<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1994 COMMISSION FILE NUMBER
0-6159
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 63-0589368
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
417 North 20th Street, Birmingham, Alabama 35202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 832-8450
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to the filing requirements for at least
the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $.625 Par Value-41,748,524 shares outstanding
as of October 31, 1994
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Condition -
September 30, 1994, December 31, 1993
and September 30, 1993 2
Consolidated Statements of Income -
Three months ended September 30, 1994 and
September 30, 1993 and Nine months ended
September 30, 1994 and September 30, 1993 3
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1994 and
September 30, 1993 4
Notes to Consolidated Financial Statements -
September 30, 1994 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 15
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
September 30 December 31 September 30
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 470,005 $ 462,032 $ 405,484
Interest-bearing deposits in other
banks 830 11,031 628
Investment securities 1,910,091 2,368,445 1,646,778
Securities available for sale 574,744 0 0
Trading account assets 2,942 20,368 9,897
Mortgage loans held for sale 273,356 285,665 228,028
Federal funds sold and securities
purchased under agreement
to resell 39,427 106,724 5,391
Loans 8,063,431 6,869,497 5,623,689
Unearned income (25,543) (36,251) (37,734)
Loans, net of unearned income 8,037,888 6,833,246 5,585,955
Allowance for loan losses (112,864) (100,762) (86,939)
Net Loans 7,925,024 6,732,484 5,499,016
Premises and equipment 147,769 140,206 118,775
Interest receivable 83,332 67,488 60,576
Due from customers on acceptances 33,852 75,913 15,680
Other assets 208,585 205,992 155,585
$11,669,957 $10,476,348 $8,145,838
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $ 1,280,713 $ 1,196,685 $1,137,005
Interest-bearing 7,989,143 7,574,009 5,906,041
Total Deposits 9,269,856 8,770,694 7,043,046
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 700,650 184,566 115,632
Commercial paper 33,000 17,201 19,239
Other short-term borrowings 757 1,994 3,139
Total Short-term Borrowings 734,407 203,761 138,010
Long-term borrowings 612,198 462,862 141,842
Total Borrowed Funds 1,346,605 666,623 279,852
Bank acceptances outstanding 33,852 75,913 15,680
Other liabilities 118,111 112,153 101,244
Total Liabilities 10,768,424 9,625,383 7,439,822
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 120,000,000 shares
Issued, including treasury stock -
44,934,458; 42,520,025; and
39,087,472 shares, respectively 28,084 26,575 24,430
Surplus 390,171 375,983 269,527
Undivided profits 553,081 462,280 442,955
Treasury stock, at cost - 2,919,179;
1,470,700; and 1,924,700 shares;
respectively (63,759) (12,320) (28,713)
Unearned restricted stock (1,108) (1,553) (2,183)
Unrealized gain (loss) on securities
available for sale, net of taxes (4,936) 0 0
Total Stockholders' Equity 901,533 850,965 706,016
$11,669,957 $10,476,348 $8,145,838
</TABLE>
See notes to consolidated financial statements.
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $155,019 $107,180 $430,187 $313,544
Interest on securities:
Taxable interest income 37,275 25,324 111,491 78,534
Tax-exempt interest
income 3,413 3,078 10,208 8,501
Total Interest on Securities 40,688 28,402 121,699 87,035
Interest on mortgage loans held
for sale 6,277 4,088 14,628 11,339
Income on federal funds sold
and securities purchased under
agreement to resell 403 142 1,685 1,231
Interest on time deposits in
other banks 3 12 68 177
Interest on trading account assets 28 29 91 117
Total Interest Income 202,418 139,853 568,358 413,443
Interest Expense:
Interest on deposits 74,891 49,834 211,933 146,937
Interest on short-term borrowings 6,719 1,193 11,305 3,543
Interest on long-term borrowings 8,718 2,721 23,056 8,039
Total Interest Expense 90,328 53,748 246,294 158,519
Net Interest Income 112,090 86,105 322,064 254,924
Provision for loan losses 4,367 4,101 13,804 17,401
Net Interest Income After Provision
for Loan Losses 107,723 82,004 308,260 237,523
Non-Interest Income:
Trust department income 4,992 5,029 14,813 13,732
Service charges on deposit accounts 13,035 10,692 37,133 32,072
Mortgage servicing and origination fees 10,175 11,018 32,258 30,914
Securities gains 76 34 444 76
Other 6,996 7,071 24,348 20,247
Total Non-Interest Income 35,274 33,844 108,996 97,041
Non-Interest Expense:
Salaries and employee benefits 46,010 38,771 134,089 115,817
Net occupancy expense 5,293 3,928 15,320 11,110
Furniture and equipment expense 5,700 4,714 16,674 13,354
Other 29,644 27,123 88,293 69,351
Total Non-Interest Expense 86,647 74,536 254,376 209,632
Income Before Income Taxes 56,350 41,312 162,880 124,932
Applicable income taxes 18,923 12,689 54,243 40,946
Net Income $ 37,427 $ 28,623 $108,637 $ 83,986
Average number of shares
outstanding 42,464 37,158 43,029 37,167
Per share:
Net income $0.88 $0.77 $2.52 $2.26
Cash dividends declared $0.30 $0.26 $0.90 $0.78
</TABLE>
See notes to consolidated financial statements.
