<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, 1995 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) 326-7100
(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-46,033,354 shares outstanding
as of October 31, 1995
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition -
September 30, 1995, December 31, 1994
and September 30, 1994 2
Consolidated Statement of Income -
Three months ended September 30, 1995 and
September 30, 1994 and Nine months ended
September 30, 1995 and September 30, 1994 3
Consolidated Statement of Cash Flows -
Nine months ended September 30, 1995 and
September 30, 1994 4
Notes to Consolidated Financial Statements -
September 30, 1995 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
September 30 December 31 September 30
1995 1994 1994
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 636,158 $ 551,084 $ 470,005
Interest-bearing deposits in
other banks 14,922 630 830
Investment securities 2,145,891 1,948,675 1,910,091
Securities available for sale 887,309 660,513 574,744
Trading account assets 17,942 24,853 2,942
Mortgage loans held for sale 98,046 104,471 273,356
Federal funds sold and securities
purchased under agreement to resell 1,639 45,074 39,427
Loans 9,617,619 9,043,467 8,063,431
Unearned income (20,946) (25,665) (25,543)
Loans, net of unearned income 9,596,673 9,017,802 8,037,888
Allowance for loan losses (131,426) (116,988) (112,864)
Net Loans 9,465,247 8,900,814 7,925,024
Premises and equipment 188,054 160,801 147,769
Interest receivable 101,923 88,339 83,332
Due from customers on acceptances 15,561 110,520 33,852
Other assets 275,218 243,546 208,585
$13,847,910 $12,839,320 $11,669,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $ 1,461,775 $ 1,450,330 $ 1,280,713
Interest-bearing 9,280,412 8,642,805 7,989,143
Total Deposits 10,742,187 10,093,135 9,269,856
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 1,216,763 991,214 700,650
Commercial paper 48,100 18,600 33,000
Other short-term borrowings 2,350 1,727 757
Total Short-term Borrowings 1,267,213 1,011,541 734,407
Long-term borrowings 573,790 519,238 612,198
Total Borrowed Funds 1,841,003 1,530,779 1,346,605
Bank acceptances outstanding 15,561 110,520 33,852
Other liabilities 135,369 91,016 118,111
Total Liabilities 12,734,120 11,825,450 10,768,424
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 120,000,000 shares
Issued, including treasury stock -
47,526,707; 46,482,811; and
44,934,458 shares, respectively 29,704 29,052 28,084
Surplus 418,453 430,981 390,171
Undivided profits 676,285 577,901 553,081
Treasury stock, at cost - 1,474,579;
1,474,579; and 2,919,179
shares, respectively (12,441) (12,441) (63,759)
Unearned restricted stock (1,798) (966) (1,108)
Unrealized gain(loss) on securities
available for sale, net of taxes 3,587 (10,657) (4,936)
Total Stockholders' Equity 1,113,790 1,013,870 901,533
$13,847,910 $12,839,320 $11,669,957
</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
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $210,357 $155,019 $619,307 $430,187
Interest on securities:
Taxable interest income 43,965 37,275 119,750 111,491
Tax-exempt interest income 3,597 3,413 10,614 10,208
Total Interest on Securities 47,562 40,688 130,364 121,699
Interest on mortgage loans held
for sale 2,441 6,277 5,812 14,628
Income on federal funds sold
and securities purchased under
agreement to resell 87 403 402 1,685
Interest on time deposits in
other banks 421 3 1,314 68
Interest on trading account
assets 122 28 261 91
Total Interest Income 260,990 202,418 757,460 568,358
Interest Expense:
Interest on deposits 110,187 74,891 319,791 211,933
Interest on short-term
borrowings 15,050 6,719 38,049 11,305
Interest on long-term borrowings 10,172 8,718 29,272 23,056
Total Interest Expense 135,409 90,328 387,112 246,294
Net Interest Income 125,581 112,090 370,348 322,064
Provision for loan losses 5,494 4,367 15,312 13,804
Net Interest Income After
Provision for Loan Losses 120,087 107,723 355,036 308,260
