<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 MARCH 31, 1996 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-62,337,965 shares outstanding
as of April 30, 1996
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition -
March 31, 1996, December 31, 1995
and March 31, 1995 2
Consolidated Statement of Income -
Three months ended March 31, 1996 and
March 31, 1995 3
Consolidated Statement of Cash Flows -
Three months ended March 31, 1996 and
March 31, 1995 4
Notes to Consolidated Financial Statements -
March 31, 1996 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 14
SIGNATURES 15
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
March 31 December 31 March 31
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 578,339 $ 587,161 $ 602,663
Interest-bearing deposits in other
banks 86,900 56,477 41,254
Investment securities 1,925,152 1,589,106 2,018,448
Securities available for sale 2,195,845 2,274,675 1,278,088
Trading account assets 9,551 28,870 17,797
Mortgage loans held for sale 163,574 117,087 68,832
Federal funds sold and securities
purchased under agreement to resell 87,495 66,339 129,068
Loans 11,878,871 11,569,551 11,445,592
Unearned income (14,515) (27,240) (32,852)
Loans, net of unearned income 11,864,356 11,542,311 11,412,740
Allowance for loan losses (167,066) (159,487) (152,622)
Net Loans 11,697,290 11,382,824 11,260,118
Premises and equipment 259,924 254,992 250,109
Interest receivable 105,941 120,950 92,314
Due from customers on acceptances 49,663 51,286 86,630
Other assets 371,748 322,007 354,958
$17,531,422 $16,851,774 $16,200,279
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $ 1,888,099 $ 1,864,970 $ 1,725,541
Interest-bearing 12,294,508 11,632,642 11,396,151
Total Deposits 14,182,607 13,497,612 13,121,692
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 1,080,851 1,031,957 852,232
Commercial paper 21,100 21,100 17,600
Other short-term borrowings 22,682 15,540 6,108
Total Short-term Borrowings 1,124,633 1,068,597 875,940
Long-term borrowings 501,520 632,019 606,662
Total Borrowed Funds 1,626,153 1,700,616 1,482,602
Bank acceptances outstanding 49,663 51,286 86,630
Other liabilities 190,209 173,007 150,391
Total Liabilities 16,048,632 15,422,521 14,841,315
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 120,000,000 shares
Issued, including treasury stock -
62,185,402; 61,733,185; and
63,474,327 shares, respectively 38,866 38,583 39,671
Surplus 514,380 505,350 529,961
Undivided profits 928,628 895,755 807,053
Treasury stock, at cost - 0;
614,000; and 1,474,579 shares,
respectively -0- (25,085) (12,441)
Unearned restricted stock (2,908) (1,582) ( 799)
Unrealized gain(loss) on securities available
for sale, net of taxes 3,824 16,232 (4,481)
Total Stockholders' Equity 1,482,790 1,429,253 1,358,964
$17,531,422 $16,851,774 $16,200,279
</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
March 31
1996 1995
<S> <C> <C>
Interest Income:
Interest and fees on loans $259,020 $241,488
Interest on securities:
Taxable interest income 59,061 47,461
Tax-exempt interest income 5,916 6,206
Total Interest on Securities 64,977 53,667
Interest on mortgage loans held for sale 2,351 1,920
Income on federal funds sold
and securities purchased under
agreement to resell 1,344 2,034
Interest on time deposits in other banks 1,126 757
Interest on trading account assets 187 79
Total Interest Income 329,005 299,945
Interest Expense:
Interest on deposits 140,033 124,270
Interest on short-term borrowings 15,260 13,136
Interest on long-term borrowings 9,826 10,009
Total Interest Expense 165,119 147,415
Net Interest Income 163,886 152,530
Provision for loan losses 6,874 5,050
Net Interest Income After Provision
for Loan Losses 157,012 147,480
Non-Interest Income:
Trust department income 7,140 6,605
Service charges on deposit accounts 20,370 17,276
Mortgage servicing and origination fees 12,686 10,002
Securities gains (losses) 131 7
Other 15,355 10,029
Total Non-Interest Income 55,682 43,919
Non-Interest Expense:
Salaries and employee benefits 69,774 62,550
Net occupancy expense 7,667 6,938
Furniture and equipment expense 8,253 7,335
Merger expenses 8,785 0
Other 40,529 39,406
Total Non-Interest Expense 135,008 116,229
Income Before Income Taxes 77,686 75,170
Applicable income taxes 24,892 24,920
Net Income $ 52,794 $ 50,250
Average number of shares outstanding 61,985 61,907
Per share:
Net income $0.85 $0.81
Cash dividends declared $0.35 $0.33
</TABLE>
See notes to consolidated financial statements.
