<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
---------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------------
Commission file number 0-4554
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Bank South Corporation
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(Exact name of Registrant as specified in its charter)
Georgia 58-1048216
------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
55 Marietta Street, Atlanta, Georgia 30303
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(404) 529-4111
----------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed
since last report. )
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes XX No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Common Stock, Shares Outstanding at July 31, 1995:
----- ------------------------------------
$5 par value 58,772,126 shares
<PAGE> 2
BANK SOUTH CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
at June 30, 1995 and December 31, 1994 1
Consolidated Statements of Income
for the Three Months and Six Months Ended
June 30, 1995 and 1994 2
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1995 and 1994 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 5
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
<PAGE> 3
BANK SOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
ASSETS (Thousands of dollars, except share data)
<S> <C> <C>
Cash and due from banks:
Interest-bearing deposits $ 25,533 $ 64,048
Non-interest bearing deposits and cash 345,082 359,473
---------- ----------
Total cash and due from banks 370,615 423,521
Federal funds sold and securities purchased
under agreements to resell 107,600 50,649
Trading account securities 9,769 75,431
Investment securities available for sale 654,511 472,061
Investment securities held to maturity (fair value $1,810,577
at June 30, 1995 and $1,875,006 at December 31, 1994) 1,861,542 1,968,970
Loans 4,110,638 3,954,490
Less: Unearned income 15,808 21,207
Allowance for loan losses 79,832 82,936
---------- ----------
Net loans 4,014,998 3,850,347
---------- ----------
Premises and equipment, net 116,630 113,557
Customers' acceptance liability 598 770
Other real estate owned, net 2,827 3,678
Other assets 300,611 287,026
---------- ----------
Total assets $7,439,701 $7,246,010
========== ==========
LIABILITIES
Non-interest bearing demand deposits $1,160,467 $1,203,258
Interest-bearing deposits:
NOW accounts 799,263 785,795
Money market accounts 522,818 602,429
Savings accounts 455,267 484,913
Certificates of deposit $100,000 or more 417,407 364,584
Other time deposits 1,694,483 1,591,780
---------- ----------
Total interest-bearing deposits 3,889,238 3,829,501
---------- ----------
Total deposits 5,049,705 5,032,759
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 691,158 944,153
Commercial paper 60,901 49,773
Other short-term borrowings 625,000 375,998
---------- ----------
Total short-term borrowings 1,377,059 1,369,924
Bank acceptances outstanding 598 770
Long-term debt 188,572 89,413
Other liabilities 155,892 118,912
---------- ----------
TOTAL LIABILITIES 6,771,826 6,611,778
---------- ----------
<CAPTION>
SHAREHOLDERS' EQUITY 1995 1994
---------------------------
<S> <C> <C> <C> <C>
Preferred stock:
Par value $ 25 $ 25
Shares authorized 5,000,000 5,000,000
Shares issued and outstanding - -
Common stock:
Par value $ 5 $ 5
Shares authorized 100,000,000 100,000,000
Shares issued and outstanding 58,774,265 58,326,282 293,871 291,631
Capital surplus 187,832 183,544
Retained earnings 188,439 167,582
Unrealized loss on investment securities
available for sale, net of tax (2,267) (8,525)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 667,875 634,232
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,439,701 $7,246,010
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
BANK SOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1995 1994
-------- --------
INTEREST INCOME (In thousands, except per share data)
<S> <C> <C>
Interest and fees on loans:
Taxable $ 86,997 $ 75,235
Tax-exempt 1,192 846
-------- --------
Total interest and fees on loans 88,189 76,081
Interest and dividends on investment securities held to maturity
Taxable 21,333 8,280
Tax-exempt 7,926 4,806
-------- --------
Total interest and dividends on investment securities held to maturity 29,259 13,086
Interest and dividends on investment securities
available for sale (taxable) 12,707 8,172
Trading account securities 309 2,159
Federal funds sold and securities purchased
under agreements to resell 3,079 2,251
Interest-bearing deposits 392 299
Other short-term investments 122 836
-------- --------
Total interest income 134,057 102,884
-------- --------
INTEREST EXPENSE
Interest on deposits:
NOW accounts 5,665 4,950
Money market accounts 4,757 4,040
Savings accounts 2,619 3,265
Certificates of deposit $100,000 or more 6,125 2,628
Other time deposits 24,173 15,417
-------- --------
Total interest on deposits 43,339 30,300
Interest on short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 14,682 5,932
Other short-term borrowings 11,717 1,222
-------- --------
Total interest on short-term borrowings 26,399 7,154
Interest on long-term debt 2,233 1,555
-------- --------
Total interest expense 71,971 39,009
-------- --------
NET INTEREST INCOME 62,086 63,875
Less: Provision for loan losses - 2,300
-------- --------
Net interest income after provision for loan losses 62,086 61,575
-------- --------
NON-INTEREST INCOME
Trust income 2,692 2,334
Service charges and fees on deposit accounts 19,321 16,368
Electronic banking 5,539 4,290
Mortgage banking activities 1,079 952
Other service charges and fees 3,451 2,539
Institutional investment activities 3,373 432
Retail investment activities 448 407
Securities gains 1,013 2,180
Other income 2,062 2,390
-------- --------
Total non-interest income 38,978 31,892
-------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits 34,906 31,825
Occupancy 4,617 4,822
Equipment 4,124 4,239
Other real estate owned (946) 319
Other expense 26,917 25,371
-------- --------
Total non-interest expense 69,618 66,576
-------- --------
Income before income taxes 31,446 26,891
Income tax expense 9,608 4,248
-------- --------
NET INCOME $ 21,838 $ 22,643
======== ========
Earnings per common share $ 0.37 $ 0.39
Cash dividends declared per share 0.14 0.11
Weighted average common shares and common
share equivalents outstanding 59,547 58,571
<CAPTION>
Six Months Ended June 30,
1995 1994
-------- --------
INTEREST INCOME (In thousands, except per share data)
<S> <C> <C>
Interest and fees on loans:
