REGIONS FINANCIAL CORP
S-4, 1998-11-12
NATIONAL COMMERCIAL BANKS
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<PAGE>   1
As filed with the Securities and Exchange Commission on November 12, 1998
                                                                Registration No.
- -------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------
                                    FORM S-4
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                             ----------------------
                         Regions Financial Corporation
             (Exact Name of Registrant as Specified in its Charter)
                             ----------------------

<TABLE>
<CAPTION>
           Delaware                               6711                    63-0589368
<S>                                  <C>                             <C>
(State or Other Jurisdiction of      (Primary Standard Industrial     (I.R.S. Employer
Incorporation or Organization)       Classification Code Number)     Identification No.)
</TABLE>


                             417 North 20th Street
                             Birmingham, AL  35203
                                 (205) 326-7100
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)
                             ----------------------
                            Samuel E. Upchurch, Jr.
                    General Counsel and Corporate Secretary
                             417 North 20th Street
                              Birmingham, AL 35203
                                 (205) 326-7860
               (Name, address, including zip code, and telephone
               number, including area code, of agent for service)
                             ----------------------
                                   Copies to:

<TABLE>
<S>                                 <C>                             <C>
       CHARLES C. PINCKNEY              FRANK M. CONNER III             W. SCOTT MCGINNESS, JR.
   LANGE, SIMPSON, ROBINSON &              ALSTON & BIRD LLP             MILLER & MARTIN LLP
           SOMERVILLE LLP           601 PENNSYLVANIA AVENUE, N.W.   VOLUNTEER BUILDING; SUITE 1000
417 NORTH 20TH STREET, SUITE 1700    NORTH BUILDING, SUITE 250          832 GEORGIA AVENUE
       BIRMINGHAM, AL 35203             WASHINGTON, D.C. 20004         CHATTANOOGA, TN  37402
         (205) 250-5000                   (202) 508-3303                    (423) 756-8284
</TABLE>

                              --------------------
     Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
     If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

                              --------------------

                       CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Title of each                                          Proposed maximum       Proposed maximum             Amount of
class of securities            Amount to be            offering price             aggregate               registration
to be registered                registered                per unit*            offering price*                fee
- -------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                     <C>                    <C>                         <C>

Common Stock                     577,143                 $12.21424846           $7,049,368                 $1,959.72
========================================================================================================================
</TABLE>

*Calculated in accordance with Rule 457(f), based on the total stockholders'
equity of the company being acquired.

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), shall
determine.

<PAGE>   2
 
<TABLE>
<S>                                <C>
         PROXY STATEMENT                       PROSPECTUS
  MEIGS COUNTY BANCSHARES, INC.      REGIONS FINANCIAL CORPORATION
                                     UP TO 577,143 SHARES OF COMMON
                                                 STOCK
</TABLE>
 
                           -------------------------
 
                 MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
                           -------------------------
 
The Boards of Directors of Meigs County Bancshares, Inc. and Regions Financial
Corporation have agreed on a merger of Meigs County Bancshares and Regions.
Regions will be the surviving corporation in the Merger. Regions is a regional
bank holding company headquartered in Birmingham, Alabama. Regions has banking
operations in Alabama, Arkansas, Florida, Georgia, Louisiana, South Carolina,
Tennessee, and Texas. Regions has assets of about $35.1 billion, deposits of
about $27.2 billion, and stockholders' equity of about $3.0 billion.
 
If the Merger is completed, Meigs County Bancshares stockholders will receive
1.9 shares of Regions common stock for each share of Meigs County Bancshares
common stock they own. Regions stockholders will continue to own their existing
shares of Regions common stock after the Merger.
 
We can't complete the Merger unless the stockholders of Meigs County Bancshares
approve it. Meigs County Bancshares has scheduled a special meeting for its
stockholders to vote on the Merger.
 
YOUR VOTE IS VERY IMPORTANT.  Whether or not you plan to attend the stockholder
meeting, please take the time to vote by completing and mailing the enclosed
proxy card. If you sign, date and mail your proxy card without indicating how
you want to vote, your proxy will be counted as a vote in favor of the Merger.
If you don't return your card, the effect will be a vote against the Merger.
 
The date, time, and place of the special meeting of stockholders is as follows:
 
             , 1998
                  p.m.
   Main Office, Meigs County Bancshares, Inc.
   116 N. Main Street
   Decatur, Tennessee 37322
 
This Proxy Statement-Prospectus provides you with detailed information about the
proposed Merger. You can also get information about Regions from documents filed
with the Securities and Exchange Commission. We encourage you to read this
entire document carefully. Your Board of Directors strongly supports this Merger
of Meigs County Bancshares with Regions, and I join with the other members of
the Board of Directors in enthusiastically recommending that you vote in favor
of the Merger.
 
                                          F. Stephen Miller
                                          President and Chief Executive Officer
                                          Meigs County Bancshares, Inc.
 
SHARES OF REGIONS COMMON STOCK ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE REGIONS COMMON STOCK TO BE ISSUED UPON COMPLETION
OF THE MERGER OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
Proxy Statement-Prospectus dated             , 1998, and first mailed to
stockholders on             , 1998.
<PAGE>   3
 
We have not authorized anyone to give any information or make any representation
about the Merger or our companies that differs from, or adds to, the information
in this Proxy Statement-Prospectus or in Regions' documents that are publicly
filed with the Securities and Exchange Commission. Therefore, if anyone does
give you different or additional information, you should not rely on it.
 
If you are in a jurisdiction where it is unlawful to offer to exchange or sell,
or to ask for offers to exchange or buy, the securities offered by this Proxy
Statement-Prospectus or to ask for proxies, or if you are a person to whom it is
unlawful to direct such activities, then the offer presented by this Proxy
Statement-Prospectus does not extend to you.
 
The information contained in this Proxy Statement-Prospectus speaks only as of
its date unless the information specifically indicates that another date
applies.
 
Information in this Proxy Statement-Prospectus about Regions Financial
Corporation has been supplied by Regions, and information about Meigs County
Bancshares, Inc. has been supplied by Meigs County Bancshares.
 
                    CAUTION ABOUT FORWARD-LOOKING STATEMENTS
 
Each company makes forward-looking statements in this Proxy
Statement-Prospectus, and in Regions' public documents to which we refer, that
are subject to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of our operations or the
performance of the combined company after the Merger. Also, when we use any of
the words "believes," "expects," "anticipates" or similar expressions, we are
making forward-looking statements. Many possible events or factors could affect
the future financial results and performance of each of our companies and the
combined company after the Merger. This could cause results or performance to
differ materially from those expressed in our forward-looking statements. You
should consider these risks when you vote on the Merger. These possible events
or factors include the following:
 
     1. Regions' revenues after the Merger and other recent acquisitions may be
     lower than expected, Regions' restructuring charges in recent acquisitions
     may be higher than expected, or Regions' operating costs after the Merger
     and other recent acquisitions may be greater than expected;
 
     2. Competition among depository and other financial institutions may
     increase significantly;
 
     3. We may have more trouble obtaining regulatory approvals for the Merger
     than expected;
 
     4. Regions may have more trouble integrating acquired businesses or
     retaining key personnel than expected;
 
     5. Regions' costs savings from the Merger and other recent acquisitions may
     be less than expected, or Regions may be unable to obtain those cost
     savings as soon as expected;
 
     6. Changes in the interest rate environment may reduce operating margins;
 
     7. General economic or business conditions may be worse than we expect;
 
     8. Legislative or regulatory changes may adversely affect our businesses;
 
     9. Technological changes and systems integration may be harder to make or
     more expensive than expected; and
 
     10. Adverse changes may occur in the securities markets.
<PAGE>   4
 
                         MEIGS COUNTY BANCSHARES, INC.
                 116 N. MAIN STREET, DECATUR, TENNESSEE, 37322
                           -------------------------
 
                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                         TO BE HELD             , 1998
                           -------------------------
 
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Meigs County Bancshares, Inc., a bank holding company, will be held
at Meigs County Bancshares' main office, located at 116 N. Main Street, Decatur,
Tennessee, 37322 on           , 1998, at                :00 p.m., local time,
for the following purposes:
 
     1. Merger.  To consider and vote on the Agreement and Plan of Merger, dated
     as of June 22, 1998 (the "Agreement"), by and between Meigs County
     Bancshares and Regions Financial Corporation ("Regions") pursuant to which
     (i) Meigs County Bancshares will merge with and into Regions with Regions
     as the surviving corporation (the "Merger") and (ii) each share of Meigs
     County Bancshares common stock (excluding certain shares held by Meigs
     County Bancshares, Regions, or their respective subsidiaries and excluding
     all shares held by stockholders who perfect their dissenters' rights) will
     be converted into 1.9 shares of Regions common stock, subject to possible
     adjustment, with cash to be paid in lieu of any remaining fractional share
     interest, all as described more fully in the accompanying Proxy
     Statement-Prospectus; and
 
     2. Other Business.  To transact such other business as may properly come
     before the Special Meeting, including adjourning the Special Meeting to
     permit, if necessary, further solicitation of proxies.
 
Only stockholders of record at the close of business on           , 1998, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
 
Stockholders of Meigs County Bancshares have a right to dissent from the Merger
and obtain payment of the fair value of their shares in cash by complying with
the applicable provisions of applicable law, which are attached to the
accompanying Proxy Statement-Prospectus as Appendix C.
 
The Board of Directors of Meigs County Bancshares unanimously recommends that
holders of Meigs County Bancshares common stock vote FOR the proposals listed
above.
 
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
Meigs County Bancshares an instrument of revocation or a duly executed proxy
bearing a later date or by electing to vote in person at the Special Meeting.
 
                                          By Order of the Board of Directors
 
                                          Patsy Hayes
                                          Corporate Secretary
 
          , 1998
<PAGE>   5
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
 
SUMMARY.....................................................    1
  The Companies.............................................    1
  The Merger................................................    1
  Comparative Per Share Market Price Information............    2
  Reasons for the Merger....................................    2
  Opinion of Financial Advisor..............................    2
  The Special Meeting.......................................    3
  Recommendations to Stockholders...........................    3
  Record Date; Voting Power.................................    3
  Vote Required.............................................    3
  Conditions to Completion of the Merger....................    3
  Termination of the Merger Agreement.......................    4
  Federal Income Tax Consequences...........................    4
  Accounting Treatment......................................    5
  Interests of Persons in the Merger That Are Different from
     Yours..................................................    5
  Dissenters' Appraisal Rights..............................    5
  Regulatory Approvals......................................    5
  Comparative Per Share Data................................    6
  Selected Financial Data...................................    8
THE SPECIAL MEETING.........................................   13
  General...................................................   13
  Record Date; Vote Required................................   14
THE MERGER..................................................   16
  General...................................................   16
  Possible Adjustment of Exchange Ratio.....................   16
  Treatment of Meigs County Bancshares Options..............   19
  Background of the Merger..................................   19
  Meigs County Bancshares' Reasons for the Merger...........   20
  Regions' Reasons for the Merger...........................   22
  Opinion of Meigs County Bancshares' Financial Advisor.....   22
  Effective Time of the Merger..............................   25
  Distribution of Regions Stock Certificates and Payment For
     Fractional Shares......................................   26
  Conditions to Consummation of the Merger..................   26
  Regulatory Approvals......................................   27
  Waiver, Amendment, and Termination of the Merger
     Agreement..............................................   28
  Conduct of Business Pending the Merger....................   29
  Management Following the Merger...........................   30
  Interests of Certain Persons in the Merger................   30
  Dissenting Stockholders...................................   31
  Accounting Treatment......................................   35
  Expenses and Fees.........................................   35
  Resales of Regions Common Stock...........................   36
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS..............   36
  Antitakeover Provisions Generally.........................   37
  Authorized Capital Stock..................................   38
  Amendment of Certificate or Articles of Incorporation and
     Bylaws.................................................   38
  Classified Board of Directors and Absence of Cumulative
     Voting.................................................   39
</TABLE>
 
                                        i
<PAGE>   6
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
  Removal of Directors......................................   40
  Limitations on Director Liability.........................   40
  Indemnification...........................................   40
  Special Meetings of Stockholders..........................   41
  Actions by Stockholders Without a Meeting.................   41
  Stockholder Nominations...................................   41
  Mergers, Consolidations, and Sales of Assets Generally....   42
  Business Combinations with Certain Persons................   42
  Dissenters' Rights........................................   44
  Stockholders' Rights to Examine Books and Records.........   44
  Dividends.................................................   45
COMPARATIVE MARKET PRICES AND DIVIDENDS.....................   46
MEIGS COUNTY BANCSHARES MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........   48
INFORMATION ABOUT MEIGS COUNTY BANCSHARES...................   63
  Business and Properties...................................   63
  Competition...............................................   64
  Legal Proceedings.........................................   64
  Management................................................   64
  Transactions with Management..............................   66
  Voting Securities and Principal Stockholders..............   66
INFORMATION ABOUT REGIONS...................................   68
  General...................................................   68
  Recent Developments.......................................   68
SUPERVISION AND REGULATION..................................   70
  General...................................................   71
  Payment of Dividends......................................   72
  Capital Adequacy..........................................   73
  Prompt Corrective Action..................................   74
  FDIC Insurance Assessments................................   75
DESCRIPTION OF REGIONS COMMON STOCK.........................   75
STOCKHOLDER PROPOSALS.......................................   76
EXPERTS.....................................................   76
OPINIONS....................................................   76
WHERE YOU CAN FIND MORE INFORMATION.........................   76
INDEX TO MEIGS COUNTY BANCSHARES FINANCIAL STATEMENTS.......  F-1
APPENDIX A -- Agreement and Plan of Merger..................  A-1
APPENDIX B -- Opinion of Stevens & Company..................  B-1
APPENDIX C -- Copy of Chapter 23 of the Tennessee Business
  Corporation Act, pertaining to dissenters' rights.........  C-1
</TABLE>
 
                                       ii
<PAGE>   7
 
                                    SUMMARY
 
This summary highlights selected information from this Proxy
Statement-Prospectus. It does not contain all of the information that is
important to you. You should carefully read this entire document and the
documents to which we have referred. These will give you a more complete
description of the proposed Merger and of the legal terms of the Merger. See
"Where You Can Find More Information" (page   ). Each item in this summary
includes a page reference that directs you to a more complete description in
this document of the topic discussed.
 
THE COMPANIES (PAGES   AND   )
 
     REGIONS FINANCIAL CORPORATION
     417 North 20th Street
     Birmingham, Alabama 35203
     (205) 326-7100
 
Regions is incorporated in Delaware and is a regional bank holding company.
Regions provides banking and other financial services. Regions has banking
operations in Alabama, Arkansas, Florida, Georgia, Louisiana, South Carolina,
Tennessee, and Texas. As of September 30, 1998, Regions' total assets were about
$35.1 billion, deposits were about $27.2 billion and stockholders' equity was
about $3.0 billion.
 
The section of this Proxy Statement-Prospectus under the caption "Where You Find
More Information" refers you to places where you can find more information about
Regions.
 
     MEIGS COUNTY BANCSHARES, INC.
     116 N. Main Street
     Decatur, Tennessee, 37322
     (423) 334-3622
 
Meigs County Bancshares is incorporated in Tennessee and is a bank holding
company. Meigs County Bancshares owns Meigs County Bank, a commercial bank which
serves customers primarily in Meigs, Hamilton, and McMinn Counties in eastern
Tennessee. As of September 30, 1998, Meigs County Bancshares' total assets were
about $ 110.7 million, deposits were about $101.3 million, and stockholders'
equity was about $ 7.0 million.
 
THE MERGER (PAGE   )
 
Meigs County Bancshares proposes to merge with Regions Financial Corporation.
Regions will be the surviving corporation in the Merger. When the Merger is
completed, you will receive 1.9 shares of Regions stock for each share of Meigs
County Bancshares stock that you own. You will not receive a fraction of a
share. Instead, you will receive a cash payment for any fraction of a share to
which you may become entitled.
 
If you elect to dissent from the Merger under Tennessee law and follow the
required procedures, you will receive a cash payment for your shares of Meigs
County Bancshares common stock instead of receiving Regions common stock. More
information about your rights to dissent from the Merger, and the procedures you
must follow should you choose to do so, is included under the heading "The
Merger -- Dissenting Stockholders" at page   .
                                        1
<PAGE>   8
 
The Merger Agreement protects you as stockholders against a sharp decline in the
trading price of Regions stock compared to stock prices of other bank holding
companies. If the average price of Regions stock over a ten-day period prior to
the special meeting is less than $33.35 and also underperforms a group of bank
holding company stocks by more than 15% between the date of the agreement and
the date of the special meeting, then your Board of Directors can terminate the
Merger Agreement unless Regions agrees to issue more Regions stock in exchange
for your shares of Meigs County Bancshares stock. This mechanism is explained in
detail under the heading "The Merger -- Possible Adjustment of Exchange Ratio"
at page   .
 
We have attached the Merger Agreement to this Proxy Statement-Prospectus as
Appendix A. We encourage you to read the Merger Agreement. It is the legal
document that establishes the terms and conditions of the Merger.
 
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE   )
 
Shares of Regions are quoted on the Nasdaq National Market. Shares of Meigs
County Bancshares are not quoted on any established market. On June 24, 1998,
the last full trading day prior to the public announcement of the Merger,
Regions stock closed at $39.63 per share. As of that date the last known price
of Meigs County Bancshares stock was $17.50 per share. On           , 1998,
Regions stock closed at $     per share and the last known price of Meigs County
Bancshares stock was $     per share.
 
Based on the exchange ratio in the Merger, which is 1.9, the market value of the
consideration that Meigs County Bancshares stockholders will receive in the
Merger for each share of Meigs County Bancshares common stock would be $75.30
based on Regions' June 24, 1998 closing price and $     based on Regions'
          , 1998 closing price. Of course, the market price of Regions common
stock will fluctuate prior to and after completion of the Merger, while the
exchange ratio is fixed. Therefore, you should obtain current stock price
quotations for Regions common stock.
 
REASONS FOR THE MERGER (PAGE   )
 
Before deciding to approve and recommend the Merger, your Board of Directors
considered the financial condition and prospects of Meigs County Bancshares,
information about Regions, the financial terms of the Merger, the likelihood the
bank regulators will approve the Merger, the federal income tax consequences of
the Merger, the advice of your Board's legal and financial advisors, and other
factors. Your Board of Directors decided the Merger is advisable and is in your
best interests as stockholders.
 
To review the background of and reasons for the Merger in greater detail, please
see the discussion under the headings "The Merger -- Background of the Merger"
and "The Merger -- Meigs County Bancshares' Reasons for the Merger" at pages
and   .
 
OPINION OF FINANCIAL ADVISOR (PAGE   )
 
In deciding to approve the Merger, your Board considered the opinion of its
financial advisor, Stevens & Company that as of the date of the opinion the
exchange ratio was fair from a financial point of view to you as Meigs County
Bancshares stockholders. We have attached this opinion as Appendix B to this
Proxy Statement-Prospectus. You should read it carefully.
                                        2
<PAGE>   9
 
THE SPECIAL MEETING (PAGE   )
 
The Meigs County Bancshares special meeting will be held at Meigs County
Bancshares' main office, 116 N. Main Street, Decatur, Tennessee, 37322, at
               p.m. on           , 1998. At the special meeting, Meigs County
Bancshares stockholders will be asked to approve the Merger Agreement.
 
RECOMMENDATIONS TO STOCKHOLDERS (PAGE   )
 
Your Board of Directors believes that the Merger is fair to you and in your best
interests. The Board unanimously recommends that you vote "FOR" the proposal to
approve the Merger Agreement.
 
RECORD DATE; VOTING POWER (PAGE   )
 
You can vote at the Meigs County Bancshares Special Meeting if you owned Meigs
County Bancshares common stock as of the close of business on           , 1998,
the record date. On that date,                shares of Meigs County Bancshares
common stock were outstanding and therefore are allowed to vote at the special
meeting. You will be able to cast one vote for each share of Meigs County
Bancshares common stock you owned on           , 1998.
 
Regions stockholders will not vote on the Merger.
 
VOTE REQUIRED (PAGE   )
 
In order for the special meeting to be held, a quorum must be present. A quorum
is established when a majority of the shares of Meigs County Bancshares common
stock are represented at the special meeting either in person or by proxy. To
approve the Merger, Meigs County Bancshares stockholders who hold a majority of
the outstanding shares of common stock on the record date must vote for the
Merger. If you do not vote, this will have the same effect as a vote against the
Merger.
 
All together, the directors and officers of Meigs County Bancshares can cast
about      % of the votes entitled to be cast at the Meigs County Bancshares
special meeting. The members of your Board of Directors have agreed to vote all
of their shares in favor of the Merger.
 
CONDITIONS TO COMPLETION OF THE MERGER (PAGE   )
 
The completion of the Merger depends on a number of conditions being met,
including the following:
 
     - Meigs County Bancshares stockholders approving the Merger;
 
     - Receipt of all required regulatory approvals and the expiration of any
       regulatory waiting periods;
 
     - The absence of any governmental or court order blocking completion of the
       Merger, or of any proceedings by a government body trying to block it;
                                        3
<PAGE>   10
 
     - Receipt of an opinion of counsel that the U.S. federal income tax
       treatment to you the stockholders and to Meigs County Bancshares in the
       Merger will generally be tax-free as we've described it to you in this
       Proxy Statement-Prospectus;
 
     - Receipt of an opinion of Stevens & Company that the consideration to be
       received in the Merger by the stockholders of Meigs County Bancshares is
       fair to such stockholders from a financial point of view; and
 
     - Filing with the National Association of Securities Dealers, Inc. of
       Regions' notification for listing of additional shares on the Nasdaq
       National Market for the shares of Regions common stock to be issued in
       the Merger
 
In cases where the law permits, a party to the Merger Agreement could elect to
waive a condition that has not been satisfied and complete the Merger although
it is entitled not to. We can't be certain whether or when any of the conditions
we've listed will be satisfied (or waived, where permissible), or that the
Merger will be completed.
 
TERMINATION OF THE MERGER AGREEMENT (PAGE   )
 
We can agree at any time to terminate the Merger Agreement without completing
the Merger, even if you, the stockholders, have already voted to approve it.
 
Moreover, either of us can terminate the Merger Agreement in the following
circumstances:
 
     - After a final decision by a governmental authority to prohibit the
       Merger, or after the rejection of an application for a governmental
       approval required to complete the Merger;
 
     - If the Merger isn't completed by March 31, 1999;
 
     - If the Meigs County Bancshares stockholders don't approve the Merger; or
 
     - If the other party violates, in a significant way, any of its
       representations, warranties or obligations under the Merger Agreement and
       the party seeking termination isn't in violation of the Merger Agreement.
 
In addition, Meigs County Bancshares could decide to terminate the Merger
Agreement based on the market price of Regions' common stock. If the average
price of Regions common stock during a ten-day period before the date
stockholders approve the Merger is less than $33.35 and if the price of Regions
common stock underperforms a group of bank holding company stocks by 15% or more
during the period following our entering into the Merger Agreement, then the
board of directors of Meigs County Bancshares could elect to terminate the
Merger Agreement.
 
However, Meigs County Bancshares will not be able to terminate the Merger
Agreement if Regions elects to issue more shares of Regions common stock in
exchange for shares of Meigs County Bancshares common stock.
 
FEDERAL INCOME TAX CONSEQUENCES (PAGE   )
 
We have structured the Merger with the intent that you won't recognize any gain
or loss for U.S. federal income tax purposes in the Merger when you exchange all
of your shares of Meigs County Bancshares common stock for shares of Regions
common stock in the
                                        4
<PAGE>   11
 
Merger, except in connection with cash received instead of fractional shares. We
have conditioned the Merger on our receipt of legal opinions that this will be
the case, but these opinions won't bind the Internal Revenue Service, which
could take a different view.
 
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN MEIGS COUNTY BANCSHARES
STOCKHOLDERS, INCLUDING THE TYPES OF MEIGS COUNTY BANCSHARES STOCKHOLDERS
DISCUSSED ON PAGE   , AND WILL NOT APPLY TO ANY MEIGS COUNTY BANCSHARES
STOCKHOLDER WHO DISSENTS FROM THE MERGER UNDER TENNESSEE LAW. DETERMINING THE
ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU CAN BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND MANY VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES.
 
ACCOUNTING TREATMENT (PAGE   )
 
We expect the Merger to qualify as a pooling of interests, which means that, for
accounting and financial reporting purposes, we will treat our companies as if
they had always been one company.
 
INTERESTS OF PERSONS IN THE MERGER THAT ARE DIFFERENT FROM YOURS (PAGE   )
 
Some of the officers of Meigs County Bancshares have benefit and compensation
plans that provide them with interests in the Merger that are different from, or
in addition to, their interests as stockholders of Meigs County Bancshares. In
particular, they hold outstanding options under Meigs County Bancshares'
existing stock option plan, which will be converted into stock options to
acquire Regions stock after the Merger. Also, members of Meigs County
Bancshares' Board and its officers are entitled to indemnification under the
Merger Agreement.
 
The board of directors of Meigs County Bancshares was aware of these interests
and considered them in approving and recommending the merger.
 
For more information concerning these matters, please refer to the discussion
under the heading "The Merger -- Interests of Certain Persons in the Merger" on
page   .
 
DISSENTERS' APPRAISAL RIGHTS (PAGE   )
 
Tennessee law permits you to dissent from the Merger and to have the fair value
of your stock appraised by a court and paid to you in cash. To do this, you must
follow certain procedures, including the filing of certain notices and
refraining from voting your shares in favor of the Merger. If you dissent from
the Merger, your shares of Meigs County Bancshares common stock will not be
exchanged for shares of Regions common stock in the Merger, and your only right
will be to receive the appraised value of your shares in cash.
 
REGULATORY APPROVALS (PAGE   )
 
We can't complete the Merger unless we obtain the approval of the Board of
Governors of the Federal Reserve System. The U.S. Department of Justice has
input into the Federal Reserve Board's approval process. Federal law requires us
to wait for up to 30 days before completing the Merger after the Federal Reserve
Board has approved it, which the Federal Reserve Board may shorten to 15 days.
                                        5
<PAGE>   12
 
We have filed (or shortly will file) all of the required notices with these
regulatory authorities. While we don't know of any reason why we shouldn't
obtain the remaining regulatory approvals in a timely manner, we can't be
certain when we'll obtain them or that we will obtain them.
 
COMPARATIVE PER SHARE DATA
 
The following table shows information about our companies' income per share,
dividends per share and book value per share, and similar information reflecting
the Merger of our two companies (which is referred to as "pro forma"
information). In presenting the comparative pro forma information for certain
time periods, we assumed that our companies had been merged throughout those
periods.
 
In presenting the comparative pro forma information, we also assumed that we
will treat our companies as if they had always been combined for accounting and
financial reporting purposes (a method which is referred to as the "pooling of
interests" method of accounting).
 
The information listed as "equivalent pro forma" was obtained by multiplying the
pro forma amounts by the exchange ratio of 1.9. It is intended to reflect the
fact that Meigs County Bancshares stockholders will be receiving 1.9 shares of
Regions common stock for each share of Meigs County Bancshares common stock
exchanged in the Merger.
 
The pro forma information, while helpful in illustrating the financial
attributes of the combined company under one set of assumptions, doesn't attempt
to predict or suggest future results. Also, the information we've set forth for
the nine-month period ended September 30, 1998 doesn't indicate what the results
will be for the full 1998 fiscal year.
                                        6
<PAGE>   13
 
The information in the following table is based on the historical financial
information of our companies. See "Information About Regions -- Recent
Developments," "Where You Can Find More Information," and "Index to Meigs County
Bancshares Financial Statements."
 
<TABLE>
<CAPTION>
                                             NINE MONTHS
                                                ENDED
                                            SEPTEMBER 30,      YEAR ENDED DECEMBER 31,
                                           ---------------   ---------------------------
                                            1998     1997     1997      1996      1995
                                           ------   ------   -------   -------   -------
                                             (UNAUDITED)      (UNAUDITED EXCEPT REGIONS
                                                                 AND MCB HISTORICAL)
<S>                                        <C>      <C>      <C>       <C>       <C>
INCOME BEFORE EXTRAORDINARY ITEM PER
  COMMON SHARE
Regions historical.......................  $ 1.34   $ 1.38   $ 1.82    $ 1.64    $ 1.45
Regions historical -- diluted............    1.32     1.36     1.79      1.61      1.43
MCB historical...........................    3.70     2.89     4.24      3.73      3.14
MCB historical -- diluted................    3.70     2.89     4.24      3.73      3.14
Regions and MCB pro forma combined(1)....    1.34              1.82      1.64      1.45
Regions and MCB pro forma combined --
  diluted(1).............................    1.32              1.79      1.61      1.43
MCB pro forma equivalent(2)..............    2.55              3.46      3.12      2.76
MCB pro forma equivalent -- diluted(2)...    2.51              3.40      3.06      2.72
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical.......................     .69      .60      .80       .70       .66
MCB historical...........................      --       --       --        --        --
MCB pro forma equivalent(3)..............    1.31     1.14     1.52      1.33      1.25
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical.......................   13.38    12.46    12.75     11.82     10.74
MCB historical...........................   27.30    21.97    23.44     18.76     15.56
Regions and MCB pro forma combined(1)....   13.38
MCB pro forma equivalent(2)..............   25.42
</TABLE>
 
- -------------------------
 
(1) Represents the combined results of Regions and Meigs County Bancshares as if
    the Merger were consummated on January 1, 1995 (or September 30, 1998, in
    the case of Book Value Per Share Data), and were accounted for as a pooling
    of interests.
 
(2) Represents pro forma combined information multiplied by the Exchange Ratio
    of 1.9 shares of Regions common stock for each share of Meigs County
    Bancshares common stock. The Exchange Ratio is subject to upward adjustment
    under certain conditions if the average of the closing sales prices of
    Regions common stock over a specified period is less than $33.35. See "The
    Merger -- Possible Adjustment of Exchange Ratio." The presentation of pro
    forma equivalent information would be affected by any increase in the
    Exchange Ratio.
 
(3) Represents historical dividends declared per share by Regions multiplied by
    the Exchange Ratio of 1.9 shares of Regions common stock for each share of
    Meigs County Bancshares common stock.
                                        7
<PAGE>   14
 
SELECTED FINANCIAL DATA
 
The following tables show summarized historical financial data for each of our
companies.
 
The information in the following tables is based on the historical financial
information of our companies. All of the summary financial information provided
in the following tables should be read in connection with this historical
financial information and with the more detailed financial information we have
provided in this Proxy Statement-Prospectus, which you can find beginning at
page F-1 and in the documents of Regions incorporated by reference. See
"Information About Regions -- Recent Developments" on page   and "Where You Can
Find More Information" on page   . The financial information as of or for the
interim periods ended September 30, 1998 and 1997 has not been audited and in
the respective opinions of management reflects all adjustments (consisting only
of normal recurring adjustments) necessary to a fair presentation of such data.
 
                 SELECTED HISTORICAL FINANCIAL DATA OF REGIONS
 
<TABLE>
<CAPTION>
                              NINE MONTHS
                          ENDED SEPTEMBER 30,                            YEAR ENDED DECEMBER 31,
                       -------------------------   -------------------------------------------------------------------
                          1998          1997          1997          1996          1995          1994          1993
                       -----------   -----------   -----------   -----------   -----------   -----------   -----------
                              (UNAUDITED)
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S>                    <C>           <C>           <C>           <C>           <C>           <C>           <C>
INCOME STATEMENT
  DATA:
Total interest
  income.............  $ 1,932,506   $ 1,684,430   $ 2,276,584   $ 1,954,283   $ 1,750,427   $ 1,385,512   $ 1,102,493
Total interest
  expense............      948,247       808,368     1,097,376       942,459       861,242       598,160       446,199
Net interest income..      984,259       876,062     1,179,208     1,011,824       889,185       787,352       656,294
Provision for loan
  losses.............       41,482        58,966        89,663        46,026        37,493        22,058        38,017
Net interest income
  after loan loss
  provision..........      942,777       817,096     1,089,545       965,798       851,692       765,294       618,277
Total noninterest
  income excluding
  security gains
  (losses)...........      340,835       283,374       381,400       341,792       280,834       251,837       242,326
Security gains
  (losses)...........        3,127           454           498         3,311          (697)          681         3,312
Total noninterest
  expense............      839,939       663,039       901,776       837,034       720,825       653,506       584,044
Income tax expense...      152,095       147,693       187,563       156,008       134,529       115,853        88,225
Income before
  extraordinary
  item...............      294,705       290,192       382,104       317,859       276,475       248,453       191,646
Extraordinary item...           --        15,425        15,425            --            --            --            --
Net income...........      294,705       305,617       397,529       317,859       276,475       248,453       191,646
PER SHARE DATA:
Income, before
  extraordinary
  items..............  $      1.34   $      1.38   $      1.82   $      1.64   $      1.45   $      1.36   $      1.14
Net income...........         1.34          1.46          1.89          1.64          1.45          1.36          1.14
Income, before
  extraordinary
  item -- diluted....         1.32          1.36          1.79          1.61          1.43          1.34          1.12
Net income --
  diluted............         1.32          1.43          1.86          1.61          1.43          1.34          1.12
Cash dividends.......          .69           .60           .80           .70           .66           .60           .52
Book value...........        13.38         12.46         12.75         11.82         10.74          9.58          8.89
</TABLE>
 
                                        8
<PAGE>   15
 
<TABLE>
<CAPTION>
                              NINE MONTHS
                          ENDED SEPTEMBER 30,                            YEAR ENDED DECEMBER 31,
                       -------------------------   -------------------------------------------------------------------
                          1998          1997          1997          1996          1995          1994          1993
                       -----------   -----------   -----------   -----------   -----------   -----------   -----------
                              (UNAUDITED)
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S>                    <C>           <C>           <C>           <C>           <C>           <C>           <C>
OTHER INFORMATION:
Average number of
  shares
  outstanding........      220,220       209,721       209,781       194,241       190,896       182,903       168,758
Average number of
  shares
  outstanding, --
  diluted............      223,935       213,940       213,750       197,751       193,579       185,110       171,363
STATEMENT OF
  CONDITION DATA
  (PERIOD END):
Total assets.........  $35,076,264   $30,451,527   $31,414,058   $26,993,344   $24,419,249   $22,184,508   $19,126,602
Securities...........    7,696,008     6,192,352     6,315,923     5,742,375     5,618,839     5,143,226     4,861,348
Loans, net of
  unearned income....   23,852,206    21,215,476    21,881,123    18,395,552    16,156,132    14,726,649    11,791,556
Total deposits.......   27,184,895    24,699,371    25,011,021    22,019,412    19,982,422    18,048,906    16,242,208
Long-term debt.......      424,176       456,347       445,529       570,545       762,521       766,774       683,171
Stockholders'
  equity.............    2,957,653     2,614,863     2,679,821     2,274,563     2,047,398     1,785,026     1,581,143
PERFORMANCE RATIOS:
Return on average
  assets(1)..........      1.17%(a)      1.40%(b)      1.35%(c)      1.25%(d)        1.19%         1.23%         1.19%
Return on average
  stockholders'
  equity(1)..........      13.79(a)      16.02(b)      15.38(c)      14.71(d)        14.30         14.88         14.02
Net interest
  margin(1)..........         4.28          4.42          4.41          4.36          4.27          4.33          4.57
Efficiency(2)........      62.54(a)        56.32         57.78       61.84(d)        61.61         62.89         63.84
Dividend payout......        51.49         41.10         42.33         42.68         45.52         44.12         45.61
ASSET QUALITY RATIOS:
Net charge-offs to
  average loans, net
  of unearned
  income(1)..........          .22%          .23%          .27%          .18%          .15%          .18%          .24%
Problem assets to net
  loans and other
  real estate(3).....          .67           .76           .78           .63           .69           .91          1.44
Nonperforming assets
  to net loans and
  other real
  estate(4)..........          .84           .90           .91           .83           .81           .98          1.59
Allowance for loan
  losses to loans,
  net of unearned
  income.............         1.36          1.39          1.39          1.38          1.43          1.41          1.62
Allowance for loan
  losses to
  nonperforming
  assets(4)..........       163.04        153.64        151.89        166.41        177.53        144.04        101.66
</TABLE>
 
                                        9
<PAGE>   16
 
<TABLE>
<CAPTION>
                              NINE MONTHS
                          ENDED SEPTEMBER 30,                            YEAR ENDED DECEMBER 31,
                       -------------------------   -------------------------------------------------------------------
                          1998          1997          1997          1996          1995          1994          1993
                       -----------   -----------   -----------   -----------   -----------   -----------   -----------
                              (UNAUDITED)
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S>                    <C>           <C>           <C>           <C>           <C>           <C>           <C>
LIQUIDITY AND CAPITAL
  RATIOS:
Average stockholders'
  equity to average
  assets.............         8.51%         8.74%         8.75%         8.50%         8.36%         8.23%         8.49%
Average loans to
  average deposits...        86.91         84.54         84.94         82.42         82.23         75.90         72.36
Tier 1 risk-based
  capital(5).........        10.64         10.35         10.48         10.81         11.14         10.69         11.13
Total risk-based
  capital(5).........        11.84         11.54         12.93         13.59         14.61         14.29         13.48
Tier 1 leverage(5)...         7.84          7.35          7.52          7.44          7.49          8.21         10.11
</TABLE>
 
- -------------------------
 
(1) Interim period ratios are annualized.
 
(2) Noninterest expense divided by the sum of net interest income
    (taxable-equivalent basis) and noninterest income net of gains (losses) from
    security transactions.
 
(3) Problem assets include loans on a nonaccrual basis, restructured loans, and
    foreclosed properties.
 
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
    loans, loans 90 days or more past due, and foreclosed properties.
 
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
    respectively. The minimum leverage ratio of Tier 1 capital to total assets
    is 3% to 5%. The ratios for prior periods have not been restated to reflect
    the combinations with First National Bancorp and First Commercial
    Corporation, accounted for as poolings of interests, or any other
    pooling-of-interests transactions.
 
(a) Ratios for the nine months ended September 30, 1998, excluding $76.5 million
    (after tax) for nonrecurring merger and restructuring charges are as follow:
    Return on average assets -- 1.48%, Return on average stockholders' equity --
    17.36%, and Efficiency -- 54.00%.
 
(b) Ratios for the nine months ended September 30, 1997, excluding $15.4 million
    (after tax) for extraordinary gain from divestiture of two banks by a pooled
    company are as follow: Return on average assets -- 1.33% and Return on
    average stockholders' equity -- 15.21%.
 
(c) Ratios for 1997 excluding $15.4 million (after tax) for extraordinary gain
    from divestiture of two banks by a pooled company are as follow: Return on
    average assets -- 1.29% and Return on average stockholders' equity --
    14.79%.
 
(d) Ratios for 1996 excluding $19.0 million (after-tax) charge for SAIF
    assessment and merger expenses are as follows: Return on average assets --
    1.40%, Return on average stockholders' equity -- 16.45%, and Efficiency --
    56.16%. 
                                       10
<PAGE>   17
 
         SELECTED HISTORICAL FINANCIAL DATA OF MEIGS COUNTY BANCSHARES
 
<TABLE>
<CAPTION>
                                         NINE MONTHS
                                            ENDED
                                        SEPTEMBER 30,                  YEAR ENDED DECEMBER 31,
                                      ------------------   -----------------------------------------------
                                        1998      1997      1997      1996      1995      1994      1993
                                      --------   -------   -------   -------   -------   -------   -------
                                         (UNAUDITED)
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S>                                   <C>        <C>       <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA:
Total interest income...............  $  7,046   $ 6,008   $ 8,228   $ 6,842   $ 5,929   $ 5,013   $ 4,555
Total interest expense..............     3,270     2,832     3,851     3,106     2,548     1,757     1,702
Net interest income.................     3,776     3,176     4,377     3,736     3,381     3,256     2,853
Provision for loan losses...........       333       209       304       220       213       112        96
Net interest income after loan loss
  provision.........................     3,443     2,967     4,073     3,516     3,168     3,144     2,757
Total noninterest income excluding
  security (losses) gains...........       804       690     1,109     1,007     1,090       951       788
Security (losses) gains.............        --        (2)       (3)        6         6        (4)       28
Total noninterest expense...........     2,822     2,560     3,584     3,206     3,044     2,805     2,508
Income tax expense..................       471       349       500       362       413       455       371
Net income..........................       954       746     1,095       961       807       831       694
PER SHARE DATA:
Net income..........................  $   3.70   $  2.89   $  4.24   $  3.73   $  3.14   $  2.38   $  1.98
Net income -- diluted...............      3.70      2.89      4.24      3.73      3.14      2.38      1.98
Cash dividends......................        --        --        --        --        --        --        --
Book value..........................     27.30     21.97     23.44     18.76     15.56     12.00     10.12
OTHER INFORMATION:
Average number of shares
  outstanding.......................       258       258       258       258       257       350       350
Average number of shares
  outstanding,
   -- diluted.......................       258       258       258       258       257       350       350
STATEMENT OF CONDITION DATA
  (PERIOD END):
Total assets........................  $110,706   $95,098   $97,869   $85,147   $69,417   $60,170   $57,201
Securities..........................    12,666    18,404    16,290    17,291    15,774    11,182    10,009
Federal funds sold..................     9,690     2,880     2,000     3,050     1,415       825     3,220
Loans, net of unearned income.......    80,053    66,433    70,519    56,809    46,772    43,347    38,172
Allowance for loan losses...........       918       791       864       686       569       473       481
Total deposits......................   101,340    86,803    89,596    77,640    62,680    54,303    51,892
Long-term debt......................     1,064     1,224     1,157     1,474     1,727       845     1,100
Stockholders' equity................     7,049     5,672     6,052     4,833     3,994     4,194     3,539
PERFORMANCE RATIOS:
Return on average assets(1).........      1.20%     1.08%     1.16%     1.20%     1.19%     1.37%     1.25%
Return on average stockholders'
  equity(1).........................     18.98     18.11     19.94     22.12     22.06     21.04     21.04
Net interest margin(1)..............      5.20      5.01      5.10      5.19      5.46      6.09      5.93
Efficiency(2).......................     65.05     68.70     70.87     72.23     72.85     69.34     71.52
Dividend payout.....................        --        --        --        --        --        --        --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
  net of unearned income(1).........       .37%      .17%      .20%      .20%      .26%      .29%      .05%
Problem assets to net loans and
  other real estate (3).............       .77       .85       .50       .80      1.00       .20       .30
Nonperforming assets to net loans
  and other real estate(4)..........       .79      1.52       .83      1.18      1.04       .22       .32
Allowance for loan losses to loans,
  net of unearned income............      1.15      1.19      1.18      1.22      1.22      1.09      1.26
Allowance for loan losses to
  nonperforming assets(4)...........      1.47x      .78x     1.48x     1.02x     1.17x     4.98x     3.94x
</TABLE>
 
                                       11
<PAGE>   18
 
<TABLE>
<CAPTION>
                                         NINE MONTHS
                                            ENDED
                                        SEPTEMBER 30,                  YEAR ENDED DECEMBER 31,
                                      ------------------   -----------------------------------------------
                                        1998      1997      1997      1996      1995      1994      1993
                                      --------   -------   -------   -------   -------   -------   -------
                                         (UNAUDITED)
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S>                                   <C>        <C>       <C>       <C>       <C>       <C>       <C>
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
  average assets....................      6.35%     5.93%     5.81%     5.44%     5.41%     6.52%     5.95%
Average loans to average deposits...     77.98     71.82     78.64     73.04     75.26     80.60     73.97
Tier 1 risk-based capital(5)........     10.37     10.73     10.40     11.36     11.40     12.33     11.87
Total risk-based capital(5).........     11.57     11.96     11.61     12.58     12.60     13.46     13.11
Tier 1 leverage(5)..................      7.28      7.32      7.33      7.60      7.60      8.48      8.01
</TABLE>
 
- -------------------------
 
(1) Interim period ratios are annualized.
 
(2) Noninterest expense divided by the sum of net interest income
    (taxable-equivalent basis) and noninterest income net of gains (losses) from
    security transactions.
 
(3) Problem assets include loans on a nonaccrual basis, restructured loans, and
    foreclosed properties.
 
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
    loans, loans 90 days or more past due, and foreclosed properties.
 
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
    respectively. The minimum leverage ratio of Tier 1 capital to total assets
    is 3% to 5%.
                                       12
<PAGE>   19
 
                              THE SPECIAL MEETING
 
GENERAL
 
This Proxy Statement-Prospectus is being furnished to the stockholders of Meigs
County Bancshares, Inc. in connection with the solicitation by the Meigs County
Bancshares Board of Directors of proxies for use at a special meeting of
stockholders (the "Special Meeting"), at which Meigs County Bancshares
stockholders will be asked to vote upon a proposal to approve the Agreement and
Plan of Merger dated as of June 22, 1998, by and between Meigs County Bancshares
and Regions Financial Corporation.
 
The Special Meeting will be held at   :00 p.m., local time, on           , 1998,
at the main offices of Meigs County Bancshares, located at 116 N. Main Street,
Decatur, Tennessee, 37322.
 
Meigs County Bancshares stockholders are requested promptly to sign, date, and
return the accompanying proxy card to Meigs County Bancshares in the enclosed
postage-paid, addressed envelope. A stockholder's failure to return a properly
executed proxy card or to vote at the Special Meeting will have the same effect
as a vote against the Merger Agreement.
 
Any Meigs County Bancshares stockholder who has delivered a proxy may revoke it
at any time before it is voted by giving notice of revocation in writing or
submitting to Meigs County Bancshares a signed proxy card bearing a later date,
provided that such notice or proxy card is actually received by Meigs County
Bancshares before the vote of stockholders or in open meeting prior to the
taking of the stockholder vote at the Special Meeting. Any notice of revocation
should be sent to Meigs County Bancshares, Inc., 116 N. Main Street, Decatur,
Tennessee, 37322, Attention: Patsy Hayes, Corporate Secretary. A proxy will not
be revoked by death of the stockholder executing the proxy, or if the
stockholder becomes incompetent after submitting a signed proxy, unless, before
the vote, notice of such death or incapacity is filed with the Secretary. The
shares of Meigs County Bancshares common stock represented by properly executed
proxies received at or prior to the Special Meeting and not subsequently revoked
will be voted as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES
REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE MERGER
AGREEMENT AND IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT
PROPERLY MAY COME BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY
INSTRUCTIONS ARE GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO
ADJOURN THE SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER
TO OBTAIN SUFFICIENT VOTES TO APPROVE THE MERGER AGREEMENT. As of the date of
this Proxy Statement-Prospectus, Meigs County Bancshares is unaware of any other
matter to be presented at the Special Meeting.
 
The provisions of the Meigs County Bancshares, Inc. Employee Stock Ownership
Plan (the "ESOP") specify that participating members of the ESOP will receive
copies of materials disseminated by Meigs County Bancshares or any other person
with respect to matters to be voted upon at the Special Meeting and may direct
the voting of the Meigs County Bancshares common stock allocated to their
accounts. After receipt of instructions from the participating members on any
matter submitted to the stockholders of Meigs
 
                                       13
<PAGE>   20
 
County Bancshares for a vote, the ESOP Trustee will vote allocated shares as to
which instructions are given in accordance with the instructions.
 
Meigs County Bancshares will solicit proxies by mail, and possibly by telephone
or telegram or in person by the directors, officers, and employees of Meigs
County Bancshares, who will receive no additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and will be reimbursed for their
reasonable out-of-pocket expenses.
 
Meigs County Bancshares stockholders should not forward any stock certificates
with their proxy cards.
 
RECORD DATE; VOTE REQUIRED
 
Meigs County Bancshares' Board of Directors has established the close of
business on           , 1998, as the record date for determining the Meigs
County Bancshares stockholders entitled to notice of and to vote at the Special
Meeting. Only Meigs County Bancshares stockholders of record as of the record
date will be entitled to vote at the Special Meeting. As of the record date,
there were approximately 80 holders, including approximately 45 participants in
the ESOP with pass-through voting rights, of      shares of the no par value
common stock of Meigs County Bancshares outstanding and entitled to vote at the
Special Meeting. Each share is entitled to one vote. For information as to
persons known by Meigs County Bancshares to beneficially own more than 5.0% of
the outstanding shares of Meigs County Bancshares common stock as of the record
date, see "Information About Meigs County Bancshares -- Voting Securities and
Principal Stockholders."
 
The presence, in person or by proxy, of a majority of the outstanding shares of
Meigs County Bancshares common stock is necessary to constitute a quorum of the
stockholders. A quorum must be present before a vote on the Merger Agreement can
be taken at the Special Meeting. For these purposes, shares of Meigs County
Bancshares common stock that are present, or represented by proxy, at the
Special Meeting will be counted for quorum purposes regardless of whether the
holder of the shares or proxy fails to vote on the Merger Agreement for any
reason, including broker nonvotes. Generally, a broker who holds shares of Meigs
County Bancshares common stock in "street" name on behalf of a beneficial owner
lacks authority to vote such shares in the absence of specific voting
instructions from the beneficial owner.
 
Once a quorum is established, approval of the Merger Agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of Meigs
County Bancshares common stock entitled to vote at the Special Meeting. A
failure to vote, in person or by proxy, for any reason, including failure to
return a properly executed proxy, an abstention, or a broker nonvote, has the
same effect as a vote against the Merger Agreement.
 
The directors and executive officers of Meigs County Bancshares and their
affiliates beneficially owned, as of the record date,           shares (or
approximately   % of the outstanding shares) of Meigs County Bancshares common
stock. Mr. F. Stephen Miller,
 
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<PAGE>   21
 
President and Director of Meigs County Bancshares, beneficially owned, as of the
record date, 210,878 shares (or approximately   % of the outstanding shares) of
Meigs County Bancshares. Mr. Miller and the other directors of Meigs County
Bancshares have agreed to vote those shares of Meigs County Bancshares common
stock over which they have voting control (other than in a fiduciary capacity)
in favor of the Merger. The directors and executive officers of Regions and
their affiliates beneficially owned, as of the record date, no shares of Meigs
County Bancshares common stock. As of that date, no subsidiary of either Meigs
County Bancshares or Regions held any shares of Meigs County Bancshares common
stock in a fiduciary capacity for others.
 
                                       15
<PAGE>   22
 
                                   THE MERGER
 
The following material describes certain aspects of the merger of Meigs County
Bancshares with and into Regions. This description does not purport to be
complete and is qualified in its entirety by reference to the Appendices hereto,
including the Merger Agreement, which is attached as Appendix A to this Proxy
Statement-Prospectus and incorporated herein by reference. All stockholders are
urged to read the Appendices in their entirety.
 
GENERAL
 
The Merger Agreement provides generally for the acquisition of Meigs County
Bancshares by Regions pursuant to the Merger of Meigs County Bancshares with and
into Regions, with Regions as the surviving corporation resulting from the
Merger.
 
On the date and at the time that the Merger becomes effective, each share of
Meigs County Bancshares common stock (excluding shares held by Meigs County
Bancshares, Regions, or their respective subsidiaries, in each case other than
shares held in a fiduciary capacity or as a result of debts previously
contracted, and excluding all shares held by stockholders who perfect their
dissenters' rights) issued and outstanding at the effective time of the Merger
will be converted into 1.9 shares of the $.625 par value common stock of
Regions, subject to possible adjustment as described below under the caption
"-- Possible Adjustment of Exchange Ratio." Each share of Regions common stock
outstanding immediately prior to the effective time of the Merger will remain
outstanding and unchanged as a result of the Merger.
 
No fractional shares of Regions common stock will be issued in connection with
the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment equal to the fractional part of a share which a Meigs County Bancshares
stockholder would otherwise receive multiplied by the closing price of Regions
common stock on the Nasdaq National Market (as reported by The Wall Street
Journal, or, if not reported thereby, by another authoritative source selected
by Regions), on the last trading day prior to the effective time of the Merger.
 
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
 
Under certain circumstances described below, the exchange ratio of 1.9 shares of
Regions common stock for each share of Meigs County Bancshares common stock (the
"Exchange Ratio") could be adjusted pursuant to certain provisions of the Merger
Agreement. UNDER NO CIRCUMSTANCES WOULD THE EXCHANGE RATIO BE LESS THAN 1.9
SHARES OF REGIONS COMMON STOCK FOR EACH SHARE OF MEIGS COUNTY BANCSHARES COMMON
STOCK. An adjustment could occur only if the Meigs County Bancshares Board
elects to terminate the Merger Agreement pursuant to the provisions of the
Merger Agreement described below, and if Regions then elects to avoid
termination of the Merger Agreement by increasing the Exchange Ratio.
 
For purposes of the description of these provisions and their operation, the
following definitions apply.
 
The "Average Closing Price" is the average of the daily last sale prices of
Regions common stock as reported on the Nasdaq National Market (as reported by
The Wall Street Journal, or, if not reported thereby, another authoritative
source as chosen by
 
                                       16
<PAGE>   23
 
Regions) for 10 consecutive full trading days in which such shares are traded on
the Nasdaq National Market ending at the close of trading on the Determination
Date.
 
The "Determination Date" is the date the Merger is approved by the stockholders
of Meigs County Bancshares.
 
The "Regions Ratio" is the number obtained by dividing the Average Closing Price
by $41.69.
 
The "Index Price" is the weighted average of the last sale prices of the common
stock of the bank holding companies defined as the "Index Group" as of a given
date.
 
The "Index Ratio" is the number obtained by dividing the Index Price on the
Determination Date by the Index Price as of July 1, 1998 (the fourth trading day
after public announcement of the Merger), less 15%.
 
If both:
 
     (i) the Average Closing Price is less than $33.35; and
 
     (ii) the Regions Ratio is less than the Index Ratio,
 
then Meigs County Bancshares may elect to terminate the Merger Agreement unless
Regions increases the Exchange Ratio such that the number of shares of Regions
common stock issued in exchange for each share of Meigs County Bancshares common
stock has a value (based on the Average Closing Price) equal to the lesser of
(i) $63.37 or (ii) the value (based on the Average Closing Price) of the number
of shares of Regions common stock that would have been exchanged for each share
of Meigs County Bancshares common stock if the relative performance of Regions
common stock as determined above was 15% lower than the relative performance of
the Index Group. If the Merger is approved by the Meigs County Bancshares
stockholders, the Meigs County Bancshares Board may elect not to terminate the
Merger Agreement and to consummate the Merger without resoliciting the Meigs
County Bancshares stockholders even if Meigs County Bancshares' Stock Price
Termination Right is triggered and, as a result of the Exchange Ratio, the value
of shares of Regions common stock (valued at the Average Closing Price) issued
in exchange for each share of Meigs County Bancshares common stock would be less
than the lesser of (i) $63.37 or (ii) the value (based on the Average Closing
Price) of the number of shares of Regions common stock that would have been
exchanged for each share of Meigs County Bancshares common stock if the relative
performance of Regions common stock as determined above was 15% lower than the
relative performance of the Index Group.
 
These conditions reflect the parties' agreement that Meigs County Bancshares'
stockholders will assume the risk of declines in the value of Regions common
stock to $33.35. Any adjustment of the Exchange Ratio reflecting a decline in
the price of Regions common stock to below $33.35 would be dependent on whether
the Average Closing Price of Regions common stock lags behind a market basket of
comparable bank holding company common stocks (the Index Group referenced above)
by more than 15%.
 
