<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 JUNE 30, 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-60,880,449 shares outstanding
as of July 31, 1996
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition -
June 30, 1996, December 31, 1995
and June 30, 1995 2
Consolidated Statement of Income -
Three months ended June 30, 1996 and
June 30, 1995 and Six months ended
June 30, 1996 and June 30, 1995 3
Consolidated Statement of Cash Flows -
Six months ended June 30, 1996 and
June 30, 1995 4
Notes to Consolidated Financial Statements -
June 30, 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 15
SIGNATURES 16
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
June 30 December 31 June 30
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 677,250 $ 587,161 $ 646,270
Interest-bearing deposits in other
banks 60,337 56,477 126,542
Investment securities 2,103,436 1,589,106 2,187,067
Securities available for sale 1,864,209 2,274,675 1,253,046
Trading account assets 11,691 28,870 3,505
Mortgage loans held for sale 183,402 117,087 132,500
Federal funds sold and securities
purchased under agreement to resell 66,637 66,339 47,410
Loans 12,389,999 11,569,551 11,646,728
Unearned income (18,032) (27,240) (22,837)
Loans, net of unearned income 12,371,967 11,542,311 11,623,891
Allowance for loan losses (171,436) (159,487) (155,352)
Net Loans 12,200,531 11,382,824 11,468,539
Premises and equipment 263,427 254,992 251,931
Interest receivable 135,404 120,950 96,938
Due from customers on acceptances 16,400 51,286 37,769
Other assets 337,884 322,007 354,988
$17,920,608 $16,851,774 $16,606,505
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $ 1,968,463 $ 1,864,970 $ 1,843,695
Interest-bearing 12,646,253 11,632,642 11,513,040
Total Deposits 14,614,716 13,497,612 13,356,735
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 1,247,127 1,031,957 921,144
Commercial paper 21,700 21,100 43,100
Other short-term borrowings 6,752 15,540 13,546
Total Short-term Borrowings 1,275,579 1,068,597 977,790
Long-term borrowings 457,189 632,019 691,409
Total Borrowed Funds 1,732,768 1,700,616 1,669,199
Bank acceptances outstanding 16,400 51,286 37,769
Other liabilities 113,941 173,007 159,162
Total Liabilities 16,477,825 15,422,521 15,222,865
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 120,000,000 shares
Issued, including treasury stock -
62,676,642; 61,733,185; and
63,049,836 shares, respectively 39,173 38,583 39,406
Surplus 518,512 505,350 514,082
Undivided profits 976,709 895,755 836,822
Treasury stock, at cost - 1,800,000;
614,000; and 1,474,579 shares,
respectively (84,622) (25,085) (12,441)
Unearned restricted stock (3,146) (1,582) ( 2,069)
Unrealized gain(loss) on securities
available for sale, net of taxes (3,843) 16,232 7,840
Total Stockholders' Equity 1,442,783 1,429,253 1,383,640
$17,920,608 $16,851,774 $16,606,505
</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 Six Months Ended
June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $273,798 $254,970 $532,818 $496,458
Interest on securities:
Taxable interest income 61,602 48,087 120,663 95,548
Tax-exempt interest income 5,021 6,148 10,937 12,354
Total Interest on Securities 66,623 54,235 131,600 107,902
Interest on mortgage loans held for sale 5,418 2,014 7,769 3,934
Income on federal funds sold
and securities purchased under
agreement to resell 496 2,251 1,840 4,285
Interest on time deposits in other banks 2,338 610 3,464 1,367
Interest on trading account assets 233 61 420 140
Total Interest Income 348,906 314,141 677,911 614,086
Interest Expense:
Interest on deposits 145,395 134,735 285,428 259,005
Interest on short-term borrowings 15,893 13,004 31,153 26,140
Interest on long-term borrowings 7,857 11,348 17,683 21,357
Total Interest Expense 169,145 159,087 334,264 306,502
