30% 2,605,833 30% 1,628,878 24%
Other interest-bearing deposits....... 912,247 10% 889,305 10% 866,136 13%
---------- --- ---------- --- ---------- ---
Total interest-bearing
deposits.................... 7,633,890 87% 7,574,009 86% 5,659,155 84%
---------- --- ---------- --- ---------- ---
Total deposits................ $8,766,995 100% $8,770,694 100% $6,701,142 100%
========= === ========= === ========= ===
</TABLE>
ASSET QUALITY
March 31, 1994. Nonperforming assets (including loans ninety days or more
past due) at March 31, 1994 were $58.9 million or 0.86% of loans and other real
estate, compared to $70.4 million or 1.03% of loans and other real estate at
December 31, 1993, and $46.0 million or 0.88% of loans and other real estate at
March 31, 1993.
The allowance for loan losses at March 31, 1994 was $103.3 million or 1.51%
of loans, compared to $100.8 million or 1.47% of loans at year-end 1993, and
$81.3 million or 1.57% of loans at March 31, 1993. Net charge-offs for the three
months ended March 31, 1994 were $1.8 million or 0 .10% of average loans on an
annualized basis, compared to net recoveries of $413,000 for the three months
ended March 31, 1993 or (0.03)% 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 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 Regions' 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 Regions' 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, 1993. Nonperforming assets at December 31, 1993 were $70.4
million or 1.03% of loans and other real estate, compared to $41.8 million or
0.81% of loans and other real estate at December 31, 1992. This increase was
primarily attributable to the nonperforming assets added by Secor.
At December 31, 1993, the allowance for loan losses was $ 100.8 million or
1.47% of loans, compared to $73.6 million or 1.43% of loans at December 31,
1992. The increase in the allowance resulted from a provision of $21.5 million
to the allowance, less net charge-offs of $10.4 million during the year, plus
$16.0 million
8
<PAGE> 10
added for acquired institutions. Net charge-offs during 1993 represented 0.19%
of average loans, a decrease of $2.2 million from the previous year, when the
ratio was 0.28% of average loans.
The following table presents information on nonperforming assets at the
dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------
NONPERFORMING ASSETS 1994 1993 1992
-------------------------------------------------- --------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Nonaccrual loans:
Commercial...................................... $11,120 $ 8,456 $ 9,442
Real estate..................................... 25,368 28,929 10,381
Installment..................................... 2,524 2,134 1,948
--------- ------- -------
Total nonaccrual loans.................. 39,012 39,519 21,771
Other real estate................................. 11,505 13,720 11,678
Restructured loans................................ 4,061 4,169 2,777
--------- ------- -------
Total problem assets.................... 54,578 57,408 36,226
Loans 90 days past due............................ 4,315 13,028 5,622
--------- ------- -------
Total nonperforming assets.............. $58,893 $70,436 $41,848
======= ======= =======
Nonperforming assets to loans and other real
estate.......................................... 0.86% 1.03% 0.81%
Allowance to nonaccrual and restructured loans.... 239.90 230.64 299.90
Allowance to nonperforming assets................. 175.45 143.05 175.92
</TABLE>
The following table shows, for the periods indicated, activity in the
allowance for loan losses:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------
ALLOWANCE FOR LOAN LOSSES 1994 1993 1992
----------------------------------------------- --------- -------- --------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Beginning balance.............................. $ 100,762 $ 73,619 $ 54,769
Net charge-offs (recoveries):
Commercial................................ (1,106) 3,634 5,265
Real estate............................... 2,284 2,209 1,669
Installment............................... 580 4,546 5,650
--------- -------- --------
Total................................ 1,758 10,389 12,584
Allowance of purchased institutions............ 0 15,999 4,362
Provision charged to expense................... 4,326 21,533 27,072
--------- -------- --------
Ending balance................................. $ 103,330 $100,762 $ 73,619
======== ======== ========
Net charge-offs to average loans............... 0.10%(1) 0.19% 0.28%
Allowance for loan losses to loans (at period
end)......................................... 1.51 1.47 1.43
</TABLE>
- ---------------
(1) Annualized.
CAPITAL RESOURCES
Regions' risk-based capital and leverage ratios exceeded all regulatory
minimum guidelines at March 31, 1994. Regions is required to maintain total
risk-weighted and Tier 1 capital ratios of at least 8.0% and 4.0%, respectively.
In addition to risk-based capital ratios, Regions 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. See "Supervision and
Regulation -- Capital Adequacy."
For information concerning Regions' risk-based capital ratios and leverage
ratios on a historical basis, see "Selected Consolidated Financial Data." In
addition, each of Regions' 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."
9
<PAGE> 11
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to Regions.
GENERAL
Regions is a bank holding company, registered with the Federal Reserve
under the BHC Act. As such, Regions and its subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the voting shares of the bank, (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of the bank, or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy and consideration of convenience and needs issues includes the parties'
performance under the Community Reinvestment Act of 1977 (the "CRA"), both of
which are discussed below.
The BHC Act prohibits the Federal Reserve from approving a bank holding
company's application to acquire a bank or bank holding company located outside
the state in which the deposits of its banking subsidiaries were greatest on the
date the company became a bank holding company (Alabama in the case of Regions),
unless such acquisition is specifically authorized by statute of the state in
which the bank or bank holding company 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.
