REGIONS FINANCIAL CORP
S-4, 1998-02-10
NATIONAL COMMERCIAL BANKS
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<PAGE>   1
    As filed with the Securities and Exchange Commission on February 10, 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>
<S>                                  <C>                             <C>
           Delaware                               6711                    63-0589368
(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                        KATHRYN KNUDSON
   LANGE, SIMPSON, ROBINSON &              ALSTON & BIRD                POWELL, GOLDSTEIN, FRAZER & MURPHY, LLP
           SOMERVILLE               601 PENNSYLVANIA AVENUE, N.W.                   SIXTEENTH FLOOR
417 NORTH 20TH STREET, SUITE 1700    NORTH BUILDING, SUITE 250                191 PEACHTREE STREET, N.E.
       BIRMINGHAM, AL 35203             WASHINGTON, D.C. 20004                  ATLANTA, GEORGIA  30303
         (205) 250-5000                   (202) 508-3303                            (404) 572-6600
</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
class of securities            Amount to be            offering price             aggregate               Amount of
registered                      registered                per unit*            offering price*            registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                      <C>                    <C>                         <C>       
Common Stock                  4,039,131                   $39.29                $158,697,457              $46,815.75

 ========================================================================================================================
</TABLE>

*Calculated in accordance with Rule 457(f), based on the last sale price of
common stock of the company to be acquired on the Nasdaq National Market on
February 9, 1998.

     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


                         REGIONS FINANCIAL CORPORATION

                             CROSS-REFERENCE SHEET


<TABLE>
<CAPTION>
                                                                       CAPTION OR LOCATION IN
                         FORM S-4 ITEM                               PROXY STATEMENT/PROSPECTUS
- ----------------------------------------------------------   ------------------------------------------
<S> <C>                                                      <C>
 1. Forepart of registration statement and outside front
    cover page of prospectus..............................   Outside Front Cover of Proxy
                                                             Statement/Prospectus; Facing Page of
                                                             Registration Statement; Cross-Reference Sheet.
 2. Inside front and outside back cover of prospectus.....   Available Information; Documents
                                                             Incorporated by Reference; Table of
                                                             Contents.
 3. Risk factors, ratio of earnings to fixed charges and
    other information.....................................   Summary; Comparative Market Prices and Dividends.
 4. Terms of the transaction..............................   Summary; Description of the Transaction;
                                                             Effect of the Merger on Rights of
                                                             Stockholders; Description of Regions
                                                             Common Stock.
 5. Pro forma financial information.......................   Summary.
 6. Material contacts with the company being acquired.....   Summary; Description of the Transaction.
 7. Additional information required for re-offering by
    persons and parties deemed to be underwriters.........   Not applicable.
 8. Interest of named experts and counsel.................   Opinions.
 9. Disclosure of Commission position on indemnification
    for Securities Act liabilities........................   Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants...........   Documents Incorporated by Reference;
                                                             Summary; Recent Developments; Business of Regions.
11. Incorporation of certain information by reference.....   Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants....   Not Applicable.
13. Incorporation of certain information by reference.....   Not Applicable.
14. Information with respect to registrants other than S-2
    or S-3 registrants....................................   Not Applicable.
15. Information with respect to S-3 companies.............   Not Applicable.
16. Information with respect to S-2 or S-3 companies......   Business of First State; Voting Securities and
                                                             Principal Stockholders of First State
17. Information with respect to companies other than S-2
    or S-3 companies......................................   Not Applicable.
18. Information if proxies, consents, or authorizations
    are to be solicited...................................  Documents Incorporated by Reference;  Summary;
                                                            The Special Meeting; Description of the Transaction;
                                                            Description of Regions Common Stock.
19. Information if proxies, consents, or authorizations
    are not to be solicited or in an exchange offer.......   Not Applicable.
</TABLE>



<PAGE>   3





Dear First State Corporation Stockholder:

     You are cordially invited to attend the Special Meeting of Stockholders of
First State Corporation ("First State") to be held at Merry Acres Events Center
(Plantation Room), 1504 Dawson Road, Albany, Georgia, 31707 on March 30, 1998,
at 1:30 p.m., local time, notice of which is enclosed.

     At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which First
State will merge (the "Merger") with and into Regions, the subsidiaries of First
State will become subsidiaries of Regions, and Regions as successor to First
State will continue the banking operations of First State's banking subsidiaries
through Regions' subsidiaries. Upon consummation of the Merger, each share of
First State common stock issued and outstanding (except for certain shares held
by First State, Regions, or their respective subsidiaries) will be converted
into .56 of a share of Regions common stock, subject to possible adjustment.

     The accompanying Proxy Statement/Prospectus includes a description of the
proposed Merger and provides other specific information concerning the Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.

     The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of First State has agreed to vote those First State shares over which
such member has voting authority (other than in a fiduciary capacity) in favor
of the Merger. Consummation of the Merger is subject to certain conditions,
including approval of the Agreement by First State stockholders and approval of
the Merger by various regulatory agencies.

     It is important to understand that approval of the Agreement requires the
affirmative vote of a majority of the common stock of First State entitled to
vote at the Special Meeting, not just a majority of the votes cast.
Consequently, a failure to vote will have the same effect as a vote against the
Agreement.

     Accordingly, whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for First State, and your vote on this matter is of great
importance. On behalf of the Board of Directors, I urge you to vote for approval
of the Merger by marking the enclosed proxy card "FOR" Item One.

                                   Sincerely,



                                   Morgan G. Murphy
                                   Chairman and Chief Executive Officer



<PAGE>   4



                             FIRST STATE CORPORATION
                   333 W. BROAD AVENUE, ALBANY, GEORGIA 31703
                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

                            TO BE HELD MARCH 30, 1998


     Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of First State Corporation ("First State"), will be held at Merry
Acres Events Center (Plantation Room), 1504 Dawson Road, Albany, Georgia, 31707
on March 30, 1998, at 1:30 p.m., local time, for the following purposes:

     1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of December 22, 1997 (the "Agreement"), by and between First State and
Regions Financial Corporation ("Regions") pursuant to which (i) Regions will
acquire all of the issued and outstanding common stock of First State through
the merger of First State with and into Regions (the "Merger"), (ii) each share
of First State common stock (except for certain shares held by First State,
Regions, or their respective subsidiaries) will be converted into .56 of a share
of Regions common stock, subject to possible adjustment, and (iii) each First
State stockholder will receive cash 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 February 17, 1998,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.

     The Board of Directors of First State unanimously recommends that holders
of First State common stock vote to approve 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
First State 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



                                    Robert E. Lee
                                    Corporate Secretary


 _______, 1998




<PAGE>   5




      FIRST STATE CORPORATION                      REGIONS FINANCIAL CORPORATION
          PROXY STATEMENT                                    PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS                         COMMON STOCK
     TO BE HELD MARCH 30, 1998                            (PAR VALUE $.625)
                                                            _______ SHARES


     This Prospectus of Regions Financial Corporation, a regional bank holding
company organized and existing under the laws of the state of Delaware
("Regions"), relates to the shares of its common stock, par value $.625 per
share ("Regions Common Stock"), which are issuable to the stockholders of First
State Corporation, a bank holding company organized and existing under the laws
of the state of Georgia ("First State") upon consummation of the proposed merger
(the "Merger") described herein, by which First State will merge with and into
Regions pursuant to the terms of an Agreement and Plan of Merger, dated as of
December 22, 1997, by and between Regions and First State (the "Agreement").

     On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) First State will merge with and into Regions,
(ii) each outstanding share of the $1.00 par value common stock of First State
("First State Common Stock") will be converted into .56 of a share of Regions
Common Stock, subject to possible adjustment (the "Exchange Ratio"), and (iii)
each holder of First State Common Stock will receive cash in lieu of any
remaining fractional share interest. A copy of the Agreement is attached to this
Proxy Statement/Prospectus as Appendix A.

     As a result of the Merger, the separate existence of First State will
cease, the subsidiaries of First State will become subsidiaries of Regions, and
Regions as successor to First State will continue the banking operations of
First State's banking subsidiaries through Regions' subsidiaries. For a further
description of the terms of the Merger, see "Description of the Transaction."

     If  (i)  the Average Closing Price (as defined herein) of Regions Common
         Stock is less than $34.20 (which is 80% of the closing price of Regions
         Common Stock on December 18, 1997, the fourth trading day after the
         public announcement of the Merger) and

         (ii) the relative performance of Regions Common Stock (as measured by
         comparing the Average Closing Price to $42.75, which was the closing
         price of Regions Common Stock on December 18, 1997) is more than 15%
         lower than the relative performance of the common stocks of a specified
         group (the "Index Group") of bank holding companies (as measured by
         comparing the Index Price on the Determination Date (as such terms are
         defined herein) to the Index Price on December 18, 1997),

then First State may elect to terminate the Agreement unless Regions increases
the Exchange Ratio such that the fraction of a share of Regions Common Stock
issued in exchange for each share of First State Common Stock has a value (based
on the Average Closing Price) equal to the lesser of (i) $34.20 or (ii) the
value (based on the Average Closing Price) of that fraction of a share of
Regions Common Stock that would have been exchanged for each share of First
State 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 First State stockholders, the Board of
Directors of First State (the "First State Board") may elect not to terminate
the Agreement and to consummate the Merger without resoliciting the First State
stockholders even if First State's Stock Price Termination Right is triggered
and as a result of the Exchange Ratio, the value of the shares of Regions Common
Stock (valued at the Average Closing Price) issued in exchange for each share of
First State Common Stock would be less than the lesser of (i) $34.20 or (ii) the
value (based on the Average Closing Price) of that fraction of a share of
Regions Common Stock that would


<PAGE>   6



have been exchanged for each share of First State Common Stock if the relative
performance of Regions Common Stock as determined above was 15% lower than the
relative performance of the Index Group.

     In making its determination of whether to terminate the Agreement, the
First State 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 historical financial data of Regions, customary
statistical measurements of Regions's 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 First State Board elects to
terminate the 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 First State's earning potential as part of Regions justifies the issuance of
an increased number of Regions' shares. See "Description of the
Transaction--Possible Adjustment of Exchange Ratio."

     This Prospectus also constitutes a Proxy Statement of First State and is
being furnished to the stockholders of First State in connection with the
solicitation of proxies by the Board of Directors of First State for use at its
special meeting of stockholders, including any adjournment or postponement
thereof (the "Special Meeting"), to be held on March 30, 1998, to consider and
vote on the proposed Merger and related matters. This Proxy Statement/Prospectus
and the accompanying proxy card are first being mailed to stockholders of First
State on or about _______, 1998.


   THE SECURITIES OFFERED HEREBY 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 OR INSTRUMENTALITY.


  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
       EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
          COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
            ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
                       ANY REPRESENTATION TO THE CONTRARY
                             IS A CRIMINAL OFFENSE.

          The date of this Proxy Statement/Prospectus is _______, 1998.

                                        

<PAGE>   7



                              AVAILABLE INFORMATION

     Regions and First State are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, file reports, proxy statements, and other information with
the Securities and Exchange Commission (the "SEC"). Copies of such reports,
proxy statements, and other information can be obtained, at prescribed rates,
from the SEC by addressing written requests for such copies to the Public
Reference Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements, and other
information can be inspected at the public reference facilities referred to
above and at the regional offices of the SEC at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The SEC also maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC.

     This Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of Regions (including any exhibits and amendments thereto,
the "Registration Statement") filed with the SEC under the Securities Act of
1933, as amended (the "Securities Act"), relating to the securities offered
hereby. This Proxy Statement/Prospectus does not include all of the information
in the Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the SEC. For further information about
Regions and the securities offered hereby, reference is made to the Registration
Statement. The Registration Statement may be inspected and copied, at prescribed
rates, at the SEC's public reference facilities at the addresses set forth
above. Regions Common Stock is traded in the Nasdaq National Market. Reports,
proxy statements, and other information concerning Regions may be inspected at
the offices of the National Association of Securities Dealers, Inc. (the
"NASD"), 1735 K Street, N.W., Washington, D.C. 20006.

     NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY REGIONS OR FIRST STATE. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF REGIONS OR FIRST STATE SINCE THE
DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF.

     All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to Regions was supplied by Regions, and all
information included or incorporated by reference herein with respect to First
State was supplied by First State.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The following documents previously filed with the SEC by Regions pursuant
to the Exchange Act are hereby incorporated by reference herein:

          1. Regions' Annual Report on Form 10-K for the fiscal year ended
     December 31, 1996;

          2. Regions' Quarterly Reports on Form 10-Q for the three months ended
     March 31, June 30, and September 30, 1997;

          3. Regions' Report on Form 10-C filed June 20, 1997;


                                        3

<PAGE>   8


          4. Regions' current report on Form 8-K filed with the SEC on
     February 9, 1998; and

          5. The description of Regions Common Stock under the heading "Item 1.
     Capital Stock to be Registered" in the registration statement on Form 8-A
     of Regions relating to Regions Common Stock and in any amendment or report
     filed for the purpose of updating such description.

     Regions' Annual Report on Form 10-K for the year ended December 31, 1996,
incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to Stockholders"), but
does not incorporate other portions of the Regions Annual Report to
Stockholders. Only those portions of the Regions Annual Report to Stockholders
captioned "Financial Summary & Review 1996," "Financial Statements and Notes,"
and "Historical Financial Summary" are incorporated herein. Other portions of
the Annual Report to Stockholders are NOT incorporated herein and are not a part
of the Registration Statement.

     The following documents previously filed with the SEC by First State
pursuant to the Exchange Act are hereby incorporated by reference herein:

          1. First State's Annual Report on Form 10-K for the fiscal year ended
     December 31, 1996;

          2. First State's Quarterly Reports on Form 10-Q for the three months
     ended March 31, June 30, and September 30, 1997;

          3. First State's Current Report on Form 8-K filed with the SEC on
     January 26, 1998.

     All documents filed by Regions and First State pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference in this Proxy Statement/Prospectus and to
be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part hereof, except as so
modified or superseded.

     THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), IF FILED BY
REGIONS, FROM RONALD C. JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL
CORPORATION, 417 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203 (TELEPHONE (205)
326-7090), AND IF FILED BY FIRST STATE, FROM ROBERT E. LEE, 333 W. BROAD AVENUE,
ALBANY, GEORGIA, 31703, (TELEPHONE (912) 432-8050). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 23, 1998.


                                        4

<PAGE>   9
   
    

           CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION

     This Proxy Statement/Prospectus, documents incorporated by reference
herein, or any other written or oral statements made by or on behalf of Regions
may include forward looking statements which reflect Regions' current views with
respect to future events and financial performance. Such forward looking
statements are subject to certain uncertainties and other factors that may cause
actual results to differ materially from the views, beliefs, and projections
expressed in such statements. These uncertainties and other factors include, but
are not limited to, uncertainties relating to business and economic conditions,
the financial services industry, and Regions. The words "believe", "expect",
"anticipate", "project", and similar expressions signify forward looking
statements. Readers are cautioned not to place undue reliance on any forward
looking statements made by or behalf of Regions. Any such statement speaks only
as of the date the statement was made. Regions undertakes no obligation to
update or revise any forward looking statements.

     More specifically, Regions' current report on Form 8-K filed with the SEC
on February 9, 1998, pertaining to Regions' pending combination with First
Commercial Corporation ("FCC") includes certain forward-looking statements
regarding each of Regions, FCC, and the combined company following the FCC
acquisition, including statements relating to cost savings, enhanced revenues,
and accretion to reported earnings that may be realized from the FCC
Acquisition, and certain restructuring charges expected to be incurred in
connection with the FCC acquisition. Such forward-looking statements involve
certain risks and uncertainties, including a variety of factors that may cause
Regions' actual results to differ materially from the anticipated results or
other expectations expressed in such forward-looking statements. Factors that
might cause such a difference include, but are not limited to: (i) expected cost
savings from the FCC acquisition and Regions' other pending acquisitions may not
be fully realized or realized within the expected time frame; (ii) revenues
following the FCC acquisition and the other pending acquisitions may be lower
than expected, or deposit attrition, operating costs or customer loss and
business disruption following the FCC acquisition and the other pending
acquisitions may be greater than expected; (iii) competitive pressures among
depository and other financial institutions may increase significantly; (iv)
costs or difficulties related to the integration of the business of Regions,
FCC, and the other pending acquisitions may be greater than expected; (v)
changes in the interest rate environment may reduce margins; (vi) general
economic or business conditions, either nationally or in the states or regions
in which Regions does business, may be less favorable than expected, resulting
in, among other things, a deterioration in credit quality or a reduced demand
for credit; (vii) legislative or regulatory changes may adversely affect the
businesses in which Regions is engaged; and (viii) changes may occur in the
securities markets. Additional information with respect to factors that may
cause results to differ materially from those contemplated by such
forward-looking statements is included in Regions' current and subsequent
filings with the SEC.




                                       5
<PAGE>   10



                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                        <C>
AVAILABLE INFORMATION.....................................................................  2
DOCUMENTS INCORPORATED BY REFERENCE.......................................................  2
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION...............................  5
SUMMARY...................................................................................  7
     The Parties..........................................................................  7   
     Special Meeting of First State Stockholders..........................................  8
     Record Date; Vote Required...........................................................  8
     The Merger; Exchange Ratio...........................................................  8
     Absence of Dissenters' Rights .......................................................  9
     Reasons for the Merger; Recommendation of First State's Board
      of Directors........................................................................  9
     Opinion of First State's Financial Advisor...........................................  9
     Effective Date....................................................................... 10
     Exchange of Stock Certificates....................................................... 10
     Regulatory Approvals and Other Conditions............................................ 10
     Waiver, Amendment, and Termination of the Agreement.................................. 10
     Interests of Certain Persons in the Merger........................................... 11 
     Certain Federal Income Tax Consequences of the Merger................................ 11
     Certain Differences in Stockholders' Rights.......................................... 11
     Comparative Market Prices of Common Stock............................................ 11
     Comparative Per Share Data........................................................... 12
     Selected Financial Data.............................................................. 13
RECENT DEVELOPMENTS.......................................................................
     The First Commercial Corporation Acquisition.........................................
     Region's 1997 Operating Results......................................................
THE SPECIAL MEETING....................................................................... 16
     General.............................................................................. 16
     Record Date; Vote Required........................................................... 16
DESCRIPTION OF THE TRANSACTION............................................................ 17
     General.............................................................................. 17
     Possible Adjustment of Exchange Ratio ............................................... 18
     Treatment of First State Options..................................................... 20
     Background of and Reasons for the Merger............................................. 20
     Opinion of First State's Financial Advisor........................................... 23
     Effective Date of the Merger......................................................... 28
     Distribution of Regions Stock Certificates and
       Payment for Fractional Shares...................................................... 28
     Conditions to Consummation of the Merger............................................. 29
     Regulatory Approvals................................................................. 29
     Waiver, Amendment, and Termination of the Agreement.................................. 30
     Conduct of Business Pending the Merger............................................... 31
     Management Following the Merger...................................................... 32
     Interests of Certain Persons in the Merger........................................... 33
     Absence of Dissenters' Rights........................................................ 33
     Certain Federal Income Tax Consequences of the Merger................................ 33
     Accounting Treatment................................................................. 34
     Expenses and Fees.................................................................... 35
     Resales of Regions Common Stock...................................................... 35
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS............................................ 36
     Antitakeover Provisions Generally.................................................... 36
     Authorized Capital Stock............................................................. 37
</TABLE>

                                        

<PAGE>   11



<TABLE>
<S>                                                                                   <C>
     Amendment of Certificate of Incorporation and Bylaws............................. 37
     Classified Board of Directors and Absence of Cumulative Voting................... 38
     Removal of Directors............................................................. 38
     Limitations on Director Liability................................................ 38
     Indemnification.................................................................. 39
     Special Meetings of Stockholders................................................. 39
     Actions by Stockholders Without a Meeting........................................ 40
     Stockholder Nominations and Proposals............................................ 40
     Mergers, Consolidations, and Sales of Assets Generally........................... 41
     Business Combinations with Certain Persons....................................... 41
     Absence of Dissenters' Rights.................................................... 42
     Stockholders' Rights to Examine Books and Records................................ 42
     Dividends........................................................................ 42
COMPARATIVE MARKET PRICES AND DIVIDENDS............................................... 44
BUSINESS OF FIRST STATE     .......................................................... 45
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FIRST STATE........................... 45
BUSINESS OF REGIONS................................................................... 47
     General.......................................................................... 47
     Acquisition Activity............................................................. 48
CERTAIN REGULATORY CONSIDERATIONS..................................................... 51
     General.......................................................................... 51
     Payment of Dividends............................................................. 52
     Capital Adequacy................................................................. 53
     Support of Subsidiary Institutions............................................... 54
     Prompt Corrective Action......................................................... 54
     FDIC Insurance Assessments....................................................... 55
DESCRIPTION OF REGIONS COMMON STOCK................................................... 56
STOCKHOLDER PROPOSALS................................................................. 56
EXPERTS............................................................................... 57
OPINIONS.............................................................................. 57
APPENDIX A--Agreement and Plan of Merger..............................................A-1
APPENDIX B--Opinion of Morgan Keegan & Company, Inc. .................................B-1
</TABLE>



                                        6

<PAGE>   12




                                     SUMMARY

     The following is a summary of certain information relating to the Special
Meeting, the proposed Merger, and the offering of shares of Regions Common Stock
to be issued upon consummation thereof. This summary does not purport to be
complete and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy
Statement/Prospectus. Stockholders are urged to read carefully the entire Proxy
Statement/Prospectus, including the Appendices. As used in this Proxy
Statement/Prospectus, the terms "Regions" and "First State" refer to those
entities, respectively, and, where the context requires, to those entities and
their respective subsidiaries.

THE PARTIES

      First State. First State is a bank holding company organized and existing
under the laws of the state of Georgia, headquartered in Albany, Georgia. First
State operates principally through its two banking subsidiaries, which are
state-chartered commercial banks and which provide a range of consumer and
commercial banking services through a total of 14 banking offices in southwest
Georgia. At September 30, 1997, First State had total consolidated assets of
approximately $540 million, total consolidated deposits of approximately $462
million, and total consolidated stockholders' equity of approximately $52
million. First State's principal executive office is located at 333 W. Broad
Avenue, Albany, Georgia, 31703 and its telephone number at such address is (912)
432-8000.

     Regions. 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 435 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of September 30, 1997. At that date,
Regions had total consolidated assets of approximately $22.2 billion, total
consolidated deposits of approximately $17.6 billion, and total consolidated
stockholders' equity of approximately $1.9 billion. Regions is the second
largest bank holding company headquartered in Alabama in terms of assets, based
on September 30, 1997 information. Regions operates banking subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee and 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.

     Since December 31, 1996, Regions has completed the acquisitions of nine
financial institutions and has entered into definitive agreements to acquire
eight financial institutions, including the Merger. For information concerning
Regions' acquisition activity, including the completed and other pending
acquisitions, see "Recent Developments--First Commercial Corporation
Acquisition, " " Documents Incorporated by Reference," and "Business of 
Regions--Acquisition Activity."

     Regions commenced operations in 1971, under its former name First Alabama
Bancshares, Inc., as a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). 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.

     Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."


                                        7

<PAGE>   13



SPECIAL MEETING OF FIRST STATE STOCKHOLDERS

     The Special Meeting will be held at 1:30 p.m., local time, on March 30,
1998, at Merry Acres Events Center (Plantation Room), 1504 Dawson Road, Albany,
Georgia, 31707, for the purpose of considering and voting on approval of the
Agreement and to transact such other business as may properly come before the
meeting. See "The Special Meeting."

RECORD DATE; VOTE REQUIRED

     Only holders of record of First State Common Stock at the close of business
on February 17, 1998 (the "Record Date"), will be entitled to vote at the
Special Meeting. The affirmative vote of a majority of the First State Common
Stock outstanding and entitled to vote at the Special Meeting will be required
to approve the Agreement not just a majority of the votes cast. As of the Record
Date, there were 6,879,898 shares of First State Common Stock outstanding and
entitled to be voted.

     The directors and executive officers of First State and their affiliates
beneficially owned, as of the Record Date, 1,256,510 shares (or approximately
18.26% of the outstanding shares) of First State Common Stock. Each member of
the Board of Directors of First State has agreed to vote those shares of First
State Common Stock over which such member has voting authority (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 First State Common Stock. As of that date, no subsidiary of Regions
held any shares of First State Common Stock in a fiduciary capacity for others,
but subsidiaries of First State held 2,332,759 shares of First State Common
Stock in a fiduciary capacity for others. See "The Special Meeting--Record Date;
Vote Required."