Taxable $170,905 $148,703
Tax-exempt 2,329 1,610
-------- --------
Total interest and fees on loans 173,234 150,313
Interest and dividends on investment securities held to maturity
Taxable 42,473 16,408
Tax-exempt 15,779 8,861
-------- --------
Total interest and dividends on investment securities held to maturity 58,252 25,269
Interest and dividends on investment securities
available for sale (taxable) 22,741 21,481
Trading account securities 961 3,008
Federal funds sold and securities purchased
under agreements to resell 3,732 2,570
Interest-bearing deposits 903 576
Other short-term investments 1,079 911
-------- --------
Total interest income 260,902 204,128
-------- --------
INTEREST EXPENSE
Interest on deposits:
NOW accounts 10,999 10,046
Money market accounts 9,634 7,833
Savings accounts 5,564 6,501
Certificates of deposit $100,000 or more 11,622 4,885
Other time deposits 45,732 30,904
-------- --------
Total interest on deposits 83,551 60,169
Interest on short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 28,548 10,509
Other short-term borrowings 21,608 2,612
-------- --------
Total interest on short-term borrowings 50,156 13,121
Interest on long-term debt 3,387 3,179
-------- --------
Total interest expense 137,094 76,469
-------- --------
NET INTEREST INCOME 123,808 127,659
Less: Provision for loan losses - 6,997
-------- --------
Net interest income after provision for loan losses 123,808 120,662
-------- --------
NON-INTEREST INCOME
Trust income 5,209 4,910
Service charges and fees on deposit accounts 36,020 30,987
Electronic banking 10,297 7,997
Mortgage banking activities 2,093 1,989
Other service charges and fees 6,856 5,535
Institutional investment activities 4,815 2,156
Retail investment activities 901 872
Securities gains 2,173 1,851
Other income 2,802 3,578
-------- --------
Total non-interest income 71,166 59,875
-------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits 69,883 62,521
Occupancy 9,421 9,828
Equipment 8,294 8,026
Other real estate owned (938) 359
Other expense 56,608 48,790
-------- --------
Total non-interest expense 143,268 129,524
-------- --------
Income before income taxes 51,706 51,013
Income tax expense 14,427 9,061
-------- --------
NET INCOME $ 37,279 $ 41,952
======== ========
Earnings per common share $ 0.63 $ 0.73
Cash dividends declared per share 0.28 0.22
Weighted average common shares and common
share equivalents outstanding 59,341 57,200
</TABLE>
<PAGE> 5
BANK SOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
----------- -----------
(Thousands of dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 37,279 $ 41,952
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Provision for loan losses - 6,997
Provision for losses on other real estate owned 592 429
Depreciation and amortization expense - premises and equipment 6,068 5,447
Amortization expense - intangible and other assets 5,716 5,492
Deferred income tax expense (benefit) 3,308 (3,085)
Net amortization of investment securities premiums and discounts 1,514 2,021
Securities gains (2,173) (1,864)
Net unrealized valuation losses (gains) on trading account securities 448 (597)
Net realized loss (gain) on sales of other assets 1,887 (403)
Net decrease (increase) in trading account securities 65,214 (354,614)
Net increase in mortgage loans held for resale (50,213) -
Net decrease in interest receivable 287 -
Net increase in other assets (22,208) (41,591)
Net increase (decrease) in interest payable 18,086 (967)
Net increase (decrease) in other liabilities 15,174 179,698
----------- -----------
Total adjustments 43,700 (203,037)
----------- -----------
Net cash provided by (used in) operating activities 80,979 (161,085)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in federal funds sold and securities purchased
under agreements to resell (56,951) (331,675)
Purchases of investment securities held to maturity (22,338) (728,548)
Purchases of investment securities available for sale (3,610,631) (1,104,252)
Proceeds from sales of investment securities available for sale 3,314,783 1,642,533
Proceeds from calls, maturities and redemptions of investment securities held to maturity 128,012 90,654
Proceeds from calls, maturities and redemptions of investment securities
available for sale 125,026 107,441
Net increase in loans (128,297) (10,792)
Purchases of premises and equipment (11,643) (6,647)
Proceeds from sales of premises and equipment 2,284 4,257
Proceeds from sales of other real estate owned 2,831 4,614
Proceeds from recoveries on loans previously charged off 9,693 10,360
Business combinations, net of cash acquired - 7,872
----------- -----------
Net cash used in investing activities (247,231) (314,183)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 16,946 30,401
Net increase in short-term borrowings 7,135 489,659
Repayments of long-term debt (750) (6,982)
Proceeds from issuance of long-term debt 99,909 -
Proceeds from employee and director stock purchases 5,569 7,070
Cash dividends paid (16,422) (12,330)
Proceeds from dividend reinvestment plan 959 608
----------- -----------
Net cash provided by financing activities 113,346 508,426
----------- -----------
Net (decrease) increase in cash and due from banks (52,906) 33,158
Net increase in cash and due from banks at beginning of period 423,521 390,482
----------- -----------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 370,615 $ 423,640
=========== ===========
SUPPLEMENTARY INFORMATION:
Income taxes paid $ 11,759 $ 21,453
Income tax refunds received 6,860 974
Interest paid 119,008 61,091
Non-cash transactions:
Loans transferred to other real estate owned 4,166 2,663
Loans to facilitate the sale of other real estate owned - 205
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
BANK SOUTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
The financial statements in this report have not been audited. In the opinion
of management, all adjustments necessary for a fair presentation of the
financial position and results of operations for the interim periods have been
made. All such adjustments are of a normal recurring nature. These statements
should be read in conjunction with the 1994 Annual Report on Form 10-K for Bank
South Corporation (the "Registrant" or "Company"). Results of operations for
the six months ended June 30, 1995, are not necessarily indicative of the
results of operations for the year ending December 31, 1995, or any interim
periods. Certain previously reported amounts have been reclassified to conform
to the current presentation.