The BHC Act generally prohibits Regions from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. For example, factoring accounts receivable, acquiring or servicing
loans, leasing personal property, conducting discount securities brokerage
activities, performing certain data processing services, acting as agent or
broker in selling credit life insurance and certain other types of insurance in
connection with credit transactions, and performing certain insurance
underwriting activities all have been determined by the Federal Reserve to be
permissible activities of bank holding companies. The BHC Act does not place
territorial limitations on permissible bank-related activities of bank holding
companies. Despite prior approval, the Federal Reserve has the power to order a
holding company or its subsidiaries to terminate any activity or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that continuation of such activity or such
10
<PAGE> 12
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Each of the Subsidiary Institutions is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, their deposits are insured by the
FDIC to the extent provided by law. Each Subsidiary Institution is also subject
to numerous state and federal statutes and regulations that affect its business,
activities, and operations, and each is supervised and examined by one or more
state or federal bank regulatory agencies.
Because each of Regions' subsidiary banks is a state-chartered bank that is
not a member of the Federal Reserve System, such banks are subject to
supervision and examination by the FDIC. Regions' subsidiary savings bank is a
federally-chartered savings bank that is a member of the Federal Home Loan Bank
System and is subject to supervision and examination by the Office of Thrift
Supervision ("OTS") and to the back-up supervisory authority of the FDIC. Such
agencies regularly examine the operations of the Subsidiary Institutions and are
given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions. Such agencies also
have the power to prevent the continuance or development of unsafe or unsound
banking practices or other violations of law.
The Subsidiary Institutions are subject to the provisions of the CRA. Under
the terms of the CRA, the appropriate federal bank regulatory agency is
required, in connection with its examination of a Subsidiary Institution, to
assess such institution's record in meeting the credit needs of the community
served by that institution, including low and moderate-income neighborhoods. The
regulatory agency's assessment of the institution's record is made available to
the public. Further, such assessment is required of any institution which has
applied to (i) charter a national bank, (ii) obtain deposit insurance coverage
for a newly chartered institution, (iii) establish a new branch office that will
accept deposits, (iv) relocate an office, or (v) merge or consolidate with, or
acquire the assets or assume the liabilities of, a federally regulated financial
institution. In the case of a bank holding company applying for approval to
acquire a bank or other bank holding company, the Federal Reserve will assess
the records of each Subsidiary Institution of the applicant bank holding
company, and such records may be the basis for denying the application.
In December 1993, the federal banking agencies proposed to revise their CRA
regulations in order to provide clearer guidance to depository institutions on
the nature and extent of their CRA obligations and the methods by which those
obligations will be assessed and enforced. The proposed regulations substitute
for the current process-based CRA assessment factors a new evaluation system
that would rate institutions based on their actual performance in meeting
community credit needs. Under the proposal, all depository institutions would be
subject to three CRA-related tests: a lending test; an investment test; and a
service test. The lending test, which would be the primary test for all
institutions other than wholesale and limited-purpose banks, would evaluate an
institution's lending activities by comparing the institution's share of
housing, small business, and consumer loans in low-and moderate-income areas in
its service area with its share of such loans in the other parts of its service
area. The agencies would also evaluate the institution's performance independent
of other lenders by examining the ratio of such loans made by the institution to
low-and moderate-income areas to all such loans made by the institution. At the
election of an institution, the agencies would also consider "indirect" loans
made by affiliates and subsidiaries of the institution as well as lending
consortia and other lenders in which the institution had made lawful
investments.
The focus of the investment test, under which wholesale and limited-purpose
institutions would normally be evaluated, would be the amount of assets
(compared to its risk-based capital) that an institution has devoted to
"qualified investments" that benefit low-and moderate-income individuals and
areas in the institution's service area. The service test would evaluate an
institution based on the percentage of its branch offices that are located in or
are readily accessible to low-and moderate-income areas. Smaller institutions,
those having total assets of less than $250 million, would be evaluated under
more streamlined criteria.
The joint agency CRA proposal provides that an institution evaluated under
a given test would receive one of five ratings for that test: outstanding; high
satisfactory; low satisfactory; needs to improve; or substantial non-compliance.
The ratings for each test would then be combined to produce an overall composite
rating of either outstanding, satisfactory (including both high and low
satisfactory), needs to improve, or substantial
11
<PAGE> 13
non-compliance. In the case of a retail-oriented institution, its lending test
rating would form the basis for its composite rating. That rating would then be
increased by up to two levels in the case of outstanding or high satisfactory
investment performance, increased by one level in the case of outstanding
service, and decreased by one level in the case of substantial non-compliance in
service. An institution found to have engaged in illegal lending discrimination
would be rebuttably presumed to have a less-than-satisfactory composite CRA
rating.
Under the proposal, an institution's CRA rating will continue to be taken
into account by a regulator in considering various types of applications. In
addition, an institution receiving a rating of "substantial non-compliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
It is uncertain at this time whether or when the CRA proposal will
ultimately be adopted by the federal banking agencies in its current form.
PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking and other
subsidiaries. The principal source of cash flow of Regions, including cash flow
to pay dividends to its stockholders, is dividends from the Subsidiary
Institutions. There are statutory and regulatory limitations on the payment of
dividends by the Subsidiary Institutions to Regions as well as Regions to its
stockholders.
As state nonmember banks, the subsidiary banks are subject to the
respective laws and regulations of the States of Alabama, Florida, Georgia,
Louisiana, and Tennessee and to the regulations of the FDIC as to the payment of
dividends. The subsidiary savings bank is subject to the regulations of the OTS
and the FDIC as to payment of dividends.