THE MERGER; EXCHANGE RATIO

     The Agreement provides for the acquisition of First State by Regions
pursuant to the Merger of First State with and into Regions. On the Effective
Date, each share of First State Common Stock then issued and outstanding (except
for shares held by First State, Regions, or their respective subsidiaries, in
each case other than shares held in a fiduciary capacity or as a result of debts
previously contracted) will be converted into .56 of a share of Regions Common
Stock, subject to possible adjustment. No fractional shares of Regions Common
Stock will be issued. Rather, cash will be paid in lieu of any fractional share
interest to which any First State stockholder would be entitled upon
consummation of the Merger, based on 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) on the last trading day
immediately preceding the Effective Date. See "Description of the
Transaction--General."

     If (i) the Average Closing Price (as described below) of Regions Common
Stock is less than $34.20 and (ii) the relative performance of Regions Common
Stock (as measured by comparing the Average Closing Price to $34.20, which is
80% of the closing price of Regions Common Stock on December 18, 1997, the
fourth trading day after the public announcement of the Merger) is more than 15%
lower than the relative performance of the common stocks of a specified group
(the "Index Group") of bank holding companies (as measured by comparing the
Index Price on the Determination Date (as such terms are defined below) to the
Index Price on December 18, 1997), then First State may elect to terminate the
Agreement (the "Stock Price Termination Right") unless Regions increases the
Exchange Ratio such that the fraction of a share of Regions Common Stock issued
in exchange for each share of First State Common Stock has a value (based on the
Average Closing Price) equal to the lesser of (i) $34.20 or (ii) the value
(based on the Average Closing Price) of that fraction of a share of Regions
Common Stock that would have been exchanged for each share of First

                                        8

<PAGE>   14



State Common Stock if the relative performance of Regions Common Stock as
determined was 15% lower than the relative performance of the Index Group. If
the Merger is approved by the First State stockholders, the First State Board
may elect not to terminate the Agreement and to consummate the Merger without
resoliciting the First State stockholders even if First State's Stock Price
Termination Right is triggered and, as a result of the Exchange Ratio, the value
of the shares of Regions Common Stock (valued at the Average Closing Price)
issued in exchange for each share of First State Common Stock would be less than
the lesser of (i) $34.20 or (ii) the value (based on the Average Closing Price)
of the shares of Regions Common Stock that would have been exchanged for each
share of First State Common Stock if the relative performance of Regions Common
Stock as determined above was 15% lower than the relative performance of the
Index Group.

     Under no circumstances would the Exchange Ratio be less than .56 of a share
of Regions Common Stock for each share of First State Common Stock. See
"Description of the Transaction--Possible Adjustment of Exchange Ratio."

ABSENCE OF DISSENTERS' RIGHTS

     In accordance with the applicable provisions of the Georgia Act, because
First State Common Stock is quoted on the Nasdaq National Market, the holders of
shares of First State Common Stock are not afforded the right to dissent from
the Merger and to receive an appraised value of such shares in cash.

REASONS FOR THE MERGER; RECOMMENDATION OF FIRST STATE'S BOARD OF DIRECTORS

      First State's Board of Directors has unanimously approved the Merger and
the Agreement and has determined that the Merger is fair to, and in the best
interests of, First State and its stockholders. Accordingly, First State's Board
unanimously recommends that First State's stockholders vote FOR approval of the
Agreement. EACH MEMBER OF THE BOARD OF DIRECTORS OF FIRST STATE HAS AGREED TO
VOTE THOSE SHARES OF FIRST STATE COMMON STOCK OVER WHICH SUCH MEMBER HAS VOTING
AUTHORITY (OTHER THAN IN A FIDUCIARY CAPACITY) IN FAVOR OF THE AGREEMENT. In
approving the Agreement, First State's directors considered First State's
financial condition, the financial terms and the income tax consequences of the
Merger, the likelihood of the Merger being approved by regulatory authorities
without undue conditions or delay, and legal advice concerning the proposed
Merger, and the opinion of Morgan Keegan & Company ("Morgan Keegan") that, as of
the date of its opinion, the consideration to be received in the Merger was
fair, from a financial point of view, to the stockholders of First State. See
"Description of the Transaction--Background of and Reasons for the Merger."

OPINION OF FIRST STATE'S FINANCIAL ADVISOR

      Morgan Keegan has rendered an opinion to First State that, based on and
subject to the procedures, matters, and limitations described in its opinion and
such other matters as it considered relevant, as of the date of its opinion, the
consideration to be received in the Merger was fair, from a financial point of
view, to the stockholders of First State. The opinion of Morgan Keegan is
attached as Appendix B to this Proxy Statement/Prospectus. First State
stockholders are urged to read the opinion in its entirety for a description of
the procedures followed, matters considered, and limitations on the reviews
undertaken in connection therewith. See "Description of the Transaction--Opinion
of First State's Financial Advisor."


                                        9

<PAGE>   15



EFFECTIVE DATE

     Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger become
effective with, respectively, the Delaware Secretary of State and the Georgia
Secretary of State. Unless otherwise agreed upon by Regions and First State, and
subject to the conditions to the obligations of the parties to effect the
Merger, the parties will use their reasonable efforts to cause the Effective
Date to occur on the last day of the month in which the last of the following
events occurs: (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 Agreement is approved by
the requisite vote of First State stockholders, unless otherwise mutually agreed
upon by the parties. The parties expect that all conditions to consummation of
the Merger will be satisfied so that the Merger can be consummated during the
first quarter of 1998, although there can be no assurance as to whether or when
the Merger will occur. See "Description of the Transaction--Effective Date of
the Merger," "--Conditions to Consummation of the Merger," and "--Waiver,
Amendment, and Termination of the Agreement."

EXCHANGE OF STOCK CERTIFICATES

     Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions (the "Exchange Agent"), to mail to the former stockholders
of First State a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of First State
Common Stock for certificates representing shares of Regions Common Stock. FIRST
STATE STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. See "Description of the
Transaction--Distribution of Regions Stock Certificates and Payment for
Fractional Shares."

REGULATORY APPROVALS AND OTHER CONDITIONS

     The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Department of Banking and Finance
of the state of Georgia (the "Georgia Department"). Applications for the
requisite approvals have been filed with these agencies, each of which has yet
to issue its approval of the Merger. There can be no assurance that the
approvals of the Georgia Department and the Federal Reserve will be given or as
to the timing or conditions of such approvals.

     Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of First State stockholders, receipt
of an opinion of counsel as to the tax-free nature of certain aspects of the
Merger, and certain other customary conditions. See "Description of the
Transaction--Conditions to Consummation of the Merger."

WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT

     The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual consent of the Boards of Directors of both
First State and Regions, or by action of the Board of Directors of either
company under certain circumstances, including if the Merger is not consummated
by September 30, 1998, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason the
Merger is not consummated, First State will continue to operate as a bank
holding company under its present management. See "Description of the
Transaction--Waiver, Amendment, and Termination of the Agreement."


                                       10

<PAGE>   16



INTERESTS OF CERTAIN PERSONS IN THE MERGER

     Certain members of First State's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of First
State generally. Those interests relate to, among other things, provisions in
the Agreement regarding indemnification and eligibility for certain Regions
employee benefits, and treatment of outstanding options to acquire First State
Common Stock. See "Description of the Transaction--Interests of Certain Persons
in the Merger."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     Consummation of the Merger is conditioned on the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the exchange in the Merger of First State
Common Stock for Regions Common Stock will not give rise to gain or loss to
First State stockholders, except to the extent of any cash received in lieu of
fractional share interests. Gain recognition, if any, will not be in excess of
the amount of cash received. Subject to the provisions and limitations of
Section 302(a) of the Code, gain or loss will be recognized upon the receipt of
cash in lieu of fractional share interests. See "Description of the
Transaction--Certain Federal Income Tax Consequences of the Merger."

     BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCE OF EACH STOCKHOLDER AND OTHER CIRCUMSTANCES, EACH FIRST
STATE STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER (INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX LAWS).

CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS

     On the Effective Date, First State stockholders, whose rights are governed
by the Georgia Business Corporation Code (the "Georgia Act") and by First
State's Articles of Incorporation and Bylaws, will automatically become Regions
stockholders, and their rights as Regions stockholders will be determined by the
Delaware General Corporation Law (the "Delaware GCL") and by Regions'
Certificate of Incorporation and Bylaws.

     The rights of Regions stockholders differ from the rights of First State
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."

COMPARATIVE MARKET PRICES OF COMMON STOCK

     Regions Common Stock and First State Common Stock are traded in the
over-the-counter market and are quoted in the Nasdaq National Market. The
following table sets forth the last sale price of Regions Common Stock, the last
sale price of First State Common Stock, and the equivalent per share price (as
explained below) of First State Common Stock at the close of trading on December
11, 1997, the last trading day immediately preceding public announcement of the
Merger, and _______, 1998, the latest practicable date prior to the mailing of
this Proxy Statement/Prospectus:



                                       11

<PAGE>   17



<TABLE>
<CAPTION>
                                                                                       EQUIVALENT
                                                                                           PER
                                                                                       SHARE PRICE
                                         REGIONS             FIRST STATE             OF FIRST STATE
MARKET PRICE PER SHARE AT:            COMMON STOCK          COMMON STOCK              COMMON STOCK
- --------------------------            ------------          ------------             --------------
<S>                                   <C>                   <C>                      <C>
 December 11, 1997                    $ 41.75                 $ 19.25                   $ 23.38
 _______, 1998
</TABLE>

     The equivalent per share price of First State Common Stock at each
specified date represents the last sale price of a share of Regions Common Stock
on such date multiplied by the Exchange Ratio of .56. Stockholders are advised
to obtain current market quotations for Regions Common Stock and First State
Common Stock. No assurance can be given as to the market price of Regions Common
Stock at or after the Effective Date.


COMPARATIVE PER SHARE DATA

     The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
Regions and First State, (ii) a pro forma combined basis per share of Regions
Common Stock, giving effect to the Merger, and (iii) an equivalent pro forma
basis per share of First State Common Stock, giving effect to the Merger. The
Regions and First State pro forma combined information and the First State pro
forma Merger equivalent information give effect to the Merger on a
pooling-of-interests accounting basis and assume an Exchange Ratio of .56. See
"Description of the Transaction--Accounting Treatment." The pro forma data are
presented for informational purposes only and are not necessarily indicative of
the results of operations or combined financial position that would have
resulted had the Merger been consummated at the dates or during the periods
indicated, nor are they necessarily indicative of future results of operations
or combined financial position.

     The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions and
First State, including the respective notes thereto. Regions' historical
information has been adjusted to reflect a 2-for-1 stock split effected by
Regions on June 13, 1997, and a 2-for-1 stock split effected by First State on
May 20, 1997. See "Documents Incorporated by Reference," and "--Selected
Financial Data."


                                       12

<PAGE>   18



<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                 SEPTEMBER 30,          YEAR ENDED DECEMBER 31,
                                                               -----------------        ------------------------
                                                                1997      1996          1996      1995      1994
                                                                ----      ----          ----      ----      ----
                                                                    (Unaudited)       (Unaudited except Regions
                                                                                       and First State historical)
<S>                                                           <C>       <C>            <C>       <C>       <C>   
NET INCOME PER COMMON SHARE
Regions historical.......................................     $ 1.62    $ 1.33         $ 1.85    $ 1.60    $ 1.55
First State historical ..................................        .77       .78           1.07       .98       .77
Regions and First State pro forma combined(1)............       1.61                     1.85      1.61      1.54
First State pro forma Merger equivalent(2)...............        .90                     1.04       .90       .86
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical.......................................        .60      .525            .70       .66       .60
First State historical...................................        .25       .20            .28       .21       .17
First State pro forma Merger equivalent(3)...............        .34       .29            .39       .37       .34
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical.......................................      13.58     12.43          12.76     11.69     10.63
First State historical...................................       7.54      6.80           7.05      6.29      5.43
Regions and First State pro forma combined(1)............      13.58
First State pro forma Merger equivalent(2)...............       7.60
</TABLE>


(1)  Represents the combined results of Regions and First State as if the Merger
     were consummated on January 1, 1994 (or September 30, 1997, in the case of
     Book Value Per Common Share Data), and were accounted for as a pooling of
     interests.

(2)  Represents pro forma combined information multiplied by the Exchange Ratio
     of .56 of a share of Regions Common Stock for each share of First State
     Common Stock.

(3)  Represents historical dividends declared per share by Regions multiplied by
     the Exchange Ratio of .56 of a share of Regions Common Stock for each share
     of First State Common Stock.

(4)  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 $34.20. See "Description of the Transaction
     -- Possible Adjustment of Exchange Ratio." The presentation of pro forma
     Merger equivalent information would be affected by any increase in the
     Exchange Ratio.




SELECTED FINANCIAL DATA

     The following tables present certain selected historical financial
information for Regions and First State. The per share data for Regions have
been adjusted to reflect a 2-for-1 stock split effected by Regions on June 13,
1997, and the per share data for First State have been adjusted to reflect a
2-for-1 stock split effected by First State on May 20, 1997. The data should be
read in conjunction with the historical financial statements, related notes, and
other financial information concerning Regions and First State incorporated by
reference or included herein. Interim unaudited data for the nine months ended
September 30, 1997 and 1996 of Regions and First State reflect, in the opinion
of the respective managements of Regions and First State, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the nine months ended September 30, 1997,
are not necessarily indicative of results which may be expected for any other
interim period or for the year as a whole. See "Documents Incorporated by
Reference."


                                       13

<PAGE>   19




Selected Historical Financial Data of Regions

<TABLE>
<CAPTION>
                                              NINE MONTHS
                                           ENDED SEPTEMBER 30,                          YEAR ENDED DECEMBER 31,
                                         ------------------------  -----------------------------------------------------------------
                                             1997         1996         1996         1995           1994         1993         1992
                                         -----------  -----------  -----------  -----------    -----------  -----------  -----------
                                         (Unaudited)
                                                                   (In thousands except per share data and ratios)       
<S>                                      <C>          <C>          <C>          <C>           <C>          <C>          <C>
INCOME STATEMENT DATA:
  Total interest income ..............   $ 1,217,085  $ 1,029,151  $ 1,386,122  $ 1,259,600   $   991,693  $   746,544  $   737,094
  Total interest expense .............       603,046      508,573      685,656      635,336       436,157      296,195      324,420
  Net interest income ................       614,039      520,578      700,466      624,264       555,536      450,349      412,674
  Provision for loan losses ..........        31,449       21,734       29,041       30,271        20,580       24,695       39,367
  Net interest income after
       loan loss provision ...........       582,590      498,844      671,425      593,993       534,956      425,654      373,307
  Total noninterest income excluding
       security gains (losses) .......       189,852      162,759      217,624      187,830       171,705      169,318      147,943
  Security gains (losses) ............           541          259        3,115         (424)          344          831        2,417
  Total noninterest expense ..........       441,688      415,955      553,801      487,461       442,376      383,130      343,279
  Income tax expense .................       110,592       81,022      108,677       96,109        84,109       66,169       56,405
  Net income .........................       220,703      164,885      229,686      197,829       180,520      146,504      123,983
PER SHARE DATA:
  Net income .........................   $      1.62  $      1.33  $      1.85  $      1.60   $      1.55  $      1.40  $      1.21
  Cash dividends .....................           .60         .525          .70          .66           .60          .52          .46
  Book value .........................         13.58        12.43        12.76        11.69         10.63         9.93         8.57
OTHER INFORMATION:
  Average number of shares outstanding       136,526      123,960      124,272      123,340       116,412      104,306      102,384
STATEMENT OF CONDITION DATA
(PERIOD END):
  Total assets .......................   $22,241,897  $18,731,424  $18,930,175  $16,851,774   $15,810,076  $13,163,161  $10,457,676
  Securities .........................     4,386,163    4,005,675    3,870,595    3,863,781     3,346,291    2,993,417    2,255,732
  Loans, net of unearned income ......    15,823,660   13,032,238   13,311,172   11,542,311    10,855,195    8,430,931    6,657,557
  Total deposits .....................    17,623,742   15,186,950   15,048,336   13,497,612    12,575,593   11,025,376    8,923,801
  Long-term debt .....................       402,627      447,959      447,269      632,019       599,476      525,820      151,460
  Stockholders' equity ...............     1,851,493    1,554,740    1,598,726    1,429,253     1,286,322    1,106,361      886,116
PERFORMANCE RATIOS:
  Return on average assets(1)(6) .....          1.41%        1.25%        1.29%        1.21%         1.27%        1.38%        1.29%
  Return on average stockholders'
       equity(1)(6) ..................         16.26        14.83        15.19        14.29         15.26        15.76        15.04
  Net interest margin ................          4.30         4.29         4.27         4.21          4.37         4.77         4.85
  Efficiency (2)(6) ..................         54.06        59.97        59.44        58.79         59.44        60.23        59.62
  Dividend payout ....................         37.04        39.47        37.84        41.12         38.71        37.01        37.60
ASSET QUALITY RATIOS:
  Net charge-offs to average loans,
       net of unearned income(1) .....           .22%         .10%         .15%         .17%          .19%         .23%         .36%
  Problem assets to net loans and
       other real estate (3) .........           .69          .54          .56          .59           .75         1.12         1.29
  Nonperforming assets to net loans
       and other real estate (4) .....           .81          .73          .76          .68           .80         1.28         1.39
  Allowance for loan losses to loans,
       net of unearned income ........          1.24         1.37         1.32         1.38          1.32         1.48         1.51
  Allowance for loan losses to
       nonperforming assets (4) ......        153.38       186.89       173.65       202.55
LIQUIDITY AND CAPITAL RATIOS:
  Average stockholders' equity to
       average assets ................          8.66%        8.41%        8.49%        8.44%         8.35%        8.76%        8.60%
  Average loans to average deposits ..         88.43        85.01        85.90        86.12         79.90        76.41        71.59
  Tier 1 risk-based capital (5) ......          9.85        10.71        10.81        11.14         10.69        11.13        11.68
  Total risk-based capital (5) .......         12.24        13.53        13.59        14.61         14.29        13.48        14.44
  Tier 1 leverage (5) ................          7.35         7.65         7.44         7.49          8.21        10.11         8.44
</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 periods prior to 1996 have not been restated to
     reflect the combination with First National Bancorp effected March 1, 1996,
     and accounted for as a pooling of interests, or any other
     pooling-of-interests transactions.

(6)  Ratios for 1996 excluding $19.0 million (after-tax) charged for SAIF
     assessment and merger expenses are as follows: Return on average
     stockholders' equity - 16.45%, Return on average total assets - 1.40%, and
     Efficiency - 56.16%.


<PAGE>   20





Selected Historical Financial Data of First State
 
<TABLE>
<CAPTION>
                                               NINE MONTHS
                                           ENDED SEPTEMBER 30,                 YEAR ENDED DECEMBER 31,
                                           -------------------   ----------------------------------------------------
                                             1997       1996       1996       1995       1994       1993       1992
                                           --------   --------   --------   --------   --------   --------   --------
                                               (Unaudited)
                                                             (In thousands except per share data and ratios)
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>        <C>     
INCOME STATEMENT DATA:
  Total interest income ................   $ 31,170   $ 26,951   $ 37,049   $ 34,366   $ 29,429   $ 28,039   $ 29,269
  Total interest expense ...............     12,841     10,495     14,751     12,347     10,005      9,875     12,516
  Net interest income ..................     18,329     16,456     22,298     22,019     19,424     18,164     16,753
  Provision for loan losses ............        825        350        413        753        773      1,733      1,416
  Net interest income after
       loan loss provision .............     17,504     16,106     21,885     21,266     18,651     16,431     15,337
  Total noninterest income
       excluding security gains (losses)      5,166      4,990      7,179      7,386      7,874     10,638      8,215
  Security gains (losses) ..............          6         68         70         46         --          2         --
  Total noninterest expense ............     14,590     13,218     18,094     18,864     19,128     20,580     18,522
  Income tax expense ...................      2,626      2,463      3,479      2,980      2,139      1,860      1,227
  Net income ...........................      5,460      5,483      7,561      6,854      5,258      4,631      3,803

PER SHARE DATA:
  Net income ...........................   $    .77   $    .78   $   1.07   $    .98   $    .77   $    .68   $    .43
  Cash dividends .......................        .25        .20        .28        .21        .17        .13        .03
  Book value ...........................       7.54       6.80       7.05       6.29       5.43       5.01       4.19

OTHER INFORMATION:
  Average number of shares outstanding .      6,851      6,850      6,843      6,858      6,810      6,701      8,797

STATEMENT OF CONDITION DATA
(PERIOD END):
  Total assets .........................   $539,949   $515,443   $516,499   $436,859   $409,521   $394,133   $396,333
  Securities ...........................    107,615    118,518    121,839     71,559     92,087     58,228     64,973
  Loans, net of unearned income ........    382,188    332,571    334,332    299,161    267,435    275,813    255,867
  Total deposits .......................    461,657    452,612    452,451    384,326    363,858    347,012    347,150
  Long-term debt .......................      3,058      4,823      3,145         --        450        650      1,268
  Stockholders' equity .................     51,994     46,385     48,130     43,148     37,223     31,839     36,928

PERFORMANCE RATIOS:
  Return on average assets (1) .........       1.40%      1.65%      1.63%      1.67%      1.33%      1.23%      1.01%
  Return on average stockholders'
       equity (1) ......................      14.72      16.40      16.72      17.03      15.15      14.91      10.91
  Net interest margin (1) ..............       4.81       5.32       5.42       6.02       5.57       5.53       5.14
  Efficiency (2) .......................      62.15      61.72      61.22      64.17      70.05      71.46      74.26
  Dividend payout ......................      32.47      25.64      26.42      21.23      21.74      18.99       7.90

ASSET QUALITY RATIOS:
  Net charge-offs to average loans,
       net of unearned income (1)  .....        .19%       .09%       .12%       .08%       .14%       .18%       .38%
  Problem assets to net loans and
       other real estate (3) ...........        .38        .52        .30        .45        .33        .29        .64
  Nonperforming assets to net loans
       and other real estate (4) .......        .72        .72        .48        .66        .49        .43        .91
  Allowance for loan losses to loans,
       net of unearned income ..........       1.41       1.56       1.51       1.68       1.68       1.49       1.11
  Allowance for loan losses to
       nonperforming assets (4) ........     199.15     218.07     316.57     255.82     343.77     348.30     123.15

LIQUIDITY AND CAPITAL RATIOS:
  Average stockholders' equity to
       average assets ..................       9.01%     10.02%      9.75%      9.81%      8.79%      8.26%      9.24%
  Average loans to average deposits ....      78.09      79.92      77.96      79.31      75.34      79.40      71.91
  Tier 1 risk-based capital (5) ........      12.24      12.52      12.98      14.26      13.02      11.40      16.68
  Total risk-based capital (5) .........      13.49      13.81      14.24      15.52      14.27      12.96      17.81
  Tier 1 leverage (5) ..................       8.60       7.68       7.99       9.87       8.40       7.62      10.66
</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%.


<PAGE>   21
   
    



                               RECENT DEVELOPMENTS

FIRST COMMERCIAL CORPORATION ACQUISITION

     On February 8, 1998, Regions and FCC entered into an Agreement and Plan of
Merger, pursuant to which FCC will be acquired by Regions, by means of the
merger of FCC with and into Regions, with Regions as the surviving entity (the
"FCC Acquisition"). Upon consummation of the FCC Acquisition, Regions will
exchange 1.7 shares of Regions Common Stock for each share of FCC common stock
outstanding, with a total of approximately 65.9 million shares of Regions common
stock expected to be issued in the merger. Regions expects the FCC Acquisition
to be accounted for as a pooling of interests and expects to consummate the
transaction during the third quarter of 1998, subject to approval of Regions and
FCC stockholders in accordance with applicable law, approval of various
regulatory authorities, and other customary conditions of closing.

     FCC is a multi-bank bank holding company headquartered in Little Rock,
Arkansas, with approximately _______ banking offices in Arkansas, Tennessee,
Texas and Louisiana, and a 50% interest in two Oklahoma banks. FCC also operates
banking-related affiliates in the areas of mortgage banking, trust services,
securities brokerage, asset management and accounts receivable factoring. At
September 30, 1997, FCC reported total consolidated assets of approximately $6.6
billion, total consolidated deposits of approximately $5.7 billion, and total
consolidated stockholders equity of approximately $627 million. Based on
September 30, 1997 information, FCC is the largest bank holding company
headquartered in Arkansas and has the largest market share of deposits in
Arkansas of depository institutions with offices in Arkansas.

     In connection with consummation of the FCC Acquisition, Regions anticipates
taking a pre-tax merger charge of approximately $85 million.