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Operating Activities:
Net income $ 52,794 $ 50,250
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 6,698 3,644
Provision for loan losses 6,874 5,050
Net (accretion) amortization of securities (532) (58)
Amortization of loans and other assets 5,316 5,198
Amortization of deposits and borrowings (411) (1,680)
Provision for losses on other real estate 41 314
Deferred income taxes (2,480) 4,017
(Gain) on sale of premises and equipment 158 (8)
Realized security (gains) 131 (7)
Decrease in trading account assets 19,319 7,056
(Increase) decrease in mortgages held for sale (46,487) 49,158
Decrease (increase) in interest receivable 15,009 (1,598)
(Increase) in other assets (55,541) (25,236)
Increase in other liabilities 16,886 13,094
Stock issued to employees 5,723 375
Other 378 (1,532)
Net Cash Provided By Operating Activities 23,876 108,037
Investing Activities:
Net (increase) in loans (320,897) (133,687)
Proceeds from sale of securities 7,603 11,932
Proceeds from maturity of investment securities 273,452 143,703
Proceeds from maturity of securities available for sale 336,387 120,750
Purchase of investment securities (625,681) (38,671)
Purchase of securities available for sale (257,918) (123,263)
Net (increase) decrease in interest-bearing deposits
in other banks (30,423) (11,463)
Proceeds from sale of premises and equipment 1,483 348
Purchase of premises and equipment (13,271) (14,512)
Net decrease in customers' acceptance liability 1,623 23,890
Net cash received in acquisitions 35,175 15,857
Net Cash (Used) By Investing Activities (592,467) (5,116)
Financing Activities:
Net increase in deposits 684,995 145,329
Net increase in short-term borrowings 56,036 (241,850)
Proceeds from long-term borrowings 700 10,000
Payments on long-term borrowings (131,058) (34,528)
Net (decrease) in bank acceptance liability (1,623) (23,890)
Cash dividends (21,764) (18,627)
Purchase of treasury stock for acquisitions (7,309) (18,839)
Proceeds from exercise of stock options 948 835
Net Cash Provided (used) By Financing Activities 580,925 (181,570)
Increase (Decrease) In Cash And Cash Equivalents 12,334 (78,649)
Cash and Cash Equivalents, Beginning of Period 653,500 810,380
Cash And Cash Equivalents, End of Period $ 665,834 $ 731,731
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
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 1995 Annual Re-
port to Stockholders previously filed as Exhibit 13 to Form 10-K
and Note A to the Supplemental Consolidated Financial Statements
previously filed as Exhibit 99.c to the Form 10-K. It is manage-
ment'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 Acquisitions
On January 31, 1996, Regions issued 733,910 shares of common stock
in exchange for all the outstanding stock of Metro Financial
Corporation located in Atlanta, Georgia. This transaction,
accounted for as a purchase, added $210 million in assets.
On February 2, 1996, Regions paid approximately $8.5 million for
all the outstanding common stock and options of Enterprise
National Bank of Atlanta. The Enterprise transaction, accounted
for as a purchase, added approximately $54 million in assets.
On March 1, 1996, Regions issued 15,920,108 shares of common stock
in exchange for all the outstanding stock of First National
Bancorp of Gainesville, Georgia (FNB). The FNB transaction,
accounted for as a pooling of interests, added approximately $3.2
billion in assets.
