<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1998 COMMISSION FILE NUMBER
0-6159
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 63-0589368
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
417 North 20th Street, Birmingham, Alabama 35203
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (205) 326-7100
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing requirements for
at least the past 90 days.
YES X NO
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.625 Par Value-221,159,941 shares outstanding
as of October 31, 1998
<PAGE> 2
REGIONS FINANCIAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
--------------------------------------
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Condition -
September 30, 1998, December 31, 1997
and September 30, 1997 2
Consolidated Statements of Income - Three months ended
September 30, 1998 and September 30, 1997 and Nine months
ended September 30, 1998 and September 30, 1997 3
Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1998 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1998 and
September 30, 1997 5
Notes to Consolidated Financial Statements -
September 30, 1998 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II. OTHER INFORMATION
----------------------------------
Item 4 Submission of Matters to a Vote of Security
Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
----------
</TABLE>
<PAGE> 3
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
September 30 December 31 September 30
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
- ------
Cash and due from banks $ 1,225,990 $ 1,177,564 $ 1,213,389
Interest-bearing deposits in other
banks 141,595 48,162 37,659
Investment securities 2,972,053 3,338,279 3,304,729
Securities available for sale 4,723,955 2,977,644 2,887,623
Trading account assets 24,553 50,825 23,437
Mortgage loans held for sale 728,746 383,924 273,147
Federal funds sold and securities
purchased under agreement to resell 117,148 292,189 394,655
Loans 23,923,417 21,952,280 21,309,079
Unearned income (71,211) (71,157) (93,603)
----------- ----------- -----------
Loans, net of unearned income 23,852,206 21,881,123 21,215,476
Allowance for loan losses (325,238) (304,223) (294,512)
----------- ----------- -----------
Net Loans 23,526,968 21,576,900 20,920,964
Premises and equipment 514,082 458,792 456,918
Interest receivable 287,317 231,947 216,028
Due from customers on acceptances 16,814 157,262 29,992
Other assets 797,043 720,570 692,986
----------- ----------- -----------
$35,076,264 $31,414,058 $30,451,527
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Non-interest-bearing $ 3,875,059 $ 3,744,198 $ 3,771,696
Interest-bearing 23,309,836 21,266,823 20,927,675
----------- ----------- -----------
Total Deposits 27,184,895 25,011,021 24,699,371
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agreement
to repurchase 1,289,513 2,128,826 2,208,292
Commercial paper 56,750 52,750 23,384
Other short-term borrowings 2,551,480 525,775 53,373
----------- ----------- -----------
Total Short-term Borrowings 3,897,743 2,707,351 2,285,049
Long-term borrowings 424,176 445,529 456,347
----------- ----------- -----------
Total Borrowed Funds 4,321,919 3,152,880 2,741,396
Bank acceptances outstanding 16,814 157,262 29,976
Other liabilities 594,983 413,074 365,921
----------- ----------- -----------
Total Liabilities 32,118,611 28,734,237 27,836,664
Stockholders' Equity:
Preferred Stock, par value $1.00 a share
Authorized 5,000,000 shares 0 0 0
Common Stock, par value $.625 a share:
Authorized - 500,000,000 shares
Issued, including treasury stock -
221,111,474; 210,596,519; and
210,330,869 shares, respectively 138,195 131,623 131,457
Surplus 1,142,592 1,089,089 984,937
Undivided profits 1,649,105 1,466,431 1,508,091
Treasury stock, at cost - 0;
363,279; and 533,572 shares, respectively -0- (13,855) (18,478)
Unearned restricted stock (7,224) (9,410) (4,107)
Accumulated other comprehensive income 34,985 15,943 12,963
----------- ----------- -----------
Total Stockholders' Equity 2,957,653 2,679,821 2,614,863
----------- ----------- -----------
$35,076,264 $31,414,058 $30,451,527
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- --------------------------
1998 1997 1998 1997
-------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $521,428 $ 470,724 $1,545,899 $1,356,846
Interest on securities:
Taxable interest income 105,163 88,349 305,434 266,655
Tax-exempt interest income 9,318 10,599 30,970 32,405
-------- --------- ---------- ----------
Total Interest on Securities 114,481 98,948 336,404 299,060
Interest on mortgage loans held for sale 13,880 5,339 32,089 13,856
Income on federal funds sold
and securities purchased under
agreement to resell 5,563 4,324 13,645 11,856
Interest on time deposits in other banks 1,782 745 3,877 2,270
Interest on trading account assets 172 65 592 542
-------- --------- ---------- ----------
Total Interest Income 657,306 580,145 1,932,506 1,684,430
Interest Expense:
Interest on deposits 269,086 242,253 799,178 703,318
Interest on short-term borrowings 53,614 29,543 124,818 78,833
Interest on long-term borrowings 8,818 7,845 24,251 26,217
-------- --------- ---------- ----------
Total Interest Expense 331,518 279,641 948,247 808,368
-------- --------- ---------- ----------
Net Interest Income 325,788 300,504 984,259 876,062
Provision for loan losses 12,547 30,765 41,482 58,966
-------- --------- ---------- ----------
Net Interest Income After Provision
for Loan Losses 313,241 269,739 942,777 817,096
Non-Interest Income:
Trust department income 14,231 11,773 39,662 33,069
Service charges on deposit accounts 40,816 38,787 122,881 111,372
Mortgage servicing and origination fees 27,524 23,740 83,920 69,836
Securities gains (losses) 85 (60) 3,127 454
Other 31,606 23,968 94,372 69,097
-------- --------- ---------- ----------
Total Non-Interest Income 114,262 98,208 343,962 283,828
Non-Interest Expense:
Salaries and employee benefits 125,371 121,809 391,059 356,137
Net occupancy expense 15,253 15,188 46,664 45,300
Furniture and equipment expense 18,296 13,954 49,179 40,699
Other 75,772 79,065 238,309 220,903