     Additional information with respect to the FCC acquisition is set forth in
Regions' current report on Form 8-K filed with the SEC on February 9, 1998 (the
"FCC 8-K"). The FCC 8-K includes or incorporates by reference certain forward
looking statements, estimates, and projections concerning the FCC Acquisition,
which are subject to various uncertainties and risks as explained above under
the caption "Cautionary Statement Concerning Forward Looking Information."
Estimates and projections concerning the future financial performance of Regions
following the FCC Acquisition are predicated on certain assumptions and depend
upon future events, the course of which cannot be ascertained with certainty,
and therefore such estimates and projections, including but not limited to
estimates concerning future levels of accretion and dilution of Regions'
earnings per share, future cost savings achievable in consolidation, and levels
of merger related charges, should be considered only as estimates and understood
to be uncertain and subject to risks of inaccuracy. Future events may cause
Regions' actual experience to differ materially from such estimates and
projections. See " Cautionary Statement Concerning Forward Looking Information."

REGIONS' 1997 OPERATING RESULTS

     For the fourth quarter ended December 31, 1997, Regions reported net income
of $79.0 million (or $.58 per share or $.57 per share assuming dilution),
representing a 22% increase in net income (and a 12% increase on a per share
basis) over the same period of 1996. For the twelve months ended December 31,
1997, Regions reported net income of $299.7 million or $2.20 per share (or $2.15
per share assuming dilution), representing a 19% increase on a per-share basis
in net income over 1996. The return on average total assets for 1997 was 1.4%,
and the return on average stockholders' equity was 16.3%. At December 31, 1997,
the ratio of stockholders' equity to total assets was 8.3%. As of December 31,
1997, Regions had total consolidated assets of approximately $23.0 billion,
total consolidated deposits of approximately $17.8 billion, and total
consolidated stockholders' equity of approximately $1.9 billion.


<PAGE>   22
   

                               THE SPECIAL MEETING

GENERAL

     This Proxy Statement/Prospectus is being furnished to the holders of First
State Common Stock in connection with the solicitation by the First State Board
of Directors of proxies for use at the Special Meeting, at which First State
stockholders will be asked to vote upon a proposal to approve the Agreement. The
Special Meeting will be held at 1:30 p.m., local time, on March 30, 1998, at
Merry Acres Events Center (Plantation Room), 1504 Dawson Road, Albany, Georgia,
31707.

      First State stockholders are requested promptly to sign, date, and return
the accompanying proxy card to First State 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 Agreement.

     Any First State 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 First State a signed proxy card bearing a later date, provided that such
notice or proxy card is actually received by First State 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 First State
Corporation, 333 W. Broad Avenue, Albany, Georgia, 31703, Attention: Robert E.
Lee, Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
First State 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 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 AGREEMENT. As of the date of this Proxy
Statement/Prospectus, First State is unaware of any other matter to be presented
at the Special Meeting.

     Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
First State, 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.

      First State stockholders should not forward any stock certificates with
their proxy cards.

RECORD DATE; VOTE REQUIRED

      First State's Board of Directors has established the close of business on
February 17, 1998, as the Record Date for determining the First State
stockholders entitled to notice of and to vote at the Special Meeting. Only
First State 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 559
holders of 6,879,898 shares of First State Common Stock outstanding and entitled
to vote at the Special Meeting, with each share entitled to one vote. For
information as to persons known by First State to beneficially own more than
5.0% of the outstanding shares of First State Common Stock as of the Record
Date, see "Voting Securities and Principal Stockholders of First State."


                                       16

<PAGE>   23



     The presence, in person or by proxy, of a majority of the outstanding
shares of First State Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these purposes,
shares of First State 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 Agreement for any reason,
including broker nonvotes. Generally, a broker who holds shares of First State
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 Agreement requires the
affirmative vote of the holders of a majority of the First State Common Stock
outstanding and entitled to vote at the Special Meeting. A failure to vote, in
person or by proxy, for any reason has the same effect as a vote against the
Agreement, including failure to return a properly executed proxy, an abstention,
or a broker nonvote.

     The directors and executive officers of First State and their affiliates
beneficially owned, as of the Record Date, 1,256,510 shares (or approximately
18.26% of the outstanding shares) of First State Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of the
Record Date, no shares of First State Common Stock. As of that date, no
subsidiary of either First State or Regions held any shares of First State
Common Stock in a fiduciary capacity for others, but subsidiaries of First State
held 2,332,759 shares of First State Common Stock in a fiduciary capacity for
others.



                         DESCRIPTION OF THE TRANSACTION

     The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the 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

     Each share of First State Common Stock (excluding any shares held by First
State, Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or as a result of debts previously contracted) issued and
outstanding at the Effective Date will be converted into .56 of a share of
Regions Common Stock, 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 Date 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 First State 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), on the last trading day
prior to the Effective Date.


                                       17

<PAGE>   24



POSSIBLE ADJUSTMENT OF EXCHANGE RATIO

     Under certain circumstances described below, the Exchange Ratio could be
adjusted pursuant to certain provisions of the Agreement. UNDER NO CIRCUMSTANCES
WOULD THE EXCHANGE RATIO BE LESS THAN .56 OF A SHARE OF REGIONS COMMON STOCK FOR
EACH SHARE OF FIRST STATE COMMON STOCK. An adjustment could occur only if the
First State Board elects to terminate the Agreement pursuant to the provisions
of the Agreement described below, and if Regions then elects to avoid
termination of the 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 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 on which consent of the Federal
Reserve shall be received (without regard to any requisite waiting period
thereof).

     The "Regions Ratio" is the number obtained by dividing the Average Closing
Price by $42.75.

     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" in the
Agreement 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 December 18, 1997, less 15%.

     If both:

         (i)  the Average Closing Price is less than $34.20; and

         (ii) the Regions Ratio is less than the Index Ratio,

then First State may elect to terminate the Agreement unless Regions increases
the Exchange Ratio such that the fraction of a share of Regions Common Stock
issued in exchange for each share of First State Common Stock has a value (based
on the Average Closing Price) equal to the lesser of (i) $34.20 or (ii) the
value (based on the Average Closing Price) of the fraction of a share of Regions
Common Stock that would have been exchanged for each share of First State 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 First State stockholders, the First State Board may elect not to
terminate the Agreement and to consummate the Merger without resoliciting the
First State stockholders even if First State's 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 First State Common Stock would be less than the lesser of (i) $34.20 or
(ii) the value (based on the Average Closing Price) of the fraction of a share
of Regions Common Stock that would have been exchanged for each share of First
State Common Stock if the relative performance of Regions Common Stock as
determined above was 15% lower than the relative performance of the Index Group.


                                       18

<PAGE>   25



     These conditions reflect the parties' agreement that First State's
stockholders will assume the risk of declines in the value of Regions Common
Stock to $34.20. Any adjustment of the Exchange Ratio reflecting a decline in
the price of Regions Common Stock to below $34.20 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 Agreement, the
First State 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 historical financial data of Regions, customary
statistical measurements of Regions's 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 First State Board elects to
terminate the 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 First State's earning potential as part of Regions justifies the issuance of
an increased number of Regions' shares. If Regions declines to adjust the
Exchange Ratio, First State 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 .56, the Starting Price of Regions Common stock is $42.75, and
the Index Price, as of the Starting Date, is $100.)

     (1) The first scenario occurs if the Average Closing Price is $34.20 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 First State stockholders could have
         fallen from a pro forma $23.94 per share, as of the Starting Date, to
         as little as a pro forma $19.15 per share, as of the Determination
         Date.

     (2) The second scenario occurs if the Average Closing Price is less than
         $34.20, 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 First State stockholders would have fallen from a pro forma
         $23.94 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 $19.15 per share.

     (3) The third scenario occurs if the Average Closing Price declines below
         $34.20 and the Regions Ratio is below the Index Ratio. Under this
         scenario, the adjustment in the Exchange Ratio is designed to ensure
         that the First State stockholders receive shares of Regions Common
         Stock having a value (based upon the Average Closing Price) that
         corresponds to at least $34.20 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
         (.7018) would be below the Index Ratio (.75, or .90 minus .15), and
         First State could terminate the Agreement unless Regions elected within
         five days to increase the Exchange Ratio to equal .5985, which
         represents the lesser of (a) .6384 [the result of dividing $19.15 (the
         product of $34.20 and the .56 Exchange Ratio) by the Average Closing
         Price

                                       19

<PAGE>   26



         ($30.00), rounded to the nearest thousandth] and (b) .5985 [the result
         of dividing the Index Ratio (.75) times .56 by the Regions Ratio
         (.7018), rounded to the nearest thousandth]. Based upon the assumed
         $30.00 Average Closing Price, the new Exchange Ratio would represent a
         value to the First State stockholders of $17.96 per share.

         If the Average Closing Price were $30.00, and the ending Index Price,
         as of the Determination Date, were $100, the Regions Ratio (.7018)
         would be below the Index Ratio (.85, or 1.00 minus .15), and First
         State could terminate the Agreement unless Regions elected within five
         days to increase the Exchange Ratio to equal .6384, which represents
         the lesser of (a) .6384 [the result of dividing $19.15 (the product of
         $34.20 and the .56 Exchange Ratio) by the Average Closing Price
         ($30.00), rounded to the nearest thousandth] and (b) .6783 [the result
         of dividing the Index Ratio (.85) times .56 by the Regions Ratio
         (.7018), rounded to the nearest thousandth]. Based upon the assumed
         $30.00 Average Closing Price, the new Exchange Ratio would represent a
         value to the First State stockholders of $19.15 per 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 First State Common Stock
may be more or less than the Average Closing Price. First State stockholders are
urged to obtain current market quotations for Regions Common Stock. See
"Comparative Market Prices and Dividends."


TREATMENT OF FIRST STATE OPTIONS

     The Agreement provides that all rights with respect to First State Common
Stock pursuant to stock options or stock appreciation rights granted by First
State under its stock option plans which are outstanding on the Effective Date,
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 Date, 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. Sixteen executive officers or directors of First
State hold in the aggregate exercisable options to purchase 316,915 shares of
First State Common Stock as of the date of this Proxy Statement/Prospectus.

BACKGROUND OF AND REASONS FOR THE MERGER

     Background of the Merger. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments have included the increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation and geographic
expansion, coupled with a relaxation of regulatory restrictions on interstate
conduct of business of financial institutions.

     Due to these developments, the First State Board and its financial advisor,
Ralph W. Jernigan Jr., periodically reviewed First State's strategic options.
These options included, but were not limited to: (a) remaining independent with
particular emphasis on profitability and growth including acquiring other
financial institutions; or (b) combining with a regional banking organization.


                                       20

<PAGE>   27



     During 1997 the First State Board continued to review its strategic options
in light of continuing developments. These included: (a) the difficulty in
continuing acceptable profitable growth both internally and externally through
acquisitions; and (b) the increasing prices being paid by regional banking
organizations in acquisitions of financial institutions similar to First State.

     On September 9, 1997, among other topics, the outside directors of First
State reviewed these developments with First State's financial advisor. Later
that same day, First State's senior management met with the financial advisor
and discussed these same developments and the views of the outside directors,
and decided to hold a planning meeting to develop a course of action to
recommend to the Board.

     This planning meeting was held October 22, 1997, where management and First
State's financial advisor reviewed First State's position and its strategic
options. Discussion focused on the continued consolidation among financial
institutions and the historically high acquisition prices being realized by the
selling community-based banking organizations. These acquisition premiums were
making it difficult for First State to acquire other institutions as a method of
achieving its growth objectives. The consolidation discussion also covered the
timing question, specifically, how long this wave of consolidation at these
higher acquisition premiums would continue, as well as the possible reduction in
the number of potential merger partners who might have an interest in First
State. Based on these discussions, management developed a recommendation to the
executive committee of the Board to pursue an option which met the Board's
objective of enhancing stockholder value while recognizing First State's
historic commitment to its employees, customers and communities.

     This recommendation was accepted by the executive committee of the Board on
October 23, 1997. The committee then authorized First State's financial advisor
to initiate discussions with representatives of Regions to determine if there
was a basis for discussion of a possible merger between First State and Regions.
The committee's interest in Regions was based on the historical performance of
Regions, the attractive investment characteristics of its common stock and the
compatibility of its community orientation with that of First State.

     Accordingly, First State's financial advisor contacted Richard D. Horsley,
Vice Chairman and Executive Financial Officer of Regions, and determined that
there was sufficient interest by Regions to pursue this option. On November 19,
1997, Morgan G. Murphy, Douglas E. Wren and the financial advisor met in
Birmingham with Carl E. Jones Jr., President and Chief Operating Officer of
Regions, Peter D. Miller, Georgia Region President, and Richard D. Horsley to
discuss the potential for a merger.

     As a result of management's report from this meeting, the executive
committee of the Board concluded that it could serve the best interests of its
stockholders, employees, customers and community by combining with Regions,
provided that First State could obtain a fair price for its stockholders.
Accordingly, First State's financial advisor and representatives of Regions
entered into discussions which culminated into specific negotiations on December
5 and December 8, 1997, and then into a written proposal from Regions in the
form of a letter of intent on December 9, 1997. On December 11, 1997, the First
State Board met with its financial advisor and with its outside counsel to
discuss the proposed Merger and approved the letter of intent.

     Thereafter, the parties conducted due diligence investigations on each
other and negotiated the terms of the definitive merger agreement. On December
18, 1997, the First State Board met, together with its financial advisor and
with its outside counsel, and reviewed and adopted the Agreement, subject to
certain changes as may be deemed necessary by management and subsequently
approved by the Board. The Agreement was executed on December 22, 1997.


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<PAGE>   28



     First State's Reasons for the Merger. In approving the Merger, the
directors of First State considered a number of factors. Without assigning any
relative or specific weights to the factors, the First State Board of Directors
considered the following material factors:

     (a) the information presented to the directors by the management of First
State concerning the business, operations, earnings, asset quality, and
financial condition of Regions, including compliance with regulatory capital
requirements on an historical and prospective basis;

     (b) the financial terms of the Merger, including the relationship of the
merger price to the market value, tangible book value, and earnings per share of
First State Common Stock, and the partial protection against a decline in the
market value of Regions Common Stock;

     (c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of First State Common Stock for Regions Common
Stock for federal and state income tax purposes;

     (d) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;

     (e) The alternatives to the Merger, including remaining an independent
institution in light of the current economic conditions of First State's
markets;

     (f) The financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected combinations
with the terms of the proposed transaction with Regions;

     (g) The enhanced liquidity of Regions Common Stock compared to First State
Common Stock; and

     (h) Regions' ability to provide comprehensive financial services through
First State's subsidiaries to its markets;

     The terms of the Merger were the result of arms-length negotiations between
representatives of First State and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of First State
unanimously approved the Merger as being in the best interests of First State
and its stockholders. Each member of the Board of Directors of First State has
agreed to vote those shares of First State Common Stock over which such member
has voting authority (other than in a fiduciary capacity) in favor of the
Merger.

      First State's Board of Directors unanimously recommends that First State
stockholders vote for approval of the Agreement.

     Regions' Reasons for the Merger. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:

     (a) a review, based in part on a presentation by Regions management, of (i)
the business, operations, earnings, and financial condition, including the
capital levels and asset quality, of First State on an historical, prospective,
and pro forma basis and in comparison to other financial institutions in the
area, (ii) the demographic, economic, and financial characteristics of the
markets in which First State operates, including existing competition, history
of the market areas with respect to financial institutions, and average demand

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<PAGE>   29



for credit, on an historical and prospective basis, and (iii) the results of
Regions' due diligence review of First State; and

     (b) a variety of factors affecting and relating to the overall strategic
focus of Regions, including Regions' desire to expand into markets in the
general vicinity of its core markets.

OPINION OF FIRST STATE'S FINANCIAL ADVISOR

     First State retained Morgan Keegan as its financial advisor to render an
opinion to the First State Board of Directors concerning the fairness, from a
financial point of view, to First State stockholders of the Exchange Ratio
pursuant to the Agreement. Morgan Keegan was retained by First State on the
basis of, among other things, its experience and expertise in the bank and
thrift industries. As part of its investment banking business, Morgan Keegan is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for various
purposes.

     On February 4, 1998, Morgan Keegan delivered its written opinion to the
Board of Directors of First State to the effect that, as of February 2, 1998 and
based upon and subject to certain matters stated in such opinion, the Exchange
Ratio is fair, from a financial point of view, to First State stockholders.

     THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN KEEGAN, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN,
IS ATTACHED HERETO AS APPENDIX B AND IS INCORPORATED HEREIN BY REFERENCE. FIRST
STATE STOCKHOLDERS ARE URGED TO READ THIS OPINION CAREFULLY IN ITS ENTIRETY.
MORGAN KEEGAN'S OPINION IS DIRECTED ONLY TO THE FAIRNESS TO THE FIRST STATE
STOCKHOLDERS, FROM A FINANCIAL POINT OF VIEW, OF THE EXCHANGE RATIO AND DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER OR RELATED TRANSACTIONS AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE FIRST STATE SPECIAL MEETING. THE SUMMARY OF THE OPINION OF MORGAN
KEEGAN SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.

     In arriving at its opinion, Morgan Keegan reviewed the Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of First State and certain senior officers and other
representatives and advisors of Regions concerning the businesses, operations
and prospects of First State and Regions. Morgan Keegan examined certain
publicly available business and financial information relating to First State
and Regions as well as certain financial forecasts and other data for First
State and Regions which were provided to Morgan Keegan by or otherwise discussed
with the respective management teams of, First State and Regions, including
information relating to certain strategic implications and operational benefits
anticipated from the Merger. Morgan Keegan reviewed the financial terms of the
Merger as set forth in the Merger Agreement in relation to, among other things:
current and historical market prices and trading volumes of First State Common
Stock and Regions Common Stock; the historical and projected earnings and
operating data of First State and Regions; and the capitalization and financial
condition of First State and Regions. Morgan Keegan considered, to the extent
publicly available, the financial terms of certain other similar transactions
recently effected which Morgan Keegan considered relevant in evaluating the
Merger and analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose businesses
Morgan Keegan considered relevant in evaluating those of First State and
Regions. Morgan Keegan also considered the relative contributions of First State
and Regions to the

                                       23

<PAGE>   30



combined company. In addition to the foregoing, Morgan Keegan conducted such
other analyses and examinations and considered such other financial, economic
and market criteria as Morgan Keegan deemed appropriate to arrive at its
opinion. Morgan Keegan noted that its opinion was necessarily based upon
information available, and financial, stock market and other conditions and
circumstances existing and disclosed, to Morgan Keegan as of the date of its
opinion.

     In conducting its review and rendering its opinion, Morgan Keegan assumed
and relied, without independent verification, upon the accuracy and completeness
of all financial and other information publicly available or furnished to or
otherwise reviewed by or discussed with Morgan Keegan. With respect to financial
forecasts and other information provided to or otherwise reviewed by or
discussed with Morgan Keegan, the management teams of First State and Regions
advised Morgan Keegan that such forecasts and other information were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the respective management teams of First State and Regions as to
the future financial performance of First State and Regions and the strategic
implications and operational benefits anticipated from the Merger. Morgan Keegan
assumed, with the consent of the Board of Directors of First State, that the
Merger will be accounted for as a pooling of interests in accordance with
generally accepted accounting principles and as a tax-free reorganization for
federal income tax purposes. Morgan Keegan did not express any opinion as to
what the value of Regions Stock actually will be when issued pursuant to the
Merger or the price at which Regions Common Stock will trade subsequent to the
Merger. In addition, Morgan Keegan did not make or obtain an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of First State or Regions nor did Morgan Keegan make any physical inspection of
the properties or assets of First State or Regions. Morgan Keegan was not asked
to consider, and its opinion does not address, the relative merits of the Merger
as compared to any alternative business strategies that might exist for First
State or the effect of any other transaction in which First State might engage.
In addition, although Morgan Keegan evaluated the Exchange Ratio from a
financial point of view, Morgan Keegan was not asked to and did not recommend
the specific consideration payable in the Merger, which was determined by First
State and Regions through arms-length negotiations. No other limitations were
imposed by First State on Morgan Keegan with respect to the investigations made
or procedures followed by Morgan Keegan in rendering its opinion.

     The following is a summary of the principal analyses performed by Morgan
Keegan in connection with its opinion.

     Summary Transaction Analysis. Morgan Keegan reviewed the terms of the
proposed transaction, including the Exchange Ratio and the aggregate transaction
value. Morgan Keegan reviewed the implied value of the consideration offered
based upon the $40.56 per share closing price of Regions' Common Stock on
February 2, 1998, which indicates an implied value of $22.68 per share of First
State Common Stock (assuming 6,879,898 total outstanding shares), representing a
19% premium to the closing price of $19.00 for First State's Common Stock on
December 1, 1997, approximately two weeks prior to the announcement of the
Merger. This indicates an aggregate transaction value of $156.27 million. Morgan
Keegan calculated that as of February 2, 1998, the aggregate transaction value
represented 28.94% of the total assets of First State at September 30, 1997,
3.01x First State's stated book value at September 30, 1997, and 20.73x First
State's earnings for the trailing twelve months ending September 30, 1997.

     Contribution Analysis. Morgan Keegan reviewed certain historical financial
and operating information for First State, Regions and the pro forma combined
entity resulting from the Merger based on financial data reported by First State
and Regions. Morgan Keegan analyzed the relative balance sheet contribution of
First State and Regions for certain data to the combined company on a pro forma
basis as of September 30, 1997. This analysis indicated that First State would
have contributed 2.3% to combined total assets, 2.3% to combined loans (net of
allowances for losses), 2.5% to deposits and 3.2% to tangible equity. Morgan
Keegan

                                       24

<PAGE>   31



also analyzed the relative income statement contribution of First State and
Regions for certain data to the combined company on a pro forma basis. This
analysis indicated that First State would have contributed 3.6% to combined net
interest income for the latest twelve months ("LTM") ended September 30, 1997,
2.9% to combined pretax income and 2.9% to combined net income. At the Exchange
Ratio of one share of First State Common Stock for 0.56 shares of Regions Common
Stock, the holders of outstanding First State Common Stock would own
approximately 2.9% of Regions on a fully diluted basis.

     Comparable Company Analysis for First State. Morgan Keegan reviewed and
compared certain financial information relating to First State to corresponding
financial information, public market multiples and ratios for fourteen publicly
traded Georgia companies that it deemed to be comparable to First State. The
companies which Morgan Keegan used for purposes of this analysis were ABC
Bancorp., Bank Corporation of Georgia, Century South Banks, Inc., Fidelity
National Corporation, First Banking Company Southeast Georgia, First Community
Banking Services, First Sterling Banks, Inc., Habersham Bancorp., Merit Holding
Corporation, PAB Bankshares, Inc., Premier Bancshares, Inc., Savannah Bancorp.,
Inc., Southwest Georgia Financial Corporation and Summit Bank Corporation
(collectively, the "Comparable Companies"). Morgan Keegan calculated a range of
market multiples for the Comparable Companies by dividing market value as of
February 2, 1998 by each such company's LTM earnings per share ("EPS") ended
September 30, 1997 and tangible book value reported September 30,1997. This
analysis indicated that the price per share/earnings multiples ("P/E") for LTM
EPS ranged from 14.71x to 32.77x, with a mean of 21.21x and a median of 20.33x,
compared to 20.75x for First State. Using balance sheet data as of September 30,
1997, Morgan Keegan's analyses of the Comparable Companies indicated market
value multiples of tangible book value that ranged from 1.74x to 4.60x, with a
mean of 2.52x and a median of 2.46x, compared to 3.43x for First State. For the
LTM results ending September 30, 1997, Morgan Keegan also compared certain
ratios (including, among other things, return on average assets; return on
average equity; net interest margin; non-performing assets to total assets,
total equity capital to assets and loans to deposits) of the Comparable
Companies to First State. For the Comparable Companies, the analysis indicated a
return on average assets range of 0.74% to 1.70%, with a mean of 1.15% and a
median of 1.35%, compared to 1.45% for First State; a return on average equity
range of 7.80% to 18.83%, with a mean of 10.92% and a median of 13.20% for the
Comparable Companies, compared to 15.41% for First State; and a net interest
margin range of 4.49% to 6.43%, with a mean of 5.29% and a median of 5.33% for
the Comparable Companies, compared to 5.33% for First State. Additionally, the
analysis indicated a non-performing assets to total assets range of 0.08% to
1.64%, with a mean of 0.72% and a median of 0.58% for the Comparable Companies,
compared to 0.29% for First State; a total equity capital to total assets range
of 4.66% to 11.48%, with a mean of 9.65% and a median of 10.02% for the
Comparable Companies, compared to 9.63% for First State; and a loans to deposits
range of 64.69% to 88.07%, with a mean of 78.04% and a median of 77.60% for the
Comparable Companies, compared to 82.02% for First State.