Net Interest Income 179,761 155,054 343,647 307,584
Provision for loan losses 7,442 5,811 14,316 10,861
Net Interest Income After Provision
for Loan Losses 172,319 149,243 329,331 296,723
Non-Interest Income:
Trust department income 7,017 6,583 14,157 13,188
Service charges on deposit accounts 20,883 17,378 41,253 34,654
Mortgage servicing and origination fees 13,539 11,018 26,225 21,020
Securities gains (losses) 23 214 154 221
Other 10,780 10,696 26,135 20,725
Total Non-Interest Income 52,242 45,889 107,924 89,808
Non-Interest Expense:
Salaries and employee benefits 69,505 64,146 139,279 126,696
Net occupancy expense 7,804 7,008 15,471 13,946
Furniture and equipment expense 8,787 7,629 17,040 14,964
Merger expenses 0 0 8,785 0
Other 44,503 41,646 85,032 81,052
Total Non-Interest Expense 130,599 120,429 265,607 236,658
Income Before Income Taxes 93,962 74,703 171,648 149,873
Applicable income taxes 32,450 24,802 57,342 49,722
Net Income $ 61,512 $ 49,901 $114,306 $100,151
Average number of shares outstanding 62,197 61,772 62,091 61,839
Per share:
Net income $0.99 $0.81 $1.84 $1.62
Cash dividends declared $0.35 $0.33 $0.70 $0.66
</TABLE>
See notes to consolidated financial statements.
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
Six Months Ended
June 30
1996 1995
<S> <C> <C>
Operating Activities:
Net income $ 114,306 $ 100,151
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 13,430 9,178
Provision for loan losses 14,316 10,861
Net (accretion) amortization of securities (747) (83)
Amortization of loans and other assets 11,196 9,937
Amortization of deposits and borrowings (822) (3,360)
Provision for losses on other real estate 219 495
Deferred income taxes (6,273) (4,653)
(Gain) on sale of premises and equipment (532) (130)
Realized security (gains) 154 (221)
Decrease in trading account assets 17,179 21,348
(Increase) in mortgages held for sale (66,315) (14,510)
(Increase) in interest receivable (14,454) (3,744)
(Increase) in other assets (28,179) (29,810)
(Decrease) increase in other liabilities (44,752) 21,951
Stock issued to employees 5,723 375
Other 1,382 (2,954)
Net Cash Provided By Operating Activities 15,831 114,831
Investing Activities:
Net (increase) in loans (831,136) (379,417)
Proceeds from sale of securities 7,560 35,027
Proceeds from maturity of investment securities 341,700 209,537
Proceeds from maturity of securities available
for sale 240,383 230,831
Purchase of investment securities (392,732) (275,896)
Purchase of securities available for sale (325,916) (206,294)
Net (increase) in interest-bearing deposits
in other banks (3,860) (13,527)
Proceeds from sale of premises and equipment 2,173 579
Purchase of premises and equipment (23,506) (23,224)
Net decrease in customers' acceptance liability 34,886 72,751
Net cash and other received in acquisitions 42,667 23,909
Net Cash (Used) By Investing Activities (907,781) (325,724)
Financing Activities:
Net increase in deposits 1,117,104 387,827
Net increase in short-term borrowings 206,982 (143,681)
Proceeds from long-term borrowings 2,717 135,972
Payments on long-term borrowings (176,725) (50,947)
Net (decrease) in bank acceptance liability (34,886) (72,751)
Cash dividends (43,567) (38,696)
Purchase of treasury stock for acquisitions (91,932) (36,797)
Proceeds from exercise of stock options 2,644 997
Net Cash Provided By Financing Activities 982,337 181,924
Increase (Decrease) In Cash And Cash Equivalents 90,387 (28,969)
Cash and Cash Equivalents, Beginning of Period 653,500 722,649
Cash And Cash Equivalents, End of Period $ 743,887 $ 693,680
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 Acquisition
On April 1, 1996, Regions issued 388,677 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 interests, added $94
million in assets.