On April 1, 1996, subsequent to the date of the financial
statements, Regions issued approximately 389,000 shares of common
stock in exchange for all the outstanding common stock of First
Federal Bank of Northwest Georgia, Federal Savings Bank. The First
Federal transaction, accounted for as a pooling of interest, added
$90 million in assets.
NOTE C - Pending Acquisitions
Regions' pending acquisitions are summarized in the following
table. Of the transactions listed, all are expected to be
accounted for as purchases and are subject to applicable
shareholder and regulatory approvals.
<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 (in 000's)
First
Gwinnett
Bancshares,
Inc. of Regions
Norcross, Common
Georgia $ 66 Stock 1.1336 330
Delta Bank
and Trust
Company, of Regions
Belle Chasse, Common
Louisiana 206 Stock 2.2568(1) 845
American
Bancshares of
Houma Inc., Regions
of Houma, Common
Louisiana 88 Stock 1.66 383
Rockdale
Community
Bank of Regions
Conyers, Common
Georgia 46 Stock 0.515116(1) 285
</TABLE>
(1) - Subject to possible adjustment.
(2) - Based on the number of shares of outstanding stock of each
institution as of the announcement date, and without
possible adjustment in the exchange ratio.
NOTE D - New Accounting Standards
Effective January 1, 1996, Regions adopted 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 requires impairment losses to be
recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed
of. The adoption of Statement 121 did not have a material impact
on the Company's financial statements.
Effective January 1, 1996, Regions adopted 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 exists.
Statement 122 also requires that capitalized mortgage servicing
rights be assessed for impairment based on the fair value of those
rights. The adoption of Statement 122 did not have a material
impact on Regions' financial statements.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at March 31, 1996, were $17.5 billion --an
increase of 8% over a year earlier. This increase was due to
growth in almost all categories of assets, particularly
securities, due to acquisition activity and internal growth.
Since year-end 1995, total assets have increased 4%.
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, but have
been restated to reflect the FNB transaction. Relevant 1995 and
1996 acquisitions are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Date Headquarters Total Assets Accounting
Acquired Company Acquired Location (in thousands) Treatment
May 1995 Fidelity Federal Dalton,
Savings Bank Georgia $ 333,336 Pooling
July 1995 Interstate
Billing Service, Decatur,
Inc. Alabama 30,521 Pooling
November
1995 Branch Office of
Prudential Cartersville,
Savings Bank Georgia 59,933 Purchase
January Metro Financial Atlanta,
1996 Corporation Georgia 210,487 Purchase
February Enterprise
1996 National Bank of Atlanta,
Atlanta Georgia 54,263 Purchase
March First National Gainesville,
1996 Bancorp Georgia 3,198,634 Pooling
</TABLE>
Loans have increased 4% since a year ago. Loans added from the
three purchase acquisitions, combined with the Fidelity and IBS
transactions, partially offset by the securitization of $396
million of single-family residential mortgage loans, accounted for
a 1% increase in loans. The remaining 3% increase was attributable
to internal growth, primarily in commercial and real estate
construction loans. Since year-end, total loans have increased
3%, due to $182 million in loans added by acquisitions and $140
million in internal growth. The average yield on loans during the
first three months of 1996 was 8.96%, compared to 8.79% during the
same period in 1995. This increase was primarily the result of
higher average base lending rates.
Non-performing assets were as follows (in thousands):
<TABLE>
March 31, Dec. 31, March 31,
1996 1995 1995
<S> <C> <C> <C>
Non-accruing loans $ 57,162 $ 54,132 $ 56,216
Loans past due 90
days or more 10,860 10,238 6,447
Renegotiated loans 4,081 4,235 3,179
Other real estate 11,126 10,137 21,283
Total $ 83,229 $ 78,742 $ 87,125
Non-performing assets
as a percentage of
loans and other real
estate .70% .68% .76%
</TABLE>
Non-accruing loans have remained relatively constant since March
of last year. At March 31, 1996, real estate loans comprised $28.2
million of total non-accruing loans, with commercial loans
accounting for $16.5 million and installment loans $12.5 million.