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
Nine Months Ended
September 30
1994 1993
<S> <C> <C>
Operating Activities:
Net income $ 108,637 $ 83,986
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 13,172 10,551
Provision for loan losses 13,804 17,401
Net amortization (accretion) of securities 10,996 (19)
Amortization of loans and other assets 13,709 13,467
Amortization of deposits and borrowings (5,039) 0
Provision for losses on other real estate (551) 298
Deferred income taxes (10,535) (8,204)
(Gain) on sale of premises and equipment (380) (91)
Realized security (gains) (444) (76)
Decrease in trading account assets 17,426 2,192
Decrease (increase) in mortgages held for sale 12,309 (20,416)
(Increase) in interest receivable (15,844) (7,456)
(Increase) in other assets (15,324) (29,196)
Increase in other liabilities 19,467 20,306
Stock issued to employees 247 0
Other 560 940
Net Cash Provided By Operating Activities 162,210 83,683
Investing Activities:
Net (increase) in loans (1,206,772) (447,528)
Proceeds from sale of securities available
for sale 42,837 1,646
Proceeds from maturity of investment securities 746,133 371,845
Proceeds from maturity of securities available
for sale 24,224 0
Purchase of investment securities (862,009) (350,004)
Purchase of securities available for sale (86,037) 0
Net decrease (increase) in interest-bearing
deposits in other banks 10,201 (286)
Proceeds from sale of premises and equipment 3,133 295
Purchase of premises and equipment (23,487) (13,658)
Net decrease (increase) in customers' acceptance
liability 42,061 11,498
Net Cash (Used) By Investing Activities (1,309,716) (426,192)
Financing Activities:
Net increase in deposits 502,454 341,904
Net increase (decrease) in short-term borrowings 530,646 (115,149)
Proceeds from long-term borrowings 373,581 6,729
Payments on long-term borrowings (222,498) (1,877)
Net (decrease) in bank acceptance liability (42,061) (11,498)
Issuance of common stock for acquisitions 36,154 8,926
Cash dividends (39,311) (28,954)
Purchase of treasury stock (51,439) (16,393)
Proceeds from exercise of stock options 656 855
Net Cash Provided By Financing Activities 1,088,182 184,543
(Decrease) In Cash And Cash Equivalents (59,324) (157,966)
Cash and Cash Equivalents, Beginning of Period 568,756 568,841
Cash And Cash Equivalents, End of Period $509,432 $410,875
</TABLE>
See notes to consolidated financial statements.
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE A -- Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions for Form 10-Q,
and, therefore, do not include all information and footnotes
necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted
accounting principles. For a summary of significant accounting
policies that have been consistently followed, see NOTE A to the
Consolidated Financial Statements included in the 1993 Annual Re
port to Stockholders previously filed as Exhibit 13 to Form 10-K.
It is management's opinion that all adjustments, consisting of
only normal and recurring items necessary for a fair presentation,
have been included.
Certain amounts in prior periods have been reclassified to conform
to the current period presentation.
NOTE B -- Completed Acquisitions
On July 7, 1994, Regions purchased, for $17 million in cash and
notes, First Fayette Bank, located in Fayette, Alabama, adding $77
million in assets and two offices.
On August 31, 1994, Regions issued 725,477 shares of common stock
in exchange for all the outstanding common stock of BNR Bancshares
Inc. The acquisition, accounted for as a pooling-of-interests,
added $137 million in assets and five offices in the New Roads,
Louisiana market.