If, in the opinion of the federal regulatory agencies, an institution under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the institution, could
include the payment of dividends), such authority may require, after notice and
hearing, that such institution cease and desist from such practice. The Federal
Reserve, the FDIC, and the OTS have indicated that paying dividends that deplete
an institution's capital base to an inadequate level would be an unsafe and
unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), an insured institution may not pay any
dividend if payment would cause it to become undercapitalized or once it is
undercapitalized. See "-- Prompt Corrective Action." Moreover, the Federal
Reserve and the FDIC have issued policy statements which provide that bank
holding companies and insured banks should generally only pay dividends out of
current operating earnings.
At March 31, 1994, under dividend restrictions imposed under federal and
state laws, the Subsidiary Institutions, without obtaining governmental
approvals, could declare aggregate dividends to Regions of approximately $214
million.
The payment of dividends by Regions and the Subsidiary Institutions may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various restrictions on the extent to which Regions and it
nonbank subsidiaries can borrow or otherwise obtain credit from the Subsidiary
Institutions. Each Subsidiary Institution (and its subsidiaries) is limited in
engaging in borrowing and other "covered transactions" with nonbank or
non-savings bank affiliates to the following amounts: (i) in the case of any
such affiliate, the aggregate amount of covered transactions of the Subsidiary
Institution and its subsidiaries may not exceed 10% of the capital stock and
surplus of such Subsidiary Institution; and (ii) in the case of all affiliates,
the aggregate amount of covered transactions of the Subsidiary Institution and
its subsidiaries may not exceed 20% of the capital stock and surplus of such
Subsidiary Institution. "Covered transactions" are defined by statute to include
a loan or extension of credit, as well as a purchase of securities issued by an
affiliate, a purchase of assets (unless otherwise exempted by the Federal
Reserve), the acceptance of securities issued by the affiliate as collateral for
a loan and the issuance of
12
<PAGE> 14
a guarantee, and the issuance of a guarantee, acceptance, or letter of credit on
behalf of an affiliate. Covered transactions are also subject to certain
collateralization requirements. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease, or sale of property or
furnishing of services.
CAPITAL ADEQUACY
Regions and the Subsidiary Institutions are required to comply with the
capital adequacy standards established by the Federal Reserve in the case of
Regions, the FDIC in the case of the subsidiary banks, and the OTS in the case
of the subsidiary savings bank. There are two basic measures of capital adequacy
for bank holding companies that have been promulgated by the Federal Reserve: a
risk-based measure and a leverage measure. All applicable capital standards must
be satisfied for a bank holding company 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, 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.
The minimum guideline for the ratio of total capital ("Total Capital") to
risk-weighted assets (including certain off-balance-sheet items, such as standby
letters of credit) is 8.0%. At least half of the Total Capital must be composed
of common stock, minority interests in the equity accounts of consolidated
subsidiaries, noncumulative perpetual preferred stock, and a limited amount of
cumulative perpetual preferred stock, less goodwill and certain other intangible
assets ("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves. At March 31, 1994,
Regions' consolidated Tier 1 Capital and Total Capital ratios were 11.7% and
14.1%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0% plus an additional cushion of 100 to 200 basis
points. Regions' Leverage Ratio at March 31, 1994 was 8.0%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of Regions' subsidiary banks is subject to risk-based and leverage
capital requirements adopted by the FDIC and Regions' subsidiary savings bank is
subject to tangible, risk-based, and core capital requirements adopted by the
OTS. Each of Regions' Subsidiary Institutions was in compliance with applicable
minimum capital requirements as of December 31, 1993. Neither Regions nor any of
the Subsidiary Institutions has been advised by any federal banking agency of
any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "-- Prompt Corrective
Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC, and the OTS have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
which would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest
13
<PAGE> 15
rates and would require banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as a source of
financial strength to, and to commit resources to support, each of the
Subsidiary Institutions. This support may be required at times when, absent such
Federal Reserve policy, Regions may not be inclined to provide it. In addition,
any capital loans by a bank holding company to any of the Subsidiary
Institutions are subordinate in right of payment to deposits and to certain
other indebtedness of such Subsidiary Institution. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a Subsidiary
Institution will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
Under the FDIA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989 in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur in
the absence of regulatory assistance.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective on December 19, 1992, the federal banking regulators are required to
establish five capital categories ("well-capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized") and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, the FDICIA requires the banking regulator to appoint a
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.
Under the final agency rule implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital ratio of 10.0% or
greater, a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of 5.0%
or greater, and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency, is deemed to be "well-capitalized." An institution with
a Total Capital ratio of 8.0% or greater, a Tier 1 Capital ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital ratio of less
than 8.0% or a Tier 1 Capital ratio of less than 4.0% or a Leverage Ratio that
is less than 4.0% is considered to be "undercapitalized." A depository
institution that has a Total Capital ratio of less than 6.0%, a Tier 1 Capital
ratio of less than 3.0%, or a Leverage Ratio that is less than 3.0% is
considered to be "significantly undercapitalized" and an institution that has a
tangible equity capital to assets ratio equal to or less than 2.0% is deemed to
be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository 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.
In the case of an institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized, the institution
is required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. Under FDICIA, a bank holding company must guarantee that
a subsidiary depository institution meet its capital restoration plan, subject
to certain limitations. The obligation
14
<PAGE> 16
of a controlling bank holding company under FDICIA to fund a capital restoration
plan is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets
or the amount required to meet regulatory capital requirements. An
undercapitalized institution is also generally prohibited from increasing its
average total assets, making acquisitions, establishing any branches, or
engaging in any new line of business except in accordance with an accepted
capital restoration plan or with the approval of the FDIC. In addition, the
appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are (i) significantly undercapitalized or (ii)
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
nonbank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized; provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer without
regulatory approval.
At March 31, 1994, all of Regions' Subsidiary Institutions had the
requisite capital levels to qualify as well capitalized.