NOTE C - Pending Acquisitions at June 30, 1996
Regions' pending acquisitions are summarized in the following
table. The First Gwinnett, Delta, American, Rockdale and Florida
First transactions will be accounted for as purchases. The Allied
and West Carroll transactions are expected to be accounted for as
poolings of interests. The Florida First, Allied and West Carroll
transactions 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
Institution (in millions) Consideration Ratio (in 000's)
First
Gwinnett
Bancshares,
Inc. of Regions
Norcross, Common
Georgia $ 68 Stock 1.1336 331
Delta Bank &
Trust
Company, of Regions
Belle Chasse, Common
Louisiana(1) 197 Stock 2.2568 845
American
Bancshares of
Houma, Inc., Regions
of Houma, Common
Louisiana 89 Stock 1.66 381
Rockdale
Community
Bank of Regions
Conyers, Common
Georgia 48 Stock 0.515116 270
Florida First
Bancorp,
Inc., of
Panama City,
Florida 304 Cash N/A N/A
Allied
Bankshares,
Inc., of Regions
Thomson, Common
Georgia 562 Stock 0.226 2,852
West Carroll
Bancshares,
Inc., of Oak Regions
Grove, Common
Louisiana 121 Stock 4.0 608
</TABLE>
(1) - Transaction consummated on August 8, 1996.
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.
In June 1996, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 125
'Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities' (Statement 125). Statement 125
provides accounting and reporting standards for transfers of
financial assets and extinguishments of liabilities which will
effect the rules for determining whether a transfer represents a
sale and, if so, the calculation of the gain or loss resulting
from the sale. Statement 125 supersedes FASB Statement No. 76 and
77, and is effective for transfers of assets after December 31,
1996. Management has not determined the impact Statement 125 will
have on the financial condition of Regions.
NOTE E - Saving Association Insurance Fund (SAIF) Assessment
Congress is considering several proposals that will attempt to
recapitalize the SAIF Fund. However, given the legislative
uncertainty, it cannot be predicted which proposal, if any, will
be enacted and what impact such proposal might have on Regions. A
significant increase in SAIF insurance premiums or a significant
one-time assessment to recapitalize the SAIF Fund could have a
potentially adverse effect on the operating expenses and results
of operations of Regions.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at June 30, 1996, were $17.9 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 6%.
Comparisons with the prior year are significantly affected by
three acquisitions shown below, which were accounted for as
purchases, and by the First Federal Bank of Northwest Georgia
(First Federal) acquisition, which was accounted for as a pooling
of interests. Prior year financial information has not been
restated to give effect to the First Federal transaction since the
effect is not material, but has been restated to reflect the First
National Bancorp 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
July 1995 Interstate
Billing Service, Decatur,
Inc. Alabama $30,521 Pooling
November Branch Office of
1995 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
April First Federal
1996 Bank of
Northwest,
Georgia, Federal Cedartown,
Savings Bank Georgia 93,584 Pooling
</TABLE>
Loans have increased 6% since a year ago. Loans added as a result
of the three purchase acquisitions and the First Federal
transaction, were offset by the securitization, in the second half
of 1995, of $396 million of single-family residential mortgage
loans, resulting in a 1% decrease in loans. Internal growth
accounted for a 7% increase in loans, which occurred primarily in
commercial and real estate loans. Since year end, total loans
have increased 7%, due to $246 million in loans added by
acquisitions and $584 million in internal growth. The average
yield on loans during the first half of 1996 was 9.01%, compared
to 8.86% during the same period in 1995. This increase was pri-
marily the result of higher average base lending rates.
Non-performing assets were as follows (in thousands):
<TABLE>
June 30, Dec. 31, June 30,
1996 1995 1995
<S> <C> <C> <C>
Non-accruing loans $ 49,533 $ 54,132 $ 57,933
Loans past due 90
days or more 18,326 10,238 6,632
Renegotiated loans 6,152 4,235 3,508
Other real estate 9,810 10,137 16,377
Total $ 83,821 $ 78,742 $ 84,450
Non-performing assets
as a percentage of
loans and other real
estate .68% .68% .73%
</TABLE>
Non-accruing loans have decreased 14% since June of last year due
to payoffs, paydowns and the return of certain loans to accrual
status. At June 30, 1996, real estate loans comprised $27.5
million of total non-accruing loans, with commercial loans
accounting for $10.0 million and installment loans $12.0 million.