     Comparable Company Analysis for Regions. Morgan Keegan reviewed and
compared certain financial information relating to Regions to corresponding
financial information, public market multiples and ratios for seven publicly
traded Southeastern banking companies that it deemed to be comparable to
Regions. The companies which Morgan Keegan used for purposes of this analysis
were AmSouth Bancorporation, Colonial BancGroup, Compass Bancshares, First
Commercial Corporation, Hibernia Corporation. SouthTrust Corporation, and Union
Planters Corporation (collectively, the "Regions Comparable Companies"). Morgan
Keegan calculated a range of market multiples for the Regions Comparable
Companies by dividing market value as of February 2, 1998 by each such company's
EPS for the latest twelve months ending September 30, 1997 and tangible book
value as of September 30, 1997. This analysis indicated that the price per
share/earnings multiples ("P/E") for LTM EPS ranged from 19.33x to 24.86x, with
a mean of 21.63x and a median of 20.25x, compared to 18.93x for Regions. Using
balance sheet data reported September 30, 1997, Morgan Keegan's analyses of the
Regions Comparable Companies indicated market value multiples

                                       25

<PAGE>   32



of tangible book value that ranged from 2.93x to 3.98x, with a mean of 3.43x and
a median of 3.49x, compared to 3.36x for Regions. For the LTM results ending
September 30, 1997, Morgan Keegan also compared certain ratios (including, among
other things, return on average assets; return on average equity; net interest
margin; non-performing assets to total assets, total equity capital to assets
and loans to deposits) of the Regions Comparable Companies to Regions. For the
Regions Comparable Companies, the analysis indicated a return on average assets
range of 1.07% to 1.43%, with a mean of 1.25% and a median of 1.22%, compared to
1.41% for Regions; a return on average equity range of 13.46% to 17.28%, with a
mean of 15.54% and a median of 15.90% for the Regions Comparable Companies,
compared to 16.23% for Regions; and a net interest margin range of 3.98% to
4.85%, with a mean of 4.37% and a median of 4.20% for the Regions Comparable
Companies, compared to 4.28% for Regions. Additionally, the analysis indicated a
non-performing assets to total assets range of 0.24% to 0.62%, with a mean of
0.45% and a median of 0.48% for the Regions Comparable Companies, compared to
0.49% for Regions; a total equity capital to total assets range of 6.77% to
10.02%, with a mean of 8.32% and a median of 7.55% for the Regions Comparable
Companies, compared to 8.32% for Regions; and a loans to deposits range of
73.36% to 113.98%, with a mean of 92.38% and a median of 91.23% for the Regions
Comparable Companies, compared to 89.79% for Regions.


     Stock Trading Analysis. Morgan Keegan reviewed and analyzed the price
performance and the historical trading volume for Regions' Common Stock.

     Morgan Keegan's analysis indicated that for the five-year period ending
December 31, 1997, the total return (annualized) for Regions' Common Stock (all
cash distributions and dividends reinvested on the ex-dividend date) was 24.42%
compared to 17.77% for the S&P 400 Mid-Cap Index and 34.12% for the S&P Mid-Cap
Banks Index. For the twelve-month period ending December 31, 1997, the total
return (annualized) for Regions' Common Stock (all cash distributions and
dividends reinvested on the ex-dividend date) was 67.15% compared to 32.24% for
the S&P 400 Mid-Cap Index and 80.33% for the S&P Mid-Cap Banks Index.

     Additionally, Morgan Keegan compared recent trading volume in Regions'
Common Stock to that of its Regions Comparable Companies. During the four
quarters ending September 30, 1997, the quarterly trading volume as a percentage
of average outstanding shares for the Regions Comparable Companies ranged from
3.39% to 23.38%, with a mean of 12.27% and a median of 12.40%. During the same
period, the quarterly trading volume as a percentage of average outstanding
shares for Regions ranged from 9.18% to 14.12%, with a mean of 10.90% and a
median of 10.15%. Morgan Keegan considers Regions' Common Stock to be liquid and
marketable.

     Morgan Keegan also examined recent trading prices and volumes of First
State's Common Stock, which also trades on the NASDAQ National Market. Morgan
Keegan placed little weight on the market price of First State's Common Stock in
its analysis.

     Analysis of Selected Comparable Mergers and Acquisitions. In order to
assess market pricing for comparable mergers, Morgan Keegan reviewed overall
mergers transactions in the banking industry. Morgan Keegan selected fifteen
transactions occurring between January 31, 1997 and January 31, 1998, involving
sellers located in the Southeastern United States with total assets between $250
million and $1 billion. No transaction was considered identical to the Merger;
therefore, the medians of the overall transaction multiples were considered more
relevant than the multiples for any specific transaction. Morgan Keegan
calculated market value multiples of LTM net income ranging from 13.73x to
30.21x, with a mean of 19.57x and a median of 18.59x, latest reported tangible
book value ranging from 1.95x to 3.94x, with a mean of 2.50x and

                                       26

<PAGE>   33



a median of 2.35x and latest reported total assets ranging from 15.43% to
34.31%, with a mean of 23.72% and a median of 24.29%. First State's transaction
multiples are 20.73x latest twelve months earnings for the period ending
September 30, 1997, 3.01x stated book value as of September 30, 1997, and 28.94%
of total assets as of September 30, 1997.

     No company or transaction used in the comparable companies and comparable
transactions analyses for comparative purposes is identical to First State 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.
Mathematical analysis (such as determining the average or median) is not, in
itself, a meaningful method of using comparable company or transaction data.

     Discounted Cash Flow Analysis. Morgan Keegan performed a discounted cash
flow analysis of the projected cash flow available for dividends of First State
for fiscal years 1998 through 2002, based on projections provided by First State
management. Using this information, Morgan Keegan calculated a range of equity
values for First State based on the sum of (i) the present value of the cash
flow available for dividends to First State and (ii) the present value of the
estimated terminal value for First State assuming that it was sold at the end of
fiscal year 2002. In performing its discounted cash flow analysis, Morgan Keegan
assumed, among other things, discount rates of 11.0% to 13.0% and terminal
multiples of net income of 10.0x to 12.0x. Those discount rates and terminal
multiples reflect Morgan Keegan's qualitative judgments concerning the specific
risk associated with such an investment and the historical and projected
operating performance of First State. This analysis resulted in a range of
equity values for First State of $78.14 million to $94.67 million, or $11.36 to
$13.76 per share.

     The summary of the Morgan Keegan Report set forth above does not purport to
be a complete description of the presentation by Morgan Keegan of the Morgan
Keegan Report to First State's Board of Directors or of the analyses performed
by Morgan Keegan. The preparation of a fairness opinion is not necessarily
susceptible to partial analysis or summary description. Morgan Keegan believes
that its analyses and the summary set forth above must be considered as a whole
and that selecting portions of its analyses, without considering all analyses,
or of the above summary, without considering all factors and analyses, would
create an incomplete view of the process underlying the analyses set forth in
the Morgan Keegan Report and its opinion. In addition, Morgan Keegan may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to represent the actual value of First State or the combined
company.

     In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of First State or Regions.
The analyses performed by Morgan Keegan are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Morgan Keegan's analysis of the fairness, from a financial point of
view, of the consideration to be paid by Regions. The analyses do not purport to
be appraisals or to reflect the prices at which a company might actually be sold
or the prices at which any securities may trade at the present time or at any
time in the future.

     First State has agreed to pay Morgan Keegan a fee of $35,000 for its
services pursuant to an engagement letter. No portion of Morgan Keegan's fee is
contingent upon the closing of the transaction. First State also has agreed to
reimburse Morgan Keegan for its reasonable out-of-pocket expenses and to
indemnify Morgan Keegan against certain liabilities, including liabilities under
the federal securities laws.


                                       27

<PAGE>   34



EFFECTIVE DATE OF THE MERGER

     Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger relating to
the Merger become effective with, respectively, the Delaware Secretary of State
and the Georgia Secretary of State. Unless otherwise agreed upon by Regions and
First State, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties will use their reasonable efforts to cause the
Effective Date to occur on the last day of the month in which 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 Agreement is approved by
the requisite vote of First State stockholders.

     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 First State anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the first quarter of 1998. However, delays in the
consummation of the Merger could occur.

     The Board of Directors of either Regions or First State generally may
terminate the Agreement if the Merger is not consummated by September 30, 1998,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See "--Conditions to Consummation of
the Merger" and "--Waiver, Amendment, and Termination of the Agreement."

DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES

     Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions to mail to the former stockholders of First State a form
letter of transmittal, together with instructions for the exchange of such
stockholders' certificates representing shares of First State Common Stock for
certificates representing shares of Regions Common Stock.

      FIRST STATE 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 First State Common Stock, together with a
properly completed letter of transmittal, there will be issued and mailed to
each holder of First State 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 Date, to
the extent permitted by law, First State stockholders of record as of the
Effective Date 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
First State Common Stock has been converted, regardless of whether such
stockholders have surrendered their First State Common Stock certificates. No
dividend or other distribution payable after the Effective Date with respect to
Regions Common Stock, however, will be paid to the holder of any unsurrendered
First State 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.

     The stock transfer books of First State will be closed at the effective
time of the Merger and after the Effective Date, there will be no transfers of
shares of First State Common Stock on First State's stock transfer books. If
certificates representing shares of First State Common Stock are presented for
transfer after the Effective Date, 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.

                                       28

<PAGE>   35




CONDITIONS TO CONSUMMATION OF THE MERGER

     Consummation of the Merger is subject to a number of conditions, including,
but not limited to:

     (a) approval from the Federal Reserve and the Georgia Department, and the
expiration of all applicable waiting periods associated with these approvals,
without any conditions or restrictions that would, in the reasonable good faith
judgment of Regions' Board of Directors, so materially adversely impact the
economic benefits of the transactions contemplated by the Agreement so as to
render inadvisable the consummation of the Merger;

     (b) the approval by the holders of requisite number of shares of First
State Common Stock;

     (c) the absence of any action by any court or governmental or regulatory
authority of competent jurisdiction restricting, prohibiting, or making illegal
the consummation of the Merger and the other transactions contemplated by the
Agreement;

     (d) 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 and that the exchange of First State Common Stock for Regions
Common Stock will not give rise to recognition of gain or loss to First State
stockholders, except to the extent of any cash received; and

     (e) notification for listing on the Nasdaq National Market of the shares of
Regions Common Stock to be issued in the Merger.

     Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including, among others:
(i) the delivery by Regions and First State 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
Agreement; (ii) as of the Effective Date, the accuracy of certain
representations and warranties and the compliance in all material respects with
the agreements and covenants of each party; and (iii) the receipt by Regions of
a letter from its independent auditors that the Merger will qualify for
pooling-of-interests accounting treatment.

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. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have been
submitted to the appropriate regulatory agencies.

     Regions and First State 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, pursuant to
Section 3 of the BHC Act. In granting its approval under Section 3 of the BHC
Act, the Federal Reserve 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 from approving the Merger (i) if it would result in
a monopoly or be in furtherance of any combination or

                                       29

<PAGE>   36



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 any other manner, unless the Federal
Reserve 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 BHC Act, the
Merger may not be consummated until the 30th day following the date of Federal
Reserve approval, which may be shortened by the Federal Reserve 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's approval, unless a court
specifically orders otherwise.

     The Merger also is subject to the approval of the Georgia Department. In
its evaluation, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.

WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT

     Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
First State approved by their respective Boards of Directors; provided, however,
that after approval by the First State stockholders, no amendment that pursuant
to the Georgia Act requires further approval of the First State stockholders,
including decreasing the consideration to be received by First State
stockholders, may be made without the further approval of such stockholders.

     The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by First State
stockholders, under certain circumstances, including:

     (a) by the Board of Directors of either party if any required consent of
any regulatory authority shall have been denied by any final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal;

     (b) by the Board of Directors of either party, if the holders of the
requisite number of shares of First State Common Stock shall not have approved
the Agreement;

     (c) by mutual consent of the Boards of Directors of Regions and First 
State;

     (d) by the Board of Directors of either party (provided that the
terminating party is not then in breach of any representation, warranty,
covenant, or agreement under the applicable standard set forth in the
Agreement), in the event of any material breach by the other party of any
covenant or agreement, or in the event of any material inaccuracy in any
representation or warranty of the other party meeting certain standards, which
breach or inaccuracy cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party; or

     (e) by the Board of Directors of either party if the Merger shall not have
been consummated by September 30, 1998, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach of
the Agreement.

     If the 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 Agreement giving rise to
such termination.

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<PAGE>   37




CONDUCT OF BUSINESS PENDING THE MERGER

     Each of First State and Regions generally has agreed to operate its
business only in the usual, regular, and ordinary course, to preserve intact its
business organizations and assets and maintain its rights and franchises, and 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 Agreement in all material respects 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, or 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 Agreement includes certain
other restrictions applicable to the conduct of the business of either First
State or Regions prior to consummation of the Merger, as described below.

     First State. First State 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. Generally, First State has agreed that, except
as specifically contemplated by the Agreement, it will not:

     (a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of First State or its subsidiaries;

     (b) incur, guarantee, or otherwise become responsible for, any additional
debt obligation or other obligation for borrowed money in excess of an aggregate
of $100,000 (for First State and its subsidiaries on a consolidated basis)
except in the ordinary course of the business of First State and its
subsidiaries consistent with past practices (which shall include creation of
deposit liabilities, purchases of federal funds, advances from the Federal Home
Loan Bank or the Federal Reserve Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or forgive any such
indebtedness of any person to First State or its subsidiaries in excess of any
aggregate of $25,000, or impose, or suffer the imposition, on any share of stock
held by First State or its subsidiaries of any lien or permit any such lien to
exist;

     (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 First State or its subsidiaries, or declare or pay any dividend
or make any other distribution in respect of First State Common Stock; provided
that First State may (to the extent legally able to do so), but shall not be
obligated to, declare and pay regular annual cash dividends on the First State
Common Stock in the amounts and with the usual and regular record and payment
dates in accordance with past practice as previously disclosed to Regions;

     (d) except pursuant to the exercise of stock options outstanding as of the
date of the Agreement and pursuant to the terms thereof in existence on the date
of the 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
First State Common Stock or any other capital stock of First State or its
subsidiaries, 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;

     (e) adjust, split, combine, or reclassify any capital stock of First State
or its subsidiaries or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of First State Common Stock or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares of
capital stock of First State's subsidiaries or any assets having in the
aggregate a book value in excess of $100,000, other than in the ordinary course
of business for reasonable and adequate consideration;

                                       31

<PAGE>   38




     (f) acquire direct or indirect control over, or invest in equity securities
of, any entity, other than in connection with foreclosures in the ordinary
course of business, or acquisitions of control by First State in its fiduciary
capacity;

     (g) grant any increase in compensation or benefits to the employees or
officers of First State or its subsidiaries except as previously disclosed to
Regions or as required by law; pay any bonus except pursuant to the provisions
of any applicable program or plan adopted by its Board of Directors prior to the
date of the Agreement and previously disclosed to Regions; enter into or amend
any severance agreements with officers of First State or its subsidiaries; or
grant any increase in fees or other increases in compensation or other benefits
to directors of First State or its subsidiaries;

     (h) enter into or amend any employment contract between First State or its
subsidiaries and any person (unless such amendment is required by law) that
First State or its subsidiaries 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 Date;

     (i) adopt any new employee benefit plan or program of First State or its
subsidiaries or make any material change in or to any existing employee benefit
plans or programs of First State or its subsidiaries 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;

     (j) make any significant change in any accounting methods, principles, or
practices or systems of internal accounting controls, except as may be necessary
to conform to changes in regulatory accounting requirements or generally
accepted accounting principles ("GAAP");

     (k) with certain exceptions, commence or settle any litigation for money
damages in excess of $25,000, or involving restrictions upon the operations of
First State or any subsidiary; or

     (l) except in the ordinary course of business, enter into or terminate any
material contract or make any change in any material lease or contract, other
than renewals of leases and contracts without material adverse changes of terms.

     In addition, First State has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. First State 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, First State has agreed to
use reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.

     Regions. The Agreement prohibits Regions, without the prior written consent
of a duly authorized officer of First State, from amending its certificate of
incorporation or bylaws in any manner which is adverse to, and discriminates
against, the holders of First State Common Stock.

MANAGEMENT FOLLOWING THE MERGER

     Consummation of the Merger will not alter the present officers and
directors of Regions. Certain information pertaining to the directors and
executive officers of Regions, executive compensation, certain relationships and
related transactions, and other related matters, is incorporated by reference or
set forth in

                                       32

<PAGE>   39



Regions' Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated herein by reference. See "Documents Incorporated by Reference."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

     The Agreement generally provides that Regions will, and will cause First
State to, indemnify each person entitled to indemnification from First State or
any of its subsidiaries to the full extent permitted by Georgia law and by First
State's Articles of Incorporation or Bylaws as in effect on the date of the
Agreement, for a period of six years from the Effective Date with respect to
matters occurring at or prior to the Effective Date.

     The Agreement also provides that, after the Effective Date, Regions will
provide generally to officers and employees of First State and its subsidiaries
who, at or after the Effective Date, 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 First State
or its subsidiaries prior to the Effective Date will be treated as service with
Regions or its subsidiaries. The Agreement further provides that Regions will
cause First State to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between First State or
its subsidiaries and any current or former director, officer, or employee, and
all provisions for vested amounts earned or accrued through the Effective Date
under First State's benefit plans.

     As described above under " --Treatment of First State Options," the
Agreement also provides that all rights with respect to First State Common Stock
pursuant to stock options or stock appreciation rights granted by First State
under its stock option plans which are outstanding at the Effective Date,
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 First State
owned _____ shares of Regions Common Stock.

ABSENCE OF DISSENTERS' RIGHTS

     In accordance with the applicable provisions of the Georgia Act and because
First State Common Stock is quoted on the Nasdaq National Market, the holders of
shares of First State Common Stock are not afforded the right to dissent from
the Merger and to receive an appraised value of such shares in cash.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX LAWS
NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, AND INSURANCE COMPANIES, AMONG OTHERS). NOR
DOES

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<PAGE>   40



THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY STATE, LOCAL,
ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER,
INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF
FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY
PROPOSED CHANGES IN THE TAX LAWS.

     A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, consummation of the Merger
is conditioned upon receipt by Regions and First State of an opinion from Alston
& Bird LLP, special counsel to Regions, concerning certain federal income tax
consequences of the proposed Merger under federal income tax law. Based upon
representations made by Regions and First State, it is such firm's opinion that:

     (a) Provided the Merger qualifies as a statutory merger under the Delaware
GCL and the Georgia Act, the Merger will be a reorganization within the meaning
of Section 368(a) of the Code. First State and Regions will each be "a party to
a reorganization" within the meaning of Section 368(b) of the Code.

     (b) The stockholders of First State will recognize no gain or loss upon the
exchange of their First State Common Stock solely for shares of Regions Common
Stock.

     (c) The basis of the Regions Common Stock received by the First State
stockholders in the Merger will, in each instance, be the same as the basis of
the First State Common Stock surrendered in exchange therefor, less the basis of
any fractional share of Regions Common Stock settled by cash payment.

     (d) The holding period of the Regions Common Stock received by the First
State stockholders will, in each instance, include the period during which the
First State Common Stock surrendered in exchange therefor was held, provided
that the First State Common Stock was held as a capital asset on the date of the
exchange.

     (e) The payment of cash to First State 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 Code.

     The opinion of Alston & Bird LLP is based upon certain representations made
by First State and Regions. If these representations are inaccurate or
incomplete in any material respect, then the tax consequences may differ from
those stated above, and the opinion of Alston & Bird LLP as to the federal
income tax consequences of the Merger may not be relied upon.

     THE OPINION OF ALSTON & BIRD LLP DOES NOT ADDRESS ANY STATE, LOCAL,
FOREIGN, OR OTHER TAX CONSEQUENCES OF THE MERGER. FIRST STATE STOCKHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF
THE PROPOSED TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER
STATE, LOCAL, OR 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 GAAP, 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. See "Summary--Comparative Per Share
Data."


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<PAGE>   41




EXPENSES AND FEES

     The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.

RESALES OF REGIONS COMMON STOCK

     The shares of Regions Common Stock to be issued to First State stockholders
in the Merger have been registered under the Securities Act, but that
registration does not cover resales of those shares by persons who control, are
controlled by, or are under common control with, First State (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 SEC Rule 145 or in accordance with a
legal opinion satisfactory to Regions that such sale or transfer is otherwise
exempt from the Securities Act registration requirements.

     Each person who First State reasonably believes will be an affiliate of
First State 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 of the SEC promulgated thereunder.



                                       35

<PAGE>   42



                 EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS

     As a result of the Merger, holders of First State Common Stock will be
exchanging their shares of a Georgia corporation governed by the Georgia Act and
First State's Articles of Incorporation, as amended (the "Articles"), and
Bylaws, for shares of Regions, a Delaware corporation governed by the Delaware
GCL and Regions' Certificate of Incorporation (the "Certificate") and Bylaws.
Certain significant differences exist between the rights of First State
stockholders and those of Regions stockholders. The differences deemed material
by First State and Regions are summarized below. In particular, Regions'
Certificate and Bylaws contain several provisions that may be deemed to 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 Georgia Act and the Delaware GCL as well as to Regions'
Certificate and Bylaws and First State's Articles 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 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 Proposals," and "--Mergers,
Consolidations, and Sales of Assets Generally," and the provisions of the
Delaware GCL 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 result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.


                                       36

<PAGE>   43



AUTHORIZED CAPITAL STOCK

     Regions. The Certificate authorizes the issuance of up to 240,000,000
shares of Regions Common Stock, of which 136,820,461 shares were issued,
including 500,000 treasury shares, as of September 30, 1997. Regions' Board of
Directors may authorize the issuance of additional shares of Regions Common
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 Common 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.

     First State. First State's authorized capital stock consists of 20,000,000
shares of First State Common Stock, of which 6,879,898 shares were issued and
outstanding as of the Record Date, and 100,000 shares of 7% cumulative nonvoting
preferred stock, none of which is outstanding.

     Pursuant to the Georgia Act, First State's Board of Directors may authorize
the issuance of additional shares of First State Common Stock without further
action by First State's stockholders. First State's Articles do not provide the
stockholders of First State with preemptive rights to purchase or subscribe to
any unissued authorized shares of First State Common Stock or any option or
warrant for the purchase thereof.

AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS

     Regions. The Delaware GCL 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
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.

     First State. The Georgia Act generally provides that a Georgia
corporation's articles of incorporation may be amended by the affirmative vote
of a majority of the shares entitled to vote thereon, unless the articles of
incorporation provide for a higher or lower voting requirement. First State's
Articles provide that certain provisions therein (generally pertaining to
business combination transactions) require the affirmative vote of

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<PAGE>   44



80% of the voting power of the corporation, excluding shares owned by an
interested stockholder, as defined. First State's Articles also provide that the
affirmative vote of at least two-thirds of the outstanding shares of First State
Common Stock is required to amend the provision dealing with the limitation of
liability of directors unless the amendment is approved by two-thirds of the
current directors. Otherwise, the Articles do no provide for a higher or lower
voting requirement to amend the Articles.

     First State's Bylaws provide that the Bylaws may be altered, amended or
repealed or new Bylaws adopted by a majority vote of all of the directors or by
the vote of the holders of a majority of the outstanding shares.

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.

     First State. Like Regions' Certificate, First State's Articles also provide
that the Board of Directors is divided into three classes with the directors in
each class serving a three-year term of office. Also like Regions' Certificate,
First State's Articles do not provide for cumulative voting rights in the
election of directors.

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.

     First State. Pursuant to First State's Bylaws, any director may be removed
with or without cause by the holders of a majority of the outstanding stock
entitled to vote for the election of directors.

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

                                       38

<PAGE>   45



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.

     First State. The Georgia Act permits a corporation's articles of
incorporation to relieve directors from liability for money damages for good
faith conduct. The Articles provide that First State directors shall not be
liable for money damages for breach of duty as a director except for actions not
taken in good faith or that involve intentional misconduct or certain unlawful
transactions. Such limitations on director liability are substantially similar
to those applicable to Regions.

INDEMNIFICATION

     Regions. The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
GCL. Under Section 145 of the Delaware GCL 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
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.

     First State. First State's Bylaws provide that any person, the person's
heirs, executors or administrators, may be indemnified or reimbursed by First
State for reasonable expenses actually incurred in connection with any action,
suit or proceeding, civil or criminal, to which the person shall be made a party
by reason of the fact that the person is or was a director, trustee, officer,
employee or agent of First State, or that the person is or was serving at the
request of First State in such position with a trust or other organization or
enterprise, in substantially the same manner and with substantially the same
effect as provided by Regions' Certificate.


                                       39

<PAGE>   46



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.

     First State. First State's Bylaws provide that special meetings of
stockholders shall be called by First State upon written request by the holders
of 50% or more of all the shares of First State which are entitled to vote in an
election of directors. The Bylaws also provide that special meetings of the
stockholders may be called at any time by the President, Chairman of the Board,
or by the Board of Directors.

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.

     First State. Under the Georgia Act and First State's Bylaws, any action
requiring or permitting shareholder approval may be approved by the unanimous
written consent of stockholders.

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 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.