In making its determination of whether to terminate the Merger Agreement, the
Meigs County Bancshares Board will take into account, consistent with its
fiduciary duties, all relevant facts and circumstances that exist at such time,
including, without limitation, information concerning the business, financial
condition, results of operations, and prospects of Regions (including the recent
performance of Regions common stock, the
 
                                       17
<PAGE>   24
 
historical financial data of Regions, customary statistical measurements of
Regions' financial performance, and the future prospects for Regions common
stock following the Merger), and the advice of its financial advisors and legal
counsel. If the Meigs County Bancshares Board elects to terminate the Merger
Agreement, Regions would then determine whether to proceed with the Merger at
the higher Exchange Ratio. In making this determination, the principal factors
Regions will consider include the projected effect of the Merger on Regions' pro
forma earnings per share and whether Regions' assessment of Meigs County
Bancshares' earning potential as part of Regions justifies the issuance of an
increased number of Regions' shares. If Regions declines to adjust the Exchange
Ratio, Meigs County Bancshares may elect to proceed without the adjustment,
provided it does so within 12 days after the Determination Date. REGIONS IS
UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO.
 
The operation of the adjustment mechanism can be illustrated by three scenarios.
(For purposes of the scenarios, it has been assumed that the initial Exchange
Ratio is 1.9, the Starting Price of Regions Common stock is $41.69, and the
Index Price, as of the Starting Date, is $100.)
 
(1) The first scenario occurs if the Average Closing Price is $33.35 or greater.
Under this scenario, regardless of any comparison between the Regions Ratio and
the Index Ratio, there would be no possible adjustment to the Exchange Ratio,
even though the value of the consideration to be received by Meigs County
Bancshares stockholders could have fallen from a pro forma $79.21 per share, as
of the Starting Date, to as little as a pro forma $63.37 per share, as of the
Determination Date.
 
(2) The second scenario occurs if the Average Closing Price is less than $33.35,
but does not represent a decline from the Starting Price of more than 15% than
the decline of the common stock prices of the Index Group. Under this scenario,
there also would be no possible adjustment to the Exchange Ratio, even though
the value of the consideration to be received by Meigs County Bancshares
stockholders would have fallen from a pro forma $79.21 per share, as of the
Starting Date, to an amount based on the then lower Average Closing Price of
Regions common stock, as of the Determination Date, of less than a pro forma
$63.37 per share.
 
(3) The third scenario occurs if the Average Closing Price declines below $33.35
and the Regions Ratio is below the Index Ratio. Under this scenario, the
adjustment in the Exchange Ratio is designed to ensure that the Meigs County
Bancshares stockholders receive shares of Regions common stock having a value
(based upon the Average Closing Price) that corresponds to at least $63.37 or a
15% decline from the stock price performance reflected by the Index Group,
whichever is less.
 
For example, if the Average Closing Price were $30.00, and the ending Index
Price, as of the Determination Date, were $90, the Regions Ratio (.7196) would
be below the Index Ratio (.75, or .90 minus .15), and Meigs County Bancshares
could terminate the Merger Agreement unless Regions elected within five days to
increase the Exchange Ratio to equal 1.9802, which represents the lesser of (a)
2.1122 [the result of dividing $63.365 (the product of $33.35 and the 1.9
Exchange Ratio) by the Average Closing Price ($30.00), rounded to the nearest
ten-thousandth] and (b) 1.9802 [the result of dividing the Index Ratio (.75)
times 1.9 by the Regions Ratio (.7196), rounded to the nearest ten-thousandth].
Based upon the assumed $30.00 Average Closing Price, the new Exchange Ratio
would represent a value to the Meigs County Bancshares stockholders of $59.40
per Meigs County Bancshares share.
 
                                       18
<PAGE>   25
 
If the Average Closing Price were $30.00, and the ending Index Price, as of the
Determination Date, were $100, the Regions Ratio (.7196) would be below the
Index Ratio (.85, or 1.00 minus .15), and Meigs County Bancshares could
terminate the Merger Agreement unless Regions elected within five days to
increase the Exchange Ratio to equal 2.1122, which represents the lesser of (a)
2.1122 [the result of dividing $63.365 (the product of $33.35 and the 1.9
Exchange Ratio) by the Average Closing Price ($30.00), rounded to the nearest
ten-thousandth] and (b) 2.2442 [the result of dividing the Index Ratio (.85)
times 1.9 by the Regions Ratio (.7196), rounded to the nearest ten-thousandth].
Based upon the assumed $30.00 Average Closing Price, the new Exchange Ratio
would represent a value to the Meigs County Bancshares stockholders of $63.37
per Meigs County Bancshares share.
 
The actual market value of a share of Regions common stock at the Effective Date
and at the time certificates for those shares are delivered following surrender
and exchange of certificates for shares of Meigs County Bancshares common stock
may be more or less than the Average Closing Price. Meigs County Bancshares
stockholders are urged to obtain current market quotations for Regions common
stock. See "Comparative Market Prices and Dividends."
 
TREATMENT OF MEIGS COUNTY BANCSHARES OPTIONS
 
The Merger Agreement provides that all rights with respect to Meigs County
Bancshares common stock pursuant to stock options or stock appreciation rights
granted by Meigs County Bancshares under its stock option plans which are
outstanding at the effective time of the Merger, whether or not then
exercisable, will be converted into and will become rights with respect to
Regions common stock, and Regions will assume each of such options in accordance
with the terms of the plan under which it was issued and the agreement by which
it is evidenced. After the effective time of the Merger, those options will
become options to purchase Regions common stock, with the exercise price and
number of shares of Regions common stock purchasable thereunder adjusted to
reflect the Exchange Ratio, as it may be adjusted. Those options that were
issued as incentive stock options will be adjusted in accordance with Section
424 of the Internal Revenue Code in order to avoid certain tax consequences for
the option holder.
 
The executive officers or directors of Meigs County Bancshares held in the
aggregate exercisable options to purchase 45,580 shares of Meigs County
Bancshares common stock, as of the date of this Proxy Statement-Prospectus.
 
BACKGROUND OF THE MERGER
 
Nearly a decade ago the Board of Directors and management of Meigs County
Bancshares developed a strategy to expand the market areas served by the bank.
This decision led to expansion into Hamilton and McMinn counties. These
additions, together with an improved economy in Meigs County, resulted in
favorable financial performances when compared to Meigs County Bancshares'
peers.
 
Recently, the appetite for growth through acquisition by several bank holding
companies spawned interest in Meigs County Bancshares. The market area and Meigs
County Bancshares' overall financial performance created an attractive merger
candidate. Within a two to three month period beginning in the winter of 1998,
management of Meigs County Bancshares had received several inquiries concerning
possible business combinations. The Board of Directors was advised of all
contacts. Discussions were held with two regional
 
                                       19
<PAGE>   26
 
bank holding companies, other than Regions, one based in Alabama, the other in
Georgia. Meigs County Bancshares received verbal merger proposals, both at
prices lower than offered by Regions, and neither of the proposals was ever
formalized. At the same time Meigs County Bancshares management was in
negotiations with Regions. Meigs County Bancshares' Board of Directors believed
Regions to be the more attractive option for our stockholders for several
reasons. See "Meigs County Bancshares' Reasons for the Merger."
 
Contact with Regions began when Joe M. Hinds, Jr., President/Regions North, had
a telephone conversation with F. Stephen Miller, President and Chief Executive
Officer of Meigs County Bancshares, during the first week in April 1998. The
purpose of the telephone call was to introduce himself and establish a time for
Mr. Hinds to visit with Mr. Miller at Meigs County Bancshares' Decatur office.
That visit occurred April 14, 1998.
 
During the April 14 meeting Mr. Hinds informed Mr. Miller that Lee J.
Styslinger, a Regions director, had given him his name. Mr. Styslinger and Mr.
Miller had met previously through other business. Following discussion of
matters such as management philosophies and future business strategies, both
Miller and Hinds shared the opinion that further consideration should be given
to a possible merger.
 
Mr. Miller visited Regions' corporate headquarters in Birmingham on May 4, 1998.
He met with several of Regions' key executives, including Mr. Hinds, Richard D.
Horsley, Vice Chairman and Executive Financial Officer, William E. Jordan,
President/Regions Central, William E. Askew, Executive Vice President, E.C.
Stone, Executive Vice President, and John S. Welch, Senior Accounting Officer.
The following day Mr. Hinds called to make an offer to exchange 1.8 shares of
Regions stock for each share of Meigs County Bancshares stock.
 
On May 21, 1998, Mr. Miller returned to Birmingham to meet with Stanley Mackin,
Chairman, and Carl E. Jones, Jr., President and Chief Executive Officer of
Regions. He also had further discussions with Mr. Horsley. On Friday, May 22,
1998, Mr. Horsley and Mr. Jones called Mr. Miller and increased the exchange
ratio to 1.85. Following much discussion, Mr. Miller agreed to present an offer
of a 1.90 share exchange to Meigs County Bancshares' Board of Directors, an
exchange ratio which was agreed to by Mr. Horsley and Mr. Jones. On May 22,
1998, the Meigs County Bancshares Board of Directors approved the proposed
transaction and authorized management to take all necessary steps to enter into
a definitive merger agreement. The agreement was signed on June 22, 1998.
 
MEIGS COUNTY BANCSHARES' REASONS FOR THE MERGER
 
In approving the Merger, the directors of Meigs County Bancshares considered a
number of factors. Without assigning any relative or specific weights to the
factors, the Meigs County Bancshares Board of Directors considered the following
material factors:
 
     - the information presented to the directors by the management of Meigs
       County Bancshares concerning the business, operations, earnings, asset
       quality, and financial condition of Meigs County Bancshares and Regions;
 
     - the financial terms of the Merger, including the relationship of the
       merger price to the book value and earnings per share of Meigs County
       Bancshares common stock and the partial protection against a decline in
       the market value of Regions common stock;
 
                                       20
<PAGE>   27
 
     - the nonfinancial terms of the Merger, including the treatment of the
       Merger as a tax-free exchange of Meigs County Bancshares common stock for
       Regions common stock for federal and state income tax purposes;
 
     - the likelihood of the Merger being approved by applicable regulatory
       authorities without undue conditions or delay;
 
     - the opinion rendered by Meigs County Bancshares' financial advisor to the
       effect that, from a financial point of view, the exchange of Meigs County
       Bancshares common stock for Regions common stock on the terms and
       conditions set forth in the Merger Agreement is fair to the holders of
       Meigs County Bancshares common stock;
 
     - stockholders of Meigs County Bancshares will receive shares of Regions
       common stock, which is publicly traded on the Nasdaq National Market;
       there is no current public market for Meigs County Bancshares common
       stock;
 
     - affiliation with a larger holding company would provide the opportunity
       to realize economies of scale and increase efficiencies of operations to
       the benefit of stockholders and customers. Affiliation with Regions will
       also enhance the development of new products and services, the
       development and provision of which are becoming increasingly difficult to
       address by smaller banks;
 
     - potential benefits and opportunities for employees of Meigs County
       Bancshares, as a result of both employment in a larger enterprise and
       Regions' benefit plans and policies; and
 
     - growth of Meigs County Bancshares without affiliation with a larger
       holding company would likely be limited because of Meigs County
       Bancshares' need for increasing capital resources to support that growth.
       Without such a combination, the Meigs County Bancshares Board of
       Directors believed it would be necessary to obtain additional capital
       resources beyond those which could be obtained from operations, in order
       to achieve a size which the Meigs County Bancshares Board of Directors
       believed would be necessary to maintain Meigs County Bancshares as a
       viable independent entity.
 
The terms of the Merger were the result of arms-length negotiations between
representatives of Meigs County Bancshares and representatives of Regions. Based
upon the consideration of the foregoing factors, the Board of Directors of Meigs
County Bancshares unanimously approved the Merger as being in the best interests
of Meigs County Bancshares and its stockholders. Each member of the Board of
Directors of Meigs County Bancshares has agreed to vote those shares of Meigs
County Bancshares common stock over which such member has voting authority
(other than in a fiduciary capacity) in favor of the Merger.
 
Meigs County Bancshares' Board of Directors unanimously recommends that Meigs
County Bancshares stockholders vote FOR approval of the Merger and the Merger
Agreement.
 
                                       21
<PAGE>   28
 
REGIONS' REASONS FOR THE MERGER
 
In approving the Merger Agreement and the Merger, the Regions Board considered a
number of factors concerning the benefits of the Merger, including the
following:
 
     - Information Concerning Meigs County Bancshares: The Regions Board
       considered information concerning the business, operations, earnings,
       asset quality, and financial condition of Meigs County Bancshares, and
       aspects of the Meigs County Bancshares franchise, including the market
       position of Meigs County Bancshares in each of the markets in which it
       operates and the compatibility of the community bank orientation of the
       operations of Meigs County Bancshares to that of Regions. The Regions
       Board concluded that Meigs County Bancshares is a sound, well managed
       financial institution which is well positioned in its market areas and
       which presents an attractive opportunity for Regions to add to its
       franchise as an adjunct to its Southeastern Tennessee and North Georgia
       markets.
 
     - Financial Terms of the Merger:  The Regions Board considered various
       financial aspects of the Merger as reported by Regions' management
       including (1) the anticipated effect of the Merger on Regions' per share
       earnings (with the Merger anticipated to have no significant effect on
       Regions' earnings per share), (2) the anticipated effect of the Merger on
       Regions' book value per share (with the Merger anticipated not to dilute
       significantly Regions' book value per share), (3) a comparison of Meigs
       County Bancshares to selected peer banks and a comparison of pricing
       aspects of the Merger to pricing characteristics of other merger
       transactions involving financial institutions, and (4) the anticipated
       accounting treatment of the Merger as a pooling of interests.
 
     - Nonfinancial Terms of the Merger.  The Regions Board considered various
       nonfinancial aspects of the Merger, including the treatment of the Merger
       as a tax-free exchange of Meigs County Bancshares common stock for
       Regions common stock for federal income tax purposes and the likelihood
       of the Merger being approved by applicable regulatory authorities without
       undue conditions or delay.
 
The foregoing discussion of the information and factors considered by the
Regions Board is not intended to be exhaustive but includes all material factors
considered by the Regions Board. In reaching its determination to approve the
Merger and the Merger Agreement, the Regions Board did not assign any relative
or specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors. After deliberating with respect to
the Merger and the other transactions contemplated by the Merger Agreement, and
considering, among other things, the matters discussed above, the Regions Board
determined that the Merger is in the best interests of Regions and its
stockholders and unanimously approved the Merger Agreement.
 
OPINION OF MEIGS COUNTY BANCSHARES' FINANCIAL ADVISOR
 
Meigs County Bancshares has retained Stevens & Company ("Stevens") to act as
financial advisor in connection with the Merger. As part of this engagement,
Stevens agreed to render to Meigs County Bancshares' Board an opinion with
respect to the fairness to the stockholders of the consideration to be received
in the Merger from a financial point of view. As compensation for Stevens'
services on the engagement, Meigs County Bancshares has agreed to pay Stevens a
fee of $25,000. On August 31, 1998, Stevens delivered to Meigs County Bancshares
a letter confirming the consideration to be
 
                                       22
<PAGE>   29
 
received as fair from a financial point of view. The full text, appearing in the
Appendix of the Proxy Statement-Prospectus should be read carefully and in its
entirety. Stevens' opinion does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the proposed transaction.
The fairness opinion was based upon information available to Stevens as of the
date the opinion was rendered.
 
In rendering its opinion, Stevens has, among other things: (1) reviewed certain
publicly available information and other data with respect to Regions, including
financial statements for the past five years, Meigs County Bancshares' audited
financial statements for the past five years, and certain other relevant
financial and operating records of Meigs County Bancshares and Regions; (2)
reviewed the Merger Agreement; (3) reviewed certain historical market prices and
trading volumes of Regions common stock as reported by NASDAQ and historical and
current market prices for Meigs County Bancshares' Common Stock; (4) considered
the financial terms, to the extent publicly available, of selected recent
acquisitions of financial institutions which Stevens deemed to be comparable, in
whole or in part, to the Merger; (5) analyzed the business prospects of Meigs
County Bancshares and Regions, and the economies of their respective markets;
(6) reviewed with management of Meigs County Bancshares alternative merger
prospects; (7) inquired about and discussed the Merger Agreement and other
matters related thereto with Meigs County Bancshares' counsel; and (8) performed
such other analyses and examinations as Stevens deemed appropriate.
 
In connection with this review, Stevens assumed and relied on the accuracy and
completeness of the financial and other information provided to it by Meigs
County Bancshares and Regions.
 
Stevens is a financial consulting and investment banking firm that specializes
in community bank transactions. Meigs County Bancshares' Board of Directors
selected Stevens to act as its financial advisor in connection with the specific
purpose of completing a fairness opinion on the basis of the firm's expertise in
mergers and acquisitions of community banks, prior experience with Regions, and
knowledge of the history of Meigs County Bancshares.
 
This summary reflects the material analysis performed by Stevens but does not
purport to be a complete description of the analysis performed by Stevens. The
evaluation of the fairness, from a financial point of view, of the consideration
to be received in the Merger was to some extent a subjective one based on the
experience and judgment of Stevens and not merely the result of mathematical
analysis of financial data. The preparation of a fairness opinion involves
determination as to the most appropriate factors to be considered as well as
relevant methods of financial analysis and the application of those factors and
methods to the particular circumstances, and, therefore, such an opinion is not
readily susceptible to summary description. Stevens believes that its analysis
must be considered as a whole and that selecting only portions of the analysis
and factors considered by Stevens could create an incomplete view of the process
underlying Stevens' opinion. In addition, Stevens may have given various factors
more or less weight than others and may have deemed various assumptions more or
less probable than other assumptions. In its analysis, Stevens incorporated
numerous assumptions with respect to business, market, monetary and economic
conditions, industry performance and other matters, many of which are beyond
Meigs County Bancshares and Regions' control. Any estimates contained in
Stevens' analysis are not necessarily indicative of future results or values,
which may be significantly more or less favorable than such estimates. Such
estimates were prepared solely as part of Stevens' analysis of the fairness to
Meigs County Bancshares' stockholders of the consideration to be paid in the
Merger.
 
                                       23
<PAGE>   30
 
The following is a brief summary of analysis performed by Stevens in connection
with its opinion dated August 31, 1998.
 
Summary of Proposal.  Stevens reviewed the terms of the proposed transaction as
reflected in the Merger Agreement, including the terms of the Exchange Ratio.
Based on a 50 day average trading price of Regions at $40.25, the Exchange Ratio
of 1.90 shares of Meigs County Bancshares' Common Stock, would have a value of
$76.48. Stevens noted that holders of stock options, stock appreciation rights,
or stock awards granted by Meigs County Bancshares would receive the right to
purchase equivalent Regions common stock with both the number of shares and
price per share of the substituted rights in Regions being a function of the 1.9
exchange ratio and the number of shares and price per share of the original
Meigs County Bancshares rights. In addition, certain shares of Meigs County
Bancshares are held by Meigs County Bancshares' Employee Stock Ownership Plan
("ESOP") with the plan having full voting rights to those shares. Stevens also
noted that the Board of Directors of Meigs County Bancshares could terminate the
transaction under Section 10 of the Merger Agreement, as explained under the
caption "--Possible Adjustment of Exchange Ratio."
 
Possible Value of Meigs County Bancshares in a Sale of Control.  In determining
the potential value per share of Meigs County Bancshares' Common Stock if Meigs
County Bancshares were sold to an alternative purchaser, Stevens reviewed the
historical results of Meigs County Bancshares and examined certain projections.
Stevens computed the value of Meigs County Bancshares based on a multiple of 16
to 19 times 1997 earnings and a multiple of 2.25 to 2.50 times Meigs County
Bancshares' stockholders' equity. Based on this analysis, Stevens calculated an
expected value to Meigs County Bancshares' stockholders in a sale of control
transaction of $55.84 on book, and $77.18 on earnings, for an average of $66.51.
 
Net Present Value.  The investment or earnings value of any bank's stock is an
estimate of the present value of the future benefits, usually earnings, cash
flow, or dividends which will accrue to the stock. An earnings value was
calculated using an annual future earnings stream over a period of time of not
less than ten years and an appropriate capitalization rate (the net present
value discount rate). The computations were based on an analysis of the banking
industry, the economic and competitive situations in Meigs County Bancshares'
market area, and the current financial condition and historical levels of growth
and earnings. Using a net present value discount rate of 10%, the net present
value would be $44.97 per share.
 
Dividend Capacity.  Stevens' analysis also considered the dividend stream that
would be afforded following the Merger. Given the rapid growth of Meigs County
Bancshares and the emphasis on expanding into new markets, Stevens concluded
that there would be limited dividend income for Meigs County Bancshares as an
independent. Stevens noted that based on the stated exchange ratio, and current
dividend of Regions, $0.80 per share would be paid to the stockholders of Meigs
County Bancshares, or a total of $392,432 per year.
 
Analysis of Selected Other Bank Mergers.  Stevens reviewed in excess of fifty
mergers involving transactions in the southeastern portion of the United States.
Thirteen transactions were highlighted as being similar to that of Meigs County
Bancshares. Stevens noted the prices paid in these mergers as a multiple of
earnings and book value. Stevens also reviewed other data in connection with
each of these mergers, including the amount of total assets, return on equity,
and return on assets of the selling institutions. Stevens then
 
                                       24
<PAGE>   31
 
compared this data to that of Meigs County Bancshares, and to the value to be
received by the stockholders of Meigs County Bancshares following the Merger.
 
This comparison yielded a range of transaction values as multiples of latest
twelve months earnings per share from a low of 16.88 to a high of 27.10, with
the average being 21.56. Price to book, in this analysis, ranged from 1.78 to
3.93 with the average being 2.78. Based on a 50 day average trading price of
Regions at $40.25, and the Exchange Ratio, Meigs County Bancshares would be
valued at 3.26 times book, and 18.04 times earnings.
 
There was no one company or transaction used in the above analysis as a
comparison that is identical to Meigs County Bancshares, Regions, or the Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the companies and other factors that could affect
the public trading of the companies to which they are being compared.
Mathematical analysis (such as determining an average or median) is not, in
itself, a meaningful method of using comparable comparative data. Analysis must
also be given to the consolidation issues within the financial services
industry.
 
Stevens also analyzed the value that Regions would add in terms of liquidity,
capital required to continue the growth patterns of Meigs County Bancshares, and
the ability of senior management of Meigs County Bancshares to compliment that
of Regions as they further expand in the state of Tennessee. With respect to
liquidity, Regions is traded on the Nasdaq National Market, with an average
daily volume of 1,490,000 shares. Stevens also concluded that Meigs County
Bancshares and present management are key factors in Regions' ability to grow
their banking franchise, especially in East and Middle Tennessee.
 
The foregoing description of Stevens' opinion is qualified in its entirety by
reference to the full text of such opinion, which is attached hereto in Appendix
B.
 
EFFECTIVE TIME OF THE MERGER
 
After all conditions to the Merger are satisfied or waived, the Merger will
become effective when Regions files certain certificates with the Secretaries of
State of Delaware and Tennessee. The effective time of the Merger will occur on
the date and at the time that such certificates are filed and declared
effective. Unless otherwise agreed upon by Regions and Meigs County Bancshares,
and subject to the satisfaction or waiver of the conditions to the obligations
of the parties to effect the Merger, the parties will use their reasonable
efforts to cause the effective time of the Merger to occur not later than the
15th business day after the last of the following events occur: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval required for the Merger and (ii)
the date on which the Merger Agreement is approved by the requisite vote of
Meigs County Bancshares stockholders; or such later date within 30 days thereof
as may be specified by Regions.
 
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Regions and Meigs County Bancshares anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated during the fourth quarter of 1998. However, delays in the
consummation of the Merger could occur.
 
The Board of Directors of either Regions or Meigs County Bancshares generally
may terminate the Merger Agreement if the Merger is not consummated by March 31,
1999, unless the failure to consummate by that date is the result of a breach of
the Merger
 
                                       25
<PAGE>   32
 
Agreement by the party seeking termination. See "-- Conditions to Consummation
of the Merger" and "-- Waiver, Amendment, and Termination of the Merger
Agreement."
 
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
 
Promptly after the effective time of the Merger, Regions will cause an exchange
agent selected by Regions to mail to the former stockholders of Meigs County
Bancshares a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of Meigs County
Bancshares common stock for certificates representing shares of Regions common
stock.
 
MEIGS COUNTY BANCSHARES STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to
the Exchange Agent of certificates for Meigs County Bancshares common stock,
together with a properly completed letter of transmittal, there will be issued
and mailed to each holder of Meigs County Bancshares common stock surrendering
such items a certificate or certificates representing the number of shares of
Regions common stock to which such holder is entitled, if any, and a check for
the amount to be paid in lieu of any fractional share interest, without
interest. After the effective time of the Merger, to the extent permitted by
law, Meigs County Bancshares stockholders of record as of the effective time
will be entitled to vote at any meeting of holders of Regions common stock the
number of whole shares of Regions common stock into which their Meigs County
Bancshares common stock has been converted, regardless of whether such
stockholders have surrendered their Meigs County Bancshares common stock
certificates. No dividend or other distribution payable after the effective time
of the Merger with respect to Regions common stock, however, will be paid to the
holder of any unsurrendered Meigs County Bancshares certificate until the holder
duly surrenders such certificate. Upon such surrender, all undelivered dividends
and other distributions and, if applicable, a check for the amount to be paid in
lieu of any fractional share interest will be delivered to such stockholder, in
each case without interest.
 
After the effective time of the Merger, a Meigs County Bancshares stockholder
will be unable to transfer shares of Meigs County Bancshares common stock. If
certificates representing shares of Meigs County Bancshares common stock are
presented for transfer after the effective time of the Merger, they will be
canceled and exchanged for the shares of Regions common stock and a check for
the amount due in lieu of fractional shares, if any, deliverable in respect
thereof.
 
CONDITIONS TO CONSUMMATION OF THE MERGER
 
Consummation of the Merger is subject to a number of conditions, including, but
not limited to:
 
     - approval from the Board of Governors of the Federal Reserve System and
       the expiration of all applicable waiting periods associated with such
       approval, without any conditions or restrictions (excluding requirements
       relating to the raising of additional capital or the disposition of
       assets or deposits) that would, in the reasonable judgment of Regions'
       Board of Directors, so materially adversely impact the economic benefits
       of the transactions contemplated by the Merger Agreement as to render
       inadvisable the consummation of the Merger;
 
     - the approval by the holders of the requisite number of shares of Meigs
       County Bancshares common stock;
 
                                       26
<PAGE>   33
 
     - the absence of any action by any court or governmental authority of
       competent jurisdiction restricting, prohibiting, or making illegal the
       consummation of the Merger and the other transactions contemplated by the
       Merger Agreement;
 
     - the receipt of a satisfactory opinion of counsel that the Merger
       qualifies for federal income tax treatment as a reorganization under
       Section 368(a) of the Code, with the effects described under "-- Federal
       Income Tax Consequences of the Merger," including, among others, that the
       exchange of Meigs County Bancshares common stock for Regions common stock
       will not give rise to recognition of gain or loss to Meigs County
       Bancshares stockholders, except to the extent of any cash received;
 
     - filing with the NASD notification for listing of additional shares on the
       Nasdaq National Market for the shares of Regions common stock to be
       issued in the Merger; and
 
     - the receipt by Meigs County Bancshares of an opinion of Meigs County
       Bancshares' financial advisor that the consideration to be received in
       the Merger by the stockholders of Meigs County Bancshares is fair to such
       stockholders from a financial point of view.
 
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Merger Agreement which are customary
in transactions of this nature, including, among others: (i) the delivery by
Regions and Meigs County Bancshares of opinions of their respective counsel and
certificates executed by their respective duly authorized officers as to the
satisfaction of certain conditions and obligations set forth in the Merger
Agreement and (ii) as of the effective time of the Merger, the accuracy of
certain representations and warranties and the compliance in all material
respects with the agreements and covenants of each party.
 
REGULATORY APPROVALS
 
The Merger may not proceed in the absence of receipt of the requisite regulatory
approvals. There can be no assurance that such regulatory approvals will be
obtained or as to the timing of such approvals. It is also possible that any
such approval may be accompanied by a conditional requirement which causes such
approvals to fail to satisfy the conditions set forth in the Merger Agreement.
Applications for the approvals described below have been submitted to the
appropriate regulatory agencies.
 
Regions and Meigs County Bancshares are not aware of any material governmental
approvals or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
 
The Merger requires the prior approval of the Federal Reserve Board, pursuant to
Section 3 of the Bank Holding Company Act of 1956. In granting its approval
under Section 3 of the Bank Holding Company Act, the Federal Reserve Board must
take into consideration, among other factors, the financial and managerial
resources and future prospects of the institutions and the convenience and needs
of the communities to be served. The relevant statutes prohibit the Federal
Reserve Board from approving the Merger (i) if it would result in a monopoly or
be in furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States or (ii) if
its effect in any section of the country may be to substantially lessen
competition or to tend to create a monopoly, or if it would be a restraint of
trade in
 
                                       27
<PAGE>   34
 
any other manner, unless the Federal Reserve Board finds that any
anticompetitive effects are outweighed clearly by the public interest and the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. Under the Bank Holding Company Act, the Merger may not
be consummated until the 30th day following the date of Federal Reserve Board
approval, which may be shortened by the Federal Reserve Board to the 15th day,
during which time the United States Department of Justice may challenge the
transaction on antitrust grounds. The commencement of any antitrust action would
stay the effectiveness of the Federal Reserve Board's approval, unless a court
specifically orders otherwise.
 
The Merger also is subject to review of the Tennessee Commissioner of Financial
Institutions.
 
WAIVER, AMENDMENT, AND TERMINATION OF THE MERGER AGREEMENT
 
Prior to the effective time of the Merger, and to the extent permitted by law,
any provision of the Merger Agreement generally may be (i) waived by the party
benefitted by the provision or (ii) amended by a written agreement between
Regions and Meigs County Bancshares approved by their respective Boards of
Directors; provided, however, that after approval by the Meigs County Bancshares
stockholders, no amendment that pursuant to the Tennessee Business Corporation
Act requires further approval of the Meigs County Bancshares stockholders,
including decreasing the consideration to be received by Meigs County Bancshares
stockholders, may be made without the further approval of such stockholders.
 
The Merger Agreement may be terminated, and the Merger abandoned, at any time
prior to the effective time of the Merger, either before or after approval by
Meigs County Bancshares stockholders, under certain circumstances, including:
 
     - by the Board of Directors of either party upon final denial of any
       required consent of any regulatory authority, if such denial is
       nonappealable or was not appealed within the time limit for appeal;
 
     - by the Board of Directors of either party, if the holders of the
       requisite number of shares of Meigs County Bancshares common stock shall
       not have approved the Merger Agreement;
 
     - by mutual consent of the Boards of Directors of Regions and Meigs County
       Bancshares;
 
     - by the Board of Directors of either party (provided the terminating party
       is not in material breach of any representation, warranty, covenant, or
       agreement included in the Merger Agreement), in the event of any
       inaccuracy in any representation or warranty by the other party which
       meets certain standards specified in the Merger Agreement and cannot be
       or has not been cured within 30 days after the giving of written notice
       to the breaching party;
 
     - by the Board of Directors of either party (provided the terminating party
       is not in material breach of any representation, or warranty included in
       the Merger Agreement), in the event of a breach by the other party of any
       covenant or agreement included in the Merger Agreement that cannot be
       cured within 30 days after giving notice to the breaching party; and
 
                                       28
<PAGE>   35
 
     - by the Board of Directors of either party if the Merger shall not have
       been consummated by March 31, 1999, but only if the failure to consummate
       the Merger by such date has not been caused by the terminating party's
       breach of the Merger Agreement.
 
The Meigs County Bancshares Board has the right to terminate the Merger in
certain situations in which the price of Regions common stock declines
significantly and such decline is significantly greater than the overall decline
of a selected group of bank holding companies' stocks during the same time
period. Termination in such a situation can be avoided if Regions elects (at its
sole discretion) to adjust the Exchange Ratio according to a formula set forth
in the Merger Agreement. See "-- Possible Adjustment of Exchange Ratio."
 
If the Merger Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination generally will not relieve the parties from
the consequences of any uncured willful breach of the Merger Agreement giving
rise to such termination.
 
CONDUCT OF BUSINESS PENDING THE MERGER
 
Each of Meigs County Bancshares and Regions generally has agreed to operate its
business only in the usual, regular, and ordinary course, and to preserve intact
its business organizations and assets and maintain its rights and franchises.
Each has also agreed to take no action which would materially adversely affect
the ability of either party to obtain any consents required for the Merger or to
perform its covenants and agreements under the Merger Agreement and to
consummate the Merger. The foregoing shall not prevent Regions or any subsidiary
of Regions from discontinuing or disposing of any of its assets or business. Nor
is Regions prevented from acquiring or agreeing to acquire any other entity or
any assets thereof, if such action is, in the judgment of Regions, desirable in
the conduct of the business of Regions and its subsidiaries. In addition, the
Merger Agreement includes certain other restrictions applicable to the conduct
of the business of Meigs County Bancshares prior to consummation of the Merger,
as described below.
 
Meigs County Bancshares.  Meigs County Bancshares has agreed not to take certain
actions relating to the operation of its business pending consummation of the
Merger without the prior written consent of Regions, which Regions has agreed
shall not be unreasonably withheld. The actions Meigs County Bancshares has
agreed not to take are in the general categories of:
 
     - amending its Charter, Bylaws, or other governing instruments;
 
     - incurring indebtedness;
 
     - acquiring any of its outstanding shares or making distributions in
       respect to its outstanding shares;
 
     - issuing additional securities;
 
     - reclassifying capital stock or selling or encumbering assets;
 
     - acquiring or investing in other entities;
 
                                       29
<PAGE>   36
 
     - increasing employees' salaries and benefits or accelerating the vesting
       of any stock-based compensation or employee benefits;
 
     - entering into or amending employment contracts;
 
     - adopting employee benefit plans or amending existing plans;
 
     - changing accounting methods or practices;
 
     - commencing or settling litigation; or
 
     - entering into or terminating material contracts.
 
The specific agreements not to take certain actions of such character, including
the exceptions and contractually permitted actions, are set forth in the Merger
Agreement, which is attached as Appendix A. See Article 7 of the Merger
Agreement.
 
In addition, Meigs County Bancshares has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. Meigs
County Bancshares also has agreed not to negotiate with respect to any such
proposal, provide nonpublic information to any party making such a proposal, or
enter into any agreement with respect to any such proposal, except in compliance
with the fiduciary obligations of its Board of Directors. In addition, Meigs
County Bancshares has agreed to use reasonable efforts to cause its advisors and
other representatives not to engage in any of the foregoing activities.
 
MANAGEMENT FOLLOWING THE MERGER
 
Upon consummation of the Merger, the present officers and directors of Regions
will retain their respective positions with Regions. Information pertaining to
the directors and executive officers of Regions, executive compensation, certain
relationships and related transactions, and other related matters is included in
Regions' Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated herein by reference. See "Where You Can Find More Information."
 
INTERESTS OF CERTAIN PERSONS IN THE MERGER
 
The Merger Agreement generally provides that Regions will indemnify and hold
harmless each person entitled to indemnification from Meigs County Bancshares or
any of its subsidiaries to the full extent permitted by Tennessee law and by
Meigs County Bancshares' Charter or Bylaws as in effect on the date of the
Merger Agreement, and that such rights will continue in full force and effect
for six years from the effective time of the Merger with respect to matters
occurring at or prior to the effective time.
 
The Merger Agreement also provides that, after the effective time of the Merger,
Regions will provide generally to officers and employees of Meigs County
Bancshares and its subsidiaries who, at or after the effective time, become
officers or employees of Regions or its subsidiaries, employee benefits under
employee benefit plans (other than stock option or other plans involving the
potential issuance of Regions common stock) on terms and conditions that, taken
as a whole, are substantially similar to those currently provided by Regions and
its subsidiaries to their similarly situated officers and employees. For
purposes of participation and vesting (but not benefit accrual) under such
employee benefit plans, service with Meigs County Bancshares or its subsidiaries
prior to the effective time of the Merger will be treated as service with
Regions or its subsidiaries. The Merger Agreement
 
                                       30
<PAGE>   37
 
further provides that Regions will cause Meigs County Bancshares to honor all
employment, severance, consulting, and other compensation contracts previously
disclosed to Regions between Meigs County Bancshares or its subsidiaries and any
current or former director, officer, or employee, and all provisions for vested
amounts earned or accrued through the effective time of the Merger under Meigs
County Bancshares' benefit plans.
 
As described above under "-- Treatment of Meigs County Bancshares Options," the
Merger Agreement also provides that all rights with respect to Meigs County
Bancshares common stock pursuant to stock options or stock appreciation rights
granted by Meigs County Bancshares under its stock option and other stock-based
compensation plans which are outstanding at the effective time of the Merger,
whether or not then exercisable, will be converted into and will become rights
with respect to Regions common stock, and Regions will assume each of such
options in accordance with its terms.
 
As of the record date, directors and executive officers of Meigs County
Bancshares owned no shares of Regions common stock.
 
DISSENTING STOCKHOLDERS
 
Pursuant to the provisions of Chapter 23 of the Tennessee Business Corporation
Act, if the Merger is consummated, any holder of Meigs County Bancshares common
stock who (i) gives to Meigs County Bancshares, prior to the vote at the Special
Meeting with respect to the approval of the Merger Agreement, written notice of
such holder's intent to demand payment for such holder's shares, and (ii) does
not vote in favor thereof, shall be entitled to receive, upon compliance with
the statutory requirements summarized below, the fair value of such holder's
shares as of the Effective Date, excluding any appreciation or depreciation in
anticipation of the Merger.
 
A stockholder of record may assert dissenters' rights as to fewer than all the
shares registered in such holder's name only if such holder dissents with
respect to all shares beneficially owned by any one beneficial stockholder and
such holder notifies Meigs County Bancshares in writing of the name and address
of each person on whose behalf such holder asserts dissenters' rights. The
rights of such a partial dissenter are determined as if the shares as to which
such holder dissents and such holder's other shares were registered in the names
of different stockholders. A beneficial stockholder may assert dissenters'
rights as to shares held on his behalf only if he dissents with respect to all
shares of which he is the beneficial stockholder or over which he has power to
direct the vote. A beneficial stockholder asserting dissenters' rights to shares
held on such holder's behalf shall notify Meigs County Bancshares in writing of
the name and address of the record stockholder of the shares, if known.
 
The written notice requirement referred to above will not be satisfied under the
Tennessee statutory provisions by merely voting against approval of the Merger
Agreement by proxy or in person at the Special Meeting. In addition to not
voting in favor of the Merger Agreement, a stockholder wishing to preserve the
right to dissent and seek appraisal must give a separate written notice of such
holder's intent to demand payment for such holder's shares if the Merger is
effected, as hereinabove provided.
 
Any written notice of intent to demand payment pursuant to Chapter 23 of the
Tennessee Business Corporation Act should be addressed as follows: Meigs County
Bancshares, Inc., 116 N. Main Street, Decatur, Tennessee, 37322, Attention:
Corporate Secretary.
 
                                       31
<PAGE>   38
 
If the Merger is authorized at the Special Meeting, Meigs County Bancshares must
deliver a written dissenters' notice (the "Dissenters' Notice") to all holders
of Meigs County Bancshares common stock who satisfied the foregoing
requirements. The Dissenters' Notice must be sent within ten days after the
Effective Date and must (1) state where the demand for payment must be sent and
where certificates for shares of Meigs County Bancshares common stock must be
deposited, (2) inform holders of uncertificated shares to what extent transfer
of these shares will be restricted after the demand for payment is received, (3)
supply a form for demanding payment that includes the date of the first
announcement to news media or to stockholders of the terms of the Merger and
requires that the person asserting dissenters' rights certify whether or not
such person, or if a nominee asserting dissenters' rights on behalf of a
beneficial stockholder, the beneficial stockholder acquired beneficial ownership
of the shares before that date, (4) set a date by which Meigs County Bancshares
must receive the demand for payment (which date may not be less than one month
nor more than two months after the Dissenters' Notice is delivered), and (5) be
accompanied by a copy of Chapter 23 of the Tennessee Business Corporation Act if
not previously provided.
 
A stockholder of record who receives the Dissenters' Notice must demand payment,
certify whether such holder (or the beneficial stockholder on whose behalf such
holder is asserting dissenters' rights) acquired beneficial ownership of the
shares before the date set forth in the Dissenters' Notice, and deposit such
holder's certificates in accordance with the Dissenters' Notice. Such
stockholder will retain all other rights of a stockholder until those rights are
canceled or modified by the consummation of the Merger. A stockholder who does
not comply substantially with the requirements that such holder demand payment
and deposit such holder's share certificates where required, each by the date
set in the Dissenters' Notice, is not entitled to payment for such holder's
shares under Chapter 23. A demand for payment may not be withdrawn unless the
surviving corporation consents to the withdrawal.
 
Except as described below, as soon as the Merger is consummated, or upon receipt
of a payment demand, the surviving corporation resulting from the Merger must
pay to each dissenting stockholder who complied with the payment demand and
deposit requirements described above the amount the surviving corporation
estimates to be the fair value of such holder's shares, plus accrued interest
from the Effective Date. Such payment must be accompanied by (1) certain recent
Meigs County Bancshares financial statements, (2) the surviving corporation's
estimate of the fair value of the shares and an explanation how the fair value
was calculated, (3) an explanation of how the interest was calculated, (4) a
statement of the dissenter's right to demand additional payment under Section
48-23-209 of the Tennessee Business Corporation Act, and (5) a copy of Chapter
23 of the Tennessee Business Corporation Act if not previously provided.
 
The surviving corporation may elect to withhold such payment from a dissenter as
to any shares of which such dissenter (or the beneficial owner on whose behalf
such dissenter is asserting dissenters' rights) was not the beneficial owner on
the date set forth in the Dissenters' Notice as the date of the first
announcement to news media or to stockholders of the terms of the proposed
Merger, unless the beneficial ownership of the shares devolved upon him by
operation of law from a person who was the beneficial owner on the date of the
first announcement. To the extent the surviving corporation elects so to
withhold payment, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of such dissenter's demand. The surviving corporation shall
send with its offer a statement of its
 
                                       32
<PAGE>   39
 
estimate of the fair value of the shares, an explanation of how the fair value
and interest were calculated, and a statement of the dissenter's right to demand
additional payment under Section 48-23-209.
 
Section 48-23-209 of the Tennessee Business Corporation Act provides that a
dissenting stockholder may notify the surviving corporation in writing of such
holder's own estimate of the fair value of such holder's shares and the interest
due, and may demand payment of such holder's estimate (less any payment already
received), if (i) such holder believes that the amount offered by the surviving
corporation is less than the fair value of such holder's shares or that the
interest due has been calculated incorrectly, (ii) the surviving corporation
fails to make payment under Section 48-23-206 or to offer payment under Section
48-23-208 within two months after the date set for demanding payment; or (iii)
the corporation has failed to effect the Merger and does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within two months after the date set for demanding
payment. A dissenting stockholder waives such holder's right to demand payment
under Section 48-23-209 unless such holder notifies the surviving corporation of
such holder's demand in writing within one month after the surviving corporation
makes or offers payment for such holder's shares.
 
If a demand for payment under Section 48-23-209 remains unsettled, the surviving
corporation must commence a proceeding in the Circuit Court of Meigs County,
Tennessee, within two months after receiving the demand for additional payment
and must petition the court to determine the fair value of the shares and
accrued interest. If the surviving corporation does not commence the proceeding
within those two months, it is required to pay each dissenting stockholder whose
demand remains unsettled the amount demanded. The surviving corporation is
required to make all dissenting stockholders whose demands remain unsettled
parties to the proceeding and to serve a copy of the petition upon all such
parties. The court may appoint appraisers to receive evidence and to recommend a
decision on fair value. Each dissenter made a party to the proceeding is
entitled to judgment for the amount, if any, by which the court finds the fair
value of such dissenter's shares, plus interest, exceeds the amount paid by the
surviving corporation.
 
The court in an appraisal proceeding commenced under the foregoing provision
must determine the costs of the proceeding, excluding fees and expenses of
attorneys and experts for the respective parties, and must assess those costs
against the surviving corporation, except that the court may assess the costs
against all or some of the dissenting stockholders to the extent the court finds
they acted arbitrarily, vexatiously, or not in good faith in demanding payment
under Section 48-23-209. The court also may assess the fees and expenses of
attorneys and experts for the respective parties against the surviving
corporation if the court finds the surviving corporation did not substantially
comply with the requirements of specified provisions of Chapter 23 of the
Tennessee Business Corporation Act, or against either the surviving corporation
or a dissenting stockholder if the court finds that such party acted
arbitrarily, vexatiously, or not in good faith with respect to the rights
provided by Chapter 23 of the Tennessee Business Corporation Act.
 
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the surviving corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
 
In a proceeding commenced by dissenters to enforce the liability under Section
48-23-301(a) of a corporation that has failed to commence an appraisal
 
                                       33
<PAGE>   40
 
proceeding within the sixty-day period, the court shall assess the costs of the
proceeding and the fees and expenses of dissenters' counsel against the
surviving corporation and in favor of the dissenters.
 
The foregoing is a summary of the material rights of a dissenting stockholder of
Meigs County Bancshares, but is qualified in its entirety by reference to
Chapter 23 of the Tennessee Business Corporation Act, included in Appendix C to
this Proxy Statement-Prospectus. It is not intended to give any right of dissent
or payment to any stockholder and should not be so read. Stockholders' rights of
dissent and payment are limited to those provided by law. Any Meigs County
Bancshares stockholder who intends to exercise the right to dissent from
consummation of the Merger should carefully review the text of such provisions
and should also consult with such holder's attorney. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to Meigs County Bancshares stockholders, except as indicated above
or otherwise required by law.
 
Any dissenting Meigs County Bancshares stockholder who perfects such holder's
right to be paid the value of such holder's shares will recognize taxable gain
or loss upon receipt of cash for such shares for federal income tax purposes.
See "-- Federal Income Tax Consequences of the Merger."
 
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
THE FOLLOWING IS A DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER TO HOLDERS OF MEIGS COUNTY BANCSHARES COMMON STOCK. THIS DISCUSSION
MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS MEIGS COUNTY BANCSHARES
STOCKHOLDERS, IF ANY, WHO HOLD MEIGS COUNTY BANCSHARES COMMON STOCK OTHER THAN
AS A CAPITAL ASSET, WHO RECEIVED MEIGS COUNTY BANCSHARES COMMON STOCK UPON THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, WHO HOLD MEIGS
COUNTY BANCSHARES COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION
TRANSACTION," OR WHO ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL
INSTITUTIONS OR FOREIGN PERSONS, AND DOES NOT DISCUSS ANY ASPECTS OF STATE,
LOCAL, OR FOREIGN TAXATION. THIS DISCUSSION IS BASED UPON LAWS, REGULATIONS,
RULINGS AND DECISIONS NOW IN EFFECT AND ON PROPOSED REGULATIONS, ALL OF WHICH
ARE SUBJECT TO CHANGE (POSSIBLY WITH RETROACTIVE EFFECT) BY LEGISLATION,
ADMINISTRATIVE ACTION, OR JUDICIAL DECISION. NO RULING HAS BEEN OR WILL BE
REQUESTED FROM THE INTERNAL REVENUE SERVICE ON ANY MATTER RELATING TO THE TAX
CONSEQUENCES OF THE MERGER.
 
Consummation of the Merger is conditioned upon receipt by Regions and Meigs
County Bancshares of an opinion from Alston & Bird LLP, special counsel to
Regions, concerning the material federal income tax consequences of the Merger.
Based upon the assumption that the Merger is consummated in accordance with the
Merger Agreement and upon factual statements and factual representations made by
Regions and Meigs County Bancshares, it is such firm's opinion that:
 
     1. The Merger will constitute a reorganization within the meaning of
     Section 368(a) of the Internal Revenue Code, and Meigs County Bancshares
     and Regions will each be "a party to a reorganization" within the meaning
     of Section 368(b) of the Internal Revenue Code.
 
     2. No gain or loss will be recognized by holders of Meigs County Bancshares
     common stock upon the exchange in the Merger of all of their Meigs County
     Bancshares common stock solely for shares of Regions common stock (except
     with
 
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<PAGE>   41
 
respect to any cash received in lieu of fractional share interests in Regions
common stock).
 
     3. The aggregate tax basis of the Regions common stock received by the
     Meigs County Bancshares stockholders in the Merger will, in each instance,
     be the same as the aggregate tax basis of the Meigs County Bancshares
     common stock surrendered in exchange therefor, less the basis of any
     fractional share of Regions common stock settled by cash payment.
 
     4. The holding period of the Regions common stock received by the Meigs
     County Bancshares stockholders in the Merger will, in each instance,
     include the holding period of the Meigs County Bancshares common stock
     surrendered in exchange therefor, provided that such Meigs County
     Bancshares common stock is held as a capital asset at the effective time of
     the Merger.
 
     5. The payment of cash to Meigs County Bancshares stockholders in lieu of
     fractional share interests of Regions common stock will be treated for
     federal income tax purposes as if the fractional shares were distributed as
     part of the exchange and then were redeemed by Regions. These cash payments
     will be treated as having been received as distributions in full payment in
     exchange for the stock redeemed, as provided in Section 302(a) of the
     Internal Revenue Code.
 
     6. Where solely cash is received by a Meigs County Bancshares stockholder
     in exchange for Meigs County Bancshares common stock pursuant to the
     exercise of dissenters' rights, such cash will be treated as having been
     received in redemption of such holder's Meigs County Bancshares common
     stock, subject to the provisions and limitations of Section 302 of the
     Internal Revenue Code.
 
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER TAX
CONSEQUENCES OF THE MERGER. MEIGS COUNTY BANCSHARES STOCKHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX REPORTING REQUIREMENTS AND TAX
CONSEQUENCES UNDER STATE, LOCAL, AND FOREIGN LAW.
 
ACCOUNTING TREATMENT
 
It is anticipated that the Merger will be accounted for as a pooling of
interests as that term is used pursuant to generally accepted accounting
principles, for accounting and financial reporting purposes. Under the
pooling-of-interests method of accounting, assets, liabilities, and equity of
the acquired company are carried forward to the combined entity at their stated
amounts.
 
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding Meigs County
Bancshares common stock must be exchanged for Regions common stock with
substantially similar terms. There are certain other criteria that must be
satisfied in order for the Merger to qualify as a pooling of interests, some of
which criteria cannot be satisfied until after the effective time of the Merger.
See "Summary -- Comparative Per Share Data" and "-- Resales of Regions Common
Stock."
 
EXPENSES AND FEES
 
The Merger Agreement provides, in general, that each of the parties will bear
and pay its own expenses in connection with the transactions contemplated by the
Merger Agreement, including fees and expenses of its own financial or other
consultants, investment bankers,
 
                                       35
<PAGE>   42
 
accountants, and counsel, except that Regions will bear and pay the filing fees
and one-half of printing costs in connection with this Proxy
Statement-Prospectus.
 
RESALES OF REGIONS COMMON STOCK
 
The Regions common stock to be issued to Meigs County Bancshares stockholders in
the Merger has been registered under the Securities Act of 1933, but that
registration does not cover resales of those shares by persons who control, are
controlled by, or are under common control with, Meigs County Bancshares (such
persons are referred to hereinafter as "affiliates" and generally include
executive officers, directors, and 10% stockholders) at the time of the Special
Meeting. Affiliates may not sell shares of Regions common stock acquired in
connection with the Merger, except pursuant to an effective registration
statement under the Securities Act or in compliance with Rule 145 promulgated
under the Securities Act or in accordance with a legal opinion satisfactory to
Regions that such sale or transfer is otherwise exempt from the Securities Act
registration requirements.
 
Rule 145 promulgated under the Securities Act restricts the sale of Regions
common stock received in the Merger by affiliates and certain of their family
members and related interests. Under the rule, during the one-year period
following the effective time of the Merger, affiliates of Meigs County
Bancshares may resell publicly the Regions common stock received by them in the
Merger subject to certain limitations as to the amount of Regions common stock
sold in any three-month period and as to the manner of sale, and subject to the
timeliness of Regions' periodic reporting obligations with the Securities and
Exchange Commission. After the one-year period and within two years following
the effective time of the Merger, affiliates of Meigs County Bancshares who are
not affiliates of Regions may effect such resales subject only to the timeliness
of Regions' periodic reporting requirements. After two years, such affiliates of
Meigs County Bancshares who are not affiliates of Regions may resell their
shares without restriction. Persons who are affiliates of Regions after the
effective time of the Merger may publicly resell the Regions common stock
received by them in the Merger subject to similar limitations and subject to
certain filing requirements specified in SEC Rule 144. Affiliates will receive
additional information regarding the effect of Rule 145 on their ability to
resell Regions common stock received in the Merger. Affiliates also would be
permitted to resell Regions common stock received in the Merger pursuant to an
effective registration statement under the Securities Act or an available
exemption from the Securities Act registration requirements. This Proxy
Statement-Prospectus does not cover any resales of Regions common stock received
by persons who may be deemed to be affiliates of Meigs County Bancshares or
Regions.
 
Each person who Meigs County Bancshares reasonably believes will be an affiliate
of Meigs County Bancshares has delivered to Regions a written agreement
providing that such person generally will not sell, pledge, transfer, or
otherwise dispose of any Regions common stock to be received by such person upon
consummation of the Merger, except in compliance with the Securities Act and the
rules and regulations promulgated thereunder.
 
                 EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
 
As a result of the Merger, holders of Meigs County Bancshares common stock will
be exchanging their shares of a Tennessee corporation governed by the Tennessee
Business Corporation Act and Meigs County Bancshares' Charter, as amended (the
"Charter"), and
 
                                       36
<PAGE>   43
 
Bylaws, for shares of Regions, a Delaware corporation governed by the Delaware
General Corporation Law and Regions' Certificate of Incorporation (the
"Certificate") and Bylaws. Certain significant differences exist between the
rights of Meigs County Bancshares stockholders and those of Regions
stockholders. The material differences are summarized below. In particular,
Regions' Certificate and Bylaws contain several provisions that under certain
circumstances may have an antitakeover effect in that they could impede or
prevent an acquisition of Regions unless the potential acquirer has obtained the
approval of Regions' Board of Directors. The following discussion is necessarily
general; it is not intended to be a complete statement of all differences
affecting the rights of stockholders and their respective entities, and it is
qualified in its entirety by reference to the Tennessee Business Corporation Act
and the Delaware General Corporation Law as well as to Regions' Certificate and
Bylaws and Meigs County Bancshares' Charter and Bylaws.
 
ANTITAKEOVER PROVISIONS GENERALLY
 
The provisions of Regions' Certificate and Bylaws described below under the
headings, "-- Authorized Capital Stock," "-- Amendment of Certificate of
Incorporation or Charter and Bylaws," "-- Classified Board of Directors and
Absence of Cumulative Voting," "-- Removal of Directors," "-- Limitations on
Director Liability," "-- Special Meetings of Stockholders," "--Actions by
Stockholders Without a Meeting," "-- Stockholder Nominations," and "-- Mergers,
Consolidations, and Sales of Assets Generally," and the provisions of the
Delaware General Corporation Law described under the heading "-- Business
Combinations With Certain Persons," are referred to herein as the "protective
provisions." In general, one purpose of the protective provisions is to assist
Regions' Board of Directors in playing a role in connection with attempts to
acquire control of Regions, so that the Board can further and protect the
interests of Regions and its stockholders as appropriate under the
circumstances, including, if the Board determines that a sale of control is in
their best interests, by enhancing the Board's ability to maximize the value to
be received by the stockholders upon such a sale.
 
Although Regions' management believes the protective provisions are, therefore,
beneficial to Regions' stockholders, the protective provisions also may tend to
discourage some takeover bids. As a result, Regions' stockholders may be
deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the protective provisions discourage undesirable
proposals, Regions may be able to avoid those expenditures of time and money.
 