BROKERED DEPOSITS
The FDIC has adopted regulations governing the receipt of brokered
deposits. Under the regulations, a depository institution cannot accept,
rollover, or renew brokered deposits unless (i) it is well capitalized or (ii)
it is adequately capitalized and receives a waiver from the FDIC. A depository
institution that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether or not it
has obtained such a waiver, an adequately capitalized depository institution may
not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates specified by regulation. There are no such
restrictions on a depository institution that is well capitalized. Because all
of the Subsidiary Institutions of Regions had at March 31, 1994, the requisite
capital levels to qualify as well capitalized, Regions believes the brokered
deposits regulation will have no material effect on the funding or liquidity of
any of the Subsidiary Institutions.
FDIC INSURANCE ASSESSMENTS
In July 1993, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994 and replaces a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized
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for prompt corrective action purposes. An institution is also assigned by the
FDIC to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information which the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications (i.e.,
combinations of capital groups and supervisory subgroups) to which different
assessment rates are applied. Assessment rates for 1994, as they had during
1993, will range from .23% of deposits for an institution in the highest
category (i.e., "well-capitalized" and "healthy" to .31% of deposits for an
institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory concern").
The FDIC is authorized to raise insurance premiums in certain
circumstances. Any increase in premiums would have an adverse effect on the
results of operations of Regions.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
NEW SAFETY AND SOUNDNESS STANDARDS
In November 1993, federal banking agencies issued for comment proposed
safety and soundness standards relating to internal controls, information
systems and internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees, and benefits. With
respect to internal controls, information systems, and internal audit systems,
the standards describe the functions that adequate internal controls and
information systems must be able to perform, including (i) monitoring adherence
to prescribed policies, (ii) effective risk management, (iii) timely and
accurate financial, operational, and regulatory reporting, (iv) safeguarding and
managing assets, and (v) compliance with applicable laws and regulations. The
standards also include requirements that (i) those performing internal audits be
qualified and independent, (ii) internal controls and information systems be
tested and reviewed, (iii) corrective actions be adequately documented, and (iv)
that results of an audit be made available for review of management actions.
As in the case of internal controls and information systems, the proposal
establishes general principles and standards, rather than specific requirements,
that must be followed in other areas. For example, loan documentation and credit
underwriting practices must be such that they enable the institution to make an
informed lending decision and assess credit risk on an ongoing basis. Similarly,
an institution must manage interest rate risk "in a manner that is appropriate
to the size of [the institution] and the complexity of its assets and
liabilities" and must conduct any asset growth in accordance with a plan that
has taken a variety of factors such as deposit volatility, capital, and interest
rate risk into account. The proposal also prohibits "excessive compensation,"
which is defined as amounts paid that are unreasonable or disproportionate to
the services performed by an officer, employee, director, or principal
stockholder in light of all circumstances. In order to help alert institutions
and their regulators to deteriorating financial conditions, the proposed rule
also would impose a maximum ratio of classified assets to total capital of 1.0
and, in the case of an institution that had incurred a net loss over the last
four quarters, would require that institution to have sufficient capital to
absorb a similar loss over the next four quarters and still remain in compliance
with its minimum capital requirements.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide depositor
preference rule in the event of a bank failure. Under this arrangement, all
deposits and certain other claims against a bank, including the claim of the
FDIC as subrogee of insured depositors, would receive payment in full before any
general creditor of the bank would be entitled to any payment in the event of an
insolvency or liquidation of the bank.
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<PAGE> 18
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"),
entered into between Regions and Bankers Trust Company, as trustee (the
"Trustee") as of December 1, 1992, and, if applicable, any supplemental
indenture. The Indenture is incorporated by reference 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 Regions (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 Regions (as
described below). (Sections 101, 1502). Regions has issued and outstanding
$75,000,000 unsecured, subordinated indebtedness. Subordinated Debt Securities
may be issued on a parity with previously outstanding subordinated indebtedness
of Regions, or may be issued senior to or subordinate to the outstanding
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 Regions for such purposes,
except that at the option of Regions, 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.
Because Regions 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 Regions 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 Regions may itself be a creditor with
recognized claims against such subsidiary. Claims on subsidiaries of Regions by
creditors other than Regions 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;
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<PAGE> 19
(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
Regions 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 Regions; (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 Regions
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 Regions.
(Section 1502). "Senior Indebtedness" is defined for this purpose by the
Indenture to include all indebtedness and other obligations of Regions 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 Regions 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 Regions. 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. The Indenture does not limit the amount of Senior
Debt Securities or Subordinated Debt Securities that Regions 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 Regions 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).
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 Regions, no amount shall be paid by
Regions, 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, provided that the Trustee shall
have received notice of an event which triggers a requirement that no payment be
made with respect to Subordinated Debt Securities at least three business days
prior to the date for any payment on Subordinated Securities, 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
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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 Regions 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 Regions 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 Regions applicable to the Senior
Indebtedness until the Subordinated Debt Securities shall be paid in full.
(Section 1502).
COVENANTS
In the Indenture Regions 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 Regions with respect to the Debt
Securities and the covenants of Regions under the Indenture. (Section 801). The
Indenture does not restrict Regions 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 Regions' 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 Regions 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 Regions 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 Regions and
continuance of such default or breach for a period of 60 days after notice
thereof to Regions 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 Regions. (Section 501).
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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 Regions 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 Regions 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).
Regions is obligated to furnish the Trustee annually a statement as to the
compliance by Regions 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 Regions 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) Regions 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 Regions 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 Regions with the Trustee of a
certificate as to the absence of default and as to compliance with the terms of
that Indenture. (Section 1004).
