<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, 1997 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-136,148,636 shares outstanding
as of October 31, 1997
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition -
September 30, 1997, December 31, 1996
and September 30, 1996 2
Consolidated Statement of Income -
Three months ended September 30, 1997 and
September 30, 1996 and Nine months ended
September 30, 1997 and September 30, 1996 3
Consolidated Statement of Cash Flows -
Nine months ended September 30, 1997 and
September 30, 1996 4
Notes to Consolidated Financial Statements -
September 30, 1997 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>
<S> <C> <C> <C>
September 30 December 31 September 30
1997 1996 1996
ASSETS
Cash and due from banks $ 753,391 $ 774,849 $ 791,284
Interest-bearing deposits in
other banks 29,542 33,191 46,187
Investment securities 2,656,619 2,102,750 2,125,025
Securities available for sale 1,729,544 1,767,845 1,880,650
Trading account assets 23,217 29,648 14,693
Mortgage loans held for sale 263,820 169,861 126,862
Federal funds sold and securities
purchased under agreement to
resell 183,984 20,842 78,085
Loans 15,855,073 13,335,450 13,056,662
Unearned income (31,413) (24,278) (24,424)
Loans, net of unearned income 15,823,660 13,311,172 13,032,238
Allowance for loan losses (196,118) (175,548) (178,435)
Net Loans 15,627,542 13,135,624 12,853,803
Premises and equipment 310,020 276,890 273,278
Interest receivable 161,783 139,333 139,110
Due from customers on acceptances 29,976 78,108 11,662
Other assets 472,459 401,234 390,785
$22,241,897 $18,930,175 $18,731,424
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $2,412,614 $1,909,174 $2,111,852
Interest-bearing 15,211,128 13,139,162 13,075,098
Total Deposits 17,623,742 15,048,336 15,186,950
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 2,025,069 1,549,729 1,342,771
Commercial paper 23,384 40,367 21,200
Other short-term borrowings 18,751 21,831 1,765
Total Short-term Borrowings 2,067,204 1,611,927 1,365,736
Long-term borrowings 402,627 447,269 447,959
Total Borrowed Funds 2,469,831 2,059,196 1,813,695
Bank acceptances outstanding 29,976 78,108 11,662
Other liabilities 266,855 145,809 164,377
Total Liabilities 20,390,404 17,331,449 17,176,684
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 240,000,000 shares
Issued, including treasury stock -
136,820,461; 62,914,750; and
62,810,998 shares, respectively 85,513 39,322 39,257
Surplus 598,400 520,571 519,144
Undivided profits 1,179,323 1,050,606 1,012,331
Treasury stock, at cost-500,000;
260,000; and 260,000 shares,
respectively (17,279) (12,356) (12,356)
Unearned restricted stock (4,107) (3,121) (2,854)
Unrealized gain(loss) on securities
available for sale, net of taxes 9,643 3,704 (782)
Total Stockholders' Equity 1,851,493 1,598,726 1,554,740
$22,241,897 $18,930,175 $18,731,424
</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>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
Interest Income:
Interest and fees on loans $345,750 $280,853 $ 985,890 $ 813,671
Interest on securities:
Taxable interest income 63,886 58,780 190,445 179,443
Tax-exempt interest income 7,342 5,718 22,452 16,655
Total Interest on Securities 71,228 64,498 212,897 196,098
Interest on mortgage loans
held for sale 4,506 4,286 11,363 12,055
Income on federal funds sold
and securities purchased under
agreement to resell 1,847 314 4,800 2,154
Interest on time deposits in
other banks 436 913 1,609 4,377
Interest on trading account assets 58 376 526 796
Total Interest Income 423,825 351,240 1,217,085 1,029,151
Interest Expense:
Interest on deposits 178,128 149,594 510,092 435,022
Interest on short-term borrowings 26,878 17,408 70,813 48,561
Interest on long-term borrowings 6,848 7,307 22,141 24,990
Total Interest Expense 211,854 174,309 603,046 508,573
Net Interest Income 211,971 176,931 614,039 520,578
Provision for loan losses 10,892 7,418 31,449 21,734
Net Interest Income After
Provision for Loan Losses 201,079 169,513 582,590 498,844
Non-Interest Income:
Trust department income 7,716 6,852 21,975 21,009
Service charges on deposit accounts 28,928 22,237 81,213 63,490
Mortgage servicing and origination fees 14,437 12,496 41,149 38,721
Securities gains (losses) 40 105 541 259
Other 15,624 13,404 45,515 39,539
Total Non-Interest Income 66,745 55,094 190,393 163,018
Non-Interest Expense:
Salaries and employee benefits 85,927 68,992 249,162 208,271
Net occupancy expense 9,419 8,983 27,810 24,454
Furniture and equipment expense 9,575 8,540 27,968 25,580
SAIF assessment and merger expenses 0 21,010 0 29,795
Other 46,735 42,823 136,748 127,855
Total Non-Interest Expense 151,656 150,348 441,688 415,955
Income Before Income Taxes 116,168 74,259 331,295 245,907
Applicable income taxes 39,200 23,680 110,592 81,022
Net Income $ 76,968 $ 50,579 $220,703 $164,885
Average number of shares outstanding 136,505 123,520 136,526 123,960
Per share:
Net income $0.56 $0.41 $1.62 $1.33
Cash dividends declared $0.20 $0.175 $0.60 $0.525
See notes to consolidated financial statements.