The protective provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
common stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the protective
provisions may decrease the market price of Regions common stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The protective provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the protective provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a
 
                                       37
<PAGE>   44
 
result, the protective provisions may tend to perpetuate the incumbent Board of
Directors and management.
 
AUTHORIZED CAPITAL STOCK
 
Regions.  The Certificate authorizes the issuance of up to 500,000,000 shares of
Regions common stock, of which 221,111,474 shares were issued as of September
30, 1998, none of which were held as treasury shares, and 5,000,000 shares of
preferred stock, none of which are outstanding. Regions' Board of Directors may
authorize the issuance of additional shares of Regions common stock or preferred
stock without further action by Regions' stockholders, unless such action is
required in a particular case by applicable laws or regulations or by any stock
exchange upon which Regions' capital stock may be listed. The Certificate does
not provide preemptive rights to Regions stockholders.
 
The authority to issue additional shares of Regions capital stock provides
Regions with the flexibility necessary to meet its future needs without the
delay resulting from seeking stockholder approval. The authorized but unissued
shares of Regions common stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock dividends,
employee benefit and compensation plans, acquisitions, and public or private
sales for cash as a means of raising capital. Such shares could be used to
dilute the stock ownership of persons seeking to obtain control of Regions. In
addition, the sale of a substantial number of shares of Regions common stock to
persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
common stock (or the right to receive Regions common stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions. Regions has committed not to
issue shares of preferred stock for any anti-takeover purpose, including any
purpose to make a change in control of Regions more costly or difficult.
 
Meigs County Bancshares.  Meigs County Bancshares' authorized capital stock
consists of 1,000,000 shares of Meigs County Bancshares common stock, which is
the only class of capital stock authorized and of which                shares
were issued and outstanding as of the record date.
 
Pursuant to the Tennessee Business Corporation Act, Meigs County Bancshares'
Board of Directors may authorize the issuance of additional shares of Meigs
County Bancshares common stock without further action by Meigs County
Bancshares' stockholders. Meigs County Bancshares' Charter, as amended, does not
provide the stockholders of Meigs County Bancshares with preemptive rights to
purchase or subscribe to any unissued authorized shares of Meigs County
Bancshares common stock or any option or warrant for the purchase thereof.
 
AMENDMENT OF CERTIFICATE OF INCORPORATION OR CHARTER AND BYLAWS
 
Regions.  The Delaware General Corporation Law generally provides that the
approval of a corporation's board of directors and the affirmative vote of a
majority of (i) all shares entitled to vote thereon and (ii) the shares of each
class of stock entitled to vote thereon as a class is required to amend a
corporation's certificate of incorporation, unless the certificate specifies a
greater voting requirement. The Certificate states that its provisions regarding
authorized capital stock, election, classification, and removal of directors,
the approval required for certain business combinations, meetings of
stockholders, and amendment of the Certificate and Bylaws may be amended or
repealed only by the
 
                                       38
<PAGE>   45
 
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions common stock.
 
The Certificate also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 75% of the outstanding shares of
Regions common stock.
 
Meigs County Bancshares.  The Tennessee Business Corporation Act generally
provides that a Tennessee corporation's charter may be amended by the
affirmative vote of a majority of the shares entitled to vote thereon, unless
the charter provides for a higher or lower voting requirement. Meigs County
Bancshares' Charter does not include special provisions relating to amendment of
the Charter.
 
The Board of Directors has the power to adopt, amend, or repeal the Bylaws by a
majority vote, subject to the right of the stockholders by majority vote to
adopt, amend, or repeal the Bylaws by majority vote.
 
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
 
Regions.  The Certificate provides that Regions' Board of Directors is divided
into three classes, with each class to be as nearly equal in number as possible.
The directors in each class serve three-year terms of office.
 
The effect of Regions' having a classified Board of Directors is that only
approximately one-third of the members of the Board are elected each year;
consequently, two annual meetings are effectively required for Regions'
stockholders to change a majority of the members of the Board.
 
Pursuant to the Certificate, each stockholder generally is entitled to one vote
for each share of Regions stock held and is not entitled to cumulative voting
rights in the election of directors. With cumulative voting, a stockholder has
the right to cast a number of votes equal to the total number of such holder's
shares multiplied by the number of directors to be elected. The stockholder has
the right to cast all of such holder's votes in favor of one candidate or to
distribute such holder's votes in any manner among any number of candidates.
Directors are elected by a plurality of the total votes cast by all
stockholders. With cumulative voting, it may be possible for minority
stockholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of Regions common
stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining Regions common stock effectively may not be able to
elect any person to the Board of Directors. The absence of cumulative voting,
therefore, could make it more difficult for a stockholder who acquires less than
a majority of the shares of Regions common stock to obtain representation on
Regions' Board of Directors.
 
Meigs County Bancshares.  Meigs County Bancshares' Charter does not provide for
a classified board of directors. Holders of Meigs County Bancshares common stock
are not afforded cumulative voting rights.
 
                                       39
<PAGE>   46
 
REMOVAL OF DIRECTORS
 
Regions.  Under the Certificate, any director or the entire Board of Directors
may be removed only for cause and only by the affirmative vote of the holders of
at least 75% of Regions' voting stock.
 
Meigs County Bancshares.  Pursuant to Meigs County Bancshares' Bylaws, one or
more of the directors may be removed by majority vote of the stockholders.
 
LIMITATIONS ON DIRECTOR LIABILITY
 
Regions.  The Certificate provides that a director of Regions will have no
personal liability to Regions or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
 
Although this provision does not affect the availability of injunctive or other
equitable relief as a remedy for a breach of duty by a director, it does limit
the remedies available to a stockholder who has a valid claim that a director
acted in violation of such director's duties, if the action is among those as to
which liability is limited. This provision may reduce the likelihood of
stockholder derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duties, even though such action, if successful, might have benefitted
Regions and its stockholders. The SEC has taken the position that similar
provisions added to other corporations' certificates of incorporation would not
protect those corporations' directors from liability for violations of the
federal securities laws.
 
Meigs County Bancshares.  The Tennessee Business Corporation Act includes
similar provisions limiting a director's liability.
 
INDEMNIFICATION
 
Regions.  The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
General Corporation Law. Under Section 145 of the Delaware General Corporation
Law as currently in effect, other than in actions brought by or in the right of
Regions, such indemnification would apply if it were determined in the specific
case that the proposed indemnitee acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
Regions and, with respect to any criminal proceeding, if such person had no
reasonable cause to believe that the conduct was unlawful. In actions brought by
or in the right of Regions, such indemnification probably would be limited to
reasonable expenses (including attorneys' fees) and would apply if it were
determined in the specific case that the proposed indemnitee acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of Regions, except that no indemnification may be made with
respect to any matter as to which such person is adjudged liable to Regions,
unless, and only to the extent that, the court determines upon application that,
in view of all the circumstances of the case, the proposed indemnitee is fairly
and reasonably entitled to indemnification for such expenses as the court deems
proper. To the extent that any director, officer, employee, or agent of Regions
has been
 
                                       40
<PAGE>   47
 
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
 
Meigs County Bancshares.  The Tennessee Business Corporation Act and Meigs
County Bancshares' Bylaws provide for indemnification of its directors,
officers, employees, and agents in substantially the same manner and with
substantially the same effect as in the case of Regions.
 
SPECIAL MEETINGS OF STOCKHOLDERS
 
Regions.  Regions' Certificate and Bylaws provide that special meetings of
stockholders may be called at any time, but only by the chief executive officer,
the secretary, or the Board of Directors of Regions. Regions stockholders do not
have the right to call a special meeting or to require that Regions' Board of
Directors call such a meeting. This provision, combined with other provisions of
the Certificate and the restriction on the removal of directors, would prevent a
substantial stockholder from compelling stockholder consideration of any
proposal (such as a proposal for a business combination) over the opposition of
Regions' Board of Directors by calling a special meeting of stockholders at
which such stockholder could replace the entire Board with nominees who were in
favor of such proposal.
 
Meigs County Bancshares.  Under Meigs County Bancshares' Bylaws, a special
meeting of Meigs County Bancshares stockholders may be called by the Chairman or
by not less than one-third of the members of the Board of Directors. A special
meeting may also be called by the Tennessee Commissioner of Financial
Institutions.
 
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
 
Regions.  The Certificate provides that any action required or permitted to be
taken by Regions stockholders must be effected at a duly called meeting of
stockholders and may not be effected by any written consent by the stockholders.
These provisions would prevent stockholders from taking action, including action
on a business combination, except at an annual meeting or special meeting called
by the Board of Directors, chief executive officer, or secretary, even if a
majority of the stockholders were in favor of such action.
 
Meigs County Bancshares.  Under the Tennessee Business Corporation Act and Meigs
County Bancshares' Bylaws, any action requiring or permitting stockholder
approval may be approved by written consent of stockholders holding all of the
shares of Meigs County Bancshares common stock outstanding.
 
STOCKHOLDER NOMINATIONS
 
Regions.  Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to the
Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth certain
background
 
                                       41
<PAGE>   48
 
information about the persons to be nominated, including information concerning
(i) the name, age, business, and, if known, residential address of each nominee,
(ii) the principal occupation or employment of each such nominee, and (iii) the
number of shares of Regions capital stock beneficially owned by each such
nominee. The Board of Directors is not required to nominate in the annual proxy
statement any person so proposed; however, compliance with this procedure would
permit a stockholder to nominate the individual at the stockholders' meeting,
and any stockholder may vote such holder's shares in person or by proxy for any
individual such holder desires.
 
Meigs County Bancshares.  Meigs County Bancshares' Charter and Bylaws do not
provide for special nominating procedures for election of directors.
 
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
 
Regions.  The Certificate generally requires the affirmative vote of the holders
of at least 75% of the outstanding voting stock of Regions to effect (i) any
merger or consolidation with or into any other corporation, or (ii) any sale or
lease of any substantial part of the assets of Regions to any party that
beneficially owns 5.0% or more of the outstanding shares of Regions voting
stock, unless the transaction was approved by Regions' Board of Directors before
the other party became a 5.0% beneficial owner or is approved by 75% or more of
the Board of Directors after the party becomes such a 5.0% beneficial owner. In
addition, the Delaware General Corporation Law generally requires the approval
of a majority of the outstanding voting stock of Regions to effect (i) any
merger or consolidation with or into any other corporation, (ii) any sale,
lease, or exchange of all or substantially all of Regions property and assets,
or (iii) the dissolution of Regions. However, pursuant to the Delaware General
Corporation Law, Regions may enter into a merger transaction without stockholder
approval if (i) Regions is the surviving corporation, (ii) the agreement of
merger does not amend in any respect Regions' Certificate, (iii) each share of
Regions stock outstanding immediately prior to the effective date of the merger
is to be an identical outstanding or treasury share of Regions after the
effective date of the merger, and (iv) either no shares of Regions common stock
and no shares, securities, or obligations convertible into such stock are to be
issued or delivered under the plan of merger, or the authorized unissued shares
or the treasury shares of Regions common stock to be issued or delivered under
the plan of merger plus those initially issuable upon conversion of any other
shares, securities, or obligations to be issued or delivered under such plan do
not exceed 20% of the shares of Regions common stock outstanding immediately
prior to the effective date of the merger.
 
Meigs County Bancshares.  The Tennessee Business Corporation Act generally
requires approval of a majority of the outstanding shares of a corporation's
voting stock to approve a merger, consolidation, share exchange, sale of all or
substantially all of the corporation's assets, or similar corporate transaction.
 
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
 
Regions.  Section 203 of the Delaware General Corporation Law ("Section 203")
places certain restrictions on "business combinations" (as defined in Section
203 to include, generally, mergers, sales and leases of assets, issuances of
securities, and similar transactions) by Delaware corporations with an
"interested stockholder" (as defined in Section 203 to include, generally, the
beneficial owner of 15% or more of the corporation's outstanding voting stock).
Section 203 generally applies to Delaware corporations, such as
 
                                       42
<PAGE>   49
 
Regions, that have a class of voting stock listed on a national securities
exchange, authorized for quotation on an interdealer quotation system of a
registered national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
 
Regions has not specifically elected to avoid the application of Section 203. As
a result, Section 203 generally would prohibit a business combination by Regions
or a subsidiary with an interested stockholder within three years after the
person or entity becomes an interested stockholder, unless (i) prior to the time
when the person or entity becomes an interested stockholder, Regions' Board of
Directors approved either the business combination or the transaction pursuant
to which such person or entity became an interested stockholder, (ii) upon
consummation of the transaction in which the person or entity became an
interested stockholder, the interested stockholder held at least 85% of the
outstanding Regions voting stock (excluding shares held by persons who are both
officers and directors and shares held by certain employee benefit plans), or
(iii) once the person or entity becomes an interested stockholder, the business
combination is approved by Regions' Board of Directors and by the holders of at
least two-thirds of the outstanding Regions voting stock, excluding shares owned
by the interested stockholder.
 
Meigs County Bancshares.  Corporations organized under Tennessee law are
generally subject to the Tennessee Business Combination Act, the Tennessee
Control Share Acquisition Act, the Tennessee Investor Protection Act, and the
Tennessee Greenmail Act.
 
The Tennessee Business Combination Act provides that a party beneficially owning
10% or more of the voting power of any class or series of then outstanding
shares entitled to vote generally in the election of directors of a corporation
(an "interested shareholder") cannot engage in a business combination with the
corporation for a period of five years following such interested shareholder's
share acquisition date, unless the transaction either (i) is approved by at
least two-thirds of the voting stock of the corporation not beneficially owned
by such interested shareholder at a meeting called for such purpose no earlier
than five years after such interested shareholder's share acquisition date or
(ii) satisfies certain fairness criteria specified in the Tennessee Business
Corporation Act. The Tennessee Business Combination Act exempts transactions
with interested shareholders if the transaction is approved by the corporation's
board of directors prior to the time when the person became an interested
shareholder. The Tennessee Business Combination Act also exempts transactions
under certain other circumstances. Meigs County Bancshares has not adopted
provision in its Charter or Bylaws removing Meigs County Bancshares from the
coverage of the Tennessee Business Combination Act.
 
The Tennessee Investor Protection Act imposes certain filing and disclosure
requirements on tender offers and covered share purchases that meet
jurisdictional requirements of the act. However, the Tennessee Investor
Protection Act does not apply to bank holding companies that, like Meigs County
Bancshares, are subject to U.S. federal regulation.
 
The Tennessee Control Share Acquisition Act (the "TCSAA") generally restricts
voting rights of shares acquired in certain control share acquisitions.
Generally, if a person acquires in one or a series of related transactions an
amount of stock equal to one-fifth or more of all of the voting power of a
Tennessee corporation subject to such provisions in a "control share
acquisition" (as defined in the TCSAA), such shares have only such voting rights
as are accorded them by resolution adopted by the majority of stockholders of
the corporation. The TCSAA defines "control shares" for purposes of such act and
establishes
 
                                       43
<PAGE>   50
 
the procedures under which an acquiring person obtains stockholder action with
respect to voting rights of control shares.
 
The Tennessee Greenmail Act (the "TGA") provides that it is unlawful for any
Tennessee corporation which has a class of voting stock registered or traded on
a national securities exchange or registered with the Commission pursuant to
Section 12(g) of the Exchange Act or any subsidiary of such corporation to
purchase, directly or indirectly, any of its shares at a price above the market
value of such shares from any person who holds more than 3% of the class of the
securities to be purchased if such person has held such shares for less than two
years, unless the purchase has been approved by the affirmative vote of a
majority of the outstanding shares of each class of voting stock of the
corporation, or, alternatively, unless the corporation makes an offer of at
least equal value per share to all holders of such class. The TGA applies to
purchases of Meigs County Bancshares common stock.
 
DISSENTERS' RIGHTS
 
Regions.  The rights of dissenting stockholders of Regions are governed by the
Delaware General Corporation Law. Pursuant thereto, except as described below,
any stockholder has the right to dissent from any merger of which Regions could
be a constituent corporation. No appraisal rights are available, however, for
(i) the shares of any class or series of stock that is either listed on a
national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders or (ii) any shares of stock of the
constituent corporation surviving a merger if the merger did not require the
approval of the surviving corporation's stockholders, unless, in either case,
the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (1) shares of stock
of the corporation surviving or resulting from the merger or consolidation; (2)
shares of stock of any other corporation that will be listed at the effective
date of the merger on a national securities exchange, quoted on the Nasdaq
National Market, or held of record by more than 2,000 stockholders; (3) cash in
lieu of fractional shares of stock described in clause (1) or (2) immediately
above; or (4) any combination of the shares of stock and cash in lieu of
fractional shares described in clauses (1) through (3) immediately above.
Because Regions common stock is quoted on the Nasdaq National Market and is held
of record by more than 2,000 stockholders, unless the exception described
immediately above applies, holders of Regions common stock do not have
dissenters' rights.
 
Meigs County Bancshares.  A summary of the pertinent provisions of the Tennessee
Business Corporation Act pertaining to dissenters' rights is set forth under the
caption "The Merger -- Dissenting Stockholders," and such provisions are
included as Appendix C.
 
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
 
Regions.  The Delaware General Corporation Law provides that a stockholder may
inspect books and records upon written demand under oath stating the purpose of
the inspection, if such purpose is reasonably related to such person's interest
as a stockholder.
 
Meigs County Bancshares.  Pursuant to the Tennessee Business Corporation Act,
upon written notice of a demand to inspect corporate records and demonstration
of a proper purpose, a stockholder is entitled to inspect specified corporate
records, including
 
                                       44
<PAGE>   51
 
accounting records, minutes of stockholder meetings and certain resolutions
adopted at director meetings, and stockholder records.
 
DIVIDENDS
 
Regions.  The Delaware General Corporation Law provides that, subject to any
restrictions in the corporation's certificate of incorporation, dividends may be
declared from the corporation's surplus, or, if there is no surplus, from its
net profits for the fiscal year in which the dividend is declared and the
preceding fiscal year. Dividends may not be declared, however, if the
corporation's capital has been diminished to an amount less than the aggregate
amount of all capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets. Substantially all
of the funds available for the payment of dividends by Regions are derived from
its subsidiary depository institutions. There are various statutory limitations
on the ability of Regions' subsidiary depository institutions to pay dividends
to Regions. See "Supervision and Regulation -- Payment of Dividends."
 
Meigs County Bancshares.  Pursuant to the Tennessee Business Corporation Act, a
board of directors may from time to time make distributions to its stockholders,
subject to restrictions in its charter, provided that no distribution may be
made if, after giving it effect, (i) the corporation would not be able to pay
its debts as they become due in the usual course of business, or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the charter permits otherwise) the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution.
 
                                       45
<PAGE>   52
 
                    COMPARATIVE MARKET PRICES AND DIVIDENDS
 
Regions common stock is quoted on the Nasdaq National Market under the symbol
"RGBK." Meigs County Bancshares common stock is not traded in any established
market. The following table sets forth, for the indicated periods, the high and
low closing sale prices for Regions common stock as reported on the Nasdaq
National Market and the cash dividends declared per share of Regions common
stock. The amounts indicated for Regions have been adjusted to reflect a 2-for-1
stock split effected by Regions on June 13, 1997. For the indicated period there
has been only a very limited number of transactions in Meigs County Bancshares
common stock and all such transactions have involved limited numbers of shares.
 
<TABLE>
<CAPTION>
                                                               REGIONS
                                                   --------------------------------
                                                     PRICE RANGE     CASH DIVIDENDS
                                                   ---------------      DECLARED
                                                    HIGH     LOW       PER SHARE
                                                   ------   ------   --------------
<S>                                                <C>      <C>      <C>
1996
First Quarter....................................  $24.00   $20.38       $.175
Second Quarter...................................   24.19    21.13        .175
Third Quarter....................................   24.32    21.82        .175
Fourth Quarter...................................   26.88    24.38        .175
1997
First Quarter....................................   30.94    25.69        .20
Second Quarter...................................   33.25    27.38        .20
Third Quarter....................................   39.13    32.06        .20
Fourth Quarter...................................   44.75    36.56        .20
1998
First Quarter....................................   43.50    37.94        .23
Second Quarter...................................   45.25    38.66        .23
Third Quarter....................................   42.69    33.81        .23
Fourth Quarter (through           , 1998)........
</TABLE>
 
On           , 1998, the last reported sale price of Regions common stock as
reported on the Nasdaq National Market, was $          , and the price of Meigs
County Bancshares common stock in the last known transaction was $          . On
June 24, 1998, the last business day prior to public announcement of the
proposed Merger, the last reported sale price of Regions common stock as
reported on the Nasdaq National Market, was $39.63, and the price of Meigs
County Bancshares common stock in the last known transaction was $17.50.
 
The holders of Regions common stock are entitled to receive dividends when and
if declared by the Board of Directors out of funds legally available therefor.
Regions has paid regular quarterly cash dividends since 1971. Although Regions
currently intends to continue to pay quarterly cash dividends on the Regions
common stock, there can be no assurance that Regions' dividend policy will
remain unchanged after completion of the Merger. The declaration and payment of
dividends thereafter will depend upon business conditions, operating results,
capital and reserve requirements, and the Board of Directors' consideration of
other relevant factors.
 
Regions is a legal entity separate and distinct from its subsidiaries and its
revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions. Regions' subsidiary depository institutions
are subject to certain legal restrictions on the
 
                                       46
<PAGE>   53
 
amount of dividends they are permitted to pay. See "Supervision and
Regulation -- Payment of Dividends."
 
Meigs County Bancshares' dividend policy has been not to pay dividends but
rather to use current earnings and profits to pay down Meigs County Bancshares'
indebtedness.
 
                                       47
<PAGE>   54
 
                         MEIGS COUNTY BANCSHARES, INC.
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
 
The following discussion provides certain information concerning the financial
condition and results of operations of Meigs County Bancshares, Inc. (Meigs
County Bancshares) for three years ended December 31, 1997, and as of September
30, 1998 and 1997 and for the nine months periods then ended. The financial
position and results of operations of Meigs County Bancshares were due primarily
to its banking subsidiary, Meigs County Bank (Bank). Management's discussion
should be read in conjunction with the financial statements and accompanying
notes presented elsewhere in this Proxy Statement-Prospectus.
 
 YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996 AND YEAR
        ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
 
OVERVIEW
 
Net Income for 1997 totaled $1,095,000 compared to $961,000 for 1996 and
$807,000 for 1995. The increase in net income of $134,000 from 1997 to 1996 was
due to an increase in net interest income of $641,000 along with a $102,000
increase in non-interest income, while being partially offset by an increase in
non-interest expense of $378,000, provision for loan losses of $84,000 and taxes
of $138,000.
 
Return on average assets was 1.16% and return on average equity was 19.94% for
1997, compared to 1.20% and 22.12%, respectively, for 1996 and 1.19% and 22.06%,
respectively, for 1995.
 
Average assets in 1997 increased by $14,996,000, or 19.0%, from 1996 caused by
an increase in customer deposits of $14,066,000, or 19.7%, which was partially
offset by a decrease in interest bearing liabilities of $416,000 or 22.3%. The
increase in deposits was caused by increases in time deposits of $8,623,000 and
interest bearing demand deposits of $6,177,000, offset partially by a decline in
NOW and money market deposits of $1,720,000. The increase in deposits helped to
fund the increase in loans of $10,864,000 and the changes in other asset
accounts.
 
The net interest margin, the percentage of net interest income to average
earning assets, decreased slightly in 1997, from 5.20% to 5.10%. The net
interest margin of 5.10% in 1997 is favorable to Meigs County Bancshares and is
a reflection of the continued healthy spread between rates on deposits and
yields on investments and loans. Average earning assets comprised 91.5%, 91.4%
and 91.9% of total average assets in 1997, 1996 and 1995, respectively.
 
RESULTS OF OPERATIONS
 
Net Interest Income.  Meigs County Bancshares' primary source of revenue is net
interest income. Net interest income is the difference between interest earned
on interest earning assets and interest paid on interest bearing sources of
funds. The level of net interest
 
                                       48
<PAGE>   55
 
income is determined primarily by the volume of interest earning assets and the
various rate spreads between the interest earning assets and their funding
sources.
 
Net interest income for 1997 was $4,377,000, compared to $3,736,000 for 1996 and
$3,381,000 for 1995. The increase of $641,000 from 1996 to 1997 was caused by
the increase in the average net interest earning assets. The decrease in the net
interest margin was due to the lower interest rate spread due to higher cost of
funds. Average non-interest-bearing deposits as a percent of total deposits
remained relatively stable from 1996 to 1997.
 
Loans continued to be the largest component of earning assets. Average loans for
1997 were $62,235,000, or 72.5% of average earning assets. Average mortgage-back
and investment securities totaled $18,475,000 and comprised 21.5% of average
earning assets. The remaining earning asset of Meigs County Bancshares was its
position in federal funds sold. The net yield on loans increased .06% from 1996
to 1997. The net yield on investment securities declined .09% during the same
period. The net yield on total earning assets increased .07% from 1996 to 1997,
and partially offset by a .17% increase in the rate paid on interest bearing
liabilities, for a net decrease in the net interest spread of .10%.
 
                                       49
<PAGE>   56
 
The following table represents the major components of interest earning assets
and interest bearing liabilities. Information is based on average daily balances
during the indicated periods.
 
      AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                            ---------------------------------------------------------------------------------------------------
                                         1997                              1996                              1995
                            -------------------------------   -------------------------------   -------------------------------
                            AVERAGE               AVERAGE     AVERAGE               AVERAGE     AVERAGE               AVERAGE
                            BALANCE   INTEREST   YIELD/COST   BALANCE   INTEREST   YIELD/COST   BALANCE   INTEREST   YIELD/COST
                            -------   --------   ----------   -------   --------   ----------   -------   --------   ----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                         <C>       <C>        <C>          <C>       <C>        <C>          <C>       <C>        <C>
INTEREST-EARNING ASSETS:
Loans Receivable
  Commercial and Real
    Estate................  $46,064    $4,603        9.99%    $36,522    $3,818       10.45%    $32,617    $3,421       10.49%
  Consumer and other
    loans.................  16,171      2,296       14.20     14,849      1,847       12.44     13,043      1,589       12.18
                            -------    ------                 -------    ------                 -------    ------      ------
        Total Loans.......  62,235      6,899       11.09     51,371      5,665       11.03     45,660      5,010       10.97
Mortgage-back
  securities..............   1,863         94        5.05      1,780        106        5.96      3,035        188        6.19
Investment Securities.....  16,612        968        5.83     16,903        971        5.74      9,557        523        5.47
Other earning assets......   5,085        267        5.25      1,962        100        5.10      3,653        208        5.69
                            -------    ------     -------     -------    ------     -------     -------    ------      ------
        Total interest-
          earning
          assets..........  85,795      8,228        9.59     72,016      6,842        9.50     61,905      5,929        9.58
Non-interest earning
  assets..................   7,952                             6,735                             5,458
                            -------                           -------                           -------
        Total Assets......  $93,747                           $78,751                           $67,363
                            =======                           =======                           =======
INTEREST-BEARING
  LIABILITIES:
Deposits:
  Interest bearing Demand
    deposits..............  $17,040       761        4.47%    $10,863       470        4.34%    $5,579        215        3.85%
  Now Deposits............   6,471        171        2.64      7,604        201        2.64      7,302        188        2.57
  Money Market............   1,245         37        2.97      1,832         52        2.84      2,586         71        2.75
  Savings deposits........   6,470        195        3.01      6,437        199        3.09      6,458        198        3.07
  Time deposits...........  45,070      2,581        5.73     36,447      2,048        5.62     31,892      1,732        5.43
                            -------    ------     -------     -------    ------     -------     -------    ------      ------
        Total interest
          bearing
          deposits........  76,296      3,745        4.91     63,183      2,970        4.70     53,817      2,404        4.47
Other Interest-bearing
  liabilities.............   1,447        106        7.33      1,863        136        7.30      1,750        144        8.23
                            -------    ------     -------     -------    ------     -------     -------    ------      ------
        Total interest-
          bearing
          liabilities.....  77,743      3,851        4.95     65,046      3,106        4.78     55,567      2,548        4.59
Non-Interest bearing
  demand deposits.........   8,980                             8,027                             7,013
Other non-interest bearing
  liabilities.............   1,533                               755                               816
                            -------                           -------                           -------
        Total
          Liabilities.....  88,256                            73,828                            63,396
                            -------                           -------                           -------
Equity....................   5,491                             4,923                             3,967
                            -------                           -------                           -------
        Total liabilities
          and
          shareholders'
          equity..........  $93,747                           $78,751                           $67,363
                            =======                           =======                           =======
Net interest-bearing
  assets..................   8,052                             6,970                             6,338
Net interest
  income/Interest rate
  spread..................             $4,377        4.64%                3,736        4.73%                3,381        4.99%
                                                  =======                           =======                            ======
Net interest margin.......                           5.10%                             5.19%                             5.46%
                                                  =======                           =======                            ======
Ratio of average interest-
  earning assets to
  average interest-bearing
  liabilities.............                         110.36%                           110.72%                           111.41%
</TABLE>
 
                                       50
<PAGE>   57
 
      AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
 
<TABLE>
<CAPTION>
                                                    NINE MONTHS ENDED SEPTEMBER 30,
                                  --------------------------------------------------------------------
                                                1998                                1997
                                  ---------------------------------   --------------------------------
                                  AVERAGE                 AVERAGE     AVERAGE                AVERAGE
                                  BALANCE    INTEREST   YIELD/COST*   BALANCE   INTEREST   YIELD/COST*
                                  --------   --------   -----------   -------   --------   -----------
                                                         (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>        <C>           <C>       <C>        <C>
INTEREST-EARNING ASSETS:
Loans Receivable
  Commercial and real estate....  $ 56,972    $4,243        9.93%     $44,609    $3,325        9.94%
  Consumer and other loans......    18,176     1,910       14.01       15,804     1,647       13.90
                                  --------    ------                  -------    ------
         Total Loans............    75,148     6,153       10.92       60,413     4,972       10.97
Mortgage-back securities........     1,409        57        5.39        1,878        70        4.97
Investment securities...........    13,105       553        5.63       17,020       760        5.95
Other earning assets............     7,069       283        5.34        5,278       206        5.20
                                  --------    ------      ------      -------    ------      ------
         Total interest-earning
           assets...............    96,731     7,046        9.71       84,589     6,008        9.47
Non-interest earning assets.....     8,830                              7,932
                                  --------                            -------
         Total Assets...........  $105,561                            $92,521
                                  ========                            =======
INTEREST-BEARING LIABILITIES:
Deposits:
  Interest bearing demand
    deposits....................  $ 23,868       813        4.54%     $15,865       528        4.44%
  Now deposits..................     6,715       133        2.64        6,598       129        2.61
  Money market..................       900        19        2.81        1,430        27        2.52
  Savings deposits..............     6,711       152        3.02        6,519       147        3.01
  Time deposits.................    48,529     2,093        5.75       44,795     1,918        5.71
                                  --------    ------      ------      -------    ------      ------
         Total interest bearing
           deposits.............    86,723     3,210        4.94       75,207     2,749        4.87
Other interest-bearing
  liabilities...................     1,072        60        7.46          231        83        5.46
                                  --------    ------      ------      -------    ------      ------
         Total interest-bearing
           liabilities..........    87,795     3,270        4.96       75,438     2,832        4.89
Non-interest bearing demand
  deposits......................     9,647                              8,910
Other non-interest bearing
  liabilities...................     1,420                              2,682
                                  --------                            -------
         Total Liabilities......    98,862                             87,030
                                  --------                            -------
Equity..........................     6,699                              5,491
                                  --------                            -------
         Total liabilities and
           shareholders'
           equity...............  $105,561                            $92,521
                                  ========                            =======
         Net interest-bearing
           assets...............     8,936                              9,151
         Net interest
           income/interest rate
           spread...............              $3,776        4.75%                $3,176        4.58%
                                                          ======                             ======
         Net interest margin....                            5.20%                              5.01%
                                                          ======                             ======
Ratio of average
  interest-earning assets to
  average interest-bearing
  liabilities...................                          110.18%                            112.13%
</TABLE>
 
- -------------------------
 
* Annualized
 
                                       51
<PAGE>   58
 
Rate/Volume Analysis.  The following table provides the components of changes in
net interest income in the format of a rate/volume analysis and analyzes the
dollar amount of changes in interest income and interest expense for major
components of interest-earning assets and interest-bearing liabilities. The
table distinguishes between (i) changes attributable to rate (changes in rate
multiplied by the prior period's volumes), (ii) changes attributable to volume
(changes in volume multiplied by the prior period's rate), (iii) mixed change
(changes in rate multiplied by changes in volume), and (iv) total increase
(decrease) (sum of previous columns).
 
      AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                   -------------------------------------------------------------------------
                                                1997/1996                             1996/1995
                                         CHANGE ATTRIBUTABLE TO                CHANGE ATTRIBUTABLE TO
                                   -----------------------------------   -----------------------------------
                                                              TOTAL                                 TOTAL
                                                   RATE/     INCREASE                    RATE/     INCREASE
                                   VOLUME   RATE   VOLUME   (DECREASE)   VOLUME   RATE   VOLUME   (DECREASE)
                                   ------   ----   ------   ----------   ------   ----   ------   ----------
                                                            (DOLLARS IN THOUSANDS)
<S>                                <C>      <C>    <C>      <C>          <C>      <C>    <C>      <C>
INTEREST-EARNING ASSETS:
Loans............................  $1,198   $ 30    $ 6       $1,234      $627    $ 25    $  3       $655
Investment Securities:
  Mortgage-back Securities.......       5     (16)    (1)         (12)      (78)     (7)      3        (82)
  U.S.Government & Agencies......     (17)     14     (0)          (3)      402      26      20        448
Other Earning Assets.............     159       3      5          167       (96)    (22)     10       (108)
                                   ------   ----    ---       ------      ----    ----    ----       ----
TOTAL NET CHANGE IN INCOME ON
  INTEREST-EARNING ASSETS........   1,345     31     10        1,386       855      22      36        913
                                   ------   ----    ---       ------      ----    ----    ----       ----
INTEREST BEARING LIABILITIES:
Interest-Bearing Deposits
  Deposits other than time.......     221     13      8          242       190      35      25        250
  Time Deposits..................     485     39      9          533       247      60       9        316
Other interest-bearing
  liabilities....................    (30)      0     (0)         (30)        9     (16)     (1)        (8)
                                   ------   ----    ---       ------      ----    ----    ----       ----
TOTAL NET CHANGE IN EXPENSE ON
  INTEREST-BEARING LIABILITIES...    676      52     17          745       446      79      33        558
                                   ------   ----    ---       ------      ----    ----    ----       ----
NET CHANGE IN NET INTEREST
  INCOME.........................  $ 669    $(21)   $(7)      $  641      $409    $(57)   $  3       $355
                                   ======   ====    ===       ======      ====    ====    ====       ====
</TABLE>
 
<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                              -----------------------------------
                                                                           1998/1997
                                                                    CHANGE ATTRIBUTABLE TO
                                                              -----------------------------------
                                                                                         TOTAL
                                                                              RATE/     INCREASE
                                                              VOLUME   RATE   VOLUME   (DECREASE)
                                                              ------   ----   ------   ----------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                                           <C>      <C>    <C>      <C>
INTEREST-EARNING ASSETS:
Loans.......................................................  $1,213   $(26)   $ (6)     $1,181
Investment Securities:
  Mortgage-back Securities..................................     (17)      5      (1)        (13)
  U.S.Government & Agencies.................................    (175)    (42)     10        (207)
Other Earning Assets........................................      70       5       2          77
                                                              ------   ----    ----      ------
TOTAL NET CHANGE IN INCOME ON INTEREST-EARNING ASSETS.......   1,091     (58)      5       1,038
                                                              ------   ----    ----      ------
INTEREST BEARING LIABILITIES:
Interest-Bearing Deposits
  Deposits other than time..................................  $ 266    $  1    $ 19      $  286
  Time Deposits.............................................    160      14       1         175
Other interest-bearing liabilities..........................    (39)     30     (14)        (23)
                                                              ------   ----    ----      ------
TOTAL NET CHANGE IN EXPENSE ON INTEREST-BEARING
  LIABILITIES...............................................     387     45       6         438
                                                              ------   ----    ----      ------
NET CHANGE IN NET INTEREST INCOME...........................   $ 704   (103)     (1)        600
                                                              ======   ====    ====      ======
</TABLE>
 
                                       52
<PAGE>   59
 
Interest Rate Sensitivity.  The interest rate sensitivity gap is the difference
between the amount of interest bearing assets and interest bearing liabilities
maturing in any given time frame. A primary objective of asset/liability
management is to maximize net interest margin while not subjecting Meigs County
Bancshares to significant interest rate risk in periods of rising or falling
interest rates. At December 31, 1997, Meigs County Bancshares' one year
repricing gap, defined as repricing assets minus repricing liabilities as a
percentage of total assets, was (16.30%), i.e. more of Meigs County Bancshares'
liabilities than assets re-price within a one year time frame. Management
regularly reviews interest rate exposure to analyze the impact of changes in
market interest rates on net interest income.
 
The following table set forth Meigs County Bancshares' interest rate sensitivity
at various time intervals as of December 31, 1997:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1997
                                     -------------------------------------------------------------------
                                     WITHIN    THREE TO    MORE THAN      MORE THAN      OVER
                                      THREE     TWELVE    ONE YEAR TO    THREE YEARS     FIVE
                                     MONTHS     MONTHS    THREE YEARS   TO FIVE YEARS   YEARS     TOTAL
                                     -------   --------   -----------   -------------   ------   -------
                                                           (DOLLARS IN THOUSANDS)
<S>                                  <C>       <C>        <C>           <C>             <C>      <C>
INTEREST EARNING ASSETS:
Loans Receivable...................  $15,145   $11,797      $19,042        $19,604      $4,931   $70,519
Mortgage-Back Securities...........       52        --          340             --       1,359     1,751
Investment Securities (Market
  Value)...........................      999       348        4,025          3,413       5,754    14,539
Other Earning Assets...............    2,000        --           --             --          --     2,000
                                     -------   -------      -------        -------      ------   -------
         TOTAL INTEREST EARNING
           ASSETS..................   18,196    12,145       23,407         23,017      12,044    88,809
                                     -------   -------      -------        -------      ------   -------
INTEREST-BEARING LIABILITIES:
Deposits:
  Interest-Bearing Demand
    deposits.......................    2,112     5,280        8,447          3,168       2,112    21,119
  Now Accounts.....................      671     1,677        2,684          1,006         671     6,709
  Money Market Deposit Accounts....      100       250          399            150         100       999
  Savings Accounts.................      641     1,602        2,564            961         641     6,409
  Certificates of Deposit..........   16,501    16,304       11,738          1,492          --    46,035
Note Payable and Line of Credit....    1,157        --           --             --          --     1,157
                                     -------   -------      -------        -------      ------   -------
         TOTAL INTEREST-BEARING
           LIABILITIES.............   21,182    25,113       25,832          6,777       3,524    82,428
                                     -------   -------      -------        -------      ------   -------
Excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities.....   (2,986)  (12,968)      (2,425)        16,240       8,520     6,381
Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities.....   (2,986)  (15,954)     (18,379)        (2,139)      6,381    12,762
Cumulative excess (deficiency) of
  interest-earning assets over
  interest-bearing liabilities as a
  percent of total assets..........    (3.05)%  (16.30)%     (18.78)%        (2.19)%      6.52%    13.04%
</TABLE>
 
Provision for Loan Losses.  The provision for loan losses charged to operating
expense is the result of a continuing review and assessment of the loan
portfolio, taking into consideration the history of chargeoffs in the loan
portfolio by category, the current economic conditions in the lending area, the
payment history, ability to repay and strength of collateral of specific
borrowers, and other relevant factors. The 1997 provision is $304,000, compared
to $220,000 in 1996 and $213,000 in 1995. Actual chargeoffs, net of recoveries,
were $127,000 in 1997, $103,000 in 1996 and $117,000 in 1995. Since the
provision exceeded net charge-offs in all years the result was an increase in
the allowance for loan losses.
 
                                       53
<PAGE>   60
 
Non-interest income.  Non-interest income in 1997 totaled $1,106,000 compared to
$1,012,000 in 1996 and $1,096,000 in 1995. The decrease from 1995 was due to a
change in accounting of a wholly owned-subsidiary that contributes non-interest
income to the bank.
 
Non-Interest Expenses.  Non-interest expenses were $3,584,000 in 1997, compared
to $3,206,000 in 1996 and $3,044,000 in 1995. Salaries and related benefits
increased $185,000 from 1996 to 1997 while occupancy expense remained virtually
unchanged. Other operating expenses increased by $182,000; the largest change
from 1996 to 1997 was due to the construction of a new branch in Athens,
Tennessee.
 
Income Taxes.  Meigs County Bancshares' effective tax rate was 31.3% in 1997,
27.4% in 1996 and 33.9% in 1995. The effective rate is less than the highest
statutory rate primarily because of tax-free income from municipal investments.
 
ANALYSIS OF FINANCIAL CONDITION
 
Investment Securities.  In 1997 investment securities and mortgage-back
securities decreased by $1,000,000 from 1996. The decrease was used to fund the
increase in loans during 1997. The total market value of investment securities
at December 31, 1997 was $16,329,000, including gross unrealized gains of
$82,688 and gross unrealized losses of $41,564. The investment securities
portfolio is used as a source of liquidity and a means of managing interest
rates and interest rate sensitivity. In addition, the portfolio serves as a
source of collateral on certain deposits. 71% of investment securities are
classified as available for sale, and 29% is classified as held to maturity.
 
Securities Portfolio.  The carrying amount of securities at the dates indicated
is set forth in the table below:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                SEPTEMBER 30,     -------------------------------------
                                    1998                1997                1996
                              -----------------   -----------------   -----------------
                              AMOUNT    PERCENT   AMOUNT    PERCENT   AMOUNT    PERCENT
                              -------   -------   -------   -------   -------   -------
                                               (DOLLARS IN THOUSANDS)
<S>                           <C>       <C>       <C>       <C>       <C>       <C>
U.S. Government.............  $   648     5.12%   $   499     3.06%   $   365     2.11%
U.S. Agencies...............    5,558    43.88      8,458    51.92      9,782    56.58
Mortgage-Back Securities....    1,038     8.20      1,751    10.75      1,302     7.53
Obligations of States &
  Political Subdivisions....    4,836    38.18      5,073    31.14      5,381    31.12
Other Securities............      586     4.63        509     3.12        460     2.66
                              -------   ------    -------   ------    -------   ------
          Total.............  $12,666   100.00%   $16,290   100.00%   $17,290   100.00%
                              =======   ======    =======   ======    =======   ======
</TABLE>
 
                                       54
<PAGE>   61
 
Investment Securities Maturity Distribution.  The amortized cost and estimated
fair market value of debt securities available for sale (in thousands) at
December 31, 1997, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
 
<TABLE>
<CAPTION>
                                   ONE YEAR     ONE TO      FIVE TO    OVER TEN
                                   OR LESS    FIVE YEARS   TEN YEARS    YEARS      TOTAL
                                   --------   ----------   ---------   --------   -------
<S>                                <C>        <C>          <C>         <C>        <C>
U.S. Treasuries..................   $  499      $   --      $   --      $   --    $   499
U.S. Agencies....................      803       4,277       3,378          --      8,458
Obligations of States & Political
  Subdivisions...................       45       3,448       1,388         192      5,073
Mortgage-Back Securities.........       52         340          --       1,359      1,751
Other Securities.................       --          --          --         509        509
                                    ------      ------      ------      ------    -------
          Total Investment
             Securities..........   $1,399      $8,065      $4,766      $2,060    $16,290
                                    ======      ======      ======      ======    =======
</TABLE>
 
Loans.  Net loans outstanding at December 31, 1997, totaled $69,655,000 compared
to $56,123,000 in 1996, an increase of $13,532,000, or 24.1%. Total average
loans in 1997 were $62,235,000, an increase of $10,864,000 from the average for
1996.
 
The following table sets forth the composition of Meigs County Bancshares' loan
portfolio by type of loan at the dates indicated:
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                               SEPTEMBER 30,      ---------------------------------------
                                    1998                 1997                 1996
                             ------------------   ------------------   ------------------
                                       PERCENT              PERCENT              PERCENT
                             BALANCE   OF TOTAL   BALANCE   OF TOTAL   BALANCE   OF TOTAL
                             -------   --------   -------   --------   -------   --------
                                                (DOLLARS IN THOUSANDS)
<S>                          <C>       <C>        <C>       <C>        <C>       <C>
TYPE OF LOAN:
Commercial Loans...........  $12,139     15.34%   $ 8,979     12.89%   $ 7,872     14.03%
Real Estate
  Loans -- Other...........   42,080     53.17     36,740     52.75     28,348     50.51
Real Estate Loans --
  Construction.............    2,555      3.23      2,522      3.62      1,916      3.41
Consumer Loans.............   18,993     24.00     18,527     26.60     14,900     26.55
Agricultural Loans.........    4,561      5.76      3,696      5.31      3,492      6.22
Obligations of States &
  Political Subdivisions...      182      0.23        692      0.99        374      0.67
                             -------    ------    -------    ------    -------    ------
          TOTAL LOANS......   80,510    101.74%    71,156    102.16%    56,902    101.39%
                             -------    ------    -------    ------    -------    ------
Less:
  Allowance for Loan
     Losses................      918      1.16%       864      1.24%       686      1.22%
  Unearned Premium on
     Loans.................      457      0.58%       637      0.91%        93      0.17%
                             -------              -------              -------
          TOTAL LOANS,
             NET...........  $79,135    100.00%   $69,655    100.00%   $56,123    100.00%
                             =======    ======    =======    ======    =======    ======
</TABLE>
 
Real estate loans is the largest category of loans, comprising 56.4% and 53.9%
of net loans at December 31, 1997 and 1996, respectively.
 
                                       55
<PAGE>   62
 
At December 31, 1997 and 1996, fixed rate loans totaled $56,100,000 and
$47,200,000, respectively, and variable rate loans totaled $13,500,000 and
$8,900,000, respectively.
 
Non-performing Assets.  Non-accrual loans, foreclosed assets and troubled debt
restructurings are included in non-performing assets. Total non-performing
assets decreased $81,000 during 1997 to $589,000 at December 31, 1997. The
decrease is attributable to a decline in non-performing loans.
 
Non-accrual loans are loans on which the accrual of interest income has been
discontinued and previously accrued interest has been reversed because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
 
The following table sets forth information with respect to non-performing assets
identified by Meigs County Bancshares, including non-accrual loans, other real
estate owned and accruing loans past due ninety days or more at the dates
indicated:
 
<TABLE>
<CAPTION>
                                                    SEPTEMBER 30,     DECEMBER 31,
                                                    --------------    -------------
                                                         1998         1997    1996
                                                    --------------    -----   -----
                                                        (DOLLARS IN THOUSANDS)
<S>                                                 <C>               <C>     <C>
NONACCRUAL LOANS:
Real Estate Loans.................................      $  45         $ 100   $ 177
Consumer Loans....................................        138           166     120
Commercial Loans..................................          4            --      19
                                                        -----         -----   -----
          TOTAL NONACCRUAL LOANS..................        187           266     316
                                                        -----         -----   -----
ACCRUING LOANS PAST DUE NINETY DAYS OR MORE:
Real Estate Loans.................................         20            31      87
Consumer Loans....................................        173            44      34
Commercial Loans..................................          8            12      13
                                                        -----         -----   -----
          TOTAL ACCRUING LOANS PAST DUE NINETY
            DAYS OR MORE..........................        201            87     134
                                                        -----         -----   -----
Total Non-Performing Loans........................        388           353     450
Other Real Estate Owned...........................        236           236     220
                                                        -----         -----   -----
          TOTAL NON-PERFORMING ASSETS.............      $ 624         $ 589   $ 670
                                                        =====         =====   =====
Non-Performing assets to net loans and other real
  estate..........................................       0.79%         0.83%   1.18%
Allowance for loan losses to total loans at end of
  period..........................................       1.15%         1.22%   1.21%
Allowance for loan losses to non-performing
  assets..........................................       1.47          1.48    1.02
</TABLE>
 
Allowance for Loan Losses.  Inherent in Meigs County Bancshares' lending
activities is the risk that loan losses will be experienced and that the risk of
loss will vary with the type of loan being made and the creditworthiness of the
borrower over the term of the loan. To reflect the currently perceived risk of
loss associated with Meigs County Bancshares' loan portfolio, provisions are
made to the allowance for loan losses. The allowance is created by direct
charges against income and is available for loan losses. The amount of the
allowance for loan losses and the provisions for loan losses are evaluated
quarterly, based on management's estimate of risk in the overall loan portfolio
and the estimated exposure on individual loans. In evaluating the adequacy of
the allowance and the amount of the provision, consideration is given to such
factors as: management's evaluation of specific loans; the level and composition
of classified loans; historical loss experience; results of
 
                                       56
<PAGE>   63
 
examinations of regulatory agencies and an internal asset review process;
expectations of future national and local economic conditions and their impact
on particular industries and the individual borrowers; the market value of
collateral and strength of available guaranties; concentrations of credit; and
other judgmental factors. Meigs County Bancshares maintains an allowance for
loan losses which it believes is adequate to absorb reasonably foreseeable
losses in the loan portfolio.
 
The allowance for loan losses increased $178,000 from December 31, 1996 to 1997,
to $864,000 and was 1.22% of total loans. The 1996 balance in the allowance for
loan losses was $686,000 or 1.21% of total loans.
 
The following table summarizes the loan loss experience for each of the periods
indicated:
 
<TABLE>
<CAPTION>
                                                  SEPTEMBER 30,    DECEMBER 31,
                                                  -------------   ---------------
                                                      1998         1997     1996
                                                  -------------   ------   ------
                                                      (DOLLARS IN THOUSANDS)
<S>                                               <C>             <C>      <C>
BALANCE AT BEGINNING OF YEAR....................     $  864       $  686   $  569
PROVISION CHARGED TO EXPENSE....................        333          305      220
CHARGE-OFFS:
Real Estate Loans...............................         (1)         (28)     (49)
Installment Loans...............................       (310)        (117)     (91)
Commercial Loans................................         (5)         (52)     (10)
                                                     ------       ------   ------
          TOTAL CHARGE-OFFS.....................       (316)        (197)    (150)
                                                     ------       ------   ------
RECOVERIES:
Real Estate Loans...............................         --           --        4
Installment Loans...............................         37           64       34
Commercial Loans................................         --            6        9
                                                     ------       ------   ------
          TOTAL RECOVERIES......................         37           70       47
                                                     ------       ------   ------
          NET LOAN CHARGE-OFFS..................       (279)        (127)    (103)
                                                     ------       ------   ------
          BALANCE AT END OF PERIOD..............     $  918       $  864   $  686
                                                     ======       ======   ======
Allowance for loan losses as a multiple of net
  loan charge-offs..............................       3.29         6.80     6.66
Net loan charge-offs to average loans...........       0.37%        0.20%    0.20%
Recoveries as a % of charge-offs................      11.71%       35.53%   31.33%
</TABLE>
 
Deposits.  Total deposits at December 31, 1997 were $89,597,000, an increase of
$11,957,000 from the December 31, 1996 total of $77,640,000. Average deposits in
1997 increased $14,066,000 from 1996. As noted earlier, an increase occurred in
the average balance of all deposit types except NOW and money market accounts.
 
Time deposits of $100,000 or more were $8,612,000 at December 31, 1997, which
comprised 9.6% of total deposits. These deposits consist primarily of deposits
from local customers with which Meigs County Bancshares has other banking
relationships. Meigs County Bancshares had no brokered deposits at December 31,
1997.
 
                                       57
<PAGE>   64
 
Deposit Average Balances and Rates.  The following table indicates the average
daily amount of deposits and rates paid on such deposits for the period
indicated:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                    SEPTEMBER 30,    -------------------------------
                                         1998             1997             1996
                                    --------------   --------------   --------------
                                    AMOUNT    RATE   AMOUNT    RATE   AMOUNT    RATE
                                    -------   ----   -------   ----   -------   ----
                                                 (DOLLARS IN THOUSANDS)
<S>                                 <C>       <C>    <C>       <C>    <C>       <C>
Non-interest bearing demand.......  $ 9,647      0%  $ 8,980      0%  $ 8,027      0%
Interest bearing demand...........   23,868   4.42%   17,040   4.47%   10,863   4.34%
NOW Accounts......................    6,715   2.64%    6,471   2.64%    7,604   2.64%
Money market......................      900   2.81%    1,245   2.97%    1,832   2.84%
Savings...........................    6,711   3.02%    6,470   3.01%    6,437   3.09%
Time Deposits.....................   48,529   5.75%   45,070   5.73%   36,447   5.62%
                                    -------          -------          -------
          Total...................  $96,370          $85,276          $71,210
                                    =======          =======          =======
</TABLE>
 
Maturities of Time Deposits of $100,000 or more.  The maturities of time
deposits of $100,000 or more are summarized in the table below:
 
<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                     SEPTEMBER 30,   ---------------
                                                         1998         1997     1996
                                                     -------------   ------   ------
                                                         (DOLLARS IN THOUSANDS)
<S>                                                  <C>             <C>      <C>
Three months or less...............................     $ 2,556      $3,420   $2,309
Over three months through six months...............       7,249       2,769    3,333
Over six months through twelve months..............       2,722       2,423    2,635
Over twelve months.................................          --          --       --
                                                        -------      ------   ------
          Total....................................     $12,527      $8,612   $8,277
                                                        =======      ======   ======
</TABLE>
 
Liquidity.  Liquidity involves Meigs County Bancshares' ability to raise funds
to support asset growth or to reduce assets, meet deposit withdrawals and other
borrowing needs, maintain reserve requirements and otherwise operate the company
on an ongoing basis.
 
As shown in the accompanying 1997 statement of cash flows, cash and cash
equivalents decreased by $1,043,000 from December 31, 1996 to December 31, 1997.
Net cash provided by operating activities increased to $1.4 million primarily
due to the increase in other assets offset by an increase in net income. Net
cash used in investing activities of $13.8 million consisted primarily of net
loans originated of $14 million and purchases of premises and equipment of $1.1
million, largely funded by sales and maturities of investment securities. Net
cash provided by financing activities provided the remainder of funding sources
for 1997. The $11.4 million of net cash provided by financing activities
consisted primarily of a net increase in deposits of $12 million.
 
                                       58
<PAGE>   65
 
Capital Resources.  Meigs County Bancshares maintains adequate capital for
regulatory purposes and has sufficient capital to absorb the risks inherent in
the business. Risk-based capital requirements have been established that weight
different assets according to the level of risk associated with those types of
assets. The table below summarizes Meigs County Bancshares' capital levels at
the dates indicated:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                             SEPTEMBER 30,   -------------   REGULATORY
                                                 1998        1997    1996     MINIMUMS
                                             -------------   -----   -----   ----------
<S>                                          <C>             <C>     <C>     <C>
Tier I Capital to Average Assets...........       7.28%       7.33%   7.64%      4%
Tier I Capital to Risk Weighted Assets.....      10.37       10.40   11.36       4
Total Capital to Risk Weighted Assets......      11.57       11.61   12.58       8
</TABLE>
 
                 NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED
                    TO NINE MONTHS ENDED SEPTEMBER 30, 1997
 
OVERVIEW
 
Net income for the nine months ended September 30, 1998 totaled $954,000
compared to $746,000 for the same period in 1997.
 
Return on average assets was 1.20% and return on average equity was 18.98% for
the nine months ended September 30, 1998 compared to 1.08% and 18.11%,
respectively, for the comparable period in 1997.
 