On September 30, 1994, Regions issued 664,907 shares of common
stock in exchange for all the outstanding common stock of First
Community Bancshares, Inc. The acquisition, accounted for as a
pooling-of-interests, added $127 million in assets and two offices
in Rome, Georgia.
Also during the third quarter, Regions acquired from the
Resolution Trust Corporation, deposits of approximately $39
million in Houma, and Baton Rouge, Louisiana.
NOTE C -- Pending Acquisitions
During the second quarter, Regions entered into an agreement to
acquire all of the outstanding stock of Union Bank & Trust Company
(Union) located in Montgomery, Alabama. The agreement calls for
the exchange of Regions common stock for all of Union's
outstanding shares. The number of Regions shares to be issued will
be determined by the market price of Regions common stock during a
specified period. At current price levels, the total number of
Regions common stock to be issued for Union would be approximately
2,100,000 shares, valued at approximately $65 million. The $65
million includes $2 million in Regions common stock which would be
held in escrow and released upon the satisfaction of certain
conditions relating to environmental remediation costs. This
transaction is subject to approval by the stockholders of Union
and by various regulatory authorities. Union, which operates ten
offices in the Montgomery, Alabama area, had assets of $419
million and deposits of $315 million at September 30, 1994.
During the third quarter of 1994, Regions entered into an
agreement to acquire all the outstanding stock of Fidelity Federal
Savings Bank of Dalton Georgia (Fidelity). The agreement calls for
the exchange of 0.449 shares of Regions common stock for each
share of Fidelity's outstanding common and preferred stock,
subject to adjustment under certain circumstances. This
transaction is subject to approval by the stockholders of Fidelity
and by various regulatory authorities. Fidelity, which operates
three offices in Dalton and one office in Chatsworth, Georgia, had
assets of $287 million and deposits of $255 million at September
30, 1994.
Regions also entered into an agreement, during the third quarter,
to acquire all the outstanding stock of First Commercial
Bancshares, Inc. of Chalmette, Louisiana. Consideration for this
transaction had an aggregate value of approximately $20.3 million,
calculated as of October 20, 1994, the date this transaction was
announced. Such consideration will consist at the election of each
First Commercial stockholder of either Regions common stock or a
combination of Regions common stock and cash. The stock portion of
the consideration is subject to adjustment under certain
circumstances. This transaction is subject to approval by the
stockholders of First Commercial and by various regulatory
authorities. First Commercial, which operates three offices in
Chalmette and one each in Arabi and Poydras, Louisiana, had assets
of $113 million and deposits of $97 million at September 30, 1994.
On November 10, 1994, Regions issued from treasury stock
approximately 1,784,000 shares of Regions common stock in exchange
for all the outstanding common stock of American Bancshares, Inc.
(ABI) of Monroe, Louisiana. The acquisition, accounted for as a
purchase, added $307 million in assets and eight offices in the
Louisiana markets of Monroe and Shreveport.
NOTE D - Change in Method of Accounting for Debt and Equity
Securities
In May 1993 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities" (SFAS No.
115). Regions adopted the provisions of the new standard for
investments held on or acquired after January 1, 1994. In
accordance with the statement, prior period financial statements
have not been restated to reflect the change in accounting
principle. Adoption of Statement 115 did not have a material
effect on the consolidated financial statements.
NOTE E - Issuance of Subordinated Debt
On July 21, 1994, Regions issued $25 million of subordinated
indebtedness due 2001 (the "7.65% Notes") and on September 15,
1994, Regions issued $100 million of subordinated indebtedness due
2024 (the "7 3/4% Notes"). The 7.65% Notes and the 7 3/4% Notes
are subordinated to all senior indebtedness (as defined in the
controlling indenture) of Regions, and payment of principle of
such notes may be accelerated in the case of certain events
involving bankruptcy, insolvency proceedings, or reorganization of
Regions. The 7 3/4% Notes, or some portion thereof, may be
redeemed at the option of the holder in the year 2004. The net
proceeds from the issuance of the 7.65% Notes and the 7 3/4% Notes
have been used for general corporate purposes, including the
repurchase of an equivalent number of shares of Regions common
stock in the open market issued in connection with the acquisition
of ABI as described in Note B. The 7.65% Notes and the 7 3/4%
Notes qualify as "Tier II Capital" under Federal Reserve
guidelines.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at September 30, 1994, were $11.7 billion
- - --an increase of 43% over a year earlier. This increase was due
to growth in almost all categories of assets, particularly loans
and securities, primarily related to acquisition activity. Since
year-end 1993, total assets have increased 11%.