Other real estate decreased $327,000 since year end, and decreased
$6.6 million since June 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>
June 30, June 30,
1996 1995
<S> <S> <S>
Balance at beginning of year $159,487 $143,464
Net loans charged-off (recovered):
Commercial (1,552) 94
Real estate (209) 1,059
Installment 6,966 2,827
Total 5,205 3,980
Allowance of acquired banks 2,838 5,007
Provision charged to expense 14,316 10,861
Balance at end of period $171,436 $155,352
</TABLE>
Net loan losses in the first six months of 1996 were 0.09% of
loans (annualized), compared to 0.07% of loans (annualized) in the
first six months of 1995. Higher installment charge-offs in the
first six 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 June 30, 1996, the
allowance for loan losses stood at 1.39% 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 205%, respectively, at June 30, 1996, compared
to 228% and 184%, respectively, at June 30, 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 June 30, 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 15% since a year ago and 3% 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 $50.9 million since June
30, 1995, and $66.3 million since year end, as a result of higher
levels of residential mortgage loan production at Regions'
mortgage banking subsidiary during the first six months of 1996,
compared to the same time period in 1995.
Interest-bearing deposits in other banks at June 30, 1996 totaled
$60.3 million, a decrease of $66.2 million over a year ago but an
increase of $3.9 million over year end. The decrease resulted
primarily from placing funds in alternative investments.
Net federal funds purchased and security repurchase agreements
totaled $1.2 billion at June 30, 1996, $965.6 million at year end
and $873.7 million at June 30, 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 six months of
1996, net funds purchased averaged $1.0 billion, compared to
$689.3 million in the first six months of 1995, indicating more
reliance on purchased funds to support earning assets in the first
half of 1996 than in the same period last year.
Premises and equipment have increased $8.4 million since year end
and $11.5 million since June 30, 1995. These increases were due
primarily to the addition of premises and equipment obtained
through acquisitions since June 1995.
Other assets have increased $15.9 million since year end due
primarily to increased excess purchase price. Other assets have
decreased $17.1 million since the second quarter of last year, due
primarily to decreased prepaids and mortgage servicing rights,
partially offset by an increase in excess purchase price resulting
from acquisitions.
Total deposits have increased 9% since June of last year. The
deposits acquired in connection with acquisitions resulted in a 3%
increase, with the remaining 6% increase attributable to internal
growth. The internal growth resulted primarily from increases in
certificates of deposit and money market accounts. Since year end,
total deposits have increased 6%, after adjusting for the deposits
acquired in connection with acquisitions during the first half of
1996.
Long-term borrowings have decreased $174.8 million since year end
and $234.2 million since June 30, 1995. These decreases resulted
from payments and maturities of Federal Home Loan Bank advances,
Senior Bank notes 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 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 78 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. The
United States Supreme Court recently overturned an Alabama case,
holding that the punitive damage award was so grossly excessive as
to violate due process. Subsequently the Court has returned
several cases to the Alabama courts for reconsideration in light
of its ruling.
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 $1.4 billion at June 30, 1996, an in-
crease of 4% over last year and an increase of 1% since year end.
These increases resulted primarily from internally generated capi-
tal and equity added in connection with acquisitions since June
1995, partially offset by the purchase of $84.6 million of
treasury stock to be reissued in connection with pending
acquisitions that will be accounted for as purchases. The
unrealized loss on securities available for sale (net of taxes)
totaled $3.8 million at June 30, 1996, compared to an unrealized
gain of $16.2 million at year end. Regions' ratio of equity to
total assets was 8.05% at June 30, 1996, compared to 8.33% 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 June 30, 1996, the loan
to deposit ratio was 84.65%, compared to 87.03% 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 half of 1996 increased $36.1
million or 12%, compared to the same period in 1995. The increased
net interest income resulted from a higher level of earning assets
and slightly higher spreads on those earning assets. The net
yield on interest-earning assets (taxable equivalent basis) was
4.31% in the first half of 1996, compared to 4.27% in the same
period in 1995. For the second quarter of 1996, net interest
income increased $24.7 or 16%, over the second quarter of 1995,
due to increased earning assets and higher spreads on those
assets.