Note 2 - Business Combinations
On February 17, 1995, the Registrant acquired Gwinnett Bancshares, Inc.
("Gwinnett"), parent company of Gwinnett Federal Bank, FSB. As a result of the
Gwinnett merger, each share of Gwinnett common stock issued and outstanding
immediately prior to the effective time of the Gwinnett merger was converted
into the right to receive 1.75 shares of the common stock of the Registrant.
The Registrant issued an aggregate 3,681,402 shares of the Registrant's common
stock to holders of Gwinnett common stock. As of December 31, 1994, Gwinnett
had total assets of approximately $319.1 million and total shareholders' equity
of approximately $33.2 million. For the year ended December 31, 1994, Gwinnett
reported a net loss of approximately $1.4 million. The acquisition was
accounted for using the pooling-of-interests accounting method.
Note 3 - Contingencies
Although no suit has been filed, the Company has been informed of a potential
claim for contribution to clean-up costs by a party currently incurring such
costs on a Superfund site under federal environmental laws. The Company's
subsidiary, Bank South, acts in a fiduciary capacity, serving as trustee of a
trust which has an interest in a partnership that previously owned the site.
It is understood that such claim will be asserted against Bank South in both
its fiduciary and individual capacities. At this time the Company has only
limited information about the possible claim and intends to defend the claim
vigorously. The Company is not able to determine what effect, if any, such a
claim may have on the Company's financial statements.
<PAGE> 7
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company reported net income of $37.3 million, or $0.63 per share, for the
first six months of 1995 compared to $42.0 million, or $0.73 per share, for the
same period in 1994. Net income for the second quarter of 1995 was $21.8
million, or $0.37 per share, compared to $22.6 million, or $0.39 per share for
the second quarter of 1994. Contributing to the decrease in earnings in 1995
over 1994, among other factors, was an increase in other operating expenses
related to an insurance premium tax, acquisition expenses, severance payments
and an increase in tax expense. These increases were partially offset by a
decrease in the provision for loan losses in the first six months of 1995
compared to the same period of 1994.
The Company continued its internal business process reengineering program begun
in the second quarter of 1994. This program has identified 16 specific
processes to be reengineered. The focus of the program includes migration of
sales and transaction volumes to electronic and telephone-based delivery
channels, improving sales and customer service capabilities, and eliminating
non-value added activities in the branches. During the second quarter of 1995,
the business process reengineering program initiatives contributed to the
review of branch locations and hours and the rollout of enhanced telephone
banking services. The Company expects a net enhancement in 1996 pre-tax
earnings of $17 million as a result of the business process reengineering
program. In conjunction with the recommendations derived from this program,
the Company completed the consolidation of 13 traditional offices and the
opening of seven InStore offices during the second quarter of 1995, further
strengthening its position as the most convenient bank in its market based on
the number of banking locations. During the second quarter of 1995 the Company
reevaluated the ScreenPhone project as an alternative delivery channel and has
put this project on hold. During the second quarter the Company implemented
the TeleServices system which is an enhanced telephone banking system. This
system exceeded internal projections of call volumes during the quarter by
posting more than 3.6 million calls.
During the second quarter of 1995, the Company converted from a national
charter to a state charter making it the second largest state chartered bank in
Georgia.
Net Interest Income
Net interest income, on a taxable equivalent basis (t.e.), was $135.3 million
for the six months ended June 30, 1995, 1.39 percent higher than the $133.4
million for the same period in 1994. Net interest income in the second quarter
of 1995 increased 1.3 percent over the second quarter of 1994, to $67.8 million
from $67.0 million. The increase in net interest income resulted primarily
from increased volumes of investments. The net interest margin, t.e., was 3.90
percent in the second quarter of 1995 compared to 4.77 percent in the second
quarter of 1994. The margin for the first six months of 1995 was 3.97 percent
compared to 4.84 percent for the first six months of 1994. The decline in the
margin is primarily attributable to the addition of investments at relatively
narrow spreads and a higher cost of funds.
Total average earning assets were $6.9 billion during the first six months of
1995, an increase of $1.3 billion, or 23.8 percent, over the same period in
1994. Total average loans were $4.0 billion for the first six months of 1995,
an increase of 14.3 percent over the $3.5 billion of average loans for the
first six months of 1994. Comprising approximately 77 percent of the loan
increase, commercial and installment loans increased $387.8 million, or 13.3
percent, over 1994. The remaining increase in average loans was due to
mortgage loans which increased $107.9 million, or 29.9 percent, over 1994. The
increase in installment, mortgage and commercial loans reflects the Company's
expanding dealer finance niche and the rapidly growing Atlanta economy.
<PAGE> 8
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Investment securities held to maturity and investment securities available for
sale averaged $2.6 billion in the first six months of 1995, an increase of
$915.4 million, or 53.7 percent, over the same period of 1994. Average total
investments as a percentage of earning assets increased to 41.1 percent in the
first six months of 1995, compared to 36.2 percent for the same period in 1994.
These additional investment securities were added to better utilize capital.