CONCERNING THE TRUSTEE
Regions and Bankers Trust Company have from time to time engaged in
customary banking transactions in the ordinary course of business.
PLAN OF DISTRIBUTION
Regions 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 Regions from such sales, any underwriting
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<PAGE> 22
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 Regions or through agents
designated by Regions 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 Regions 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
Regions to indemnification by Regions 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 Regions in the ordinary course
of business.
EXPERTS
The consolidated financial statements of Regions, incorporated by reference
in Regions' Annual Report (Form 10-K) for the year ended December 31, 1993, 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.
LEGAL OPINIONS
Certain legal matters with respect to the Debt Securities offered hereby
will be passed upon for Regions by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama. Henry E. Simpson partner in the law firm of Lange, Simpson,
Robinson & Somerville, is a director of Regions. At June 16, 1994, attorneys of
that firm beneficially owned, directly or indirectly, an aggregate of 120,695
shares of Regions common stock.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses, other than underwriting or broker-dealer fees,
discounts and commissions, in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities Act registration fee........................................... $ 34,433
Printing and engraving.................................................... 50,000
Legal fees and expenses................................................... 40,000
Accounting fees and expenses.............................................. 40,000
Blue Sky fees and expenses................................................ 25,000
Fees of indenture trustee................................................. 25,000
Miscellaneous............................................................. 10,000
--------
224,433
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10 of the Certificate of Incorporation of the Registrant provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith which
involved intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Company to
indemnify its officers and directors under certain circumstances. The pertinent
provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in
II-1
<PAGE> 24
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall
deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
"(e) Expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed
II-2
<PAGE> 25
to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in
this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on inside
information, illegal payments, dishonesty, accounting of securities profits in
violation of Section 16(b) of the Securities Exchange Act of 1934 and acts
within the scope of the Pension Reform Act of 1974.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
4.1 -- Trust Indenture dated as of December 1, 1992 -- incorporated by reference from
Registration Statement, file no. 33-45714, of Regions Financial Corporation
(formerly First Alabama Banchsares, Inc.).
5.1 -- Form of Opinion Re: legality.
12.1 -- Calculation of Earnings to Fixed Charges and to Combined Fixed Charges.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in Exhibit 5.1
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the
signature page of the original registration statement.
26.1 -- Statement of Eligibility and Qualification of Indenture Trustee on Form T-1.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
II-3
<PAGE> 26
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement:
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes: (1) to use to its best
efforts to distribute prior to the opening of bids, to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus which
at that time meets the requirements of Section 10(a) of the Act, and relating to
the securities offered at competitive bidding, as contained in the registration
statement, together with any supplements thereto, and (2) to file an amendment
to the registration statement reflecting the results of bidding, the terms of
the reoffering and related matters to the extent required by the applicable
form, not later than the first use, authorized by the issuer after the opening
of bids, of a prospectus relating to the securities offered at competitive
bidding, unless no further public offering of such securities by the issuer and
no reoffering of such securities by the purchaser is proposed to be made."
The undersigned Registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective. (2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 27
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA ON THIS THE 20TH DAY OF
JUNE, 1994.
Registrant:
REGIONS FINANCIAL CORPORATION
BY: /s/ RICHARD D. HORSLEY
-------------------------
Richard D. Horsley
Vice Chairman of the
Board and Executive
Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Virginia L. Martin, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this registration
statement, and to file the same with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- --------------
<C> <S> <C>
/s/ J. STANLEY MACKIN Chairman of the Board and Chief June 20, 1994
- ------------------------------------------ Executive Officer and
J. Stanley MacKin Director
/s/ RICHARD D. HORSLEY Vice Chairman of the Board and June 20, 1994
- ------------------------------------------ Executive Financial Officer
Richard D. Horsley and Director
/s/ ROBERT P. HOUSTON Executive Vice President and June 20, 1994
- ------------------------------------------ Comptroller
Robert P. Houston
Director
- ------------------------------------------
Sheila S. Blair
/s/ JAMES B. BOONE, JR. Director June 20, 1994
- ------------------------------------------
James B. Boone, Jr.
/s/ ALBERT P. BREWER Director June 20, 1994
- ------------------------------------------
Albert P. Brewer
/s/ JAMES S.M. FRENCH Director June 20, 1994
- ------------------------------------------
James S.M. French
</TABLE>
II-5
<PAGE> 28
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- --------------
<C> <S> <C>
/s/ CATESBY AP C. JONES Director June 20, 1994
- ------------------------------------------
Catesby ap C. Jones
/s/ OLIN B. KING Director June 20, 1994
- ------------------------------------------
Olin B. King
/s/ H. MANNING MCPHILLIPS, JR. Director June 20, 1994
- ------------------------------------------
H. Manning McPhillips, Jr.
/s/ HENRY E. SIMPSON Director June 20, 1994
- ------------------------------------------
Henry E. Simpson
/s/ ROBERT E. STEINER, III Director June 20, 1994
- ------------------------------------------
Robert E. Steiner, III
/s/ LEE J. STYSLINGER, JR. Director June 20, 1994
- ------------------------------------------
Lee J. Styslinger, Jr.
</TABLE>
II-6
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ---------------------------------------------------------------------- ------------
<S> <C> <C>
4.1 -- Trust Indenture dated as of December 1, 1992 -- incorporated by
reference from Registration Statement, file No. 33-45714, of Regions
Financial Corporation (formerly First Alabama Bancshares, Inc.)