Merger and restructuring costs 114,728 0 114,728 0
-------- --------- ---------- ----------
Total Non-Interest Expense 349,420 230,016 839,939 663,039
-------- --------- ---------- ----------
Income Before Income Taxes 78,083 137,931 446,800 437,885
Applicable income taxes 26,799 45,745 152,095 147,693
-------- --------- ---------- ----------
Income Before Extraordinary Gain 51,284 92,186 294,705 290,192
Extraordinary gain, net of taxes 0 15,425 0 15,425
-------- --------- ---------- ----------
Net Income $ 51,284 $ 107,611 $ 294,705 $ 305,617
======== ========= ========== ==========
Average number of shares outstanding 220,809 209,781 220,220 209,721
Average number of shares outstanding--
diluted 223,711 214,840 223,935 213,940
Per share:
Income before extraordinary item $ 0.23 $ 0.44 $ 1.34 $ 1.38
Net income $ 0.23 $ 0.51 $ 1.34 $ 1.46
Income before extraordinary item--
diluted $ 0.23 $ 0.43 $ 1.32 $ 1.36
Net income--diluted $ 0.23 $ 0.50 $ 1.32 $ 1.43
Cash dividends declared $ 0.23 $ 0.20 $ 0.69 $ 0.60
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED
UNEARNED OTHER
COMMON UNDIVIDED TREASURY RESTRICTED COMPREHENSIVE
STOCK SURPLUS PROFITS STOCK STOCK INCOME TOTAL
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 $131,623 $1,089,089 $1,466,431 $ (13,855) $ (9,410) $15,943 $2,679,821
Comprehensive Income:
Net Income 294,705 294,705
Other comprehensive income, net of
tax
Unrealized gains(losses) on AFS
securities, net of
reclassification adjustment 19,042 19,042
---------- ------------------------
Comprehensive income 294,705 19,042 313,747
Equity from acquisitions accounted for
as poolings of interests 5,840 26,998 28,145 12,390 73,373
Cash dividends declared ($0.23 per
common share) (140,176) (140,176)
Treasury stock retired by pooled 1,465 1,465
company
Common stock transactions:
Stock issued to employees under
incentive plan 334 20,913 21,247
Stock options exercised 398 5,592 5,990
Amortization of unearned restricted
stock 2,186 2,186
-----------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1998 $138,195 $1,142,592 $1,649,105 $ 0 $ (7,224) $34,985 $2,957,653
=========================================================================================
DISCLOSURE OF RECLASSIFICATION AMOUNT:
Unrealized holding gains(losses) on AFS $21,075
securities arising during period
Reclassification adjustment, net of
tax, for gains and losses realized in
net income 2,033
-------
Net unrealized gains on AFS
securities, net of tax $19,042
=======
</TABLE>
4
<PAGE> 6
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------
1998 1997
----------- ----------
<S> <C> <C>
Operating Activities:
Net income $ 294,705 $ 305,617
Adjustments to reconcile net cash provided
by operating activities:
Extraordinary gain on sale of institutions -- (25,084)
Depreciation and amortization of premises and
equipment 62,438 50,662
Provision for loan losses 41,482 58,966
Net amortization (accretion) of securities 122 (721)
Amortization of loans and other assets 44,051 25,446
Amortization of deposits and borrowings 241 (1,232)
Provision for losses on other real estate 3,807 342
Deferred income taxes 45,314 (6,824)
Loss on sale of premises and equipment 596 330
Realized security (gains) (3,127) (492)
Decrease in trading account assets 26,272 41,549
(Increase) in mortgages held for sale (344,822) (81,134)
(Increase) in interest receivable (42,801) (17,022)
(Increase) in other assets (109,294) (72,403)
Increase in other liabilities 129,917 102,754
Stock issued to employees 14,717 8,534
Other 2,598 2,836
----------- ----------
Net Cash Provided By Operating Activities 166,216 392,124
Investing Activities:
Net (increase) in loans (1,123,731) (1,663,714)
Proceeds from sale of securities available for sale 622,553 233,521
Proceeds from maturity of investment securities 1,527,722 1,199,963
Proceeds from maturity of securities available for sale 1,962,463 804,699
Purchase of investment securities (1,145,825) (1,410,947)
Purchase of securities available for sale (3,986,432) (675,075)
Net (increase) decrease in interest-bearing deposits
in other banks (50,359) 39,905
Proceeds from sale of premises and equipment 5,278 14,539
Purchase of premises and equipment (89,482) (43,410)
Net decrease in customers' acceptance liability 140,448 48,132
Net cash received in acquisitions 48,355 220,146
----------- ----------
Net Cash (Used) By Investing Activities (2,089,010) (1,232,241)
Financing Activities:
Net increase in deposits 917,537 858,218
Net increase in short-term borrowings 1,184,514 411,041
Proceeds from long-term borrowings 311,405 111,021
Payments on long-term borrowings (342,643) (264,366)
Net (decrease) in bank acceptance liability (140,448) (48,132)
Cash dividends (140,176) (110,802)
Purchase of treasury stock 0 (33,437)
Proceeds from exercise of stock options 5,990 4,301
----------- ----------
Net Cash Provided By Financing Activities 1,796,179 927,844
----------- ----------
(Decrease) Increase In Cash And Cash Equivalents (126,615) 87,727
Cash and Cash Equivalents, Beginning of Period 1,469,753 1,520,317
----------- ----------
Cash And Cash Equivalents, End of Period $ 1,343,138 $1,608,044
=========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE A -- Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q, and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. For a summary of significant
accounting policies that have been consistently followed, see NOTE A to the
Supplemental Consolidated Financial Statements included in the November 6
Current Report previously filed as Exhibit 99.1 to Form 8-K. It is management's
opinion that all adjustments, consisting of only normal and recurring items
necessary for a fair presentation, have been included.
Prior period financial information has been restated for business combinations
with PALFED, Inc. (PALFED), First United Bancorporation (First United) and First
State Corporation (First State), which were consummated in the first quarter of
1998, and First Commercial Corporation (First Commercial), which was consummated
in the third quarter of 1998. All of these transactions, were accounted for as
poolings of interests according to Generally Accepted Accounting Principles.