     First State. Neither First State's Articles nor Bylaws provide procedures
for the nomination by stockholders of individuals for election to the Board of
Directors. Accordingly, a stockholder could nominate an individual to serve as a
director at a meeting at which directors are to be elected, although no such
nominations have been made in the past.


                                       40

<PAGE>   47



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 GCL 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 GCL, 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.

     First State. The Georgia Act generally provides that such transactions
require the approval by the corporation's board of directors and by a majority
of the corporation's outstanding shares. Neither First State's Articles nor
Bylaws contain provisions that operate to alter the vote required to approve the
Merger.

BUSINESS COMBINATIONS WITH CERTAIN PERSONS

     Regions. Section 203 of the Delaware GCL ("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 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.

                                       41

<PAGE>   48




     First State. The Articles provide that certain business combination
transactions involving an "interested stockholder" (as defined, generally with
reference to levels of stock ownership in First State) may not be consummated
unless approved by the affirmative vote of either (i) 80% of the outstanding
voting stock or (ii) a majority of the voting power of outstanding voting stock
in the case of a transaction either (x) approved by a majority of the
"continuing directors" of First State then in office (defined generally as
directors who are unaffiliated with an interested stockholder and were directors
prior to the time an interested stockholder became an interested stockholder),
or (y) meeting certain pricing conditions. Absent such provision, the Georgia
Act would require approval of a majority of the voting power of a corporation's
stock. Such provision does not apply to the Merger.

DISSENTERS' RIGHTS OF APPRAISAL

     Regions. The rights of appraisal of dissenting stockholders of Regions are
governed by the Delaware GCL. 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: (a) shares of stock of the corporation
surviving or resulting from the merger or consolidation; (b) 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; (c) cash in lieu of fractional shares of
stock described in clause (a) or (b) immediately above; or (d) any combination
of the shares of stock and cash in lieu of fractional shares described in
clauses (a) through (c) 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 of appraisal.

     First State. The rights of appraisal of dissenting stockholders under
Georgia law are generally similar to those afforded under the Delaware GCL.
Because First State Common Stock is quoted on the Nasdaq National Market,
holders of First State Common Stock do not have dissenters' rights of appraisal
in connection with the Merger.

STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS

     Regions. The Delaware GCL 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.

     First State. Pursuant to the Georgia Act, upon written notice of a demand
to inspect corporate records, a stockholder is entitled to inspect specified
corporate records, including articles of incorporation and bylaws, minutes of
stockholder meetings and certain resolutions adopted at director meetings, a
list of directors and officers, and all stockholder communications for the
preceding three years, including financial statements. Upon demonstration of a
proper purpose, a stockholder may be entitled to inspect other corporate
records.


                                       42

<PAGE>   49



DIVIDENDS

     Regions. The Delaware GCL 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 "Certain Regulatory Considerations--Payment of Dividends."

     First State. Pursuant to the Georgia Act, a board of directors may from
time to time make distributions to its stockholders, subject to restrictions in
its articles of incorporation, 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 articles of incorporation permit 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. As with
Regions, substantially all of the funds available for the payment of dividends
by First State are also derived from its subsidiary depository institutions, and
there are various statutory limitations on the ability of such subsidiaries to
pay dividends to First State.



                                       43

<PAGE>   50





                    COMPARATIVE MARKET PRICES AND DIVIDENDS

     Regions Common Stock and First State Common Stock are listed for quotation
on the Nasdaq National Market under the symbols "RGBK" and "FSBT," respectively.
The following table sets forth, for the indicated periods, the high and low
closing sale prices for Regions Common Stock and First State Common Stock as
reported by Nasdaq, and the cash dividends declared per share of Regions Common
Stock and First State Common Stock for the indicated periods. The amounts
indicated for Regions have been adjusted to reflect a 2-for-1 stock split
effected by Regions on June 13, 1997.

<TABLE>
<CAPTION>
                                              REGIONS                                       FIRST STATE
                                     PRICE RANGE     CASH DIVIDENDS               PRICE RANGE     CASH DIVIDENDS
                                    -------------       DECLARED                --------------        DECLARED
                                    HIGH      LOW       PER SHARE               HIGH       LOW       PER SHARE
                                    ----      ---       ---------               ----       ---       ---------
<S>                                <C>      <C>          <C>                   <C>       <C>          <C>  
1996
First Quarter ................     $24.00   $20.38       $.175                 $14.00    $11.11       $ .06
Second Quarter ...............      24.19    21.13        .175                  16.89     12.45         .07
Third Quarter.................      24.32    21.82        .175                  17.33     14.67         .07
Fourth Quarter................      26.88    24.38        .175                  22.00     14.67         .07

1997
First Quarter.................      30.94    25.69         .20                  22.00     19.33         .07
Second Quarter................      33.25    27.38         .20                  21.25     17.50         .09
Third Quarter.................      39.13    32.06         .20                  21.25     18.50         .09
Fourth Quarter................      44.75    36.56         .20                  24.00     18.75         .09

1998
First Quarter (through
     _______, 1998) ..........
</TABLE>

     On _______, 1998, the last reported sale prices of Regions Common Stock and
First State Common Stock, as reported on the Nasdaq National Market, were $
_______ and $_______, respectively. At the close of trading on December 11,
1997, the last trading day prior to public announcement of the proposed Merger,
the last reported sale prices of Regions Common Stock and First State Common
Stock, as reported on the Nasdaq National Market, were $41.75 and $19.25,
respectively.


     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, particularly Regions Bank in Alabama.
Regions' subsidiary depository institutions are subject to certain legal
restrictions on the amount of dividends they are permitted to pay. See "Certain
Regulatory Considerations--Payment of Dividends."


                                       44

<PAGE>   51



     As with Regions, the holders of First State Common Stock are entitled to
receive dividends when and if declared by the Board of Directors out of funds
legally available therefor. First State's dividend policy has provided for the
payment of dividends totaling between 25% to 35% of the prior year's profits,
and dividends are paid quarterly.

                             BUSINESS OF FIRST STATE

      First State is a bank holding company organized under the laws of the
state of Georgia with its principal executive office located in Albany, Georgia.
First State operates principally through its two banking subsidiaries, First
State Bank & Trust Company, Albany ("FSB Albany"), and First State Bank & Trust
Company, Cordele, which are state-chartered commercial banks and which provide a
range of consumer and commercial banking services through a total of 14 banking
offices in southwest Georgia. First State also operates First State Mortgage,
which originates residential mortgage loans. At September 30, 1997, First State
had total consolidated assets of approximately $540 million, total consolidated
deposits of approximately $462 million, and total consolidated stockholders'
equity of approximately $52 million. First State's principal executive office is
located at 333 W. Broad Avenue, Albany, Georgia, 31703 and its telephone number
at such address is (912) 432-8000.

     Additional information with respect to First State and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Documents incorporated by reference include First State's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and
First State's Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1997. See "Documents Incorporated by Reference."


           VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FIRST STATE

     The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of First State 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(1)      CLASS (1)
- --------------           -------------------             -----------------------     ----------
<S>                    <C>                               <C>                         <C>  
Common Stock           Mr. J. Reeves Haley                      437,463 (2)              6.36%
                       209 Dixie Drive
                       Moultrie, Georgia 31769

Common Stock           Ms. Vernon H. Warren                     876,244 (3)             12.74
                       108 Glenwood Road
                       Americus, Georgia 31709

Common Stock           FSB Albany, Trustee                    2,332,759 (4)(5)          33.91
                       333 W. Broad Avenue
                       Albany, Georgia 31703
</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 Securities Act of
1934, as amended. Under such rules a person is deemed to be a "beneficial owner"

                                       45

<PAGE>   52



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 sixty
(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 First State 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.

(2) Consists of (a) 436,968 shares owned of record by Mr. Haley and (b) an
option to purchase an additional 495 shares, according to the Schedule 13G filed
with the Securities and Exchange Commission by Mr. Haley in February, 1997.

(3) Consists of (a) 298,594 shares owned of record by FSB Albany under a
revocable agreement with Ms. Warren, (b) 274,724 shares owned of record by FSB
Albany as trustee under the Will of Marie H. Warren, as to which Ms. Warren has
sole voting power but no investment power, (c) 293,492 shares owned of record by
FSB Albany under a revocable agreement with Kathryn Warren Powell, as to which
Ms. Warren has sole voting power but no investment power, (d) 7,453 shares owned
of record by Ms. Warren as co-executor and co-trustee under the Will of Thomas
D. Warren, as to which Ms. Warren shares voting and investment powers and (e) an
option to purchase an additional 1,980 shares.

(4) Consists of an aggregate of 2,332,759 shares owned of record by FSB Albany,
Trustee, for various trust accounts, (a) 11,555 shares, as to which the Trustee
has shared voting and investment power, (b) 596,406 shares, as to which the
Trustee has sole voting power, and (c) 2,316,442 shares, as to which the Trustee
has sole investment power.

(5) 866,812 shares are included in both the number of shares beneficially owned
by Vernon H. Warren and the number of shares beneficially owned by FSB Albany,
Trustee.






                                       46

<PAGE>   53



                               BUSINESS OF 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 435 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of September 30, 1997. At that date, Regions had
total consolidated assets of approximately $22.2 billion, total consolidated
deposits of approximately $17.6 billion and total consolidated stockholders'
equity of approximately $1.9 billion. Regions has banking operations in Alabama,
Florida, Georgia, Louisiana, and Tennessee and 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.

     The following table presents information about Regions' banking operations
in the states in which its subsidiary depository institutions are located, based
on September 30, 1997 information:

<TABLE>
<CAPTION>
                             NUMBER OF               TOTAL               TOTAL
                          BANKING OFFICES           ASSETS             DEPOSITS
                          ---------------           ------             --------
                                                          (In millions)
<S>                       <C>                      <C>                 <C>   
Alabama............           183                  $8,869               $7,990
Florida............            45                   1,593                1,498
Georgia............           107                   3,998                3,489
Louisiana..........            75                   2,295                2,167
Tennessee..........            25                     526                  458
Unallocated (1)....                                 4,171                2,000
</TABLE>

     (1)Represents indirect mortgage loans, indirect auto loans, or credit card
loans of $2.5 billion, $1.5 billion, and $171 million, respectively and
negotiable certificates of deposit and certain trust and other deposits, which
in the aggregate approximate $2 billion.

     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
"Available Information" and "Documents Incorporated by Reference."


                                       47

<PAGE>   54
ACQUISITION ACTIVITY


     Since December 31, 1996, and as of the date of this Proxy
Statement/Prospectus, Regions has completed the acquisitions of nine financial
institutions (the "Completed Acquisitions" in the case of those consummated
before September 30, 1997, and the "Recently Completed Acquisitions" in the case
of those consummated after that date) and has entered into definitive agreements
to acquire seven 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)
Completed Acquisitions:
- ----------------------
<S>                                                         <C>             <C>            <C>         <C>           
Florida First Bancorp, Inc., located in Panama              $     297       $   40         Cash        Purchase
City, Florida

Allied Bankshares, Inc., located in Thomson,                      569          158        Regions       Pooling
Georgia                                                                                   Common          of
                                                                                           Stock       Interests

West Carroll Bancshares, Inc., located in                         127           37        Regions       Pooling
Oak Grove, Louisiana                                                                      Common          of
                                                                                           Stock       Interests

Gulf South Bancshares, Inc., located in Gretna,                    55           10        Regions       Pooling
Louisiana                                                                                 Common          of
                                                                                           Stock       Interests

First Mercantile National Bank, located in Longwood,              157           18         Cash        Purchase
Florida

The New Iberia Bancorp, Inc., located in New Iberia,              313           65        Regions       Pooling
Louisiana                                                                                 Common          of
                                                                                           Stock       Interests

First Bankshares, Inc., located in Hapeville,                     127           20        Regions       Pooling
Georgia                                                                                   Common          of
                                                                                           Stock       Interests

SB&T Corporation, located in Smyrna,                              148           33        Regions       Pooling
Georgia                                                                                   Common          of
                                                                                           Stock       Interests

Recently Completed Acquisitions:
- -------------------------------

GF Bancshares, Inc., located in Griffin,                           97           19        Regions      Purchase
Georgia                                                                                   Common
                                                                                           Stock
</TABLE>

<PAGE>   55

<TABLE>
<CAPTION>
Other Pending Acquisitions:
- --------------------------
<S>                                                               <C>           <C>       <C>         <C>            
Greenville Financial Corporation, located in                      134           34        Regions       Pooling
Greenville, South Carolina                                                                Common          of
                                                                                           Stock       Interests

PALFED, Inc., located in Aiken,                                   665          145        Regions       Pooling
South Carolina                                                                            Common          of
                                                                                           Stock       Interests

First United Bancorporation, located in Anderson, South           292           80        Regions       Pooling
Carolina                                                                                  Common          of
                                                                                           Stock       Interests

St. Mary Holding Corporation, located in Franklin,                113           31        Regions       Pooling
Louisiana                                                                                 Common          of
                                                                                           Stock       Interests

Key Florida Bancorp, Inc. located in Bradenton, Florida           212           39        Regions       Pooling
                                                                                          Common          of
                                                                                          Stock       Interests

Etowah Bank, located in Canton, Georgia                           432          117        Regions       Pooling
                                                                                          Common          of
                                                                                           Stock       Interests

First Commercial Corporation, located in Little Rock,           6,887        2,700        Regions       Pooling
Arkansas                                                                                  Common          of
                                                                                           Stock       Interests
</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 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 Recently Completed Acquisitions, the Other Pending Acquisitions, and
the Merger had been consummated on September 30, 1997, as of that date Regions'
total consolidated assets would have been increased by approximately $9.2
billion to approximately $31.4 billion; its total consolidated deposits would
have increased by approximately $7.9 billion to approximately $25.5 billion; and
its total consolidated stockholders' equity would have increased by
approximately $827 million to approximately $ 2.7 billion.

     For additional information concerning the FCC Acquisition, see "Recent
Developments--First Commercial Corporation Acquisition."


<PAGE>   56



                        CERTAIN REGULATORY CONSIDERATIONS

     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 First State. Additional
information is available in Regions' Annual Report on Form 10-K for the fiscal
year ended December 31, 1996. See "Documents Incorporated by Reference."

GENERAL

     Regions and First State are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, Regions and First State and their
non-bank subsidiaries are subject to the supervision, examination, and reporting
requirements of the BHC Act and the regulations of the Federal Reserve.

     The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve 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 BHC Act further provides that the Federal Reserve 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 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. Consideration of financial resources generally focuses on capital
adequacy, and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977.

     The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective in September 1995, repealed
the prior statutory restrictions on interstate acquisitions of banks by bank
holding companies, such that Regions, and any other bank holding company located
in Alabama may now acquire a bank located in any other state, and any bank
holding company located outside Alabama may lawfully acquire any Alabama-based
bank, regardless of state law to the contrary, in either case 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. By adopting legislation prior to that date, a state had the
ability to "opt out" and prohibit interstate branching altogether. None of the
states in which the banking subsidiaries of Regions or First State are located
has "opted out." Accordingly, Regions has the ability to and intends to
consolidate all of its bank subsidiaries into a single bank with interstate
branches, and has commenced a consolidation program to that end.

     The BHC Act generally prohibits Regions and First State 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 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 must consider
whether

                                       50

<PAGE>   57



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. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
discount securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities all have been determined by the
Federal Reserve to be permissible activities of bank holding companies. The BHC
Act does not place territorial limitations on permissible nonbanking activities
of bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a bank holding company or its subsidiaries to terminate any
activity or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such ownership
or control constitutes a serious risk to the financial safety, soundness, or
stability of any bank subsidiary of that bank holding company.

     Each of the subsidiary depository institutions of Regions and First State
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 First State (the FDIC and the
applicable state authority in the case of state-chartered nonmember banks and
the OTS in the case of federally chartered thrift institutions) 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 First State are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both Regions and First State, 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 First
State, as well as by Regions and First State 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 the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), 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.

                                       51

<PAGE>   58




     At September 30, 1997, under dividend restrictions imposed under federal
and state laws, the subsidiary depository institutions of Regions and First
State, without obtaining governmental approvals, could declare aggregate
dividends to Regions and First State of approximately $138 million and $14
million, respectively.

     The payment of dividends by Regions and First State 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.

CAPITAL ADEQUACY

      Regions, First State, and their respective subsidiary depository
institutions are required to comply with the capital adequacy standards
established by the Federal Reserve in the case of Regions and First State 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: 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 risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.

     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,
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 subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At September 30, 1997, Regions' consolidated Total Capital Ratio and its Tier 1
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
12.24% and 9.85%, respectively, and First State's consolidated Total Capital and
Tier 1 Capital Ratios were 13.49% and 12.24%, respectively.

     In addition, the Federal Reserve 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 a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. Regions' and First State's respective Leverage Ratios at September 30,
1997 were 7.35% and 8.60%. 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 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.

     Each of Regions' and First State's 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. Each of the subsidiary depository institutions was in
compliance with applicable minimum capital requirements as of September 30,
1997. Neither Regions, First State, nor any of their

                                       52

<PAGE>   59



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 be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements. See "--Prompt Corrective Action."

     The Federal Reserve, the OCC, and the FDIC have, pursuant to FDICIA,
recently adopted final 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.

SUPPORT OF SUBSIDIARY INSTITUTIONS

     Under Federal Reserve policy, Regions and First State are expected to act
as sources of financial strength for, and to commit resources to support, each
of their respective banking subsidiaries. This support may be required at times
when, absent such Federal Reserve policy, Regions or First State may not be
inclined to provide it. In addition, any capital loans by a bank holding company
to any of its banking subsidiaries are subordinate in right of payment to
deposits and to certain other indebtedness of such banks. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.

     Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of stockholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
subsidiary depository institutions of Regions are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking or thrift affiliates, and a potential loss of
Regions' respective investments in such other subsidiary depository
institutions.

PROMPT CORRECTIVE ACTION

     FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized") and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three

                                       53

<PAGE>   60



undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed. Generally, subject to a narrow
exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.

     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.
Under FDICIA, 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 under FDICIA 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 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 FDICIA.

     At September 30, 1997, all of the subsidiary depository institutions of
Regions and First State had the requisite capital levels to qualify as well
capitalized.

FDIC INSURANCE ASSESSMENTS

     Pursuant to FDICIA, the FDIC adopted a 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

                                       54

<PAGE>   61



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.

     Pursuant to the Deposit Insurance Funds Act of 1996, the FDIC implemented a
special one-time assessment of approximately 65.7 basis points (0.657%) on a
depository institution's deposits insured by the Savings Association Insurance
Fund ("SAIF") held as of March 31, 1995 (or approximately 52.6 basis points on
SAIF deposits acquired by banks in certain qualifying transactions), and adopted
revisions to the assessment rate schedules that would generally eliminate the
disparity between assessment rates applicable to the deposits insured by the
Bank Insurance Fund ("BIF") and the SAIF. The revisions in the assessment rate
schedules reduced assessment rates on SAIF-insured deposits and would generally
equalize BIF and SAIF assessment rates by January, 2000. Regions anticipates
that the net effect of the decrease in the premium assessment rate on SAIF
deposits will result in a reduction in its total deposit insurance premium
assessments for the years 1997 through 1999 as compared to prior years, assuming
no further changes in announced premium assessment rates. Regions recorded a
charge against earnings for the special assessment in the quarter ended
September 30, 1996 in the pre-tax amount of approximately $21.0 million.

     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 240,000,000 shares of Regions Common Stock,
of which 136,820,461 shares were issued, including 500,000 treasury shares, at
September 30, 1997, 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, 1997, under
such requirements and guidelines, Regions' subsidiary institutions had $138
million of undivided profits legally available for the payment of dividends. See
"Certain Regulatory Considerations--Payment of Dividends."

     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 1998. Under SEC rules, proposals of Regions stockholders
intended to be presented at that meeting must have been received by Regions at
its principal executive offices no later than December 2, 1997, for
consideration by Regions for possible inclusion in such proxy materials.
Proposals with respect to Regions' 1999 annual

                                       55

<PAGE>   62


meeting of stockholders may be submitted until the date specified in Regions'
1998 annual meeting proxy statement.


                                     EXPERTS

     The 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 report thereon which is
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, 1996. The
financial statements audited by Ernst & Young LLP have been incorporated herein
by reference in reliance on their report given on their authority as experts in
accounting and auditing.

     The consolidated financial statements of First State, incorporated by
reference in this Registration Statement, have been audited by Mauldin &
Jenkins, LLC, independent auditors, for the periods indicated in their report
thereon which is included in the Annual Report of First State on Form 10-K for
the year ended December 31, 1996. The financial statements audited by Mauldin &
Jenkins, LLC have been incorporated herein by reference 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.


                                       56



<PAGE>   63
 
                                                                      APPENDIX A
 
                          AGREEMENT AND PLAN OF MERGER
 
                                 BY AND BETWEEN
 
                            FIRST STATE CORPORATION
 
                                      AND
 
                         REGIONS FINANCIAL CORPORATION
 
                         DATED AS OF DECEMBER 22, 1997
<PAGE>   64
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S> <C>    <C>                                                           <C>
Parties................................................................   A-1
Preamble...............................................................   A-1
ARTICLE ONE -- TRANSACTIONS AND TERMS OF MERGER........................   A-1
    1.1    Merger......................................................   A-1
    1.2    Time and Place of Closing...................................   A-1
    1.3    Effective Time..............................................   A-1
ARTICLE TWO -- TERMS OF MERGER.........................................   A-2
    2.1    Certificate of Incorporation................................   A-2
    2.2    Bylaws......................................................   A-2
    2.3    Directors and Officers......................................   A-2
ARTICLE THREE -- MANNER OF CONVERTING SHARES...........................   A-2
    3.1    Conversion of Shares........................................   A-2
    3.2    Anti-Dilution Provisions....................................   A-2
    3.3    Shares Held by FSC or Regions...............................   A-2
    3.4    Fractional Shares...........................................   A-2
    3.5    Conversion of Stock Options; Restricted Stock...............   A-3
ARTICLE FOUR -- EXCHANGE OF SHARES.....................................   A-3
    4.1    Exchange Procedures.........................................   A-3
    4.2    Rights of Former FSC Stockholders...........................   A-4
ARTICLE FIVE -- REPRESENTATIONS AND WARRANTIES OF FSC..................   A-4
    5.1    Organization, Standing, and Power...........................   A-4
    5.2    Authority; No Breach By Agreement...........................   A-4
    5.3    Capital Stock...............................................   A-5
    5.4    FSC Subsidiaries............................................   A-5
    5.5    SEC Filings; Financial Statements...........................   A-6
    5.6    Absence of Undisclosed Liabilities..........................   A-6
    5.7    Absence of Certain Changes or Events........................   A-6
    5.8    Tax Matters.................................................   A-6
    5.9    Assets......................................................   A-7
    5.10   Environmental Matters.......................................   A-7
    5.11   Compliance With Laws........................................   A-8
    5.12   Labor Relations.............................................   A-8
    5.13   Employee Benefit Plans......................................   A-9
    5.14   Material Contracts..........................................  A-10
    5.15   Legal Proceedings...........................................  A-11
    5.16   Statements True and Correct.................................  A-11
    5.17   Accounting, Tax, and Regulatory Matters.....................  A-11
    5.18   State Takeover Laws.........................................  A-11
    5.19   Articles of Incorporation Provisions........................  A-11
    5.20   Support Agreements..........................................  A-12
    5.21   Derivatives Contracts.......................................  A-12
    5.22   Year 2000...................................................  A-12
ARTICLE SIX -- REPRESENTATIONS AND WARRANTIES OF REGIONS...............  A-12
    6.1    Organization, Standing, and Power...........................  A-12
    6.2    Authority; No Breach By Agreement...........................  A-12
    6.3    Capital Stock...............................................  A-13
    6.4    SEC Filings; Financial Statements...........................  A-13
    6.5    Absence of Undisclosed Liabilities..........................  A-13
</TABLE>
 
                                       A-i
<PAGE>   65
<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S> <C>    <C>                                                           <C>
    6.6    Absence of Certain Changes or Events........................  A-13
    6.7    Compliance With Laws........................................  A-13
    6.8    Legal Proceedings...........................................  A-14
    6.9    Statements True and Correct.................................  A-14
    6.10   Accounting, Tax, and Regulatory Matters.....................  A-14
ARTICLE SEVEN -- CONDUCT OF BUSINESS PENDING CONSUMMATION..............  A-15
    7.1    Covenants of Both Parties...................................  A-15
    7.2    Covenants of FSC............................................  A-15
    7.3    Covenants of Regions........................................  A-16
    7.4    Adverse Changes in Condition................................  A-16
    7.5    Reports.....................................................  A-16
ARTICLE EIGHT -- ADDITIONAL AGREEMENTS.................................  A-17
    8.1    Registration Statement; Proxy Statement; Stockholder
           Approval....................................................  A-17
    8.2    Nasdaq NMS Listing..........................................  A-17
    8.3    Applications................................................  A-17
    8.4    Agreement as to Efforts to Consummate.......................  A-17
    8.5    Investigation and Confidentiality...........................  A-17
    8.6    Press Releases..............................................  A-18
    8.7    Certain Actions.............................................  A-18
    8.8    Tax Matters.................................................  A-18
    8.9    Agreement of Affiliates.....................................  A-18
    8.10   Employee Benefits and Contracts.............................  A-19
    8.11   Indemnification.............................................  A-19
    8.12   State Takeover Laws.........................................  A-20
    8.13   Articles of Incorporation Provisions........................  A-20
ARTICLE NINE -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......  A-20
    9.1    Conditions to Obligations of Each Party.....................  A-20
    9.2    Conditions to Obligations of Regions........................  A-21
    9.3    Conditions to Obligations of FSC............................  A-22
ARTICLE TEN -- TERMINATION.............................................  A-22
    10.1   Termination.................................................  A-22
    10.2   Effect of Termination.......................................  A-25
    10.3   Non-Survival of Representations and Covenants...............  A-25
ARTICLE ELEVEN -- MISCELLANEOUS........................................  A-25
    11.1   Definitions.................................................  A-25
    11.2   Expenses....................................................  A-29
    11.3   Brokers and Finders.........................................  A-29
    11.4   Entire Agreement............................................  A-29
    11.5   Amendments..................................................  A-30
    11.6   Waivers.....................................................  A-30
    11.7   Assignment..................................................  A-30
    11.8   Notices.....................................................  A-30
    11.9   Governing Law...............................................  A-31
    11.10  Counterparts................................................  A-31
    11.11  Captions....................................................  A-31
    11.12  Severability................................................  A-31
Signatures.............................................................  A-31
</TABLE>
 
                                      A-ii
<PAGE>   66
 
                                LIST OF EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER   DESCRIPTION
- -------  -----------
<C>      <S>                                                           <C>
  1.     Form of Support Agreement. (sec. 11.1).
  2.     Form of agreement of affiliates of FSC. (sec. 8.9).
  3.     Form of Claims Letter. (sec. 9.2).
  4.     Form of Opinion Letter of FSC's Counsel. (sec. 9.2).
  5.     Form of Opinion Letter of Regions' Counsel. (sec. 9.3).
</TABLE>
 
                                      A-iii
<PAGE>   67
 
                          AGREEMENT AND PLAN OF MERGER
 
     THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of December 22, 1997, by and between FIRST STATE CORPORATION ("FSC"), a
corporation organized and existing under the laws of the State of Georgia, with
its principal office located in Albany, Georgia, 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 FSC and Regions are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective stockholders. This Agreement provides for the acquisition of FSC by
Regions pursuant to the merger of FSC into and with Regions. At the effective
time of such merger, the each of the issued and outstanding shares of common
stock of FSC shall be converted into and exchanged for shares of the common
stock of Regions (except as provided herein). As a result, stockholders of FSC
shall become stockholders of Regions and each of the subsidiaries of FSC shall
continue to conduct its business and operations as a wholly-owned subsidiary of
Regions. The transactions described in this Agreement are subject to the
approvals of the stockholders of FSC, the Board of Governors of the Federal
Reserve System, and the appropriate 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 be accounted for as a "pooling of interests."
 
