<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, 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-66,366,517 shares outstanding
as of April 30, 1997
<PAGE>
REGIONS FINANCIAL CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Condition -
March 31, 1997, December 31, 1996
and March 31, 1996 2
Consolidated Statement of Income -
Three months ended March 31, 1997 and
March 31, 1996 3
Consolidated Statement of Cash Flows -
Three months ended March 31, 1997 and
March 31, 1996 4
Notes to Consolidated Financial Statements -
March 31, 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>
March 31 December 31 March 31
1997 1996 1996
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 501,007 $ 774,849 $ 578,339
Interest-bearing deposits in other
banks 21,785 33,191 86,900
Investment securities 2,296,371 2,102,750 1,925,152
Securities available for sale 1,811,857 1,767,845 2,195,845
Trading account assets 13,623 29,648 9,551
Mortgage loans held for sale 164,583 169,861 163,574
Federal funds sold and securities
purchased under agreement to resell 94,048 20,842 87,495
Loans 14,134,807 13,335,450 11,878,871
Unearned income (29,188) (24,278) (14,515)
Loans, net of unearned income 14,105,619 13,311,172 11,864,356
Allowance for loan losses (185,757) (175,548) (167,066)
Net Loans 13,919,862 13,135,624 11,697,290
Premises and equipment 293,993 276,890 259,924
Interest receivable 144,619 139,333 105,941
Due from customers on acceptances 85,158 78,108 49,663
Other assets 439,215 401,234 371,748
$19,786,121 $18,930,175 $17,531,422
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing $ 1,998,476 $ 1,909,174 $ 1,888,099
Interest-bearing 13,924,195 13,139,162 12,294,508
Total Deposits 15,922,671 15,048,336 14,182,607
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 1,354,245 1,549,729 1,080,851
Commercial paper 42,367 40,367 21,100
Other short-term borrowings 6,701 21,831 22,682
Total Short-term Borrowings 1,403,313 1,611,927 1,124,633
Long-term borrowings 482,217 447,269 501,520
Total Borrowed Funds 1,885,530 2,059,196 1,626,153
Bank acceptances outstanding 85,158 78,108 49,663
Other liabilities 172,615 145,809 190,209
Total Liabilities 18,065,974 17,331,449 16,048,632
Stockholders' Equity:
Common Stock, par value $.625 a share:
Authorized - 120,000,000 shares
Issued, including treasury stock -
66,431,741; 62,914,750; and
62,185,402 shares, respectively 41,520 39,322 38,866
Surplus 579,738 520,571 514,380
Undivided profits 1,106,779 1,050,606 928,628
Treasury stock, at cost - 0;
260,000; and 0 shares, respectively -0- (12,356) -0-
Unearned restricted stock (4,730) (3,121) (2,908)
Unrealized gain(loss) on securities available
for sale, net of taxes (3,160) 3,704 3,824
Total Stockholders' Equity 1,720,147 1,598,726 1,482,790
$19,786,121 $18,930,175 $17,531,422
</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
1997 1996
<S> <C> <C>
Interest Income:
Interest and fees on loans $303,912 $259,020
Interest on securities:
Taxable interest income 60,437 59,061
Tax-exempt interest income 7,269 5,916
Total Interest on Securities 67,706 64,977
Interest on mortgage loans held for sale 3,122 2,351
Income on federal funds sold
and securities purchased under
agreement to resell 904 1,344
Interest on time deposits in other banks 726 1,126
Interest on trading account assets 200 187
Total Interest Income 376,570 329,005
Interest Expense:
Interest on deposits 158,065 140,033
Interest on short-term borrowings 19,429 15,260
Interest on long-term borrowings 8,054 9,826
Total Interest Expense 185,548 165,119
Net Interest Income 191,022 163,886
Provision for loan losses 10,177 6,874
Net Interest Income After Provision
for Loan Losses 180,845 157,012
Non-Interest Income:
Trust department income 7,287 7,140
Service charges on deposit accounts 25,198 20,370
Mortgage servicing and origination fees 13,143 12,686
Securities gains (losses) 464 131
Other 13,701 15,355
Total Non-Interest Income 59,793 55,682
Non-Interest Expense:
Salaries and employee benefits 78,858 69,774
Net occupancy expense 8,745 7,667
Furniture and equipment expense 8,559 8,253
Merger expenses 0 8,785
Other 40,850 40,529
Total Non-Interest Expense 137,012 135,008
Income Before Income Taxes 103,626 77,686
Applicable income taxes 34,954 24,892
Net Income $ 68,672 $ 52,794
Average number of shares outstanding 66,264 61,985
Per share:
Net income $1.04 $0.94
Cash dividends declared $0.40 $0.35
</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
1997 1996
<S> <C> <C>
Operating Activities:
Net income $ 68,672 $ 52,794
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization of premises and