Non-Interest Income:
Trust department income 5,753 4,992 17,765 14,813
Service charges on deposit
accounts 15,682 13,035 44,316 37,133
Mortgage servicing and
origination fees 11,759 10,175 30,124 32,258
Securities gains (losses) 16 76 16 444
Other 8,597 6,996 25,214 24,348
Total Non-Interest Income 41,807 35,274 117,435 108,996
Non-Interest Expense:
Salaries and employee benefits 52,841 46,010 151,710 134,089
Net occupancy expense 6,026 5,293 17,008 15,320
Furniture and equipment expense 6,097 5,700 17,892 16,674
Other 29,911 29,644 91,753 88,293
Total Non-Interest Expense 94,875 86,647 278,363 254,376
Income Before Income Taxes 67,019 56,350 194,108 162,880
Applicable income taxes 23,025 18,923 66,007 54,243
Net Income $ 43,994 $ 37,427 $128,101 $108,637
Average number of shares
outstanding 46,041 42,464 46,212 43,029
Per share:
Net income $0.96 $0.88 $2.77 $2.52
Cash dividends declared $0.33 $0.30 $0.99 $0.90
</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
1995 1994
<S> <C> <C>
Operating Activities:
Net income $ 128,101 $ 108,637
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 14,654 13,172
Provision for loan losses 15,312 13,804
Net (accretion) amortization of securities (149) 10,996
Amortization of loans and other assets 16,016 13,709
Amortization of deposits and borrowings (4,867) (5,039)
Provision for losses on other real estate 0 (551)
Deferred income taxes (7,348) (10,535)
(Gain) on sale of premises and equipment (334) (380)
Realized security (gains) (16) (444)
Decrease in trading account assets 6,911 17,426
Decrease in mortgages held for sale 6,425 12,309
(Increase) in interest receivable (11,262) (15,844)
(Increase) in other assets (41,487) (15,324)
Increase in other liabilities 36,124 19,467
Stock issued to employees 0 247
Other 742 560
Net Cash Provided By Operating Activities 158,822 162,210
Investing Activities:
Net (increase) in loans (163,826) (1,206,772)
Proceeds from sale of securities 75 42,837
Proceeds from maturity of investment securities 239,904 746,133
Proceeds from maturity of securities available
for sale 92,110 24,224
Purchase of investment securities (425,439) (862,009)
Purchase of securities available for sale (294,071) (86,037)
Net (increase) decrease in interest-bearing deposits
in other banks (5,898) 10,201
Proceeds from sale of premises and equipment 1,045 3,133
Purchase of premises and equipment (28,521) (23,487)
Net decrease in customers' acceptance liability 94,959 42,061
Net cash received in acquisitions 17,157 0
Net Cash (Used) By Investing Activities (472,505) (1,309,716)
Financing Activities:
Net increase in deposits 258,795 502,454
Net increase in short-term borrowings 224,471 530,646
Proceeds from long-term borrowings 102,847 373,581
Payments on long-term borrowings (54,794) (222,498)
Net (decrease) in bank acceptance liability (94,959) (42,061)
Issuance of stock for acquisitions 0 36,154
Cash dividends (45,074) (39,311)
Purchase of treasury stock for acquisitions (36,797) (51,439)
Proceeds from exercise of stock options 833 656
Net Cash Provided By Financing Activities 355,322 1,088,182
Increase (Decrease) In Cash And Cash Equivalents 41,639 (59,324)
Cash and Cash Equivalents, Beginning of Period 596,158 568,756
Cash And Cash Equivalents, End of Period $ 637,797 $ 509,432
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
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 1994 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 or restated for acquisitions
accounted for as poolings of interests.
NOTE B -- Completed Acquisition
On July 16, 1995, Regions issued 628,927 shares of common stock in
exchange for all the outstanding capital stock of Interstate
Billing Service, Inc. (IBS) of Decatur, Alabama. IBS provides
billing services and accounts receivable financing to commercial
customers related to the automotive service industry. This
transaction, accounted for as a pooling of interests, added
approximately $31 million in assets.