     As a condition and inducement to Regions' willingness to consummate the
transactions contemplated by this Agreement, prior to the execution of this
Agreement, each of FSC's directors will execute and deliver to Regions an
agreement (a "Support Agreement"), in substantially the form of Exhibit 1 to
this Agreement.
 
     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, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
 
                                  ARTICLE ONE
 
                        TRANSACTIONS AND TERMS OF MERGER
 
     1.1 Merger.  Subject to the terms and conditions of this Agreement, at the
Effective Time, FSC shall be merged into and with Regions in accordance with the
provisions of Sections 14-2-1103 and 14-2-1107 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC and of Section 258 of the DGCL and
with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of 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 Boards of Directors of FSC and Regions.
 
     1.2 Time and Place of Closing.  The Closing will 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 the offices of Regions, or such other place as may be
mutually agreed upon by the Parties.
 
     1.3 Effective Time.  The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia and the Delaware Certificate of
Merger reflecting the 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 in writing by the
 
                                       A-1
<PAGE>   68
 
duly authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the last day of the month in
which occurs the last to occur of (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 FSC approve this Agreement to the extent
such approval is required by applicable Law.
 
                                  ARTICLE TWO
 
                                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.
 
                                 ARTICLE THREE
 
                          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 the holders thereof, 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 FSC Common Stock (excluding shares held by FSC or
     any of its Subsidiaries or by Regions or any of its Subsidiaries, 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 .56 of a share of Regions Common Stock, subject to adjustment as
     provided in Section 10.1(g) of this Agreement (the "Exchange Ratio").
 
     3.2 Anti-Dilution Provisions.  In the event FSC changes the number of
shares of FSC Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization 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, or similar recapitalization 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 FSC or Regions.  Each of the shares of FSC Common Stock
held by any FSC 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 Fractional Shares.  Notwithstanding any other provision of this
Agreement, each holder of shares of FSC Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of FSC Common
 
                                       A-2
<PAGE>   69
 
Stock, 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, in the case of shares exchanged pursuant to the Merger, or the
date of exercise, in the case of options. The market value of one share of
Regions Common Stock at the Effective Time or the date of exercise, as the case
may be, shall be the last sale price of such common stock on the Nasdaq NMS (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the last trading day preceding the Effective Time, in
the case of shares exchanged pursuant to the Merger, and the date of exercise,
in the case of options. No such holder will be entitled to dividends, voting
rights, or any other rights as a stockholder in respect of any fractional
shares.
 
     3.5 Conversion of Stock Options; Restricted Stock.  (a) At the Effective
Time, all rights with respect to FSC Common Stock pursuant to stock options or
stock appreciation rights ("FSC Options") granted by FSC under the FSC 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 FSC Option, in accordance with the terms of the
FSC Stock Plan and stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each FSC Option assumed by Regions may be
exercised solely for shares of Regions Common Stock (or cash in the case of
stock appreciation rights), (ii) the number of shares of Regions Common Stock
subject to such FSC Option shall be equal to the number of shares of FSC Common
Stock subject to such FSC Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iii) the per share exercise price under
each such FSC Option shall be adjusted by dividing the per share exercise price
under each such FSC Option by the Exchange Ratio and rounding down to the
nearest cent. It is intended that the foregoing assumption shall be undertaken
in a manner that will not constitute a "modification" as defined in Section 424
of the Internal Revenue Code, as to any stock option which is an "incentive
stock option." FSC agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.5.
 
     (b) All restrictions or limitations on transfer with respect to FSC Common
Stock awarded under the FSC Stock Plans or any other plan, program, or
arrangement of any FSC 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 FOUR
 
                               EXCHANGE OF SHARES
 
     4.1 Exchange Procedures.  Promptly after the Effective Time, Regions shall
cause the exchange agent selected by Regions (the "Exchange Agent") to mail to
the former stockholders of FSC appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of FSC Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of FSC Common Stock (other than shares to
be canceled pursuant to Section 3.3 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 3.4 of this Agreement, each holder
of shares of FSC 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 FSC
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of FSC Common
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of FSC Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require.
 
                                       A-3
<PAGE>   70
 
Any other provision of this Agreement notwithstanding, neither Regions, FSC, nor
the Exchange Agent shall be liable to a holder of FSC 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 FSC Stockholders.  At the Effective Time, the stock
transfer books of FSC shall be closed as to holders of FSC Common Stock
immediately prior to the Effective Time, and no transfer of FSC 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 FSC Common Stock (other than
shares to be canceled pursuant to Section 3.3 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 3.4 of this Agreement in exchange
therefor. To the extent permitted by Law, former stockholders of record of FSC
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 FSC Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing FSC 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 FSC
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 FSC Common Stock certificate, both
the Regions Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered 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 FIVE
 
                     REPRESENTATIONS AND WARRANTIES OF FSC
 
     FSC hereby represents and warrants to Regions as follows:
 
     5.1 Organization, Standing, and Power.  FSC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Assets. FSC 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 FSC.
 
     5.2 Authority; No Breach by Agreement.  (a) FSC has the corporate power and
authority necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, subject to the
approval of this Agreement by the holders of a majority of the outstanding
shares of FSC Common Stock. The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been or will be duly and validly authorized by all
necessary corporate action in respect thereof on the part of FSC, subject to the
approval of this Agreement by the holders of a majority of the outstanding
shares of FSC Common Stock. Subject to such requisite approval, this Agreement
represents a legal, valid, and binding obligation of FSC, enforceable against
FSC in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, 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).
 
                                       A-4
<PAGE>   71
 
     (b) Neither the execution and delivery of this Agreement by FSC, nor the
consummation by FSC of the transactions contemplated hereby, nor compliance by
FSC with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of FSC'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 FSC Company under, any
Contract or Permit of any FSC Company, or (iii) subject to receipt of the
requisite approvals referred to in Section 9.1(b) of this Agreement, violate any
Law or Order applicable to any FSC Company or any of their respective 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,
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 FSC, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by FSC of the Merger
and the other transactions contemplated in this Agreement.
 
     5.3 Capital Stock.  (a) The authorized capital stock of FSC consists of
20,000,000 shares of FSC Common Stock, of which 6,879,403 shares are issued and
outstanding as of the date of this Agreement and not more than 7,212,733 shares
will be issued and outstanding at the Effective Time and 100,000 shares of FSC
Preferred Stock, of which no shares are issued and outstanding as of the date of
this Agreement and no shares will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of FSC Common Stock are duly and
validly issued and outstanding and are fully paid and nonassessable. None of the
outstanding shares of FSC Common Stock has been issued in violation of any
preemptive rights of the current or past stockholders of FSC. FSC has reserved
939,000 shares of FSC Common Stock for issuance under the FSC Stock Plans,
pursuant to which options to purchase not more than 334,905 shares of FSC Common
Stock are outstanding.
 
     (b) Except as set forth in Section 5.3(a) of this Agreement, there are no
shares of capital stock or other equity securities of FSC outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of FSC or
contracts, commitments, understandings, or arrangements by which FSC is or may
be bound to issue additional shares of FSC capital stock or options, warrants,
or rights to purchase or acquire any additional shares of its capital stock.
 
     5.4 FSC Subsidiaries.  FSC has disclosed in Section 5.4 of the FSC
Disclosure Memorandum all of the FSC Subsidiaries as of the date of this
Agreement. Except as disclosed, FSC or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each FSC Subsidiary. No equity
securities of any FSC Subsidiary are or may become required to be issued (other
than to a FSC Company) by reason of any options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of any such Subsidiary, and there are no Contracts by which any FSC
Subsidiary is bound to issue (other than to a FSC Company) additional shares of
its capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock or by which any FSC Company is or may be
bound to transfer any shares of the capital stock of any FSC Subsidiary (other
than to a FSC Company). There are no Contracts relating to the rights of any FSC
Company to vote or to dispose of any shares of the capital stock of any FSC
Subsidiary. All of the shares of capital stock of each FSC Subsidiary held by a
FSC Company are duly authorized, validly issued, and fully paid and
nonassessable (except pursuant to 12 U.S.C. Section 55 in the case of national
banks and comparable, applicable state Law, if any, in the case of state
depository institutions) under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the FSC Company free and clear of any Lien. Each FSC Subsidiary is a
corporation, and is duly organized, validly existing, and 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 FSC 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
                                       A-5
<PAGE>   72
 
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 FSC. Each
FSC Subsidiary that is a depository institution is an "insured 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
the Savings Association Insurance Fund, as appropriate.
 
     5.5 SEC Filings; Financial Statements.  (a) FSC has filed and made
available to Regions all forms, reports, and documents required to be filed by
FSC with the SEC since December 31, 1993 (collectively, the "FSC SEC Reports").
The FSC 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 FSC SEC Reports or necessary in
order to make the statements in such FSC SEC Reports, in light of the
circumstances under which they were made, not misleading. Except for FSC
Subsidiaries that are registered as a broker, dealer, or investment advisor,
none of FSC's Subsidiaries is required to file any forms, reports, or other
documents with the SEC.
 
     (b) Each of the FSC Financial Statements (including, in each case, any
related notes) contained in the FSC SEC Reports, including any FSC 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 regulations of the SEC with respect thereto, was prepared 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 FSC 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.
 
     5.6 Absence of Undisclosed Liabilities.  No FSC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FSC, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of FSC as of September 30, 1997 included in
the FSC Financial Statements or reflected in the notes thereto. No FSC Company
has incurred or paid any Liability since September 30, 1997, 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 FSC.
 
     5.7 Absence of Certain Changes or Events.  Since September 30, 1997, except
as disclosed in the FSC Financial Statements, (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 FSC, and (ii) the
FSC Companies have not taken any action, or failed to take any action, prior to
the date of this Agreement, which action or failure, if taken after the date of
this Agreement, would represent or result in a material breach or violation of
any of the covenants and agreements of FSC provided in Article Seven of this
Agreement.
 
     5.8 Tax Matters.  (a) All Tax returns required to be filed by or on behalf
of any of the FSC 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, 1996 and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time to the Knowledge of FSC, and
all returns filed are complete and accurate to the Knowledge of FSC. All Taxes
shown on filed 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 FSC, except to the extent reserved
against in the FSC 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.
 
                                       A-6
<PAGE>   73
 
     (b) None of the FSC 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
FSC Companies for the period or periods through and including the date of the
respective FSC Financial Statements has been made and is reflected on such FSC
Financial Statements.
 
     (d) Deferred Taxes of the FSC Companies have been adequately provided for
in the FSC Financial Statements.
 
     (e) Each of the FSC 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 FSC.
 
     (f) None of the FSC 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.
 
     (g) There are no Liens with respect to Taxes upon any of the assets of the
FSC Companies.
 
     (h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the FSC Companies that occurred during or after any
Taxable Period in which the FSC Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1994.
 
     (i) No FSC Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
 
     (j) All material elections with respect to Taxes affecting the FSC
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the FSC Disclosure Memorandum. After the date
hereof, no election with respect to Taxes will be made without the prior written
consent of Regions, which consent will not be unreasonably withheld.
 
     (k) No FSC 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.  Except as disclosed or reserved against in the FSC Financial
Statements, the FSC Companies have good and marketable title, free and clear of
all Liens, to all of their respective Assets that are material to the business
of the FSC Companies. All material tangible properties used in the businesses of
the FSC Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with FSC's past
practices. All Assets which are material to the business of the FSC Companies,
which are held under leases or subleases by any of the FSC 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.
 
     5.10 Environmental Matters.  (a) To the Knowledge of FSC, each FSC Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FSC.
 
     (b) To the Knowledge of FSC, there is no Litigation pending or threatened
before any court, governmental agency, or authority, or other forum in which any
FSC Company or any of its Participation Facilities has been or, with respect to
threatened Litigation, may be named as a defendant (i) for alleged
                                       A-7
<PAGE>   74
 
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material (as
defined below) or oil, whether or not occurring at, on, under, or involving a
site owned, leased, or operated by any FSC 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 FSC.
 
     (c) To the Knowledge of FSC, there is no Litigation pending or threatened
before any court, governmental agency, or board, or other forum in which any of
its Loan Properties (or FSC in respect of such Loan Property) has been or, with
respect to threatened Litigation, may be named as a defendant or potentially
responsible party (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 or oil, 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 FSC.
 
     (d) To the Knowledge of FSC, 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 FSC.
 
     (e) To the Knowledge of FSC, during the period of (i) any FSC Company's
ownership or operation of any of their respective current properties, (ii) any
FSC Company's participation in the management of any Participation Facility, or,
(iii) any FSC Company's holding of a security interest in a Loan Property, there
have been no releases of Hazardous Material or oil in, on, under, or affecting
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FSC. Prior to the period of
(i) any FSC Company's ownership or operation of any of their respective current
properties, (ii) any FSC Company's participation in the management of any
Participation Facility, or (iii) any FSC Company's holding of a security
interest in a Loan Property, to the Knowledge of FSC, there were no releases of
Hazardous Material or oil 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
FSC.
 
     5.11 Compliance With Laws.  Each FSC Company has in effect all Permits
necessary for it to own, lease, or operate its 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 FSC, 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 FSC. None of the FSC 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 FSC; 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 FSC Company is not in
     compliance with any of the material Laws or material 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 FSC, (ii) threatening to revoke any
     material Permits the revocation of which is reasonably likely to have,
     individually or in the aggregate, a Material Adverse Effect on FSC, or
     (iii) requiring any FSC 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
     management, or the payment of dividends.
 
     5.12 Labor Relations.  No FSC Company is the subject of any Litigation
asserting that it or any other FSC 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 FSC Company to bargain with any
labor organization as to wages or conditions of employment, nor is any FSC
Company a party to or bound by any
 
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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 FSC Company, pending or threatened, or to its Knowledge,
is there any activity involving any FSC Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
 
     5.13 Employee Benefit Plans.  (a) FSC has disclosed in Section 5.13 of the
FSC 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 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 FSC 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 (collectively, the "FSC Benefit Plans"). Any of the
FSC 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 "FSC ERISA
Plan." Any FSC 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 "FSC Pension Plan." On or after September 26, 1980,
neither FSC nor any FSC Company has had 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)). The only "employee pension benefit plan," as
defined in Section 3(2) of ERISA, ever maintained by any FSC Company that was
intended to qualify under Section 401(a) of the Internal Revenue Code, is the
First State Bank & Trust Company Employee Savings and Thrift Plan.
 
     (b) FSC 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 FSC Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such FSC Benefit Plans or amendments, all determination letters, rulings,
opinion letters, information letters, or advisory opinions issued by the
Internal Revenue Service, the United States Department of Labor, or the Pension
Benefit Guaranty Corporation after December 31, 1974, (iii) annual reports or
returns, audited or unaudited financial statements, actuarial valuations and
reports, and summary annual reports prepared for any FSC Benefit Plan with
respect to the most recent three plan years, and (iv) the most recent summary
plan descriptions and any material modifications thereto.
 
     (c) All FSC 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 are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FSC. Each FSC 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
FSC is not aware of any circumstances which will or could result in revocation
of any such favorable determination letter. Each trust created under any FSC
ERISA Plan has been determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and FSC is not aware of any circumstance which will or
could result in revocation of such exemption. With respect to each FSC Benefit
Plan, to the Knowledge of FSC, no event has occurred which will or could 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. There is no
material pending or threatened Litigation relating to any FSC ERISA Plan. No FSC
Company has engaged in a transaction with respect to any FSC Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject any FSC Company to a 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 FSC.
 
     (d) Except as disclosed in Section 5.13 of the FSC Disclosure Memorandum,
no FSC Pension Plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, and the fair
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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 of any FSC Pension Plan, (ii) no change in the actuarial
assumptions with respect to any FSC Pension Plan, and (iii) no increase in
benefits under any FSC Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FSC or materially adversely affect the
funding status of any such plan. Neither any FSC Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any FSC Company, or the single-employer plan
of any entity which is considered one employer with FSC under Section 4001 of
ERISA or Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA. No FSC Company has provided, or is required to provide,
security to a FSC Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
 
     (e) No liability under Title IV of ERISA has been or is expected to be
incurred by any FSC Company with respect to any defined benefit plan currently
or formerly maintained by any of them or by any ERISA Affiliate).
 
     (f) No FSC Company has any obligations for retiree health and retiree life
benefits under any of the FSC Benefit Plans.
 
     (g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (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 FSC Company from any FSC Company under any FSC Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any FSC Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
 
     (h) No oral or written representation or communication with respect to any
aspect of the FSC Benefit Plans has been made to employees of any of the FSC
Companies prior to the date hereof which is not in accordance with the written
or otherwise preexisting terms and provisions of such plans. All FSC Benefit
Plan documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the FSC Benefit Plans are correct and
complete and there have been no changes in the information set forth therein.
 
     5.14 Material Contracts.  None of the FSC 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 $75,000, (ii) any Contract
relating to the borrowing of money by any FSC Company or the guarantee by any
FSC 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 FSC
with the SEC as of the date of this Agreement that has not been filed as an
exhibit to FSC's Form 10-K filed for the fiscal year ended December 31, 1996, or
in another SEC Document and identified to Regions (together with all Contracts
referred to in Sections 5.9 and 5.13(a) of this Agreement, the "FSC Contracts").
With respect to each FSC Contract: (i) the Contract is in full force and effect;
(ii) no FSC 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 FSC; (iii) no FSC 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 FSC, 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 FSC, or has repudiated or waived any Material provision
thereunder. Except for Federal Home Loan
 
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Bank advances, all of the indebtedness of any FSC Company for money borrowed is
prepayable at any time by such FSC Company without penalty or premium.
 
     5.15 Legal Proceedings.  Except to the extent specifically reserved against
in the FSC Financial Statements dated prior to the date of this Agreement, there
is no Litigation instituted or pending, or, to the Knowledge of FSC, threatened
(or unasserted but considered probable of assertion and which if asserted would
have at least a reasonable probability of an unfavorable outcome) against any
FSC Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FSC, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any FSC Company,
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FSC.
 
     5.16 Statements True and Correct.  No statement, certificate, instrument,
or other writing furnished or to be furnished by any FSC Company or any
Affiliate thereof to Regions pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
FSC Company or any Affiliate thereof 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 FSC Company or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to FSC's stockholders in connection with the Stockholders' Meeting,
and any other documents to be filed by a FSC Company or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
stockholders of FSC, 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 FSC 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.
 
     5.17 Accounting, Tax, and Regulatory Matters.  No FSC Company or any
Affiliate thereof has taken any action, or agreed to take any action, or has any
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 treatment 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. To the Knowledge of FSC, there
exists no fact, circumstance, or reason why the requisite Consents referred to
in Section 9.1(b) of this Agreement cannot be received in a timely manner
without imposition of any condition of the type described in the second sentence
of such Section 9.1(b).
 
     5.18 State Takeover Laws.  Each FSC 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 Georgia (collectively,
"Takeover Laws"), including Sections 14-2-1111 and 14-2-1132 of the GBCC.
 
     5.19 Articles of Incorporation Provisions.  Each FSC 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 (other than a Regions
Company) under the Articles of Incorporation, Bylaws, or other governing
instruments of any FSC Company or restrict or
 
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<PAGE>   78
 
impair the ability of Regions to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of any FSC Company that may be acquired or
controlled by it.
 
     5.20 Support Agreements.  Each of the directors of FSC has executed and
delivered to Regions an agreement in substantially the form of Exhibit 1 to this
Agreement.
 
     5.21 Derivatives Contracts.  Neither FSC nor any of its Subsidiaries is a
party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract, or any
other interest rate or foreign currency protection contract not included on its
balance sheet which is a financial derivative contract (including various
combinations thereof).
 
     5.22 Year 2000.  Except as disclosed in Schedule 5.22, FSC represents and
warrants that all computer software and hardware 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 the year 2000, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century. FSC 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 SIX
 
                   REPRESENTATIONS AND WARRANTIES OF REGIONS
 
     Regions hereby represents and warrants to FSC 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 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 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, 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, 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
Regions Company under, any Contract or Permit of any Regions Company, or (iii)
subject to receipt of the requisite approvals 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 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
 
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<PAGE>   79
 
Guaranty Corporation with respect to any employee benefit plans and other than
Consents, filings, or notifications which, if not obtained or made, is 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 136,320,461 shares were issued and outstanding as of September 30, 1997.
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 FSC
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 in exchange for shares of FSC 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 SEC Filings; Financial Statements.  (a) Regions has filed all forms,
reports, and documents required to be filed by Regions with the SEC since
December 31, 1992, other than registration statements on Forms S-4 and S-8
(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 Securities Act and the Exchange 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.
 
     (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 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.
 
     6.5 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
September 30, 1997 included in the Regions Financial Statements or reflected in
the notes thereto. No Regions Company has incurred or paid any Liability since
September 30, 1997, 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.
 
     6.6 Absence of Certain Changes or Events.  Since September 30, 1997, except
as disclosed in the Regions Financial Statements filed with the SEC after such
date and prior to the date of this Agreement, 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.
 
     6.7 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 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
 
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<PAGE>   80
 
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 material Laws or material 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 are 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, 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
     management, or the payment of dividends.
 
     6.8 Legal Proceedings.  Except to the extent specifically reserved against
in the Regions Financial Statements dated prior to the date of this Agreement,
there is no Litigation instituted or pending, or, to the Knowledge of Regions,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable outcome)
against any Regions Company, or against any Asset, 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.
 
     6.9 Statements True and Correct.  No statement, certificate, instrument, or
other writing furnished or to be furnished by any Regions Company or any
Affiliate thereof to FSC pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
Regions Company or any Affiliate thereof 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 FSC's stockholders in connection with the
Stockholders' Meeting, and any other documents to be filed by any Regions
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the stockholders of FSC, 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
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.
 