Certain amounts in prior periods have been reclassified to conform to the
current period presentation.
NOTE B -- Business Combinations
On July 31, 1998 Regions issued 64,120,031 shares of common stock in exchange
for all the outstanding common stock of First Commercial Corporation of Little
Rock, Arkansas. This transaction, accounted for as a pooling of interests, added
$7.3 billion in assets. First Commercial reported revenues of $214.4 million,
net income of $60.5 million, equivalent earnings per share of $.95 per share,
and equivalent diluted earnings per share of $.94 for the six months ended June
30, 1998.
On August 31, 1998, Regions issued 1,350,000 shares of common stock in exchange
for all the outstanding stock of Jacobs Bank of Scottsboro, Alabama. This
transaction, accounted for as a pooling of interests, added approximately $186
million in assets.
Also on August 31, 1998, Regions issued 1,338,953 shares of common stock in
exchange for all the outstanding stock of Village Bankshares, Inc., of Tampa,
Florida. This transaction, accounted for as a pooling of interests, added
approximately $211 million in assets.
On September 10, 1998, Regions issued 2,915,200 shares of common stock in
exchange for all the outstanding stock of Etowah Bank of Canton, Georgia. This
transaction, accounted for as a pooling of interests, added approximately $409
million in assets.
Also on September 10, 1998, Regions issued 894,215 shares of common stock in
exchange for all the outstanding stock of First Community Banking Services,
Inc., of Peachtree City, Georgia. This transaction, accounted for as a pooling
of interests, added approximately $125 million in assets.
6
<PAGE> 8
On September 24, 1998, Regions purchased two branch offices and related deposits
of $109 million from First Union National Bank in Albany, Georgia. This
transaction generated $14.6 million in excess purchase price.
As explained in Note A Regions restated prior period financial information for
the PALFED, First United and First State transactions, which were closed in the
first quarter of 1998, and First Commercial Corporation, which was closed in the
third quarter of 1998. The following table presents financial information as
reported by Regions, PALFED, First United, First State, First Commercial and on
a combined basis for the nine months ended September 30, 1997.
<TABLE>
<S> <C>
Net interest income:
Regions $614,039
First Commercial 212,157
PALFED 18,827
First State 18,329
First United 12,710
--------
Combined $876,062
========
Net income:
Regions $220,703
First Commercial 73,064
PALFED 3,748
First State 5,460
First United 2,642
--------
Combined $305,617
========
Net income per share (Regions equivalent):
Regions $1.62
First Commercial $1.15
Combined $1.46
Net income per share - diluted (Regions equivalent):
Regions $1.58
First Commercial $1.14
Combined $1.43
</TABLE>
7
<PAGE> 9
NOTE C - Pending Acquisitions
Regions' pending acquisitions are summarized in the following table. These
transactions are expected to be accounted for as poolings of interests except
for St. James Bancorporation and Arkansas Banking Company, which are expected to
be accounted for as purchases. All of the pending transactions are subject to
applicable shareholder and regulatory approvals.
<TABLE>
<CAPTION>
Expected Number of
Approximate Shares of Regions to
Asset Size be issued(1)
Institution (in millions) Type of Consideration Exchange Ratio (in 000's)
----------- ------------- --------------------- -------------- --------------------
<S> <C> <C> <C> <C>
VB&T Bancshares Regions
Corporation, of Valdosta, Common
Georgia $ 75 Stock .6654(2) 400
Regions
Meigs County Bancshares, Common
Inc., of Decatur, Tennessee 103 Stock 1.90 577
Regions
Bullsboro BancShares, Inc., Common
of Newnan, Georgia 108 Stock 3.65 848
Regions
St. James Bancorporation Common
Inc., of Lutcher, Louisiana 152 Stock 4.23(2) 1,039
Regions
Arkansas Banking Company of Common
Jonesboro, Arkansas 343 Stock 2.85 1,673
</TABLE>
(1) - Based on the number of shares of outstanding stock of each
institution as of the announcement date.
(2) - To be adjusted based on the average of the last sales price of
Regions Common Stock on the Nasdaq National Market over a specified
period.
8
<PAGE> 10
NOTE D - New Accounting Standards
As of January 1, 1998, Regions adopted Financial Accounting Standards Statement
No. 130 (Statement 130), "Reporting Comprehensive Income". Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on net
income or stockholders' equity. Statement 130 requires unrealized gains and
losses from available for sale securities, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive
income. Prior year financial statements have been reclassified to conform to the
requirements of Statement 130. Comprehensive income for the nine months ended
September 30, 1997, was $314.4 million.
By December 31, 1998, Regions will adopt Financial Accounting Standards
Statement No. 131 (Statement 131), "Disclosures About Segments of an Enterprise
and Related Information". Statement 131, superseding FASB Statement 114,
"Financial Reporting for Segments of a Business Enterprise", establishes
standards for the way public business enterprises report information about
operating segments in annual financial statements and requires those enterprises
to report selected information about operating segments in interim financial
reports. The adoption of Statement 131 will have no effect on the results of
operations or financial position of Regions.
In February 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits" (Statement 132). Statement 132
standardizes disclosure requirements for pensions and other postretirement
benefits. Statement 132 does not change the recognition or measurement of
pensions and other postretirement benefits and therefore will have no effect on
the Company's financial condition or results of operations.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and for Hedging Activities"
(Statement 133). Statement 133 requires all derivatives to be recorded on the
balance sheet at fair value. Statement 133 is effective for fiscal periods
beginning after June 15, 1999 and is not expected to have a material effect on
the Company's financial statements.
9
<PAGE> 11
NOTE E - Year 2000 Compliance
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Based on past assessments, the Company determined that it would be required to
upgrade significant portions of its software and selected hardware so that
those systems would properly utilize dates beyond December 31, 1999. The
Company presently believes that with these upgrades of existing software and
selected hardware, the Year 2000 Issue can be mitigated.