Average transaction account deposit balances, including demand, savings and NOW
accounts, remained stable in the first six months of 1995 compared to the same
period in 1994. Consumer and other time deposits averaged $1.4 billion in the
first six months of 1995, an increase of $258.0 million, or 23.2 percent, over
the same period in 1994. Total average deposits increased 7.6 percent to $5.04
billion for the first six months of 1995 and average short-term borrowings
increased $919.4 million in the first six months of 1995 over 1994 to fund the
addition of investment securities.
Provision for Loan Losses
During the first six months of 1995, no provision was recognized for loan
losses due to the continued improvement in asset quality, lower than expected
losses, and a higher level of recoveries. During the same period in 1994, the
provision for loan losses was $7.0 million with $2.3 million recorded in the
second quarter of 1994. See "Asset Quality" for further discussion of the
Allowance for Loan Losses.
Non-Interest Income
For the six months ended June 30, 1995, non-interest income was $71.2 million,
an increase of $11.3 million, or 18.9 percent, from the same period in 1994.
Non-interest income of $39.0 million in the second quarter of 1995 was $7.1
million, or 22.2 percent, higher than the second quarter of 1994. Included in
non-interest income were gains of $1.6 million recognized from the sale of
mortgage servicing rights in the second quarter of 1995. Also included in non-
interest income were gains on the sale of investment securities available for
sale of $2.2 million in the first six months of 1995, and $1.9 million for the
first six months of 1994. Gains on the sale of investment securities available
for sale were $1.0 million in the second quarter of 1995, a decrease of $1.2
million from the second quarter of 1994. Excluding these securities gains,
non-interest income increased $11 million, or 19.0 percent, in the first six
months of 1995 over 1994 and $8.3 million, or 27.9 percent, in the second
quarter of 1995 versus 1994.
In the first six months of 1995, total deposit service charges and fees, the
largest component of non-interest income, totaled $55.3 million, an increase of
$8.8 million, or 18.8 percent, from the first six months of 1994. The increase
in service charge income was primarily due to an increase in fees on all
deposit products, ATM, and debit card transactions.
Non-Interest Expense
Non-interest expense totaled $143.3 million for the six months ended June 30,
1995, an increase of $13.7 million, or 10.6 percent, from the same period of
1994. Non-interest expense totaled $69.6 million in the second quarter of
1995, an increase of $3.0 million, or 4.6 percent, over the second quarter of
1994. The primary driver of the increase was a higher level of retail
activities including expanded hours in the branches, additional branches,
consulting services, deposit insurance premiums, amortization of intangibles
and acquisition related expenses. Offsetting these increases, was a $1.0
million gain recognized from the sale of a large oreo property in the second
quarter of 1995.
In the first six months of 1995, personnel costs increased $7.4 million or 11.8
percent over the same period in 1994 due to additional locations and expanded
banking hours. Data processing expenses increased $750,000 or 35.5 percent,
general and administrative expenses increased $3.2 million, and acquisition
expenses increased $2.2 million for the first six months of 1995 compared to
the same period in 1994, each related to increased transaction volumes,
on-going costs associated with expansion into mutual funds and teleservices,
insurance premium tax, and acquisitions.
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
COMPOSITION OF LOAN PORTFOLIO
TABLE 1
<TABLE>
<CAPTION>
December 31,
June 30, ----------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------------ ----------------- ----------------- ----------------- -----------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------------------ ----------------- ----------------- ----------------- -----------------
(Thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $1,069,035 26% $1,048,187 27% $ 894,774 25% $ 902,228 31% $1,032,436 34%
Real estate construction 233,759 6 218,985 6 137,741 4 86,709 3 314,016 10
Commercial mortgage 610,886 15 598,376 15 579,652 17 665,126 23 513,807 17
1-4 Family residential mortgage 715,655 17 672,515 17 574,548 16 521,489 18 546,153 18
Consumer 1,448,309 35 1,384,573 34 1,306,783 37 755,184 25 643,186 20
Lease financing 32,994 1 31,854 1 15,517 1 13,956 - 21,721 1
------------------ ----------------- ----------------- ----------------- -----------------
Total loans $4,110,638 100% $3,954,490 100% $3,509,015 100% $2,944,692 100% $3,071,319 100%
================== ================= ================= ================= =================
</TABLE>
Note: During 1992 loans were reclassified between real estate construction and
commercial mortgages.