Other real estate increased $989,000 since year-end, but decreased
$10.2 million since March 1995, 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>
March 31, March 31,
1996 1995
<S> <C> <C>
Balance at beginning of year $159,487 $143,464
Net loans charged-off (recovered):
Commercial (1,277) (465)
Real estate (135) 253
Installment 3,081 1,111
Total 1,669 899
Allowance of acquired banks 2,374 5,007
Provision charged to expense 6,874 5,050
Balance at end of period $167,066 $152,622
</TABLE>
Net loan losses in the first three months of 1996 were 0.06% of
loans (annualized), compared to 0.03% of loans (annualized) in the
first three months of 1995. Higher installment charge-offs in the
first three months of 1996, partially offset by recoveries of
prior period real estate and commercial loans charge-offs,
resulted in slightly higher net loan losses in 1996. At March 31,
1996, the allowance for loan losses stood at 1.41% of loans,
compared to 1.34% a year ago and 1.38% at year-end. The allowance
for loan losses as a percentage of non-performing loans and
non-performing assets was 232% and 201%, respectively, at March
31, 1996, compared to 232% and 175%, respectively, at March 31,
1995.
The allowance for loan losses is maintained at a level deemed ade-
quate by management to absorb possible losses from loans in the
portfolio. In determining the adequacy of the allowance 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 March 31, 1996, 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 25% since a year ago and 7% since
year end, as a result of securities added by acquisitions and the
securitization of $396 million of single-family residential
mortgage loans, which were added to the available for sale
portfolio in the third and fourth quarters of 1995.
Mortgage loans held for sale increased $94.7 million since March
31, 1995, and $46.5 million since year end, as a result of higher
levels of residential mortgage loan production at Regions'
mortgage banking subsidiary during the first three months of 1996,
compared to the same time periods in 1995.
Interest-bearing deposits in other banks at March 31, 1996 totaled
$86.9 million, an increase of $45.6 million over a year ago and
$30.4 over year end. These increases resulted primarily from
interest-bearing deposits added by recent acquisitions.
Net federal funds purchased and security repurchase agreements
totaled $993.4 million at March 31, 1996, $965.6 million at year
end and $723.2 million at March 31, 1995. 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 three
months of 1996, net funds purchased averaged $929.0 million,
compared to $715.3 million in the first three months of 1995,
indicating more reliance on purchased funds to support earning
assets in the first quarter of 1996 than in the same period last
year.
Premises and equipment have increased $4.9 million since year end
and $9.8 million since March 31, 1995. These increases were due
primarily to the addition of premises and equipment obtained
through acquisitions since March 1995.
Other assets have increased $49.7 million since year end and $16.8
million since the first 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 8% since March of last year. The
deposits acquired in connection with acquisitions resulted in a 5%
increase, with the remaining 3% increase attributable to internal
growth. The internal growth resulted primarily from increases in
certificates of deposit and time open accounts. Since year-end,
total deposits have increased 3%, after adjusting for the deposits
acquired in connection with acquisitions during the first quarter
of 1996.
Long-term borrowings have decreased $130.5 million since year end
and $105.1 million since March 31, 1995. During the second
quarter of 1995, Regions issued $100 million in senior bank notes,
of which $75 million was outstanding at March 31, 1996. This
increase in long-term borrowings was more than 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 95 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 $1.5 billion at March 31, 1996, an in-
crease of 9% over last year and an increase of 4% since year end.
These increases resulted primarily from internally generated capi-
tal and equity added in connection with acquisitions since March
1995. The unrealized gain on securities available for sale (net
of taxes) totaled $3.8 million at March 31, 1996, and compared to
$16.2 million at year end. Regions' ratio of equity to total
assets was 8.46% at March 31, 1996, compared to 8.39% a year ago
and 8.48% at year end.