The Company's plan to resolve the Year 2000 Issue involves the following five
steps: awareness of the potential problems Year 2000 can present, inventory and
assessment of where potential problems are within the company, renovation and
repair of noncompliant systems, testing and validation of solutions, and
implementation. Regions began planning its Year 2000 strategy in 1996 and has
since formed a project office composed of five people who manage the project on
a full-time basis. Additionally, a task force composed of individuals
representing all business units within the corporation, and a leadership
committee representing all areas of the company have been formed to support the
project office. The task force and leadership team provide reports to the Audit
Committee of the Board of Directors and to the Board of Directors on a regular
basis. Regions is utilizing both internal and external resources to reprogram,
replace, and test software and other components of its systems for Year 2000
modifications. Systems have been scheduled for modification based on a
risk-adjusted priority to ensure that mission-critical systems are completed in
time to allow for extended testing.
To date, Regions has completed its awareness and assessment steps and has made
significant progress toward completion of the renovation and testing steps. The
Company has completed the installation of the Year 2000 releases provided by
vendors on its core-business systems and is on target to complete century date
testing and validation of its core business systems by the end of 1998. Regions
will continue to communicate with its vendors and install any additional code
releases through 1999.
Approximately ninety percent of Regions' software is supplied by outside
suppliers affecting most significant systems of the Company. Regions has
initiated formal communications with all of its significant suppliers and large
customers to determine the extent to which Regions is vulnerable to those third
parties' failure to remediate their own Year 2000 Issue. Regions is spending the
majority of its Year 2000 resource allocation installing and testing vendor
releases, and has hired consultants to ensure that communications are proceeding
properly with vendors. To date, Regions is not aware of any external agent with
a Year 2000 issue that would materially impact Regions' results of operations,
liquidity or capital resources.
10
<PAGE> 12
The projected total cost of the Year 2000 project is currently estimated at
approximately $20 million and is being funded through operating cash flows. The
projected total costs includes personnel costs and other operating expenses
related to the modification of systems and applications, as well as the cost to
purchase or lease certain hardware and software. Personnel costs and other
operating expenses associated with the Year 2000 project will be expensed in the
period incurred. The costs of hardware and software associated with the Year
2000 project will be capitalized in accordance with normal policy. The costs of
the project and the date on which Regions plans to complete Year 2000
modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no assurance that these estimates will be
achieved and actual results could differ materially from those plans. From
implementation of the project through September 30, 1998, a cumulative total of
approximately $8.2 million had been spent on the assessment of and efforts in
connection with the Year 2000 project and the renovation and repair of
noncompliant systems. This includes approximately $1.7 million expended in 1997
(including $1 million for hardware and software) and $6.5 million expended to
date in 1998. The majority of the remaining cost will be spent on increased
personnel costs and consultant fees.
Management of Regions believes it has an effective program in place to resolve
the Year 2000 issue in a timely manner. As noted above, the Company is nearing
completion of all necessary phases of the Year 2000 program. The majority of
mission-critical systems have been upgraded. However, disruptions in the economy
that are beyond the Company's control resulting from Year 2000 issues could
materially adversely affect the Company. Furthermore, the Company has no means
of ensuring that external agents will be Year 2000 ready. The inability of
external agents to complete their Year 2000 resolution process in a timely
fashion could materially impact the Company's operations, the estimated costs of
the Year 2000 project, and the target dates for completion. The effect of
non-compliance by external agents is not determinable. The Company could be
subject to litigation for computer systems product failure, for example,
equipment shutdown or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Management is continuing to develop contingency plans in the event that efforts
to renovate Regions' systems are not fully successful or are not completed in
accordance with current expectations. The contingency plans represent an
enhancement of Regions' existing business resumption plans to safeguard Regions
under various Year 2000 scenarios. The contingency plans are being designed to
address failures of systems outside Regions. The contingency plans include the
use of third party service providers, alternative commercial vendors,
alternative data security and other contingency service suppliers.
11
<PAGE> 13
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Regions' total assets at September 30, 1998, were $35.1 billion -- an increase
of 15% over a year earlier. This increase was due to growth in almost all
categories of assets, particularly loans and securities, due to acquisition
activity and internal growth. Since year-end 1997, total assets have increased
12%, due primarily to acquisition activity and internal growth.
Comparisons with the prior year are affected by the GF Bancshares, Inc. and
Federal Savings Bank acquisitions accounted for as purchases, and by Greenville
Financial Corporation, St. Mary Holding Corporation, Key Florida Bancorp, Inc.,
Jacobs Bank, Etowah Bank, Village Bankshares, Inc., and First Community Banking
Services acquisitions, which were accounted for as poolings of interests. Prior
year financial information has not been restated to give effect to the
Greenville, Key, St. Mary, Jacobs, Etowah, Village, and First Community
transactions since the effect is not material. Prior period financial
information has been restated for the business combinations with PALFED, Inc.,
First United Bancorporation and First State Corporation, which were closed in
the first quarter of 1998, and First Commercial Corporation, which was closed in
the third quarter of 1998. Relevant 1997 and 1998 acquisitions (excluding the
four business combinations for which prior period financial information has been
restated) are summarized as follows:
<TABLE>
<CAPTION>
Total Assets Accounting
Date Acquired Company Acquired Headquarters Location (in thousands) Treatment
- ------------- ---------------- --------------------- -------------- ----------
<S> <C> <C> <C> <C>
December 1997 GF Bancshares, Inc. Griffin, Georgia $ 99,446 Purchase
February 1998 Greenville Financial Greenville, South 143,331 Pooling
Corporation Carolina
March 1998 Federal Savings Bank Rogersville, Arkansas 398,000 Purchase
subsidiary of Kemmons
Wilson, Inc.