</TABLE>
<PAGE>
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
<S> <C> <C>
Nine Months Ended
September 30
1997 1996
Operating Activities:
Net income $ 220,703 $ 164,885
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 23,728 20,502
Provision for loan losses 31,449 21,734
Net (accretion) of securities (721) (1,386)
Amortization of loans and other assets 25,446 17,140
Amortization of deposits and borrowings (1,232) (1,232)
Provision for losses on other real estate 7 598
Deferred income taxes (6,679) (9,298)
Loss (gain) on sale of premises and equipment 572 (724)
Realized security (gains) (541) (259)
Decrease in trading account assets 6,431 14,177
(Increase) in mortgages held for sale (56,239) (9,775)
(Increase) in interest receivable (17,025) (16,112)
(Increase) in other assets (84,153) (74,593)
Increase in other liabilities 86,980 5,572
Stock issued to employees 8,537 5,723
Other 1,373 1,867
Net Cash Provided By Operating Activities 238,636 138,819
Investing Activities:
Net (increase) in loans (1,570,673) (1,000,837)
Proceeds from sale of securities available
for sale 8,687 163,704
Proceeds from maturity of investment securities 586,495 421,761
Proceeds from maturity of securities available
for sale 392,282 348,674
Purchase of investment securities (874,319) (452,286)
Purchase of securities available for sale (135,971) (443,808)
Net decrease in interest-bearing deposits
in other banks 38,259 17,448
Proceeds from sale of premises and equipment 4,730 7,223
Purchase of premises and equipment (31,031) (31,228)
Net decrease in customers' acceptance liability 48,132 39,624
Net cash received in acquisitions 167,146 133,825
Net Cash (Used) By Investing Activities (1,366,263) (795,900)
Financing Activities:
Net increase in deposits 1,104,693 951,328
Net increase in short-term borrowings 413,212 293,455
Proceeds from long-term borrowings 2,000 8,416
Payments on long-term borrowings (90,356) (191,244)
Net (decrease) in bank acceptance liability (48,132) (39,624)
Cash dividends (81,628) (65,529)
Purchase of treasury stock for acquisitions (32,238) (87,621)
Proceeds from exercise of stock options 1,760 3,769
Net Cash Provided By Financing Activities 1,269,311 872,950
Increase In Cash And Cash Equivalents 141,684 215,869
Cash and Cash Equivalents, Beginning of Period 795,691 653,500
Cash And Cash Equivalents, End of Period $ 937,375 $ 869,369
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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 1996 Annual Re-
port to Stockholders previously filed as Exhibit 13 to Form 10-K.
It is management's opinion that all adjustments, consisting of
only normal and recurring items necessary for a fair presentation,
have been included.
Certain amounts in prior periods have been reclassified to conform
to the current period presentation.
NOTE B -- Completed Acquisitions
During the third quarter, no acquisitions were consummated by the
Registrant.
NOTE C - Pending Acquisitions
Regions currently has six pending acquisitions, which are
summarized in the following table. All of the transactions are
expected to be accounted for as poolings of interest with the
exception of the GF Bancshares, Inc. transaction, which is
expected to be accounted for as a purchase. All of the following
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(1)
Institution (in millions) Consideration Ratio (in 000's)
GF Bancshares
Inc., of Regions
Griffin, Common
Georgia $99 Stock 0.58776(2) 556
PALFED, Inc. Regions
of Aiken, Common
South Carolina $669 Stock 0.7000(3) 3,709
First United
Bancorporation Regions
of Anderson, Common
South Carolina $297 Stock 0.5173 2,055
Greenville
Financial
Corporation of Regions
Greenville, Common
South Carolina $136 Stock 1.2000 955
St. Mary
Holding
Corporation of Regions
Franklin, Common
Louisiana $113 Stock 2.1000(3) 828
Key Florida
Bancorp, Inc. Regions
of Bradenton, Common
Florida $212 Stock 0.3666 1,011
</TABLE>
(1) - Based on the number of shares of outstanding stock of the
institution as of the announcement date, and without
adjustment in the exchange ratio.