RESULTS OF OPERATIONS
 
Net Interest Income.  Meigs County Bancshares' primary source of revenue is net
interest income. Net interest income is the difference between interest earned
on interest earning assets and interest paid on interest bearing sources of
funds. The level of net interest income is determined primarily by the volume of
interest earning assets and the various rate spreads between the interest
earning assets and their funding sources.
 
Net interest income for the nine-month period ended September 30, 1998 totaled
$3,776,000, an increase of $600,000 or 18.9% from the $3,176,000 total for the
comparable period in 1997. The increase in net interest income was attributable
to an increase in total interest income of $1,038,000, which was partially
offset by an increase in total interest expense of $438,000.
 
Average interest-earning assets for the nine months ended September 30, 1998
were $96,731,000 and represented 91.6% of average total assets. An increase in
average loans outstanding of $14,735,000 and an increase in other earning assets
of $1,791,000, were partially offset by decreases in average investment
securities of $4,384,000 from September 30, 1997.
 
As of September 30, 1998, non-interest-bearing demand deposits averaged
$9,647,000 or 11.1% of deposits compared to $8,910,000 or 11.8% of deposits at
September 30, 1997. The percentage of non-interest bearing deposits has a
positive impact on Meigs County Bancshares' net interest margin.
 
Net interest margin, the ratio of net interest income to average earning assets,
for the nine months ended September 30, 1998, increased to 5.24%, an increase of
14 basis points from
 
                                       59
<PAGE>   66
 
September 30, 1997. The increase in net interest margin in 1998 is a result of
the higher percentage of assets invested in loans, which are the highest
yielding assets held by Meigs County Bancshares.
 
Net interest spread, the difference between the yield on earning assets and the
rate paid on interest bearing liabilities, was 4.78% for the nine months ended
September 30, 1998, an increase from September 30, 1997 of 21 basis points.
 
Interest Rate Sensitivity.  At September 30, 1998 Meigs County Bancshares' one
year repricing gap, defined as repricing assets minus repricing liabilities as a
percentage of total assets, was (6.94%), i.e. more of Meigs County Bancshares'
liabilities than assets re-price within a one year time frame. Management
regularly reviews interest rate exposure to analyze the impact of changes in
market interest rates on net interest income.
 
                                       60
<PAGE>   67
 
The following table details Meigs County Bancshares' interest rate sensitivity
position at various time intervals as of September 30, 1998:
 
<TABLE>
<CAPTION>
                                                       SEPTEMBER 30, 1998
                              ---------------------------------------------------------------------
                              WITHIN    THREE TO    MORE THAN      MORE THAN      OVER
                               THREE     TWELVE    ONE YEAR TO    THREE YEARS     FIVE
                              MONTHS     MONTHS    THREE YEARS   TO FIVE YEARS    YEARS     TOTAL
                              -------   --------   -----------   -------------   -------   --------
                                                     (DOLLARS IN THOUSANDS)
<S>                           <C>       <C>        <C>           <C>             <C>       <C>
INTEREST EARNING ASSETS:
Loans Receivable............  $15,834   $ 15,290     $25,897        $19,189      $ 3,843   $ 80,053
Investment Securities
  (Market Value)............    2,837        437       2,691          2,934        3,711     12,610
Federal Funds Sold..........    9,690         --          --             --           --      9,690
Interest bearing deposits at
  other banks...............       44         --          --             --           --         44
                              -------   --------     -------        -------      -------   --------
         TOTAL INTEREST
           EARNING ASSETS...  $28,405   $ 15,727     $28,588        $22,123      $ 7,554   $102,397
                              =======   ========     =======        =======      =======   ========
INTEREST-BEARING
  LIABILITIES:
Deposits:
  Interest-bearing demand...  $ 2,577   $  6,442     $10,307        $ 3,865      $ 2,577   $ 25,768
  Now Accounts..............      654      1,635       2,615            981          654      6,539
  Savings Accounts..........      714      1,785       2,856          1,071          714      7,140
  Money market Deposit
    Accounts................       89        222         355            133           89        888
  Certificates of Deposit...    8,637     29,021      11,703          1,869           --     51,230
                              -------   --------     -------        -------      -------   --------
         TOTAL INTEREST-
           BEARING
           LIABILITIES......  $12,671   $ 39,105     $27,836        $ 7,919      $ 4,034   $ 91,565
                              =======   ========     =======        =======      =======   ========
Excess (deficiency) of
  interest-earning assets
  over interest-bearing
  liabilities...............  $15,734   $(23,378)    $   752        $14,204      $ 3,520   $ 10,832
Cumulative excess
  (deficiency) of interest-
  earning assets over
  interest-bearing
  liabilities...............   15,734     (7,644)     (6,892)         7,312       10,832     21,664
Cumulative excess
  (deficiency) of interest-
  earning assets over
  interest-bearing
  liabilities as a percent
  of total assets...........    14.21%     (6.90)%     (6.23)%         6.60%        9.78%     19.57%
</TABLE>
 
Provision for Possible Loan Losses.  As of September 30, 1998, the provision for
possible loan losses totaled $333,000 compared to $209,000 for the same
nine-month period in 1997. The increase in the provision in the nine months
ended September 30, 1998 funded an increase in the level of the reserve
necessitated by the increase in the volume of loans.
 
Non-Interest Income.  Non-interest income for the nine-month period ended
September 30, 1998 totaled $804,000 compared to $690,000 for the same period in
1997. The increase resulted from a gain on the sale of some government
guaranteed loans.
 
Non-Interest Expense.  For the nine-month period ended September 30, 1998, total
non-interest expenses increased $262,000 or 10.2% from the same period in 1997.
The increase
 
                                       61
<PAGE>   68
 
resulted from the remodeling of the main office facilities and employee salaries
and benefits.
 
Income Taxes.  Meigs County Bancshares' effective tax rate was 33.1% for the
nine month period ended September 30, 1998 compared to 31.9% for the same period
in 1997. The effective tax rate is less than the highest statutory rate
primarily because of the receipt of tax-free income from municipal investments.
 
ANALYSIS OF FINANCIAL CONDITIONS
 
Investment Securities.  Average investment and mortgage-back securities for the
nine months ended September 30, 1998 were $14,500,000 or 15% of average earning
assets. Total investment securities at September 30, 1998 were $12,666,000
including gross unrealized gains of $134,445 and gross unrealized losses of
$1,003. At September 30, 1998, 75% of investment securities were classified as
available for sale and 25% are classified as held to maturity. The composition
of the portfolio, effectively managed, limits Meigs County Bancshares' exposure
to changes in interest rates and economic conditions as they occur.
 
Securities Portfolio.  The carrying amount of securities as of September 30,
1998 is included with the Securities Portfolio table in the year end comparison
subsection above.
 
Loans and Non-Performing Assets.  The loan portfolio is the largest component of
Meigs County Bancshares' earning assets. For the nine months ended September 30,
1998, average loans outstanding were $75,148,000 compared to $60,413,000 for the
same period in 1997. The amount of loans outstanding according to type of loan
as of September 30, 1998 is included in the Loan Portfolio Composition table in
the year end comparison subsection above.
 
The largest segment of Meigs County Bancshares' loan portfolio is real estate
loans that represent approximately 56.4% of net loans as of September 30, 1998.
As of September 30, 1997, real estate loans comprised 58.2% of net loans.
 
Non-accrual loans are loans as to which the accrual of interest income has been
discontinued and previously accrued interest has been reversed, because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
 
Allowance for Loan Losses.  The loan loss experience for the nine months ended
September 30, 1998 and the three years ended December 31, 1997 is summarized in
the Allowance for Loan Losses table in the year end comparison subsection above.
 
At September 30, 1998 the allowance for possible loan losses was $918,000 as
compared to $791,000 at September 30, 1997. The allowance as a percent of loans
outstanding was 1.15% and 1.19% as of September 30, 1998 and 1997, respectively.
For the nine-month period ending September 30, 1998, charge-offs exceeded
recoveries by $279,000.
 
Deposits.  Total deposits at September 30, 1998 were $101,340,000 which is
$14,737,000 or 17% higher than at September 30, 1997.
 
Time deposits of $100,000 or more were $12,527,000 at September 30, 1998. These
deposits consist primarily of deposits from local customers with which Meigs
County
 
                                       62
<PAGE>   69
 
Bancshares has other banking relationships. Meigs County Bancshares had no
brokered deposits at September 30, 1998.
 
Deposit Average Balances and Rates.  The average daily amount of deposits and
rates paid on such deposits as of September 30, 1998 are included with the
Deposit Average Balances and Rates table in the year end comparison subsection
above.
 
Maturities of Time Deposits of $100,000 or more.  The maturities of time
deposits of $100,000 or more as of September 30, 1998 are included with the
Maturities of Time Deposits of $100,000 or More table in the year end comparison
subsection above.
 
Liquidity.  Liquidity is the ability of Meigs County Bancshares to fund the
needs of its borrowers, depositors and creditors. Meigs County Bancshares'
management maintains a strategy that provides adequate liquidity and manages
interest rate risk. Meigs County Bancshares' liquidity sources, including cash
flows from sales, maturities and paydowns of loans and investment securities,
federal funds purchased, securities sold under agreements to repurchase and a
base of core deposits, are considered adequate to meet liquidity needs for
normal operations.
 
Capital Resources.  Meigs County Bancshares is required to comply with the
risk-based capital guidelines adopted by the FDIC. Those guidelines apply
weighing factors, which vary according to the level of risk associated with each
asset category. As of September 30, 1998, Meigs County Bancshares exceeds all
minimum capital ratios. Meigs County Bancshares' consolidated regulatory capital
ratios as of September 30, 1998 are included with the Capital Resources table in
the year end comparison subsection above.
 
                   INFORMATION ABOUT MEIGS COUNTY BANCSHARES
 
Meigs County Bancshares is a bank holding company organized under the laws of
the state of Tennessee with its principal executive office located in Decatur,
Tennessee. Meigs County Bancshares operates principally through Meigs County
Bank, which is a state-chartered commercial bank and which provides a range of
consumer and commercial banking services through five offices in Meigs,
Hamilton, and McMinn counties in eastern Tennessee. At September 30, 1998, Meigs
County Bancshares had total consolidated assets of approximately $ 110.7
million, total consolidated deposits of approximately $101.3 million, and total
consolidated stockholders' equity of approximately $7.0 million. Meigs County
Bancshares' principal executive office is located at 116 N. Main Street,
Decatur, Tennessee, 37322 and its telephone number at such address is (423)
334-3622.
 
BUSINESS AND PROPERTIES
 
Meigs County Bancshares has four banking facilities in Meigs County and one
office each in Hamilton and McMinn counties. All properties are owned by Meigs
County Bank.
 
The main office facility in Decatur is a 13,870 square foot building located at
116 North Main Street. A significant addition and remodeling project was
completed in 1997. A new facility is under construction at the Highway 304, Ten
Mile location, and should be completed by November 1998. The new 1,600 square
foot building replaces an outdated building and should enhance growth at that
office. The Georgetown office, located on Highway 60, serves southern Meigs and
parts of Bradley and Hamilton counties. The 3,300 square foot building was
constructed in 1983. This facility also houses the Georgetown United States Post
Office as a tenant. The fourth Meigs County location, a drive-up teller
                                       63
<PAGE>   70
 
facility located on Highway 58, was built in 1995. The Ooltewah office, located
at 9231 Lee Highway, serves a rapidly growing area of Hamilton County. The 2,500
square foot facility was constructed in 1989 and bank management anticipates the
need for an expansion to accommodate the business growth of this office. The
Athens office at 1117 S. Congress Parkway serves the McMinn County market. The
3,500 square foot building opened in 1996.
 
All the above facilities are in excellent condition and should provide for ample
growth with the one exception noted.
 
COMPETITION
 
Meigs County Bancshares encounters vigorous competition in its market areas for
the provision of depository institution financial services from a number of
sources, including bank holding companies and commercial banks, savings and loan
associations and other thrift institutions, credit unions, other financial
institutions, and financial intermediaries that operate in Meigs County
Bancshares' market area. Regional interstate banking laws and other recent
federal and state laws have resulted in increased competition from both
conventional banking institutions and other businesses offering financial
services and products. Meigs County Bank also competes for interest bearing
funds with a number of other financial intermediaries and nontraditional
consumer investment alternatives, including brokerage firms, consumer finance
companies, commercial finance companies, credit unions, money market funds, and
federal, state, and municipal issuers of short term obligations. Many of these
competitors have greater financial resources than Meigs County Bank. At
September 30, 1998, there were approximately 16 commercial banks, 2 savings
banks, and 23 credit unions competing with Meigs County Bank in the Bank's
three-county market area.
 
LEGAL PROCEEDINGS
 
Meigs County Bancshares and Meigs County Bank are not parties to any material
legal proceedings other than ordinary routine litigation incidental to their
business.
 
MANAGEMENT
 
The following table presents information about the directors and executive
officers of Meigs County Bancshares and Meigs County Bank. Unless otherwise
indicated, each person has sole voting and investment powers over the indicated
shares. Information relating to beneficial ownership of Meigs County Bancshares
common stock is based upon "beneficial ownership" concepts set forth in rules
promulgated under the Exchange Act. Under such rules a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. Under the rules, more than one person may be
deemed to be a beneficial owner of the same securities. A person is also deemed
to be a beneficial owner of any security of which that person has the right to
acquire beneficial ownership within 60 days from the record date. The footnotes
to the table indicate how many shares each person has the right to acquire
within 60 days of the record date. The shares of Meigs County Bancshares which
are issuable to a person listed below upon exercise of the vested
 
                                       64
<PAGE>   71
 
portion of the outstanding options are assumed to be outstanding for the purpose
of determining the percentage of shares beneficially owned by that person.
 
<TABLE>
<CAPTION>
                       PRESENT OCCUPATION     POSITION AND     DIRECTOR OR     NUMBER OF SHARES
                         AND PRINCIPAL        OFFICES HELD      EXECUTIVE     BENEFICIALLY OWNED
                         OCCUPATION FOR         WITH MCB         OFFICER      AT THE RECORD DATE
        NAME            LAST FIVE YEARS         AND BANK          SINCE      AND PERCENT OF CLASS
        ----           ------------------  ------------------  -----------   --------------------
<S>                    <C>                 <C>                 <C>           <C>
F. Stephen Miller      Meigs County Bank   President/CEO-         1973             210,878(1)
                                           Bank
                                           Director-Bank
                                           Pres/Director-MCB
 
William M. Buchanan    Volunteer Electric  Chairman of Board-     1976              32,262(2)
                       Coop.               Bank
                       General Manager     Director-MCB
 
Patsy Hayes            Meigs County Bank   SVP/Cashier-Bank       1984                 760
                                           Secretary-Bank
                                           Sec/Treas-MCB
 
C.E. Rockholt, Sr.     Retired             Director-MCB           1973               2,472
                                           Director-Bank
 
Jerry D. Smith         Meigs County Bank   Senior Vice            1995               1,902
                                           President-Bank
 
Jerry L. Grisham       G&P Office          Director-Bank          1994                 500
                       Machines
                       Owner
 
William Inman          TN Dept. of         Director-Bank          1994                 500
                       Agriculture
                       Farmer
 
Carlton L. Norris      Piedmont, Olsen,    Director-Bank          1996                 500
                       Hensley
                       Executive Vice
                       President
 
George Tuell           Meigs County Bank   Senior Vice            1997                   0
                                           President-Bank
Virginia Kibble        Meigs County Bank   SVP/CFO-Bank           1995                   0
Sidney W. Breaux       Meigs County Bank   Executive Vice         1989                   0
                                           President-Bank
</TABLE>
 
- -------------------------
 
(1) Includes 17,530 options exercisable within 60 days and 13,895 shares held in
    the Meigs County Bancshares Employee Stock Ownership Plan, as to which Mr.
    Miller shares voting rights.
 
(2) Includes 13,895 shares held in the Meigs County Bancshares Employee Stock
    Ownership Plan, as to which Mr. Buchanan shares voting rights.
 
                                       65
<PAGE>   72
 
TRANSACTIONS WITH MANAGEMENT
 
In the ordinary course of business, Meigs County Bank has loans, deposits and
other transactions with its executive officers, directors, and organizations
with which such persons are associated. Such transactions are on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others. The aggregate amount of loans
to the aforementioned persons and company(s) in which they have a 10% or more
ownership interest as of September 30, 1998, were approximately $903,000.
 
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
 
The following table sets forth certain information concerning the beneficial
owners of more than 5.0% of Meigs County Bancshares common stock, as of the
record date.
 
<TABLE>
<CAPTION>
                                       NAME AND ADDRESS          AMOUNT AND NATURE      PERCENT OF
TITLE OF CLASS                        OF BENEFICIAL OWNER       BENEFICIAL OWNERSHIP     CLASS(1)
- --------------                        -------------------       --------------------    ----------
<S>                              <C>                            <C>                     <C>
MCB Common Stock...............  F. Stephen Miller                    210,878(2)(4)       76.49%
                                 P.O. Box 56
                                 Decatur, TN 37322
 
MCB Common Stock...............  William M. Buchanan                   32,262(3)          12.50
                                 P.O. Box 55
                                 Decatur, TN 37322
 
MCB Common Stock...............  Rachel D. Culvahouse                  17,240              6.68
                                 P.O. Box 146
                                 Decatur, TN 37322
 
MCB Common Stock...............  Meigs County Bancshares, Inc.         13,895(4)           5.38
                                 Employee Stock
                                 Ownership Plan
                                 116 North Main Street
                                 Decatur, TN 37322
</TABLE>
 
- -------------------------
 
(1) The information shown above is based upon information furnished by the named
    persons. Information relating to beneficial ownership is based upon
    "beneficial ownership" concepts set forth in rules promulgated under the
    Exchange Securities Act. Under such rules a person is deemed to be a
    "beneficial owner" of a security if that person has or shares "voting
    power," which includes the power to dispose or to direct the voting of such
    security, or "investment power," which includes the power to dispose or to
    direct the disposition of such security. A person is also deemed to be a
    beneficial owner of any security of which that person has the right to
    acquire beneficial ownership within 60 days. Under the rules, more than one
    person may be deemed to be a beneficial owner of the same securities, and a
    person may be deemed to be a beneficial owner of securities as to which he
    or she has no beneficial interest. The shares of Meigs County Bancshares
    Common Stock issuable upon exercise of outstanding options held by a person
    are assumed to be outstanding for the purpose of determining the percentage
    of shares beneficially owned by that person.
 
                                       66
<PAGE>   73
 
(2) Includes 179,453 shares owned directly, 17,530 options exercisable within 60
    days granted under the terms of a formal stock option plan, and 13,895
    shares held in the Meigs County Bancshares ESOP, over which Mr. Miller
    shares voting rights.
 
(3) Includes 18,367 shares owned directly and 13,895 shares held in the Meigs
    County Bancshares ESOP, over which Mr. Buchanan shares voting rights.
 
(4) F. Stephen Miller and William M. Buchanan, Trustees of Meigs County
    Bancshares ESOP may vote in such a manner as they shall determine in their
    sole discretion. In the case of a vote concerning a merger, takeover,
    recapitalization, and similar issues, the ESOP Trustees must pass voting
    rights to the ESOP participants.
 
                                       67
<PAGE>   74
 
                           INFORMATION ABOUT REGIONS
 
GENERAL
 
Regions is a regional bank holding company organized and existing under the laws
of the state of Delaware and headquartered in Birmingham, Alabama, with
approximately 713 banking offices located in Alabama, Arkansas, Florida,
Georgia, Louisiana, South Carolina, Tennessee, and Texas as of September 30,
1998. At that date, Regions had total consolidated assets of approximately $35.1
billion, total consolidated deposits of approximately $27.2 billion, and total
consolidated stockholders' equity of approximately $3.0 billion. Regions has
banking-related subsidiaries engaged in mortgage banking, credit life insurance,
leasing, and securities brokerage activities with offices in various
Southeastern states. Through its subsidiaries, Regions offers a broad range of
banking and banking-related services.
 
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. In 1994, the
name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation. Regions' principal executive offices are located at 417 North 20th
Street, Birmingham, Alabama 35203, and its telephone number at such address is
(205) 326-7100.
 
Regions continually evaluates business combination opportunities and frequently
conducts due diligence activities in connection with possible business
combinations. As a result, business combination discussions and, in some cases,
negotiations frequently take place, and future business combinations involving
cash, debt, or equity securities can be expected. Any future business
combination or series of business combinations that Regions might undertake may
be material, in terms of assets acquired or liabilities assumed, to Regions'
financial condition. Recent business combinations in the banking industry have
typically involved the payment of a premium over book and market values. This
practice could result in dilution of book value and net income per share for the
acquirer.
 
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement-Prospectus. See
"Where You Can Find More Information."
 
RECENT DEVELOPMENTS
 
Since December 31, 1997, and as of the date of this Proxy Statement-Prospectus,
Regions has completed the acquisitions of eleven financial institutions (the
"Recently Completed Acquisitions") and has entered into definitive agreements to
acquire four financial institutions in addition to the Merger (the "Other
Pending Acquisitions"). Certain aspects of the completed and other pending
acquisitions are presented in the following table:
 
<TABLE>
<CAPTION>
                                                      CONSIDERATION
                                                 -----------------------
                                       APPROXIMATE
                                 ------------------------                 ACCOUNTING
INSTITUTION                      ASSET SIZE(1)   VALUE(1)       TYPE      TREATMENT
- -----------                      -------------   --------   ------------  ----------
                                      (IN MILLIONS)
<S>                              <C>             <C>        <C>           <C>
RECENTLY COMPLETED
  ACQUISITIONS:
Greenville Financial
  Corporation, located in
  Greenville, South Carolina...     $  134        $   34    Regions       Pooling of
                                                            Common Stock  Interests
</TABLE>
 
                                       68
<PAGE>   75
 
<TABLE>
<CAPTION>
                                                      CONSIDERATION
                                                 -----------------------
                                       APPROXIMATE
                                 ------------------------                 ACCOUNTING
INSTITUTION                      ASSET SIZE(1)   VALUE(1)       TYPE      TREATMENT
- -----------                      -------------   --------   ------------  ----------
                                      (IN MILLIONS)
<S>                              <C>             <C>        <C>           <C>
PALFED, Inc., located in Aiken,
  South Carolina...............     $  665        $  145    Regions       Pooling of
                                                            Common Stock  Interests
First United Bancorporation,
  located in Anderson, South
  Carolina.....................        292            80    Regions       Pooling of
                                                            Common Stock  Interests
St. Mary Holding Corporation,
  located in Franklin,
  Louisiana....................        113            31    Regions       Pooling of
                                                            Common Stock  Interests
Key Florida Bancorp, Inc.,
  located in Bradenton,
  Florida......................        212            39    Regions       Pooling of
                                                            Common Stock  Interests
First State Corporation,
  located in Albany, Georgia...        540           161    Regions       Pooling of
                                                            Common Stock  Interests
First Commercial Corporation,
  located in Little Rock,
  Arkansas.....................      7,382         2,597    Regions       Pooling of
                                                            Common Stock  Interests
Village Bankshares, Inc.
  located in Tampa, Florida....        211            46    Regions       Pooling of
                                                            Common Stock  Interests
Jacobs Bank, located in
  Scottsboro, Alabama..........        186            47    Regions       Pooling of
                                                            Common Stock  Interests
Etowah Bank, located in Canton,
  Georgia......................        409            99    Regions       Pooling of
                                                            Common Stock  Interests
First Community Banking
  Services, Inc., located in
  Peachtree City, Georgia......        125            30    Regions       Pooling of
                                                            Common Stock  Interests
OTHER PENDING ACQUISITIONS:
VB&T Bancshares Corporation,
  located in Valdosta,
  Georgia......................         75            18    Regions       Pooling of
                                                            Common Stock  Interests
Bullsboro BancShares, Inc.,
  located in Newman, Georgia...        108            36    Regions       Pooling of
                                                            Common Stock  Interests
</TABLE>
 
                                       69
<PAGE>   76
 
<TABLE>
<CAPTION>
                                                      CONSIDERATION
                                                 -----------------------
                                       APPROXIMATE
                                 ------------------------                 ACCOUNTING
INSTITUTION                      ASSET SIZE(1)   VALUE(1)       TYPE      TREATMENT
- -----------                      -------------   --------   ------------  ----------
                                      (IN MILLIONS)
<S>                              <C>             <C>        <C>           <C>
St. James Bancorporation, Inc.,
  located in Lutcher,
  Louisiana....................     $  152        $   43    Regions       Purchase
                                                            Common Stock
Arkansas Banking Company,
  located in Jonesboro,
  Arkansas.....................        343            64    Regions       Purchase
                                                            Common Stock
</TABLE>
 
- -------------------------
 
(1) Calculated as of the date of consummation in the case of the completed
    acquisitions and as of the date of announcement of the transaction in the
    case of pending acquisitions.
 
Consummation of the Other Pending Acquisitions is subject to the approval of
certain regulatory agencies and approval of the stockholders of the institutions
to be acquired. Moreover, the closing of each transaction is subject to various
contractual conditions precedent. No assurance can be given that the conditions
precedent to consummating the transactions will be satisfied in a manner that
will result in their consummation.
 
If the Other Pending Acquisitions and the Merger had been consummated on
September 30, 1998, as of that date Regions' total consolidated assets would
have been increased by approximately $751 million to approximately $35.8
billion; its total consolidated deposits would have increased by approximately
$696 million to approximately $27.9 billion; and its total consolidated
stockholders' equity would have increased by approximately $26 million to
approximately $3.0 billion.
 
The First Commercial Acquisition.  On July 31, 1998, Regions completed a
business combination with First Commercial Corporation, Little Rock, Arkansas.
Additional information concerning this business combination is included in
Regions' current reports on Form 8-K, dated as of February 8, 1998, July 31,
1998, and November 6, 1998. Such current reports are incorporated in this Proxy
Statement-Prospectus by reference. See "Where You Can Find More Information."
 
Regions accounted for the First Commercial Acquisition as a pooling of
interests. All historical financial information of Regions presented in this
Proxy Statement-Prospectus has been restated to reflect Regions' business
combination with First Commercial Corporation and other significant business
combinations consummated in the first quarter of 1998, which were accounted for
as poolings of interests. Supplemental historical consolidated financial
statements of Regions giving effect to such poolings-of-interests combinations
are included in Regions' Current Report on Form 8-K dated November 6, 1998. See
"Where You Can Find More Information."
 
                           SUPERVISION AND REGULATION
 
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to Regions and Meigs County Bancshares.
Additional information is available in Regions' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997. See "Where You Can Find More
Information."
 
                                       70
<PAGE>   77
 
GENERAL
 
Regions and Meigs County Bancshares are both bank holding companies registered
with the Federal Reserve Board under the Bank Holding Company Act. As such,
Regions and Meigs County Bancshares and their non-bank subsidiaries are subject
to the supervision, examination, and reporting requirements of the Bank Holding
Company Act and the regulations of the Federal Reserve Board.
 
The Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve Board before: (i) it may acquire direct or
indirect ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company.
 
The Bank Holding Company Act further provides that the Federal Reserve Board may
not approve any transaction that would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any section of the United States, or the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the country, or that in any other manner would be
in restraint of trade, unless the anticompetitive effects of the proposed
transaction are clearly outweighed by the public interest in meeting the
convenience and needs of the community to be served. The Federal Reserve Board
is also required to consider the financial and managerial resources and future
prospects of the bank holding companies and banks concerned and the convenience
and needs of the community to be served.
 
The Bank Holding Company Act, as amended by the interstate banking provisions of
the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act") permits any bank holding company located in Alabama to
acquire a bank located in any other state, and any bank holding company located
outside Alabama to acquire any Alabama-based bank, regardless of state law to
the contrary, subject to certain deposit-percentage, aging requirements, and
other restrictions. The Interstate Banking Act also generally provides that,
after June 1, 1997, national and state-chartered banks may branch interstate
through acquisitions of banks in other states, unless a state "opted out" and
prohibited interstate branching altogether. None of the states in which the
banking subsidiaries of Regions or Meigs County Bancshares are located has
"opted out." Accordingly, Regions has the ability to consolidate all of its bank
subsidiaries into a single bank with interstate branches.
 
The Bank Holding Company Act generally prohibits Regions and Meigs County
Bancshares from engaging in activities other than banking or managing or
controlling banks or other permissible subsidiaries and from acquiring or
retaining direct or indirect control of any company engaged in any activities
other than those activities determined by the Federal Reserve Board to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. In determining whether a particular activity is permissible,
the Federal Reserve Board must consider whether the performance of such an
activity reasonably can be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices.
 
                                       71
<PAGE>   78
 
Each of the subsidiary depository institutions of Regions and Meigs County
Bancshares is a member of the Federal Deposit Insurance Corporation (the
"FDIC"), and as such, its deposits are insured by the FDIC to the extent
provided by law. Each such subsidiary is also subject to numerous state and
federal statutes and regulations that affect its business, activities, and
operations, and each is supervised and examined by one or more state or federal
bank regulatory agencies.
 
The regulatory agencies having supervisory jurisdiction over the respective
subsidiary institutions of Regions and Meigs County Bancshares (the FDIC and the
applicable state authority) regularly examine the operations of such
institutions and have authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
The federal and state banking regulators also have the power to prevent the
continuance or development of unsafe or unsound banking practices or other
violations of law.
 
PAYMENT OF DIVIDENDS
 
Regions and Meigs County Bancshares are legal entities separate and distinct
from their banking, thrift, and other subsidiaries. The principal sources of
cash flow of both Regions and Meigs County Bancshares, including cash flow to
pay dividends to their respective stockholders, are dividends from their
subsidiary depository institutions. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institutions to Regions and Meigs County Bancshares, as well as by Regions and
Meigs County Bancshares to their stockholders.
 
As to the payment of dividends, the Bank and all of Regions' state-chartered
banking subsidiaries are subject to the respective laws and regulations of the
state in which the bank is located, and to the regulations of the bank's primary
federal regulator.
 
If, in the opinion of the federal banking regulatory agency, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under current federal law, an
insured institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements which
provide that bank holding companies and insured banks should generally pay
dividends only out of current operating earnings.
 
At September 30, 1998, under dividend restrictions imposed under federal and
state laws, the subsidiary depository institutions of Regions and Meigs County
Bancshares, without obtaining governmental approvals, could declare aggregate
dividends to Regions and Meigs County Bancshares of approximately $252 million
and $1.2 million respectively.
 
The payment of dividends by Regions and Meigs County Bancshares and their
subsidiary depository institutions may also be affected or limited by other
factors, such as the requirement to maintain adequate capital above regulatory
guidelines.
 
                                       72
<PAGE>   79
 
CAPITAL ADEQUACY
 
Regions, Meigs County Bancshares, and their respective subsidiary depository
institutions are required to comply with the capital adequacy standards
established by the Federal Reserve Board in the case of Regions and Meigs County
Bancshares and the appropriate federal banking regulator in the case of each of
their subsidiary depository institutions. There are two basic measures of
capital adequacy for bank holding companies that have been promulgated by the
Federal Reserve Board: a risk-based measure and a leverage measure. All
applicable capital standards must be satisfied for a bank holding company to be
considered in compliance.
 
The minimum guideline for the ratio (the "Total Capital Ratio") of total capital
("Total Capital") to risk-weighted assets (including certain off-balance-sheet
items, such as standby letters of credit) is 8.0%. At least half of Total
Capital must be composed of common equity, undivided profits, minority interests
in the equity accounts of consolidated subsidiaries, qualifying noncumulative
perpetual preferred stock, and a limited amount of cumulative perpetual
preferred stock, less goodwill and certain other intangible assets ("Tier 1
Capital"). The remainder may consist of certain subordinated debt, certain
hybrid capital instruments and other qualifying preferred stock, and a limited
amount of loan loss reserves ("Tier 2 Capital"). At September 30, 1998, Regions'
consolidated Total Capital Ratio was 11.84% and its Tier 1 Capital Ratio (i.e.,
the ratio of Tier 1 Capital to risk-weighted assets) was 10.64%, and Meigs
County Bancshares' consolidated Total Capital Ratio was 11.57% and its Tier 1
Capital Ratio was 10.37%.
 
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain an
additional cushion of 100 to 200 basis points above the stated minimums. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal Reserve Board has indicated that
it will consider a "tangible Tier 1 Capital leverage ratio" (deducting all
intangibles) and other indicators of capital strength in evaluating proposals
for expansion or new activities. At September 30, 1998 Regions' Leverage Ratio
was 7.84% and Meigs County Bancshares' Leverage Ratio was 7.28%.
 
Each of Regions' and Meigs County Bancshares' subsidiary depository institutions
is subject to risk-based and leverage capital requirements adopted by its
federal banking regulator, which are substantially similar to those adopted by
the Federal Reserve Board. Each of the subsidiary depository institutions was in
compliance with applicable minimum capital requirements as of September 30,
1998. Neither Regions, Meigs County Bancshares, nor any of their subsidiary
depository institutions has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
 
Failure to meet capital guidelines could subject a bank or thrift institution to
a variety of enforcement remedies, including issuance of a capital directive,
the termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and to certain other restrictions on its business. As
described below, substantial additional restrictions can
 
                                       73
<PAGE>   80
 
be imposed upon FDIC-insured depository institutions that fail to meet
applicable capital requirements. See "-- Prompt Corrective Action."
 
The Federal Reserve Board, the Office of the Comptroller of the Currency, and
the FDIC also have adopted regulations requiring regulators to consider interest
rate risk (when the interest rate sensitivity of an institution's assets does
not match the sensitivity of its liabilities or its off-balance-sheet position)
in the evaluation of a bank's capital adequacy. The bank regulatory agencies'
methodology for evaluating interest rate risk requires banks with excessive
interest rate risk exposure to hold additional amounts of capital against such
exposures.
 
PROMPT CORRECTIVE ACTION
 
Current federal law establishes a system of prompt corrective action to resolve
the problems of undercapitalized institutions. Under this system the federal
banking regulators have established five capital categories ("well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized") and must take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, current federal law requires the
banking regulator to appoint a receiver or conservator for an institution that
is critically undercapitalized.
 
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be "well capitalized." An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be "undercapitalized." A depository institution that
has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital Ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be "significantly
undercapitalized," and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards plus the amount of outstanding cumulative perpetual
preferred stock (including related surplus), minus all intangible assets with
certain exceptions. A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
 
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency. A
bank holding company must guarantee that a subsidiary depository institution
meet its capital restoration plan, subject to certain limitations. The
obligation of a controlling bank holding company to fund a capital restoration
plan is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets
or the amount required to meet regulatory capital requirements. An
undercapitalized
 
                                       74
<PAGE>   81
 
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches, or engaging in any new
line of business, except in accordance with an accepted capital restoration plan
or with the approval of the FDIC. In addition, the appropriate federal banking
agency is given authority with respect to any undercapitalized depository
institution to take any of the actions it is required to or may take with
respect to a significantly undercapitalized institution as described below if it
determines "that those actions are necessary to carry out the purpose" of the
law.
 
At September 30, 1998, all of the subsidiary depository institutions of Regions
and Meigs County Bancshares had the requisite capital levels to qualify as well
capitalized.
 
FDIC INSURANCE ASSESSMENTS
 
The FDIC currently uses risk-based assessment system for insured depository
institutions that takes into account the risks attributable to different
categories and concentrations of assets and liabilities. The risk-based
assessment system, which went into effect on January 1, 1994, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
 
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
 
                      DESCRIPTION OF REGIONS COMMON STOCK
 
Regions is authorized to issue 500,000,000 shares of Regions common stock, of
which 221,111,474 shares were issued at September 30, 1998, none of which were
held as treasury shares, and 5,000,000 shares of preferred stock, none of which
are outstanding. No other class of stock is authorized.
 
Holders of Regions common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor. The
ability of Regions to pay dividends is affected by the ability of its subsidiary
institutions to pay dividends, which is limited by applicable regulatory
requirements and capital guidelines. At September 30, 1998, under such
requirements and guidelines, Regions' subsidiary institutions had $252 million
of undivided profits legally available for the payment of dividends. See
"Supervision and Regulation -- Payment of Dividends."
 
                                       75
<PAGE>   82
 
For a further description of Regions common stock, see "Effect of the Merger on
Rights of Stockholders."
 
                             STOCKHOLDER PROPOSALS
 
Regions expects to hold its next annual meeting of stockholders after the Merger
during May 1999. Under SEC rules, proposals of Regions stockholders intended to
be presented at that meeting must be received by Regions at its principal
executive offices within a reasonable time prior to the mailing of Regions' 1999
annual meeting proxy statement, for consideration by Regions for possible
inclusion in such proxy statement.
 
                                    EXPERTS
 
The consolidated financial statements and the supplemental consolidated
financial statements of Regions, incorporated by reference in this Registration
Statement, have been audited by Ernst & Young LLP, independent auditors, for the
periods indicated in their reports thereon which are included in the Annual
Report to Stockholders which is incorporated by reference in its Annual Report
on Form 10-K for the year ended December 31, 1997 and in its current report on
Form 8-K dated November 6, 1998. The financial statements audited by Ernst &
Young LLP have been incorporated herein by reference in reliance on their
reports given on their authority as experts in accounting and auditing.
 
The consolidated financial statements of Meigs County Bancshares, included in
this Registration Statement, have been audited by Hazlett, Lewis & Bieter, PLLC,
independent auditors, for the periods indicated in their report thereon which is
included herein. The financial statements audited by Hazlett, Lewis & Bieter,
PLLC have been included herein in reliance on their report given on their
authority as experts in accounting and auditing.
 
                                    OPINIONS
 
The legality of the shares of Regions common stock to be issued in the Merger
will be passed upon by Lange, Simpson, Robinson & Somerville LLP, Birmingham,
Alabama. Henry E. Simpson, partner in the law firm of Lange, Simpson, Robinson &
Somerville LLP, is a member of the Board of Directors of Regions. As of
          , 1998, attorneys in the law firm of Lange, Simpson, Robinson &
Somerville LLP owned an aggregate of                shares of Regions common
stock.
 
Certain tax consequences of the transaction have been passed upon by Alston &
Bird LLP, Atlanta, Georgia.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
Regions files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that Regions files with the SEC at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for
 
                                       76
<PAGE>   83
 
further information on the public reference rooms. These filings are also
available at the Internet world wide web site maintained by the SEC at
"http://www.sec.gov."
 
Regions filed a Registration Statement on Form S-4 (the "Registration
Statement") to register with the SEC the Regions common stock to be issued to
Meigs County Bancshares stockholders in the Merger. This Proxy
Statement-Prospectus is a part of that Registration Statement and constitutes a
prospectus of Regions. As allowed by SEC rules, this Proxy Statement-Prospectus
does not contain all the information you can find in Regions' Registration
Statement or the exhibits to that Registration Statement.
 
SEC regulations allow Regions to "incorporate by reference" information into
this Proxy Statement-Prospectus, which means that Regions can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered part of this
Proxy Statement-Prospectus, except for any information superseded by information
contained directly in this Proxy Statement-Prospectus or in later filed
documents incorporated by reference in this Proxy Statement-Prospectus.
 
This Proxy Statement-Prospectus incorporates by reference the documents set
forth below that Regions has previously filed with the SEC. These documents
contain important information about Regions and its finances. Some of these
filings have been amended by later filings, which are also listed.
 
<TABLE>
<CAPTION>
REGIONS SEC FILINGS (FILE NO. 0-6159)   PERIOD/AS OF DATE
<S>                                     <C>
Annual Report on Form 10-K............  Year ended December 31, 1997
Quarterly Reports on Form 10-Q........  Quarters ended March 31, June 30, and
                                          September 30, 1998,
Current Reports on Form 8-K...........  February 8, 1998; July 31, 1998;
                                          November 6, 1998
</TABLE>
 
Regions also incorporates by reference additional documents that may be filed
with the SEC between the date of this Proxy Statement-Prospectus and the
consummation of the Merger or the termination of the Merger Agreement. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
 
Regions has supplied all information contained or incorporated by reference in
this Proxy Statement-Prospectus relating to Regions, and Meigs County Bancshares
has supplied all such information relating to Meigs County Bancshares.
 
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through Regions, the
SEC or the SEC's Internet web site as described above.
 
                                       77
<PAGE>   84
 
Documents incorporated by reference are available from Regions without charge,
excluding all exhibits, except that if Regions has specifically incorporated by
reference an exhibit in this Proxy Statement-Prospectus, the exhibit will also
be available without charge. Stockholders may obtain documents incorporated by
reference in this Proxy Statement-Prospectus by requesting them in writing or by
telephone from Regions at the following address:
 
    Regions Financial Corporation
    417 North 20th Street
    Birmingham, AL 35203
 
    Attention: Shareholder Relations
 
    Telephone: (205) 326-7090
 
You should rely only on the information contained or incorporated by reference
in this Proxy Statement-Prospectus. We have not authorized anyone to provide you
with information that is different from what is contained in this Proxy
Statement-Prospectus. This Proxy Statement-Prospectus is dated
               1998. You should not assume that the information contained in
this Proxy Statement-Prospectus is accurate as of any date other than that date.
Neither the mailing of this Proxy Statement-Prospectus to stockholders nor the
issuance of Regions common stock in the Merger creates any implication to the
contrary.
 
                                       78
<PAGE>   85
 
             INDEX TO MEIGS COUNTY BANCSHARES FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
 
Independent Auditor's Report................................   F-2
Consolidated Balance Sheets as of December 31, 1997 and
  1996......................................................   F-3
Consolidated Statements of Income for the Years Ended
  December 31, 1997, 1996, and 1995.........................   F-4
Consolidated Statements of Changes in Stockholders' Equity
  for the Years Ended December 31, 1997, 1996, and 1995.....   F-5
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1997, 1996, and 1995.........................   F-6
Notes to Consolidated Financial Statements..................   F-8
Consolidated Balance Sheets as of September 30, 1998 and
  1997 (Unaudited)..........................................  F-18
Consolidated Statements of Income for the the Nine Months
  Ended September 30, 1998 and 1997 (Unaudited).............  F-19
Consolidated Statements of Changes in Stockholders' Equity
  for the Nine Months Ended September 30, 1998 and 1997
  (Unaudited)...............................................  F-20
Consolidated Statements of Cash Flows for the Nine Months
  Ended September 30, 1998 and 1997 (Unaudited).............  F-21
Notes to Unaudited Consolidated Interim Financial
  Statements................................................  F-22
</TABLE>
 
                                       F-1
<PAGE>   86
 
                   [HAZLETT, LEWIS & BIETER, PLLC LETTERHEAD]
 
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
To the Stockholders and Board of Directors
Meigs County Bancshares, Inc.
Decatur, Tennessee
 
  We have audited the accompanying consolidated balance sheets of Meigs County
Bancshares, Inc. and subsidiary as of December 31, 1997 and 1996, and the
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
  In our opinion, the consolidated financial statements mentioned above present
fairly, in all material respects, the financial position of Meigs County
Bancshares, Inc. and subsidiary as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
 
                                           /s/ HAZLETT, LEWIS & BIETER, PLLC
 
Chattanooga,Tennessee
January 21, 1998
 
                                       F-2
<PAGE>   87
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                           1997          1996
                                                        -----------   -----------
<S>                                                     <C>           <C>
                                     ASSETS
Cash and due from banks...............................  $ 4,610,681   $ 4,655,040
Federal funds sold....................................    2,000,000     3,050,000
Securities available for sale (Note 2)................   11,516,701    12,070,756
Securities held to maturity (Note 2)..................    4,773,331     5,220,233
Loans, net of unearned interest and allowance for loan
  losses (Note 3).....................................   69,655,081    56,123,000
Premises and equipment (Note 4).......................    3,281,957     2,382,970
Accrued interest receivable...........................      793,918       725,423
Other assets..........................................    1,237,174       919,447
                                                        -----------   -----------
          Total assets................................  $97,868,843   $85,146,869
                                                        ===========   ===========
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Noninterest-bearing demand deposits...................  $ 8,327,362   $ 7,939,825
Interest-bearing demand deposits......................   21,118,387    13,314,380
NOW accounts..........................................    6,708,653     6,063,812
Money market accounts.................................      998,513     1,430,560
Savings accounts......................................    6,408,723     6,311,159
Time deposits.........................................   46,034,990    42,580,517
                                                        -----------   -----------
          Total deposits..............................   89,596,628    77,640,253
Note payable and line of credit (Note 9)..............    1,157,181     1,474,181
Accrued interest payable..............................      423,697       375,619
Securities sold under repurchase agreements...........           --       264,201
Other liabilities.....................................      639,861       559,526
                                                        -----------   -----------
          Total liabilities...........................   91,817,367    80,313,780
                                                        -----------   -----------
STOCKHOLDERS' EQUITY (NOTE 9):
Common stock, no par value; 1,000,000 shares
  authorized; outstanding 258,179 shares in 1997 and
  257,679 shares in 1996..............................      258,179       257,679
Additional paid-in capital............................    1,163,390     1,155,140
Retained earnings.....................................    4,628,480     3,533,555
Net unrealized gain (loss) on securities available for
  sale, net of tax....................................        1,427      (113,285)
                                                        -----------   -----------
          Total stockholders' equity..................    6,051,476     4,833,089
                                                        -----------   -----------
          Total liabilities and stockholders'
             equity...................................  $97,868,843   $85,146,869
                                                        ===========   ===========
</TABLE>
 
  The Notes to Consolidated Financial Statements are an integral part of these
                                  statements.
 
                                       F-3
<PAGE>   88
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                       CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                  1997         1996         1995
                                               ----------   ----------   ----------
<S>                                            <C>          <C>          <C>
INTEREST INCOME
  Loans......................................  $6,898,983   $5,665,152   $5,009,947
  Securities.................................   1,062,468    1,077,204      710,347
  Federal funds sold.........................     260,118       96,663      205,706
  Deposits in banks..........................       6,541        2,947        2,606
                                               ----------   ----------   ----------
                                                8,228,110    6,841,966    5,928,606
INTEREST EXPENSE.............................   3,850,808    3,105,562    2,547,893
                                               ----------   ----------   ----------
  Net interest income........................   4,377,302    3,736,404    3,380,713
Provision for loan losses (Note 3)...........     304,434      219,793      213,304
                                               ----------   ----------   ----------
  Net interest income after provision for
     loan losses.............................   4,072,868    3,516,611    3,167,409
                                               ----------   ----------   ----------
NONINTEREST INCOME
  Service charges, fees, and commissions.....     731,582      670,381      538,594
  Net realized gains (losses) on
     securities..............................        (958)       6,065        5,725
  Other income...............................     375,245      335,960      551,609
                                               ----------   ----------   ----------
                                                1,105,869    1,012,406    1,095,928
                                               ----------   ----------   ----------
NONINTEREST EXPENSES
  Salaries and employee benefits.............   1,922,823    1,737,990    1,556,287
  Occupancy expenses.........................     239,510      228,638      173,682
  Other operating expenses...................   1,421,801    1,239,576    1,314,039
                                               ----------   ----------   ----------
                                                3,584,134    3,206,204    3,044,008
                                               ----------   ----------   ----------
  Income before income taxes.................   1,594,603    1,322,813    1,219,329
Income taxes (Note 5)........................     499,678      362,207      412,792
                                               ----------   ----------   ----------
          Net income.........................  $1,094,925   $  960,606   $  806,537
                                               ==========   ==========   ==========
</TABLE>
 
The Notes to Consolidated Financial Statements are an integral part of these
statements.
 
                                       F-4
<PAGE>   89
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                                                                 NET
                                                                             UNREALIZED
                                                                             GAIN (LOSS)
                                                 ADDITIONAL                 ON SECURITIES
                                       COMMON      PAID-IN      RETAINED      AVAILABLE
                           TOTAL       STOCK       CAPITAL      EARNINGS      FOR SALE
                         ----------   --------   -----------   ----------   -------------
<S>                      <C>          <C>        <C>           <C>          <C>
BALANCE, December 31,
  1994.................  $4,194,332   $349,630   $ 2,254,043   $1,766,412     $(175,753)
  Redemption of 92,951
     shares of common
     stock.............  (1,208,354)   (92,951)   (1,115,403)          --            --
  Net income...........     806,537         --            --      806,537            --
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale..............     200,894         --            --           --       200,894
                         ----------   --------   -----------   ----------     ---------
BALANCE, December 31,
  1995.................  $3,993,409   $256,679   $ 1,138,640   $2,572,949     $  25,141
  Issuance of common
     stock.............      17,500      1,000        16,500           --            --
  Net income...........     960,606         --            --      960,606            --
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale..............    (138,426)        --            --           --      (138,426)
                         ----------   --------   -----------   ----------     ---------
BALANCE, December 31,
  1996.................   4,833,089    257,679     1,155,140    3,533,555      (113,285)
  Issuance of common
     stock.............       8,750        500         8,250           --            --
  Net income...........   1,094,925         --            --    1,094,925            --
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale..............     114,712         --            --           --       114,712
                         ----------   --------   -----------   ----------     ---------
BALANCE, December 31,
  1997.................  $6,051,476   $258,179   $ 1,163,390   $4,628,480     $   1,427
                         ==========   ========   ===========   ==========     =========
</TABLE>
 
  The Notes to Consolidated Financial Statements are an integral part of these
                                  statements.
 
                                       F-5
<PAGE>   90
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                              1997           1996          1995
                                          ------------   ------------   -----------
<S>                                       <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income............................  $  1,094,925   $    960,606   $   806,537
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
     Depreciation.......................       261,095        245,308       191,698
     Provision for loan losses..........       304,434        219,793       213,304
     Deferred income taxes..............       (48,322)       (66,393)      (27,008)
     Net realized (gains) losses........        25,929         (9,056)      (15,025)
     Changes in other operating assets
       and liabilities:
       Accrued interest receivable......       (68,495)      (112,658)     (137,627)
       Accrued interest payable.........        48,078         43,007       146,985
       Other assets and liabilities.....      (197,283)       (50,529)      173,145
                                          ------------   ------------   -----------
          Net cash provided by operating
             activities.................     1,420,361      1,230,078     1,352,009
                                          ------------   ------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of securities available for
     sale...............................    (2,927,458)    (8,474,455)   (7,346,877)
  Purchase of securities held to
     maturity...........................      (970,933)    (2,624,626)   (2,329,100)
  Proceeds from security transactions:
     Securities available for sale......     3,737,299      7,802,375     3,758,511
     Securities held to maturity........     1,300,354      1,172,594     1,653,903
  Net increase in loans.................   (13,958,966)   (10,007,018)   (3,586,038)
  Proceeds from sale of foreclosed real
     estate.............................       133,000         45,000        41,853
  Purchase of premises and equipment,
     net................................    (1,160,082)      (486,656)     (586,011)
                                          ------------   ------------   -----------
          Net cash used in investing
             activities.................   (13,846,786)   (12,572,786)   (8,393,759)
                                          ------------   ------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in deposits..............    11,956,375     14,959,820     8,377,343
  Principal advances under line of
     credit.............................        40,000        175,000     1,219,181
  Principal payments on note payable and
     line of credit.....................      (357,000)      (428,000)     (337,000)
  Issuance of common stock..............         8,750         17,500            --
  Redemption of common stock............            --             --    (1,208,354)
  Net change in securities sold under
     repurchase agreements..............      (264,201)       264,201            --
                                          ------------   ------------   -----------
          Net cash provided by financing
             activities.................    11,383,924     14,988,521     8,051,170
                                          ------------   ------------   -----------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS...........................    (1,042,501)     3,645,813     1,009,420
</TABLE>
 
                                       F-6
<PAGE>   91
 
<TABLE>
<CAPTION>
                                              1997           1996          1995
                                          ------------   ------------   -----------
<S>                                       <C>            <C>            <C>
CASH AND CASH EQUIVALENTS, beginning of
  year..................................     7,705,040      4,059,227     3,049,807
                                          ------------   ------------   -----------
CASH AND CASH EQUIVALENTS, end of
  year..................................  $  6,662,539   $  7,705,040   $ 4,059,227
                                          ============   ============   ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
  Cash paid during the year for:
     Interest...........................  $  3,802,730   $  3,062,847   $ 2,400,908
     Income taxes.......................       487,514        447,665       367,945
                                          ============   ============   ===========
</TABLE>
 
  The Notes to Consolidated Financial Statements are an integral part of these
                                  statements.
 
                                       F-7
<PAGE>   92
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995
 
NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The accounting and reporting policies of the Company conform with generally
accepted accounting principles and practices within the banking industry. The
policies that materially affect financial position and results of operations are
summarized as follows:
 
PRINCIPLES OF CONSOLIDATION
 
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Meigs County Bank (Bank) and its wholly-owned
subsidiaries. All material intercompany accounts and transactions have been
eliminated in consolidation.
 
NATURE OF OPERATIONS
 
The Bank provides a variety of financial services through its branches located
in Meigs County, McMinn County, and Hamilton County, Tennessee. The Bank's
primary deposit products are demand deposits, savings accounts, and certificates
of deposit. Its primary lending products are commercial business loans, real
estate loans, and installment loans.
 
Meigs County Bank also owns all of the outstanding common stock of Credit
Source, Inc., a finance company located in Decatur, Tennessee. Its primary
lending product is consumer loans.
 
USE OF ESTIMATES
 
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowances
for losses on loans and foreclosed real estate, management obtains independent
appraisals for significant properties.
 
While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the Bank's
allowances for losses on loans and foreclosed real estate. Such agencies may
require the Bank to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.
Because of these factors, it is reasonably possible that the allowances for
losses on loans and foreclosed real estate may change materially in the near
term.
 
                                       F-8
<PAGE>   93
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
CASH AND CASH EQUIVALENTS
 
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, and federal funds sold.
 
SECURITIES HELD TO MATURITY
 
Bonds, notes, and debentures for which the Bank has the positive intent and
ability to hold to maturity are reported at cost, adjusted for premiums and
discounts that are recognized in interest income using the interest method over
the period to maturity.
 
SECURITIES AVAILABLE FOR SALE
 
Securities available for sale consist of bonds, notes, debentures, and certain
equity securities not classified as securities held to maturity. Unrealized
holding gains and losses, net of tax, on securities available for sale are
reported as a net amount in a separate component of stockholders' equity until
realized. Gains and losses on the sale of securities available for sale are
determined using the specific-identification method. Premiums and discounts are
recognized in interest income using the interest method over the period to
maturity.
 
LOANS
 
Loans are stated at unpaid principal balances, less the allowance for loan
losses and unearned interest.
 
Unearned interest on installment loans is recognized as income over the term of
the loans using the sum-of-the-months-digits method which approximates the
interest method.
 
Loans are placed on nonaccrual when a loan is specifically determined to be
impaired or when, in the opinion of management, there is an indication that the
borrower may be unable to meet payments as they become due. Any unpaid interest
previously accrued on those loans is reversed from income. Interest income
generally is not recognized on specific impaired loans unless the likelihood of
further loss is remote. Interest payments received on such loans are applied as
a reduction of the loan principal balance. Interest income on other nonaccrual
loans is recognized only to the extent of interest payments received.
 
The allowance for loan losses is maintained at a level which, in management's
judgment, is adequate to absorb credit losses inherent in the loan portfolio.
The amount of the allowance is based on management's evaluation of the
collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific impaired
loans, and economic conditions. Allowances for impaired loans are generally
determined based on collateral values or the present value of estimated cash
flows. The allowance is increased by a provision for loan losses, which is
charged to expense, and reduced by charge-offs, net of recoveries.
 
                                       F-9
<PAGE>   94
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
PREMISES AND EQUIPMENT
 
Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed primarily on the straight-line depreciation method for
financial statement purposes. Premises are depreciated over 10 to 40 years and
furniture, fixtures, and equipment are depreciated over 3 to 10 years.
 