ALLOWANCE FOR LOAN LOSS ALLOCATION
TABLE 2
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
Amount Percent Amount Percent
---------------------------------------
(Thousands of dollars)
<S> <C> <C> <C> <C>
Allowance for loan loss balance applicable to:
Commercial, financial and
agricultural $ 7,486 9% $ 9,057 11%
Real estate construction 1,646 2 1,608 2
Commercial mortgage 6,536 8 6,470 8
1-4 Family residential mortgage 4,940 6 4,047 5
Consumer 10,462 14 12,112 14
Lease financing 109 - 111 -
Unallocated 48,653 61 49,531 60
-------------------------------------
Total $79,832 100% $82,936 100%
=====================================
</TABLE>
<PAGE> 10
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
<TABLE>
<CAPTION>
ALLOWANCE FOR LOAN LOSSES Six
TABLE 3 Months Ended Year Ended December 31,
June 30, -------------------------------------------------------------
1995 1994 1993 1992 1991
------------------------------------------------------------------------------
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 82,936 $ 88,482 $ 78,713 $ 86,909 $93,267
Loans charged-off:
Commercial, financial and agricultural (1,533) (9,280) (5,498) (21,331) (57,278)
Real estate construction (1,114) (369) (453) (5,520) (6,126)
Commercial mortgage (848) (3,152) (6,609) (10,887) (11,096)
1-4 Family residential mortgage (1,903) (5,445) (6,849) (5,276) (7,057)
Consumer (7,391) (18,212) (6,425) (7,900) (8,903)
Lease financing (8) (54) (656) (511) (422)
Other - - - (267) -
------------------------------------------------------------------------------
Total loans charged-off (12,797) (36,512) (26,490) (51,692) (90,882)
------------------------------------------------------------------------------
Recoveries on loans previously charged-off:
Commercial, financial and agricultural 1,465 5,178 2,732 4,500 1,398
Real estate construction 142 2,215 135 134 397
Commercial mortgage 1,579 1,967 1,237 519 507
1-4 Family residential mortgage 1,354 3,210 1,900 1,043 566
Consumer 5,114 8,034 3,993 4,283 3,858
Lease financing 39 269 438 504 47
------------------------------------------------------------------------------
Total loan recoveries 9,693 20,873 10,435 10,983 6,773
------------------------------------------------------------------------------
Net loans charged-off (3,104) (15,639) (16,055) (40,709) (84,109)
Net increase as a result of business combinations - 2,496 5,431 - -
Provision for loan losses charged to expense - 7,597 20,393 32,513 77,751
------------------------------------------------------------------------------
Balance at end of period $ 79,832 $ 82,936 $ 88,482 $ 78,713 $ 86,909
==============================================================================
Total net loans at end of period $4,094,830 $3,933,283 $3,473,523 $2,939,574 $3,062,813
Average loans outstanding during the period 4,048,374 3,654,236 3,013,021 3,004,525 3,335,177
Allowance for loan losses to loans
outstanding at end of period 1.95 % 2.11 % 2.55 % 2.68 % 2.84 %
Net loan charge-offs to average loans
outstanding during the period (annualized) 0.15 0.43 0.53 1.35 2.52
</TABLE>
<PAGE> 11
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
NON-PERFORMING ASSETS AND LOANS PAST DUE 90 DAYS OR MORE
TABLE 4
<TABLE>
<CAPTION>
December 31,
June 30, --------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------------------
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
Non-accrual loans $20,176 $22,266 $36,880 $78,343 $160,271
Renegotiated or restructured loans - - 1,235 8,979 7,721
Other real estate owned 2,827 3,678 4,985 22,988 50,027
Other non-performing assets - - 2,417 2,646 3,646
------- ------- ------- -------- --------
Total non-performing assets $23,003 $25,944 $45,517 $112,956 $221,665
======= ======= ======= ======== ========
Loans 90 days or more past due
on accrual status $658 $1,428 $1,846 $5,420 $13,159
Potential problem loans 95,835 124,656 141,230 241,505 430,239
Non-performing assets to total
loans, other real estate owned
and other non-performing assets 0.56 % 0.66 % 1.31 % 3.81 % 7.11 %
Non performing assets and loans 90 days or more
past due on accrual status to total loans, other
real estate owned and other non-performing assets 0.58 0.69 1.36 4.00 7.54
</TABLE>
<PAGE> 12
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Income Taxes
Income tax expense was $14.4 million for the six months ended June 30, 1995, or
27.9 percent of pre-tax income, compared to $9.1 million, or 17.8 percent of
pre-tax income, for the same period in 1994. Income tax expense was $9.6
million, or 30.5 percent of pre-tax income, for the second quarter of 1995
compared to $4.2 million, or 15.8 percent of pre-tax income, for the second
quarter of 1994. The 1994 rate was positively affected by the utilization of
the remaining Federal deferred tax valuation allowance established at the
beginning of 1993. In addition, the Company reduced the state deferred tax
valuation allowance by approximately $3.4 million, of which approximately
$870,000 reduced goodwill, during the first six months of 1995 leaving an
allowance of $7.7 million at June 30, 1995. Management evaluates the need for
the valuation allowances on a quarterly basis.
Asset Quality
Non-performing assets were $23 million at June 30, 1995, $25.9 million at
December 31, 1994 and $33.9 million at June 30, 1994. Non-performing assets as
a percent of total loans and other real estate owned was 0.56 percent, 0.66
percent and 0.93 percent at June 30, 1995, December 31, 1994 and June 30, 1994,
respectively.
Non-performing assets at June 30, 1995, included $20.2 million of non-accrual
and renegotiated loans, of which $10.9 million, or 54 percent, were current as
to both principal and interest. Non-accrual and renegotiated loans were $22.3
million at December 31, 1994, and $30.3 million at June 30, 1994. Also included
in non-performing assets was other real estate owned, totaling $2.8 million at
June 30, 1995, $3.7 million at December 31, 1994, and $2.7 million at June 30,
1994.
Effective January 1, 1995, the Company adopted Financial Accounting Standards
Board Statement No. 114 ("FAS 114"), "Accounting by Creditors for Impairment of
a Loan" which was issued in May 1993 and amended in October 1994 by Statement
of Financial Accounting Standards Number 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." The impact of the
adoption of FAS 114 had no material effect on the Company's results of
operations and financial position.
Loans identified by management as potential problem assets (classified and
criticized loans) declined from 3.2 percent of total loans at December 31, 1994
to 2.4 percent of total loans at June 30, 1995.
Net loans charged off during the second quarter of 1995 were $2.5 million and
for the first six months of 1995 were $3.1 million compared to $2.9 million and
$4.8 million during the comparable periods of 1994. Further detail of loan
charge- offs and recoveries is presented in Table 3, "Allowance for Loan
Losses."
The allowance for loan losses was $79.8 million at June 30, 1995, compared to
$82.9 million at December 31, 1994 and $93.2 million at June 30, 1994. The
allowance for loan losses as a percent of total loans was 1.95 percent at June
30, 1995, 2.11 percent at December 31, 1994, and 2.56 percent at June 30, 1994.