     6.10 Accounting, Tax, and Regulatory Matters.  No Regions Company or any
Affiliate thereof has taken any action, or agreed to take any action, or has any
Knowledge of any fact or circumstance that is
 
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<PAGE>   81
 
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying for pooling-of-interests accounting or treatment 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. To the Knowledge of
Regions, there exists no fact, circumstance, or reason why the requisite
Consents referred to in Section 9.1(b) of this Agreement cannot be received in a
timely manner without imposition of any condition of the type described in the
second sentence of such Section 9.1(b).
 
                                 ARTICLE SEVEN
 
                    CONDUCT OF BUSINESS PENDING CONSUMMATION
 
     7.1 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 organizations and Assets and maintain its
rights and franchises, and (iii) take no action which would materially adversely
affect the ability of any Party to (a) obtain any Consents required for the
transactions contemplated hereby, or (b) perform its covenants and agreements
under this Agreement in all material respects and to consummate the Merger;
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 Covenants of FSC.  Except as specifically contemplated or permitted by
this Agreement, from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, FSC 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 a duly authorized officer of Regions:
 
          (a) amend the Articles of Incorporation, Bylaws, or other governing
     instruments of any FSC 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 FSC Company to another FSC Company) in excess of an
     aggregate of $100,000 (for the FSC Companies on a consolidated basis)
     except in the ordinary course of the business of FSC Companies consistent
     with past practices (which shall include, for FSC, creation of deposit
     liabilities, purchases of federal funds, advances from the Federal Home
     Loan Bank or the Federal Reserve Bank, and entry into repurchase agreements
     fully secured by U.S. government or agency securities), or forgive any such
     indebtedness of any Person to any FSC Company (in excess of an aggregate of
     $25,000), or impose, or suffer the imposition, on any share of stock held
     by any FSC Company of any Lien or permit any such Lien to exist; 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 FSC Company, or declare or pay any dividend or
     make any other distribution in respect of any FSC Common Stock; provided
     that FSC may (to the extent legally able to do so), but shall not be
     obligated to, declare and pay regular annual cash dividends on the FSC
     Common Stock in the amounts and with the usual and regular record and
     payment dates in accordance with past practice as disclosed in Section
     7.2(c) of the FSC Disclosure Memorandum; or
 
          (d) except pursuant to the exercise of stock options outstanding as of
     the date hereof and pursuant to the terms thereof in existence on the date
     hereof, 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 FSC Common Stock or any other capital stock of any FSC 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
                                      A-15
<PAGE>   82
 
          (e) adjust, split, combine, or reclassify any capital stock of any FSC
     Company or issue or authorize the issuance of any other securities in
     respect of or in substitution for shares of FSC Common Stock or sell,
     lease, mortgage, or otherwise dispose of or otherwise encumber any shares
     of capital stock of any FSC Subsidiary (unless any such shares of stock are
     sold or otherwise transferred to another FSC Company) or any Assets having
     in the aggregate a book value in excess of $100,000 other than in the
     ordinary course of business for reasonable and adequate consideration; or
 
          (f) acquire direct or indirect control over, or invest in equity
     securities of, any Person, other than in connection with (i) foreclosures
     in the ordinary course of business, or (ii) acquisitions of control by FSC
     in its fiduciary capacity; or
 
          (g) grant any increase in compensation or benefits to the employees or
     officers of any FSC Company except as required by Law; pay any bonus except
     pursuant to the provisions of any applicable program or plan adopted by its
     Board of Directors prior to the date of this Agreement and disclosed in
     Section 7.2(g) of the FSC Disclosure Memorandum; enter into or amend any
     severance agreements with officers of any FSC Company; grant any increase
     in fees or other increases in compensation or other benefits to directors
     of any FSC Company; or
 
          (h) enter into or amend any employment Contract between any FSC
     Company and any Person (unless such amendment is required by Law) that the
     FSC 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 or program of any FSC Company
     or make any material change in or to any existing employee benefit plans or
     programs of any FSC Company 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 accounting methods, principles,
     or practices or systems of internal accounting controls, except as may be
     necessary to conform to changes in regulatory accounting requirements or
     GAAP; or
 
          (k) commence or settle any Litigation other than in accordance with
     past practice; provided that, except to the extent specifically reserved
     against in the FSC Financial Statements dated prior to the date of this
     Agreement, no FSC Company shall settle any Litigation involving any
     Liability of any FSC Company for money damages in excess of $25,000 or
     restrictions upon the operations of any FSC Company; or
 
          (l) except in the ordinary course of business, enter into or terminate
     any material Contract or make any change in any material lease or Contract,
     other than renewals of leases and Contracts without material adverse
     changes of terms.
 
     7.3 Covenants of Regions.  From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Regions
covenants and agrees that it will not, without the prior written consent of a
duly authorized officer of FSC amend the Certificate of Incorporation or Bylaws
of Regions, in each case, in any manner which is adverse to, and discriminates
against, the holders of FSC Common Stock.
 
     7.4 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) is reasonably likely to 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.
 
     7.5 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 FSC shall deliver to Regions copies of all
such reports filed by FSC promptly after the same are filed. If financial
statements are contained in any such reports filed with appropriate Regulatory
Authorities, such financial statements will
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<PAGE>   83
 
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 a Regulatory Authority shall be prepared in accordance
with Laws applicable to such reports.
 
                                 ARTICLE EIGHT
 
                             ADDITIONAL AGREEMENTS
 
     8.1 Registration Statement; Proxy Statement; Stockholder Approval.  As soon
as reasonably practicable after the execution of this Agreement, Regions shall
file the Registration Statement with the SEC, provided FSC has provided, on a
reasonably timely basis, all information concerning FSC necessary for inclusion
in the Registration Statement, and shall use its reasonable efforts to cause the
Registration Statement to become effective under the 1933 Act as soon as
reasonably practicable after the filing thereof 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. FSC shall promptly furnish all information concerning it and the holders
of its capital stock as Regions may reasonably request in connection with such
action. FSC shall call a Stockholders' Meeting, to be held within forty-five
(45) days after the Registration Statement is declared effective by the SEC, for
the purpose of voting upon approval of (i) this Agreement and (ii) such other
related matters as it deems appropriate. In connection with the Stockholders'
Meeting, (i) FSC shall mail the Proxy Statement to all of 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 FSC shall recommend (subject to compliance with their
fiduciary duties as advised in writing by counsel to such Board) to its
stockholders the approval of this Agreement, and (iv) the Board of Directors and
officers of FSC shall use their reasonable efforts to obtain such stockholders'
approval (subject to compliance with their fiduciary duties as advised in
writing by counsel to such Board).
 
     8.2 Nasdaq NMS Listing.  Regions shall file with the NASD a notification
for the listing on the Nasdaq NMS relating to the proposed issuance of the
shares of Regions Common Stock to be issued to the holders of FSC Common Stock
pursuant to the Merger.
 
     8.3 Applications.  As soon as reasonably practicable after execution of
this Agreement, Regions shall prepare and file, and FSC 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. Regions shall use all reasonable
efforts to obtain the requisite Consents of all Regulatory Authorities as soon
as reasonably practicable after the filing of the appropriate applications.
 
     8.4 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
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
applicable to such Party referred to in Article Nine of 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.
 
     8.5 Investigation and Confidentiality.  (a) Prior to the Effective Time,
each Party will keep the other Party advised of all material developments
relevant to its business and to consummation of the Merger and
 
                                      A-17
<PAGE>   84
 
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, after the 30th day after execution of this Agreement,
shall not interfere unreasonably 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 all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
 
     (c) FSC shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering an
acquisition transaction with FSC to preserve the confidentiality of the
information relating to FSC provided to such parties.
 
     8.6 Press Releases.  Prior to the Effective Time, FSC and Regions 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, however, that nothing in this Section
8.6 shall be deemed to prohibit any Party from making any disclosure which its
counsel advises as necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
 
     8.7 Certain Actions.  Except with respect to this Agreement and the
transactions contemplated hereby, no FSC Company nor any Affiliate thereof nor
any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any FSC Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of FSC's Board of Directors as
advised in writing by counsel to such Board of Directors, no FSC Company or any
Affiliate or Representative thereof shall furnish any non-public information
that it is not legally obligated to furnish, negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Proposal, and shall direct
and use its reasonable efforts to cause all of its Representatives not to engage
in any of the foregoing, but FSC may communicate information about such an
Acquisition Proposal to its stockholders if and to the extent that it is
required to do so in order to comply with its legal obligations. FSC shall
promptly notify Regions orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. FSC shall immediately
cease and cause to be terminated as of the date of this Agreement any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing.
 
     8.8 Tax Matters.  The Parties agree to use their reasonable efforts to
obtain written opinions of Alston & Bird to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, (ii) the exchange in the Merger of FSC Common Stock for Regions
Common Stock will not give rise to gain or loss to the stockholders of FSC with
respect to such exchange (except to the extent of any cash received), and (iii)
each of FSC and Regions will be a party to that reorganization within the
meaning of Section 368(b) of the Internal Revenue Code ("Tax Opinions"). In
rendering such Tax Opinions, counsel shall be entitled to rely upon
representations of officers of FSC and Regions reasonably satisfactory in form
and substance to such counsel. 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 "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for Federal income tax
purposes.
 
     8.9 Agreement of Affiliates.  FSC has disclosed in Section 8.9 of the FSC
Disclosure Memorandum each Person whom it reasonably believes is an "affiliate"
of FSC for purposes of Rule 145 under the 1933 Act. FSC 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, substantially in the form of
Exhibit 2, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of FSC Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or
                                      A-18
<PAGE>   85
 
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 FSC 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 FSC in exchange for shares of FSC Common
Stock shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Regions and FSC 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 8.9 (and Regions shall be entitled
to place restrictive legends upon certificates for shares of Regions Common
Stock issued to affiliates of FSC pursuant to this Agreement to enforce the
provisions of this Section 8.9). 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.
 
     8.10 Employee Benefits and Contracts.  Following the Effective Time,
Regions shall provide generally to officers and employees of the FSC 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 8.10), 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 FSC
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of FSC shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of FSC shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause FSC and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.10 of the
FSC Disclosure Memorandum to Regions between any FSC 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 FSC Benefit Plans.
 
     8.11 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, and shall cause FSC to, indemnify, defend, and hold harmless each person
entitled to indemnification from a FSC 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 Georgia Law and
FSC'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 the FSC is required to effectuate any indemnification, Regions
shall cause the FSC 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), 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 FSC 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 FSC elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Regions or FSC and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Regions or FSC
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, however, that
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 in the defense of any such Litigation, and
(iii) Regions shall not be liable
 
                                      A-19
<PAGE>   86
 
for any settlement effected without its prior written consent; and provided
further that FSC 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.
 
     8.12 State Takeover Laws.  Each FSC 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,
including Sections 14-2-1111 and 14-2-1132 of the GBCC.
 
     8.13 Articles of Incorporation Provisions.  Each FSC 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 FSC 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
FSC Company that may be directly or indirectly acquired or controlled by it.
 
                                  ARTICLE NINE
 
               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 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 FSC shall have approved
     this Agreement and the consummation of the transactions contemplated
     hereby, including the Merger, as and to the extent required by Law or 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 so obtained which is necessary to consummate the
     transactions as 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
     benefits of the transaction as 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 other 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 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.
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<PAGE>   87
 
          (f) Nasdaq NMS Listing.  The shares of Regions Common Stock issuable
     pursuant to the Merger shall have been approved for listing on the Nasdaq
     NMS.
 
          (g) Tax Matters.  Each Party shall have received a copy of the Tax
     Opinions referred to in Section 8.8 of this Agreement. Each Party shall
     have delivered to the other a Certificate, dated as of the date of the Tax
     Opinion, signed by its duly authorized officers, to the effect that, to the
     best knowledge and belief of such officers, the statement of facts and
     representations made on behalf of the management of such Party, presented
     to the legal counsel delivering the Tax Opinions were at the date of such
     presentation, true, correct, and complete, and are on the date of such
     Certificate, to the extent contemplated by the presentation, true, correct,
     and complete, as though such presentation had been made on the date of such
     Certificate.
 
     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 FSC 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 FSC 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 FSC set forth in Sections 5.17, 5.18, and
     5.19 of this Agreement shall be true and correct in all material respects.
     There shall not exist inaccuracies in the representations and warranties of
     FSC set forth in this Agreement (including the representations and
     warranties set forth in Sections 5.3, 5.17, 5.18, and 5.19) such that the
     aggregate effect of such inaccuracies has, or is reasonably likely to have,
     a Material Adverse Effect on FSC; provided that, for purposes of this
     sentence only, those representations and warranties which are qualified by
     references to "material" or "Material Adverse Effect" shall be deemed not
     to include such qualifications.
 
          (b) Performance of Agreements and Covenants.  Each and all of the
     agreements and covenants of FSC 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.  FSC 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 Sections 9.2(a) and 9.2(b) of this Agreement have
     been satisfied, and (ii) certified copies of resolutions duly adopted by
     FSC'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) Claims Letters.  Each of the directors and officers of FSC shall
     have executed and delivered to Regions letters in substantially the form of
     Exhibit 3 to this Agreement.
 
          (e) Legal Opinion.  Regions shall have received a written opinion,
     dated as of the Effective Time, of counsel to FSC, in substantially the
     form of Exhibit 4 to this Agreement.
 
          (f) Affiliate Agreements.  Regions shall have received from each
     affiliate of FSC the affiliates agreement referred to in Section 8.9 of
     this Agreement.
 
          (g) Pooling Letter.  Regions shall have received a letter from Ernst &
     Young, LLP, dated as of the Effective Time, to the effect that the Merger
     will qualify for pooling-of-interests accounting treatment under Accounting
     Principles Board Opinion No. 16 if closed and consummated in accordance
     with this Agreement.
 
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<PAGE>   88
 
     9.3 Conditions to Obligations of FSC.  The obligations of FSC 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 FSC 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 6.10 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 6.10) 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" or "Material Adverse Effect" 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 FSC (i) a
     certificate, dated as of the Effective Time and signed on its behalf by its
     duly authorized officers, to the effect that, to the best knowledge of such
     officers, after due inquiry, the conditions of its obligations set forth in
     Sections 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, as
     appropriate, and the consummation of the transactions contemplated hereby,
     all in such reasonable detail as FSC and its counsel shall request.
 
          (d) Legal Opinion.  FSC shall have received a written opinion, dated
     as of the Effective Time, of counsel to Regions, in substantially the form
     of Exhibit 5 to this Agreement.
 
                                  ARTICLE TEN
 
                                  TERMINATION
 
     10.1 Termination.  Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of FSC,
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 FSC; 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 FSC and Section 9.3(a) 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 thirty (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 FSC 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 FSC and Section 9.3(a) in
     the case of Regions or
                                      A-22
<PAGE>   89
 
     in material breach of any covenant or other agreement contained in this
     Agreement) 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 thirty (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 FSC fail to vote their approval of this Agreement and the
     transactions contemplated hereby as required by the Laws of the State of
     Georgia at the FSC Stockholders' Meeting where the transactions were
     presented to such stockholders for approval and voted upon; or
 
          (e) By the Board of Directors of FSC or by the Board of Directors of
     Regions in the event that the Merger shall not have been consummated by
     September 30, 1998, in each case only 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 FSC and Section 9.3(a) in
     the case of Regions or in material breach of any covenant or other
     agreement contained in this Agreement) in the event that any of the
     conditions precedent to the obligations of such Party to consummate the
     Merger (other than as contemplated by Section 10.1(d) of this Agreement)
     cannot be satisfied or fulfilled by the date specified in Section 10.1(e)
     of this Agreement as the date after which such Party may terminate this
     Agreement; or
 
          (g) By the Board of Directors of FSC, 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 FSC 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
     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 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 FSC 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).
 
                                      A-23
<PAGE>   90
 
          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 10 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 Consent of
        the Board of Governors of the Federal Reserve System to the Merger shall
        be received.
 
             "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......................................      4.07%
BB&T Corporation............................................      6.78
Compass Bancshares, Inc.....................................      3.34
Fifth Third Bancorp.........................................      7.84
First American Corporation..................................      2.96
First Security Corporation..................................      5.86
First Tennessee National Corporation........................      3.25
First Virginia Banks, Inc...................................      2.62
Hibernia Corporation........................................      6.62
Huntington Bancshares, Inc..................................      9.68
Mercantile Bancorporation, Inc. ............................      6.60
SouthTrust Corporation......................................      5.05
Star Banc Corporation.......................................      4.32
Summit Bancorp..............................................      8.91
SunTrust Banks, Inc. .......................................     10.67
Union Planters Corporation..................................      3.45
Wachovia Corporation........................................      7.99
                                                               -------
          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 sale
        prices of the companies composing the Index Group.
 
             "Starting Date" shall mean the fourth full trading day after 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).
 
                                      A-24
<PAGE>   91
 
     10.2 Effect of Termination.  In the event of the termination 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 Eleven and Section 8.5(b) of this Agreement shall survive any
such termination, 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. Each of the Support Agreements
shall be governed by its own terms as to its 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 Two, Three, Four, and Eleven and Sections 8.9, and 8.11 of this
Agreement.
 
                                 ARTICLE ELEVEN
 
                                 MISCELLANEOUS
 
     11.1 Definitions.  Except as otherwise provided herein, the capitalized
terms set forth below (in their singular and plural forms as applicable) 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 ten
     percent (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
     each of the Support Agreements and the other 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.
 
          "Business Combination" shall mean an acquisition of, merger or
     combination with, share exchange involving any class of voting stock of,
     sale of more than fifty percent (50%) of the consolidated assets by, or
     other business combination involving, or tender offer for or sale or
     issuance of any equity securities involving an acquisition by a third party
     of more than fifty percent (50%) of the voting stock of, FSC, other than
     the formation of a newly organized holding company for FSC in which the
     shares of FSC Common Stock are exchanged for shares of the holding company
     on a basis that does not cause the respective beneficial interests of each
     stockholder to change or transactions with a Regions Company.
 
          "Closing" shall mean the closing of the transactions contemplated
     hereby, as described in Section 1.2 of this Agreement.
 
          "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 undertak-
 
                                      A-25
<PAGE>   92
 
     ing 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.
 
          "DGCL" shall mean the Delaware General Corporation Law.
 
          "Effective Time" shall mean the date and time at which the Merger
     becomes effective as defined in Section 1.3 of this Agreement.
 
          "Environmental Laws" shall mean all Laws which are administered,
     interpreted, or enforced by the United States Environmental Protection
     Agency and state and local agencies with jurisdiction over pollution or
     protection of the environment.
 
          "ERISA" shall mean the Employee Retirement Income Security Act of
     1974, as amended.
 
          "ERISA Plan" shall have the meaning provided in Section 5.13 of this
     Agreement.
 
          "Exchange Agent" shall have the meaning provided in Section 4.1 of
     this Agreement.
 
          "Exchange Ratio" shall have the meaning provided in Section 3.1(c) of
     this Agreement.
 
          "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.
 
          "FDIC" shall mean the Federal Deposit Insurance Corporation.
 
          "FSC Benefit Plans" shall have the meaning set forth in Section 5.13
     of this Agreement.
 
          "FSC Common Stock" shall mean the $1.00 par value common stock of FSC.
 
          "FSC Companies" shall mean, collectively, FSC and all FSC
     Subsidiaries.
 
          "FSC Disclosure Memorandum" shall mean the written information
     entitled "First State Corporation Disclosure Memorandum" delivered by the
     14th day following 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 of this
     Agreement under which such disclosure is being made.
 
          "FSC Financial Statements" shall mean (i) the consolidated statements
     of condition (including related notes and schedules, if any) of FSC as of
     September 30, 1997, and as of December 31, 1996 and 1995, and the related
     statements of income, changes in stockholders' equity, and cash flows
     (including related notes and schedules, if any) for the nine months ended
     September 30, 1997, and for each of the three years ended December 31,
     1996, 1995, and 1994, as filed by FSC in SEC Documents, and (ii) the
     consolidated statements of condition of FSC (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 September 30, 1997.
 
          "FSC Preferred Stock" shall mean the $50.00 par value 7% non-voting
     cumulative preferred stock of FSC.
 
                                      A-26
<PAGE>   93
 
          "FSC Subsidiaries" shall mean the Subsidiaries of FSC, which shall
     include the FSC Subsidiaries described in Section 5.4 of this Agreement and
     any corporation, bank, savings association, or other organization acquired
     as a Subsidiary of FSC in the future and owned by FSC at the Effective
     Time.
 
          "GAAP" shall mean generally accepted accounting principles,
     consistently applied during the periods involved.
 
          "GBCC" shall mean the Georgia Business Corporation Code.
 
          "Hazardous Material" shall mean any pollutant, contaminant, or
     hazardous substance within the meaning of the Comprehensive Environmental
     Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et seq., or
     any similar federal, state, or local Law.
 
          "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 shall mean the knowledge
     after due inquiry of the chairman, president, chief financial officer,
     chief accounting officer, chief credit officer, general counsel, any
     assistant or deputy general counsel, or any senior or 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, without limitation, those
     promulgated, interpreted, or enforced by any of the Regulatory Authorities.
 
          "Liability" shall mean any direct or indirect, primary or secondary,
     liability, indebtedness, obligation, penalty, cost, or expense (including,
     without limitation, 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 current property
     Taxes not yet due and payable, (ii) for depository institutions, pledges to
     secure deposits and other Liens incurred in the ordinary course of the
     banking business, and (iii) Liens which are not reasonably likely to have,
     individually or in the aggregate, a Material Adverse Effect on a Party.
 
          "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, but shall not include regular, periodic examinations
     of depository institutions and their Affiliates by Regulatory Authorities.
 
          "Loan Property" shall mean any property owned by the Party in question
     or by any of its Subsidiaries or in which such Party or Subsidiary holds a
     security interest, and, where 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 position,
     business, or results of operations 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
                                      A-27
<PAGE>   94
 
     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, or (d) the
     Merger and compliance with the provisions of this Agreement on the
     operating performance of the Parties.
 
          "Merger" shall mean the merger of FSC with and into Regions referred
     to in Section 1.1 of this Agreement.
 
          "NASD" shall mean the National Association of Securities Dealers, Inc.
 
          "Nasdaq NMS" shall mean the National Market System of the National
     Association of Securities Dealers, Inc. Automated Quotations System.
 
          "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 in which the Party in
     question or any of its Subsidiaries participates in the management and,
     where required by the context, includes the owner or operator or such
     property, but only with respect to such property.
 
          "Party" shall mean either FSC or Regions and "Parties" shall mean both
     FSC 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 FSC to
     solicit the approval of its stockholders of the transactions contemplated
     by this Agreement and shall include the prospectus of Regions relating to
     the shares of Regions Common Stock to be issued to the stockholders of FSC.
 
          "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 September 30, 1997, and as of December 31, 1996 and 1995, and
     the related statements of income, changes in stockholders' equity, and cash
     flows (including related notes and schedules, if any) for the nine months
     ended September 30, 1997, and for each of the three years ended December
     31, 1996, 1995, and 1994, 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 September 30, 1997.
 
          "Regions Subsidiaries" shall mean the Subsidiaries of Regions.
 
          "Registration Statement" shall mean the Registration Statement on Form
     S-4, or other appropriate form, filed with the SEC by Regions under the
     1933 Act in connection with the transactions contemplated by this
     Agreement.
 
                                      A-28
<PAGE>   95
 
          "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 Thrift Supervision,
     the Office of the Comptroller of the Currency, the FDIC, all state
     regulatory agencies having jurisdiction over the Parties and their
     respective Subsidiaries, the NASD, and the SEC.
 
          "SEC" shall mean the United States Securities and Exchange Commission.
 
          "SEC Documents" shall mean all reports and registration statements
     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
     FSC to be held pursuant to Section 8.1 of this Agreement, including any
     adjournment or adjournments thereof.
 
          "Subsidiary" or collectively "Subsidiaries" shall mean all those
     corporations, banks, associations, or other entities of which the entity in
     question owns or controls fifty percent (50%) or more of the outstanding
     equity securities either directly or through an unbroken chain of entities
     as to each of which fifty percent (50%) or more of the outstanding equity
     securities is owned directly or indirectly by its parent; provided,
     however, 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.
 
          "Support Agreements" shall mean the various Support Agreements, each
     in substantially the form of Exhibit 1 to this Agreement.
 
          "Surviving Corporation" shall mean Regions as the surviving
     corporation resulting from the Merger.
 
          "Tax" or "Taxes" shall mean any federal, state, county, local or
     foreign income, profits, franchise, gross receipts, payroll, sales,
     employment, use, property, withholding, excise, occupancy, and other taxes,
     assessments, charges, fares, or impositions, of any nature whatsoever,
     including interest, penalties, and additions imposed thereon or with
     respect thereto.
 