NOTE C - Pending Acquisitions
Since the beginning of the third quarter, Regions has entered into
several agreements to acquire other institutions. These proposed
acquisitions are summarized in the following table. Of the
transactions listed, all will be accounted for as purchases with
the exception of the First National Bancorp transaction, which
will be accounted for as a pooling of interests. Additionally, all
are subject to shareholder and regulatory approval, with the
exception of the Cartersville operation of The Prudential Savings
Bank.
<TABLE>
<S> <C> <C> <C> <C>
Expected
Number of
Shares of
Approximate Regions to
Asset Size Type of Exchange be issued(2)
Institution (in millions) Consideration Ratio(1) (in 000's)
Branch office
of Prudential
Savings Bank
in
Cartersville,
Georgia $ 57 Cash N/A N/A
Enterprise
National Bank
of Atlanta in
Dunwoody,
Georgia 54 Cash N/A N/A
Metro
Financial
Corporation Regions
of Atlanta Common
Georgia 197 Stock 0.431 714
First Federal
Bank of
Northwest,
Georgia, FSB Regions
in Cedartown Common
and Rockmart 89 Stock 1.293 386
First
National
Bancorp of Regions
Gainesville, Common
Georgia 3,112 Stock 0.76 15,602
First
Gwinnett
Bancshares,
Inc. of Regions
Norcross, Common
Georgia 62 Stock 1.1336 330
</TABLE>
(1) - Subject to possible adjustment.
(2) - Based on the number of shares of outstanding stock of each
institution as of September 30, 1995, and without possible
adjustment in the exchange ratio.
NOTE D - Issuance of Bank Notes
On April 11, 1995, Regions Bank of Louisiana, Regions' Louisiana
bank subsidiary, issued $100 million in unsecured Senior Bank
Notes (Notes). The Notes were issued in three parts (i) $25
million which matured October 5, 1995; (ii) $35 million due April
11, 1996, at an interest rate of 6.71%; and (iii) $40 million due
April 11, 1997, at an interest rate of 7.06%. The proceeds of the
Notes were used to reduce other short-term borrowings.
NOTE E - New Accounting Standards
Effective January 1, 1995, Regions adopted Statement of Financial
Accounting Standards No. 114, 'Accounting by Creditors for
Impairment of a Loan', as amended by Statement of Financial
Accounting Standards No. 118, 'Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures'
(Statement 114). The statement requires that certain impaired
loans be measured at the present value of expected future cash
flows discounted at the loan's effective interest rate or at the
loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. The adoption of
Statement 114 resulted in no material impact on Regions' financial
condition or results of operations.
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 (Statement
121) 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of.' Statement 121 establishes
standards for the identification of long-lived assets, certain
identifiable intangibles, and goodwill that may need to be written
down because of an entity's inability to recover the asset's
carrying value. Management believes that the adoption of Statement
121, effective for fiscal years beginning after December 15, 1995,
will not have a material impact on the Company's financial
statements.
In May 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 122 (Statement
122) 'Accounting for Mortgage Servicing Rights, an Amendment of
FASB No. 65.' Statement 122 requires companies that originate
mortgage loans to capitalize the cost of mortgage servicing rights
separate from the cost of originating the loan when a definitive
plan to sell or securitize those loans and retain the mortgage
servicing rights exist. Statement 122 also requires that
capitalized mortgage servicing rights be assessed for impairment
based on the fair value of those rights. Management believes that
the adoption of Statement 122, effective for the fiscal years
beginning after December 15, 1995, will not have a material impact
on Regions' financial statements.
NOTE F - FDIC Insurance Assessments
The FDIC approved a reduction in annual premium rates for Bank
Insurance Fund (BIF) member banks in the lowest assessment rate
category from $0.23 to $0.04 per $100 of deposits, effective June
1, 1995. As a result of this reduction, Regions' FDIC insurance
expense was reduced approximately $4 million in the third quarter
of 1995. However, legislative proposals to recapitalize the
Savings Association Insurance Fund (SAIF), including a one-time
assessment on SAIF-insured deposits, are currently pending.
Approximately 30% of Regions' deposits are considered SAIF-insured
deposits, with the remaining 70% considered BIF-insured deposits.