Additions and major renewals and betterments are capitalized and depreciated
over their estimated useful lives. Repairs, maintenance, and minor renewals are
charged to operating expense as incurred. When property is replaced or otherwise
disposed of, the cost of such assets and the related accumulated depreciation
are removed from the accounts. The gain or loss, if any, is recorded in the
statement of income.
 
DEFERRED INCOME TAXES
 
Deferred tax assets and liabilities are reflected at currently enacted income
tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
 
RECLASSIFICATIONS
 
Certain amounts have been reclassified in the 1996 financial statements in order
to conform to the 1997 presentation.
 
NOTE 2.  SECURITIES
 
Securities have been classified in the balance sheet according to management's
intent as either securities held to maturity or securities available for sale.
 
                                      F-10
<PAGE>   95
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The amortized cost and approximate market value of securities at December 31,
1997 and 1996, are as follows:
 
<TABLE>
<CAPTION>
                                                                1997
                                         ---------------------------------------------------
                                                         GROSS        GROSS
                                          AMORTIZED    UNREALIZED   UNREALIZED     MARKET
                                            COST         GAINS        LOSSES        VALUE
                                         -----------   ----------   ----------   -----------
<S>                                      <C>           <C>          <C>          <C>
SECURITIES AVAILABLE FOR SALE:
Securities of U.S Government agencies
  and corporations.....................  $ 6,940,132    $    --      $(31,968)   $ 6,908,164
Obligations of states and political
  subdivisions.........................    2,386,421     27,556            --      2,413,977
Mortgage-backed securities.............    1,678,254      6,715            --      1,684,969
Other securities.......................      509,591         --            --        509,591
                                         -----------    -------      --------    -----------
                                         $11,514,398    $34,271      $(31,968)   $11,516,701
                                         ===========    =======      ========    ===========
SECURITIES HELD TO MATURITY:
U.S. Government securities.............  $   499,216    $    --      $ (3,146)   $   496,070
Securities of U.S Government agencies
  and corporations.....................    1,549,912         --        (6,450)     1,543,462
Obligations of states and political
  sub-divisions........................    2,658,426     47,598            --      2,706,024
Mortgage-backed securities.............       65,777        819            --         66,596
                                         -----------    -------      --------    -----------
                                         $ 4,773,331    $48,417      $ (9,596)   $ 4,812,152
                                         ===========    =======      ========    ===========
</TABLE>
 
<TABLE>
<CAPTION>
                                                               1996
                                        ---------------------------------------------------
                                                        GROSS        GROSS
                                         AMORTIZED    UNREALIZED   UNREALIZED     MARKET
                                           COST         GAINS        LOSSES        VALUE
                                        -----------   ----------   ----------   -----------
<S>                                     <C>           <C>          <C>          <C>
SECURITIES AVAILABLE FOR SALE:
Securities of U.S Government agencies
  and corporations....................  $ 8,166,183    $    --     $(142,042)   $ 8,024,141
Obligations of states and political
  subdivisions........................    2,395,077         --       (20,959)     2,374,118
Mortgage-backed securities............    1,231,622         --       (19,716)     1,211,906
Other securities......................      460,591         --            --        460,591
                                        -----------    -------     ---------    -----------
                                        $12,253,473         --     $(182,717)   $12,070,756
                                        ===========    =======     =========    ===========
SECURITIES HELD TO MATURITY:
U.S. Government securities............  $   365,558    $    --     $  (3,396)   $   362,162
Securities of U.S Government agencies
  and corporations....................    1,757,568         --       (16,591)     1,740,977
Obligations of states and political
  sub-divisions.......................    3,006,617     40,927       (24,314)     3,023,230
Mortgage-backed securities............       90,490      2,203            --         92,693
                                        -----------    -------     ---------    -----------
                                        $ 5,220,233    $43,130     $ (44,301)   $ 5,219,062
                                        ===========    =======     =========    ===========
</TABLE>
 
                                      F-11
<PAGE>   96
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The scheduled maturities of securities available for sale and securities held to
maturity at December 31, 1997, are as follows:
 
<TABLE>
<CAPTION>
                                      SECURITIES AVAILABLE FOR SALE   SECURITIES HELD TO MATURITY
                                      -----------------------------   ---------------------------
                                        AMORTIZED        MARKET        AMORTIZED        MARKET
                                          COST            VALUE           COST          VALUE
                                      -------------   -------------   ------------   ------------
<S>                                   <C>             <C>             <C>            <C>
Due in one year or less.............   $   302,832     $   303,186     $1,044,220     $1,040,938
Due from one year to five years.....     4,348,577       4,338,727      1,177,537      1,188,528
Due from five years to ten years....     3,951,291       3,947,891      1,950,960      1,972,706
Due after ten years.................       723,853         732,337        534,837        543,384
Securities with no contractual
  maturity..........................       509,591         509,591             --             --
                                       -----------     -----------     ----------     ----------
                                         9,836,144       9,831,732      4,707,554      4,745,556
Mortgage-backed securities..........     1,678,254       1,684,969         65,777         66,596
                                       -----------     -----------     ----------     ----------
                                       $11,514,398     $11,516,701     $4,773,331     $4,812,152
                                       ===========     ===========     ==========     ==========
</TABLE>
 
Proceeds from sales of securities were $1,719,688, $6,381,057, and $2,809,306 in
1997, 1996, and 1995, respectively. Gross gains of $4,763, $19,440, and $13,328
were realized in 1997, 1996, and 1995, respectively. Gross losses of $5,721,
$13,375, and $7,603 were realized in 1997, 1996 and 1995, respectively.
 
Securities with a book value of approximately $4,142,000 at December 31, 1997,
and $6,576,000 at December 31, 1996, were pledged to secure various deposits.
 
NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES
 
A summary of transactions in the allowance for loan losses for the years ended
December 31, 1997, 1996 and 1995, is as follows:
 
<TABLE>
<CAPTION>
                                                          1997       1996       1995
                                                        --------   --------   --------
<S>                                                     <C>        <C>        <C>
Balance, beginning of year............................  $686,066   $568,892   $472,857
  Provision charged to operating expense..............   304,434    219,793    213,304
  Recoveries of loans charged off.....................    70,078     46,832     36,433
  Loans charged off...................................  (197,060)  (149,451)  (153,702)
                                                        --------   --------   --------
Balance, end of year..................................  $863,518   $686,066   $568,892
                                                        ========   ========   ========
</TABLE>
 
At December 31, 1997 and 1996, the Bank's loans consist of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                              -------   -------
<S>                                                           <C>       <C>
Real estate loans...........................................  $39,262   $30,264
Commercial and industrial loans.............................    8,979     7,872
Loans to individuals for household, family, and other
  consumer expenditures.....................................   18,527    14,900
Other.......................................................    4,388     3,866
                                                              -------   -------
          Total loans.......................................   71,156    56,902
Less -- Unearned interest and fees..........................     (637)      (93)
        Allowance for loan losses...........................     (864)     (686)
                                                              -------   -------
          Net loans.........................................  $69,655   $56,123
                                                              =======   =======
</TABLE>
 
                                      F-12
<PAGE>   97
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The Bank enters into transactions in the normal course of business with many of
its directors, executive officers, their associates, and family members. Such
transactions do not involve more than a normal risk of collectibility, nor do
they present other unfavorable features. In the opinion of management, all of
these transactions are consummated on substantially the same terms as comparable
transactions with others. The Bank's directors, executive officers, their
associates, and family members as of December 31, 1997 and 1996, had outstanding
loan balances of $932,526 and $629,000, respectively.
 
At December 31, 1997 and 1996, loans that were specifically classified as
impaired were insignificant in relation to the Bank's loan portfolio.
 
The Bank's only significant concentration of credit at December 31, 1997,
occurred in real estate loans which totaled approximately $39,262,000. While
real estate loans accounted for 55 percent of total loans, these loans were
primarily residential development and construction loans, residential mortgage
loans, commercial loans secured by commercial properties and consumer loans.
Substantially all real estate loans are secured by properties located in
Tennessee.
 
NOTE 4.  PREMISES AND EQUIPMENT
 
A summary of premises and equipment as of December 31, 1997 and 1996, is as
follows:
 
<TABLE>
<CAPTION>
                                                               1997          1996
                                                            -----------   -----------
<S>                                                         <C>           <C>
Land......................................................  $   386,068   $   256,068
Buildings and leasehold improvements......................    2,750,336     2,041,610
Furniture, fixtures and equipment.........................    1,544,386     1,373,651
Construction in progress..................................       12,505       165,811
                                                            -----------   -----------
                                                              4,693,295     3,837,140
Accumulated depreciation..................................   (1,411,338)   (1,454,170)
                                                            -----------   -----------
                                                            $ 3,281,957   $ 2,382,970
                                                            ===========   ===========
</TABLE>
 
                                      F-13
<PAGE>   98
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 5.  INCOME TAXES
 
The Company files a consolidated federal income tax return with its
subsidiaries. Under the Company's income tax allocation policy, the
subsidiaries' allocated portion of the consolidated tax liability is computed as
if the subsidiaries were reporting their income and expenses to the Internal
Revenue Service as a separate entity. The provision for income taxes in the
statements of income for the years ended December 31, 1997, 1996, and 1995,
includes the following:
 
<TABLE>
<CAPTION>
                                                          1997       1996       1995
                                                        --------   --------   --------
<S>                                                     <C>        <C>        <C>
Taxes currently payable...............................  $548,000   $428,600   $439,800
Deferred income taxes related to:
  Provision for loan losses...........................   (36,300)   (41,500)   (36,500)
  Depreciation........................................     2,200     11,800     (1,300)
  Deferred compensation...............................   (16,500)   (31,200)     3,600
  Other...............................................     2,278     (5,493)     7,192
                                                        --------   --------   --------
Provision for income taxes............................  $499,678   $362,207   $412,792
                                                        ========   ========   ========
</TABLE>
 
The provision for income taxes is different from the expected tax provision
computed by multiplying income before income taxes by the statutory federal
income tax rate. The reasons for this difference are as follows:
 
<TABLE>
<CAPTION>
                                                      1997       1996       1995
                                                    --------   --------   --------
<S>                                                 <C>        <C>        <C>
Expected tax at statutory rates, net of surtax
  exemption.......................................  $542,200   $449,800   $414,600
Increase (decrease) resulting from tax effect of:
  Tax-exempt interest on obligations of states and
     political subdivisions.......................   (70,100)   (76,300)   (37,400)
  State income taxes, net of federal income tax
     benefit......................................    62,600     55,700     53,400
  Other...........................................   (35,022)   (66,993)   (17,808)
                                                    --------   --------   --------
Provision for income taxes........................  $499,678   $362,207   $412,792
                                                    ========   ========   ========
</TABLE>
 
As of December 31, 1997, deferred tax assets for deductible temporary
differences totaled $313,944 and deferred tax liabilities for taxable temporary
differences totaled $684,075.
 
NOTE 6.  LIQUIDITY AND CAPITAL RESOURCES
 
The Company's primary source of funds with which to pay principal and interest
on its indebtedness is the receipt of dividends from its subsidiary bank.
Banking regulations limit the amount of dividends that may be paid without prior
approval of the Bank's regulatory agency. It is management's intention to limit
the amount of dividends paid in order to maintain compliance with capital
guidelines and to maintain a strong capital position in the Bank.
 
                                      F-14
<PAGE>   99
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 7.  EMPLOYEE STOCK OWNERSHIP PLAN
 
The Company has an Employee Stock Ownership Plan (ESOP) containing 401(k)
provisions. The ESOP provides that employees meeting minimum eligibility and
service requirements may participate and defer up to 15 percent of their annual
compensation not to exceed the maximum contribution prescribed by the Internal
Revenue Code. The plan provides that the Company will make matching
contributions not to exceed certain compensation levels and may make
discretionary contributions as determined by the Board of Directors. The
Company's contribution under this plan was $73,121, $70,006, and $55,400 in
1997, 1996 and 1995, respectively.
 
NOTE 8.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
 
The Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include various commitments to extend credit and standby
letters of credit. These instruments expose the Bank to varying degrees of
credit and interest rate risk in excess of the amount recognized in the
accompanying balance sheet. To manage this risk, the Bank uses the same
management policies and procedures for financial instruments with
off-balance-sheet risk as it does for financial instruments whose risk is
reflected on the balance sheet.
 
The credit risk of all financial instruments varies based on many factors,
including the value of collateral held and other security arrangements. To
mitigate credit risk, the Bank generally determines the need for specific
covenant, guarantee, and collateral requirements on a case-by-case basis,
depending on the customer's creditworthiness. The amount and type of collateral
held to reduce credit risk vary, but may include real estate, machinery,
equipment, inventory, and accounts receivable as well as cash on deposit,
stocks, bonds, and other marketable securities that are generally held in the
Bank's possession. This collateral is valued and inspected on a regular basis to
ensure both its existence and adequacy. The Bank requests additional collateral
when appropriate.
 
At December 31, 1997, commitments under standby letters of credit and
undisbursed loan commitments aggregated $6,416,810. The Bank's credit exposure
for these financial instruments is represented by their contractual amounts. The
Bank does not anticipate any material losses as a result of the commitments
under standby letters of credit and undisbursed loan commitments.
 
NOTE 9.  NOTE PAYABLE AND LINE OF CREDIT
 
The Company has a note payable which bears interest at the lender's base rate
less 0.5 percent. Interest is payable quarterly with minimum annual principal
repayments of $160,348 until paid. The note is collateralized by the outstanding
common stock of the Company's subsidiary bank. The balance outstanding at
December 31, 1997, was $1,152,181.
 
                                      F-15
<PAGE>   100
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The Company also has a $100,000 open line of credit which bears interest at the
lender's base rate and is extended until 2004. The balance outstanding at
December 31, 1997, was $5,000.
 
The indebtedness referred to above is subject to the provisions of a term loan
agreement which requires, among other things, the Company's subsidiary bank to
maintain a minimum amount of equity capital. The Company was in compliance with
all provisions of the loan agreement or had obtained appropriate waivers for
noncompliance from the lender at December 31, 1997.
 
NOTE 10.  STOCK OPTIONS
 
The Company has a stock option plan under which certain key members of
management have been granted options to purchase up to 45,580 shares of the
Company's stock. The option price is $11.50 per share and the options expire in
March 2003.
 
NOTE 11.  REGULATORY MATTERS
 
The Company and the Bank are subject to various regulatory capital requirements
administered by the Tennessee Department of Financial Institutions and the
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory -- and possibly additional discretionary -- actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company must meet
specific capital guidelines that involve quantitative measures of the Company's
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Company's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
 
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that the
Company meets all capital adequacy requirements to which it is subject.
 
As of December 31, 1997, the most recent notification from the Commissioner of
the Tennessee Department of Financial Institutions categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. There
are no conditions or events since that notification that management believes
have changed the institution's prompt corrective action category.
 
                                      F-16
<PAGE>   101
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The Bank's actual capital amounts and ratios are also presented in the table.
Dollar amounts are presented in thousands.
 
<TABLE>
<CAPTION>
                                                                           FOR CAPITAL
                                                                             ADEQUACY
                                                            ACTUAL           PURPOSES
                                                        --------------    --------------
                                                        AMOUNT   RATIO    AMOUNT   RATIO
                                                        ------   -----    ------   -----
<S>                                                     <C>      <C>      <C>      <C>
AS OF DECEMBER 31, 1997:
Total capital (to risk-weighted assets)...............  $7,934   11.6%    $5,466    8.0%
Tier I capital (to risk-weighted assets)..............   7,104   10.4      2,733    4.0
Tier I capital (to average assets)....................   7,104    7.3      3,878    4.0
AS OF DECEMBER 31, 1996:
Total capital (to risk-weighted assets)...............  $7,089   12.6%    $4,509    8.0%
Tier I capital (to risk-weighted assets)..............   6,403   11.4      2,255    4.0
Tier I capital (to average assets)....................   6,403    7.6      3,353    4.0
</TABLE>
 
                                      F-17
<PAGE>   102
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 1998 AND 1997
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                           1998          1997
                                                       ------------   -----------
<S>                                                    <C>            <C>
                                     ASSETS
Cash and due from banks..............................  $  3,624,881   $ 3,192,300
Interest bearing deposits at other banks.............        44,242        94,056
Federal funds sold...................................     9,690,000     2,880,000
Investment securities -- AFS.........................     9,268,177    12,625,857
Investment securities -- HTM.........................     3,397,619     5,777,989
Loans, net of unearned and allowance for loan
  losses.............................................    79,134,924    65,641,338
Premises and equipment...............................     3,520,685     3,098,988
Accrued interest receivable..........................       721,191       693,022
Other assets.........................................     1,304,218     1,094,589
                                                       ------------   -----------
          TOTAL ASSETS...............................  $110,705,937   $95,098,139
                                                       ============   ===========
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Noninterest-bearing demand deposits..................  $  9,777,075   $ 9,795,928
Interest bearing demand deposits.....................    25,767,060    19,144,923
NOW accounts.........................................     6,537,833     4,169,393
Money market accounts................................       888,266     1,069,195
Savings accounts.....................................     7,139,563     6,410,204
Time deposits........................................    51,229,896    46,213,738
                                                       ------------   -----------
          Total Deposits.............................   101,339,693    86,803,381
Notes payable........................................     1,064,181     1,224,181
Accrued interest payable.............................       449,069       424,996
Securities sold under repurchase agreement...........            --       184,614
Other liabilities....................................       803,626       789,219
                                                       ------------   -----------
          Total Liabilities..........................   103,656,569    89,426,392
                                                       ------------   -----------
STOCKHOLDERS' EQUITY:
Common stock, no par value...........................       258,179       258,179
Additional paid in capital...........................     1,163,390     1,163,390
Retained earnings....................................     5,582,029     4,279,560
Net unrealized gain (loss) on securities available
  for sale, net of tax...............................        45,770       (29,382)
                                                       ------------   -----------
          Total stockholders' equity.................     7,049,368     5,671,747
                                                       ------------   -----------
          TOTAL LIABILITIES AND STOCKHOLDERS'
             EQUITY..................................  $110,705,937   $95,098,139
                                                       ============   ===========
Shares Outstanding...................................       258,179       258,179
</TABLE>
 
           See notes to unaudited consolidated financial statements.
 
                                      F-18
<PAGE>   103
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
                       CONSOLIDATED STATEMENTS OF INCOME
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                             1998         1997
                                                          ----------   ----------
<S>                                                       <C>          <C>
INTEREST INCOME
  Loans.................................................  $6,153,132   $4,971,858
  Securities............................................     610,174      829,651
  Federal funds sold....................................     280,952      204,136
  Deposits in banks.....................................       2,136        2,133
                                                          ----------   ----------
          TOTAL INTEREST INCOME.........................   7,046,394    6,007,778
INTEREST EXPENSE........................................   3,269,927    2,832,040
                                                          ----------   ----------
  Net Interest Income...................................   3,776,467    3,175,738
Provision for loan losses...............................     333,220      209,302
                                                          ----------   ----------
          NET INCOME AFTER PROVISION FOR LOAN LOSSES....   3,443,247    2,966,436
NONINTEREST INCOME
  Service charges, fees, and commissions................     552,402      515,677
  Net realized gains (losses) on securities.............         248       (1,540)
  Other income..........................................     251,455      175,118
                                                          ----------   ----------
          TOTAL NONINTEREST INCOME......................     804,105      689,255
                                                          ----------   ----------
NONINTEREST EXPENSES
  Salaries and employee benefits........................   1,612,179    1,420,992
  Occupancy expenses....................................     445,117      393,593
  Other operating expenses..............................     765,105      745,811
                                                          ----------   ----------
          TOTAL NONINTEREST EXPENSES....................   2,822,401    2,560,396
                                                          ----------   ----------
  Income Before Income Taxes............................   1,424,951    1,095,295
Income Taxes............................................     471,402      349,289
                                                          ----------   ----------
          NET INCOME....................................  $  953,549   $  746,006
                                                          ==========   ==========
</TABLE>
 
           See notes to unaudited consolidated financial statements.
 
                                      F-19
<PAGE>   104
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                 NET
                                                                             UNREALIZED
                                                                             GAIN (LOSS)
                                                  ADDITIONAL                ON SECURITIES
                                        COMMON     PAID-IN      RETAINED      AVAILABLE
                            TOTAL       STOCK      CAPITAL      EARNINGS      FOR SALE
                          ----------   --------   ----------   ----------   -------------
<S>                       <C>          <C>        <C>          <C>          <C>
BALANCE,
  DECEMBER 31, 1996.....  $4,833,089   $257,679   $1,155,140   $3,533,555     $(113,285)
  Issuance of Stock.....       8,750        500        8,250            0
  Net income............     746,006                              746,006            --
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale...............      83,903         --           --           --        83,903
                          ----------   --------   ----------   ----------     ---------
BALANCE,
  SEPTEMBER 30, 1997....   5,671,748    258,179    1,163,390    4,279,561       (29,382)
  Net income............     348,919                              348,919
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale...............      30,809         --           --           --        30,809
                          ----------   --------   ----------   ----------     ---------
BALANCE,
  DECEMBER 31, 1997.....   6,051,476    258,179    1,163,390    4,628,480         1,427
  Net income............     953,549                              953,549
  Net changes in
     unrealized gain
     (loss) on
     securities
     available for
     sale...............      44,343         --           --           --        44,343
                          ----------   --------   ----------   ----------     ---------
BALANCE,
  SEPTEMBER 30, 1998....  $7,049,368   $258,179   $1,163,390   $5,582,029     $  45,770
                          ==========   ========   ==========   ==========     =========
</TABLE>
 
           See notes to unaudited consolidated financial statements.
 
                                      F-20
<PAGE>   105
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                          1998           1997
                                                       -----------   ------------
<S>                                                    <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income...........................................  $   953,549   $    746,006
Adjustments to reconcile net income to cash:
  Depreciation.......................................      236,962        181,737
  Provision for loan losses..........................      333,220        209,302
  Changes in other operating assets and liabilities:
     Accrued interest receivable.....................      (72,727)       (32,401)
     Accrued interest payable........................       25,372         49,377
     Other assets and liabilities....................      209,629        425,000
                                                       -----------   ------------
          Net cash provided by operating
             activities..............................    1,686,005        729,021
                                                       -----------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of securities available for sale..........   (1,000,000)    (2,927,458)
  Purchase of securities held to maturity............     (421,698)      (970,933)
  Proceeds from security transactions:
     Securities -- AFS...............................    3,059,079      2,733,089
     Securities -- HTM...............................    1,725,000        276,775
  Net increase in loans..............................   (9,479,843)    (9,518,338)
  Proceeds from sale of foreclosed real estate.......          535             --
  Proceeds from sale of loans, net...................       50,221             --
  Purchase of premises and equipment, net............     (658,659)    (1,029,725)
                                                       -----------   ------------
          Net cash used in investing activities......   (6,725,365)   (11,436,590)
                                                       -----------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in deposits...........................   11,743,065      9,163,128
  Advances or payments on note payable and line of
     credit..........................................      (93,000)      (250,000)
  Issuance of common stock...........................           --          8,750
  Increase (Decrease) in securities sold under
     repurchase agreements...........................     (184,614)       (79,587)
                                                       -----------   ------------
          Net cash provided by financing
             activities..............................   11,465,451      8,842,291
                                                       -----------   ------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS........................................    6,426,091     (1,865,278)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.........    6,610,681      7,705,040
                                                       -----------   ------------
CASH AND CASH EQUIVALENTS, END OF YEAR...............  $13,036,772   $  5,839,762
                                                       ===========   ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  CASH PAID DURING THE YEAR FOR
  INTEREST...........................................  $ 3,269,927   $  2,832,040
  INCOME TAXES.......................................      501,396        946,048
                                                       ===========   ============
</TABLE>
 
           See notes to unaudited consolidated financial statements.
 
                                      F-21
<PAGE>   106
 
                  MEIGS COUNTY BANCSHARES, INC. AND SUBSIDIARY
 
          NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
 
NOTE 1.  BASIS OF FINANCIAL STATEMENT PRESENTATION
 
The accompanying consolidated interim financial statements do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. All normal, recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of financial
statements, have been included. These interim financial statements should be
read in conjunction with the audited financial statements and the notes thereto
included in this Proxy Statement-Prospectus.
 
NOTE 2.  AGREEMENT TO MERGE WITH REGIONS
 
An Agreement and Plan of Merger between Meigs County Bancshares and Regions
Financial Corporation was signed on June 22, 1998. The Agreement provides for a
merger of the companies in a stock for stock exchange accounted for as a pooling
of interests. On the effective date of the merger each share of Meigs County
Bancshares stock will be exchanged for 1.9 shares of Regions stock, subject to
possible adjustment. The merger is contingent upon regulatory and shareholder
approval.
 
                                      F-22
<PAGE>   107
 
                                                                      APPENDIX A
                          AGREEMENT AND PLAN OF MERGER
 
                                 BY AND BETWEEN
 
                         MEIGS COUNTY BANCSHARES, INC.
 
                                      AND
 
                         REGIONS FINANCIAL CORPORATION
 
                           DATED AS OF JUNE 22, 1998
 
                                       A-1
<PAGE>   108
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<C>       <S>                                                           <C>
Parties............................................................      A-6
Preamble...........................................................      A-6
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER......................      A-6
   1.1    Merger......................................................   A-6
   1.2    Time and Place of Closing...................................   A-7
   1.3    Effective Time..............................................   A-7
   1.4    Execution of Support Agreements.............................   A-7
ARTICLE 2 -- TERMS OF MERGER.......................................      A-7
   2.1    Certificate of Incorporation................................   A-7
   2.2    Bylaws......................................................   A-7
   2.3    Directors and Officers......................................   A-7
ARTICLE 3 -- MANNER OF CONVERTING SHARES...........................      A-8
   3.1    Conversion of Shares........................................   A-8
   3.2    Anti-Dilution Provisions....................................   A-8
   3.3    Shares Held by MCB or Regions...............................   A-8
   3.4    Dissenting Stockholders.....................................   A-8
   3.5    Fractional Shares...........................................   A-9
   3.6    Conversion of Stock Rights..................................   A-9
ARTICLE 4 -- EXCHANGE OF SHARES....................................     A-10
   4.1    Exchange Procedures.........................................  A-10
   4.2    Rights of Former MCB Stockholders...........................  A-10
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF MCB.................     A-11
   5.1    Organization, Standing, and Power...........................  A-11
   5.2    Authority; No Breach By Agreement...........................  A-11
   5.3    Capital Stock...............................................  A-12
   5.4    MCB Subsidiaries............................................  A-12
   5.5    Financial Statements........................................  A-13
   5.6    Absence of Undisclosed Liabilities..........................  A-13
   5.7    Absence of Certain Changes or Events........................  A-13
   5.8    Tax Matters.................................................  A-14
   5.9    Assets......................................................  A-15
   5.10   Environmental Matters.......................................  A-15
   5.11   Compliance with Laws........................................  A-16
   5.12   Labor Relations.............................................  A-17
   5.13   Employee Benefit Plans......................................  A-17
   5.14   Material Contracts..........................................  A-19
   5.15   Legal Proceedings...........................................  A-20
   5.16   Reports.....................................................  A-20
   5.17   Statements True and Correct.................................  A-20
   5.18   Accounting, Tax, and Regulatory Matters.....................  A-21
   5.19   State Takeover Laws.........................................  A-21
   5.20   Charter Provisions..........................................  A-21
   5.21   Support Agreements..........................................  A-21
   5.22   Derivatives.................................................  A-21
   5.23   Year 2000...................................................  A-21
</TABLE>
 
                                       A-2
<PAGE>   109
 
<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<C>       <S>                                                           <C>
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS.............
                                                                        A-21
   6.1    Organization, Standing, and Power...........................  A-21
   6.2    Authority; No Breach By Agreement...........................  A-22
   6.3    Capital Stock...............................................  A-22
   6.4    Regions Subsidiaries........................................  A-23
   6.5    SEC Filings; Financial Statements...........................  A-23
   6.6    Absence of Undisclosed Liabilities..........................  A-24
   6.7    Absence of Certain Changes or Events........................  A-24
   6.8    Compliance with Laws........................................  A-24
   6.9    Legal Proceedings...........................................  A-25
   6.10   Reports.....................................................  A-25
   6.11   Statements True and Correct.................................  A-25
   6.12   Accounting, Tax, and Regulatory Matters.....................  A-25
   6.13   Derivatives.................................................  A-26
   6.14   Year 2000...................................................  A-26
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION..............     A-26
   7.1    Affirmative Covenants of Both Parties.......................  A-26
   7.2    Negative Covenants of MCB...................................  A-26
   7.3    Adverse Changes in Condition................................  A-28
   7.4    Reports.....................................................  A-28
ARTICLE 8 -- ADDITIONAL AGREEMENTS.................................     A-28
   8.1    Registration Statement; Proxy Statement; Stockholder
          Approval....................................................  A-28
   8.2    Exchange Listing............................................  A-29
   8.3    Applications................................................  A-29
   8.4    Filings with State Offices..................................  A-29
   8.5    Agreement as to Efforts to Consummate.......................  A-29
   8.6    Investigation and Confidentiality...........................  A-30
   8.7    Press Releases..............................................  A-30
   8.8    Certain Actions.............................................  A-30
   8.9    Accounting and Tax Treatment................................  A-31
   8.10   State Takeover Laws.........................................  A-31
   8.11   Charter Provisions..........................................  A-31
   8.12   Agreement of Affiliates.....................................  A-31
   8.13   Employee Benefits and Contracts.............................  A-32
   8.14   Indemnification.............................................  A-32
   8.15   Certain Modifications.......................................  A-33
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.....
                                                                        A-33
   9.1    Conditions to Obligations of Each Party.....................  A-33
   9.2    Conditions to Obligations of Regions........................  A-35
   9.3    Conditions to Obligations of MCB............................  A-35
ARTICLE 10 -- TERMINATION..........................................     A-37
  10.1    Termination.................................................  A-37
  10.2    Effect of Termination.......................................  A-40
  10.3    Non-Survival of Representations and Covenants...............  A-40
</TABLE>
 
                                       A-3
<PAGE>   110
 
<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<C>       <S>                                                           <C>
ARTICLE 11 -- MISCELLANEOUS........................................     A-40
  11.1    Definitions.................................................  A-47
  11.2    Expenses....................................................  A-47
  11.3    Brokers and Finders.........................................  A-47
  11.4    Entire Agreement............................................  A-47
  11.5    Amendments..................................................  A-47
  11.6    Waivers.....................................................  A-47
  11.7    Assignment..................................................  A-48
  11.8    Notices.....................................................  A-48
  11.9    Governing Law...............................................  A-49
  11.10   Counterparts................................................  A-49
  11.11   Captions....................................................  A-49
  11.12   Interpretations.............................................  A-49
  11.13   Enforcement of Agreement....................................  A-49
  11.14   Severability................................................  A-49
Signatures.........................................................     A-50
</TABLE>
 
                                       A-4
<PAGE>   111
 
                                LIST OF EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                               DESCRIPTION
- -------                              -----------
<C>     <S>  <C>
 
  1.    --   Form of Support Agreement. (sec. 1.4).
 
  2.    --   Form of Affiliate Agreement. (sec.sec. 8.12, 9.2(d)).
 
  3.    --   Form of Claims Letter. (sec. 9.2(e)).
 
  4.    --   Opinion of BBI Counsel (sec. 9.2(f)).
 
  5.    --   Opinion of Regions Counsel (sec. 9.3(d)).
</TABLE>
 
[Exhibits omitted]
 
                                       A-5
<PAGE>   112
 
                          AGREEMENT AND PLAN OF MERGER
 
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as
of June 22, 1998, by and between MEIGS COUNTY BANCSHARES, INC. ("MCB"), a
corporation organized and existing under the Laws of the State of Tennessee,
with its principal office located in Decatur, Tennessee; and REGIONS FINANCIAL
CORPORATION ("Regions"), a corporation organized and existing under the Laws of
the State of Delaware, with its principal office located in Birmingham, Alabama.
 
                                    PREAMBLE
 
The Boards of Directors of MCB and Regions are of the opinion that the
transactions described herein are in the best interests of the parties to this
Agreement and their respective stockholders. This Agreement provides for the
acquisition of MCB by Regions pursuant to the merger (the "Merger") of MCB with
and into Regions. At the effective time of the Merger, the outstanding shares of
the capital stock of MCB shall be converted into shares of the common stock of
Regions (except as provided herein). As a result, stockholders of MCB shall
become stockholders of Regions, and each of the subsidiaries of MCB shall
continue to conduct its business and operations as a subsidiary of Regions. The
transactions described in this Agreement are subject to the approvals of the
stockholders of MCB, the Board of Governors of the Federal Reserve System, and
certain state regulatory authorities, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger (i) for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code, and (ii) for accounting purposes shall qualify for treatment as a
pooling of interests.
 
As a condition and inducement to Regions' willingness to enter into this
Agreement, each of MCB's directors is executing and delivering to Regions an
agreement (a "Support Agreement"), in substantially the form of Exhibit 1.
 
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
 
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
 
                                   ARTICLE 1
 
                        TRANSACTIONS AND TERMS OF MERGER
 
1.1 Merger.  Subject to the terms and conditions of this Agreement, at the
Effective Time, MCB shall be merged with and into Regions in accordance with the
provisions of Sections 48-21-109 of the TBCA and Section 252 of the DGCL and
with the effect provided in Section 48-21-108 of the TBCA and Section 259 of the
DGCL (the "Merger"). Regions shall be the Surviving Corporation resulting from
the Merger and shall continue to be governed by the Laws of the State of
Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of MCB and Regions.
 
                                       A-6
<PAGE>   113
 
1.2 Time and Place of Closing.  The consummation of the Merger (the "Closing")
shall take place at 9:00 A.M. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or
at such other time as the Parties, acting through their duly authorized
officers, may mutually agree. The place of Closing shall be at such location as
may be mutually agreed upon by the Parties.
 
1.3 Effective Time.  The Merger and the other transactions contemplated by this
Agreement shall become effective on the date and at the time the Tennessee
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Tennessee and the Delaware Certificate of
Merger shall become effective with the Secretary of State of the State of
Delaware (the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon by the duly authorized officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur not later than the 15th business day after the last of the
following occurs: (i) the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger; and (ii) the date on which
the stockholders of MCB approve the matters relating to this Agreement required
to be approved by such stockholders by applicable Law; or such later day within
30 days thereof as may be specified by Regions.
 
1.4 Execution of Support Agreements.  Immediately prior to the execution of this
Agreement and as a condition hereto, each of the directors of MCB is executing
and delivering to Regions a Support Agreement.
 
                                   ARTICLE 2
 
                                TERMS OF MERGER
 
2.1 Certificate of Incorporation.  The Certificate of Incorporation of Regions
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
 
2.2 Bylaws.  The Bylaws of Regions in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation after the Effective Time
until otherwise amended or repealed.
 
2.3 Directors and Officers.  The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
 
                                       A-7
<PAGE>   114
 
                                   ARTICLE 3
 
                          MANNER OF CONVERTING SHARES
 
3.1 Conversion of Shares.  Subject to the provisions of this Article 3, at the
Effective Time, by virtue of the Merger and without any action on the part of
Regions or MCB, or the stockholders of either of the foregoing, the shares of
the constituent corporations shall be converted as follows:
 
     (a) Each share of Regions Common Stock issued and outstanding immediately
     prior to the Effective Time shall remain issued and outstanding from and
     after the Effective Time.
 
     (b) Each share of MCB Common Stock (excluding shares held by any MCB
     Company or any Regions Company, in each case other than in a fiduciary
     capacity or as a result of debts previously contracted) issued and
     outstanding at the Effective Time shall be converted into 1.90 shares of
     Regions Common Stock (as subject to possible adjustment pursuant to Section
     10.1(g) of this Agreement, the "Exchange Ratio").
 
3.2 Anti-Dilution Provisions.  In the event MCB changes the number of shares of
MCB Common Stock issued and outstanding prior to the Effective Time as a result
of a stock split, stock dividend, recapitalization, or similar transaction with
respect to such stock, the Exchange Ratio shall be proportionately adjusted. In
the event Regions changes the number of shares of Regions Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend, recapitalization, or similar transaction with respect to such stock
and the record date therefor (in the case of a stock dividend) or the effective
date thereof (in the case of a stock split or similar recapitalization for which
a record date is not established) shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
 
3.3 Shares Held by MCB or Regions.  Each of the shares of MCB Common Stock held
by any MCB Company or by any Regions Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
 
3.4 Dissenting Stockholders.  Any holder of shares of MCB Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Section 48-23-102 of the TBCA shall be entitled to receive the
value of such shares in cash as determined pursuant to such provision of Law;
provided, however, that no such payment shall be made to any dissenting
stockholder unless and until such dissenting stockholder has complied with the
applicable provisions of the TBCA and surrendered to the Surviving Corporation
the certificate or certificates representing the shares for which payment is
being made. In the event that after the Effective Time a dissenting stockholder
of MCB fails to perfect, or effectively withdraws or loses, such holder's right
to appraisal and of payment for such holder's shares, Regions shall issue and
deliver the consideration to which such holder of shares of MCB Common Stock is
entitled under this Article Three (without interest) upon surrender by such
holder of the certificate or certificates representing shares of MCB Common
Stock held by such holder. MCB will establish an escrow account with an amount
sufficient to satisfy the maximum aggregate payment that may be required to be
paid to dissenting stockholders. Upon satisfaction of all claims of dissenting
stockholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to MCB.
 
                                       A-8
<PAGE>   115
 
3.5 Fractional Shares.  Notwithstanding any other provision of this Agreement,
each holder of shares of MCB Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of Regions
Common Stock (after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of Regions Common Stock multiplied by
the market value of one share of Regions Common Stock at the Effective Time. The
market value of one share of Regions Common Stock at the Effective Time shall be
the last sale price of Regions Common Stock on the Nasdaq NMS (as reported by
The Wall Street Journal or, if not reported thereby, any other authoritative
source selected by Regions) on the last trading day preceding the Effective
Time. No such holder will be entitled to dividends, voting rights, or any other
rights as a stockholder in respect of any fractional shares.
 
3.6 Conversion of Stock Rights.
 
     (a) At the Effective Time, each award, option, or other right to purchase
     or acquire shares of MCB Common Stock pursuant to stock options, stock
     appreciation rights, or stock awards ("MCB Rights") granted by MCB under
     the MCB Stock Plans, which are outstanding at the Effective Time, whether
     or not exercisable, shall be converted into and become rights with respect
     to Regions Common Stock, and Regions shall assume each MCB Right, in
     accordance with the terms of the MCB Stock Plan and stock option agreement
     by which it is evidenced, except that from and after the Effective Time,
     (i) Regions and its Compensation Committee shall be substituted for MCB and
     the Committee of MCB's Board of Directors (including, if applicable, the
     entire Board of Directors of MCB) administering such MCB Stock Plan, (ii)
     each MCB Right assumed by Regions may be exercised solely for shares of
     Regions Common Stock (or cash in the case of stock appreciation rights),
     (iii) the number of shares of Regions Common Stock subject to such MCB
     Right shall be equal to the number of shares of MCB Common Stock subject to
     such MCB Right immediately prior to the Effective Time multiplied by the
     Exchange Ratio, and (iv) the per share exercise price (or similar threshold
     price, in the case of stock awards) under each such MCB Right shall be
     adjusted by dividing the per share exercise (or threshold) price under each
     such MCB Right by the Exchange Ratio and rounding up to the nearest cent.
     Notwithstanding the provisions of clause (iii) of the preceding sentence,
     Regions shall not be obligated to issue any fraction of a share of Regions
     Common Stock upon exercise of MCB Rights and any fraction of a share of
     Regions Common Stock that otherwise would be subject to a converted MCB
     Right shall represent the right to receive a cash payment equal to the
     product of such fraction and the difference between the market value of one
     share of Regions Common Stock and the per share exercise price of such
     Right. The market value of one share of Regions Common Stock shall be the
     last sale price of Regions Common Stock on the Nasdaq NMS (as reported by
     The Wall Street Journal or, if not reported thereby, any other
     authoritative source selected by Regions) on the last trading day preceding
     the Effective Time. In addition, notwithstanding the provisions of clauses
     (iii) and (iv) of the first sentence of this Section 3.4, each MCB Right
     which is an "incentive stock option" shall be adjusted as required by
     Section 424 of the Internal Revenue Code, so as not to constitute a
     modification, extension, or renewal of the option, within the meaning of
     Section 424(h) of the Internal Revenue Code. Regions agrees to take all
     necessary steps to effectuate the foregoing provisions of this Section 3.4.
 
                                       A-9
<PAGE>   116
 
     (b) All restrictions or limitations on transfer with respect to MCB Common
     Stock awarded under the MCB Stock Plans or any other plan, program, or
     arrangement of any MCB Company, to the extent that such restrictions or
     limitations shall not have already lapsed, and except as otherwise
     expressly provided in such plan, program, or arrangement, shall remain in
     full force and effect with respect to shares of Regions Common Stock into
     which such restricted stock is converted pursuant to Section 3.1 of this
     Agreement.
 
                                   ARTICLE 4
 
                               EXCHANGE OF SHARES
 
4.1 Exchange Procedures.  Promptly after the Effective Time, Regions and MCB
shall cause the exchange agent selected by Regions (the "Exchange Agent") to
mail to the former stockholders of MCB appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of MCB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of MCB Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement or with respect to which
dissenters' rights of appraisal are perfected pursuant to Section 3.4 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.5 of this Agreement, each holder of shares of MCB Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of Regions Common Stock to which such holder may be
otherwise entitled (without interest). Regions shall not be obligated to deliver
the consideration to which any former holder of MCB Common Stock is entitled as
a result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of MCB Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of MCB Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Agreement notwithstanding, neither the Surviving
Corporation nor the Exchange Agent shall be liable to a holder of MCB Common
Stock for any amounts paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property Law.
 
4.2 Rights of Former MCB Stockholders.  At the Effective Time, the stock
transfer books of MCB shall be closed as to holders of MCB Common Stock
immediately prior to the Effective Time and no transfer of MCB Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of MCB Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement or with respect
to which dissenters' rights of appraisal are perfected pursuant to Section 3.4
of this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Sections 3.1
and 3.5 of this Agreement in exchange therefor, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by MCB in respect of such shares
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<PAGE>   117
 
of MCB Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. To the extent permitted by Law, former
stockholders of record of MCB shall be entitled to vote after the Effective Time
at any meeting of Regions stockholders the number of whole shares of Regions
Common Stock into which their respective shares of MCB Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing MCB Common Stock for certificates representing Regions Common Stock
in accordance with the provisions of this Agreement. Whenever a dividend or
other distribution is declared by Regions on the Regions Common Stock, the
record date for which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of Regions Common Stock
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Regions Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of MCB Common Stock issued and outstanding at
the Effective Time until such holder surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement. However, upon surrender of such MCB
Common Stock certificate, both the Regions Common Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
 
                                   ARTICLE 5
 
                     REPRESENTATIONS AND WARRANTIES OF MCB
 
MCB hereby represents and warrants to Regions as follows:
 
5.1 Organization, Standing, and Power.  MCB is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Tennessee,
and has the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Material Assets. MCB is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on MCB.
 
5.2 Authority; No Breach By Agreement.
 
     (a) MCB has the corporate power and authority necessary to execute,
     deliver, and perform its obligations under this Agreement and to consummate
     the transactions contemplated hereby. The execution, delivery, and
     performance of this Agreement, and the consummation of the transactions
     contemplated herein, including the Merger, have been duly and validly
     authorized by all necessary corporate action in respect thereof on the part
     of MCB, subject to the approval of this Agreement by the holders of a
     majority of the outstanding shares of MCB Common Stock entitled to be cast
     thereon, which is the only stockholder vote required for approval of this
     Agreement and consummation of the Merger by MCB. Subject to such requisite
     stockholder approval, this Agreement represents a legal, valid, and binding
     obligation of MCB, enforceable against MCB in accordance with its terms
     (except in all cases as such enforceability may be limited by applicable
     bankruptcy, insolvency, reorganization,
 
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<PAGE>   118
     receivership, conservatorship, moratorium, or similar Laws affecting the
     enforcement of creditors' rights generally and except that the availability
     of the equitable remedy of specific performance or injunctive relief is
     subject to the discretion of the court before which any proceeding may be
     brought).
 
     (b) Neither the execution and delivery of this Agreement by MCB, nor the
     consummation by MCB of the transactions contemplated hereby, nor compliance
     by MCB with any of the provisions hereof or thereof, will (i) conflict with
     or result in a breach of any provision of MCB's Articles of Incorporation
     or Bylaws, or (ii) constitute or result in a Default under, or require any
     Consent pursuant to, or result in the creation of any Lien on any Asset of
     any MCB Company under, any Contract or Permit of any MCB Company, where
     such Default or Lien, or any failure to obtain such Consent, is reasonably
     likely to have, individually or in the aggregate, a Material Adverse Effect
     on MCB, or (iii) subject to receipt of the requisite Consents referred to
     in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
     any MCB Company or any of their respective Material Assets.
 
     (c) Other than in connection or compliance with the provisions of the
     Securities Laws, applicable state corporate and securities Laws, and rules
     of the NASD, and other than Consents required from Regulatory Authorities,
     and other than notices to or filings with the Internal Revenue Service or
     the Pension Benefit Guaranty Corporation with respect to any employee
     benefit plans, or under the HSR Act, and other than Consents, filings, or
     notifications which, if not obtained or made, are not reasonably likely to
     have, individually or in the aggregate, a Material Adverse Effect on MCB,
     no notice to, filing with, or Consent of, any public body or authority is
     necessary for the consummation by MCB of the Merger and the other
     transactions contemplated in this Agreement.
 
5.3 Capital Stock.
 
     (a) The authorized capital stock of MCB consists, as of the date of this
     Agreement, of 1,000,000 shares of MCB Common Stock, of which 258,179 shares
     are issued and outstanding as of the date of this Agreement and not more
     than 303,759 shares will be issued and outstanding at the Effective Time.
     All of the issued and outstanding shares of MCB Common Stock are duly and
     validly issued and outstanding and are fully paid and nonassessable under
     the TBCA. None of the outstanding shares of MCB Common Stock has been
     issued in violation of any preemptive rights of the current or past
     stockholders of MCB.
 
     (b) Except as set forth in Section 5.3(a) of this Agreement or Section
     5.3(b) of the MCB Disclosure Memorandum, there are no shares of capital
     stock or other equity securities of MCB outstanding and no outstanding
     Rights relating to the capital stock of MCB.
 
5.4 MCB Subsidiaries.  MCB has disclosed in Section 5.4 of the MCB Disclosure
Memorandum all of the MCB Subsidiaries as of the date of this Agreement. MCB or
one of its Subsidiaries owns all of the issued and outstanding shares of capital
stock of each MCB Subsidiary. No equity securities of any MCB Subsidiary are or
may become required to be issued (other than to another MCB Company) by reason
of any Rights, and there are no Contracts by which any MCB Subsidiary is bound
to issue (other than to another MCB Company) additional shares of its capital
stock or Rights or by which any MCB Company is or may be bound to transfer any
shares of the capital stock of any MCB
 
                                      A-12

<PAGE>   119
 
Subsidiary (other than to another MCB Company). There are no Contracts relating
to the rights of any MCB Company to vote or to dispose of any shares of the
capital stock of any MCB Subsidiary. All of the shares of capital stock of each
MCB Subsidiary held by a MCB Company are duly authorized, validly issued, and
fully paid and, except as provided in statutes pursuant to which depository
institution Subsidiaries are organized, nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the MCB Company free and clear of any Lien. Each MCB
Subsidiary is either a bank or a corporation, and is duly organized, validly
existing, and (as to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each MCB Subsidiary is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on MCB. Each MCB Subsidiary that is a
depository institution is an "insured depository institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or Savings Association
Insurance Fund.
 
5.5 Financial Statements.  MCB has disclosed in Section 5.5 of the MCB
Disclosure Memorandum, and has delivered to Regions copies of, all MCB Financial
Statements prepared for periods ended prior to the date hereof and will deliver
to Regions copies of all MCB Financial Statements prepared subsequent to the
date hereof. The MCB Financial Statements (as of the dates thereof and for the
periods covered thereby) (i) are or, if dated after the date of this Agreement,
will be in accordance with the books and records of the MCB Companies, which are
or will be, as the case may be, complete and correct and which have been or will
have been, as the case may be, maintained in accordance with past business
practices, and (ii) present or will present, as the case may be, fairly the
consolidated financial position of the MCB Companies as of the dates indicated
and the consolidated results of operations, changes in stockholders' equity, and
cash flows of the MCB Companies for the periods indicated, in accordance with
GAAP (subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments which were not or are not expected to
be Material in amount or effect).
 
5.6 Absence of Undisclosed Liabilities.  No MCB Company has any Liabilities that
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on MCB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of MCB as of March 31, 1998, included in the
MCB Financial Statements or reflected in the notes thereto and except for
Liabilities incurred in the ordinary course of business subsequent to March 31,
1998. No MCB Company has incurred or paid any Liability since March 31, 1998,
except for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on MCB.
 
5.7 Absence of Certain Changes or Events.  Since March 31, 1998, except as
disclosed in the MCB Financial Statements delivered prior to the date of the
Agreement or as otherwise disclosed in the MCB Disclosure Memorandum, (i) there
have been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in
 
                                      A-13
<PAGE>   120
 
the aggregate, a Material Adverse Effect on MCB, and (ii) the MCB Companies have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
 
5.8 Tax Matters.
 
     (a) All Tax Returns required to be filed by or on behalf of any of the MCB
     Companies have been timely filed, or requests for extensions have been
     timely filed, granted, and have not expired for periods ended on or before
     December 31, 1997, and, to the Knowledge of MCB, all Tax Returns filed are
     complete and accurate in all Material respects. All Tax Returns for periods
     ending on or before the date of the most recent fiscal year end immediately
     preceding the Effective Time will be timely filed or requests for
     extensions will be timely filed. All Taxes shown on filed Tax Returns have
     been paid. There is no audit examination, deficiency, or refund Litigation
     with respect to any Taxes, that is reasonably likely to result in a
     determination that would have, individually or in the aggregate, a Material
     Adverse Effect on MCB, except to the extent reserved against in the MCB
     Financial Statements dated prior to the date of this Agreement. All Taxes
     and other Liabilities due with respect to completed and settled
     examinations or concluded Litigation have been paid.
 
     (b) None of the MCB Companies has executed an extension or waiver of any
     statute of limitations on the assessment or collection of any Tax due
     (excluding such statutes that relate to years currently under examination
     by the Internal Revenue Service or other applicable taxing authorities)
     that is currently in effect.
 
     (c) Adequate provision for any Taxes due or to become due for any of the
     MCB Companies for the period or periods through and including the date of
     the respective MCB Financial Statements has been made and is reflected on
     such MCB Financial Statements.
 
     (d) Each of the MCB Companies is in compliance with, and its records
     contain all information and documents (including properly completed IRS
     Forms W-9) necessary to comply with, all applicable information reporting
     and Tax withholding requirements under federal, state, and local Tax Laws,
     and such records identify with specificity all accounts subject to backup
     withholding under Section 3406 of the Internal Revenue Code, except for
     such instances of noncompliance and such omissions as are not reasonably
     likely to have, individually or in the aggregate, a Material Adverse Effect
     on MCB.
 
     (e) None of the MCB Companies has made any payments, is obligated to make
     any payments, or is a party to any contract, agreement, or other
     arrangement that could obligate it to make any payments that would be
     disallowed as a deduction under Section 280G or 162(m) of the Internal
     Revenue Code.
 
     (f) There are no Material Liens with respect to Taxes upon any of the
     Assets of the MCB Companies.
 
     (g) There has not been an ownership change, as defined in Internal Revenue
     Code Section 382(g), of the MCB Companies that occurred during or after any
     Taxable Period in which the MCB Companies incurred a net operating loss
     that carries over to any Taxable Period ending after December 31, 1997.
 
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<PAGE>   121
 
     (h) No MCB Company has filed any consent under Section 341(f) of the
     Internal Revenue Code concerning collapsible corporations.
 
     (i) After the date of this Agreement, no Material election with respect to
     Taxes will be made without the prior consent of Regions, which consent will
     not be unreasonably withheld.
 
     (j) No MCB Company has or has had a permanent establishment in any foreign
     country, as defined in any applicable tax treaty or convention between the
     United States and such foreign country.
 
5.9 Assets.  The MCB Companies have good and marketable title, free and clear of
all Liens, to all of their respective Assets. All tangible properties used in
the businesses of the MCB Companies are in good condition, reasonable wear and
tear excepted, and are usable in the ordinary course of business consistent with
MCB's past practices. All Assets which are Material to MCB's business on a
consolidated basis, held under leases or subleases by any of the MCB Companies,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The MCB Companies currently maintain
insurance in amounts, scope, and coverage reasonably necessary for their
operations. None of the MCB Companies has received notice from any insurance
carrier that (i) such insurance will be canceled or that coverage thereunder
will be reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. The Assets of the MCB
Companies include all Material Assets required to operate the business of the
MCB Companies as presently conducted.
 
5.10 Environmental Matters.
 
     (a) To the Knowledge of MCB, each MCB Company, its Participation
     Facilities, and its Loan Properties are, and have been, in compliance with
     all Environmental Laws, except those instances of non-compliance which are
     not reasonably likely to have, individually or in the aggregate, a Material
     Adverse Effect on MCB.
 
     (b) There is no Litigation pending or, to the Knowledge of MCB, threatened
     before any court, governmental agency, or authority, or other forum in
     which any MCB Company or any of its Participation Facilities has been or,
     with respect to threatened Litigation, may reasonably be expected to be
     named as a defendant (i) for alleged noncompliance (including by any
     predecessor) with any Environmental Law or (ii) relating to the release
     into the environment of any Hazardous Material, whether or not occurring
     at, on, under, or involving a site owned, leased, or operated by any MCB
     Company or any of its Participation Facilities, except for such Litigation
     pending or threatened that is not reasonably likely to have, individually
     or in the aggregate, a Material Adverse Effect on MCB.
 
     (c) There is no Litigation pending, or to the Knowledge of MCB, threatened
     before any court, governmental agency, or board, or other forum in which
     any of its Loan Properties (or MCB in respect of such Loan Property) has
     been or, with respect to threatened Litigation, may reasonably be expected
     to be named as a defendant or potentially responsible party (i) for alleged
     noncompliance (including by any
 
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<PAGE>   122
     predecessor) with any Environmental Law or (ii) relating to the release
     into the environment of any Hazardous Material, whether or not occurring
     at, on, under, or involving a Loan Property, except for such Litigation
     pending or threatened that is not reasonably likely to have, individually
     or in the aggregate, a Material Adverse Effect on MCB.
 
     (d) To the Knowledge of MCB, there is no reasonable basis for any
     Litigation of a type described in subsections (b) or (c), except such as is
     not reasonably likely to have, individually or in the aggregate, a Material
     Adverse Effect on MCB.
 
     (e) To the Knowledge of MCB, during the period of (i) any MCB Company's
     ownership or operation of any of their respective current properties, (ii)
     any MCB Company's participation in the management of any Participation
     Facility, or (iii) any MCB Company's holding of a security interest in a
     Loan Property, there have been no releases of Hazardous Material in, on,
     under, or affecting (or potentially affecting) such properties, except such
     as are not reasonably likely to have, individually or in the aggregate, a
     Material Adverse Effect on MCB. Prior to the period of (i) any MCB
     Company's ownership or operation of any of their respective current
     properties, (ii) any MCB Company's participation in the management of any
     Participation Facility, or (iii) any MCB Company's holding of a security
     interest in a Loan Property, to the Knowledge of MCB, there were no
     releases of Hazardous Material in, on, under, or affecting any such
     property, Participation Facility, or Loan Property, except such as are not
     reasonably likely to have, individually or in the aggregate, a Material
     Adverse Effect on MCB.
 