     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 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 except for the fees payable by FSC to Ralph W. Jernigan, Jr., Jernigan &
Associates. In the event of a claim by any other broker or finder based upon his
or its representing or being retained by or allegedly representing or being
retained by FSC or Regions, each of FSC 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, or shall,
                                      A-29
<PAGE>   96
 
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 8.9 and 8.11 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; provided, however, that after
any such approval by the holders of FSC Common Stock, there shall be made no
amendment decreasing the consideration to be received by FSC stockholders
without the further approval of such stockholders.
 
     11.6 Waivers.  (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, vice chairman, or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by FSC, to waive or extend the time for the
compliance or fulfillment by FSC of any 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, FSC, acting through its Board of
Directors, chief executive 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 their obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of FSC 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 FSC.
 
     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 received:
 
<TABLE>
<S>                         <C>
FSC:                        First State Corporation
                            333 W. Broad Street
                            Albany, Georgia 31701
                            Telecopy Number: (912) 438-3811
                            Attention: Morgan G. Murphy
                                       Chairman and Chief Executive Officer
 
Copy to Counsel:            Perry & Walters
                            409 North Jackson Street
                            P.O. Box 469
                            Albany, Georgia 31702
                            Telecopy Number: (912) 436-1417
                            Attention: James E. Reynolds, Jr.
                            Powell, Goldstein, Frazer & Murphy LLP
                            191 Peachtree Street, N.E.
                            Atlanta, Georgia 30303
                            Telecopy Number: (404) 572-5958
                            Attention: Walter G. Moeling, IV
</TABLE>
 
                                      A-30
<PAGE>   97
 
Regions:                    Regions Financial Corporation
                            417 North 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 North 20th Street
                            Birmingham, Alabama 35203
                            Telecopy Number: (205) 326-7099
                            Attention: Samuel E. Upchurch, Jr.
                                       General Counsel and Corporate Secretary
 
     11.9 Governing Law.  Except to the extent the laws of the State of Georgia
apply to the Merger, 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.
 
     11.10 Counterparts.  This Agreement may be executed in one 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 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.
 
     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>
ATTEST:                                            FIRST STATE CORPORATION
 
           By: /s/ ROBERT E. LEE                             By: /s/ MORGAN G. MURPHY
- --------------------------------------------       --------------------------------------------
               Robert E. Lee                                     Morgan G. Murphy
                 Secretary                             Chairman and Chief Executive Officer
 
[CORPORATE SEAL]
 
                  ATTEST:                          REGIONS FINANCIAL CORPORATION
 
      By: /s/ SAMUEL E. UPCHURCH, JR.                        By:/s/ WILLIAM E. JORDAN
- --------------------------------------------       --------------------------------------------
          Samuel E. Upchurch, Jr.                               William E. Jordan
            Corporate Secretary                                 Regional President
 
[CORPORATE SEAL]
</TABLE>
 
                                      A-31
<PAGE>   98
 
                                                                      APPENDIX B
 
                                                               February   , 1998
 
Board of Directors
First State Corporation
3333 West Broad Avenue
Albany, GA 31701
 
Gentlemen:
 
     You have requested our opinion as to the fairness, from a financial point
of view, to the shareholders of First State Corporation (the "Company") of the
Exchange Ratio in connection with its proposed merger with Regions Financial
Corporation ("Regions") (the "Transaction") pursuant to and in accordance with
the terms of that certain Agreement and Plan of Merger (the "Agreement") entered
into by and between Regions and the Company. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Agreement.
 
     You have advised us that, pursuant to the Agreement, Regions and the
Company will merge (the "Merger") with and into Regions, the subsidiaries of
Regions, and Regions as successor to the Company will continue the banking
operations of First State's banking subsidiaries through Regions' subsidiaries.
Each share of the Company's Common Stock (excluding shares held by the Company
or any of its Subsidiaries or by Regions or any of its Subsidiaries, 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
0.56 of a share of Regions Common Stock, subject to adjustment as set forth in
the Agreement.
 
     Morgan Keegan & Company, Inc. ("Morgan Keegan"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various purposes. We have been retained by the Board of
Directors of the Company for the purpose of and will receive a fee for,
rendering this opinion. We have not advised any party in connection with the
Transaction other than the Company and we make no recommendation to the
shareholders of the Company.
 
     In connection with our opinion, we have (1) reviewed the Agreement (2) held
discussions with various members of management and representatives of the
Company and Regions concerning each company's historical and current operations,
financial condition and prospects; (3) reviewed historical consolidated
financial and operating data that was publicly available or furnished to us by
the Company and Regions; (4) reviewed internal financial analyses, financial and
operating forecasts, reports and other information prepared by officers and
representatives of the Company; (5) reviewed certain publicly available
information with respect to certain other companies that we believe to be
comparable to the Company and Regions and the trading markets for such other
companies' securities; (6) reviewed certain publicly available information
concerning the terms of certain other transactions that we deemed relevant to
our inquiry; (7) considered the relative contributions of the Company and
Regions to the combined company; and (8) conducted such other financial studies,
analyses and investigations as we deemed appropriate for the purpose of this
opinion.
 
     In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of the Company and Regions contained in the
Agreement. We have not been engaged to, and have not independently attempted to,
verify any of such information. We have also relied upon the managements of the
Company and Regions as to the reasonableness and achievabililty of the financial
and operating projections and the assumptions and bases therefor provided to us
and, with your consent, we have assumed that such projections reflect the best
currently available estimates and judgments of such respective managements of
the Company and Regions and that such projections and forecasts will be realized
in the amounts and time periods currently estimated by the managements of the
Company and Regions. We have not been engaged to assess the achievability of
such
 
                                       B-1
<PAGE>   99
 
projections or the assumptions on which they were based and express no view as
to such projections or assumptions. In addition, we have not conducted a
physical inspection or appraisal of any of the assets, properties or facilities
of either the Company or Regions nor have we been furnished with any such
evaluation or appraisal. We have also assumed that the conditions to the
Transaction would be consummated on a timely basis in the manner contemplated in
the Agreement. Our opinion is based upon analyses of the foregoing factors in
light of our assessment of general economic, financial and market conditions as
they exist and can be evaluated by us as of the date hereof. We express no
opinion as to the price or trading range at which shares of Regions' Common
Stock will trade following the date hereof, or the price or trading range at
which Regions' Stock will trade upon completion of the Transaction.
 
     Morgan Keegan has not previously provided investment banking services to
the Company. In the ordinary course of our business, we serve as a market maker
for the Regions' Common Stock and trade shares for our own account and the
accounts of our customers. Accordingly, we may at any time hold long or short
positions in the Regions' Common Stock.
 
     It is understood that this opinion is not to be quoted or referred to, in
whole or in part (including excerpts or summaries), in any filing, report
document, release or other communication used in connection with the Transaction
(unless required to be quoted or referred to by applicable regulatory
requirements), nor shall this opinion be used for any other purposes, without
our prior written consent which consent shall not be unreasonably withheld.
Furthermore, our opinion is directed to the Board of Directors of the Company
and does not constitute a recommendation to any shareholder of the Company as to
how such shareholder should vote at the shareholders' meeting held in connection
with the Transaction.
 
     Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to the Company's
shareholders.
 
                                          Yours very truly,
 
                                          MORGAN KEEGAN & COMPANY, INC.
 
                                       B-2
<PAGE>   100



                                     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>   101


     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>   102


        "(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>   103


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>    <C>
  2.1   --     Agreement and Plan of Merger, dated as of December 22, 1997,
               by and between First State Corporation and Regions Financial
               Corporation -- included as Appendix A to the Proxy
               Statement/Prospectus.
  4.1   --     Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
               Registration Statement of Regions Financial Corporation, file no. 333-37361.
  4.2   --     By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
               Regions Financial Corporation, file no. 333-37361.
  5.    --     Opinion re: legality.
  8.    --     Form of Opinion re: tax matters
 23.1   --     Consent of Ernst & Young LLP.
 23.2   --     Consent of Mauldin & Jenkins, LLC.
 23.3   --     Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
 23.4   --     Consent of Alston & Bird LLP-- to be included in Exhibit 8.
 23.5   --     Consent of Morgan Keegan & Company, Inc.
 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>   104


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>   105


                                   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 9th day of February, 1998.

                                          REGISTRANT:
                                          REGIONS FINANCIAL CORPORATION

                                           BY:    /s/ Richard D. Horsley
                                               --------------------------------
                                                    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     February 9, 1998
- --------------------------      Officer and Director
Carl E. Jones, Jr.          (principal executive officer)

/s/ Richard D. Horsley      Vice Chairman of the Board and    February 9, 1998
- --------------------------  Executive Financial Officer
Richard D. Horsley                 and Director
                            (principal financial officer)

/s/ Robert P. Houston       Executive Vice President and      February 9, 1998
- --------------------------         Comptroller
Robert P. Houston           (principal accounting officer)

</TABLE>



                                        II-5

<PAGE>   106


<TABLE>
<S>                           <C>                               <C>
/s/ Sheila S. Blair                Director                     February 9, 1998
- --------------------------
Sheila S. Blair

/s/ William B. Boles, Sr.          Director                     February 9, 1998                  
- --------------------------                                                        
William B. Boles, Sr.                                                             
                                                                                  
/s/ James B. Boone, Jr.            Director                     February 9, 1998                  
- --------------------------                                                        
James B. Boone, Jr.                                                               
                                                                                  
/s/ Albert P. Brewer               Director                     February 9, 1998                  
- --------------------------                                                        
Albert P. Brewer                                                                  
                                                                                  
/s/ James S.M. French              Director                     February 9, 1998                  
- --------------------------                                                        
James S.M. French                                                                 
                                                                                  
/s/ Olin B. King                   Director                     February 9, 1998                  
- --------------------------                                                        
Olin B. King                                                                      
                                                                                  
/s/ J. Stanley Mackin         Chairman of the Board             February 9, 1998                  
- --------------------------        and Director                                    
J. Stanley Mackin                                                                 
                                                                                  
/s/ Henry E. Simpson               Director                     February 9, 1998                  
- --------------------------                                                        
Henry E. Simpson                                                                  
                                                                                  
/s/ Lee J. Styslinger, Jr.         Director                     February 9, 1998                  
- --------------------------                                                        
Lee J. Styslinger, Jr.                                                            
                                                                                  
                                   Director
- --------------------------                                                        
Robert J. Williams
</TABLE>



<PAGE>   107


                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                                           SEQUENTIALLY
EXHIBIT                                                                                                       NUMBERED
NUMBER                           DESCRIPTION                                                                    PAGE
- -------        ------------------------------------------------------------------------------------------  ------------
<S>     <C>    <C>                                                                                         <C>
  2.1   --     Agreement and Plan of Merger, dated as of December 22, 1997,
               by and between First State Corporation and Regions Financial
               Corporation -- included as Appendix A to the Proxy
               Statement/Prospectus.
  4.1   --     Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
               Registration Statement of Regions Financial Corporation, file no. 333-37361.
  4.2   --     By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
               Regions Financial Corporation, file no. 333-37361.
  5.    --     Opinion re: legality.
  8.    --     Form of Opinion re: tax matters
 23.1   --     Consent of Ernst & Young LLP.
 23.2   --     Consent of Mauldin & Jenkins, LLC.
 23.3   --     Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
 23.4   --     Consent of Alston & Bird LLP -- to be included in Exhibit 8.
 23.5   --     Consent of Morgan Keegan & Company, Inc.
 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 5

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

                                February 6, 1998


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

     Re:  Regions Financial Corporation
          S-4 Registration Statement
          Combination with First State Corporation

Ladies and Gentlemen:

     We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger of First State Corporation
("FSC") 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 SMHC upon consummation of the Merger.
The maximum number of shares of Regions to be issued in the Merger is estimated
to be 4,039,131.

     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

                          [LETTERHEAD OF ALSTON & BIRD]

                               Form of Tax Opinion

                                 March ___, 1998


Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama  35203

First State Corporation
333 W. Broad Street
Albany, Georgia 31701

                  Re:   Proposed  Plan of  Merger  of First  State  Corporation
                        with  and into  Regions Financial Corporation

Ladies and Gentlemen:

         We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State of
Delaware, in connection with the proposed merger of First State Corporation
("FSC"), a corporation organized and existing under the laws of the State of
Georgia, with and into Regions (the "Merger"). Pursuant to the Merger, each of
the subsidiaries of FSC will become a subsidiary of Regions, and shall continue
to conduct its business and operations as a wholly-owned subsidiary of Regions.
In our capacity as counsel to Regions, our opinion has been requested with
respect to certain of the federal income tax consequences of the proposed
Merger.

         In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized 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 Code.

                             INFORMATION RELIED UPON

         In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:

                  (1)      the Agreement;


<PAGE>   2


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 2


                  (2) the Registration Statement on Form S-4 filed by Regions
with the Securities and Exchange Commission under the Securities Act of 1933, on
February __, 1998, including the Proxy Statement/Prospectus for the Special
Meeting of the stockholders of FSC; and

                  (3) such additional documents as we have considered relevant.

         In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate. We have also obtained
such additional information and representations as we have deemed relevant and
necessary through consultation with various officers and representatives of
Regions and FSC.

         You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale and provide the
combined organization with expanded geographic markets. To achieve these goals,
the following will occur pursuant to the Agreement:

                  (1) Subject to the terms and conditions of the Agreement, at
the Effective Time, FSC shall be merged into and with Regions in accordance with
the applicable provisions of the Georgia Business Corporation Code ("GBCC") and
the Delaware General Corporation Law ("DGCL") and with the effect provided in
the applicable provisions of the GBCC and the DGCL. Regions shall be the
Surviving Corporation of 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 Boards of
Directors of FSC and Regions.

                  (2) Subject to the provisions of Article 3 of the Agreement,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, 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 FSC Common Stock (excluding shares held by FSC or any
         of its Subsidiaries or by Regions or any of its Subsidiaries, in each
         case other than in a fiduciary capacity or as a result of debts
         previously contracted) issued and 


<PAGE>   3


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 3


         outstanding at the Effective Time shall be converted into .56 of a 
         share of Regions Common Stock, subject to adjustment as provided in 
         Section 10.1(g) of the Agreement (the "Exchange Ratio").

                  (3) In the event FSC changes the number of shares of FSC
Common Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, or similar recapitalization 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, or similar recapitalization 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.

                  (4) Each of the shares of FSC Common Stock held by any FSC
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.

                  (5) Holders of FSC Common Stock shall not have dissenters'
rights of appraisal in connection with the Merger.

                  (6) Notwithstanding any other provision of the Agreement, each
holder of shares of FSC Common Stock exchanged pursuant to the Merger, or of
options to purchase shares of FSC Common Stock, 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, in the case of shares exchanged
pursuant to the Merger, or the date of exercise, in the case of options. The
market value of one share of Regions Common Stock at the Effective Time or the
date of exercise, as the case may be, shall be the last sale price of such
common stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source) on the last trading day
preceding the Effective Time, in the case of shares exchanged pursuant to the
Merger, and the date of exercise, in the case of options. No such holder will be
entitled to dividends, voting rights, or any other rights as a stockholder in
respect of any fractional shares.

                  (7) At the Effective Time, all rights with respect to FSC
Common Stock pursuant to stock options or stock appreciation rights ("FSC
Options") granted by FSC under the FSC Stock Plans, which are outstanding at the
Effective Time, whether or 


<PAGE>   4


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 4


not exercisable, shall be converted into and become rights with respect to
Regions Common Stock, and Regions shall assume each FSC Option, in accordance
with the terms of the FSC Stock Plan and stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each FSC Option assumed by
Regions may be exercised solely for shares of Regions Common Stock (or cash in
the case of stock appreciation rights), (ii) the number of shares of Regions
Common Stock subject to such FSC Option shall be equal to the number of shares
of FSC Common Stock subject to such FSC Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such FSC Option shall be adjusted by dividing the per
share exercise price under each such FSC Option by the Exchange Ratio and
rounding down to the nearest cent. It is intended that the foregoing assumption
shall be undertaken in a manner that will not constitute a "modification" as
defined in Section 424 of the Internal Revenue Code, as to any stock option
which is an "incentive stock option." FSC agrees to take all necessary steps to
effectuate the foregoing provisions of this paragraph.

             (8)   All restrictions or limitations on transfer with respect
to FSC Common Stock awarded under the FSC Stock Plans or any other plan,
program, or arrangement of any FSC 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 the Agreement.

         With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated:

         (1) The fair market value of the Regions Common Stock and other
consideration, if any, received in the aggregate by the stockholders of FSC will
be approximately equal to the fair market value of the FSC Common Stock
surrendered in exchange therefor.

         (2) There is no plan or intention on the part of the stockholders of
FSC who own five percent (5%) or more of FSC Common Stock, and to the best of
the knowledge of the management of FSC, there is no plan or intention on the
part of the remaining stockholders of FSC to sell, exchange, or otherwise
dispose of a number of shares of Regions Common Stock to be received in the
proposed transaction that would reduce their holdings in Regions Common Stock
received to a number of shares having, in the aggregate, a value as of the
Effective Time of less than fifty percent (50%) of the total value of all shares
of FSC Common Stock outstanding immediately prior to the Effective Time. For
purposes of this assumption, shares of FSC Common Stock exchanged for cash or
other property, or exchanged for cash in lieu of fractional shares of Regions
Common Stock will be treated as outstanding FSC Common Stock as of the Effective
Time. 


<PAGE>   5


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 5


Moreover, shares of FSC Common Stock and shares of Regions Common Stock held by
FSC stockholders and otherwise sold, redeemed, or disposed of in contemplation
of or subsequent to the transaction will be considered in making this
assumption.

         (3)  Regions has no plan or intention to redeem or otherwise reacquire
any shares of Regions Common Stock issued in the Merger, except for purchases of
stock in the open market in the normal course of business executed through an
independent broker in which Regions is not aware of the identity of any seller
or in private placement transactions in which the sellers are not former FSC
stockholders.

         (4)  Regions has no plan or intention to sell or otherwise dispose of
any of the assets of FSC acquired in the transaction, except for dispositions
made in the ordinary course of business or transfers described in Section
368(a)(2)(C).

         (5)  The liabilities of FSC assumed by Regions and the liabilities to
which the transferred assets of FSC are subject were incurred by FSC in the
ordinary course of its business.

         (6)  Following the transaction, Regions will continue the historic
business of FSC or use a significant portion of FSC's historic business assets
in a business.

         (7)  Regions, FSC, and the stockholders of FSC will pay their 
respective expenses, if any, incurred in connection with the transaction, except
that Regions shall bear and pay the filing fees payable in connection with the
Registration Statement and the Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement.

         (8)  There is no intercorporate indebtedness existing between FSC and
Regions that was issued, acquired, or will be settled at a discount.

         (9)  FSC is not under the jurisdiction of a court in a case under Title
11 of the United States Code or a receivership, foreclosure, or similar
proceeding in a federal or state court.

         (10) The fair market value of the assets of FSC transferred to Regions
will equal or exceed the sum of the liabilities assumed by Regions plus the
amount of the liabilities, if any, to which the transferred assets are subject.

         (11) The payment of cash to FSC stockholders in lieu of fractional
shares of Regions Common Stock is solely for the purpose of avoiding the expense
and inconvenience to Regions of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that will
be paid in the transaction to the FSC stockholders instead of issuing fractional
shares of Regions Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the transaction to the FSC stockholders in
exchange for their shares of FSC Common Stock. The fractional share interests of
each FSC stockholder will be 


<PAGE>   6


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 6


aggregated, and no FSC stockholder will receive cash in an amount equal to or
greater than the value of one full share of Regions Common Stock.

         (12) None of the compensation received by any stockholder-employees of
FSC will be separate consideration for, or allocable to, any of their shares of
FSC Common Stock; none of the shares of Regions Common Stock received by any
stockholder-employees will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any stockholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar services.

         (13) At all times during the five-year period ending on the Effective
Date of the Merger, the fair market value of all of FSC's United States real
property interests was and will have been less than fifty percent (50%) of the
fair market value of the total of (a) its United States real property interests,
(b) its interests in real property located outside the United States, and (c)
its other assets used or held for use in a trade or business. For purposes of
the preceding sentence, (i) United States real property interests include all
interests (other than an interest solely as a creditor) in real property and
associated personal property (such as movable walls and furnishings) located in
the United States or the Virgin Islands and interests in any corporation (other
than a controlled corporation) owning any United States real property interest,
(ii) FSC is treated as owning its proportionate share (based on the relative
fair market value of its ownership interest to all ownership interests) of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which FSC is a partner or beneficiary, and (iii) any such entity in turn is
treated as owning its proportionate share of the assets owned by any controlled
corporation or any partnership, trust, or estate in which the entity is a
partner or beneficiary. As used in this paragraph, "controlled corporation"
means any corporation at least fifty percent (50%) of the fair market value of
the stock of which is owned by FSC, in the case of a first-tier subsidiary of
FSC or by a controlled corporation, in the case of a lower-tier subsidiary.

         (14) Neither Regions nor FSC is an investment company. For purposes of
the foregoing, an "investment company" is a corporation that is a regulated
investment company, a real estate investment trust, or a corporation fifty
percent (50%) or more of the value of whose total assets are stock and
securities and eighty percent (80%) or more of the value of whose total assets
are assets held for investment. In making the fifty percent (50%) and eighty
percent (80%) determinations under the preceding sentence, stock and securities
in any subsidiary corporation shall be disregarded and the parent corporation
shall be deemed to own its ratable share of the subsidiary's assets, and a
corporation shall be considered a subsidiary if the parent owns fifty percent
(50%) or more of the combined voting power of all classes of stock entitled to
vote or fifty percent (50%) or more of the total value of shares of all classes
of stock outstanding.


<PAGE>   7


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 7


         (15) The Agreement represents the entire understanding of FSC and 
Regions with respect to the Merger.

                                    OPINIONS

         Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Agreement and that the representations made by Regions and FSC are true and
correct at the time of the consummation of the Merger, we are of the opinion
that:

              (1) Provided the Merger qualifies as a statutory merger under the 
DGCL and the GBCC, the Merger will be a reorganization within the meaning of
Section 368(a) of the Code. FSC and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.

              (2) The stockholders of FSC will recognize no gain or loss upon
the exchange of their FSC Common Stock solely for shares of Regions Common
Stock.

              (3) The basis of the Regions Common Stock received by the FSC
stockholders in the Merger will, in each instance, be the same as the basis of
the FSC 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
FSC stockholders will, in each instance, include the period during which the FSC
Common Stock surrendered in exchange therefor was held, provided that the FSC
Common Stock was held as a capital asset on the date of the exchange.

              (5) The payment of cash to FSC 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 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. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set out herein, which we have assumed are true on the date the Merger
is consummated. Our opinions cannot be 


<PAGE>   8


Regions Financial Corporation
First State Corporation
March ___, 1998
Page 8



relied upon if any of the facts contained in such documents or if such
additional information is, or later becomes, inaccurate, or if any of the
statements set out herein is, or later becomes, inaccurate. Finally, 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 proposed Merger, including for example any issues related to
accounting methods or any income or gain recognition pursuant to Treasury
Regulations issued under Section 1502 of the Code.

         This opinion is being provided solely for the benefit of Regions, FSC
and the stockholders of FSC. No other person or party shall be entitled to rely
on this opinion.

         We consent to the use of this opinion and to the references made to the
firm under the caption "Description of the Transaction -- Certain Federal Income
Tax Consequences of the Merger" in the Proxy Statement/Prospectus constituting
part of the Registration Statement of Regions.

                                              Very truly yours,

                                              ALSTON & BIRD LLP

                                              By: 
                                                 -------------------------------


<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 4,039,131 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1997 (except for the last two paragraphs of Note Q as to which the date is March
13, 1997), with respect to the consolidated financial statements of Regions
Financial Corporation incorporated by reference in its Annual Report (Form 10-K)
for the year ended December 31, 1996, filed with the Securities and Exchange
Commission.

/s/ ERNST & YOUNG LLP

Birmingham, Alabama
February 4, 1998



<PAGE>   1
                                                                    EXHIBIT 23.2


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of our report, dated January 24, 1997,
included in the Annual Report on Form 10-K of First State Corporation and
subsidiaries for the year ended December 31, 1996.  We also consent to the
reference to our Firm under the caption "Experts" in the aforementioned
Registration Statement.

                                             /s/ Mauldin & Jenkins, LLC
                                             ---------------------------
                                             MAULDIN & JENKINS, LLC


February 4, 1998
Albany, Georgia

<PAGE>   1


                                                                    EXHIBIT 23.5


                  CONSENT OF MORGAN KEEGAN & COMPANY, INC.


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
First State Corporation 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/ Morgan Keegan & Company, Inc.
                                       MORGAN KEEGAN & COMPANY, INC.

Memphis, Tennessee
February 4, 1998




<PAGE>   1
                                                                      EXHIBIT 99

                             FIRST STATE CORPORATION
           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 designated below, all the
shares of common stock of First State Corporation (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
December 22, 1997 (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 .56 of a share 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.

[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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