(2) - To be adjustment based on the average of the last sales
price of Regions Common Stock on the Nasdaq National Market
over a specified period.
(3) - Subject to possible adjustment.
NOTE D - New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, 'Earnings Per Share', which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method used to compute earnings per share
and to restate all prior periods. Under the new requirements for
calculating basic earnings per share, the dilutive effect of stock
options will be excluded. The impact of Statement 128 on the
calculation of earnings per share in the first, second and third
quarters of 1996 and 1997, is not expected to be material.
NOTE E - Year 2000 Compliance
Regions is implementing a program designed to ensure that its
operational and financial systems will be Year 2000 compliant.
The program involves examining both Regions' propriety operating
systems and Regions' vendor-provided systems. The majority of
application systems used by Regions are products of established
national vendors, which Regions is working with to ensure that
these systems are Year 2000 compliant. The total costs to be
incurred for Year 2000 compliance have not been specifically
determined. Although Year 2000 compliance does involve
significant risk, management believes that it is taking the
necessary steps to ensure that Regions' operating and financial
systems will be Year 2000 compliant.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at September 30, 1997, were $22.2 bil-
lion--an increase of 19% over a year earlier. This increase was
due to growth in almost all categories of assets, particularly
loans, due to acquisition activity and internal growth. Since
year-end 1996, total assets have increased 17%, due primarily to
acquisition activity and strong internal growth.
Comparisons with the prior year are affected by acquisition
activity. Prior year financial information has not been restated
to give effect to acquisitions accounted for as poolings of
interest since the effect is not material. Relevant 1997
acquisitions are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Date Company Headquarters Total Assets Accounting
Acquired Acquired Location (in thousands) Treatment
January Florida First Panama City,
1997 Bancorp, Inc. Florida $286,515 Purchase
January Allied
1997 Bankshares, Thomson,
Inc. Georgia 559,815 Pooling
March West Carroll
1997 Bancshares, Oak Grove,
Inc. Louisiana 127,145 Pooling
April Gulf South
1997 Bancshares, Gretna,
Inc. Louisiana 55,363 Purchase
May First
1997 Mercantile Longwood,
National Bank Florida 157,434 Purchase
May The New Iberia New Iberia,
1997 Bancorp, Inc. Louisiana 313,494 Pooling
June First
1997 Bankshares, Hapeville,
Inc. Georgia 126,826 Pooling
June SB&T Smyrna,
1997 Corporation Georgia 147,709 Pooling
</TABLE>
Loans have increased 21% since a year ago. Loans added from the
three purchase acquisitions, combined with the five pooling
transactions, accounted for a 7% increase in loans. The remaining
14% increase was attributable to internal growth, primarily in
commercial and real estate loans. Since year-end, total loans
have increased 19%, due to $953 million in loans added by
acquisitions and $1.6 billion in internal growth. The average
yield on loans during the first nine months of 1997 was 8.90%,
compared to 8.95% during the same period in 1996. This decrease
was primarily the result of lower average base lending rates.
Non-performing assets were as follows (in thousands):
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1996
Non-accruing loans $ 89,491 $ 60,202 $ 56,819
Loans past due 90
days or more 19,053 26,532 25,161
Renegotiated loans 5,030 3,625 3,643
Other real estate 14,294 10,736 9,853
Total $127,868 $101,095 $ 95,476
Non-performing assets
as a percentage of
loans and other real
estate .81% .76% .73%
Non-accruing loans have increased $32.7 million since September of
last year and $29.3 million since year end. These increases were
mainly in the real estate and installment categories. At September
30, 1997, real estate loans comprised $39.0 million of total
non-accruing loans, with commercial loans accounting for $19.2
million and installment loans $31.3 million. Other real estate
increased $3.6 million since year end, and $4.4 million since
September 1996, due primarily to acquisition activity.