The allowance for loan losses as a percent of non-performing loans was 395.68
percent at June 30, 1995, 373.74 percent at December 31, 1994, and 299.98
percent at June 30, 1994. Table 2, "Allowance for Loan Loss Allocation,"
presents specific reserves by loan type and the general portion of the
Company's total allowance for loan losses. In management's opinion, the
allowance for loan losses was adequate at June 30, 1995.
Contingencies
Although no suit has been filed, the Company has been informed of a potential
claim for contribution to clean-up costs by a party currently incurring such
costs on a Superfund site under federal environmental laws. The Company's
subsidiary, Bank South, acts in a fiduciary capacity, serving as trustee of a
trust which has an interest in a partnership that previously owned the site.
It is understood that such claim will be asserted against Bank South in both its
fiduciary and individual capacities. At this time the Company has only limited
information about the possible claim and intends to defend the claim
vigorously.
<PAGE> 13
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company is not able to determine what effect, if any, such a claim may have
on the Company's financial statements.
Shareholders' Equity and Dividends
At June 30, 1995, shareholders' equity was at the highest level in the
Company's history at $667.9 million or 9.0 percent of total assets. At June
30, 1995, the Company's Tier 1 capital ratio was 10.69 percent, the total
risk-based capital ratio was 12.35 percent and the leverage ratio was 7.54
percent. These ratios are in excess of regulatory requirements, as presented
in Table 5 - "Capital Adequacy." In addition, Bank South, the Company's bank
subsidiary, was considered "well capitalized" by banking regulators.
In the second quarter of 1995, the Board of Directors approved a plan to
repurchase as many as 5.5 million shares of Bank South common stock through the
open market and in privately negotiated transactions. The repurchase plan will
provide additional shares for the Company's benefit plans and other general
corporate purposes. As of June 30, 1995, no shares had been repurchased under
this plan.
In the second quarter of 1995, the Company's Board of Directors declared a 14
cent per share quarterly dividend, which was paid on July 3, 1995, up 3 cents
per share from the second quarter of 1994 and 1 cent from the fourth quarter of
1994.
Liquidity
Liquidity represents the ability to provide funding for lending and investment
activities, as well as to cover deposit withdrawals and pay debt and operating
obligations. Maintaining an adequate level of liquidity is an important
component of the Company's balance sheet management objectives.
At June 30, 1995, the Company's balance sheet continued to be liquid. The
Company's core deposits, which are typically the most stable funds, were 113
percent of loans at June 30, 1995. In addition, the Company's access to debt
markets improved during 1995 and 1994 due to upgrades in debt ratings,
continued improvements in asset quality, an increased level of capital, and
increased profitability.
CAPITAL ADEQUACY
TABLE 5
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
Amount Percent Amount Percent
--------------------- ---------------------
(Thousands of dollars)
<S> <C> <C> <C> <C>
TIER 1 CAPITAL:
Actual $565,314 10.69% $524,547 11.00%
Minimum required 211,586 4.00 190,700 4.00
--------------------- ---------------------
Excess $353,728 6.69% $333,847 7.00%
===================== =====================
TOTAL RISK-BASED CAPITAL:
Actual $653,169 12.35% $605,701 12.70%
Minimum required 423,171 8.00 381,400 8.00
--------------------- ---------------------
Excess $229,998 4.35% $224,301 4.70%
===================== =====================
TIER 1 CAPITAL LEVERAGE RATIO:
Actual $565,314 7.54% $524,547 8.10%
Minimum required * 224,442 3.00 194,170 3.00
--------------------- ---------------------
Excess $340,872 4.54% $330,377 5.10%
===================== =====================
</TABLE>
* The regulatory requirement for leverage ratio is 3 percent to 5
percent. This is determined by the Federal Reserve using various
criteria. The Federal Reserve has not given the Company a
determination of the rate for 1995.
Interest Rate Sensitivity and Asset Liability Management
Interest rate sensitivity refers to the responsiveness of interest-earning
assets and interest-bearing liabilities to changes in market interest rates.
To lessen the impact of rate movements, the balance sheet is structured such
that differences in repricing opportunities between assets and liabilities are
minimized.
Interest rate risk management, an important component of the overall risk
management program of the Company, includes monitoring of the balance sheet
composition and its associated sensitivity to interest rate changes. Interest
rate sensitivity is monitored on a monthly basis by simulating net interest
income under varying interest rate scenarios. The simulation model utilizes
maturity and repricing data on loans, investments, derivative financial
instruments, deposits and other interest-bearing liabilities to predict future
levels of net interest income.
The model measures net interest income, t.e., at risk as the difference between
net interest income under rising and falling rate environments and net interest
income, t.e., in an unchanged rate environment. The Company's policy is to
actively manage the balance sheet so that net interest income simulated over a
12 month period under 100, 200 and 300 basis point changes in rates does not
vary adversely from net interest income produced in an unchanged rate
environment by more than 2 percent, 5 percent and 8 percent, respectively. At
June 30, 1995, net interest income over 12 months from a 100, 200 and 300 basis
point increase in interest rates would have decreased .8 percent, 3.5 percent
and 6.3 percent, respectively. A measure of longer-term interest rate risk is
the market value of portfolio equity, which is the present value of asset cash
flows less the present value of liability cash flows, adjusted for off-balance
sheet activity. The sensitivity of the market value of portfolio equity to
changes in interest rates is measured in comparison to established policy
<PAGE> 14
guidelines. At June 30, 1995, the Company was in compliance with its market
value of portfolio equity policies.
It is the Company's policy to utilize derivative financial instruments,
primarily interest rate swap and interest rate cap agreements, to reduce its
exposure to interest rate fluctuations. Income streams from underlying assets
and liabilities are offset with income received or paid on interest rate swaps
and caps. Consequently, the overall impact of rate movements on net interest
income for the interest rate swap and cap portfolio must be evaluated in
conjunction with the impact of rate movements on the underlying assets which
the swaps are hedging.