March 1998 Key Florida Bancorp, Inc. Bradenton, Florida 207,193 Pooling
March 1998 St. Mary Holding Corporation Franklin, Louisiana 110,216 Pooling
August 1998 Jacobs Bank Scottsboro, Alabama 185,939 Pooling
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
Total Assets Accounting
Date Acquired Company Acquired Headquarters Location (in thousands) Treatment
- ------------- ---------------- --------------------- -------------- ----------
<S> <C> <C> <C> <C>
August 1998 Village Bankshares, Inc. Tampa, Florida 211,469 Pooling
September 1998 Etowah Bank Canton, Georgia 409,139 Pooling
September 1998 First Community Banking Peachtree City, Georgia 124,762 Pooling
Services Inc.,
</TABLE>
Loans have increased 12% since a year ago. During the third quarter of 1998,
Regions securitized $534 million of mortgage loans. Loans added from the
purchase acquisition, combined with the seven pooling transactions, net of the
effect of the securitization, accounted for a 3% increase in loans. The
remaining 9% increase was attributable to internal growth, primarily in real
estate loans. Since year-end, total loans have increased 9%, due to $1.2 billion
in loans added by acquisitions and $1.2 billion in internal growth which was
partially offset by the $534 million securitization of mortgage loans. The
average yield on loans during the first nine months of 1998 was 8.93%, compared
to 8.98% during the same period in 1997. This decrease was primarily the result
of lower average base lending rates.
Non-performing assets were as follows (in thousands):
<TABLE>
<CAPTION>
Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
--------- -------- ---------
<S> <C> <C> <C>
Non-accruing loans $137,394 $138,149 $125,676
Loans past due 90
days or more 40,561 29,020 31,283
Renegotiated loans 4,852 12,616 10,623
Other real estate 16,677 20,511 24,108
-------- -------- --------
Total $199,484 $200,296 $191,690
======== ======== ========
Non-performing assets
as a percentage of
loans and other real
estate .84% .91% .90%
</TABLE>
Non-accruing loans have increased $11.7 million since September of last year but
decreased $755,000 since year end. The increase over last year was mainly in the
consumer category. At September 30, 1998, real estate loans comprised $51.1
million of total non-accruing loans, with commercial loans accounting for $26.8
million and consumer loans $59.5 million. Other real estate decreased $3.8
million since year end, and $7.4 million since September 1997, due primarily to
the disposition and writedown of several parcels of other real estate.
13
<PAGE> 15
Activity in the allowance for loan losses is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Sept. 30, Sept. 30,
1998 1997
-------- ---------
<S> <C> <C>
Balance at beginning of period $304,223 $253,248
Net loans charged-off (recovered):
Commercial 3,586 77
Real estate 2,307 228
Installment 31,756 34,246
-------- --------
Total 37,649 34,551
Allowance of acquired banks 17,182 16,849
Provision charged to expense 41,482 58,966
-------- --------
Balance at end of period $325,238 $294,512
======== ========
</TABLE>
Net loan losses in the first nine months of 1998 and 1997 were 0.22% and 0.23%
of average loans (annualized), respectively. At September 30, 1998, the
allowance for loan losses stood at 1.36% of loans, compared to 1.39% a year ago
and at year end. The allowance for loan losses as a percentage of non-performing
loans and non-performing assets was 178% and 163%, respectively, at September
30, 1998, compared to 176% and 154%, respectively, at September 30, 1997.
The allowance for loan losses is maintained at a level deemed adequate by
management to absorb possible losses from loans in the portfolio. In determining
the adequacy of the allowance for loan losses, management considers numerous
factors, including but not limited to: (1) management's estimate of future
economic conditions and the resulting impact on Regions, (2) management's
estimate of the financial condition and liquidity of certain loan customers, and
(3) management's estimate of collateral values of property securing certain
loans. Because all of these factors and others involve the use of management's
estimation and judgment, the allowance for loan losses is inherently subject to
adjustment at future dates. At September 30, 1998, it is management's opinion
that the allowance for loan losses is adequate. However, unfavorable changes in
the factors used by management to determine the adequacy of the allowance,
including increased consumer loan delinquencies and subsequent charge-offs, or
the availability of new information, could require additional provisions, in
excess of normal provisions, to the allowance for loan losses in future periods.
Total securities have increased 24% since a year ago and 22% since year end, as
a result of securities added by acquisitions in 1998 and increased balance sheet
leveraging.
14
<PAGE> 16
Mortgage loans held for sale have increased $456 million since September 30,
1997 and $345 million since year end as a result of record levels of residential
mortgage loan production at Regions' mortgage banking subsidiary. Residential
mortgage loan production at Regions' mortgage banking subsidiary was
approximately $3.5 billion during the first nine months of 1998, compared to
$1.5 billion during the same time period in 1997.
Interest-bearing deposits in other banks at June 30, 1998 totaled $141.6
million, an increase of $103.9 million compared to a year ago and $93.4 compared
to year end. These increases resulted from interest bearing deposits added by
acquisitions during the first and third quarters of 1998.
Net federal funds purchased and security repurchase agreements totaled $1.2
billion at September 30, 1998, $1.8 billion at year end and at September 30,
1997. The level of federal funds and security agreements can fluctuate
significantly on a day-to-day basis, depending on funding needs and which
sources of funds are used to satisfy those needs. During the first nine months
of 1998 net funds purchased averaged $1.2 billion compared to $1.5 billion for
the same period of 1997, indicating less reliance on purchased funds and the
utilization of alternative sources of funds to support earning asset growth
since the third quarter of 1997.
Premises and equipment have increased $55.3 million since year end and $57.2
million since September 30, 1997. These increases were due primarily to the
addition of premises and equipment obtained through acquisitions since December
1997 and the installation of new branch equipment.
Other assets have increased $76.5 million since year end, and $104.1 million
since the third quarter of last year. The increase was due primarily to higher
excess purchase price due to acquisitions as well as increased investment in
low-income housing partnerships, and increased mortgage servicing rights due to
the capitalization of mortgage servicing rights in accordance with Financial
Accounting Standards Board Statement No. 122.
Total deposits have increased 10% since September of last year. The deposits
acquired in connection with acquisitions resulted in a 7% increase, with the
remaining 3% increase attributable to internal growth. The internal growth
resulted primarily from increases in interest-bearing checking accounts and
other time deposits. Since year end, total deposits have increased 2%, after
adjusting for the deposits acquired in connection with acquisitions during 1998.