Although the reduction in premium rates for BIF-insured deposits
will result in reduced FDIC insurance expense applicable to BIF-
insured deposits during the remainder of 1995, certain legislative
proposals to recapitalize the SAIF could more than offset this
benefit in 1995.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at September 30, 1995, were $13.8 billion
- --an increase of 19% over a year earlier. This increase was due
to growth in almost all categories of assets, particularly loans
and securities, due to acquisition activity and internal growth.
Since year-end 1994, total assets have increased 8%.
Comparisons with the prior year are significantly affected by
three of the following acquisitions, which were accounted for as
purchases, and by the Fidelity Federal Savings Bank (Fidelity) and
Interstate Billing Service (IBS) acquisitions, which were
accounted for as poolings of interests. Prior year financial
information has not been restated to give effect to the Fidelity
and IBS transactions since the effect is not material. Relevant
1994 and 1995 acquisitions are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Date Company Headquarters Total Assets Accounting
Acquired Acquired Location (in thousands) Treatment
November American Monroe,
1994 Bancshares,Inc. Louisiana $302,674 Purchase
December Union Bank & Montgomery,
1994 Trust Company Alabama 417,903 Purchase
March First
1995 Commercial Chalmette,
Bancshares,Inc. Louisiana 145,968 Purchase
May 1995 Fidelity
Federal Dalton,
Savings Bank Georgia 333,336 Pooling
July 1995 Interstate
Billing Decatur,
Service, Inc. Alabama 30,521 Pooling
</TABLE>
Loans have increased 19% since a year ago. The three purchase
acquisitions, combined with the Fidelity and IBS transactions,
accounted for a 10% increase in loans, with the remaining 9% in-
crease attributable to internal growth, primarily in commercial,
consumer and single-family residential mortgage loans. Since
year-end, total loans have increased 6%, due to $421 million in
loans added by acquisitions and $158 million in internal growth.
During the third quarter of 1995, approximately $294 million of
single-family residential mortgage loans were securitized and
transferred from the loan portfolio to the available for sale
securities portfolio. The average yield on loans during the first
nine months of 1995 was 8.74%, compared to 7.90% during the same
period in 1994. This increase was primarily the result of higher
average base lending rates.
Non-performing assets were as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
Non-accruing loans $ 37,613 $ 38,035 $ 36,463
Loans past due 90
days or more 6,210 5,622 5,314
Renegotiated loans 3,107 2,818 3,917
Other real estate 5,532 6,267 8,262
Total $ 52,462 $ 52,742 $ 53,956
Non-performing assets
as a percentage of
loans and other real
estate 0.55% 0.57% 0.67%
</TABLE>
Non-accruing loans have remained relatively constant since
September of last year. At September 30, 1995, real estate loans
comprised $21.9 million of total non-accruing loans, with
commercial loans accounting for $11.1 million and installment
loans $4.6 million. Other real estate decreased $735,000 since
year-end and $2.7 million since September 1994, 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,
1995 1994
<S> <C> <C>
Balance at beginning of year $116,988 $100,762
Net loans charged-off (recovered):
Commercial 1,329 1,535
Real estate (601) 2,291
Installment 4,906 1,934
Total 5,634 5,760
Allowance of acquired banks 4,760 4,058
Provision charged to expense 15,312 13,804
Balance at end of period $131,426 $112,864
</TABLE>
Net loan losses in the first nine months of 1995 were 0.08% of
loans (annualized), compared to 0.11% of loans (annualized) in the
first nine months of 1994. Recoveries in the first nine months of
1995, of prior period real estate and commercial loans charge-
offs, resulted in lower net loan losses in 1995. At September 30,
1995, the allowance for loan losses stood at 1.37% of loans,
compared to 1.40% a year ago and 1.30% at year-end. The allowance
for loan losses as a percentage of non-performing loans and
non-performing assets was 280% and 251%, respectively, at
September 30, 1995, up from 247% and 209%, respectively, at
September 30, 1994. These ratios have been allowed to increase due
to management's evaluation of various factors, including higher
consumer debt levels and their estimated impact on Regions.
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,
including 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
collateral values of property securing certain loans. Because all
of these factors and others involve the use of management's
estimation and judgment, the allowance for loan losses is
inherently subject to adjustment at future dates. At September
30, 1995, it is management's opinion that the allowance for loan
losses is adequate. 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 periods.