Comparisons with the prior year are significantly affected by
acquisitions during the last year, which are summarized in the
chart presented below. All the transactions were accounted for as
purchases except for the Guaranty Bancorp, BNR Bancshares, and
First Community transactions, which were accounted for as poolings-
of-interests. Prior year financial information has not been
restated to give effect to the poolings-of-interests transactions
since the effect is not material.
<TABLE>
<S> <C> <C> <C>
Date Headquarters Total Assets
Acquired Company Acquired Location (in thousands)
October First Federal DeFuniak $ 89,295
1993 Savings Bank of Springs,
DeFuniak Springs Florida
December First Federal Marianna, 101,084
1993 Savings Bank of Florida
Marianna
December Secor Bank, Birmingham, 1,831,937
1993 Federal Savings Alabama
Bank
May 1994 Branches Four branches 50,700
Purchased from in Panama City,
the Resolution Florida and one
Trust branch each in
Corporation Atmore and
Brewton,
Alabama
May 1994 Guaranty Bancorp Baton Rouge, 186,879
Louisiana
July 1994 First Fayette Fayette, 76,585
Bank Alabama
Date Headquarters Total Assets
Acquired Company Acquired Location (in thousands)
August 1994 Branches Deposits in 39,413
Purchased from Houma, and
the Resolution Baton Rouge,
Trust Louisiana
Corporation
August 1994 BNR Bancshares New Roads, 136,952
Inc. Louisiana
September First Community Rome, Georgia 126,570
1994 Bancshares Inc.
</TABLE>
Loans have increased 44% since a year ago. The above acquisitions
accounted for a 26% increase in loans, with the remaining 18% in
crease attributable to internal growth, primarily in consumer and
one-to-four family residential mortgage loans. Since year-end,
total loans have increased 18%, due primarily to growth in
consumer and one-to-four family residential mortgage loans. The
average yield on loans during the first nine months of 1994 was
7.90%, compared to 8.01% during the same period in 1993. This
decrease was primarily the result of lower average base lending
rates.
Non-performing assets were as follows (in thousands):
<TABLE>
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
<S> <C> <C> <C>
Non-accruing loans $ 36,463 $ 39,519 $ 21,119
Loans past due 90
days or more 5,314 13,028 5,949
Renegotiated loans 3,917 4,169 1,756
Other real estate 8,262 13,720 7,564
Total $ 53,956 $ 70,436 $ 36,388
Non-performing assets
as a percentage of
loans and other real
estate 0.67% 1.03% 0.65%
</TABLE>
Non-accruing loans have increased $15.3 million since September
30, 1993, but decreased $3.1 million since year-end. The increase
from the prior year is due primarily to non-accruing commercial
real estate loans added as a result of the Secor acquisition. At
September 30, 1994, real estate loans comprised $20.3 million of
total non-accruing loans, with commercial loans accounting for
$13.4 million and installment loans $2.8 million. Other real
estate decreased $5.5 million since year-end due primarily to the
disposition of several parcels of other real estate.
Activity in the allowance for loan losses is summarized as follows
(in thousands):
<TABLE>
Sept. 30, Sept. 30,
1994 1993
<S> <C> <C>
Balance at beginning of year $100,762 $73,619
Net loans charged-off:
Commercial 1,535 1,874
Real estate 2,291 309
Installment 1,934 2,229
Total 5,760 4,412
Allowance of acquired banks 4,058 331
Provision charged to expense 13,804 17,401
Balance at end of period $112,864 $ 86,939
</TABLE>
Net loan losses in the first nine months of 1994 and 1993 were
0.11% of loans (annualized). At September 30, 1994, the allowance
for loan losses stood at 1.40% of loans, compared to 1.56% a year
ago and 1.47% at year-end. The allowance for loan losses as a
percentage of non-performing loans and non-performing assets was
247% and 209%, respectively, at September 30, 1994, compared to
302% and 239%, respectively, at September 30, 1993.
The allowance for loan losses is maintained at a level deemed ade
quate by management to absorb possible unidentified losses from
loans in the portfolio. In determining the adequacy of the allow
ance for loan losses, management considers numerous factors, in
cluding but not limited to: (1) management's estimate of future
economic conditions and the resulting impact on Regions, (2)
management's estimate of the financial condition and liquidity of
certain loan customers, and (3) management's estimate of collat
eral values of property securing certain loans. Because all of
these factors and others involve the use of management's estima
tion and judgment, the allowance for loan losses is inherently
subject to adjustment at future dates. At September 30, 1994, it
is management's opinion that the allowance for loan losses is ade
quate. However, unfavorable changes in any of the above factors
or other factors could require additional provisions, in excess of
normal provisions, to the allowance for loan losses in future pe
riods.