Other short-term borrowings increased $2.5 billion since September 1997 and $2.0
billion since year end. These increases are the result of Regions' utilization
of Federal Home Loan Bank structured notes as a short-term funding source in
late 1997 and throughout 1998.
15
<PAGE> 17
Long-term borrowings have decreased $21.4 million since year end, and $32.2
million since September 30, 1997. The decrease in long-term borrowings since
year end and the third quarter of 1997 resulted primarily from maturities of
Federal Home Loan Bank advances.
Stockholders' equity was $3.0 billion at September 30, 1998, an increase of 13%
over last year and an increase of 10% since year end. These increases resulted
primarily from internally generated capital and equity added in connection with
acquisitions since December 1997. The accumulated other comprehensive income
totaled $35.0 million at September 30, 1998, compared to $15.9 million at year
end and $13.0 million at September of 1997. Regions' ratio of equity to total
assets was 8.43% at September 30, 1998, compared to 8.59% a year ago and 8.53%
at year end.
Regions' primary sources of liquidity are maturities from its loan and
securities portfolios. In addition to these sources of liquidity, Regions has
access to purchased funds in the state and national money markets. Liquidity is
further enhanced by a relatively stable source of deposits. At September 30,
1998, the loan to deposit ratio was 87.74%, compared to 85.89% a year ago and
87.49% at year end. Regions' management places constant emphasis on the
maintenance of adequate liquidity to meet conditions that might reasonably be
expected to occur.
Net interest income for the first nine months of 1998 increased $108.2 million
or 12%, compared to the same period in 1997. The increased net interest income
resulted from a higher level of earning assets, partially offset by lower
spreads on those earning assets. The net yield on interest-earning assets
(taxable equivalent basis) was 4.28% in the first nine months of 1998, compared
to 4.42% in the same period in 1997. This ratio decreased due partially to
unfavorable repricing of the securities and loan portfolios and slightly higher
funding costs in the first three quarters of 1998. For the third quarter of 1998
net interest income increased $25.3 million or 8% over the third quarter of 1997
due to increased earning assets.
The provision for loan losses was $12.5 million or .21% of average loans in the
third quarter of this year, compared to $30.8 million or .59% of average loans
in the third quarter of last year. Last year's third quarter provision for loan
losses included an additional provision of approximately $15 million (.29% of
average loans), recognized by a First Commercial pooled company. On a
year-over-year comparison, the special provision in the third quarter of last
year accounted for the decline in the loan loss provision from $59.0 million
during the first nine months of 1997 to $41.5 million in the first nine months
of 1998.
Total non-interest income increased $60.1 million or 21% over the first nine
months of 1997 and $16.1 million or 16% over the third quarter of 1997. Trust
department income increased $6.6 million
16
<PAGE> 18
or 20% on a year-to-year comparison and $2.5 million or 21% on a quarterly
comparison. This resulted from growth in trust assets, due to internal growth,
changes in fee structures and increases in personal and employee benefit trust
fees. Increased charges for selected deposit account services, coupled with an
increase in the number of deposit accounts due to acquisitions and internal
growth, resulted in service charges on deposit accounts increasing $11.5 million
or 10% in the first nine months of 1998 and $2.0 million or 5% in the third
quarter, compared to the same periods in 1997. Mortgage servicing and
origination fees increased $14.1 million or 20% in the first nine months of 1998
and $3.8 million or 16% in the third quarter compared to the same periods in
1997. Mortgage origination fees were up significantly due to increased volume of
new loan production in 1998. Mortgage servicing fees increased 12% on a
year-to-year comparison. The mortgage company's servicing portfolio totaled
$23.4 billion at September 30, 1998. Other non-interest income increased $25.3
million or 37% in the first nine months of 1998 and $7.6 million in the third
quarter of 1998 over 1997. These increases are primarily due to higher
capitalization of originated mortgage servicing rights, increased trading
account income, increased ATM fees and increased insurance premiums and
commissions.
Total non-interest expense increased $176.9 million or 27% in the first nine
months of 1998 and $119.4 million or 52% in the third quarter of 1998 compared
to the same periods in 1997. Total non-interest expense, excluding the
nonrecurring merger and restructuring charges discussed below, increased $62.2
million or 9% in the first nine months of 1998 and $4.7 million or 2% in the
third quarter, compared to the same periods in 1997. Salaries and employee
benefits were up 10% in the first nine months of 1998 compared to the same
period in 1997 and up 3% in the third quarter of 1998 compared to the same
period of in 1997, due to an increase in the number of employees because of
acquisitions, and increased mortgage loan production related compensation
coupled with normal merit increases and higher benefit costs. Net occupancy
expense and furniture and equipment expense increased 11% in the first nine
months of 1998 over the same period in 1997, and increased 15% in the third
quarter of 1998 over the same period in 1997. The increase is primarily due to
additional expenses associated with branch offices and equipment added by the
1998 acquisitions and to new equipment installed at existing branches. Other
non-interest expense increased $17.4 million or 8% in the first nine months of
1998 but decreased $3.3 million or 4% in the third quarter compared to the same
periods in 1997.The year-over-year increase resulted from higher losses on
mortgage loans held for sale and increases in amortization of mortgage servicing
rights, communication costs, postage, and stationery and printing costs. The
quarterly decline is due to modest decreases in advertising, legal, and
insurance costs.