Total securities have increased 22% since a year ago and 16% since
year end, as a result of securities added by acquisitions and the
securitization of $294 million of single-family residential
mortgage loans, which were added to the available for sale
portfolio in the third quarter of 1995.
Mortgage loans held for sale decreased $175.3 million since
September 30, 1994, as a result of lower levels of residential
mortgage loan production at Regions' mortgage banking subsidiary
during the first nine months of 1995, compared to the same time
period of 1994.
Interest-bearing deposits in other banks at September 30, 1995
totaled $14.9 million, an increase of $14.1 million over a year
ago and $14.3 over year end. This increase resulted primarily
from interest-bearing deposits added by recent acquisitions.
Net federal funds purchased and security repurchase agreements
totaled $1.2 billion at September 30, 1995, $946.1 million at
year-end and $661.2 million at September 30, 1994. The level of
federal funds and security 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 1995, net funds purchased averaged $794.1
million, compared to $270.9 million in the first nine months of
1994, indicating more reliance on purchased funds to support
earning assets in the first three quarters of 1995 than in the
same period last year.
Premises and equipment have increased $27.3 million since year end
and $40.3 million since September 30, 1994. These increases were
due primarily to the addition of premises and equipment obtained
through acquisitions since September 1994.
Other assets have increased $31.7 million since year end and $66.6
million since the third quarter of last year, due primarily to
increased excess purchase price resulting from acquisitions and
increased mortgage servicing rights added by purchases of several
mortgage servicing portfolios.
Total deposits have increased 16% since September of last year.
The deposits acquired in connection with acquisitions resulted in
a 11% increase, with the remaining 5% increase attributable to
internal growth. The internal growth resulted primarily from
increases in certificates of deposit. Since year-end, total
deposits have increased 2%, after adjusting for the deposits
acquired in connection with acquisitions during the first three
quarters of 1995.
Long-term borrowings have increased $54.6 million since year end
but decreased $38.4 million since September 30, 1994. During the
second quarter of 1995, Regions issued $100 million in senior bank
notes (see Note D to the Consolidated Financial Statements).
These increases were partially offset by payments and maturities
of Federal Home Loan Bank advances and other notes payable.
Regions currently has a shelf-registration statement outstanding
pursuant to which it may offer up to $200 million of its
unsecured, subordinated notes, debentures, bonds or other
evidences of indebtedness. The amounts, dates and terms of any
offering will be determined at a later date. Any offering will be
made only by means of a prospectus.
Regions is becoming more concerned about the general trend in
litigation in Alabama state courts involving large damage awards
against financial service company defendants. Regions directly or
through its subsidiaries is party to approximately 75 cases in
Alabama in the ordinary course of business, some of which seek
class action treatment or punitive damages. The damage exposure in
Alabama in any case and in the aggregate is difficult to estimate
because the jury has broad discretion as to the amount of damages
awarded.
Notwithstanding these concerns, Regions believes, based on
consultation with legal counsel, that the outcome of pending
litigation will not have a material effect on Regions'
consolidated financial position.
Stockholders' equity was $1.1 billion at September 30, 1995, an
increase of 24% over last year and an increase of 10% since year
end. These increases resulted primarily from internally generated
capital and equity added in connection with acquisitions since
September 1994. The unrealized gain on securities available for
sale (net of taxes) totaled $3.6 million at September 30, 1995,
compared to an unrealized loss of $10.7 million at year end.
Regions' ratio of equity to total assets was 8.04% at September
30, 1995, compared to 7.73% a year ago and 7.90% at year-end.
Regions' primary sources of liquidity are maturities from its loan
and securities portfolios. At September 30, 1995, Regions had
approximately $258 million of securities maturing in one year or
less. The average maturity of the securities portfolio was 9.2
years using contractual maturities. At December 31, 1994,
approximately $1.5 billion in loans was due to mature in one year
or less. Although the corresponding amount at September 30, 1995,
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 de-
posits. At September 30, 1995, the loan to deposit ratio was
89.34%, compared to 86.71% a year ago and 89.35% 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 1995 increased
$48.3 million or 15%, compared to the same period in 1994. 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 4.11% in the first nine months of 1995,
compared to 4.30% in the same period in 1994. This ratio declined
due primarily to changes in the product mix (both in interest-
earning assets and interest-bearing liabilities) and the effect of
acquisitions. For the third quarter of 1995, net interest income
increased $13.5 million or 12%, over the third quarter of 1994,
due to increased earning assets, partially offset by lower spreads
on those earning assets.