equipment 7,347 6,698
Provision for loan losses 10,177 6,874
Net (accretion) amortization of securities (469) (532)
Amortization of loans and other assets 8,092 5,316
Amortization of deposits and borrowings (411) (411)
Provision for losses on other real estate 71 41
Deferred income taxes (4,531) (2,480)
(Gain) loss on sale of premises and equipment (702) 158
Realized security (gains) losses (464) (131)
Decrease in trading account assets 16,025 19,319
Decrease (increase) in mortgages held for sale 5,278 (46,487)
(Increase) decrease in interest receivable (2,906) 15,009
(Increase) in other assets (40,132) (55,541)
Increase in other liabilities 5,630 16,886
Stock issued to employees 8,537 5,723
Other 445 378
Net Cash Provided By Operating Activities 80,659 23,614
Investing Activities:
Net (increase) in loans (258,190) (320,897)
Proceeds from sale of securities available for sale 8,294 7,865
Proceeds from maturity of investment securities 143,600 273,452
Proceeds from maturity of securities available for sale 123,964 336,387
Purchase of investment securities (197,881) (625,681)
Purchase of securities available for sale (58,169) (257,918)
Net decrease (increase) in interest-bearing deposits
in other banks 46,016 (30,423)
Proceeds from sale of premises and equipment 2,961 1,483
Purchase of premises and equipment (10,831) (13,271)
Net (increase) decrease in customers' acceptance liability (7,050) 1,623
Net cash received in acquisitions 96,731 35,175
Net Cash (Used) By Investing Activities (110,555) (592,205)
Financing Activities:
Net increase in deposits 65,881 684,995
Net (decrease) increase in short-term borrowings (209,339) 56,036
Proceeds from long-term borrowings 1,966 700
Payments on long-term borrowings (11,553) (131,058)
Net increase (decrease) in bank acceptance liability 7,050 (1,623)
Cash dividends (26,574) (21,764)
Purchase of treasury stock for acquisitions 0 (7,309)
Proceeds from exercise of stock options 1,829 948
Net Cash (Used) Provided By Financing Activities (170,740) 580,925
(Decrease) Increase In Cash And Cash Equivalents (200,636) 12,334
Cash and Cash Equivalents, Beginning of Period 795,691 653,500
Cash And Cash Equivalents, End of Period $ 595,055 $ 665,834
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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
On January 25, 1997, Regions paid approximately $40 million for
all the outstanding common stock of Florida First Bancorp, Inc. of
Panama City, Florida. The Florida First transaction, accounted for
as a purchase, added approximately $287 million in assets.
On January 31, 1997, Regions issued 2,851,899 shares of common
stock in exchange for all the outstanding stock of Allied
Bankshares, Inc. of Thomson, Georgia. This transaction, accounted
for as a pooling of interests, added $560 million in assets.
On March 13, 1997, Regions issued 608,000 shares of common stock
in exchange for all the outstanding stock of West Carroll
Bancshares, Inc. of Oak Grove, Louisiana. The West Carroll
transaction, accounted for as a pooling of interests, added
approximately $127 million in assets.
On April 11, 1997, subsequent to the date of the financial
statements, Regions issued 187,863 shares of common stock in
exchange for all the outstanding common stock of Gulf South
Bancshares, Inc., of Gretna, Louisiana. The Gulf South
transaction, accounted for as a purchase, added $55 million in
assets.
NOTE C - Pending Acquisitions
Regions' pending acquisitions are summarized in the following
table. The First Mercantile transaction is expected to be
accounted for as a purchase. The First Bankshares, SB&T and New
Iberia transactions are expected to be accounted for as poolings
of interests. All 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
Mercantile
National
Bank, of
Longwood,
Florida $145 Cash N/A N/A
First
Bankshares,
Inc., of Regions
Hapeville, Common
Georgia 106 Stock 0.32(1) 338
SB&T
Corporation, Regions
of Smyrna, Common
Georgia 152 Stock 0.50 511
The New
Iberia
Bancorp,
Inc., of New Regions
Iberia, Common
Louisiana 299 Stock 0.36(1) 1,080
</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 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 primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the
calculation of primary and fully diluted earnings per share in the
first quarters of 1996 and 1997, is not expected to be material.
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at March 31, 1997, were $19.8 billion--an
increase of 13% 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 5%, due primarily to acquisition
activity.