5.11 Compliance with Laws.  MCB is duly registered as a bank holding company
under the BHC Act. Each MCB Company has in effect all Permits necessary for it
to own, lease, or operate its Material Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
MCB, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on MCB. None of the MCB Companies:
 
     (a) is in violation of any Laws, Orders, or Permits applicable to its
     business or employees conducting its business, except for violations which
     are not reasonably likely to have, individually or in the aggregate, a
     Material Adverse Effect on MCB; and
 
     (b) has received any notification or communication from any agency or
     department of federal, state, or local government or any Regulatory
     Authority or the staff thereof (i) asserting that any MCB Company is not in
     compliance with any of the Laws or Orders which such governmental authority
     or Regulatory Authority enforces, where such noncompliance is reasonably
     likely to have, individually or in the aggregate, a Material Adverse Effect
     on MCB, (ii) threatening to revoke any Permits, the revocation of which is
     reasonably likely to have, individually or in the aggregate, a Material
     Adverse Effect on MCB, or (iii) requiring any MCB Company (x) to enter into
     or consent to the issuance of a cease and desist order, formal agreement,
     directive, commitment, or memorandum of understanding, or (y) to adopt any
     Board resolution or similar undertaking, which restricts materially the
     conduct of its business, or in any manner relates to its capital adequacy,
     its credit or reserve policies, its management, or the payment of
     dividends.
 
                                      A-16
<PAGE>   123
 
5.12 Labor Relations.  No MCB Company is the subject of any Litigation asserting
that it or any other MCB Company has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state Law) or
seeking to compel it or any other MCB Company to bargain with any labor
organization as to wages or conditions of employment, nor is any MCB Company a
party to or bound by any collective bargaining agreement, Contract, or other
agreement or understanding with a labor union or labor organization, nor is
there any strike or other labor dispute involving any MCB Company, pending or
threatened, or to the Knowledge of MCB, is there any activity involving any MCB
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
 
5.13 Employee Benefit Plans.
 
     (a) MCB has disclosed to Regions in writing prior to the execution of the
     Agreement and in Section 5.13 of the MCB Disclosure Memorandum, and has
     delivered or made available to Regions prior to the execution of this
     Agreement correct and complete copies in each case of, all Material MCB
     Benefits Plans. For purposes of this Agreement, "MCB Benefit Plans" means
     all pension, retirement, profit-sharing, deferred compensation, stock
     option, employee stock ownership, severance pay, vacation, bonus, or other
     incentive plan, all other written employee programs or agreements, all
     medical, vision, dental, or other health plans, all life insurance plans,
     and all other employee benefit plans or fringe benefit plans, including,
     without limitation, "employee benefit plans" as that term is defined in
     Section 3(3) of ERISA maintained by, sponsored in whole or in part by, or
     contributed to by, any MCB Company for the benefit of employees, retirees,
     dependents, spouses, directors, independent contractors, or other
     beneficiaries and under which employees, retirees, dependents, spouses,
     directors, independent contractors, or other beneficiaries are eligible to
     participate. Any of the MCB Benefit Plans which is an "employee welfare
     benefit plan," as that term is defined in Section 3(l) of ERISA, or an
     "employee pension benefit plan," as that term is defined in Section 3(2) of
     ERISA, is referred to herein as a "MCB ERISA Plan." Any MCB ERISA Plan
     which is also a "defined benefit plan" (as defined in Section 414(j) of the
     Internal Revenue Code or Section 3(35) of ERISA) is referred to herein as a
     "MCB Pension Plan." Neither MCB nor any MCB Company has an "obligation to
     contribute" (as defined in ERISA Section 4212) to a "multiemployer plan"
     (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)). Each "employee
     pension benefit plan," as defined in Section 3(2) of ERISA, ever maintained
     by any MCB Company that was intended to qualify under Section 401(a) of the
     Internal Revenue Code and with respect to which any MCB Company has any
     Liability, is disclosed as such in Section 5.13 of the MCB Disclosure
     Memorandum.
 
     (b) MCB has delivered or made available to Regions prior to the execution
     of this Agreement correct and complete copies of the following documents:
     (i) all trust agreements or other funding arrangements for such MCB Benefit
     Plans (including insurance contracts), and all amendments thereto, (ii)
     with respect to any such MCB Benefit Plans or amendments, all determination
     letters, Material rulings, Material opinion letters, Material information
     letters, or Material advisory opinions issued by the Internal Revenue
     Service, the United States Department of Labor, or the Pension Benefit
     Guaranty Corporation after December 31, 1994, (iii) annual reports or
     returns, audited or unaudited financial statements, actuarial valuations
     and reports, and summary annual reports prepared for any MCB Benefit Plan
     with respect to the
 
                                      A-17
<PAGE>   124
     most recent plan year, and (iv) the most recent summary plan descriptions
     and any Material modifications thereto.
 
     (c) All MCB Benefit Plans are in compliance with the applicable terms of
     ERISA, the Internal Revenue Code, and any other applicable Laws, the breach
     or violation of which is reasonably likely to have, individually or in the
     aggregate, a Material Adverse Effect on MCB. Each MCB ERISA Plan which is
     intended to be qualified under Section 401(a) of the Internal Revenue Code
     has received a favorable determination letter from the Internal Revenue
     Service, and MCB is not aware of any circumstances which will or could
     reasonably result in revocation of any such favorable determination letter.
     Each trust created under any MCB ERISA Plan has been determined to be
     exempt from Tax under Section 501(a) of the Internal Revenue Code and MCB
     is not aware of any circumstance which will or could reasonably result in
     revocation of such exemption. With respect to each MCB Benefit Plan to the
     Knowledge of MCB, no event has occurred which will or could reasonably give
     rise to a loss of any intended Tax consequences under the Internal Revenue
     Code or to any Tax under Section 511 of the Internal Revenue Code that is
     reasonably likely, individually or in the aggregate, to have a Material
     Adverse Effect on MCB. There is no Material pending or, to the Knowledge of
     MCB, threatened Litigation relating to any MCB ERISA Plan.
 
     (d) No MCB Company has engaged in a transaction with respect to any MCB
     Benefit Plan that, assuming the Taxable Period of such transaction expired
     as of the date of this Agreement, would subject any MCB Company to a
     Material tax or penalty imposed by either Section 4975 of the Internal
     Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
     likely to have, individually or in the aggregate, a Material Adverse Effect
     on MCB. Neither MCB nor any administrator or fiduciary of any MCB Benefit
     Plan (or any agent of any of the foregoing) has engaged in any transaction,
     or acted or failed to act in any manner which could subject MCB to any
     direct or indirect Liability (by indemnity or otherwise) for breach of any
     fiduciary, co-fiduciary, or other duty under ERISA, where such Liability,
     individually or in the aggregate, is reasonably likely to have a Material
     Adverse Effect on MCB. No oral or written representation or communication
     with respect to any aspect of the MCB Benefit Plans has been made to
     employees of any MCB Company which is not in accordance with the written or
     otherwise preexisting terms and provisions of such plans, where any
     Liability with respect to such representation or disclosure is reasonably
     likely to have a Material Adverse Effect on MCB.
 
     (e) No MCB Pension Plan has any "unfunded current liability," as that term
     is defined in Section 302(d)(8)(A) of ERISA, and the fair market value of
     the Assets of any such plan exceeds the plan's "benefit liabilities," as
     that term is defined in Section 4001(a)(16) of ERISA, when determined under
     actuarial factors that would apply if the plan terminated in accordance
     with all applicable legal requirements. Since the date of the most recent
     actuarial valuation, there has been (i) no Material change in the financial
     position or funded status of any MCB Pension Plan, (ii) no change in the
     actuarial assumptions with respect to any MCB Pension Plan, and (iii) no
     increase in benefits under any MCB Pension Plan as a result of plan
     amendments or changes in applicable Law, any of which is reasonably likely
     to have, individually or in the aggregate, a Material Adverse Effect on
     MCB. Neither any MCB Pension Plan nor any "single-employer plan," within
     the meaning of
 
                                      A-18
<PAGE>   125

     Section 4001(a)(15) of ERISA, currently or formerly maintained by any MCB
     Company, or the single-employer plan of any entity which is considered one
     employer with MCB under Section 4001 of ERISA or Section 414 of the
     Internal Revenue Code or Section 302 of ERISA (whether or not waived) (a
     "MCB ERISA Affiliate") has an "accumulated funding deficiency" within the
     meaning of Section 412 of the Internal Revenue Code or Section 302 of
     ERISA. All contributions with respect to a MCB Pension Plan or any
     single-employer plan of a MCB ERISA Affiliate have or will be timely made
     and there is no lien or expected to be a lien under Internal Revenue Code
     Section 412(n) or ERISA Section 302(f) or Tax under Internal Revenue Code
     Section 4971. No MCB Company has provided, or is required to provide,
     security to a MCB Pension Plan or to any single-employer plan of a MCB
     ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue
     Code. All premiums required to be paid under ERISA Section 4006 have been
     timely paid by MCB, except to the extent any failure would not have a
     Material Adverse Effect on MCB.
 
     (f) No Liability under Title IV of ERISA has been or is expected to be
     incurred by any MCB Company with respect to any defined benefit plan
     currently or formerly maintained by any of them or by any MCB ERISA
     Affiliate that has not been satisfied in full (other than Liability for
     Pension Benefit Guaranty Corporation premiums, which have been paid when
     due, except to the extent any failure would not have a Material Adverse
     Effect on MCB).
 
     (g) No MCB Company has any obligations for retiree health and retiree life
     benefits under any of the MCB Benefit Plans other than with respect to
     benefit coverage mandated by applicable Law.
 
     (h) Neither the execution and delivery of this Agreement nor the
     consummation of the transactions contemplated hereby will, by themselves,
     (i) result in any payment (including, without limitation, severance,
     unemployment compensation, golden parachute, or otherwise) becoming due to
     any director or any employee of any MCB Company from any MCB Company under
     any MCB Benefit Plan or otherwise, (ii) increase any benefits otherwise
     payable under any MCB Benefit Plan, or (iii) result in any acceleration of
     the time of payment or vesting of any such benefit.
 
5.14 Material Contracts.  Except as set forth in Section 5.14 of the MCB
Disclosure Memorandum, none of the MCB Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $50,000, (ii) any Contract relating to the borrowing
of money by any MCB Company or the guarantee by any MCB Company of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables, and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
and (iii) any other Contract or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by MCB with the SEC as of the date of
this Agreement if MCB were required to file a Form 10-K with the SEC (together
with all Contracts referred to in Sections 5.9 and 5.13(a) of this Agreement,
the "MCB Contracts"). With respect to each MCB Contract: (i) the Contract is in
full force and effect; (ii) no MCB Company is in Default thereunder, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on
 
                                      A-19
<PAGE>   126
 
MCB; (iii) no MCB Company has repudiated or waived any Material provision of any
such Contract; and (iv) no other party to any such Contract is, to the Knowledge
of MCB, in Default in any respect, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
MCB, or has repudiated or waived any Material provision thereunder. Except for
Federal Home Loan Bank advances, all of the indebtedness of any MCB Company for
money borrowed is prepayable at any time by such MCB Company without penalty or
premium.
 
5.15 Legal Proceedings.
 
     (a) There is no Litigation instituted or pending, or, to the Knowledge of
     MCB, threatened against any MCB Company, or against any Asset, employee
     benefit plan, interest, or right of any of them, that is reasonably likely
     to have, individually or in the aggregate, a Material Adverse Effect on
     MCB, nor are there any Orders of any Regulatory Authorities, other
     governmental authorities, or arbitrators outstanding against any MCB
     Company, that are reasonably likely to have, individually or in the
     aggregate, a Material Adverse Effect on MCB.
 
     (b) Section 5.15(b) of the MCB Disclosure Memorandum includes a summary
     report of all Litigation as of the date of this Agreement to which any MCB
     Company is a party and which names a MCB Company as a defendant or
     cross-defendant.
 
5.16 Reports.  Since December 31, 1994, or the date of organization if later,
each MCB Company has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with any Regulatory Authorities, except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on MCB. As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all Material respects with all applicable Laws.
 
5.17 Statements True and Correct.  None of the information supplied or to be
supplied by any MCB Company or any Affiliate thereof regarding MCB or such
Affiliate for inclusion in the Registration Statement to be filed by Regions
with the SEC will, when the Registration Statement becomes effective, be false
or misleading with respect to any Material fact, or contain any untrue statement
of a Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any MCB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to MCB's stockholders
in connection with the Stockholders' Meeting will, when first mailed to the
stockholders of MCB, be false or misleading with respect to any Material fact,
or contain any misstatement of Material fact, or omit to state any Material fact
required to be stated thereunder or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Stockholders' Meeting, be false or misleading with respect to
any Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to correct any Material statement in any earlier
communication with respect to the solicitation of any proxy for the
Stockholders' Meeting. All documents that any MCB Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
 
                                      A-20
<PAGE>   127
 
5.18 Accounting, Tax, and Regulatory Matters.  No MCB Company or any Affiliate
thereof has taken or agreed to take any action, and MCB has no Knowledge of any
fact or circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
 
5.19 State Takeover Laws.  Each MCB Company has taken all necessary action to
exempt the transactions contemplated by this Agreement from any applicable
"moratorium," "control share," "fair price," "business combination," or other
anti-takeover laws and regulations of the State of Tennessee (collectively,
"Takeover Laws").
 
5.20 Charter Provisions.  Each MCB Company has taken all action so that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Articles of Incorporation, Bylaws,
or other governing instruments of any MCB Company or restrict or impair the
ability of Regions or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any MCB Company that may
be directly or indirectly acquired or controlled by it.
 
5.21 Support Agreements.  Each of the directors of MCB has executed and
delivered to Regions a Support Agreement in substantially the form as Exhibit 1
to this Agreement.
 
5.22 Derivatives.  All interest rate swaps, caps, floors, option agreements,
futures and forward contracts, and other similar risk management arrangements,
whether entered into for MCB's own account, or for the account of one or more
the MCB Subsidiaries or their customers, were entered into (i) in accordance
with prudent business practices and all applicable Laws, and (ii) with
counterparties believed to be financially responsible.
 
5.23 Year 2000.  MCB represents and warrants that all computer software
necessary for the conduct of its business (the "Software") is designed to be
used prior to, during, and after the calendar year 2000 A.D., and that the
Software will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than one
century. MCB further represents and warrants that the Software accepts,
calculates, sorts, extracts and otherwise processes date inputs and date values,
and returns and displays date values, in a consistent manner regardless of the
dates used, whether before, on, or after January 1, 2000.
 
                                   ARTICLE 6
 
                   REPRESENTATIONS AND WARRANTIES OF REGIONS
 
Regions hereby represents and warrants to MCB as follows:
 
6.1 Organization, Standing, and Power.  Regions is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Delaware,
and has the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Material Assets. Regions is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign
 
                                      A-21
<PAGE>   128
 
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions.
 
6.2 Authority; No Breach By Agreement.
 
     (a) Regions has the corporate power and authority necessary to execute,
     deliver, and perform its obligations under this Agreement and to consummate
     the transactions contemplated hereby. The execution, delivery, and
     performance of this Agreement and the consummation of the transactions
     contemplated herein, including the Merger, have been duly and validly
     authorized by all necessary corporate action in respect thereof on the part
     of Regions. This Agreement represents a legal, valid, and binding
     obligation of Regions, enforceable against Regions in accordance with its
     terms (except in all cases as such enforceability may be limited by
     applicable bankruptcy, insolvency, reorganization, receivership,
     conservatorship, moratorium, or similar Laws affecting the enforcement of
     creditors' rights generally and except that the availability of the
     equitable remedy of specific performance or injunctive relief is subject to
     the discretion of the court before which any proceeding may be brought).
 
     (b) Neither the execution and delivery of this Agreement by Regions, nor
     the consummation by Regions of the transactions contemplated hereby, nor
     compliance by Regions with any of the provisions hereof, will (i) conflict
     with or result in a breach of any provision of Regions' Certificate of
     Incorporation or Bylaws, (ii) constitute or result in a Default under, or
     require any Consent pursuant to, or result in the creation of any Lien on
     any Asset of any Regions Company under, any Contract or Permit of any
     Regions Company, where such Default or Lien, or any failure to obtain such
     Consent, is reasonably likely to have, individually or in the aggregate, a
     Material Adverse Effect on Regions, or (iii) subject to receipt of the
     requisite Consents referred to in Section 9.1(b) of this Agreement, violate
     any Law or Order applicable to any Regions Company or any of their
     respective Material Assets.
 
     (c) Other than in connection or compliance with the provisions of the
     Securities Laws, applicable state corporate and securities Laws, and rules
     of the NASD, and other than Consents required from Regulatory Authorities,
     and other than notices to or filings with the Internal Revenue Service or
     the Pension Benefit Guaranty Corporation with respect to any employee
     benefit plans, or under the HSR Act, and other than Consents, filings, or
     notifications which, if not obtained or made, are not reasonably likely to
     have, individually or in the aggregate, a Material Adverse Effect on
     Regions, no notice to, filing with, or Consent of, any public body or
     authority is necessary for the consummation by Regions of the Merger and
     the other transactions contemplated in this Agreement.
 
6.3 Capital Stock.  The authorized capital stock of Regions consists, as of the
date of this Agreement, of 240,000,000 shares of Regions Common Stock, of which
149,797,609 shares were issued and outstanding and no shares were held as
treasury shares as of March 31, 1998. All of the issued and outstanding shares
of Regions Common Stock are, and all of the shares of Regions Common Stock to be
issued in exchange for shares of MCB Common Stock upon consummation of the
Merger, when issued in accordance with the terms of this Agreement, will be,
duly and validly issued and outstanding and fully paid and nonassessable under
the DGCL. None of the outstanding shares of Regions Common Stock has been, and
none of the shares of Regions Common Stock to be issued
 
                                      A-22
<PAGE>   129
 
in exchange for shares of MCB Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
stockholders of Regions.
 
6.4 Regions Subsidiaries.  Regions or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each Regions Subsidiary. No
equity securities of any Regions Subsidiary are or may become required to be
issued (other than to another Regions Company) by reason of any Rights, and
there are no Contracts by which any Regions Subsidiary is bound to issue (other
than to another Regions Company) additional shares of its capital stock or
Rights or by which any Regions Company is or may be bound to transfer any shares
of the capital stock of any Regions Subsidiary (other than to another Regions
Company). There are no Contracts relating to the rights of any Regions Company
to vote or to dispose of any shares of the capital stock of any Regions
Subsidiary. All of the shares of capital stock of each Regions Subsidiary held
by a Regions Company are fully paid and, except as provided in statutes pursuant
to which depository institution Subsidiaries are organized, nonassessable under
the applicable corporation Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the Regions Company free and clear of
any Lien. Each Regions Subsidiary is either a bank or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each Regions Subsidiary is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions. Each Regions Subsidiary
that is a depository institution is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Bank Insurance Fund or
Savings Association Insurance Fund.
 
6.5 SEC Filings; Financial Statements.
 
     (a) Regions has filed and made available to MCB all forms, reports, and
     documents required to be filed by Regions with the SEC since January 1 of
     the second fiscal year prior to the date of this Agreement (collectively,
     the "Regions SEC Reports"). The Regions SEC Reports (i) at the time filed,
     complied in all Material respects with the applicable requirements of the
     1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time
     they were filed (or if amended or superseded by a filing prior to the date
     of this Agreement, then on the date of such filing) contain any untrue
     statement of a Material fact or omit to state a Material fact required to
     be stated in such Regions SEC Reports or necessary in order to make the
     statements in such Regions SEC Reports, in light of the circumstances under
     which they were made, not misleading. Except for Regions Subsidiaries that
     are registered as a broker, dealer, or investment advisor or filings
     required due to fiduciary holdings of the Regions Subsidiaries, none of
     Regions Subsidiaries is required to file any forms, reports, or other
     documents with the SEC.
 
     (b) Each of the Regions Financial Statements (including, in each case, any
     related notes) contained in the Regions SEC Reports, including any Regions
     SEC Reports filed after the date of this Agreement until the Effective
     Time, complied or will comply as to form in all Material respects with the
     applicable published rules and
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<PAGE>   130
     regulations of the SEC with respect thereto, was or will be prepared in
     accordance with GAAP applied on a consistent basis throughout the periods
     involved (except as may be indicated in the notes to such financial
     statements or, in the case of unaudited statements, as permitted by Form
     10-Q of the SEC), and fairly presented or will fairly present the
     consolidated financial position of Regions and its Subsidiaries as at the
     respective dates and the consolidated results of its operations and cash
     flows for the periods indicated, except that the unaudited interim
     financial statements were or are subject to normal and recurring year-end
     adjustments which were not or are not expected to be Material in amount or
     effect.
 
6.6 Absence of Undisclosed Liabilities.  No Regions Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, except Liabilities which are accrued or reserved
against in the consolidated balance sheets of Regions as of March 31, 1998,
included in the Regions Financial Statements or reflected in the notes thereto
and except for Liabilities incurred in the ordinary course of business
subsequent to March 31, 1998. No Regions Company has incurred or paid any
Liability since March 31, 1998, except for such Liabilities incurred or paid in
the ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions.
 
6.7 Absence of Certain Changes or Events.  Since March 31, 1998, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, and (ii) the Regions Companies have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
 
6.8 Compliance with Laws.  Regions is duly registered as a bank holding company
under the BHC Act. Each Regions Company has in effect all Permits necessary for
it to own, lease, or operate its Material Assets and to carry on its business as
now conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions. None of the Regions Companies:
 
     (a) is in violation of any Laws, Orders, or Permits applicable to its
     business or employees conducting its business, except for violations which
     are not reasonably likely to have, individually or in the aggregate, a
     Material Adverse Effect on Regions; and
 
     (b) has received any notification or communication from any agency or
     department of federal, state, or local government or any Regulatory
     Authority or the staff thereof (i) asserting that any Regions Company is
     not in compliance with any of the Laws or Orders which such governmental
     authority or Regulatory Authority enforces, where such noncompliance is
     reasonably likely to have, individually or in the aggregate, a Material
     Adverse Effect on Regions, (ii) threatening to revoke any Permits, the
     revocation of which is reasonably likely to have, individually or in the
     aggregate, a Material Adverse Effect on Regions, or (iii) requiring any
     Regions Company (x) to enter into or consent to the issuance of a cease and
     desist order, formal agreement,
 
                                      A-24
<PAGE>   131
     directive, commitment, or memorandum of understanding, or (y) to adopt any
     Board resolution or similar undertaking, which restricts materially the
     conduct of its business, or in any manner relates to its capital adequacy,
     its credit or reserve policies, its management, or the payment of
     dividends.
 
6.9 Legal Proceedings.  There is no Litigation instituted or pending, or, to the
Knowledge of Regions, threatened against any Regions Company, or against any
Asset, employee benefit plan, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Regions
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions.
 
6.10 Reports.  Since December 31, 1994, or the date of organization if later,
each Regions Company has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with any Regulatory Authorities, except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions. As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all Material respects with all applicable Laws.
 
6.11 Statements True and Correct.  None of the information supplied or to be
supplied by any Regions Company or any Affiliate thereof regarding Regions or
such Affiliate for inclusion in the Registration Statement to be filed by
Regions with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any Material fact, or contain any untrue
statement of a Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any Regions Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to MCB's
stockholders in connection with the Stockholders' Meeting, will, when first
mailed to the stockholders of MCB, be false or misleading with respect to any
Material fact, or contain any misstatement of Material fact, or omit to state
any Material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material fact
required to be stated thereunder or necessary to correct any Material statement
in any earlier communication with respect to the solicitation of any proxy for
the Stockholders' Meeting. All documents that any Regions Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
 
6.12 Accounting, Tax, and Regulatory Matters.  No Regions Company or any
Affiliate thereof has taken or agreed to take any action, and Regions has no
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
 
                                      A-25
<PAGE>   132
 
6.13 Derivatives.  All interest rate swaps, caps, floors, option agreements,
futures and forward contracts, and other similar risk management arrangements,
whether entered into for Regions' own account, or for the account of one or more
the Regions Subsidiaries or their customers, were entered into (i) in accordance
with prudent business practices and all applicable Laws, and (ii) with
counterparties believed to be financially responsible.
 
6.14 Year 2000.  Regions has disclosed to MCB a complete and accurate copy of
Regions' plan, including an estimate of the anticipated associated costs, for
implementing modifications to Regions' hardware, software, and computer systems,
chips, and microprocessors, to ensure proper execution and accurate processing
of all date-related data, whether from years in the same century or in different
centuries. Between the date of this Agreement and the Effective Time, Regions
shall endeavor to continue its efforts to implement such plan.
 
                                   ARTICLE 7
 
                    CONDUCT OF BUSINESS PENDING CONSUMMATION
 
7.1 Affirmative Covenants of Both Parties.  Unless the prior written consent of
the other Party shall have been obtained, and except as otherwise expressly
contemplated herein, each Party shall and shall cause each of its Subsidiaries
to (i) operate its business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organization and Assets and maintain its
rights and franchises, (iii) use its reasonable efforts to maintain its current
employee relationships, and (iv) take no action which would (a) adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) of this Agreement, or (b)
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not prevent
any Regions Company from discontinuing or disposing of any of its Assets or
business, or from acquiring or agreeing to acquire any other Person or any
Assets thereof, if such action is, in the judgment of Regions, desirable in the
conduct of the business of Regions and its Subsidiaries.
 
7.2 Negative Covenants of MCB.  From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, MCB
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of Regions, which consent shall not be unreasonably
withheld:
 
     (a) amend the Articles of Incorporation, Bylaws, or other governing
     instruments of any MCB Company, or
 
     (b) incur, guarantee, or otherwise become responsible for, any additional
     debt obligation or other obligation for borrowed money (other than
     indebtedness of a MCB Company to another MCB Company) in excess of an
     aggregate of $100,000 (for the MCB Companies on a consolidated basis),
     except in the ordinary course of the business consistent with past
     practices (which shall include, for MCB Subsidiaries that are depository
     institutions, creation of deposit liabilities, purchases of federal funds,
     advances from the Federal Reserve Bank or Federal Home Loan Bank, and entry
     into repurchase agreements fully secured by U.S. government or agency
     securities), or impose, or suffer the imposition, on any Asset of any MCB
     Company of any Lien or permit any such Lien to exist (other than in
     connection with deposits,
                                      A-26
<PAGE>   133
     repurchase agreements, bankers acceptances, "treasury tax and loan"
     accounts established in the ordinary course of business, the satisfaction
     of legal requirements in the exercise of trust powers, and Liens in effect
     as of the date hereof that are disclosed in the MCB Disclosure Memorandum);
     or
 
     (c) repurchase, redeem, or otherwise acquire or exchange (other than
     exchanges in the ordinary course under employee benefit plans), directly or
     indirectly, any shares, or any securities convertible into any shares, of
     the capital stock of any MCB Company, or declare or pay any dividend or
     make any other distribution in respect of MCB's capital stock; or
 
     (d) except for this Agreement or pursuant to the exercise of Rights
     outstanding as of the date of this Agreement and pursuant to the terms
     thereof in existence on the date of this Agreement, issue, sell, pledge,
     encumber, authorize the issuance of, enter into any Contract to issue,
     sell, pledge, encumber, or authorize the issuance of, or otherwise permit
     to become outstanding, any additional shares of MCB Common Stock or any
     other capital stock of any MCB Company, or any stock appreciation rights,
     or any option, warrant, conversion, or other right to acquire any such
     stock, or any security convertible into any such stock; or
 
     (e) adjust, split, combine, or reclassify any capital stock of any MCB
     Company or issue or authorize the issuance of any other securities in
     respect of or in substitution for shares of MCB Common Stock, or sell,
     lease, mortgage, or otherwise dispose of or otherwise encumber (i) any
     shares of capital stock of any MCB Subsidiary (unless any such shares of
     stock are sold or otherwise transferred to another MCB Company) or (ii) any
     Asset other than in the ordinary course of business for reasonable and
     adequate consideration; or
 
     (f) except for purchases of U.S. Treasury securities or U.S. Government
     agency securities, which in either case have maturities of three years or
     less, purchase any securities or make any Material investment, either by
     purchase of stock or securities, contributions to capital, Asset transfers,
     or purchase of any Assets, in any Person other than a wholly-owned MCB
     Subsidiary, or otherwise acquire direct or indirect control over any
     Person, other than in connection with (i) foreclosures in the ordinary
     course of business, (ii) acquisitions of control by a depository
     institution Subsidiary in its fiduciary capacity, or (iii) the creation of
     new wholly-owned Subsidiaries organized to conduct or continue activities
     otherwise permitted by this Agreement; or
 
     (g) grant any increase in compensation or benefits to the employees or
     officers of any MCB Company, except as required by Law; pay any severance
     or termination pay or any bonus other than pursuant to written policies or
     written Contracts in effect on the date of this Agreement; enter into or
     amend any severance agreements with officers of any MCB Company; grant any
     increase in fees or other increases in compensation or other benefits to
     directors of any MCB Company; or voluntarily accelerate the vesting of any
     stock options or other stock-based compensation or employee benefits; or
 
     (h) enter into or amend any employment Contract between any MCB Company and
     any Person (unless such amendment is required by Law) that the MCB Company
     does not have the unconditional right to terminate without Liability (other
     than Liability for services already rendered), at any time on or after the
     Effective Time; or
 
     (i) adopt any new employee benefit plan of any MCB Company or make any
     Material change in or to any existing employee benefit plans of any MCB
     Company
 
                                      A-27
<PAGE>   134
     other than any such change that is required by Law or that, in the opinion
     of counsel, is necessary or advisable to maintain the tax qualified status
     of any such plan; or
 
     (j) make any significant change in any Tax or accounting methods or systems
     of internal accounting controls, except as may be appropriate to conform to
     changes in Tax Laws or regulatory accounting requirements or GAAP; or
 
     (k) commence any Litigation other than as necessary for the prudent
     operation of its business or settle any Litigation involving any Liability
     of any MCB Company for Material money damages or restrictions upon the
     operations of any MCB Company; or
 
     (l) except in the ordinary course of business, modify, amend, or terminate
     any Material Contract or waive, release, compromise, or assign any Material
     rights or claims.
 
7.3 Adverse Changes in Condition.  Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
 
7.4 Reports.  Each Party and its Subsidiaries shall file all reports required to
be filed by it with Regulatory Authorities between the date of this Agreement
and the Effective Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial statements are contained
in any such reports filed with the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such statements
as of the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not Material). As of their respective
dates, such reports filed with the SEC will comply in all Material respects with
the Securities Laws and will not contain any untrue statement of a Material fact
or omit to state a Material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
 
                                   ARTICLE 8
 
                             ADDITIONAL AGREEMENTS
 
8.1 Registration Statement; Proxy Statement; Stockholder Approval.  As soon as
reasonably practicable after execution of this Agreement, Regions shall file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and take
any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of Regions Common
Stock upon consummation of the Merger. MCB shall furnish all information
concerning it and the holders of its capital stock as Regions may reasonably
request in connection with such action. MCB shall call a
 
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<PAGE>   135
 
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Stockholders' Meeting, (i) MCB shall
prepare and file with the SEC a Proxy Statement and mail such Proxy Statement to
its stockholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (iii) the Board of Directors of MCB shall recommend to its
stockholders the approval of the matters submitted for approval, and (iv) the
Board of Directors and officers of MCB shall use their reasonable efforts to
obtain such stockholders' approval, provided that each of Regions and MCB may
withdraw, modify, or change in an adverse manner to the other Party its
recommendations if the Board of Directors of such Party, after having consulted
with and based upon the advice of outside counsel, determines in good faith that
the failure to so withdraw, modify, or change its recommendation could
constitute a breach of the fiduciary duties of MCB's Board of Directors under
applicable Law. In addition, nothing in this Section 8.1 or elsewhere in this
Agreement shall prohibit accurate disclosure by MCB of information that is
required to be disclosed in the Registration Statement or the Proxy Statement or
in any other document required to be filed with the SEC (including, without
limitation, a Solicitation/Recommendation Statement on Schedule 14D-9) or
otherwise required to be publicly disclosed by applicable Law or regulations or
rules of the NASD.
 
8.2 Exchange Listing.  Regions shall use its reasonable efforts to list, prior
to the Effective Time, on the Nasdaq NMS, subject to official notice of
issuance, the shares of Regions Common Stock to be issued to the holders of MCB
Common Stock pursuant to the Merger.
 
8.3 Applications.  Regions shall promptly prepare and file, and MCB shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement.
 
8.4 Filings with State Offices.  Upon the terms and subject to the conditions of
this Agreement, Regions shall execute and file the Delaware Certificate of
Merger with the Secretary of State of the State of Delaware and the Tennessee
Articles of Merger with the Secretary of State of the State of Tennessee in
connection with the Closing.
 
8.5 Agreement as to Efforts to Consummate.  Subject to the terms and conditions
of this Agreement, each Party agrees to use, and to cause its Subsidiaries to
use, its reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper, or advisable under
applicable Laws to consummate and make effective, as soon as reasonably
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including, without limitation, using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
 
                                      A-29
<PAGE>   136
 
8.6 Investigation and Confidentiality.
 
     (a) Prior to the Effective Time, each Party shall keep the other Party
     advised of all Material developments relevant to its business and to
     consummation of the Merger and shall permit the other Party to make or
     cause to be made such investigation of the business and properties of it
     and its Subsidiaries and of their respective financial and legal conditions
     as the other Party reasonably requests, provided that such investigation
     shall be reasonably related to the transactions contemplated hereby and
     shall not interfere unnecessarily with normal operations. No investigation
     by a Party shall affect the representations and warranties of the other
     Party.
 
     (b) Each Party shall, and shall cause its advisers and agents to, maintain
     the confidentiality of all confidential information furnished to it by the
     other Party concerning its and its Subsidiaries' businesses, operations,
     and financial positions and shall not use such information for any purpose
     except in furtherance of the transactions contemplated by this Agreement.
     If this Agreement is terminated prior to the Effective Time, each Party
     shall promptly return or certify the destruction of all documents and
     copies thereof, and all work papers containing confidential information
     received from the other Party.
 
     (c) Each Party agrees to give the other Party notice as soon as practicable
     after any determination by it of any fact or occurrence relating to the
     other Party which it has discovered through the course of its investigation
     and which represents, or is reasonably likely to represent, either a
     Material breach of any representation, warranty, covenant, or agreement of
     the other Party or which has had or is reasonably likely to have a Material
     Adverse Effect on the other Party.
 
     (d) Neither Party nor any of their respective Subsidiaries shall be
     required to provide access to or to disclose information where such access
     or disclosure would violate or prejudice the rights of its customers,
     jeopardize the attorney-client or similar privilege with respect to such
     information or contravene any Law, rule, regulation, Order, judgment,
     decree, fiduciary duty, or agreement entered into prior to the date of this
     Agreement. The Parties will use their reasonable efforts to make
     appropriate substitute disclosure arrangements, to the extent practicable,
     in circumstances in which the restrictions of the preceding sentence apply.
 
8.7 Press Releases.  Prior to the Effective Time, Regions and MCB shall consult
with each other as to the form and substance of any press release or other
public disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.7 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
 
8.8 Certain Actions.  Except with respect to this Agreement and the transactions
contemplated hereby, no MCB Company nor any Affiliate thereof nor any
Representatives thereof retained by any MCB Company shall directly or indirectly
solicit or engage in negotiations concerning any Acquisition Proposal, or
provide any confidential information or assistance to, or have any discussions
with, any Person with respect to an Acquisition Proposal. Notwithstanding the
foregoing, MCB may, and may authorize and permit its Representatives to, provide
Persons with confidential information, have discussions or negotiations with, or
otherwise facilitate an effort or attempt by such Person to make or implement an
Acquisition Proposal not solicited in violation of this Agreement if MCB's
 
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<PAGE>   137
 
Board of Directors, after having consulted with, and based upon the advice of,
outside counsel, determines in good faith that the failure to take such actions
could constitute a breach of the fiduciary duties of MCB's Board of Directors
under applicable Law; provided, that MCB shall promptly advise Regions following
the receipt of any Acquisition Proposal and the Material details thereof; and,
provided further, that prior to delivery of confidential information relating to
MCB or access to MCB's books, records, or properties in connection therewith,
the other Person shall have entered into a confidentiality agreement
substantially similar to the Confidentiality Agreement previously entered into
between MCB and Regions. Nothing contained in this Section 8.8 shall prohibit
the Board of Directors of MCB from complying with Rule 14e-2, promulgated under
the 1934 Act. MCB shall (i) immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any Persons conducted
heretofore with respect to any of the foregoing, and (ii) direct and use its
reasonable efforts to cause of all its Representatives not to engage in any of
the foregoing.
 
8.9 Accounting and Tax Treatment.  Each of the Parties undertakes and agrees to
use its reasonable efforts to cause the Merger, and to take no action which
would cause the Merger not, to qualify for treatment as a pooling of interests
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
 
8.10 State Takeover Laws.  Each MCB Company shall take all necessary steps to
exempt the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Laws.
 
8.11 Charter Provisions.  Each MCB Company shall take all necessary action to
ensure that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws, or other governing instruments of any MCB Company or restrict or impair
the ability of Regions or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a stockholder with respect to, shares of any MCB Company
that may be directly or indirectly acquired or controlled by it.
 
8.12 Agreement of Affiliates.  MCB has disclosed in Section 8.12 of the MCB
Disclosure Memorandum each Person whom it reasonably believes may be deemed an
"affiliate" of MCB for purposes of Rule 145 under the 1933 Act. MCB shall use
its reasonable efforts to cause each such Person to deliver to Regions not later
than 30 days prior to the Effective Time, a written agreement, in substantially
the form of Exhibit 2, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of MCB Common Stock held by such
Person except as contemplated by such agreement or by this Agreement and will
not sell, pledge, transfer, or otherwise dispose of the shares of Regions Common
Stock to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of Regions and MCB have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies. Shares of Regions Common Stock issued to such affiliates of
MCB in exchange for shares of MCB Common Stock shall not be transferable until
such time as financial results covering at least 30 days of combined operations
of Regions and MCB have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies, regardless of whether
each such affiliate has provided the written agreement referred to in this
Section 8.12 (and Regions shall be entitled to place restrictive legends upon
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<PAGE>   138
 
certificates for shares of Regions Common Stock issued to affiliates of MCB
pursuant to this Agreement to enforce the provisions of this Section 8.12).
Regions shall not be required to maintain the effectiveness of the Registration
Statement under the 1933 Act for the purposes of resale of Regions Common Stock
by such affiliates.
 
8.13. Employee Benefits and Contracts.  Following the Effective Time, Regions
shall provide generally to officers and employees of the MCB Companies, who at
or after the Effective Time become employees of a Regions Company, employee
benefits under employee benefit plans (other than stock option or other plans
involving the potential issuance of Regions Common Stock except as set forth in
this Section 8.13), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the Regions Companies to
their similarly situated officers and employees. For purposes of participation
and vesting (but not accrual of benefits) under such employee benefit plans, (i)
service under any qualified defined benefit plans of MCB shall be treated as
service under Regions' qualified defined benefit plans, (ii) service under any
qualified defined contribution plans of MCB shall be treated as service under
Regions' qualified defined contribution plans, and (iii) service under any other
employee benefit plans of MCB shall be treated as service under any similar
employee benefit plans maintained by Regions. Regions also shall cause MCB and
its Subsidiaries to honor all employment, severance, consulting, and other
compensation Contracts disclosed in Section 0.13 of the MCB Disclosure
Memorandum to Regions between any MCB Company and any current or former
director, officer, or employee thereof, and all provisions for vested benefits
or other vested amounts earned or accrued through the Effective Time under the
MCB Benefit Plans.
 
8.14 Indemnification.
 
     (a) Subject to the conditions set forth in paragraph (b) below, for a
     period of six (6) years after the Effective Time, Regions shall indemnify,
     defend, and hold harmless each Person entitled to indemnification from a
     MCB Company (each, an "Indemnified Party") against all Liabilities arising
     out of actions or omissions occurring at or prior to the Effective Time
     (including, without limitation, the transactions contemplated by this
     Agreement) to the full extent permitted by Tennessee Law and MCB's Articles
     of Incorporation and Bylaws, in each case as in effect on the date hereof,
     including provisions relating to advances of expenses incurred in the
     defense of any Litigation. Without limiting the foregoing, in any case in
     which approval by MCB is required to effectuate any indemnification,
     Regions shall cause MCB to direct, at the election of the Indemnified
     Party, that the determination of any such approval shall be made by
     independent counsel mutually agreed upon between Regions and the
     Indemnified Party.
 
     (b) Any Indemnified Party wishing to claim indemnification under paragraph
     (a) above, upon learning of any such Liability or Litigation, shall
     promptly notify Regions thereof. In the event of any such Litigation
     (whether arising before or after the Effective Time), (i) Regions or MCB
     shall have the right to assume the defense thereof and Regions shall not be
     liable to such Indemnified Parties for any legal expenses of other counsel
     or any other expenses subsequently incurred by such Indemnified Parties in
     connection with the defense thereof, except that if Regions or MCB elects
     not to assume such defense or counsel for the Indemnified Parties advises
     in writing that there are Material substantive issues which raise conflicts
     of interest between Regions or MCB and the Indemnified Parties, the
     Indemnified Parties may retain counsel satisfactory to them, and Regions or
     MCB shall pay all reasonable fees
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<PAGE>   139
     and expenses of such counsel for the Indemnified Parties promptly as
     statements therefor are received; provided, however, that (i) Regions shall
     be obligated pursuant to this paragraph (b) to pay for only one firm of
     counsel for all Indemnified Parties in any jurisdiction, (ii) the
     Indemnified Parties will cooperate (to the extent reasonably appropriate
     under the circumstances) in the defense of any such Litigation, and (iii)
     Regions shall not be liable for any settlement effected without its prior
     written consent; and provided further that Regions shall not have any
     obligation hereunder to any Indemnified Party when and if a court of
     competent jurisdiction shall determine, and such determination shall have
     become final, that the indemnification of such Indemnified Party in the
     manner contemplated hereby is prohibited by applicable Law.
 
     (c) If Regions or any of its successors or assigns shall consolidate with
     or merge into any other Person and shall not be the continuing or surviving
     Person of such consolidation or merger or shall transfer all or
     substantially all of its Assets to any Person, then and in each case,
     proper provision shall be made so that the successors and assigns of
     Regions shall assume the obligations set forth in this Section 8.14.
 
     (d) The provisions of this Section 8.14 are intended to be for the benefit
     of and shall be enforceable by, each Indemnified Party, his or her heirs
     and representatives.
 
8.15 Certain Modifications.  Regions and MCB shall consult with respect to their
loan, litigation, and real estate valuation policies and practices (including
loan classifications and levels of reserves) and MCB shall make such
modifications or changes to its policies and practices, if any, prior to the
Effective Time, as may be mutually agreed upon. Regions and MCB also shall
consult with respect to the character, amount, and timing of restructuring and
Merger-related expense charges to be taken by each of the Parties in connection
with the transactions contemplated by this Agreement and shall take such charges
in accordance with GAAP as may be mutually agreed upon by the Parties. Neither
Party's representations, warranties, and covenants contained in this Agreement
shall be deemed to be inaccurate or breached in any respect or deemed to have a
Material Adverse Effect on MCB as a consequence of any modifications or charges
undertaken solely on account of this Section 8.15.
 
                                   ARTICLE 9
 
               CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
 
9.1 Conditions to Obligations of Each Party.  The respective obligations of each
Party to perform this Agreement and to consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
 
     (a) Stockholder Approval.  The stockholders of MCB shall have approved this
     Agreement, and the consummation of the transactions contemplated hereby,
     including the Merger, as and to the extent required by Law and by the
     provisions of any governing instruments.
 
     (b) Regulatory Approvals.  All Consents of, filings and registrations with,
     and notifications to, all Regulatory Authorities required for consummation
     of the Merger shall have been obtained or made and shall be in full force
     and effect and all waiting periods required by Law shall have expired. No
     Consent obtained from any
 
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<PAGE>   140
     Regulatory Authority which is necessary to consummate the transactions
     contemplated hereby shall be conditioned or restricted in a manner
     (excluding requirements relating to the raising of additional capital or
     the disposition of Assets or deposits) which in the reasonable good faith
     judgment of the Board of Directors of Regions would so materially adversely
     impact the economic or business benefits of the transactions contemplated
     by this Agreement so as to render inadvisable the consummation of the
     Merger.
 
     (c) Consents and Approvals.  Each Party shall have obtained any and all
     Consents required for consummation of the Merger (other than those referred
     to in Section 9.1(b) of this Agreement) or for the preventing of any
     Default under any Contract or Permit of such Party which, if not obtained
     or made, is reasonably likely to have, individually or in the aggregate, a
     Material Adverse Effect on such Party. No Consent obtained which is
     necessary to consummate the transactions contemplated hereby shall be
     conditioned or restricted in a manner which in the reasonable good faith
     judgment of the Board of Directors of Regions would so materially adversely
     impact the economic or business benefits of the transactions contemplated
     by this Agreement so as to render inadvisable the consummation of the
     Merger.
 
     (d) Legal Proceedings.  No court or governmental or Regulatory Authority of
     competent jurisdiction shall have enacted, issued, promulgated, enforced,
     or entered any Law or Order (whether temporary, preliminary, or permanent)
     or taken any other action which prohibits, restricts, or makes illegal
     consummation of the transactions contemplated by this Agreement.
 
     (e) Registration Statement.  The Registration Statement shall be effective
     under the 1933 Act, no stop orders suspending the effectiveness of the
     Registration Statement shall have been issued, no action, suit, proceeding,
     or investigation by the SEC to suspend the effectiveness thereof shall have
     been initiated and be continuing, and all necessary approvals under state
     securities Laws or the 1933 Act or 1934 Act relating to the issuance or
     trading of the shares of Regions Common Stock issuable pursuant to the
     Merger shall have been received.
 
     (f) Exchange Listing.  The shares of Regions Common Stock issuable pursuant
     to the Merger shall have been approved for listing on the Nasdaq NMS,
     subject to official notice of issuance.
 
     (g) Tax Matters.  Each Party shall have received a written opinion from
     Alston & Bird LLP, in a form reasonably satisfactory to such Party (the
     "Tax Opinion"), dated the date of the Effective Time, substantially to the
     effect that (i) the Merger will constitute a reorganization within the
     meaning of Section 368(a) of the Internal Revenue Code, (ii) no gain or
     loss will be recognized by holders of MCB Common Stock who exchange all of
     their MCB Common Stock solely for Regions Common Stock pursuant to the
     Merger (except with respect to any cash received in lieu of a fractional
     share interest in Regions Common Stock), (iii) the tax basis of the Regions
     Common Stock received by holders of MCB Common Stock who exchange all of
     their MCB Common Stock solely for Regions Common Stock in the Merger will
     be the same as the tax basis of the MCB Common Stock surrendered in
     exchange for the Regions Common Stock (reduced by an amount allocable to a
     fractional share interest in Regions Common Stock for which cash is
     received), and (iv) the holding period of the Regions Common Stock received
     by holders who exchange all of their MCB Common Stock solely for Regions
     Common Stock in the Merger will be the
 
                                      A-34
<PAGE>   141
     same as the holding period of the MCB Common Stock surrendered in exchange
     therefor, provided that such MCB Common Stock is held as a capital asset at
     the Effective Time. In rendering such Tax Opinion, such counsel shall be
     entitled to rely upon representations of officers of MCB and Regions
     reasonably satisfactory in form and substance to such counsel.
 
     (h) Pooling Letter.  Each Party shall have received a letter, dated as of
     the Effective Time, in a form reasonably acceptable to such Party, from
     Ernst & Young LLP to the effect that the Merger will qualify for
     pooling-of-interests accounting treatment.
 
9.2 Conditions to Obligations of Regions.  The obligations of Regions to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by Regions pursuant to Section 11.6(a) of this Agreement:
 
     (a) Representations and Warranties.  For purposes of this Section 9.2(a),
     the accuracy of the representations and warranties of MCB set forth in this
     Agreement shall be assessed as of the date of this Agreement and as of the
     Effective Time with the same effect as though all such representations and
     warranties had been made on and as of the Effective Time (provided that
     representations and warranties which are confined to a specified date shall
     speak only as of such date). The representations and warranties of MCB set
     forth in Section 5.3 of this Agreement shall be true and correct (except
     for inaccuracies which are de minimis in amount). The representations and
     warranties of MCB set forth in Sections 5.18, 5.19, and 5.20 of this
     Agreement shall be true and correct in all Material respects. There shall
     not exist inaccuracies in the representations and warranties of MCB set
     forth in this Agreement (including the representations and warranties set
     forth in Sections 5.3, 5.18, 5.19, and 5.20) such that the aggregate effect
     of such inaccuracies has, or is reasonably likely to have, a Material
     Adverse Effect on MCB; provided that, for purposes of this sentence only,
     those representations and warranties which are qualified by references to
     "material," "Material," "Material Adverse Effect," or variations thereof,
     or to the "Knowledge" of MCB or to a matter being "known" by MCB shall be
     deemed not to include such qualifications.
 
     (b) Performance of Agreements and Covenants.  Each and all of the
     agreements and covenants of MCB to be performed and complied with pursuant
     to this Agreement and the other agreements contemplated hereby prior to the
     Effective Time shall have been duly performed and complied with in all
     Material respects.
 
     (c) Certificates.  MCB shall have delivered to Regions (i) a certificate,
     dated as of the Effective Time and signed on its behalf by its duly
     authorized officers, to the effect that the conditions of its obligations
     set forth in Section 9.2(a) and 9.2(b) of this Agreement have been
     satisfied, and (ii) certified copies of resolutions duly adopted by MCB's
     Board of Directors and stockholders evidencing the taking of all corporate
     action necessary to authorize the execution, delivery, and performance of
     this Agreement, and the consummation of the transactions contemplated
     hereby, all in such reasonable detail as Regions and its counsel shall
     request.
 
     (d) Affiliate Agreements.  Regions shall have received from each affiliate
     of MCB the affiliates agreement referred to in Section 8.12 of this
     Agreement, to the extent necessary to assure in the reasonable judgment of
     Regions that the transactions contemplated hereby will qualify for
     pooling-of-interests accounting treatment.
 
                                      A-35
<PAGE>   142
 
     (e) Claims Letters.  Each of the directors and executive officers of MCB
     shall have executed and delivered to Regions, letters in substantially the
     form of Exhibit 3.
 
     (f) Legal Opinion.  Regions shall have received a written opinion, dated as
     of the Effective Time, of counsel to MCB, in substantially the form of
     Exhibit 4.
 
9.3 Conditions to Obligations of MCB.  The obligations of MCB to perform this
Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by MCB pursuant to Section 11.6(b) of this Agreement:
 
     (a) Representations and Warranties.  For purposes of this Section 9.3(a),
     the accuracy of the representations and warranties of Regions set forth in
     this Agreement shall be assessed as of the date of this Agreement and as of
     the Effective Time with the same effect as though all such representations
     and warranties had been made on and as of the Effective Time (provided that
     representations and warranties which are confined to a specified date shall
     speak only as of such date). The representations and warranties of Regions
     set forth in Section 6.3 of this Agreement shall be true and correct
     (except for inaccuracies which are de minimis in amount). The
     representations and warranties of Regions set forth in Section 6.12 of this
     Agreement shall be true and correct in all Material respects. There shall
     not exist inaccuracies in the representations and warranties of Regions set
     forth in this Agreement (including the representations and warranties set
     forth in Sections 6.3 and 6.12) such that the aggregate effect of such
     inaccuracies has, or is reasonably likely to have, a Material Adverse
     Effect on Regions; provided that, for purposes of this sentence only, those
     representations and warranties which are qualified by references to
     "material," "Material," "Material Adverse Effect," or variations thereof,
     or to the "Knowledge" of Regions or to a matter being "known" by Regions
     shall be deemed not to include such qualifications.
 
     (b) Performance of Agreements and Covenants.  Each and all of the
     agreements and covenants of Regions to be performed and complied with
     pursuant to this Agreement and the other agreements contemplated hereby
     prior to the Effective Time shall have been duly performed and complied
     with in all Material respects.
 
     (c) Certificates.  Regions shall have delivered to MCB (i) a certificate,
     dated as of the Effective Time and signed on its behalf by its duly
     authorized officers, to the effect that the conditions of its obligations
     set forth in Section 9.3(a) and 9.3(b) of this Agreement have been
     satisfied, and (ii) certified copies of resolutions duly adopted by
     Regions' Board of Directors and stockholders evidencing the taking of all
     corporate action necessary to authorize the execution, delivery, and
     performance of this Agreement, and the consummation of the transactions
     contemplated hereby, all in such reasonable detail as MCB and its counsel
     shall request.
 
     (d) Legal Opinion.  MCB shall have received a written opinion, dated as of
     the Effective Time, of counsel to Regions, in substantially the form of
     Exhibit 5.
 
     (e) Fairness Opinion.  MCB shall have received a letter from Charles
     Stevens & Company dated five business days prior to the date of the Proxy
     Statement to the effect that in the opinion of such firm, the consideration
     to be received in the Merger by the stockholders of MCB is fair to the
     stockholders of MCB from a financial point of view.
 