Interest rate swap and cap agreements are used to modify the repricing
characteristics of interest-earning assets and interest-bearing liabilities.
These agreements generally involve the receipt of fixed-rate interest payments
in exchange for floating-rate interest payments over the life of the agreement
without an exchange of the underlying notional amount. The differential to be
paid or received is accrued as interest rates change and is recognized as an
adjustment to interest expense or interest income related to the underlying
hedged item. The related amount payable to, or receivable from, counterparties
is included in other liabilities or assets. The fair value changes in the
interest rate swap and cap agreements are recognized in accordance with the
accounting for the underlying hedged item.
Interest rate swap agreements are stated in terms of a notional amount, which
represents a value used to compute the amount of interest to be received or
paid under the agreement. The Company's risk of loss relates to the ability of
the counterparties to make the interest payments required under the terms of
the agreements. Counterparties must meet rigorous credit standards and be
approved by the Company's Capital Markets Credit Committee before entering into
interest rate swap and cap agreements. Counterparties to the contract must
provide collateral sufficient to protect the other party from significant
exposure to loss.
The notional balance for interest rate swaps and caps/floors at June 30, 1995,
was $2.7 billion and $2.3 billion, respectively. At December 31, 1994, the
Company had $2.1 billion in interest rate swaps and $1.5 billion in interest
rate caps/floors. The net unrealized market value loss on total off-balance
sheet derivative financial instruments at June 30, 1995, was approximately
$37.6 million, or .76 percent of the total notional balance for total
off-balance sheet derivative financial instruments compared to a $90.4 million,
or 2.4 percent, net unrealized market value loss on total off-balance sheet
derivative financial instruments at December 31, 1994. The Company terminated
$102.7 million in interest rate caps during the second quarter of 1995
resulting in a $1.4 million loss. The termination of the interest rate caps
was due to the sale of the underlying assets which resulted in a $1.7 million
gain. The Company has $2.3 billion of interest rate swaps whose average lives
extend when interest rates rise as a means of constructing more effective
hedges.
<PAGE> 15
BANK SOUTH CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
The Annual Meeting of Shareholders of the Company was held on April 20, 1995,
at which the following matters were brought before and voted upon by the
shareholders.
1. The election of the following to the Board of Directors to serve for a
term of one year:
<TABLE>
<CAPTION>
Name For Withheld
--------------------------- ---------- --------
<S> <C> <C>
Ray C. Anderson 47,169,898 425,650
Kenneth W. Cannestra 47,284,973 310,575
John S. Carr 47,060,189 535,359
Patrick L. Flinn 47,154,412 441,136
Sidney E., Jennette, Jr. 47,085,537 510,011
Lynn H. Johnston 47,217,945 377,603
William M. McClatchey, M.D. 47,298,121 297,427
John E., McKinley, III 47,170,721 424,827
Julia W. Morgan 47,298,095 297,453
Barry Phillips 47,032,864 562,684
Ben G. Porter 47,301,682 293,866
John W. Robinson, Jr. 47,295,799 299,749
Felker W. Ward, Jr. 47,214,395 381,153
Virgil R. Williams 47,239,912 355,636
</TABLE>
<PAGE> 16
There were 396,429 broker non-votes with respect to the election of directors.
Item 4. Submission of Matters to a Vote of Security Holders -(continued)
2. A proposal to amend the 1993 Equity Incentive Plan:
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- -------
<S> <C> <C>
44,317,995 1,543,875 906,021
</TABLE>
There were 1,224,084 broker non-votes with respect to this proposal.
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
a. The exhibits filed as part of this Report are as follows:
Exhibit
Number Description
------ ------------------------------------------------
4(a) Amended and restated Articles of Incorporation,
(included as Exhibit 4(a) to the
Registrant's Form S-8 No. 33-57791, previously
filed with the Commission and incorporated
herein by reference).
4(b) Amended and restated By-laws, (included as
Exhibit 4(b) to the Registrant's Form S-8 No.
33-57791, previously filed with the Commission
and incorporated herein by reference.)
4(c) Bank South Corporation Rights Agreement
(included as Exhibit 1 to the Form 8 Amendment
to the Form 8-A filed with the Commission on
April 8, 1988 (File No. 0-4554) and incorporated
herein by reference).
10(a) Supplemental Executive Retirement Agreement for
Ralph E. Hutchins, Jr., and Supplemental
Executive Retirement Agreements for Patrick L.
Flinn, John E. McKinley, Lee M. Sessions, Jr.
and James A. Dewberry (included as Exhibit 10(a)
to the Registrant's Form 10-K for the fiscal
year ended December 31, 1991, previously filed
with the Commission and incorporated herein by
reference).
10(b) Employment Agreements with Patrick L. Flinn,
John E. McKinley and Lee M. Sessions, Jr.
(included as Exhibit 10(b) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1991, previously filed with the Commission and
incorporated herein by reference).
10(c) Employment Agreement with Ralph E. Hutchins, Jr.
(included as Exhibit 10(c) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1994, previously filed with the Commission and
incorporated herein by reference).
<PAGE> 17
Item 6. Exhibits and Reports on Form 8-K (continued)
10(d) Directors' Deferred Compensation Plan (included
as Exhibit 10(c) to the Registrant's Form 10-K
for the fiscal year ended December 31, 1988,
previously filed with the Commission and
incorporated herein by reference).
10(e) Key Employee Stock Option Plan, as amended
(included as Exhibit 10(d) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1991, previously filed with the Commission and
incorporated herein by reference).
10(f) 1993 Equity Incentive Plan as amended April 20,
1995, (included as Exhibit 10(f) to the
Registrant's Form 10-Q for the quarter ended
March 31, 1995, previously filed with the
Commission and incorporated herein by
reference.)