Comparisons with the prior year are significantly affected by the
following acquisitions, accounted for as purchases, and by the
First Federal Bank of Northwest Georgia, Federal Savings Bank
(First Federal), Allied Bankshares, Inc. (Allied) and West Carroll
Bancshares, Inc. (West Carroll) acquisitions, which were accounted
for as poolings of interests. Prior year financial information
has not been restated to give effect to the First Federal, Allied
and West Carroll transactions since the effect is not material.
Relevant 1996 and 1997 acquisitions are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Date Headquarters Total Assets Accounting
Acquired Company Acquired Location (in thousands) Treatment
April 1996 First Federal
Bank of Northwest
Georgia, Federal Cedartown,
Savings Bank Georgia $ 93,584 Pooling
August 1996 Delta Bank & Belle Chasse,
Trust Company Louisiana 190,547 Purchase
August 1996 First Gwinnett Norcross,
Bancshares, Inc. Georgia 68,364 Purchase
August 1996 Rockdale Conyers,
Community Bank Georgia 47,457 Purchase
September American
1996 Bancshares of Houma,
Houma, Inc. Louisiana 88,743 Purchase
January Florida First Panama City,
1997 Bancorp, Inc. Florida 286,515 Purchase
January Allied Thomson,
1997 Bankshares, Inc. Georgia 559,815 Pooling
March 1997 West Carroll Oak Grove,
Bancshares, Inc. Louisiana 127,145 Pooling
</TABLE>
Loans have increased 19% since a year ago. Loans added from the
five purchase acquisitions, combined with the three pooling
transactions, accounted for a 7% increase in loans. The remaining
12% increase was attributable to internal growth, primarily in
commercial and consumer loans. Since year-end, total loans have
increased 6%, due to $536 million in loans added by acquisitions
and $258 million in internal growth. The average yield on loans
during the first three months of 1997 was 8.87%, compared to 8.96%
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):
<TABLE>
March 31, Dec. 31, March 31,
1997 1996 1996
<S> <C> <C> <C>
Non-accruing loans $ 80,966 $ 60,202 $ 57,162
Loans past due 90
days or more 28,668 26,532 10,860
Renegotiated loans 4,875 3,625 4,081
Other real estate 8,638 10,736 11,126
Total $123,147 $101,095 $ 83,229
Non-performing assets
as a percentage of
loans and other real
estate .87% .76% .70%
</TABLE>
Non-accruing loans have increased $23.8 million since March of
last year and $20.8 million since year end. These increases were
mainly in the real estate and installment categories. At March 31,
1997, real estate loans comprised $45.9 million of total
non-accruing loans, with commercial loans accounting for $13.7
million and installment loans $21.4 million. Management
anticipates that an undetermined, but possibly significant amount
of the consumer loans classified as non-accruing at March 31, 1997,
may be removed from the non-accrual classification upon review of
classification policies in recently acquired banks. Other real
estate decreased $2.1 million since year end, and $2.5 million
since March 1996, 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,
1997 1996
<S> <C> <C>
Balance at beginning of year $175,548 $159,487
Net loans charged-off (recovered):
Commercial (2,221) (1,277)
Real estate (238) (135)
Installment 8,939 3,081
Total 6,480 1,669
Allowance of acquired banks 6,512 2,374
Provision charged to expense 10,177 6,874
Balance at end of period $185,757 $167,066
</TABLE>
Net loan losses in the first three months of 1997 were 0.19% of
loans (annualized), compared to 0.06% of loans (annualized) in the
first three months of 1996. Higher installment charge-offs in the
first three months of 1997, partially offset by recoveries of
prior period real estate and commercial loans charge-offs,
resulted in higher net loan losses in 1997. At March 31, 1997,
the allowance for loan losses stood at 1.32% of loans, compared to
1.41% 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 162% and 151%, respectively, at March 31, 1997,
compared to 232% and 201%, respectively, at March 31, 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 March 31, 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 been stable since a year ago and have
increased 6% since year end, as a result of securities added in
the first quarter of 1997 by acquisitions.
Mortgage loans held for sale have remained relatively constant as
of each of the dates shown on the consolidated statement of
condition. Residential mortgage loan production at Regions'
mortgage banking subsidiary was approximately $418 million during
the first three months of 1997, compared to $380 million during
the same time period in 1996.
Interest-bearing deposits in other banks at March 31, 1997 totaled
$21.8 million, a decrease of $65.1 million compared to a year ago
and $11.4 compared to year end. These decreases resulted
primarily from placing funds in alternative investments.