                                      A-36
<PAGE>   143
 
                                   ARTICLE 10
 
                                  TERMINATION
 
10.1 Termination.  Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the stockholders of MCB or
Regions, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
 
     (a) By mutual consent of the Board of Directors of Regions and the Board of
     Directors of MCB; or
 
     (b) By the Board of Directors of either Party (provided that the
     terminating Party is not then in breach of any representation or warranty
     contained in this Agreement under the applicable standard set forth in
     Section 9.2(a) of this Agreement in the case of MCB and Section 9.3(a) of
     this Agreement in the case of Regions or in Material breach of any covenant
     or other agreement contained in this Agreement) in the event of an
     inaccuracy of any representation or warranty of the other Party contained
     in this Agreement which cannot be or has not been cured within 30 days
     after the giving of written notice to the breaching Party of such
     inaccuracy and which inaccuracy would provide the terminating Party the
     ability to refuse to consummate the Merger under the applicable standard
     set forth in Section 9.2(a) of this Agreement in the case of MCB and
     Section 9.3(a) of this Agreement in the case of Regions; or
 
     (c) By the Board of Directors of either Party (provided that the
     terminating Party is not then in breach of any representation or warranty
     contained in this Agreement under the applicable standard set forth in
     Section 9.2(a) of this Agreement in the case of MCB and Section 9.3(a) in
     the case of Regions) in the event of a Material breach by the other Party
     of any covenant or agreement contained in this Agreement which cannot be or
     has not been cured within 30 days after the giving of written notice to the
     breaching Party of such breach; or
 
     (d) By the Board of Directors of either Party in the event (i) any Consent
     of any Regulatory Authority required for consummation of the Merger and the
     other transactions contemplated hereby shall have been denied by final
     nonappealable action of such authority or if any action taken by such
     authority is not appealed within the time limit for appeal, or (ii) the
     stockholders of MCB fail to vote their approval of the matters submitted
     for the approval by such stockholders at the Stockholders' Meeting where
     the transactions were presented to such stockholders for approval and voted
     upon; or
 
     (e) By the Board of Directors of either Party in the event that the Merger
     shall not have been consummated by March 31, 1999, if the failure to
     consummate the transactions contemplated hereby on or before such date is
     not caused by any breach of this Agreement by the Party electing to
     terminate pursuant to this Section 10.1(e); or
 
     (f) By the Board of Directors of either Party (provided that the
     terminating Party is not then in breach of any representation or warranty
     contained in this Agreement under the applicable standard set forth in
     Section 9.2(a) of this Agreement in the case of MCB and Section 9.3(a) of
     this Agreement in the case of Regions or in Material breach of any covenant
     or other agreement contained in this Agreement) in
 
                                      A-37
<PAGE>   144
     the event that any of the conditions precedent to the obligations of such
     Party to consummate the Merger cannot be satisfied or fulfilled by the date
     specified in Section 10.1(e) of this Agreement; or
 
     (g) By the Board of Directors of MCB, if it determines by a vote of a
     majority of the members of its entire Board, at any time during the ten-day
     period commencing two days after the Determination Date, if both of the
     following conditions are satisfied:
 
        (1) the Average Closing Price shall be less than the product of (i) 0.80
        and (ii) the Starting Price; and
 
        (2) (i) the quotient obtained by dividing the Average Closing Price by
        the Starting Price (such number being referred to herein as the "Regions
        Ratio") shall be less than (ii) the quotient obtained by dividing the
        Index Price on the Determination Date by the Index Price on the Starting
        Date and subtracting 0.15 from the quotient in this clause (2)(ii) (such
        number being referred to herein as the "Index Ratio");
 
        subject, however, to the following three sentences. If MCB refuses to
        consummate the Merger pursuant to this Section 10.1(g), it shall give
        prompt written notice thereof to Regions; provided, that such notice of
        election to terminate may be withdrawn at any time within the
        aforementioned ten-day period. During the five-day period commencing
        with its receipt of such notice, Regions shall have the option to elect
        to increase the Exchange Ratio to equal the lesser of (i) the quotient
        (rounded to the nearest one-ten-thousandth) obtained by dividing (1) the
        product of 0.80, the Starting Price, and the Exchange Ratio (as then in
        effect) by (2) the Average Closing Price, and (ii) the quotient (rounded
        to the nearest one-ten-thousandth) obtained by dividing (1) the product
        of the Index Ratio and the Exchange Ratio (as then in effect) by (2) the
        Regions Ratio. If Regions makes an election contemplated by the
        preceding sentence, within such five-day period, it shall give prompt
        written notice to MCB of such election and the revised Exchange Ratio,
        whereupon no termination shall have occurred pursuant to this Section
        10.1(g) and this Agreement shall remain in effect in accordance with its
        terms (except as the Exchange Ratio shall have been so modified), and
        any references in this Agreement to "Exchange Ratio" shall thereafter be
        deemed to refer to the Exchange Ratio as adjusted pursuant to this
        Section 10.1(g).
 
     For purposes of this Section 10.1(g), the following terms shall have the
     meanings indicated:
 
        "Average Closing Price" shall mean the average of the daily last sales
        prices of Regions Common Stock as reported on the Nasdaq NMS (as
        reported by The Wall Street Journal or, if not reported thereby, another
        authoritative source as chosen by Regions) for the ten consecutive full
        trading days in which such shares are traded on the Nasdaq NMS ending at
        the close of trading on the Determination Date.
 
        "Determination Date" shall mean the date on which the MCB stockholders
        approve the Merger at the Stockholders' Meeting.
 
                                      A-38
<PAGE>   145
 
        "Index Group" shall mean the 17 bank holding companies listed below, the
        common stocks of all of which shall be publicly traded and as to which
        there shall not have been, since the Starting Date and before the
        Determination Date, any public announcement of a proposal for such
        company to be acquired or for such company to acquire another company or
        companies in transactions with a value exceeding 25% of the acquiror's
        market capitalization. In the event that any such company or companies
        are removed from the Index Group, the weights (which shall be determined
        based upon the number of outstanding shares of common stock) shall be
        redistributed proportionately for purposes of determining the Index
        Price. The 17 bank holding companies and the weights attributed to them
        are as follows:
 
              <TABLE>
              <CAPTION>
              BANK HOLDING COMPANIES
              ----------------------                             WEIGHTING
              <S>                                                <C>
              AmSouth Bancorporation...........................     3.56%
              BB&T Corporation.................................     6.02
              Compass Bancshares, Inc..........................     3.01
              Fifth Third Bancorp..............................     6.86
              First American Corporation.......................     2.61
              First Security Corporation.......................     7.78
              First Tennessee National Corporation.............     5.66
              First Virginia Banks, Inc........................     2.29
              Hibernia Corporation.............................     6.55
              Huntington Bancshares, Inc.......................     8.49
              Mercantile Bancorporation, Inc...................     5.91
              SouthTrust Corporation...........................     7.09
              Star Banc Corporation............................     4.21
              Summit Bancorp...................................     7.83
              SunTrust Banks, Inc..............................     9.34
              Union Planters Corporation.......................     3.69
              Wachovia Corporation.............................     9.10
                                                                  ------
                        Total..................................   100.00%
                                                                  ======
</TABLE>
 
        "Index Price" on a given date shall mean the weighted average (weighted
        in accordance with the factors listed above) of the last sales prices of
        the companies composing the Index Group.
 
        "Starting Date" shall mean the fourth full trading day following the
        announcement by press release of the Merger.
 
        "Starting Price" shall mean the last sale price per share of Regions
        Common Stock as reported on the Nasdaq NMS (as reported by The Wall
        Street Journal or, if not reported thereby, another authoritative source
        as chosen by Regions) on the Starting Date.
 
     If any company belonging to the Index Group or Regions declares or effects
     a stock dividend, reclassification, recapitalization, split-up,
     combination, exchange of shares, or similar transaction between the date of
     this Agreement and the Determination Date, the prices for the common stock
     of such company or Regions shall be appropriately adjusted for the purposes
     of applying this Section 10.1(g); or
 
     (h) By the Board of Directors of Regions, at any time prior to the 15th day
     after execution of this Agreement without any Liability in the event that
     the review by
 
                                      A-39
<PAGE>   146
     Regions during such time period of the disclosures contained in the MCB
     Disclosure Memorandum causes the Board of Directors of Regions to
     determine, in its reasonable good faith judgment, that a fact or
     circumstance exists or is likely to exist or result which materially and
     adversely impacts one or more of the economic benefits to Regions of the
     transactions contemplated by this Agreement so as to render inadvisable the
     consummation of the Merger.
 
10.2 Effect of Termination.  In the event of the termination and abandonment of
this Agreement pursuant to Section 10.1 of this Agreement, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.6(b) of this Agreement shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections
10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant, or agreement giving rise to such termination.
 
10.3 Non-Survival of Representations and Covenants.  The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.12, 8.13, and 8.14 of this Agreement.
 
                                   ARTICLE 11
 
                                 MISCELLANEOUS
 
11.1 Definitions.
 
     (a) Except as otherwise provided herein, the capitalized terms set forth
     below shall have the following meanings:
 
     "ACQUISITION PROPOSAL" with respect to a Party shall mean any tender offer
     or exchange offer or any proposal for a merger, acquisition of all of the
     stock or Assets of, or other business combination involving such Party or
     any of its Subsidiaries or the acquisition of a substantial equity interest
     in, or a substantial portion of the Assets of, such Party or any of its
     Subsidiaries.
 
     "AFFILIATE" of a Person shall mean: (i) any other Person directly, or
     indirectly through one or more intermediaries, controlling, controlled by
     or under common control with such Person; (ii) any officer, director,
     partner, employer, or direct or indirect beneficial owner of any 10% or
     greater equity or voting interest of such Person; or (iii) any other Person
     for which a Person described in clause (ii) acts in any such capacity.
 
     "AGREEMENT" shall mean this Agreement and Plan of Merger, including the
     Exhibits delivered pursuant hereto and incorporated herein by reference.
 
     "ASSETS" of a Person shall mean all of the assets, properties, businesses,
     and rights of such Person of every kind, nature, character, and
     description, whether real, personal, or mixed, tangible or intangible,
     accrued or contingent, or otherwise relating to or utilized in such
     Person's business, directly or indirectly, in whole or in part, whether or
     not carried on the books and records of such Person, and whether or not
     owned in the name of such Person or any Affiliate of such Person and
     wherever located.
 
     "BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
     amended.
 
                                      A-40
<PAGE>   147
 
     "CONFIDENTIALITY AGREEMENTS" shall mean those certain Confidentiality
     Agreements, entered into prior to the date of this Agreement, between MCB
     and Regions.
 
     "CONSENT" shall mean any consent, approval, authorization, clearance,
     exemption, waiver, or similar affirmation by any Person pursuant to any
     Contract, Law, Order, or Permit.
 
     "CONTRACT" shall mean any written or oral agreement, arrangement,
     authorization, commitment, contract, indenture, instrument, lease,
     obligation, plan, practice, restriction, understanding, or undertaking of
     any kind or character, or other document to which any Person is a party or
     that is binding on any Person or its capital stock, Assets, or business.
 
     "DEFAULT" shall mean (i) any breach or violation of or default under any
     Contract, Order, or Permit, (ii) any occurrence of any event that with the
     passage of time or the giving of notice or both would constitute a breach
     or violation of or default under any Contract, Order, or Permit, or (iii)
     any occurrence of any event that with or without the passage of time or the
     giving of notice would give rise to a right to terminate or revoke, change
     the current terms of, or renegotiate, or to accelerate, increase, or impose
     any Liability under, any Contract, Order, or Permit, where, in any such
     event, such Default is reasonably likely to have, individually or in the
     aggregate, a Material Adverse Effect on a Party.
 
     "DELAWARE CERTIFICATE OF MERGER" shall mean the certificate of merger to be
     executed by Regions and filed with the Secretary of State of the State of
     Delaware, relating to the Merger as contemplated by Section 1.1 of this
     Agreement.
 
     "DGCL" shall mean the Delaware General Corporation Law.
 
     "ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
     protection of human health or the environment (including ambient air,
     surface water, ground water, land surface, or subsurface strata) and which
     are administered, interpreted, or enforced by the United States
     Environmental Protection Agency and state and local agencies with
     jurisdiction over, and including common law in respect of, pollution or
     protection of the environment, including the Comprehensive Environmental
     Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
     ("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
     U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
     discharges, releases, or threatened releases of any Hazardous Material, or
     otherwise relating to the manufacture, processing, distribution, use,
     treatment, storage, disposal, transport, or handling of any Hazardous
     Material.
 
     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
     amended.
 
     "EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits so marked,
     copies of which are attached to this Agreement. Such Exhibits are hereby
     incorporated by reference herein and made a part hereof, and may be
     referred to in this Agreement and any other related instrument or document
     without being attached hereto.
 
     "GAAP" shall mean generally accepted accounting principles, consistently
     applied during the periods involved.
 
                                      A-41
<PAGE>   148
 
     "HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
     material, hazardous waste, regulated substance, or toxic substance (as
     those terms are defined by any applicable Environmental Laws) and (ii) any
     chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
     (and specifically shall include asbestos requiring abatement, removal, or
     encapsulation pursuant to the requirements of governmental authorities and
     any polychlorinated biphenyls).
 
     "HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title II of
     the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
     the rules and regulations promulgated thereunder.
 
     "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
     amended, and the rules and regulations promulgated thereunder.
 
     "KNOWLEDGE" as used with respect to a Person (including references to such
     Person being aware of a particular matter) shall mean the personal
     knowledge of the chairman, president, chief financial officer, chief
     accounting officer, chief credit officer, general counsel, or any executive
     vice president of such Person.
 
     "LAW" shall mean any code, law, ordinance, regulation, reporting or
     licensing requirement, rule, or statute applicable to a Person or its
     Assets, Liabilities, or business, including those promulgated, interpreted,
     or enforced by any Regulatory Authority.
 
     "LIABILITY" shall mean any direct or indirect, primary or secondary,
     liability, indebtedness, obligation, penalty, cost, or expense (including
     costs of investigation, collection, and defense), claim, deficiency,
     guaranty, or endorsement of or by any Person (other than endorsements of
     notes, bills, checks, and drafts presented for collection or deposit in the
     ordinary course of business) of any type, whether accrued, absolute or
     contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
 
     "LIEN" shall mean any conditional sale agreement, default of title,
     easement, encroachment, encumbrance, hypothecation, infringement, lien,
     mortgage, pledge, reservation, restriction, security interest, title
     retention, or other security arrangement, or any adverse right or interest,
     charge, or claim of any nature whatsoever of, on, or with respect to any
     property or property interest, other than (i) Liens for property Taxes not
     yet due and payable, and (ii) for depository institution Subsidiaries of a
     Party, pledges to secure deposits, and other Liens incurred in the ordinary
     course of the banking business.
 
     "LITIGATION" shall mean any action, arbitration, cause of action, claim,
     complaint, criminal prosecution, demand letter, governmental or other
     examination or investigation, hearing, inquiry, administrative or other
     proceeding, or notice (written or oral) by any Person alleging potential
     Liability or requesting information relating to or affecting a Party, its
     business, its Assets (including Contracts related to it), or the
     transactions contemplated by this Agreement, but shall not include regular,
     periodic examinations of depository institutions and their Affiliates by
     Regulatory Authorities.
 
     "LOAN PROPERTY" shall mean any property owned, leased, or operated by the
     Party in question or by any of its Subsidiaries or in which such Party or
     Subsidiary holds a security or other interest (including an interest in a
     fiduciary capacity), and, where
 
                                      A-42
<PAGE>   149
     required by the context, includes the owner or operator of such property,
     but only with respect to such property.
 
     "MATERIAL" for purposes of this Agreement shall be determined in light of
     the facts and circumstances of the matter in question; provided that any
     specific monetary amount stated in this Agreement shall determine
     materiality in that instance.
 
     "MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
     occurrence which, individually or together with any other event, change, or
     occurrence, has a Material adverse impact on (i) the financial condition,
     results of operations, or business of such Party and its Subsidiaries,
     taken as a whole, or (ii) the ability of such Party to perform its
     obligations under this Agreement or to consummate the Merger or the other
     transactions contemplated by this Agreement, provided that "Material
     Adverse Effect" shall not be deemed to include the impact of (a) changes in
     banking and similar Laws of general applicability or interpretations
     thereof by courts or governmental authorities, (b) changes in GAAP or
     regulatory accounting principles generally applicable to banks and their
     holding companies, (c) actions and omissions of a Party (or any of its
     Subsidiaries) taken with the prior informed consent of the other Party in
     contemplation of the transactions contemplated hereby, and (d) the Merger
     and compliance with the provisions of this Agreement on the operating
     performance of the Parties.
 
     "MCB COMMON STOCK" shall mean the no par value common stock of MCB.
 
     "MCB COMPANIES" shall mean, collectively, MCB and all MCB Subsidiaries.
 
     "MCB DISCLOSURE MEMORANDUM" shall mean the written information entitled
     "MCB Disclosure Memorandum" delivered within ten days of the execution of
     this Agreement to Regions describing in reasonable detail the matters
     contained therein and, with respect to each disclosure made therein,
     specifically referencing each Section or subsection of this Agreement under
     which such disclosure is being made. Information disclosed with respect to
     one Section or subsection shall not be deemed to be disclosed for any other
     purpose hereunder. The inclusion of any matter in this document shall not
     be deemed an admission or otherwise to imply that any such matter is
     Material for purposes of this Agreement.
 
     "MCB FINANCIAL STATEMENTS" shall mean (i) the consolidated statements of
     condition (including related notes and schedules, if any) of MCB as of
     March 31, 1998 and as of December 31, 1997 and 1996, and the related
     statements of income, changes in stockholders' equity, and cash flows
     (including related notes and schedules, if any) for the three months ended
     March 31, 1998 and for each of the three years ended December 31, 1997,
     1996, and 1995, included in the MCB Disclosure Memorandum, and (ii) the
     consolidated statements of condition of MCB (including related notes and
     schedules, if any) and related statements of income, changes in
     stockholders' equity, and cash flows (including related notes and
     schedules, if any) with respect to periods ended subsequent to March 31,
     1998.
 
     "MCB STOCK PLANS" shall mean the existing stock option and other
     stock-based compensation plans of MCB.
 
     "MCB SUBSIDIARIES" shall mean the Subsidiaries of MCB, which shall include
     the MCB Subsidiaries described in Section 5.4 of this Agreement and any
     corporation,
 
                                      A-43
<PAGE>   150
     bank, savings association, or other organization acquired as a Subsidiary
     of MCB in the future and owned by MCB at the Effective Time.
 
     "NASD" shall mean the National Association of Securities Dealers, Inc.
 
     "NASDAQ NMS" shall mean the National Market System of The Nasdaq Stock
     Market.
 
     "1933 ACT" shall mean the Securities Act of 1933, as amended.
 
     "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
 
     "ORDER" shall mean any administrative decision or award, decree,
     injunction, judgment, order, quasi-judicial decision or award, ruling, or
     writ of any federal, state, local, or foreign or other court, arbitrator,
     mediator, tribunal, administrative agency, or Regulatory Authority.
 
     "PARTICIPATION FACILITY" shall mean any facility or property in which the
     Party in question or any of its Subsidiaries participates in the management
     (including, but not limited to, participating in a fiduciary capacity) and,
     where required by the context, said term means the owner or operator of
     such facility or property, but only with respect to such facility or
     property.
 
     "PARTY" shall mean either MCB or Regions, and "PARTIES" shall mean both MCB
     and Regions.
 
     "PERMIT" shall mean any federal, state, local, and foreign governmental
     approval, authorization, certificate, easement, filing, franchise, license,
     notice, permit, or right to which any Person is a party or that is or may
     be binding upon or inure to the benefit of any Person or its securities,
     Assets, or business.
 
     "PERSON" shall mean a natural person or any legal, commercial, or
     governmental entity, such as, but not limited to, a corporation, general
     partnership, joint venture, limited partnership, limited liability company,
     trust, business association, group acting in concert, or any person acting
     in a representative capacity.
 
     "PROXY STATEMENT" shall mean the proxy statement used by MCB to solicit the
     approval of its stockholders of the transactions contemplated by this
     Agreement, which shall include the prospectus of Regions relating to the
     issuance of the Regions Common Stock to holders of MCB Common Stock.
 
     "REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
     Regions.
 
     "REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
     Subsidiaries.
 
     "REGIONS FINANCIAL STATEMENTS" shall mean (i) the consolidated statements
     of condition (including related notes and schedules, if any) of Regions as
     of March 31, 1998 and as of December 31, 1997 and 1996, and the related
     statements of income, changes in stockholders' equity, and cash flows
     (including related notes and schedules, if any) for the three months ended
     March 31, 1998 and for each of the three years ended December 31, 1997,
     1996, and 1995, as filed by Regions in SEC Documents, and (ii) the
     consolidated statements of condition of Regions (including related notes
     and schedules, if any) and related statements of income, changes in
     stockholders' equity, and cash flows (including related notes and
     schedules, if any) included in SEC Documents filed with respect to periods
     ended subsequent to March 31, 1998.
 
                                      A-44
<PAGE>   151
 
     "REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions and any
     corporation, bank, savings association, or other organization acquired as a
     Subsidiary of Regions in the future and owned by Regions at the Effective
     Time.
 
     "REGISTRATION STATEMENT" shall mean the Registration Statement on Form S-4,
     or other appropriate form, including any pre-effective or post-effective
     amendments or supplements thereto, filed with the SEC by Regions under the
     1933 Act with respect to the shares of Regions Common Stock to be issued to
     the stockholders of MCB in connection with the transactions contemplated by
     this Agreement.
 
     "REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
     Commission, the United States Department of Justice, the Board of the
     Governors of the Federal Reserve System, the Office of the Comptroller of
     the Currency, the Federal Deposit Insurance Corporation, the Office of
     Thrift Supervision, all state regulatory agencies having jurisdiction over
     the Parties and their respective Subsidiaries, the NASD, and the SEC.
 
     "REPRESENTATIVE" shall mean any investment banker, financial advisor,
     attorney, accountant, consultant, or other representative of a Person.
 
     "RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
     options, rights to subscribe to, scrip, understandings, warrants, or other
     binding obligations of any character whatsoever relating to, or securities
     or rights convertible into or exchangeable for, shares of the capital stock
     of a Person or by which a Person is or may be bound to issue additional
     shares of its capital stock or other Rights.
 
     "SEC" shall mean the United States Securities and Exchange Commission.
 
     "SEC DOCUMENTS" shall mean all forms, proxy statements, registration
     statements, reports, schedules, and other documents filed, or required to
     be filed, by a Party or any of its Subsidiaries with any Regulatory
     Authority pursuant to the Securities Laws.
 
     "SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
     Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
     amended, the Trust Indenture Act of 1939, as amended, and the rules and
     regulations of any Regulatory Authority promulgated thereunder.
 
     "STOCKHOLDERS' MEETING" shall mean the meeting of the stockholders of MCB
     to be held pursuant to Section 8.1 of this Agreement, including any
     adjournment or adjournments thereof.
 
     "SUBSIDIARIES" shall mean all those corporations, banks, associations, or
     other entities of which the entity in question owns or controls 50% or more
     of the outstanding equity securities either directly or through an unbroken
     chain of entities as to each of which 50% or more of the outstanding equity
     securities is owned directly or indirectly by its parent; provided, there
     shall not be included any such entity acquired through foreclosure or any
     such entity the equity securities of which are owned or controlled in a
     fiduciary capacity.
 
     "SURVIVING CORPORATION" shall mean Regions as the surviving corporation
     resulting from the Merger.
 
     "TAX" OR "TAXES" shall mean all federal, state, local, and foreign taxes,
     charges, fees, levies, imposts, duties, or other assessments, including
     income, gross receipts, excise,
 
                                      A-45
<PAGE>   152
     employment, sales, use, transfer, license, payroll, franchise, severance,
     stamp, occupation, windfall profits, environmental, federal highway use,
     commercial rent, customs duties, capital stock, paid-up capital, profits,
     withholding, Social Security, single business and unemployment, disability,
     real property, personal property, registration, ad valorem, value added,
     alternative or add-on minimum, estimated, or other tax or governmental fee
     of any kind whatsoever, imposed or required to be withheld by the United
     States or any state, local, or foreign government or subdivision or agency
     thereof, including any interest, penalties, or additions thereto.
 
     "TAXABLE PERIOD" shall mean any period prescribed by any governmental
     authority, including the United States or any state, local, or foreign
     government or subdivision or agency thereof for which a Tax Return is
     required to be filed or Tax is required to be paid.
 
     "TAX RETURN" shall mean any report, return, information return, or other
     information required to be supplied to a taxing authority in connection
     with Taxes, including any return of an affiliated or combined or unitary
     group that includes a Party or its Subsidiaries.
 
     "TBCA" shall mean the Tennessee Business Corporation Act.
 
     "TENNESSEE ARTICLES OF MERGER" shall mean the Articles of Merger to be
     executed by Regions and filed with the Secretary of State of the State of
     Tennessee relating to the Merger as contemplated by Section 1.1 of this
     Agreement.
 
     (b) The terms set forth below shall have the meanings ascribed thereto in
     the referenced sections:
 
            <TABLE>
            <S>                                         <C>
            Average Closing Price.....................  Section 10.1(g)
            Claim.....................................  Section 8.15(a)
            Closing...................................  Section 1.2
            Determination Date........................  Section 10.1(g)
            Effective Time............................  Section 1.3
            Exchange Agent............................  Section 4.1
            Exchange Ratio............................  Section 3.1(b)
            Indemnified Party.........................  Section 8.14
            Index Group...............................  Section 10.1(g)
            Index Price...............................  Section 10.1(g)
            Index Ratio...............................  Section 10.1(g)
            MCB Benefit Plans.........................  Section 5.13(a)
            MCB Contracts.............................  Section 5.14
            MCB ERISA Affiliate.......................  Section 5.13(e)
            MCB ERISA Plan............................  Section 5.13(a)
            MCB Rights................................  Section 3.6(a)
            MCB Pension Plan..........................  Section 5.13(a)
            MCB SEC Reports...........................  Section 5.5(a)
            Merger....................................  Section 1.1
            Regions Ratio.............................  Section 10.1(g)
            Regions SEC Reports.......................  Section 6.5(a)
            Starting Date.............................  Section 10.1(g)
            Starting Price............................  Section 10.1(g)
            Takeover Laws.............................  Section 5.19
            Tax Opinion...............................  Section 9.1(g)
            </TABLE>
 
                                      A-46
<PAGE>   153
 
     (c) Any singular term in this Agreement shall be deemed to include the
     plural, and any plural term the singular. Whenever the words "include,"
     "includes," or "including" are used in this Agreement, they shall be deemed
     followed by the words "without limitation."
 
11.2 Expenses.
 
     (a) Except as otherwise provided in this Section 11.2, each of the Parties
     shall bear and pay all direct costs and expenses incurred by it or on its
     behalf in connection with the transactions contemplated hereunder,
     including filing, registration, and application fees, printing fees, and
     fees and expenses of its own financial or other consultants, investment
     bankers, accountants, and counsel, except that Regions shall bear and pay
     the filing fees payable in connection with the Registration Statement and
     the Proxy Statement and one-half of the printing costs incurred in
     connection with the printing of the Registration Statement and the Proxy
     Statement.
 
     (b) Nothing contained in this Section 11.2 shall constitute or shall be
     deemed to constitute liquidated damages for the willful breach by a Party
     of the terms of this Agreement or otherwise limit the rights of the
     nonbreaching Party.
 
11.3 Brokers and Finders.  Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his, her, or
its representing or being retained by or allegedly representing or being
retained by MCB or Regions, each of MCB and Regions, as the case may be, agrees
to indemnify and hold the other Party harmless of and from any Liability in
respect of any such claim.
 
11.4 Entire Agreement.  Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Sections 8.12 and 8.14 of this Agreement.
 
11.5 Amendments.  To the extent permitted by Law, this Agreement may be amended
by a subsequent writing signed by each of the Parties upon the approval of the
Boards of Directors of each of the Parties, whether before or after stockholder
approval of this Agreement has been obtained; provided, that the provisions of
this Agreement relating to the manner or basis in which shares of MCB Common
Stock will be exchanged for Regions Common Stock shall not be amended after the
Stockholders' Meeting without the requisite approval of the holders of the
issued and outstanding shares of Regions Common Stock and MCB Common Stock, as
the case may be, entitled to vote thereon.
 
11.6 Waivers.
 
     (a) Prior to or at the Effective Time, Regions, acting through its Board of
     Directors, chief executive officer, chief financial officer, or other
     authorized officer, shall have the right to waive any Default in the
     performance of any term of this Agreement by MCB, to waive or extend the
     time for the compliance or fulfillment by MCB of any
 
                                      A-47
<PAGE>   154
     and all of its obligations under this Agreement, and to waive any or all of
     the conditions precedent to the obligations of Regions under this
     Agreement, except any condition which, if not satisfied, would result in
     the violation of any Law. No such waiver shall be effective unless in
     writing signed by a duly authorized officer of Regions.
 
     (b) Prior to or at the Effective Time, MCB, acting through its Board of
     Directors, chief executive officer, chief financial officer, or other
     authorized officer, shall have the right to waive any Default in the
     performance of any term of this Agreement by Regions, to waive or extend
     the time for the compliance or fulfillment by Regions of any and all of its
     obligations under this Agreement, and to waive any or all of the conditions
     precedent to the obligations of MCB under this Agreement, except any
     condition which, if not satisfied, would result in the violation of any
     Law. No such waiver shall be effective unless in writing signed by a duly
     authorized officer of MCB.
 
     (c) The failure of any Party at any time or times to require performance of
     any provision hereof shall in no manner affect the right of such Party at a
     later time to enforce the same or any other provision of this Agreement. No
     waiver of any condition or of the breach of any term contained in this
     Agreement in one or more instances shall be deemed to be or construed as a
     further or continuing waiver of such condition or breach or a waiver of any
     other condition or of the breach of any other term of this Agreement.
 
11.7 Assignment.  Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
 
11.8 Notices.  All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
 
<TABLE>
<S>                <C>
MCB:               MEIGS COUNTY BANCSHARES, INC.
                   116 N. Main Street
                   Decatur, Tennessee 37322
                   Telecopy Number: (423) 334-3353
                   Attention: F. Stephen Miller
                              President and Chief Executive Officer
 
Copy to Counsel:   MILLER & MARTIN, LLP
                   Suite 2325
                   Suntrust Center
                   424 Church Street
                   Nashville, Tennessee 37219
                   Telecopy Number: (615) 244-1423
                   Attention: Kathryn Reed Edge
</TABLE>
 
                                      A-48
<PAGE>   155
<TABLE>
<S>                <C>
Regions:           REGIONS FINANCIAL CORPORATION
                   417 N. 20th Street
                   Birmingham, Alabama 35203
                   Telecopy Number: (205) 326-7571
                   Attention: Richard D. Horsley
                              Vice Chairman and Executive
                              Financial Officer
 
Copy to Counsel:   REGIONS FINANCIAL CORPORATION
                   417 N. 20th Street
                   Birmingham, Alabama 35203
                   Telecopy Number: (205) 326-7751
                   Attention: Samuel E. Upchurch, Jr.
                              General Counsel
</TABLE>
 
11.9 Governing Law.  This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws, except to the extent that the Laws of the State of
Tennessee relate to the consummation of the Merger.
 
11.10 Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
 
11.11 Captions.  The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
 
11.12 Interpretations.  Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against any Party, whether under any rule
of construction or otherwise. No Party to this Agreement shall be considered the
draftsman. The Parties acknowledge and agree that this Agreement has been
reviewed, negotiated, and accepted by all Parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of the Parties.
 
11.13 Enforcement of Agreement.  The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
 
11.14 Severability.  Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
 
                                      A-49
<PAGE>   156
 
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
on its behalf and its corporate seal to be hereunto affixed and attested by
officers thereunto as of the day and year first above written.
 
<TABLE>
<S>                                                 <C>
                                                    MEIGS COUNTY BANCSHARES, INC.
ATTEST:
                                                               By: /s/ F. STEPHEN MILLER
                                                      -------------------------------------------
                                                                   F. Stephen Miller
                                                         President and Chief Executive Officer
              By: /s/ PATSY HAYES
  -------------------------------------------
                  Patsy Hayes
                   Secretary
 
[CORPORATE SEAL]
 
                                                    REGIONS FINANCIAL CORPORATION
ATTEST:
 
                                                               By: /s/ RICHARD D. HORSLEY
                                                      -------------------------------------------
                                                                   Richard D. Horsley
                                                     Vice Chairman and Executive Financial Officer
        By: /s/ SAMUEL E. UPCHURCH, JR.
  -------------------------------------------
            Samuel E. Upchurch, Jr.
              Corporate Secretary
 
[CORPORATE SEAL]
</TABLE>
 
                                      A-50
<PAGE>   157
 
                                                                      APPENDIX B
 
August 31, 1998
 
Board of Directors
Meigs County Bancshares, Inc.
116 North Main Street
Decatur, Tennessee 37322
 
Ladies and Gentlemen:
 
You have asked us to advise you with respect to the fairness to the shareholders
of Meigs County Bancshares, Inc. (the "Company"), from a financial point of
view, of the exchange ratio (the "Exchange Ratio") provided for in the Agreement
and Plan of Merger dated as of June 22, 1998, (the "Merger Agreement") between
the Company and Regions Financial Corporation ("Regions"). The Merger Agreement
provides for a merger (the "Merger") of the Company and Regions pursuant to
which the common shareholders of the Company will receive 1.90 common shares of
Regions for every common share of the Company. Holders of stock options, stock
appreciation rights, or stock awards granted by the Company ("MCB Rights") will
receive the right to purchase equivalent Regions common stock with both the
number of shares and price per share of the substituted rights in Regions being
a function of the Exchange ratio and the number of shares and price per share of
the original MCB Rights. In addition, certain shares of the Company are held by
the Company's Employee Stock Ownership Plan (ESOP) with the plan having full
voting rights to those shares.
 
Termination rights to the Merger are available to the Company, as fully
described in Section 10 of the Merger Agreement, if at any time during the 10
day period commencing two days after the date on which the Company stockholders
approve the merger ("Determination Date"), that both of the following conditions
are met:
 
     1. the Average Closing Price of Regions common stock is less than 80% of
        the Starting Price (Last sale price of Regions common stock on the
        Starting Date, which is the fourth full trading day following
        announcement of the merger)
 
     1. and, the ratio of the Average Closing Price to the Starting Price is
        less than the ratio of the Index Price on the Determination Date to the
        Index Price on the Starting Date minus 15 percent. The Index Price is
        the weighted average of the last sale prices for 17 bank holding
        companies making up the Index Group
 
     Subject, however, to the following -- if the Company refuses to consummate
     the Merger pursuant to Section 10.1(g), it shall give prompt written notice
     thereof to Regions' provided, that such notice of election to terminate may
     be withdrawn at any time within the aforementioned ten-day period, During
     the five-day period commencing with its receipt of such notice, Regions
     shall have the option to elect to increase the Exchange Ratio to equal the
     lesser of (i) the quotient (rounded to the nearest one-ten-thousandth)
     obtained by dividing (1) the product of 0.80, the Starting Price, and the
     Exchange Ratio (as then in effect) by (2) the Average Closing Price, and
     (ii) the quotient (rounded to the nearest one-ten-thousandth) obtained by
     dividing (l) the product of the Index Ratio and the Exchange Ratio (as then
     in effect) by (2) the Regions Ratio. If Regions makes an election
     contemplated by the preceding sentence, within such five-day period, it
     shall give prompt written notice to the Company of such election and the
     revised Exchange Ratio, whereupon no
 
                                       B-1
<PAGE>   158
     termination shall have occurred pursuant to this Section 10.1(g) and this
     Agreement shall remain in effect in accordance with its terms (except as
     the Exchange Ratio shall have been so modified), and any references in this
     Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
     Exchange Ratio as adjusted pursuant to this Section 10.1 (g).
 
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to Regions and the Company. We have also
reviewed certain other information, including financial forecasts and budgets
and have discussed with the Company's management that business and prospects of
the Company.
 
We have also considered certain financial and stock market data of Regions and
we have compared that data with similar data for other publicly held bank
holding companies and we have considered the financial terms of certain other
comparable transactions which have recently been effected. We also considered
such other information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant. In connection
with our review, we have not independently verified any of the foregoing
information and have relied on its being complete and accurate in all material
respects. With respect to the financial forecasts and budgets, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgements the Company's management as to the future
financial performance of the Company. We have not made an independent evaluation
or appraisal of the assets of Regions or the Company and we have assumed that
the aggregate allowances for loan losses for Regions and the Company are
adequate to cover such losses. We have not solicited third party indications of
interest in acquiring the Company.
 
It should be noted that this opinion is based on market conditions and other
circumstances existing on the date hereof and this opinion does not represent
our view as to what the value of the Regions common stock necessarily will be
when the Regions common stock is issued to the stockholders of the Company upon
consummation of the Merger.
 
Stevens & Company is a financial consulting and investment banking firm that
specializes in community bank transactions. We have acted as financial advisor
to the Company in connection with the Merger and will receive a fee for our
services, a significant portion of which is contingent upon the consummation of
the Merger.
 
Based on the above, it is our opinion that the Exchange Ratio to be received of
the Merger is fair, as of the date hereof, from a financial point of view, to
the common shareholder of the Company.
 
This opinion is being delivered to the Board of Directors of the Company, and is
not to be reproduced or, delivered to any third party without the expressed
written consent of Stevens & Company, except as required by law. However, it is
understood that this opinion may be included in its entirety in any
communication by the Company or its Board of Directors to the Company's
shareholders.
 
                                          STEVENS & COMPANY
 
                                       B-2
<PAGE>   159
 
                            Tennessee Code Annotated
                     Title 48 Corporations and Associations
                        For-Profit Business Corporations
                         Chapter 23 Dissenters' Rights
 
48-23-101 DEFINITIONS.
 
As used in this chapter, unless the context otherwise requires:
 
     (1) "Beneficial shareholder" means the person who is a beneficial owner of
     shares held by a nominee as the record shareholder;
 
     (2) "Corporation" means the issuer of the shares held by a dissenter before
     the corporate action, or the surviving or acquiring corporation by merger
     or share exchange of that issuer;
 
     (3) "Dissenter" means a shareholder who is entitled to dissent from
     corporate action under sec. 48-23-102 and who exercises that right when and
     in the manner required by part 2 of this chapter;
 
     (4) "Fair value", with respect to a dissenter's shares, means the value of
     the shares immediately before the effectuation of the corporate action to
     which the dissenter objects, excluding any appreciation or depreciation in
     anticipation of the corporate action;
 
     (5) "Interest" means interest from the effective date of the corporate
     action that gave rise to the shareholder's right to dissent until the date
     of payment, at the average auction rate paid on United States treasury
     bills with a maturity of six (6) months (or the closest maturity thereto)
     as of the auction date for such treasury bills closest to such effective
     date;
 
     (6) "Record shareholder" means the person in whose name shares are
     registered in the records of a corporation or the beneficial owner of
     shares to the extent of the rights granted by a nominee certificate on file
     with a corporation; and
 
     (7) "Shareholder" means the record shareholder or the beneficial
     shareholder.
 
48-23-102 RIGHT TO DISSENT.
 
(a) A shareholder is entitled to dissent from, and obtain payment of the fair
value of the shareholder's shares in the event of, any of the following
corporate actions:
 
     (1) Consummation of a plan of merger to which the corporation is a party:
 
        (A) If shareholder approval is required for the merger by sec. 48-21-104
        or the charter and the shareholder is entitled to vote on the merger; or
 
        (B) If the corporation is a subsidiary that is merged with its parent
        under sec. 48-21-105;
 
     (2) Consummation of a plan of share exchange to which the corporation is a
     party as the corporation whose shares will be acquired, if the shareholder
     is entitled to vote on the plan;
 
                                       C-1
<PAGE>   160
 
     (3) Consummation of a sale or exchange of all, or substantially all, of the
     property of the corporation other than in the usual and regular course of
     business, if the shareholder is entitled to vote on the sale or exchange,
     including a sale in dissolution, but not including a sale pursuant to court
     order or a sale for cash pursuant to a plan by which all or substantially
     all of the net proceeds of the sale will be distributed to the shareholders
     within one (1) year after the date of sale;
 
     (4) An amendment of the charter that materially and adversely affects
     rights in respect of a dissenter's shares because it:
 
        (A) Alters or abolishes a preferential right of the shares;
 
        (B) Creates, alters, or abolishes a right in respect of redemption,
        including a provision respecting a sinking fund for the redemption or
        repurchase, of the shares;
 
        (C) Alters or abolishes a preemptive right of the holder of the shares
        to acquire shares or other securities;
 
        (D) Excludes or limits the right of the shares to vote on any matter, or
        to cumulate votes, other than a limitation by dilution through issuance
        of shares or other securities with similar voting rights; or
 
        (E) Reduces the number of shares owned by the shareholder to a fraction
        of a share, if the fractional share is to be acquired for cash under
        sec. 48-16- 104; or
 
     (5) Any corporate action taken pursuant to a shareholder vote to the extent
     the charter, bylaws, or a resolution of the board of directors provides
     that voting or nonvoting shareholders are entitled to dissent and obtain
     payment for their shares.
 
(b) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this chapter may not challenge the corporate action creating the
shareholder's entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
 
(c) Notwithstanding the provisions of subsection (a), no shareholder may dissent
as to any shares of a security which, as of the date of the effectuation of the
transaction which would otherwise give rise to dissenters' rights, is listed on
an exchange registered under sec. 6 of the Securities Exchange Act of 1934, as
amended, or is a "national market system security," as defined in rules
promulgated pursuant to the Securities Exchange Act of 1934, as amended.
 
48-23-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
 
(a) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
(1) person and notifies the corporation in writing of the name and address of
each person on whose behalf the record shareholder asserts dissenters' rights.
The rights of a partial dissenter under this subsection are determined as if the
shares as to which the partial dissenter dissents and the partial dissenter's
other shares were registered in the names of different shareholders.
 
                                       C-2
<PAGE>   161
 
(b) A beneficial shareholder may assert dissenters' rights as to shares of any
one (1) or more classes held on the beneficial shareholder's behalf only if the
beneficial shareholder:
 
     (1) Submits to the corporation the record shareholder's written consent to
     the dissent not later than the time the beneficial shareholder asserts
     dissenters' rights; and
 
     (2) Does so with respect to all shares of the same class of which the
     person is the beneficial shareholder or over which the person has power to
     direct the vote.
 
48-23-201 NOTICE OF DISSENTERS' RIGHTS.
 
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
 
(b) If corporate action creating dissenters' rights under sec. 48-23-102 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in sec. 48-23-203.
 
(c) A corporation's failure to give notice pursuant to this section will not
invalidate the corporate action.
 
48-23-202 NOTICE OF INTENT TO DEMAND PAYMENT.
 
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must:
 
     (1) Deliver to the corporation, before the vote is taken, written notice of
     the shareholder's intent to demand payment for the shareholder's shares if
     the proposed action is effectuated; and
 
     (2) Not vote the shareholder's shares in favor of the proposed action. No
     such written notice of intent to demand payment is required of any
     shareholder to whom the corporation failed to provide the notice required
     by sec. 48-23- 201.
 
(b) A shareholder who does not satisfy the requirements of subsection (a) is not
entitled to payment for the shareholder's shares under this chapter.
 
48-23-203 DISSENTERS' NOTICE.
 
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of sec. 48-23-202.
 
(b) The dissenters' notice must be sent no later than ten (10) days after the
corporate action was authorized by the shareholders or effectuated, whichever is
the first to occur, and must:
 
     (1) State where the payment demand must be sent and where and when
     certificates for certificated shares must be deposited;
 
                                       C-3
<PAGE>   162
 
     (2) Inform holders of uncertificated shares to what extent transfer of the
     shares will be restricted after the payment demand is received;
 
     (3) Supply a form for demanding payment that includes the date of the first
     announcement to news media or to shareholders of the principal terms of the
     proposed corporate action and requires that the person asserting
     dissenters' rights certify whether or not the person asserting dissenters'
     rights acquired beneficial ownership of the shares before that date;
 
     (4) Set a date by which the corporation must receive the payment demand,
     which date may not be fewer than one (1) nor more than two (2) months after
     the date the subsection (a) notice is delivered; and
 
     (5) Be accompanied by a copy of this chapter if the corporation has not
     previously sent a copy of this chapter to the shareholder pursuant to sec.
     48-23-201.
 
48-23-204 DUTY TO DEMAND PAYMENT.
 
(a) A shareholder sent a dissenters' notice described in sec. 48-23-203 must
demand payment, certify whether the shareholder acquired beneficial ownership of
the shares before the date required to be set forth in the dissenters' notice
pursuant to sec. 48-23-203(b)(3), and deposit the shareholder's certificates in
accordance with the terms of the notice.
 
(b) The shareholder who demands payment and deposits the shareholder's share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the effectuation of the proposed
corporate action.
 
(c) A shareholder who does not demand payment or deposit the shareholder's share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for the shareholder's shares under this chapter.
 
(d) A demand for payment filed by a shareholder may not be withdrawn unless the
corporation with which it was filed, or the surviving corporation, consents
thereto.
 
48-23-205 SHARE RESTRICTIONS.
 
(a) The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is effectuated or the restrictions released under sec. 48-23-207.
 
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the effectuation of the proposed corporate action.
 
48-23-206 PAYMENT.
 
(a) Except as provided in sec. 48-23-208, as soon as the proposed corporate
action is effectuated, or upon receipt of a payment demand, whichever is later,
the corporation shall pay each dissenter who complied with sec. 48-23-204 the
amount the corporation estimates to be the fair value of each dissenter's
shares, plus accrued interest.
 
                                       C-4
<PAGE>   163
 
(b) The payment must be accompanied by:
 
     (1) The corporation's balance sheet as of the end of a fiscal year ending
     not more than sixteen (16) months before the date of payment, an income
     statement for that year, a statement of changes in shareholders' equity for
     that year, and the latest available interim financial statements, if any;
 
     (2) A statement of the corporation's estimate of the fair value of the
     shares;
 
     (3) An explanation of how the interest was calculated;
 
     (4) A statement of the dissenter's right to demand payment under sec.
     48-23-209; and
 
     (5) A copy of this chapter if the corporation has not previously sent a
     copy of this chapter to the shareholder pursuant to sec. 48-23-201 or sec.
     48-23-203.
 
48-23-207 FAILURE TO TAKE ACTION.
 
(a) If the corporation does not effectuate the proposed action that gave rise to
the dissenters' rights within two (2) months after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
 
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under sec. 48-23-203 and repeat the payment demand
procedure.
 
48-23-208 AFTER-ACQUIRED SHARES.
 
(a) A corporation may elect to withhold payment required by sec. 48-23-206 from
a dissenter unless the dissenter was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action.
 
(b) To the extent the corporation elects to withhold payment under subsection
(a), after effectuating the proposed corporate action, it shall estimate the
fair value of the shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of the dissenter's
demand. The corporation shall send with its offer a statement of its estimate of
the fair value of the shares, an explanation of how the interest was calculated,
and a statement of the dissenter's right to demand payment under sec. 48-23-
209.
 
48-23-209 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
 
(a) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest due,
and demand payment of the dissenter's estimate (less any payment under sec.
48-23-206), or reject the corporation's offer under sec. 48-23-208 and demand
payment of the fair value of the dissenter's shares and interest due, if:
 
(1) The dissenter believes that the amount paid under sec. 48-23-206 or offered
under sec. 48-23-208 is less than the fair value of the dissenter's shares or
that the interest due is incorrectly calculated;
 
                                       C-5
<PAGE>   164
 
(2) The corporation fails to make payment under sec. 48-23-206 within two (2)
months after the date set for demanding payment; or
 
(3) The corporation, having failed to effectuate the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within two (2) months after the date set for demanding
payment.
 
(b) A dissenter waives the dissenter's right to demand payment under this
section unless the dissenter notifies the corporation of the dissenter's demand
in writing under subsection (a) within one (1) month after the corporation made
or offered payment for the dissenter's shares.
 
48-23-301 COURT ACTION.
 
(a) If a demand for payment under sec. 48-23-209 remains unsettled, the
corporation shall commence a proceeding within two (2) months after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the two-month period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
 
(b) The corporation shall commence the proceeding in a court of record having
equity jurisdiction in the county where the corporation's principal office (or,
if none in this state, its registered office) is located. If the corporation is
a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
 
(c) The corporation shall make all dissenters (whether or not residents of this
state) whose demands remain unsettled, parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law.
 
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
 
(e) Each dissenter made a party to the proceeding is entitled to judgment:
 
(1) For the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus accrued interest, exceeds the amount paid by the
corporation; or
 
     (2) For the fair value, plus accrued interest, of the dissenter's
     after-acquired shares for which the corporation elected to withhold payment
     under sec. 48-23-208.
 
48-23-302 COURT COSTS AND COUNSEL FEES.
 
(a) The court in an appraisal proceeding commenced under sec. 48-23-301 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the
 
                                       C-6
<PAGE>   165
 
court finds equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment under sec.
48-23-209.
 
(b) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable against:
 
     (1) The corporation and in favor of any or all dissenters if the court
     finds the corporation did not substantially comply with the requirements of
     part 2 of this chapter; or
 
     (2) Either the corporation or a dissenter, in favor of any other party, if
     the court finds that the party against whom the fees and expenses are
     assessed acted arbitrarily, vexatiously, or not in good faith with respect
     to the rights provided by this chapter.
 
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
 
                                       C-7
<PAGE>   166
                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Article Tenth of the Certificate of Incorporation of the Registrant
provides:

          "(a) The corporation shall indemnify its officers, directors,
     employees, and agents to the full extent permitted by the General
     Corporation Law of Delaware. (b) No director of the corporation shall be
     personally liable to the corporation or its stockholders for monetary
     damages, for breach of fiduciary duty as a director, except for liability
     (i) for any breach of the director's duty of loyalty to the corporation or
     its stockholders; (ii) for acts or omissions not in good faith or which
     involve intentional misconduct or a knowing violation of law; (iii) under
     Section 174 of the Delaware General Corporation Law; or (iv) for any
     transaction from which the director derived an improper personal benefit."

     Section 145 of the Delaware General Corporation law empowers the Registrant
to indemnify its officers and directors under certain circumstances. The
pertinent provisions of that statute read as follows:

        "(a) A corporation may indemnify any person who was or is a party or is
     threatened to be made a party to any threatened, pending or completed
     action, suit or proceeding, whether civil, criminal, administrative or
     investigative (other than an action by or in the right of the corporation)
     by reason of the fact that he is or was a director, officer, employee or
     agent of the corporation, or is or was serving at the request of the
     corporation as a director, officer, employee or agent of another
     corporation, partnership, joint venture, trust or other enterprise, against
     expenses (including attorneys' fees), judgments, fines and amounts paid in
     settlement actually and reasonably incurred by him in connection with such
     action, suit or proceeding if he acted in good faith and in a manner he
     reasonably believed to be in or not opposed to the best interests of the
     corporation, and, with respect to any criminal action or proceeding, had no
     reasonable cause to believe his conduct was unlawful. The termination of
     any action, suit or proceeding by judgment, order, settlement, conviction,
     or upon a plea of nolo contendere or its equivalent, shall not, of itself,
     create a presumption that the person did not act in good faith and in a
     manner which he reasonably believed to be in or not opposed to the best
     interests of the corporation, and, with respect to any criminal action or
     proceeding, had reasonable cause to believe that his conduct was unlawful.

        "(b) A corporation may indemnify any person who was or is a party or is
     threatened to be made a party to any threatened, pending or completed
     action or suit by or in the right of the corporation to procure a judgment
     in its favor by reason of the fact that he is or was a director, officer,
     employee or agent of the corporation, or is or was serving at the request



                                      II-1
<PAGE>   167

     of the corporation as a director, officer, employee or agent of another
     corporation, partnership, joint venture, trust or other enterprise against
     expenses (including attorneys' fees) actually and reasonably incurred by
     him in connection with the defense or settlement of such action or suit if
     he acted in good faith and in a manner he reasonably believed to be in or
     not opposed to the best interests of the corporation and except that no
     indemnification shall be made in respect of any claim, issue or matter as
     to which such person shall have been adjudged to be liable to the
     corporation unless and only to the extent that the Court of Chancery or the
     court in which such action or suit was brought shall determine upon
     application that, despite the adjudication of liability but in view of all
     the circumstances of the case, such person is fairly and reasonably
     entitled to indemnity for such expenses which the Court of Chancery or such
     other court shall deem proper.

        "(c) To the extent that a director, officer, employee or agent of a
     corporation has been successful on the merits or otherwise in defense of
     any action, suit or proceeding referred to in subsections (a) and (b) of
     this section, or in defense of any claim, issue or matter therein, he shall
     be indemnified against expenses (including attorneys' fees) actually and
     reasonably incurred by him in connection therewith.

        "(d) Any indemnification under subsections (a) and (b) of this section
     (unless ordered by a court) shall be made by the corporation only as
     authorized in the specific case upon a determination that indemnification
     of the director, officer, employee or agent is proper in the circumstances
     because he has met the applicable standard of conduct set forth in
     subsections (a) and (b) of this section. Such determination shall be made
     (1) by a majority vote of the directors who are not parties to such action,
     suit or proceeding, even though less than a quorum, or (2) if there are no
     such directors, or if such directors so direct, by independent legal
     counsel in a written opinion, or (3) by the stockholders.

        "(e) Expenses (including attorneys' fees) incurred by an officer or
     director in defending any civil, criminal, administrative or investigative
     action, suit or proceeding may be paid by the corporation in advance of the
     final disposition of such action, suit or proceeding upon receipt of an
     undertaking by or on behalf of such director or officer to repay such
     amount if it shall ultimately be determined that he is not entitled to be
     indemnified by the corporation as authorized in this section. Such expenses
     (including attorneys' fees) incurred by other employees and agents may be
     so paid upon such terms and conditions, if any, as the board of directors
     deems appropriate.

        "(f) The indemnification and advancement of expenses provided by, or
     granted pursuant to, the other subsections of this section shall not be
     deemed exclusive of any other rights to which those seeking indemnification
     or advancement of expenses may be entitled under any bylaw, agreement, vote
     of stockholders or disinterested directors or otherwise, both as to action
     in his official capacity and as to action in another capacity while holding
     such office.

                                       II-2

<PAGE>   168

        "(g) A corporation shall have power to purchase and maintain insurance
     on behalf of any person who is or was a director, officer, employee or
     agent of the corporation, or is or was serving at the request of the
     corporation as a director, officer, employee or agent of another
     corporation, partnership, joint venture, trust or other enterprise against
     any liability asserted against him and incurred by him in any such
     capacity, or arising out of his status as such, whether or not the
     corporation would have the power to indemnify him against such liability
     under this section.

        "(h) For purposes of this section, references to "the corporation" shall
     include, in addition to the resulting corporation, any constituent
     corporation (including any constituent of a constituent) absorbed in a
     consolidation or merger which, if its separate existence had continued,
     would have had power and authority to indemnify its directors, officers,
     and employees or agents, so that any person who is or was a director,
     officer, employee or agent of such constituent corporation, or is or was
     serving at the request of such constituent corporation as a director,
     officer, employee or agent of another corporation, partnership, joint
     venture, trust or other enterprise, shall stand in the same position under
     this section with respect to the resulting or surviving corporation as he
     would have with respect to such constituent corporation if its separate
     existence had continued.

        "(i) For purposes of this section, references to "other enterprises"
     shall include employee benefit plans; references to "fines" shall include
     any excise taxes assessed on a person with respect to any employee benefit
     plan; and references to "serving at the request of the corporation" shall
     include any service as a director, officer, employee or agent of the
     corporation which imposes duties on, or involves services by, such
     director, officer, employee or agent with respect to an employee benefit
     plan, its participants or beneficiaries; and a person who acted in good
     faith and in a manner he reasonably believed to be in the interest of the
     participants and beneficiaries of an employee benefit plan shall be deemed
     to have acted in a manner "not opposed to the best interests of the
     corporation" as referred to in this section.

        "(j) The indemnification and advancement of expenses provided by, or
     granted pursuant to, this section shall, unless otherwise provided when
     authorized or ratified, continue as to a person who has ceased to be a
     director, officer, employee or agent and shall inure to the benefit of the
     heirs, executors and administrators of such a person.

        "(k) The Court of Chancery is hereby vested with exclusive jurisdiction
     to hear and determine all actions for advancement of expenses or
     indemnification brought under this section or under any bylaw, agreement,
     vote of stockholders or disinterested directors, or otherwise. The Court of
     Chancery may summarily determine a corporation's obligation to advance
     expenses (including attorneys' fees)."

     The Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a

                                      II-3

<PAGE>   169

director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on inside
information, illegal payments, dishonesty, accounting of securities profits in
violation of Section 16(b) of the Securities Exchange Act of 1934 and acts
within the scope of the Pension Reform Act of 1974.

ITEM 21.  EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                                     DESCRIPTION
- ------         -----------------------------------------------------------------------------------------------
<S>            <C>
  2.1   --     Agreement and Plan of Merger, dated as of June 22, 1998, by and between Meigs County Bancshares, Inc. and
               Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
  4.1   --     Certificate of Incorporation of Regions Financial Corporation.
  4.2   --     By-laws of Regions Financial Corporation.
  5.    --     Opinion re: legality.
  8.    --     Opinion re: tax matters.
 23.1   --     Consent of Ernst & Young LLP.
 23.2   --     Consent of Hazlett, Lewis & Bieter, PLLC
 23.3   --     Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
 23.4   --     Consent of Alston & Bird LLP -- included in Exhibit 8.
 23.5   --     Consent of Stevens & Company
 24.    --     Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
               registration statement.
 99.    --     Form of proxy.
</TABLE>

ITEM 22.  UNDERTAKINGS.