Regions' primary sources of liquidity are maturities from its loan
and securities portfolios. 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 March 31, 1996, the loan
to deposit ratio was 83.65%, compared to 86.98% a year ago and
85.51% 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 three months of 1996 increased
$11.4 million or 7%, compared to the same period in 1995. 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 4.22% in the first three months of 1996,
compared to 4.31% in the same period in 1995. This ratio declined
due primarily to changes in the product mix, both in interest-
earning assets and interest-bearing liabilities.
Total non-interest income increased $11.8 million or 27% over the
first three months of 1995. Trust department income increased
$535,000 or 8% on a year-to-year comparison. This resulted from
growth in trust assets, due to acquisitions and internal growth,
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 due to
acquisitions and internal growth, resulted in service charges on
deposit accounts increasing $3.1 million or 18% in the first three
months of 1996, compared to the same period in 1995. Mortgage
servicing and origination fees increased $2.7 million or 27% in
the first three months of 1996 compared to the same period in
1995. Mortgage origination fees were up significantly due to
increased volume of new loan production in the first quarter of
1996. Mortgage servicing fees increased 14% on a year-to-year
comparison. The mortgage company's servicing portfolio totaled
$11.5 billion at March 31, 1996. Other non-interest income
increased $5.3 million or 53% in the first three months of 1996,
over the comparable year ago period primarily due to increased
automated teller machine fees, increased trading account income
and a $2.5 million benefit resulting from the capitalization of
originated mortgage servicing rights upon adoption of Statement
122 (See Note D to the consolidated financial statements).
Total non-interest expense increased $18.8 million or 16% in the
first three months of 1996, compared to the same period in 1995.
Excluding the non-recurring merger expenses in 1996, total non-
interest expense was up $10.0 million or 9%. Salaries and employee
benefits were up 12% in the first three months of 1996, 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
12% in the first three months of 1996 over the same period in
1995, primarily because of additional expenses associated with
branch offices and equipment added by the 1995 and 1996
acquisitions. A non-recurring pre-tax merger charge of $8.8
million was taken in the first quarter of 1996 related to the
merger of FNB with Regions. This charge consisted primarily of
investment banking and other professional fees, severance costs,
data processing contract buyouts and obsolete equipment write-
downs. Other non-interest expense increased $1.1 million or 3% in
the first three months of 1996, primarily because of increases in
excess purchase price amortization and professional fees and
increased losses from the sale or holding of residential mortgages
originated by the mortgage company, partially offset by lower FDIC
premiums related to the lower assessment rates on Bank Insurance
Fund insured deposits and lower advertising cost in 1996. Other
non-interest expense in the first quarter of 1995 was reduced
because of a $1.8 million recovery on a lawsuit settlement.
Income tax expense decreased $28,000 over the first three months
of 1995, due to lower taxable income for state purposes, partially
offset by an increase in federal taxable income, and an increase
in taxable income as a percentage of total income.
Net income for the first quarter was $52.8 million--up 5% over the
first quarter of last year. Annualized return on stockholders'
equity declined to 14.51%, compared to 15.38% in the first three
months of last year. Annualized return on assets also declined to
1.24% in the first three months of 1996, compared to 1.28% for the
same period in 1995. Excluding the non-recurring merger expenses in
the first quarter of 1996, net income was $58.3 million--up 16%
over the first quarter of last year. Annualized return on
stockholders' equity and return on assets were 16.01% and 1.37%,
respectively, in the first quarter of 1996, excluding the non-
recurring merger expenses.
<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:
One report and an amendment thereto, on Form 8-K,
were filed during the first quarter of 1996. The
report on Form 8-K was dated March 1, 1996, and was
filed on March 16, 1996, and Amendment #1 also was
dated March 1, 1996, and filed March 28, 1996.
The report, filed March 15, 1996, was filed under
item 2, and relates to consummation of the merger of
First National Bancorp with and into Regions.
Amendment #1, filed March 28, 1996, was filed under
items 2 and 7, and includes financial statements and
notes of First National Bancorp.
<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: May 15, 1996 /s/ Robert P. Houston
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
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