5.1 -- Form of Opinion Re: legality
12.1 -- Calculation of Earnings to Fixed Charges and to Combined Fixed
Charges.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in
Exhibit 5.1
24. -- Power of Attorney -- the manually signed power of attorney is set
forth in the signature page of the original registration statement.
25. -- Statement of Eligibility and Qualification of Indenture Trustee on
Form T-1.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
Letterhead of
LANGE, SIMPSON, ROBINSON & SOMERVILLE
June 20, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Gentlemen:
Regions Financial Corporation (the "Company"), a corporation organized
and existing under and pursuant to the laws of the state of Delaware, proposes
to issue and sell up to $100,000,000 face amount of its unsecured notes, bonds,
debentures, or other evidences of indebtedness (the "Debt Securities"), under a
trust indenture entered into between the Company and Bankers Trust Company
("the Trust Indenture").
In connection with this proposal, we have examined the following
documents and items:
The certificate of incorporation of the Company as most
recently amended.
The by-laws of the Company as most recently amended.
The form of Trust Indenture as entered into between the
Company and Bankers Trust Company, and a supplemental indenture
proposed to be entered into between the Company and Bankers Trust
Company.
Such documents evidencing the actions taken to date by the
stockholders of the Company and the board of directors of the Company
as we have considered necessary and appropriate to review in order to
render this opinion.
Based upon the foregoing and with regard to such legal considerations
as we deem relevant to this opinion, it is our
<PAGE> 2
opinion that:
The Company has the corporate power and authority to issue the
Debt Securities.
The Board of Directors has the authority to authorize the
issuance of the Debt Securities and to establish the terms of the Debt
Securities, including but not limited to (1) the specific title of
the Debt Securities; (2) whether the Debt Securities are senior or
subordinated; (3) the aggregate principal amount of the Debt
Securities to be issued (but not exceeding ($100,000,000) (4) the
denominations in which the Debt Securities are authorized to be
issued; (5) any sinking fund provisions; (6) the percentage of the
principal amount at which the Debt Securities will be issued; (7) the
date on which the Debt Securities will mature; (8) 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); (9) any premium payments; (10) the times at which any such
interest will be payable; (11) 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; (12) any terms by which such Debt
Securities may be convertible into common stock or other securities of
the Company; (13) any provisions relating to the conversion or
exchange of the Debt Securities into Debt Securities of another
series; (14) 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; and (15) any additional covenants and
events of default and the remedies with respect thereto not currently
set forth in the Trust Indenture.
The approval of stockholders of the Company is not required
for the issuance of the Debt Securities.
Issuance of the Debt Securities is not prohibited by and will
not contravene any provision of the Certificate of Incorporation or
the by-laws of the Company or any provision of the General Corporation
Law of Delaware.
In addition, it is our opinion that, upon (a) execution and delivery
of the supplemental indenture (b) authorization, execution, and delivery of a
board resolution or additional supplemental indenture, as contemplated by
section 301 of the Trust Indenture, establishing the terms of the Debt
Securities and the sales price thereof, (c) execution and delivery of the Debt
Securities as contemplated by Section 303 of the Trust Indenture, (d)
authentication of the Debt Securities as contemplated by Section 303 of the
Trust Indenture, and (e) payment for the Debt Securities, the Debt Securities
will be validly issued and will represent binding obligations of the
<PAGE> 3
First Alabama Bancshares, Inc.
June 21, 1994
Page 3
Company.
The binding effect of the Trust Indenture and the Debt Securities may
be subject to or limited by applicable bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws affecting the rights of
creditors generally.
We consent to the inclusion of this opinion as an exhibit to the
registration statement and to the reference to this firm in the prospectus
under the caption "Legal Opinions".
Yours truly,
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES EXCLUDING AND INCLUDING
INTEREST ON DEPOSITS
<TABLE>
<CAPTION>
March 31, December 31,
------------------ -------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income 33,152 27,426 112,045 95,048 78,256 68,894 62,634
Provision for Income Taxes 16,292 13,656 53,476 44,977 33,660 27,175 21,046
------ ------ ------- ------- ------- ------ ------
Earnings before Taxes 49,444 41,082 165,521 140,025 111,916 96,069 83,680
====== ====== ======= ======= ======= ====== ======
Fixed Charges:
Interest Expense (Excluding
Interest on Deposits) 8,500 3,446 15,313 8,788 11,285 15,041 26,525
Interest Portion of Rentals (33%) 494 358 1,411 1,107 1,093 1,309 1,249
------ ------ ------- ------- ------- ------ ------
Total Fixed Charges 8,994 3,604 16,724 9,895 12,378 16,350 27,774
====== ====== ======= ======= ======= ====== ======
Earnings before Taxes and
Fixed Charges 58,438 44,886 182,245 149,920 124,294 112,419 111,454
Ratio of Earnings to Fixed Charges 6.50 11.80 10.90 15.15 10.04 6.88 4.01
<CAPTION>
March 31, December 31,
------------------ -------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income 33,152 27,426 112,045 95,048 78,258 68,894 62,634
Provision for Income Taxes 16,292 13,658 53,476 44,977 33,660 27,175 21,046
------ ------ ------- ------- ------- ------- -------
Earnings before Taxes 49,444 41,082 165,521 140,025 111,916 96,069 83,680
====== ====== ======= ======= ======= ======= =======
Fixed Charges:
Interest Expense (Including
Interest on Deposits) 73,539 51,875 213,614 224,068 292,017 297,613 292,687
Interest Portion of Rentals (33%) 494 358 1,411 1,107 1,093 1,309 1,249
------ ------ ------- ------- ------- ------- -------
Total Fixed Charges 74,033 52,233 215,025 225,175 293,110 298,922 293,936
====== ====== ======= ======= ======= ======= =======
Earnings before Taxes and
Fixed Charges 123,477 93,315 380,546 365,200 405,026 394,991 377,616
Ratio of Earnings to Fixed Charges 1.67 1.79 1.77 1.62 1.38 1.31 1.28
</TABLE>
<PAGE> 1
EXHIBIT 23.1
EXHIBIT 23.1 - CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the reference to our firm in the headnote to "Selected
Consolidated Financial Data" and under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Regions Financial
Corporation for the registration of $100 million in debt securities and to the
incorporation by reference therein of our report dated February 4, 1994 with
respect to the consolidated financial statements of Regions Financial
Corporation (formerly First Alabama Bancshares, Inc.) included in its Annual
Report to Stockholders which is incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1993, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young
Birmingham, Alabama
June 20, 1994
<PAGE> 1
EXHIBIT 25
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)__________
-------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation (I.R.S. Employer
if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
-------------------------------
REGIONS FINANCIAL CORPORATION
(Exact name of obligor as specified in the charter)
DELAWARE 63-0589368
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(Address of principal executive offices) (Zip Code)
-------------------------------
DEBT SECURITIES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE> 2
-2-
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
NAME ADDRESS
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
ITEM 3. -15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990 and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated March
21, 1994 -see attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No.