Total securities have increased 51% since a year ago, primarily as
a result of securities added by the acquisitions completed since
September 1993. Since year-end, securities have increased 5%.
Mortgage loans held for sale decreased $12.3 million since year-
end but increased $45.3 million since September 30, 1993.
Improving economic conditions, combined with competitive pricing
of residential mortgages, even with higher market rates in 1994,
resulted in increased loan production through the first nine
months of 1994, compared to the prior year. Slower growth in
residential mortgage production at the end of the third quarter
accounted for the decline in the mortgage loans held for sale at
September 30, 1994.
Interest-bearing deposits in other banks at September 30, 1994,
totaled $830,000, an increase of $202,000 over the same period in
1993 but a decrease of $10.2 million since year-end. Maturities
from these short-term investments were not reinvested in this
category of earning assets.
Net federal funds purchased and security repurchase agreements
totaled $661.2 million at September 30, 1994, $77.8 million at
year-end and $110.2 million at September 30, 1993. The level of
federal funds and security repurchase or resell agreements can
fluctuate significantly on a day-to-day basis, depending on
funding needs and which sources of funds are used to satisfy those
needs. During the first nine months of 1994, net funds purchased
averaged $270.9 million, compared to $75.1 million in the first
nine months of 1993, indicating more reliance on purchased funds
to support earning assets in the first nine months of 1994 than in
the same period last year.
Premises and equipment increased $29.0 million from the third
quarter of 1993. This increase was due primarily to the addition
of premises and equipment obtained through acquisitions during the
last year.
Other assets increased $2.6 million since year-end, and $53.0
million since the third quarter of 1993, due primarily to
increased excess purchase price and deferred tax assets added by
acquisitions during the past year.
Total deposits have increased 32% since September of last year.
The deposits acquired in connection with acquisitions resulted in
a 31% increase, with the remaining 1% attributable to internal
growth and increases in certificates of deposit greater than
$100,000. Since year-end, total deposits have increased $499,000
or 6%.
Long-term borrowings have increased $149.3 million since year-end
and $470.4 million since September 30, 1993. In the fourth quarter
of 1993, as a result of acquisitions, Regions assumed $294.6
million of Federal Home Loan Bank advances and $27.0 million in
medium term notes. Additionally, Regions issued $125 million in
subordinated debt during the third quarter of the current year.
Stockholders' equity was $902 million at September 30, 1994, an in
crease of 28% over last year and an increase of 6% since year end.
These increases resulted primarily from internally generated capi
tal and equity added in connection with the acquisitions during
the last year. These increases were partially offset by a $4.9
million unrealized loss on securities classified as available for
sale, arising from the adoption of SFAS No. 115 and the purchase
of $51.4 million of treasury stock, which was reissued in early
November in connection with the ABI acquisition. Regions' ratio of
equity to total assets was 7.73% at September 30, 1994, compared
to 8.67% a year ago and 8.12% at year end.
Regions' primary sources of liquidity are maturities from its loan
and securities portfolios. At September 30, 1994, Regions had
approximately $193 million of securities maturing in one year or
less. The average maturity of the securities portfolio was 8.9
years using contractual maturities. At December 31, 1993,
approximately $1.2 billion in loans was due to mature in one year
or less. Although the amount at September 30, 1994, has not been
determined, loan maturities would provide significant liquidity.
In addition to these sources of liquidity, Regions has access to
purchased funds in the state and national money markets. Liquidity
is further enhanced by a relatively stable source of deposits. At
September 30, 1994, the loan to deposit ratio was 86.71%, compared
to 79.20% a year ago and 77.91% at year-end. Regions' management
places constant emphasis on the maintenance of adequate liquidity
to meet conditions that might reasonably be expected to occur.
Net interest income for the first nine months of 1994 increased
$67.1 million, compared to the same period in 1993. The increased
net interest income resulted from a higher level of earning
assets, partially offset by lower spreads on those earning assets.