During the third quarter of 1998, Regions incurred a $114.7 million pre-tax
($76.5 million or $.34 per share after-tax) nonrecurring charge. This
nonrecurring charge includes an $80.1
17
<PAGE> 19
million pre-tax ($54.9 million or $.25 per share after-tax) merger charge
related to the First Commercial transaction as well as the four other
pooling-of-interests transactions that closed in the third quarter of 1998. A
summary of the merger charge is presented below (in thousands):
<TABLE>
<S> <C>
Employee related $30,405
Occupancy and equipment 11,193
Loss on divestiture of
certain mortgage
servicing assets 5,125
Conversion 6,378
Investment banker, legal,
accounting, and other
merger related fees 19,547
Charitable foundation 7,500
-------
Total $80,148
</TABLE>
The third quarter nonrecurring charge includes $34.6 million pre-tax ($21.6
million or $.09 per share after-tax) to cover the costs of consolidating certain
branch offices (lease buyouts and writedowns to net realizable value of
excess facilities), exiting certain lines of business (costs of exiting a
limited number of marginally-profitable specialty mortgage servicing lines
Regions is not equipped to continue), and eliminating obsolete equipment
(writedown to net realizable value).
Income tax expense increased $4.4 million or 3% over the first nine months of
1997, but declined $18.9 million or 41% over the third quarter of 1997. This
annual increase was the result of an increase in taxable income and an increase
in taxable income as a percentage of total income and was substantially offset
by the tax benefit generated from the nonrecurring charge. Excluding the effect
of the nonrecurring charge income tax expense would have increased 29% on a
yearly comparison and 42% on a quarterly comparison.
In the third quarter of 1997, a pooled subsidiary reported an extraordinary gain
of $15.4 million, net of tax. The gain arose from the required divestiture, by
regulatory authorities, of certain banking offices obtained in connection with
an acquired company.
Net income for the third quarter was $51.3 million--down 52% compared to the
third quarter of last year. Year-to-date net income totaled $294.7 million or
$1.32 per diluted share, a decrease of 8% on a per share basis compared to the
first nine months of 1997. Annualized return on stockholders' equity decreased
to 13.79%, compared to 16.02% in the first nine months of last year. Annualized
return on assets also decreased to 1.17% in the first nine months of 1998,
compared to 1.40% for the same period in 1997. Operating income (net income less
nonrecurring items) totaled $127.8 million ($.57 per diluted share) in the third
quarter and
18
<PAGE> 20
$371.2 million ($1.66 per diluted share) for the first nine months of 1998.
Annualized return on stockholders' equity based on operating income, increased
to 17.36%, compared to 15.21% in the first nine months of last year. Annualized
return on assets, based on operating income, also increased to 1.48% in the
first nine months of 1998, compared to 1.33% for the same period in 1997.
19
<PAGE> 21
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on July 29, 1998, the
proposed merger of First Commercial Corporation of Little Rock,
Arkansas with and into Regions was approved by the stockholders
(105,528,687 votes in favor, 860,515 votes against, 906,180 votes
abstained, and 16,664,432 broker non-votes).
Also at the Annual Meeting, three nominees were elected as directors of
Regions to serve three year terms. The directors elected at the 1998
Annual Meeting were Carl E. Jones, Jr. (123,223,369 votes in favor, and
746,445 votes withheld), Henry E. Simpson (123,215,065 votes in favor
and 744,749 votes withheld) and Robert J. Williams (123,211,962 votes
in favor and 747,852 votes withheld).
In addition, the stockholders approved an amendment to Article IV of
the Certificate of Incorporation to increase the number of authorized
shares of common stock from 240,000,000 to 500,000,000 (119,928,672
votes in favor, 3,288,541 votes against and 742,601 votes abstained).
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27.1) Financial Data Schedule (SEC use only)
(27.2) Restated Financial Data Schedule (SEC use only)
(27.3) Restated Financial Data Schedule (SEC use only)
(27.4) Restated Financial Data Schedule (SEC use only)
(27.5) Restated Financial Data Schedule (SEC use only)
(27.6) Restated Financial Data Schedule (SEC use only)
(27.7) Restated Financial Data Schedule (SEC use only)
(27.8) Restated Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K:
On August 12, 1998, a report on Form 8-K was filed under items
5 and 7. The report related to the Registrant's completed
acquisition of First Commercial Corporation.
Also on November 6, 1998, a report on Form 8-K was filed under
items 5 and 7. This report includes the Registrant's
supplemental financial statements and related financial
information reflecting certain recently completed business
combinations accounted for as poolings of interests.
20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by undersigned
thereunto duly authorized.
Regions Financial Corporation
DATE: November 9, 1998 /s/ Robert P. Houston
-----------------------------------------
Robert P. Houston
Executive Vice President and
Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)
21