33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein by
reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, dated
as amended on September 21, 1993. - Incorporated
herein by reference to Exhibit 4 filed with Form
T-1 Statement, Registration No. 33-52359.
<PAGE> 3
-3-
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated herein
by reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
EXHIBIT 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of March 31, 1994
- Attached
EXHIBIT 8 - Not Applicable
EXHIBIT 9 - Not Applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Bankers Trust Company, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 20th day of
June, 1994.
BANKERS TRUST COMPANY
By: /s/ Lara Graff
---------------------------
Lara Graff
Assistant Vice President
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Bankers Trust Company, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 20th day of
June, 1994.
BANKERS TRUST COMPANY
By: Lara Graff
------------------
Lara Graff
Assistant Vice President
<PAGE> 6
EXHIBIT 1
STATE OF NEW YORK
Banking Department
I, CARMINE M. TENGA, Deputy Superintendent of Banks of the
State of New York, DO HEREBY APPROVE, the annexed Certificate entitled
"CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS
TRUST COMPANY Under Section 8005 of the Banking Law," dated March 21,
1994, providing for an increase in authorized capital stock from,
$951,666,670 consisting of 70,166,667 shares with a par value of $10
each designated as Common Stock and 250 shares with a par value of
$1,000,000 each designated as Series Preferred Stock to $1,101,666,670
consisting of 85,166,667 shares with a par value of $10 each
designated as Common Stock and 250 shares with a par value of
$1,000,000 each designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the
City of New York, this 28th day of March in
the Year of our Lord one thousand nine
hundred and ninety-four.
/s/ Carmine M. Tenga
------------------------------------------
Deputy Superintendent of Banks
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST COMPANY
Under Section 8005 of the Banking Law
---------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of BANKERS TRUST COMPANY,
do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was
filed by the Superintendent of Banks on the 5th day of March, 1903.
3. The organization certificate as heretofore amended is
hereby amended to increase the aggregate number of shares which the
corporation shall have authority to issue and to increase the amount
of its authorized capital stock in conformity therewith.
4. Article III of the organization certificate with
reference to the authorized capital stock, the number of shares into
which the capital stock shall be divided, the par value of shares and
the capital stock outstanding, which reads as follows:
"III. Capital Stock: The amount of capital stock
which the corporation is hereafter to have is Nine Hundred
Fifty-One Million, Six Hundred Sixty-Six Thousand, Six Hundred
Seventy Dollars ($951,666,670), divided into Seventy Million,
One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(70,166,667) shares with a par value of $10 each designated as
Common Stock and 250 shares with a par value of One Million
Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE> 8
is hereby amended to read as follows:
"III. The amount of capital stock which the
corporation is hereafter to have is One Billion, One Hundred
One Million, Six Hundred Sixty-Six Thousand, Six Hundred
Seventy Dollars ($1,101,666,670), divided into Eighty-Five
Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 250 shares with a par value of
One Million Dollars ($1,000,000) each designated as Series
Preferred Stock."
5. The foregoing amendment of the organization certificate
was authorized by unanimous written consent signed by the holder of
all ourstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this
certificate this 21st day of March, 1994.
/s/ James T. Byrne, Jr.
-----------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
-----------------------
Lea Lahtinen
Assistant Secretary
-2-
<PAGE> 9
State of New York )
) ss.:
County of New York )
Lea Lahtinen, being duly sworn, deposes and says that she is
an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the
foregoing certificate and knows the contents thereof, and that the
statements therein contained are true.
/s/ Lea Lahtinen
-----------------------
Lea Lahtinen
Sworn to before me this 21st
day of March, 1994.
/s/ Sandra L. West
----------------------------
Notary Public
-3-
<PAGE> 10
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/94 ST-BK: 36-4840 FFIEC 031
<S> <C> <C>
Address: 130 Liberty Street Page RC-1
City, State ZIP: New York, NY 10006
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks March 31, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
-----------
C400
-------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS / / / / / / / / / / / / / / / / / /
1. Cash and balances due from depository institutions
(from Schedule RC-A): / / / / / / / / / / / / / / / / / /
a. Noninterest-bearing balances and currency and
coin(1)............................................... 0081 1,764,000 1.a.
b. Interest-bearing balances(2).............................. 0071 1,588,000 1.b.