10(g) 1994 Stock Option Plan for Outside Directors
(included as Exhibit 10(g) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1994, previously filed with the Commission and
incorporated herein by reference).
10(h) Change in Control Agreements with Patrick L.
Flinn, John E. McKinley, Lee M. Sessions, Jr.
and James A. Dewberry (included as Exhibit 10(f)
to the Registrant's Form 10-K for the fiscal
year ended December 31, 1991, previously filed
with the Commission and incorporated herein by
reference). Form of Change in Control
Agreements with Barry Anderson, Bernard Baum,
George M. Boltwood, J. Brent Lee, John E.
Thacker, Ray K. Williams and J. Blake Young Jr.
(included as Exhibit 10(h) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1994, previously filed with the Commission and
incorporated herein by reference). Change in
Control Agreement with Ralph E. Hutchins, Jr.
(included as Exhibit 10(h) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1994, previously filed with the Commission and
incorporated herein by reference).
10(i) Agreement between the Registrant and the Federal
Reserve Bank of Atlanta, dated April 3, 1992
(included as Exhibit 28 to the Registrant's Form
10-Q for the quarter ended March 31, 1992,
previously filed with the Commission and
incorporated herein by reference).
10(j) Management Employees Salary Deferral Plan
(included as Exhibit 10(h) to the Registrant's
Form 10-K for the fiscal year ended December 31,
1991, previously filed with the Commission and
incorporated herein by reference).
11 Statement Re Computation of Per Share Earnings.
23 Consent of Independent Auditors - Ernst & Young, LLP
27 Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K filed during the quarter ended June 30, 1995 - None
<PAGE> 18
BANK SOUTH CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1995
------------------------------------
BANK SOUTH CORPORATION
------------------------------------
Registrant
By: /s/ Ralph E. Hutchins, Jr
------------------------------------
Ralph E. Hutchins, Jr.
Chief Financial Officer
(Principal Financial Officer)
<PAGE> 19
BANK SOUTH CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------------------------------------------------
11 Statement Re Computation of Per Share Earnings
23 Consent of Independent Auditors
27 Financial Data Schedules (for SEC use only)
<PAGE> 1
BANK SOUTH CORPORATION
EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
Primary: 1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Average Shares Outstanding 58,668 57,810 58,565 56,519
Dilutive Stock Options -
based on the treasury stock method using
the average market price for the period 879 761 776 681
------- ------- ------- -------
Total primary shares outstanding 59,547 58,571 59,341 57,200
======= ======= ======= =======
Net Income $21,838 $22,643 $37,279 $41,952
======= ======= ======= =======
Primary earnings per share $0.37 $0.39 $0.63 $0.73
======= ======= ======= =======
Fully diluted:
Average Shares Outstanding 58,668 57,810 58,565 56,519
Dilutive Stock Options -
based on the treasury stock method using
the period-end market price, if greater
than average market price for the period 928 761 918 733
------- ------- ------- -------
Total fully-dilutive shares outstanding 59,596 58,571 59,483 57,252
======= ======= ======= =======
Net Income $21,838 $22,643 $37,279 $41,952
======= ======= ======= =======
Fully diluted earnings per share * $0.37 $0.39 $0.63 $0.73
======= ======= ======= =======
</TABLE>
* Fully diluted earnings per share is less than 3% dilutive and, therefore,
was not disclosed on the Statements of Income in accordance with the
provisions of Accounting Principles Board Opinion Number 15.
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Bank South Corporation (1)
Registration Statement (Form S-8 No. 33- 53493) dated May 5, 1994, and (2)
Registration Statement (Form S-8 No. 33-53497) dated May 5, 1994, of our report
dated January 19, 1995, with respect to the financial statements of Bank South
Corporation incorporated by reference in the Annual Report (Form 10-K) of Bank
South Corporation for the year ended December 31, 1994.
Ernst & Young, LLP
Atlanta, Georgia
August 14, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK SOUTH CORP FOR THE SIX MONTHS ENDED JUNE 30, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 345,082
<INT-BEARING-DEPOSITS> 25,533
<FED-FUNDS-SOLD> 107,600
<TRADING-ASSETS> 9,769
<INVESTMENTS-HELD-FOR-SALE> 654,511
<INVESTMENTS-CARRYING> 1,861,542
<INVESTMENTS-MARKET> 1,866,349
<LOANS> 4,094,830
<ALLOWANCE> 79,832
<TOTAL-ASSETS> 7,439,701
<DEPOSITS> 5,049,705
<SHORT-TERM> 1,377,059
<LIABILITIES-OTHER> 156,490
<LONG-TERM> 188,572
<COMMON> 293,871
0
0
<OTHER-SE> 374,004
<TOTAL-LIABILITIES-AND-EQUITY> 7,439,701
<INTEREST-LOAN> 173,234
<INTEREST-INVEST> 82,072
<INTEREST-OTHER> 5,596
<INTEREST-TOTAL> 260,902
<INTEREST-DEPOSIT> 83,551
<INTEREST-EXPENSE> 137,094
<INTEREST-INCOME-NET> 123,808
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 2,173
<EXPENSE-OTHER> 143,268
<INCOME-PRETAX> 51,706
<INCOME-PRE-EXTRAORDINARY> 51,706
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,279
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.63
<YIELD-ACTUAL> 7.99
<LOANS-NON> 20,176
<LOANS-PAST> 658
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 95,835
<ALLOWANCE-OPEN> 82,936
<CHARGE-OFFS> 12,797
<RECOVERIES> 9,693
<ALLOWANCE-CLOSE> 79,832
<ALLOWANCE-DOMESTIC> 79,832
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 48,653
</TABLE>