Activity in the allowance for loan losses is summarized as follows
(in thousands):
Sept. 30, Sept. 30,
1997 1996
Balance at beginning of year $175,548 $159,487
Net loans charged-off (recovered):
Commercial (2,095) (1,187)
Real estate (567) (1,323)
Installment 27,295 11,432
Total 24,633 8,922
Allowance of acquired banks 13,754 6,136
Provision charged to expense 31,449 21,734
Balance at end of period $196,118 $178,435
Net loan losses in the first nine months of 1997 were 0.22% of
loans (annualized), compared to 0.10% of loans (annualized) in the
first nine months of 1996. Higher installment loan charge-offs in
the first three quarters of 1997, partially offset by recoveries
of prior period commercial and real estate loan charge-offs,
resulted in higher net loan losses in 1997. The higher installment
loan charge-offs in 1997 resulted primarily from unfavorable
trends in consumer loans, including increased delinquencies and
personal bankruptcies At September 30, 1997, the allowance for
loan losses stood at 1.24% of loans, compared to 1.37% a year ago
and 1.32% at year end. The allowance for loan losses as a
percentage of non-performing loans and non-performing assets was
173% and 153%, respectively, at September 30, 1997, compared to
208% and 187%, respectively, at September 30, 1996.
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 September 30, 1997, it is management's
opinion that the allowance for loan losses is adequate. However,
unfavorable changes in the factors used by management to determine
the adequacy of the allowance, including increased consumer loan
delinquencies and subsequent charge-offs, or the availability of
new information, could require additional provisions, in excess of
normal provisions, to the allowance for loan losses in future
periods.
Total securities have increased 9% since a year ago and 13% since
year end, primarily as a result of securities added in the first
nine months of 1997 by acquisitions.
Mortgage loans held for sale have increased $137.0 million since
September 30, 1996 and $94.0 million since year end as a result of
higher levels of residential mortgage loan production at Regions'
mortgage banking subsidiary during the first nine months of 1997.
Residential mortgage loan production at Regions' mortgage banking
subsidiary was approximately $1.5 billion during the first nine
months of 1997, compared to $1.3 billion during the same time
period in 1996.
Interest-bearing deposits in other banks at September 30, 1997
totaled $29.5 million, a decrease of $16.6 million compared to a
year ago and $3.6 million compared to year end. These decreases
resulted primarily from placing funds in alternative investments.
Net federal funds purchased and security repurchase agreements
totaled $1.8 billion at September 30, 1997, $1.5 billion at year
end and $1.3 billion at September 30, 1996. 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 1997, net funds purchased averaged $1.5 billion,
compared to $1.1 billion in the first nine months of 1996,
indicating more reliance on purchased funds to support earning
assets in the first three quarters of 1997 than in the same period
last year.
Premises and equipment have increased $33.1 million since year end
and $36.7 million since September 30, 1996. These increases were
due primarily to the addition of premises and equipment obtained
through acquisitions since December 1996.
Other assets have increased $71.2 million since year end and $81.7
million since the third quarter of last year, due primarily to
increased excess purchase price resulting from acquisitions,
increased mortgage servicing rights added by purchases of several
mortgage servicing portfolios and the capitalization of mortgage
servicing rights in accordance with Financial Accounting Standards
Board Statement No. 122, and increased investments in low-income
housing partnerships and officers life insurance.
Total deposits have increased 16% since September of last year.
The deposits acquired in connection with acquisitions resulted in
a 10% increase, with the remaining 6% increase attributable to
internal growth. The internal growth resulted primarily from
increases in certificates of deposit accounts. Since year end,
total deposits have increased 7%, after adjusting for the deposits
acquired in connection with acquisitions during the first nine
months of 1997.
Long-term borrowings have decreased $44.6 million since year end,
and $45.3 million since September 30, 1996. These decreases
resulted primarily from the paydown of Senior Bank Notes issued by
Regions' Louisiana banking affiliate and scheduled payments on
other long-term borrowings.
Regions continues to be 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 60 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 U.S. Supreme Court overturned an Alabama case
involving a large jury award, holding that the punitive damage
award was so grossly excessive as to violate due process.
Subsequently, the U.S. Supreme Court has returned several cases to
the Alabama courts for reconsideration in light of its ruling. In
addition, the Alabama Supreme Court has reduced several large
damage awards against defendants that were awarded by lower court
juries. In March of 1997, the Alabama Supreme Court reversed a
precedent set in 1989 regarding reliance by plaintiffs on verbal
representations which are not in agreement with written contracts.
The 1989 ruling had been the source of significant litigation
losses in the state and its reversal is viewed as a positive
event.