The net yield on interest-earning assets (taxable equivalent
basis) was 4.30% in the first nine months of 1994, compared to
4.87% in the same period in 1993. This ratio declined primarily
because of the lower spread associated with the assets acquired in
the 1993 acquisitions. For the third quarter of 1994, net
interest income increased $26.0 million over the third quarter of
1993, due to increased earning assets, partially offset by lower
spreads on those earning assets.
Non-interest income increased $12.0 million or 12% over the first
nine months of 1993 and $1.4 million or 4% over the third quarter
of 1993. Trust department income increased $1.1 million or 8% on
a year-to-year comparison but decreased slightly on a quarterly
comparison. The increase resulted from growth in trust assets and
increases in personal, corporate and employee benefit trust fees.
Increased charges for selected deposit account services, coupled
with an increase in the number of deposit accounts, resulted in
service charges on deposit accounts increasing $5.1 million or 16%
in the first nine months of 1994 and $2.3 million or 22% in the
third quarter, compared to the same periods in 1993. Mortgage
servicing and origination fees increased $1.3 million or 4% in the
first nine months of 1994 but decreased $843,000 or 8% in the
third quarter of 1994, compared to the same periods in 1993.
These changes are due to increases in the number and dollar amount
of loans serviced and to increased volume of new loan closings in
the first nine months of 1994, offset in the third quarter by
intense competitive pricing on new single family residential
mortgage loan originations. The mortgage company's servicing
portfolio totaled $9.1 billion at September 30, 1994--up $600
million over a year earlier. Production of new mortgages totaled
$1.6 billion during the first nine months of 1994, compared to
$1.3 billion during the same period in 1993. Other non-interest
income increased $4.1 million or 20% in the first nine months of
1994 but decreased slightly in the third quarter, over the
comparable year ago periods, due primarily to a $2.3 million gain
on the sale of mortgage servicing rights during the first quarter
of 1994, increases in insurance fees and commissions, credit card
fees, safe deposit box fees and international department income,
partially offset by a decrease in trading account commissions
during the third quarter.
Non-interest expense increased $44.7 million or 21% in the first
nine months of 1994 and $12.1 million or 16% in the third quarter
of 1994, compared to the same periods in 1993. Excluding the
expenses added by acquisitions during the last year, total non-
interest expense would have increased approximately 6%. Salaries
and employee benefits were up 16% in the first nine months of 1994
and 19% in the third quarter, due to an increase in the number of
employees because of acquisitions and increased business activity,
coupled with normal merit increases and higher benefit costs. Net
occupancy expense and furniture and equipment expense increased
31% in the first nine months of 1994 and 27% in the third quarter,
over the same periods in 1993, primarily because of additional
expenses associated with branch offices and equipment added by
recent acquisitions. Other non-interest expense increased $18.9
million or 27% in the first nine months of 1994 and $2.5 million
or 9% in the third quarter, over the same periods in 1993,
primarily because of expenses added by recent acquisitions,
particularly in supplies, postage, insurance, legal and other
professional fees, communications, and amortization of excess
purchase price. Also, losses from the sale or holding of
residential mortgages originated by the mortgage company totaled
$2.5 million in 1994, compared to gains of $1.3 million in 1993.
Income tax expense increased $13.3 million (32%) over the first
nine months of 1993 and $6.2 million (49%) over the third quarter
of 1993, primarily because of an increase in taxable income, and
an increase in taxable income as a percentage of total income.
Net income for the quarter was a record $37,427,000--up 31% over
the third quarter of last year. Year-to-date net income totaled
$108,637,000 or $2.52 per share, an increase of 12% on a per share
basis over the first nine months of last year. Return on
stockholders' equity declined to 15.99%, compared to 16.49% in the
first nine months of last year. Return on assets also declined to
1.31% in the first nine months of 1994, compared to 1.43% in the
first nine months of 1993.
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
Two reports on Form 8-K were filed with the
Commission during the third quarter of 1994.
The September 6, 1994, report, filed under items 5
and 7, relates to pro forma financial statements
reflecting the effect of the recently completed and pending
acquisitions. Included in the report are the combined
condensed statement of condition as of June 30, 1994, and
combined condensed statements of income as of June 30, 1994,
December 31, 1993, 1992 and 1991.
The September 8, 1994, report, also filed under items
5 and 7, relates to the issuance of $100 million of
subordinated notes.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by undersigned thereunto duly authorized.
Regions Financial Corporation
DATE: November 14,1994 /s/ Robert P. Houston
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
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<NAME> REGIONS FINANCIAL CORP
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