Total non-interest income increased $18.1 million or 20% over the
first half of 1995 and $6.4 million or 14% over the second quarter
of 1995. Trust department income increased $969,000 or 7% on a
year-to-year comparison and $434,000 or 7% on a quarterly
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
$6.6 million or 19% in the first half of 1996, compared to the
same period in 1995 and $3.5 million or 20% over the second
quarter of 1995. Mortgage servicing and origination fees
increased $5.2 million or 25% in the first half of 1996 compared
to the same period in 1995 and $2.5 million or 23% over the second
quarter of 1995. Mortgage origination fees were up significantly
due to increased volume of new loan production in the first half
of 1996. Mortgage servicing fees increased 16% on a year-to-year
comparison. The mortgage company's servicing portfolio totaled
$11.9 billion at June 30, 1996. Other non-interest income
increased $5.4 million or 26% in the first half of 1996, over the
comparable year ago period primarily due to increased automated
teller machine fees, increased trading account income and a $4.2
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 $28.9 million or 12% in the
first half of 1996, compared to the same period in 1995 and $10.2
million or 8% in the second quarter of 1996 compared to the same
period in 1995. Excluding the non-recurring merger expenses in the
first quarter of 1996, total non-interest expense was up $20.2
million or 9%. Salaries and employee benefits were up 10% in the
first half of 1996 compared to the same period in 1995 and 8% in
the second quarter compared to the comparable 1995 period, 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
13% in the first half of 1996 and in the second quarter of 1996
over the same periods 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 First National Bancorp 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 $4.0 million or 5% in the first half of 1996 and $2.9
million in the second quarter of 1996 over comparable 1995
periods, 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 in 1996. Other non-interest expense in the first half of
1995 was reduced because of a $1.8 million recovery on a lawsuit
settlement.
Income tax expense increased $7.6 million (15%) over the first
half of 1995 and $7.6 million (31%) over the second quarter of
1995, due to an increase in federal taxable income, and an
increase in taxable income as a percentage of total income,
partially offset by lower taxable income for state purposes in the
first half of 1996.
Net income for the second quarter was $61.5 million--up 23% over
the second quarter of last year. Year-to-date net income totaled
$114.3 million or $1.84 per share, an increase of 14% on a per
share basis compared to the first half of 1995. Annualized return
on stockholders' equity increased to 15.53%, compared to 15.00% in
the first half of last year. Annualized return on assets also
increased to 1.32% in the first six months of 1996, compared to
1.25% for the same period in 1995. Excluding the non-recurring
merger expenses in the first half of 1996, net income was $119.8
million--up 20% over the first half of last year. Annualized
return on stockholders' equity and return on assets were 16.27% and
1.38%, respectively, in the first half 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:
Two reports, on Form 8-K, were filed during the
second quarter of 1996. The reports, on Form 8-K,
were dated June 4, 1996, and June 26, 1996.
The report, filed June 4, 1996, was filed under
items 5 and 7, and included Management's Discussion
and Analysis of Financial Condition and Results of
Operations of Regions for the three years ended
December 31, 1995, giving effect to the March 1,
1996, combination of First National Bancorp with
Regions, accounted for as a pooling of interests.
The report, filed June 26, 1996, was filed under
items 5 and 7, and included an unaudited pro forma
combined condensed statement of condition as of March
31, 1996, and unaudited pro forma combined condensed
statements of income dated March 31, 1996, and
December 31, 1995, 1994 and 1993, reflecting Regions'
pending acquisitions.
<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: August 13, 1996 /s/ Robert P. Houston
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
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<PERIOD-END> JUN-30-1996
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<INT-BEARING-DEPOSITS> 60,337,000
<FED-FUNDS-SOLD> 66,637,000
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