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,225,990,000
<INT-BEARING-DEPOSITS> 141,595,000
<FED-FUNDS-SOLD> 117,148,000
<TRADING-ASSETS> 24,553,000
<INVESTMENTS-HELD-FOR-SALE> 4,723,955,000
<INVESTMENTS-CARRYING> 2,972,053,000
<INVESTMENTS-MARKET> 2,987,450,000
<LOANS> 23,852,206,000
<ALLOWANCE> 325,238,000
<TOTAL-ASSETS> 35,076,264,000
<DEPOSITS> 27,184,895,000
<SHORT-TERM> 3,897,743,000
<LIABILITIES-OTHER> 611,797,000
<LONG-TERM> 424,176,000
0
0
<COMMON> 138,195,000
<OTHER-SE> 2,819,458,000
<TOTAL-LIABILITIES-AND-EQUITY> 35,076,264,000
<INTEREST-LOAN> 1,545,899,000
<INTEREST-INVEST> 336,404,000
<INTEREST-OTHER> 50,203,00
<INTEREST-TOTAL> 1,932,506,000
<INTEREST-DEPOSIT> 799,178,000
<INTEREST-EXPENSE> 948,247,000
<INTEREST-INCOME-NET> 984,259,000
<LOAN-LOSSES> 41,482,000
<SECURITIES-GAINS> 3,127,000
<EXPENSE-OTHER> 839,939,000
<INCOME-PRETAX> 446,800,000
<INCOME-PRE-EXTRAORDINARY> 446,800,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294,705,000
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.32
<YIELD-ACTUAL> 4.28
<LOANS-NON> 137,394,000
<LOANS-PAST> 40,561,000
<LOANS-TROUBLED> 4,852,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 304,223,000
<CHARGE-OFFS> 58,334,000
<RECOVERIES> 20,685,000
<ALLOWANCE-CLOSE> 325,238,000
<ALLOWANCE-DOMESTIC> 325,238,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 325,238,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,393,961,000
<INT-BEARING-DEPOSITS> 98,907,000
<FED-FUNDS-SOLD> 245,393,000
<TRADING-ASSETS> 18,532,000
<INVESTMENTS-HELD-FOR-SALE> 4,444,509,000
<INVESTMENTS-CARRYING> 2,787,680,000
<INVESTMENTS-MARKET> 2,828,283,000
<LOANS> 23,658,297,000
<ALLOWANCE> 331,633,000
<TOTAL-ASSETS> 34,726,819,000
<DEPOSITS> 27,252,022,000
<SHORT-TERM> 3,706,789,000
<LIABILITIES-OTHER> 419,331,000
<LONG-TERM> 421,665,000
0
0
<COMMON> 137,834,000
<OTHER-SE> 2,789,178,000
<TOTAL-LIABILITIES-AND-EQUITY> 34,726,819,000
<INTEREST-LOAN> 1,024,471,000
<INTEREST-INVEST> 221,923,000
<INTEREST-OTHER> 28,806,000
<INTEREST-TOTAL> 1,275,200,000
<INTEREST-DEPOSIT> 530,092,000
<INTEREST-EXPENSE> 616,729,000
<INTEREST-INCOME-NET> 658,471,000
<LOAN-LOSSES> 28,935,000
<SECURITIES-GAINS> 3,042,000
<EXPENSE-OTHER> 490,519,000
<INCOME-PRETAX> 368,717,000
<INCOME-PRE-EXTRAORDINARY> 368,717,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,421,000
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.09
<YIELD-ACTUAL> 4.38
<LOANS-NON> 167,343,000
<LOANS-PAST> 42,402,000
<LOANS-TROUBLED> 4,084,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 304,223,000
<CHARGE-OFFS> 41,112,000
<RECOVERIES> 17,320,000
<ALLOWANCE-CLOSE> 331,633,000
<ALLOWANCE-DOMESTIC> 331,633,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 331,633,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,343,681,000
<INT-BEARING-DEPOSITS> 90,245,000
<FED-FUNDS-SOLD> 434,696,000
<TRADING-ASSETS> 24,729,000
<INVESTMENTS-HELD-FOR-SALE> 4,070,436,000
<INVESTMENTS-CARRYING> 3,005,329,000
<INVESTMENTS-MARKET> 3,049,102,000
<LOANS> 23,235,922,000
<ALLOWANCE> 329,051,000
<TOTAL-ASSETS> 33,925,047,000
<DEPOSITS> 27,425,114,000
<SHORT-TERM> 2,747,894,000
<LIABILITIES-OTHER> 482,304,000
<LONG-TERM> 431,291,000
0
0
<COMMON> 137,627,000
<OTHER-SE> 2,700,817,000
<TOTAL-LIABILITIES-AND-EQUITY> 33,925,047,000
<INTEREST-LOAN> 503,943,000
<INTEREST-INVEST> 109,236,000
<INTEREST-OTHER> 14,918,000
<INTEREST-TOTAL> 628,097,000
<INTEREST-DEPOSIT> 259,339,000
<INTEREST-EXPENSE> 301,777,000
<INTEREST-INCOME-NET> 326,320,000
<LOAN-LOSSES> 14,419,000
<SECURITIES-GAINS> 104,000
<EXPENSE-OTHER> 242,022,000
<INCOME-PRETAX> 178,236,000
<INCOME-PRE-EXTRAORDINARY> 178,236,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 117,064,000
<EPS-PRIMARY> .53
<EPS-DILUTED> .52
<YIELD-ACTUAL> 4.43
<LOANS-NON> 154,720,000
<LOANS-PAST> 28,665,000
<LOANS-TROUBLED> 2,594,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 304,223,000
<CHARGE-OFFS> 19,473,000
<RECOVERIES> 7,624,000
<ALLOWANCE-CLOSE> 329,051,000
<ALLOWANCE-DOMESTIC> 329,051,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 329,051,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,177,564,000
<INT-BEARING-DEPOSITS> 48,162,000
<FED-FUNDS-SOLD> 292,189,000
<TRADING-ASSETS> 50,825,000
<INVESTMENTS-HELD-FOR-SALE> 2,977,644,000
<INVESTMENTS-CARRYING> 3,338,279,000
<INVESTMENTS-MARKET> 3,372,494,000
<LOANS> 21,881,123,000
<ALLOWANCE> 304,223,000
<TOTAL-ASSETS> 31,414,058,000
<DEPOSITS> 25,011,021,000
<SHORT-TERM> 2,707,351,000
<LIABILITIES-OTHER> 570,336,000
<LONG-TERM> 445,529,000
0
0
<COMMON> 131,623,000
<OTHER-SE> 2,548,198,000
<TOTAL-LIABILITIES-AND-EQUITY> 31,414,058,000
<INTEREST-LOAN> 1,837,392,000
<INTEREST-INVEST> 398,427,000
<INTEREST-OTHER> 40,765,000
<INTEREST-TOTAL> 2,276,584,000
<INTEREST-DEPOSIT> 954,782,000
<INTEREST-EXPENSE> 1,097,376,000
<INTEREST-INCOME-NET> 1,179,208,000
<LOAN-LOSSES> 89,663,000
<SECURITIES-GAINS> 498,000
<EXPENSE-OTHER> 901,776,000
<INCOME-PRETAX> 569,667,000
<INCOME-PRE-EXTRAORDINARY> 382,104,000
<EXTRAORDINARY> 15,425,000
<CHANGES> 0
<NET-INCOME> 397,529,000
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.86
<YIELD-ACTUAL> 4.41
<LOANS-NON> 138,149,000
<LOANS-PAST> 29,020,000
<LOANS-TROUBLED> 12,616,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 253,248,000
<CHARGE-OFFS> 88,279,000
<RECOVERIES> 32,171,000
<ALLOWANCE-CLOSE> 304,223,000
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