Net federal funds purchased and security repurchase agreements
totaled $1.3 billion at March 31, 1997, $1.5 billion at year end
and $993.4 million at March 31, 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 three months of
1997, net funds purchased averaged $1.3 billion, compared to
$929.0 million in the first three months of 1996, indicating more
reliance on purchased funds to support earning assets in the first
quarter of 1997 than in the same period last year.
Premises and equipment have increased $17.1 million since year end
and $34.1 million since March 31, 1996. These increases were due
primarily to the addition of premises and equipment obtained
through acquisitions since March 1996.
Other assets have increased $38.0 million since year end and $67.5
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 and the capitalization of mortgage
servicing rights in accordance with Financial Accounting Standards
Board Statement No. 122.
Total deposits have increased 12% since March of last year. The
deposits acquired in connection with acquisitions resulted in a 9%
increase, with the remaining 3% increase attributable to internal
growth. The internal growth resulted primarily from increases in
certificates of deposit and money market savings accounts. Since
year end, total deposits have increased less than 1%, after
adjusting for the deposits acquired in connection with
acquisitions during the first quarter of 1997.
Long-term borrowings have increased $34.9 million since year end,
but decreased $19.3 million since March 31, 1996. The increase in
long-term borrowings since year end resulted from Federal Home
Loan Bank advances acquired in connection with acquisitions. The
decrease since the first quarter of 1996 resulted primarily from
the paydown of Senior Bank Notes issued by Regions' Louisiana
banking affiliate.
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 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 81 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 $1.7 billion at March 31, 1997, an in-
crease of 16% over last year and an increase of 8% since year end.
These increases resulted primarily from internally generated capi-
tal and equity added in connection with acquisitions since March
1996. The unrealized loss on securities available for sale (net
of taxes) totaled $3.2 million at March 31, 1997, and compared to
an unrealized gain of $3.7 million at year end. Regions' ratio of
equity to total assets was 8.69% at March 31, 1997, compared to
8.46% 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 March 31, 1997, the loan
to deposit ratio was 88.59%, compared to 83.65% 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 three months of 1997 increased
$27.1 million or 17%, compared to the same period in 1996. The
increased net interest income resulted from a higher level of
earning assets, combined with higher spreads on those earning
assets. The net yield on interest-earning assets (taxable
equivalent basis) was 4.31% in the first three months of 1997,
compared to 4.22% in the same period in 1996. This ratio
increased due primarily to changes in the product mix, both in
interest-earning assets and interest-bearing liabilities and lower
funding costs in the first quarter of 1997.
Total non-interest income increased $4.1 million or 7% over the
first three months of 1996. Trust department income increased
$147,000 or 2% on a year-to-year comparison. This resulted from
growth in trust assets, due to internal growth, and increases in
personal 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
$4.8 million or 24% in the first three months of 1997, compared to
the same period in 1996. Mortgage servicing and origination fees
increased $457,000 or 4% in the first three months of 1997
compared to the same period in 1996. Mortgage origination fees
were up 4% due to increased volume of new loan production in the
first quarter of 1997. Mortgage servicing fees increased 4% on a
year-to-year comparison. The mortgage company's servicing
portfolio totaled $12.7 billion at March 31, 1997. Other
non-interest income decreased $1.7 million or 11% in the first
three months of 1997, compared to the first three months of 1996,
primarily due to lower capitalization of originated mortgage
servicing rights partially offset by increased automated teller
machine fees and increased trading account income.
Total non-interest expense increased $2.0 million or 1% in the
first three months of 1997, compared to the same period in 1996.
Excluding the non-recurring merger expenses in 1996, total non-
interest expense was up $10.8 million or 9%. Acquisitions during
the first quarter of 1997 added approximately $5.0 million to
total non-interest expense. Salaries and employee benefits were up
13% in the first three months of 1997, 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
three months of 1997 over the same period in 1996, primarily
because of additional expenses associated with branch offices and
equipment added by the 1996 and 1997 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 $321,000 or 1% in the
first three months of 1997, primarily because of increases in
excess purchase price amortization partially offset by lower FDIC
premiums related to the lower assessment rates on insured
deposits, professional fees, computer services fees and stationery
and printing costs.
Income tax expense increased $10.1 million over the first three
months 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 quarter was $68.7 million--up 30% over the
first quarter of last year. Annualized return on stockholders'
equity increased to 16.24%, compared to 14.51% in the first three
months of last year. Annualized return on assets also increased to
1.41% in the first three months of 1997, compared to 1.24% for the
same period in 1996. First quarter of 1996 income, excluding the
non-recurring merger expenses, was $58.3 million. 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:
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: May 12, 1997 /s/ Robert P. Houston
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
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0
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