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 $1.9 billion at September 30, 1997, an
increase of 19% over last year and an increase of 16% since year
end. These increases resulted primarily from internally generated
capital and equity added in connection with acquisitions since
September 1996. The unrealized gain on securities available for
sale (net of taxes) totaled $9.6 million at September 30, 1997,
and $3.7 million at year end. Regions' ratio of equity to total
assets was 8.32% at September 30, 1997, compared to 8.30% a year
ago and 8.45% 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 September 30, 1997, the
loan to deposit ratio was 89.79%, compared to 85.81% a year ago
and 88.46% 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 1997 increased
$93.5 million or 18%, compared to the same period in 1996. The
increased net interest income resulted from a higher level of
earning assets. The net yield on interest-earning assets (taxable
equivalent basis) was 4.30% in the first nine months of 1997,
compared to 4.29% in the same period in 1996. For the third
quarter of 1997, net interest income increased $35.0 million or
20%, over the third quarter of 1996, due to increased earning
assets and slightly higher spreads on those assets.
Total non-interest income increased $27.4 million or 17% over the
first nine months of 1996 and $11.7 million or 21% over the third
quarter of 1996. Trust department income increased $966,000 or 5%
on a year-to-year comparison and $864,000 or 13% on a quarterly
comparison. Increased charges for selected deposit account
services, coupled with an increase in the number of deposit ac-
counts due to acquisitions and internal growth, resulted in
service charges on deposit accounts increasing $17.7 million or
28% in the first nine months of 1997, compared to the same period
in 1996 and $6.7 million or 30% over the third quarter of 1996.
Mortgage servicing and origination fees increased $2.4 million or
6% in the first nine months of 1997 compared to the same period in
1996 and $1.9 million for the third quarter of 1997 or 16%
compared to the same period of 1996. Mortgage origination fees
were up 5% due to increased volume of loan production. Mortgage
servicing fees increased 1% on a year-to-year comparison. The
mortgage company's servicing portfolio totaled $13.1 billion at
September 30, 1997. Other non-interest income increased $6.0
million or 15% in the first nine months of 1997, compared to the
first nine months of 1996, and $2.2 million or 17% compared to the
third quarter of 1996, primarily due to increased automated teller
machine fees and increased trading account income.
Total non-interest expense increased $25.7 million or 6% in the
first nine months of 1997, compared to the same period in 1996 and
$1.3 million or 1% in the third quarter compared to the same
period in 1996. Excluding the SAIF assessment and non-recurring
merger expenses in 1996, total non-interest expense was up $55.5
million or 14% on a year-to-date comparison. Salaries and employee
benefits were up 20% in the first nine months of 1997, and 25% in
the third quarter of 1997 compared to the same periods in 1996 due
to an increase in the number of employees because of acquisitions,
coupled with normal merit increases, higher benefit costs and
increased incentive-based compensation. Net occupancy expense and
furniture and equipment expense increased 11% in the first nine
months of 1997 over the same period in 1996 and 8% over the third
quarter of 1996, primarily because of additional expenses
associated with branch offices and equipment added by the 1997
acquisitions and because of increased investments in automated
equipment and technology initiatives. 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. Additionally, a $21.0
million assessment was taken in the third quarter of 1996 as a
part of the Savings Association Insurance Fund (SAIF)
recapitalization. Other non-interest expense increased $8.9
million or 7% in the first nine months of 1997 and $3.9 million or
9% in the third quarter over comparable 1996 periods, primarily
because of increases in excess purchase price and mortgage
servicing rights amortization, and postage, partially offset by
lower FDIC premiums related to the lower assessment rates on
insured deposits, lower professional fees and lower computer
service fees.
Income tax expense increased $29.6 (36%) million over the first
nine months of 1996 and $15.5 million (66%) over the third quarter
of 1996, due to an increase in federal taxable income, and an
increase in taxable income as a percentage of total income.
Net income for the first nine months of 1997 was $220.7 million--up
34% over the same period last year. Net income for the third
quarter was $77.0 million--up 52% over the third quarter of last
year. Annualized return on stockholders' equity increased to
16.26%, compared to 14.83% in the first nine months of last year.
Annualized return on assets also increased to 1.41% in the first
nine months of 1997, compared to 1.25% for the same period in 1996.
Income for the first nine months of 1996, excluding the non-
recurring merger expenses and SAIF assessment, was $183.5 million.
Annualized return on stockholders' equity and return on assets were
16.51% and 1.39%, respectively, in the first nine months of 1996,
excluding the non-recurring merger expenses and SAIF assessment.
<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:
None.
<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, 1997 /s/ Robert P. Houston
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
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