     A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the

                                      II-4

<PAGE>   170

matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

     C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

     (2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

     D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

     E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-5

<PAGE>   171

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 10th day of November, 1998.

                          REGISTRANT:
                          REGIONS FINANCIAL CORPORATION

                              /s/ Richard D. Horsley
                          BY: --------------------------------
                                  Richard D. Horsley
                              Vice Chairman of the Board and
                               Executive Financial Officer

    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.



<TABLE>
<CAPTION>
         SIGNATURE                     TITLE                        DATE
- --------------------------  ----------------------------      -----------------
<S>                         <C>                               <C>
/s/ Carl E. Jones, Jr.
- --------------------------  President and Chief Executive     November 10, 1998
Carl E. Jones, Jr.              Officer and Director
                            (principal executive officer)

/s/ Richard D. Horsley
- --------------------------  Vice Chairman of the Board and    November 10, 1998
Richard D. Horsley          Executive Financial Officer
                                   and Director
                            (principal financial officer)
/s/ Robert P. Houston
- --------------------------  Executive Vice President and      November 10, 1998
Robert P. Houston                  Comptroller
                            (principal accounting officer)
</TABLE>


                                        II-6


<PAGE>   172

<TABLE>
<CAPTION>
   SIGNATURE                     TITLE                                 DATE     
- --------------------------  ----------------------------      ------------------
<S>                         <C>                               <C>
/s/ Sheila S. Blair
- --------------------------         Director                   November 10, 1998
Sheila S. Blair

/s/ James B. Boone, Jr.
- --------------------------         Director                   November 10, 1998
James B. Boone, Jr.

/s/ Albert P. Brewer
- --------------------------         Director                   November 10, 1998
Albert P. Brewer

/s/ James S.M. French
- --------------------------         Director                   November 10, 1998
James S.M. French


- --------------------------         Director
Barnett Grace


- --------------------------         Director
Frank D. Hickingbotham

/s/ Olin B. King
- --------------------------         Director                   November 10, 1998
Olin B. King

/s/ J. Stanley Mackin
- --------------------------  Chairman of the Board             November 10, 1998
J. Stanley Mackin                 and Director                    


- --------------------------         Director
Michael W. Murphy

/s/ Henry E. Simpson
- --------------------------         Director                   November 10, 1998
Henry E. Simpson

/s/ Lee J. Styslinger, Jr.
- --------------------------         Director                   November 10, 1998
Lee J. Styslinger, Jr.


- --------------------------         Director                   
Robert J. Williams
</TABLE>


<PAGE>   173

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                                           SEQUENTIALLY
EXHIBIT                                                                                                       NUMBERED 
NUMBER                           DESCRIPTION                                                                    PAGE
- -------        ------------------------------------------------------------------------------------------       ----
<S>            <C>                                                                                         <C>
  2.1   --     Agreement and Plan of Merger, dated as of June 22, 1998, by and between Meigs County Bancshares, Inc. and
               Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
  4.1   --     Certificate of Incorporation of Regions Financial Corporation.
  4.2   --     By-laws of Regions Financial Corporation.
  5.    --     Opinion re: legality.
  8.    --     Opinion re: tax matters.
 23.1   --     Consent of Ernst & Young LLP.
 23.2   --     Consent of Hazlett, Lewis & Bieter, PLLC
 23.3   --     Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
 23.4   --     Consent of Alston & Bird LLP -- included in Exhibit 8.
 23.5   --     Consent of Stevens & Company
 24.    --     Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
               registration statement.
 99.    --     Form of proxy.
</TABLE>

<PAGE>   1
                                                                     EXHIBIT 4.1


                          CERTIFICATE OF INCORPORATION

                                       OF

                          REGIONS FINANCIAL CORPORATION


     FIRST.  The name of the corporation is Regions Financial
Corporation.

     SECOND. The address of its registered office in the State of Delaware is
No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
The principal office of the corporation shall be in the State of Alabama and
shall be located in the City of Birmingham, County of Jefferson. Directors'
meetings (unless from time to time specifically otherwise ordered by the Board
of Directors) and appropriate corporate functions shall be held in Birmingham.
The chief executive officer may, for his convenience, in discharging his duties,
locate at whatever place he deems desirable the necessary secretariat and
personal assistants for the efficient operation of his office. The corporation
may have such other offices, either within or without the State of Alabama, as
the Board of Directors may designate or as the business of the corporation may
require from time to time. Specialized personnel, such as auditors, examiners,
public relation officers, etc., shall be located in such cities as the Directors
may from time to time order.

     THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware. Without limiting in any manner the scope and generality of the
foregoing, the corporation shall have the following purposes and powers:

        (1) To engage generally in the business of owning stock in other
corporations which are engaged in the business of banking in all its branches
and to transact and do all matters and things incidental thereto or which may at
any time hereafter or at any place where the company shall carry on the
business, be usual in connection with the business of banking or dealing in
money or securities.

        (2) To acquire by purchase, subscription or otherwise, and to receive,
hold, own guarantee, sell, assign, exchange, transfer, mortgage, pledge, or
otherwise dispose of or deal in and with any and all securities, as such term is
hereinafter defined, issued or created by any corporation, firm organization,
association or other entity, public or private, whether formed under the laws of
the United States of America or of any state, commonwealth, territory,
dependency or possession thereof, or of any foreign country or of any political
subdivision, territory, dependency, possession or municipality


<PAGE>   2



thereof, or issued or created by the United States of America or any state or
commonwealth thereof or any foreign country, or by any agency, subdivision,
territory, dependency, possession or municipality of any of the foregoing, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon.

        The term "securities" as used in this Certificate of Incorporation shall
mean any and all notes, stocks, treasury stocks, bonds, debentures, evidences of
indebtedness, certificates of interest of participation in any profit-sharing
agreement, collateral- trust certificates, pre-organization certificates or
subscriptions, transferable shares, investment contracts, voting trust
certificates, certificates of deposit for a security, fractional undivided
interests in oil, gas or other mineral rights, or, in general, any interests or
instruments commonly known as "securities," or any and all certificates of
interest or participation in, temporary or interim certificates for, receipts
for, guaranties of, or warrants or rights to subscribe to or purchase, any of
the foregoing.

        (3) To make, establish and maintain investments in securities, and to
supervise and manage such investments.

        (4) To cause to be organized under the laws of the United States of
America or of any state, commonwealth, territory, dependency or possession
thereof, or of any foreign country or of any political subdivision, territory,
dependency, possession or municipality thereof, one or more corporations, firms,
organizations, associations or other entities and to cause the same to be
dissolved, wound up, liquidated, merges or consolidated.

        (5) To acquire by purchase or exchange, or by transfer to or by merger
or consolidation with the corporation or any corporation, firm, organization,
association or other entity owned or controlled, directly or indirectly, by the
corporation, or to otherwise acquire, the whole or any part of the business,
good will, rights, or other assets of any corporation, firm, organization,
association or other entity, and to undertake or assume in connection therewith
the whole or any part of the liabilities and obligations thereof, to effect any
such acquisition in whole or in part by delivery of cash or other property,
including securities issued by the corporation, or by any other lawful means.

         (6) To make loans and give other forms of credit, with or without
security, and to negotiate and made contracts and agreements in connection
therewith.



                                        2

<PAGE>   3


         (7) To aid by loan, subsidy, guaranty or in any other lawful manner any
corporation, firm, organization, association or other entity of which any
securities are in any manner directly or indirectly held by the corporation or
in which the corporation or any such corporation, firm, organization,
association or entity may be or become otherwise interested; to guarantee the
payment of dividends on any stock issued by any such corporation, firm,
organization, association or entity; to guarantee or, with or without recourse
against any such corporation, firm, organization, association or entity, to
assume the payment of the principal of, or the interest on, any obligations
issues or incurred by such corporation, firm, organization, association or
entity; to do any and all other acts and things for the enhancement, protection
or preservation of any securities which are in any manner, directly or
indirectly, held, guaranteed or assumed by the corporation, and to do any and
all acts and things designed to accomplish any such purpose.

         (8) To borrow money for any business, object or purpose of the
corporation from time to time, without limit as to amount; to issue any kind of
indebtedness, whether or not in connection with borrowing money, including
evidences of indebtedness convertible into stock of the corporation, to secure
the payment of any evidence of indebtedness by the creation of any interest in
any of the property or rights of the corporation, whether at that time owned or
thereafter acquired.

         (9) To render service, assistance, counsel and advice to, and to act as
representative or agent in any capacity (whether managing, operating, financial,
purchasing, selling, advertising or otherwise) of, any corporation, firm,
organization, association or other entity.

         The purposes and powers specified in the foregoing paragraphs shall,
except where otherwise expressed, be in no wise limited or restricted by
reference to, or inference from the terms of any other paragraph in this
Certificate of Incorporation, but the purposes and powers specified in each of
the foregoing paragraphs of this Article shall be regarded as independent
purposes and powers.

         The corporation shall possess and may exercise all powers and
privileges necessary or convenient to effect any or all of the foregoing
purposes, or to further any or all of the foregoing powers, and the enumeration
herein of any specific purposes or powers shall not be held to limit or restrict
in any manner exercise by the corporation of the general powers now or hereafter
conferred by the laws of the State of Delaware upon corporations formed under
the General Corporation Law of Delaware.


                                        3

<PAGE>   4


         FOURTH. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is Five Hundred Five Million
(505,000,000) of which Five Hundred Million (500,000,000) shares are to be
common stock (hereinafter called the "Common Stock"), of a par value of
sixty-two and one half cents ($.625) each, and Five Million (5,000,000) shares
are to be Preferred Stock (hereinafter called the "Preferred Stock") of the par
value of one dollar ($1) each.

                  1. Authority is hereby expressly granted to the Board of
         Directors from time to time to issue the Preferred Stock, for such
         consideration and on such terms as it may determine, as Preferred Stock
         of one or more series and in connection with the creation of any such
         series to fix by the resolution or resolutions providing for the issue
         of shares thereof the designation, powers and relative participating,
         optional, or other special rights of such series, and the
         qualifications, limitations, or restrictions thereof. Such authority of
         the Board of Directors with respect to each such series shall include,
         but not be limited to, the determination of the following:

                           (a) the distinctive designation of, and the number of
                  shares comprising, such series, which number may be increased
                  (except where otherwise provided by the Board of Directors in
                  creating such series) or decreased (but not below the number
                  of shares thereof then outstanding) from time to time by like
                  action of the Board of Directors;

                           (b) the dividend rate or amount for such series, the
                  conditions and dates upon which such dividends shall be
                  payable, the relation which such dividends shall bear to the
                  dividends payable on any other class or classes or any other
                  series of any class or classes of stock, and whether such
                  dividends shall be cumulative, and if so, from which date or
                  dates for such series;

                           (c) whether or not the shares of such series shall be
                  subject to redemption by the Corporation and the time, prices,
                  and other terms and conditions of such redemption;

                           (d) whether or not the shares of such series shall be
                  subject to the operation of a sinking fund or purchase fund to
                  be applied to the redemption or purchase of such shares and if
                  such a fund be established, the amount thereof and the terms
                  and provisions relative to the application thereof;


                                        4

<PAGE>   5

                           (e) whether or not the shares of such series shall be
                  convertible into or exchangeable for shares of any other class
                  or classes, or of any other series of any class or classes, of
                  stock of the Corporation and if provision be made for
                  conversion or exchange, the times, prices, rates, adjustments,
                  and other terms and conditions of such conversion or exchange;

                           (f) whether or not the shares of such series shall
                  have voting rights, in addition to the voting rights provided
                  by law, and if they are to have such additional voting rights,
                  the extent thereof, provided that the holders of shares of the
                  Preferred Stock will not be entitled to more than the lesser
                  of: (i) one vote per $100 liquidation value or (ii) one vote
                  per share, when voting as a class with the holders of the
                  shares of Common Stock, and will not be entitled to vote
                  separately as a class except where the Preferred Stock is
                  adversely affected or for the election of directors after
                  default in the payment of dividends on Preferred Stock;

                           (g) the rights of the shares of such series in the
                  event of any liquidation, dissolution, or winding up of the
                  Corporation or upon any distribution of its assets; and

                           (h) any other powers, preferences, and relative,
                  participating, optional, or other special rights of the shares
                  of such series, and the qualifications, limitations or
                  restrictions thereof, to the full extent now or hereafter
                  permitted by law and not inconsistent with the provisions
                  hereof.

                  2. Authority is hereby expressly granted to the Board of
         Directors from time to time to issue any authorized but unissued shares
         of Common Stock for such consideration and on such terms as it may
         determine.

                  3. All shares of any one series of Preferred Stock shall be
         identical in all respects except as to the dates from which dividends
         thereon may be cumulative. All series of the Preferred Stock shall rank
         equally and be identical in all respects except as otherwise provided
         in the resolution or resolutions providing for the issue of any series
         of Preferred Stock.

                  4. Whenever dividends upon the Preferred Stock at the time
         outstanding, to the extent of the preference to which such stock is
         entitled, shall have been paid in full or declared and set apart for
         payment for all past dividend 


                                        5

<PAGE>   6


         periods, and after the provisions for any sinking or purchase fund or
         funds for any series of Preferred Stock shall have been complied with,
         the Board of Directors may declare and pay dividends on the Common
         Stock, payable in cash, stock or otherwise, and the holders of shares
         of Preferred Stock shall not be entitled to share therein, subject to
         the provisions of the resolution or resolutions creating any series of
         Preferred Stock.

                  5. In the event of any liquidation, dissolution, or winding up
         of the Corporation or upon the distribution of the assets of the
         Corporation or upon the distribution of the assets of the Corporation
         remaining, after the payment to the holders of the Preferred Stock of
         the full preferential amounts to which they shall be entitled as
         provided in the resolution or resolutions creating any series thereof,
         the remaining assets of the Corporation shall be divided and
         distributed among the holders of the Common Stock ratably, except as
         may otherwise be provided in any such resolution or resolutions.
         Neither the merger or consolidation of the Corporation with another
         corporation nor the sale or lease of all or substantially all the
         assets of the Corporation shall be deemed to be a liquidation,
         dissolution, or winding up of the Corporation or a distribution of its
         assets.

                  6. Except as otherwise required by law or provided by a
         resolution or resolutions of the Board of Directors creating any series
         of Preferred Stock, the holders of Common Stock shall have the
         exclusive power to vote and shall have one vote in respect of each
         share of such stock held by them and the holders of Preferred Stock
         shall have no voting power whatsoever. Except as otherwise provided in
         such a resolution or resolutions, the number of authorized shares of
         the Preferred Stock may be increased or decreased by the affirmative
         vote of the holders of a majority of the outstanding shares of capital
         stock of the Corporation entitled to vote.

                  7. No holder of Preferred Stock or Common Stock of the
         Corporation shall have any preemptive right as such holder (other than
         such right, if any, as the Board of Directors in its discretion may by
         resolution, determine pursuant to this Article Fourth) to purchase,
         subscribe for or otherwise acquire any shares of stock of the
         Corporation of any class now or hereafter authorized, or any securities
         convertible into or exchangeable for any such shares, or any warrants
         or any instruments evidencing rights or options to subscribe for,
         purchase or otherwise acquire any such shares, whether such shares,
         securities, warrants or other instruments are now, or shall hereafter
         be, authorized,

                                        6

<PAGE>   7
         unissued or issued and thereafter acquired by the Corporation.

         FIFTH. The name and mailing address of each incorporator is as follows:


              NAME                   MAILING ADDRESS
              ----                   ---------------

     Sibyl A. Garrett       P.O. Box 668, Montgomery, Alabama
    ----------------
- ---------------------------------

    Linda V. Neill          P.O. Box 668, Montgomery, Alabama
    --------------
- ---------------------------------

    Mary E. Lee             P.O. Box 668, Montgomery, Alabama
    -----------
- ---------------------------------

     SIXTH.    The corporation is to have perpetual existence.

     SEVENTH.  In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized.

         (1) To make, alter or repeal the by-laws of the corporation.

         (2) To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.

         (3) To declare such awful dividends, either in cash or stock of the
corporation, as in its discretion it may deem advisable.

         (4) To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purposes and to abolish any
such reserve in the manner in which it was created.

         (5) To fix the number of Directors which shall constitute the whole
Board, subject to the following:

             (a) The number of Directors constituting the 

                                        7

<PAGE>   8



entire Board shall be fixed from time to time by vote of a majority of the
entire Board, provided, however, that the number of Directors shall not be
reduced so as to shorten the term of an Director at the time in office, and
provided further, that the number of Directors constituting the entire Board
shall be 21 until otherwise fixed by a majority of the entire Board, and shall
not be less than three. Each Director shall be the record owner of one or more
shares of common stock of the corporation.

             (b) The Board of Directors shall be divided into three classes, as
nearly equal in numbers as the then total number of Directors constituting the
entire Board permits with the term of office of one class expiring each year. At
the annual meeting of stockholders in 1982, Directors of the first class shall
be elected to hold office for a term expiring at the next succeeding annual
meeting, Directors of the second class shall be elected to hold office for a
term expiring at the second succeeding annual meeting and Directors of the third
class shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Any vacancies in the Board of Directors for any
reason, and any created directorships resulting from any increase in the number
of Directors may be filled by the Board of Directors, acting by a majority of
the Directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
Directors shall have been chosen and until their successors shall be elected and
qualified. No decrease in the number of Directors shall shorten the term of any
incumbent Director. Subject to the foregoing, at each annual meeting of
stockholders the successors to the class of Directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting.

             (c) Notwithstanding any other provisions of this certificate of
incorporation or the by-laws of the corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this certificate of
incorporation or the by-laws of the corporation), any Director or the entire
Board of Directors of the corporation may be removed at any time, but only for
cause and only by the affirmative vote of the holders of 75% or more of the
outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose.

             (d) Nominations for the election of Directors may be made by the
Board of Directors or by any stockholder entitled to vote for the election of
Directors. Such nominations shall be made by notice in writing, delivered or
mailed by first class United States Mail, postage prepaid, to the Secretary of


                                        8

<PAGE>   9

the corporation not less than 14 days nor more than 50 days prior to any meeting
of the stockholders called for the election of Directors; provided, however,
that if less than 21 days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
the corporation not later than the close of the seventh day following the day on
which notice of the meeting was mailed to stockholders. Notice of nominations
which are proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.

             (e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of each such nominee
and (iii) the number of shares of stock of the corporation beneficially owned by
each such nominee.

             (f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.

        (6) By a majority of the whole Board, to designate one or more
committees, each committee to consist of two or more of the Directors of the
corporation. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member or any
meeting of the committee. Any such committee, to the extent provided in the
resolution or in the by-laws of the corporation, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; provided, however, the by-laws may provide
that in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

        (7) (a) Except as set forth in Clause (d) of this paragraph (7) of
Article Seventh the affirmative vote of the holders of at lease 75% of the
outstanding shares of the corporation entitled to vote in election of Directors
shall be required to effect or validate:

                   (1)      any merger or consolidation with or
into any other corporation, or

                                       9
<PAGE>   10

                   (2) any sale or lease of all or a substantial part of the
assets of the corporation to any other corporation, person or other entity, if
as of the record date for determination of stockholders entitled to notice
thereof and to vote thereon, such other corporation, person or entity which is
party to such a transaction is the beneficial owner, directly or indirectly, of
5% or more of the outstanding shares of the corporation entitled to vote in
elections of directors. Such affirmative vote shall be in addition to any vote
of the holders of the shares of the corporation otherwise required by law, this
certificate of incorporation or any agreement between the corporation and any
national securities exchange.

             (b) For purpose of this paragraph (7) any corporation, person or
other entity shall be deemed to be the beneficial owner of any shares of the
corporation:

                   (1) which it owns directly, whether not of record, or

                   (2) which it has the right to acquire pursuant to any
agreement or understanding or upon exercise of conversion rights, warrants or
options or otherwise, or

                   (3) which are beneficially owned, directly or indirectly
(including shares deemed to be owned through application of clause (2) above),
by an "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect on May 1, 1977, or

                   (4) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (2) above), by any
other corporation, person or entity with which it or its "affiliate" or
"associate" has any agreement or arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of shares of the corporation. For the
purpose of determining whether a corporation, person or entity is the beneficial
owner of one or more of the outstanding shares of the corporation, the
outstanding shares of the corporation shall include shares not in fact
outstanding but deemed owned through the application of clauses (b)(2), (3) and
(4) above, but shall not include any other shares which may be issuable pursuant
to any agreement or upon exercise of conversion rights, warrants or options or
otherwise.

             (c) The Board of Directors shall have the power and duty to
determine for the purposes of this paragraph (7), on the basis of information
known to the corporation whether:

                                       10
<PAGE>   11

                   (1) such other corporation or other entity beneficially owns
more than 5% of the outstanding shares of the corporation entitled to vote in
elections of Directors;

                   (2) a corporation, person, or entity is an "affiliate" or
"associate" (as defined in paragraph (b) above) of another;

                   (3) the memorandum of understanding referred to in clause (d)
below is substantially consistent with the transaction covered thereby.

                    Any such determination shall be conclusive and binding for
all purposes of this paragraph (7).

             (d) The provisions of this paragraph (7) shall not apply to:

                   (1) any merger or similar transaction with any corporation if
the Board of Directors of the corporations has approved a memorandum of
understanding with such other corporation with respect to such transaction prior
to the time that such other corporation shall have become the beneficial owner
of more than 5% of the outstanding shares of the corporation entitled to vote in
elections of Directors; or after such acquisition of 5% of the outstanding
shares, if 75% or more of the entire Board of Directors approve such transaction
prior to its consummation; or

                   (2) any merger or consolidation of the corporation with, or
any sale or lease to the corporation or any subsidiary thereof of any assets of,
or any sale or lease by the corporation or any subsidiary thereof of any of its
assets to, any corporation of which a majority of the outstanding shares of all
classes of stock entitled to vote in election of Directors is owned of record or
beneficially by the corporation and its subsidiaries.

     EIGHTH. Directors of Corporation and its Subsidiaries. Directors of the
corporation shall retire as such upon reaching age seventy-two (72) or after
serving three (3) years as a member of the Board, whichever event occurs later.

     The nomination and election of Directors of each corporation which is or
may in the future be a subsidiary of the corporation shall be conducted in the
manner prescribed in the charter or by-laws of said subsidiary corporation.

     NINTH. No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the corporation may be taken without a
meeting, and the power of 

                                       11
<PAGE>   12

stockholders to consent in writing, without a meeting, to the taking of any
action is specifically denied.

     TENTH. (a) The corporation shall indemnify its officers directors,
employees and agents to the full extent permitted by the General Corporation Law
of Delaware. (b) No director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages, for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit.

     ELEVENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on this application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said application has
been made, be binding on all the creditors or class or creditors, and/or on all
the stockholders or class of stockholders, of this corporation, as the case may
be, and also on this corporation.

     TWELFTH. Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the corporation. Special meetings of the
stockholders may be called at any time by the Chief Executive Officer, Secretary
or Board of Directors of the corporation.


                                       12
<PAGE>   13

     THIRTEENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

      As provided in Article Seventh, paragraph (1), the Board of Directors is
expressly authorized to make, alter or repeal by-laws of the corporation by a
vote of a majority of the entire Board; and the stockholders may make, alter or
repeal any by-laws whether or not adopted by them, provided however, that any
such additional by-laws, alterations or repeal may be adopted only by the
affirmative vote of the holders of 75% or more of the outstanding shares of
capital stock of the corporation entitled to vote generally in the election of
Directors (considered for this purpose as one class) at a meeting of
stockholders called for such purpose.

      Notwithstanding any other provision of this certificate of incorporation
or the by-laws of the corporation (and in addition to any other vote that may be
required by law, this certificate of incorporation or the by-laws), the
affirmative vote of the holders of at least 75% of the outstanding shares of the
capital stock of the corporation entitled to vote generally in the election of
Directors (considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Article Fourth; Article Seventh paragraph (5);
Article Seventh paragraph (7); Article Ninth; Article Twelfth; or Article
Thirteenth of the certificate of incorporation.

     WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 24th day of June, 1970.

                                    /s/ Sibyl A. Garrett


                                    /s/ Linda V. Neill


                                    /s/ Mary E. Lee

As amended through August 17, 1998




                                       13


<PAGE>   1
                                                                     EXHIBIT 4.2

                                     BYLAWS
                                       OF
                          REGIONS FINANCIAL CORPORATION
                      (as amended 1/17/73, 1/8/75, 4/20/77,
                       4/21/82, 1/19/83, 9/18/85, 3/22/89,
                     1/24/90, 4/28/93, 5/18/94 and 9/16/98)

                             A DELAWARE CORPORATION

                                    ARTICLE I

                                     Offices

      The address of its registered office in the State of Delaware is No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company. The
principal office of the corporation shall be in the State of Alabama and shall
be located in the City of Birmingham, County of Jefferson. Directors' meetings
(unless from time to time specifically otherwise ordered by the Board of
Directors) and appropriate corporate functions shall be held in Birmingham. The
Chief Executive Officer may, for his convenience, in discharging his duties,
locate at whatever place he deems desirable the necessary secretary and personal
assistants for the efficient operation of his office. The corporation may have
such other offices, either within or without the State of Alabama, as the Board
of Directors may designate or as the business of the corporation may require
from time to time. Specialized personnel, such as auditors, examiners, public
relations officers, etc., shall be located in such cities as the Directors may
from time to time order.


                                        1


<PAGE>   2



                                   ARTICLE II

                             Meeting of Shareholders

         1. Place of Meetings. The first annual meeting of the stockholders
shall be held in Birmingham, Alabama. Thereafter, the Board of Directors may
designate any place, either within or without the State of Alabama, as the place
of meeting for any annual meeting or for any special meeting of the shareholders
called by the Board of Directors.

         2. Annual Meetings. The Annual Meeting of Stockholders shall be held on
the third Wednesday of April of each year, if not a legal holiday, but if a
legal holiday, then on the next day following not a legal holiday, for the
purpose of electing Directors of the Corporation and for the transaction of such
business as may be properly brought before the meeting.

         3. Substitute Annual Meetings. If the annual meeting shall not be held
on the day designated by these bylaws, a substitute annual meeting may be called
in accordance with the provisions of Section 4 of this Article. A meeting so
called shall be designated and treated for all purposes as the annual meeting.

         4. Special Meetings. Special meetings of the shareholders may be called
at any time by the Chief Executive Officer, Secretary or Board of Directors of
the corporation.

         5. Notice of Meetings. Written or printed notice stating the time and
place of the meeting shall be delivered not less than 10 nor more than 50 days
before the date thereof, either personally or by mail, by or at the direction of
the Chief Executive Officer, the Secretary or the Board of Directors, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the 


                                        2


<PAGE>   3



shareholder at his address as it appears on the record of shareholders of the
corporation, with postage thereon prepaid.

         In the case of an annual or substitute annual meeting, the notice of
the meeting need not specifically state the business to be transacted thereat.
In the case of a special meeting, the notice of meeting shall specifically state
the purpose or purposes for which the meeting is called.

         When a meeting is adjourned for thirty days or more notice of the
adjourned meeting shall be given as in the case of an original meeting. When a
meeting is adjourned for less than thirty days in any one adjournment, it is not
necessary to give any notice of the adjourned meeting other than by announcement
at the meeting at which the adjournment is taken.

         6. Quorum. The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at meetings of
shareholders. If there is no quorum at the opening of a meeting of shareholders,
such meeting may be adjourned from time to time by a vote of a majority of the
shares voting on the motion to adjourn; and, at any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the original meeting.

         The shareholders at a meeting at which a quorum is present may continue
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.

         7. Voting of Shares. Each outstanding share having voting rights shall
be entitled to one vote on each matter submitted to a vote at a meeting of the
shareholders.

         The vote of a majority of the shares voted on any matter at a meeting
of shareholders at which a quorum is present shall be the act of the
shareholders on that matter, except as otherwise required by law or by the
certificate of incorporation or the bylaws of this corporation.


                                        3


<PAGE>   4



         As more specifically provided in Article VII, paragraph 7 of the
certificate of incorporation of this corporation, (1) any merger or
consolidation with or into any other corporation, or (2) any sale or lease of
all or a substantial part of the assets of the corporation to any other
corporation, person or entity, must be approved by the affirmative vote of the
holders of at least 75% of the outstanding shares of the corporation entitled to
vote, provided, however, that approval by 75% of the outstanding shares shall
not be required if any proposed merger, consolidation, or similar transaction
shall have been previously approved by the affirmative vote of at least 75% of
the entire Board of Directors; or if any proposed merger, consolidation or sale
or lease of the assets of the corporation is with a corporation, the majority of
the outstanding stock of which is owned by this corporation.

         Voting on all matters shall be by voice vote or by a show of hands
unless the holders of one-tenth of the shares represented at the meeting shall,
prior to the voting on any matter, demand a ballot vote on that particular
matter.

         8. No Shareholder Action by Consent. No action required to be taken at
a meeting of shareholders may be taken without a meeting. The stockholders shall
not have the power to consent in writing, without a meeting, to the taking of
any such action.

         9. Qualification of Speakers at Shareholders' Meeting. Any person in
attendance at the meeting of shareholders shall, at the time of gaining
recognition from the chair, state the name of the speaker, the number of shares
owned by the speaker, and, if appearing in a representative capacity, produce
satisfactory written evidence of the right of representation signed by a
shareholder of record. Upon a failure to comply with this requirement, the
chairman shall ignore such speaker and, if deemed necessary, request the
sergeant at arms to remove the proposed speaker from the meeting.


                                        4


<PAGE>   5



                                   ARTICLE III

                                    Directors

         1. General Powers. The business and affairs of the corporation shall be
managed by the Board of Directors or by such Executive Committee as the Board
may establish pursuant to these bylaws.

         2. Number, Classification, Term, Qualifications and Vacancies. The
number of Directors which shall constitute the whole Board shall be fixed, from
time to time, by resolutions adopted by the Board, but shall not be less than
three persons, and, until otherwise provided, shall be two inside or full-time
employee directors and ten outside directors who are not full-time employees of
the Corporation. The Directors shall be of three classes, so that approximately
one-third in number of the Directors shall be elected at each annual meeting of
stockholders and, except as hereinafter provided, each Director shall hold
office for three years, or until his successor is elected and qualified, or
until his earlier retirement, death, resignation or removal. Directors need not
be residents of the state of Delaware.

         Any vacancy in the office of Director, for any reason, or resulting
from an increase in the authorized number of Directors, may be filled by the
affirmative vote of a majority of the Directors then in office, although less
than a quorum, or by a sole remaining Director. Any Director so chosen shall
hold office until the next election of the class for which such Director shall
have been chosen and until his successor shall be elected and qualified. No
decrease in the number of Directors shall shorten the term of any incumbent
Director.

         3. Nominations and Election of Directors. Nominations for the election
of Directors may be made by the Board of Directors or by any stockholder
entitled to vote for the election of 


                                        5


<PAGE>   6



Directors. Such nominations shall be made by notice in writing, delivered or
mailed by first class United States mail, postage prepaid, to the secretary of
the corporation not less than 14 days nor more than 50 days prior to any meeting
of the stockholders called for the election of Directors; provided, however,
that if less than 21 days' notice of the meeting is given stockholders, such
written notice of nominations shall be delivered or mailed to the secretary of
the corporation not later than the close of business on the seventh day
following the day on which notice of the meeting was mailed to stockholders.
Notice of nominations which are proposed by the Board of Directors shall be
given by the chairman on behalf of the Board.

         Notice of nominations shall set forth (1) the name, age, business
address, and, if known, residence address of each nominee; (2) the principal
occupation or employment of each nominee; and (3) the number of shares of stock
of the corporation beneficially owned by said nominee.

         The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.

         For the election of Directors, those nominees who receive the highest
number of votes shall be deemed to have been elected.

         To achieve the classification of Directors described in Section 2 of
the Article, the Board of Directors shall be divided into three classes of seven
Directors each, or as nearly equal in number as the then total number of
Directors constituting the entire Board permits with the term of office of one
class expiring each year. At the Annual Meeting of Stockholders in 1982,
Directors of the first class shall be elected to hold office for a one-year term
expiring at the 1983 annual meeting, Directors of the second class shall be
elected at the 1982 annual meeting of stockholders to hold 


                                       6
<PAGE>   7

office for a two year term expiring at the 1982 annual meeting, and the
Directors of the third class shall be elected at the 1982 annual meeting to hold
office for a three-year term expiring at the 1985 annual meeting. After the
initial election of each class of Directors, each class should be elected for a
three-year term, so that the term of office of one class expires each year.

         4. Chairman. There may be a Chairman of the Board of Directors elected
by the Directors from their number at any meeting of the board. The Chairman
shall preside at all meetings of the Board of Directors and perform such other
duties as may be directed by the Board.

         5. Vice-Chairman. There may be a Vice-Chairman of the Board of
Directors elected by the Directors from their number at any meeting of the
Board. In the absence of the Chairman, the Vice-Chairman in order of seniority
shall preside at all meetings of the Board and perform such other duties as may
be directed by the Board.

         6. Compensation. The Board of Directors may compensate Directors for
their services as such and may provide for the payment of all expenses incurred
by Directors in attending regular and special meetings of the Board.

         7. Retirement. Directors of the corporation shall retire as such
immediately prior to the next Annual Meeting of stockholders after reaching age
sixty-eight (68). Provided, however, that any Director who is over age 68 on
September 16, 1998, shall retire immediately prior to the next Annual Meeting of
stockholders after reaching age seventy (70).

         8. Removal. Notwithstanding any provision of the certificate of
incorporation, these bylaws, or law, any Director or the entire Board of
Directors of the corporation may be removed at any time, but only for cause and
only by the affirmative vote of the holders of 75% or more of the


                                       7
<PAGE>   8


outstanding shares of capital stock of the corporation entitled to vote
generally in the election of Directors cast in a meeting of stockholders called
for that purpose.

                                   ARTICLE IV

                              Meeting of Directors

     1. Regular Meetings. A regular meeting of the Board of Directors shall
be held immediately before or after the annual meeting of shareholders. In
addition, the Board of Directors may provide, by resolution, the time and place,
either within or without the State of Alabama, for the holding of additional
regular meetings.

         2. Special Meetings. Special Meetings of the Board of Directors may be
called by or at the request of the Chief Executive Officer or by a majority of
the members of the Board or upon waiver of notice by all of the Directors. Such
meetings may be held either within or without the State of Alabama.

         3. Notice of Meetings. Regular meetings of the Board of Directors may
be held without notice.

         The person or persons calling a special meeting of the Board of
Directors shall, at least two days before the meeting, give notice thereof by
any usual means of communication. Such notice need not specify the purpose for
which the meeting is called.

         Attendance by a Director at a meeting shall constitute a waiver of
notice of such meeting, except where a Director attends a meeting for the
purpose of objecting to the transaction of any business because the meeting is
not lawfully called.

         4. Quorum. A majority of the Directors fixed by these bylaws, shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors.


                                       8
<PAGE>   9



         5. Manner of Acting. Except as otherwise provided in these bylaws, an
act of the majority of the Directors present at the meeting at which a quorum is
present shall be the act of the Board of Directors.

         The vote of a majority of the number of Directors fixed by these bylaws
shall be required to adopt a resolution constituting an Executive Committee.
Vacancies in the Board of Directors may be filled as provided in Article III,
Section 2 of these bylaws.

         6. Informal Action by Directors. Action taken by a majority of the
Directors without a meeting is nevertheless Board action if written consent to
the action in question is signed by all the Directors and filed with the minutes
of the proceeding of the Board, whether done before or after the action so
taken.

                                    ARTICLE V

                                    Officers

         1. Number. The officers of the corporation shall consist of a
President, a Chairman, Vice-Chairman, a Secretary, a Comptroller, and such
Vice-Presidents, Assistant Secretaries, Assistant Comptroller and other officers
as the Board of Directors may from time to time elect. Any two or more offices
may be held by the same person, except the offices of chief executive and
secretary. It shall not be necessary for any officer to be a shareholder of the
corporation.

         2. Election and Term. The officers of the corporation shall be elected
by the Board of Directors, such election may be held at any regular or special
meeting of the board. Each officer shall hold office until his death,
resignation, retirement, removal, disqualification or until his successor is
elected and qualified.


                                       9
<PAGE>   10


         3. Compensation. The compensation of all officers of the corporation
shall be fixed by the Board of Directors.

         4. Chairman. The Chairman shall have general executive powers and shall
be the chief executive officer of the corporation and, subject to the control of
the Board of Directors, shall supervise and control the management of the
corporation according to these bylaws.

         He shall, when present, preside at all meetings of the shareholders or
name another to preside. He shall sign, with any other proper officer,
certificates for shares of the corporation, and any deeds, mortgages, bonds,
contracts or other instruments which may lawfully be executed on behalf of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
delegated by the Board of Directors to some other officer or agent; and, in
general, he shall perform all duties incident to the office of Chairman and such
other duties as may be prescribed by the Board of Directors from time to time.

         5. President. The President shall have general executive powers and
shall also have and may exercise such further powers and duties as from time to
time may be conferred upon or assigned to him by the Board or by the Chairman.
In the absence or disability of the Chairman, he shall perform such duties and
have such powers as the Board may have assigned the Chairman.

         6. Vice-Chairman. The Vice-Chairman shall have general executive powers
and shall also have and may exercise such further powers and duties as from time
to time may be conferred upon or assigned to him or them by the Board. In the
absence or disability of the President and the Chairman, he or they shall
perform such duties and have such powers as the Board may have assigned the
President and the Chairman.


                                       10
<PAGE>   11



         7. Vice Presidents. The Vice Presidents in the order of their election,
unless otherwise determined by the Board of Directors, shall in the absence or
disability of the President, Chairman and Vice-Chairman perform the duties and
exercise the powers that the Board may have assigned the President, Chairman and
Vice-Chairman. In addition, they shall perform such other duties and shall have
such other powers as the Board of Directors shall prescribe.

         8. Secretary. The secretary shall keep accurate records of the acts and
proceedings of all meetings of shareholders and Directors. He shall give all
notices required by law and by these bylaws. He shall have general charge of the
corporate books and records and of the corporate seal, and he shall affix the
corporate seal to any lawfully executed instruments requiring it. He shall have
general charge of the stock transfer books of the corporation. He shall sign
such instruments as may require his signature, and, in general, shall perform
all duties incident to the office of Secretary and such other duties as may be
assigned to him from time to time by the President or by the Board of Directors.

         9. Comptroller. The Comptroller shall have custody of all funds and
securities belonging to the corporation and shall receive, deposit or disburse
the same under the direction of the Board of Directors. He shall keep full and
accurate accounts of the finances of the corporation in books especially
provided for that purpose. The Comptroller shall, in general, perform all duties
incident to this office and such other duties as may be assigned from time to
time by the President or by the Board of Directors.

         10. Assistant Secretaries and Comptrollers. The Assistant Secretaries
and Assistant Comptrollers shall, in the absence or disability of the Secretary
or the Comptroller, respectively, perform the duties and exercise the powers of
those offices and shall, in general, perform such other


                                       11
<PAGE>   12


duties as shall be assigned to them by the Secretary of the Comptroller,
respectively, or by the President or the Board of Directors.

         11. Bonds. The Board of Directors may by resolution require that any or
all officers, agents and employees of the corporation give bond to the
corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board of Directors.

         12. Retirement. It shall be mandatory for all officers of the
corporation to retire at age seventy (70), provided, however, that if the Board
of Directors concludes that it is for the best interest of the corporation, it
may waive the provisions hereof by affirmative vote recorded in the minutes in
electing the Chief Executive Officer, the Chairman, the President or Executive
Vice President.

                                   ARTICLE VI

                         Contracts, Checks and Deposits

        1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument on behalf of the corporation, and such authority may be general or
confined to specific instances.

        2. Checks and drafts. All checks, drafts or other orders for payment of
money issued in the name of the corporation shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.


                                       12
<PAGE>   13



         3. Deposits. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such
depositories as the Board of Directors shall direct.

         4. Loans. No loans shall be contracted on behalf of the corporation and
no evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined 
to specific instances.

                                   ARTICLE VII

                  Certificates for Shares and Transfer Thereof

         1. Certificates for shares. Certificates representing shares of the
corporation shall be issued, in such form as the Board of Directors shall
determine, to every shareholder for the fully paid shares owned by him. These
certificates shall be signed by the Chairman or President, and the Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer. The Board of Directors
may authorize the use of facsimile signatures. All certificates shall be
consecutively numbered or otherwise identified; and the name and address of the
persons to whom they are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation.

         2. Transfer of shares. Transfer of shares shall be made on the stock
transfer books of the corporation only upon surrender of the certificates for
the shares sought to be transferred by the record holder thereof or by his duly
authorized agent, transferee or legal representative. All certificates
surrendered for transfer shall be cancelled before new certificates for the
transferred shares shall be issued.

         3. Closing transfer books and fixing record date. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment


                                       13
<PAGE>   14


thereof, or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting.

         In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for such determination of shareholders,
such record date in any case to be not more than fifty days and, in case of the
meeting of shareholders, not less than ten days immediately preceding the date
on which the particular action, requiring such determination of shareholders, is
to be taken.

         If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders.

         4. Voting lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten (10) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten (10) days prior to such meeting, shall be kept
on file at the principal office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such


                                       14
<PAGE>   15


list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole of
the meeting. The original stock transfer book shall be prima facie evidence as
to who are the shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.

         5. Lost certificates. The Board of Directors may authorize the issuance
of a new certificate in place of a certificate claimed to have been lost or
destroyed, upon receipt of an affidavit of such fact from the person claiming
the loss or destruction. When authorizing such issuance of a new certificate,
the Board may require the claimant to give the corporation a bond in such sum as
it may direct to indemnify the corporaiton against loss from any claim with
respect to the certificate claimed to have been lost or destroyed; or the Board
may, by resolution reciting that the circumstances justify such action,
authorize the issuance of a new certificate without requiring such a bond.

                                  ARTICLE VIII

                               General Provisions

         1. Dividends. The Board of Directors may from time to time declare, and
the corporation may pay, dividends in cash, stock or property on its outstanding
shares in the manner and upon the terms and conditions provided by law and by
its charter.

         2. Waiver of notice. Whenever any notice is required to be given to any
shareholder or Director under the provisions of the laws of Delaware or under
the provisions of the charter or bylaws of this corporation, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be equivalent to the giving of such
notice.


                                       15
<PAGE>   16


         3. Fiscal year. The fiscal year of the corporation shall be as fixed by
the Board of Directors. If no fiscal year is fixed, then a calendar year will be
used.

         4. Amendments. Except as otherwise provided herein or in the
certificate of incorporation of the corporation, these bylaws may be amended or
repealed by the affirmative vote of a majority of the Directors then holding
office at any regular or special meeting of the Board of Directors, and the
stockholders may make, alter or repeal any bylaws, whether or not adopted by
them, provided, however, that any such additional bylaw, alteration or repeal
may be adopted only by the affirmative vote of the holders of 75% or more of the
outstanding shares of capital stock of the corporation entitled to vote
generally in election of Directors at a meeting of stockholders called for such
purpose, and provided further, however, that Article III, Section 2 and 3 hereof
may be amended or repealed only by the affirmative vote of 75% of the Directors
then in office.

         These Bylaws were adopted as the Bylaws of First Alabama Bancshares,
Inc. by the Interim Directors thereof on the 20th day of August, 1970.

         The name First Alabama Bancshares, Inc. was changed to Regions
Financial Corporation on May 2, 1994.


                                       16

<PAGE>   1

                                                                       EXHIBIT 5

           [Letterhead of Lange, Simpson, Robinson & Somerville LLP]

                               November 10, 1998


Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203

          Re:  Regions Financial Corporation
               S-4 Registration Statement
               Combination with Meigs County Bancshares, Inc.

Ladies and Gentlemen:

     We have acted as counsel for Regions Financial Corporation, a Delaware 
corporation ("Regions") in connection with the merger of Meigs County 
Bancshares, Inc. ("MCB") with and into Regions (the "Merger") and in connection 
with the registration of shares of common stock of Regions, par value $.625 per 
share ("Regions Common Stock"), on Form S-4 under the Securities Act of 1933. 
The Merger provides for issuance of shares of common stock of Regions, par 
value $.625 per share, to the stockholders of MCB upon consummation of the 
Merger. The maximum number of shares of Regions to be issued in the Merger is 
estimated to be 577,143.

     We have examined and are familiar with the registration statement on Form 
S-4 filed with the Securities and Exchange Commission, as such registration 
statement has been amended to date. We have examined and are familiar with the 
records relating to the organization of Regions and the documents and records 
as we have deemed relevant for purposes of rendering this opinion.

     Based on the foregoing it is our opinion that upon satisfaction of the 
conditions precedent to consummation of the Merger, or waiver of such 
conditions capable of being waived, and upon consummation of the Merger, the 
shares of Regions Common Stock issued pursuant to the Merger will be duly 
authorized, validly issued and outstanding, fully paid and non-assessable, with 
no personal liability attaching to the ownership thereof.

     We hereby consent to the filing of this opinion as an exhibit to the 
registration statement and to the reference to Lange, Simpson, Robinson & 
Somerville LLP under the caption "Opinions" in the proxy statement/prospectus 
forming a part of the registration statement.


                               Very truly yours,


                 /s/ Lange, Simpson, Robinson & Somerville LLP

<PAGE>   1
                                                                       EXHIBIT 8


                                ALSTON & BIRD LLP

                               One Atlantic Center
                           1201 West Peachtree Street
                           Atlanta, Georgia 30309-3424

                                  404-881-7000
                                Fax: 404-881-4777
                                 www.alston.com

Philip C. Cook                                        Direct Dial: 404-881-7000


                                November 12, 1998


Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203

Meigs County Bancshares, Inc.
116 N. Main Street
Decatur, Tennessee  37322

         Re:  Merger Involving Regions Financial Corporation and Meigs County 
              Bancshares, Inc.

Ladies and Gentlemen:

         We have served as special counsel to Regions Financial Corporation, a
corporation organized under the laws of the State of Delaware ("Regions"), in
connection with the reorganization of Regions and Meigs County Bancshares, Inc.,
a corporation organized under the laws of the State of Tennessee ("MCB"),
pursuant to the Agreement and Plan of Merger dated as of June 22, 1998 (the
"Agreement"), which sets forth the terms of the merger of MCB with and into
Regions (the "Merger"). In our capacity as special counsel to Regions, our
opinion has been requested with respect to certain of the federal income tax
consequences of the Merger.

         Pursuant to the Merger, and as more fully described in the Agreement,
at the Effective Time, each share of MCB Common Stock issued and outstanding at
the Effective Time shall be converted into a certain number of shares of Regions
Common Stock, as computed using the Exchange Ratio. As a result, stockholders of
MCB shall become stockholders of Regions, and each of the subsidiaries of MCB
shall continue to conduct its business and operations as a subsidiary of
Regions. All terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all section
references herein are to the Internal Revenue Code of 1986, as amended (the
"Code").

<PAGE>   2
Regions Financial Corporation
Meigs County Bancshares, Inc.
November 12, 1998
Page 2


         In rendering the opinions expressed herein, we have examined such
documents as we deemed appropriate, including (i) the Agreement and (ii) the
Registration Statement on Form S-4 filed by Regions with the Securities and
Exchange Commission under the Securities Act of 1933, on November 12, 1998, as
amended, including the Proxy Statement/Prospectus constituting part thereof
(together the "Registration Statement"). In rendering the opinions expressed
herein, we have assumed with the consent of Regions and MCB, that the Agreement
and the Registration Statement accurately and completely describe the Merger and
that the Merger will be consummated in accordance with the Agreement and as
described in the Registration Statement.

         In rendering the opinions expressed herein, we have relied with the
consent of Regions and MCB, upon the accuracy and completeness of the factual
statements and factual representations (which factual statements and factual
representations we have neither investigated nor verified) contained in the
certificates of Regions and MCB to us dated November 5, 1998 and November 4,
1998, respectively (together, the "Certificates"), which we have assumed are
complete and accurate as of the date hereof and will be complete and accurate as
of the date on which the Merger is consummated.

         Based on the foregoing, we are of the opinion that, under presently
applicable federal income tax law:

         (1) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and MCB and Regions will each be a party to the
reorganization within the meaning of Section 368(b) of the Code.

         (2) No gain or loss will be recognized by holders of MCB Common Stock
upon the exchange in the Merger of all of their MCB Common Stock solely for
shares of Regions Common Stock (except with respect to any cash received in lieu
of a fractional share interest in Regions Common Stock).

         (3) The aggregate tax basis of the Regions Common Stock received by
holders of MCB Common Stock who exchange all of their MCB Common Stock solely
for Regions Common Stock in the Merger will be the same as the tax basis of the
MCB Common Stock surrendered in exchange therefor, less the basis of any
fractional share of Regions Common Stock settled by cash payment.

         (4) The holding period of the Regions Common Stock received by holders
who exchange all of their MCB Common Stock solely for Regions Common Stock in
the Merger will include the holding period of the MCB Common Stock surrendered
in 


<PAGE>   3
Regions Financial Corporation
Meigs County Bancshares, Inc.
November 12, 1998
Page 3


exchange therefor, provided that such MCB Common Stock is held as a capital
asset at the Effective Time.

         (5) The payment of cash to holders of MCB Common Stock in lieu of
fractional share interests of Regions Common Stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Regions. These cash payments will be treated
as having been received as distributions in full payment in exchange for the
Regions Common Stock redeemed, as provided in Section 302(a) of the Code.

         (6) Where solely cash is received by a holder of MCB Common Stock in
exchange for MCB Common Stock pursuant to the exercise of dissenters' rights,
such cash will be treated as having been received in redemption of such holder's
MCB Common Stock, subject to the provisions and limitations of Section 302 of
the Code.

         The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. The federal income tax consequences described herein may not
apply to certain shareholders of MCB with special situations, including, without
limitation, shareholders who hold their MCB Common Stock other than as a capital
asset, who received their MCB Common Stock upon the exercise of employee stock
options or otherwise as compensation, who hold their MCB Common Stock as part of
a "straddle" or "conversion transaction" for federal income tax purposes, or are
foreign persons, insurance companies, or securities dealers.

         In addition, our opinions are based solely on the documents that we
have examined, and the factual statements and factual representations set out in
the Certificates, which we have assumed were true on the date of the
Certificates, and are true on the date hereof. Our opinions cannot be relied
upon if any of the facts pertinent to the federal income tax treatment of the
Merger stated in such documents or any of the factual statements or factual
representations set out in the Certificates is, or later becomes, inaccurate.
Our opinions are limited to the tax matters specifically covered thereby, and we
have not been asked to address, nor have we addressed, any other tax
consequences of the Merger, including for example any issues related to
intercompany transactions, accounting methods, or changes in accounting methods
resulting from the Merger, or the consequences of the Merger under state, local
or foreign law. These opinions are provided solely for the benefit and use of
Regions and MCB. No other party or person is entitled to rely on the opinions.


<PAGE>   4
Regions Financial Corporation
Meigs County Bancshares, Inc.
November 12, 1998
Page 4


         We hereby consent to the use of this opinion and to the references made
to Alston & Bird LLP in the Registration Statement under the captions
"Summary--Federal Income Tax Consequences" and "The Merger--Federal Income Tax
Consequences of the Merger" and to the filing of this opinion as an exhibit to
the Registration Statement.

                                       Very truly yours,

                                       ALSTON & BIRD LLP


                                       By: /s/ Philip C. Cook
                                           -----------------------
                                           Philip C. Cook, Partner

<PAGE>   1
                                                                    EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 577,143 shares of its common stock and
to the incorporation by reference therein of our report dated February 9, 1998
(except for Note Q as to which the date is February 13, 1998) with respect to
the consolidated financial statements of Regions Financial Corporation
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1997 and our report dated July 31, 1998 (except for Note Q as to
which the date is November 3, 1998) with respect to the supplemental
consolidated financial statements of Regions Financial Corporation included in
its Current Report on Form 8-K dated November 6, 1998, filed with the Securities
and Exchange Commission.

/s/ ERNST & YOUNG LLP

Birmingham, Alabama
November 12, 1998

<PAGE>   1
                                                                    EXHIBIT 23.2

                     CONSENT OF INDEPENDENT PUBLIC ACCOUNTS


We hereby consent to the inclusion in the registration statement of Regions 
Financial Corporation and in the related Proxy Statement-Prospectus of Meigs 
County Bancshares, Inc. and Regions Financial Corporation of our report dated 
January 21, 1998, on the consolidated financial statements of Meigs County 
Bancshares, Inc., as of December 31, 1997 and 1996, and for the three year 
period ended December 31, 1997. We also consent to the reference to our firm 
under the heading "Experts" in the Proxy Statement-Prospectus.


                                            /s/ HAZLETT, LEWIS & BIETER, PLLC


                                                HAZLETT, LEWIS & BIETER, PLLC


Chattanooga, Tennessee
November 9, 1998


<PAGE>   1

                                                                    EXHIBIT 23.5

                          CONSENT OF STEVENS & COMPANY


We hereby consent to the inclusion as Appendix B to the Proxy 
Statement/Prospectus constituting part of the Registration Statement on Form 
S-4 of Regions Financial Corporation of our letter to the Board of Directors of 
Meigs County Bancshares, Inc. and to the references made to such letter and to 
the firm in such Proxy Statement/Prospectus. In giving such consent, we do not 
thereby admit that we come within the category of persons whose consent is 
required under Section 7 of the Securities Act of 1933 or the rules and 
regulations of the Securities and Exchange Commission thereunder.


                                   /s/ STEVENS & COMPANY


LaGrange, Georgia
November 11, 1998

<PAGE>   1
                                                                      EXHIBIT 99


                         Meigs County Bancshares, Inc.
          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned stockholder hereby appoints ______ ______, ______ ______, 
and ______ ______, and each or any one of them, with full power of 
substitution, as Proxies to represent and to vote as designed below, all the 
shares of common stock of Meigs County Bancshares, Inc. (the "Company") held of 
record by the undersigned on ______, 1998, at the Special Meeting of 
Stockholders (the "Special Meeting") to be held on ______, 1998, or any 
adjournments thereof.

     1.   Proposal to approve the Agreement and Plan of Merger, dated as of 
June 22, 1998 (the "Agreement"), by and between the Company and Regions 
Financial Corporation ("Regions") pursuant to which the Company will merge with 
and into Regions and each share of the Company's common stock (except for 
certain shares held by the Company, Regions, or their respective subsidiaries) 
will be converted into 1.9 shares of Regions common stock, subject to possible 
adjustment, and under such other terms and conditions as are set forth in the 
Agreement:

         ___ FOR             ___ AGAINST           ___ ABSTAIN

     2.   To transact such other business as may properly come before the 
meeting or any adjournment thereof.

     This proxy when properly executed will be voted in the manner directed 
herein by the undersigned stockholder, and in the discretion of the persons 
named as Proxies on all other matters which may properly come before the 
Special Meeting or any adjournment thereof. If no direction is made, this proxy 
will be voted in favor of Proposal 1.

<PAGE>   2
[Reverse]

     This Proxy revokes all prior proxies with respect to the Special Meeting 
and may be revoked prior to its exercise.

     Please date and sign exactly as name appears on your stock certificate. 
When shares are held by joint tenants, both should sign. When signing as 
attorney, executor, administrator, trustee or guardian, please give full title 
as such. If a corporation, please sign in full corporate name by president or 
other authorized officer. If a partnership, please sign in partnership name by 
authorized person.

Dated: ______________________________, 1998.

_____________________________________
(Print Name of Stockholder)

_____________________________________
(Signature of Stockholder)

_____________________________________
(Print Name of Stockholder)

_____________________________________
(Signature of Stockholder)

PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED 
POSTAGE-PREPAID ENVELOPE.



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