2. Securities: / / / / / / / / / / / / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B,
column A)............................................. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)............................................. 1773 3,677,000 2.b.
3. Federal funds sold and securities purchased under agreements to / / / / / / / / / / / / / / / / / / / /
resell in domestic offices of the bank and of its Edge and / / / / / / / / / / / / / / / / / / / /
Agreement subsidiaries, and in IBFs: / / / / / / / / / / / / / / / / / / / /
a. Federal funds sold........................................ 0276 2,153,000 3.a.
b. Securities purchased under agreements to resell........... 0277 979,000 3.b.
4. Loans and lease financing receivables: / / / / / / / / / / / / / / / / / / / /
a. Loans and leases, net of unearned income (from / / / / / / / / / / / / / / / / / / / /
Schedule RC-C)..................... RCFD 2122 17,386,000 / / / / / / / / / / / / / / / / / / / / 4.a.
b. LESS: Allowance for loan and lease
losses............................. RCFD 3123 1,269,000 / / / / / / / / / / / / / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve...RCFD 3128 0 / / / / / / / / / / / / / / / / / / / / 4.c.
d. Loans and leases, net of unearned income, / / / / / / / / / / / / / / / / / / / /
allowance, and reserve (item 4.a minus 4.b and 4.c) ............. 2125 16,117,000 4.d.
5. Assets held in trading accounts ....................................... 3545 35,036,000 5.
6. Premises and fixed assets (including capitalized leases) .............. 2145 704,000 6.
7. Other real estate owned (from Schedule RC-M) .......................... 2150 248,000 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 188,000 8.
9. Customers' liability to this bank on acceptances outstanding .......... 2155 436,000 9.
10. Intangible assets (from Schedule RC-M) ................................. 2143 10,000 10.
11. Other assets (from Schedule RC-F) ...................................... 2160 10,462,000 11.
12. Total assets (sum of items 1 through 11) ............................... 2170 73,362,000 12.
</TABLE>
__________________________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE> 11
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/94 ST-BK: 36-4840 FFIEC 031
<S> <C> <C>
Address: 130 Liberty Street Page RC-2
City, State Zip: New York, NY 10006
FDIC Certificate No.: / 0 / 0 / 6 / 2 / 3
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
-----------------------------------
Dollar Amounts in Thousands / / / / / / / / Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES / / / / / / / / / / / / / / / / / /
13. Deposits: / / / / / / / / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I) RCON 2200 8,815,000 13.a.
(1) Noninterest-bearing(1) ........RCON 6631 3,691,000.... / / / / / / / / / / / / / / / / / 13.a.(1)
(2) Interest-bearing ..............RCON 6636 5,124,000.... / / / / / / / / / / / / / / / / / 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E part II) ........................... RCFN 2200 11,770,000 13.b.
(1) Noninterest-bearing .......... RCFN 6631 570,000 / / / / / / / / / / / / / / / / / / 13.b.(1)
(2) Interest-bearing ............. RCFN 6636 11,200,000 / / / / / / / / / / / / / / / / / / 13.b.(2)
14. Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs: / / / / / / / / / / / / / / / / / /
a. Federal funds purchased ...................................... RCFD 0278 4,755,000 14.a.
b. Securities sold under agreements to repurchase ............... RCFD 0279 121,000 14.b.
15. a. Demand notes issued to the U.S. Treasury ..................... RCON 2840 0 15.a.
b. Trading liabilities .......................................... RCFD 3548 19,956,000 15.b.
16. Other borrowed money: / / / / / / / / / / / / / / / / / /
a. With original maturity of one year or less ................... RCFD 2332 11,599,000 16.a.
b. With original maturity of more than one year ................. RCFD 2333 1,341,000 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ... RCFD 2910 9,000 17.
18. Bank's liability on acceptances executed and outstanding ......... RCFD 2920 436,000 18.
19. Subordinated notes and debentures ................................ RCFD 3200 1,279,000 19.
20. Other liabilities (from Schedule RC-G) ........................... RCFD 2930 9,107,000 20.
21. Total liabilities (sum of items 13 through 20) ................... RCFD 2948 69,188,000 21.
/ / / / / / / / / / / / / / / / / /
22. Limited-life preferred stock and related surplus ................. RCFD 3282 0 22.
EQUITY CAPITAL / / / / / / / / / / / / / / / / / /
23. Perpetual preferred stock and related surplus .................... RCFD 3838 250,000 23.
24. Common stock ..................................................... RCFD 3230 852,000 24.
25. Surplus (exclude all surplus related to preferred stock) ......... RCFD 3839 498,000 25.
26. a. Undivided profits and capital reserves........................ RCFD 3632 2,859,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities ................................................... RCFD 8434 39,000 26.b.
27. Cumulative foreign currency translation adjustments .............. RCFD 3284 (324,000) 27.
28. Total equity capital (sum of items 23 through 27) ................ RCFD 3210 4,174,000 28.
29. Total liabilities, limited-life preferred stock, and equity / / / / / / / / / / / / / / / / / /
capital (sum of items 21, 22, and 28)............................. RCFD 3300 73,362,000 29.
</TABLE>
<TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below
that best describes the most comprehensive level of auditing work
performed for the bank by independent external Number
auditors as of any date during 1993...................................................... RCFD 6724 2 M.1
<S> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by
with generally accepted auditing standards by a certified other external auditors (may be required by
public accounting firm which submits a report on the bank state chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements
submits a report on the consolidated holding company by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax
3 = Directors' examination of the bank conducted in preparation work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
____________________________
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