Total non-interest income increased $8.4 million or 8% over the
first nine months of 1994 and $6.5 million or 19% over the third
quarter of 1994. Trust department income increased $3.0 million
or 20% on a year-to-year comparison and $761,000 or 15% on a
quarterly comparison. This resulted from growth in trust assets,
due to acquisitions and internal growth, and increases in
personal, corporate, estate and employee benefit trust fees.
Increased charges for selected deposit account services, coupled
with an increase in the number of deposit accounts due to
acquisitions and internal growth, resulted in service charges on
deposit accounts increasing $7.2 million or 19% in the first nine
months of 1995 and $2.6 million or 20% in the third quarter,
compared to the same periods in 1994. Mortgage servicing and
origination fees decreased $2.1 million or 7% in the first nine
months of 1995, but increased $1.6 million or 16% in the third
quarter, compared to the same periods in 1994. Mortgage
origination fees were down 38% on a year-to-year comparison but up
14% on a quarterly comparison with last year, due to decreased
volume of new loan production in the first half of the year, but
increased production in the third quarter. Mortgage servicing
fees increased 5% and 16%, respectively, in the year-to-date and
quarterly comparison with the prior year, partially offsetting the
decline in origination fees on a year-to-date basis. The mortgage
company's servicing portfolio totaled $10.5 billion at September
30, 1995. Other non-interest income increased $866,000 or 4% in
the first nine months of 1995, over the comparable year ago period
due to higher international department income and increased
automated teller machine fees, partially offset by a $2.3 million
gain on the sale of mortgage servicing rights in the first quarter
of 1994. Compared to the third quarter of last year, other non-
interest income increased $1.6 million or 23% due to increased
customer fees and higher international department income.
Total non-interest expense increased $24.0 million or 9% in the
first nine months of 1995 and $8.2 million or 9% in the third
quarter of 1995, compared to the same periods in 1994. Salaries
and employee benefits were up 13% in the first nine months of 1995
and 15% in the third quarter, due to an increase in the number of
employees because of acquisitions, coupled with normal merit
increases and higher benefit costs. Net occupancy expense and
furniture and equipment expense increased 9% in the first nine
months of 1995 and 10% in the third quarter, over the same periods
in 1994, primarily because of additional expenses associated with
branch offices and equipment added by the 1994 and 1995
acquisitions. Other non-interest expense increased $3.5 million
or 4% in the first nine months of 1995 and $267,000 or 1% in the
third quarter, primarily because of increases in excess purchase
price amortization, postage, advertising and professional fees.
Partially offsetting these increases was a $1.8 million recovery
on a lawsuit settlement recognized in the first quarter of 1995
and the FDIC rebate paid on BIF deposits during the third quarter
of 1995(see Note F to the Consolidated Financial Statements).
Income tax expense increased $11.8 million (22%) over the first
nine months of 1994 and $4.1 million (22%) over the third quarter
of 1994, primarily because of an increase in taxable income, and
an increase in taxable income as a percentage of total income.
Net income for the third quarter was a record $44.0 million--up 18%
over the third quarter of last year. Year-to-date net income
totaled $128.1 million or $2.77 per share, an increase of 10% on a
per share basis over the first nine months of 1994. Return on
stockholders' equity declined to 15.87%, compared to 15.99% in the
first nine months of last year. Return on assets also declined to
1.29% in the first nine months of 1995, compared to 1.31% for the
same period in 1994.
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the third
quarter of 1995. However a report on Form 8-K dated
October 22, 1995, was filed with the Commission after
the end of the third quarter.
The October 22, 1995, report, filed under item 5,
relates to Regions' proposed acquisition of First
National Bancorp, headquartered in Gainesville,
Georgia.
<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 13, 1995 /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 CORPORATION
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