<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission file number 0-3613
------------------- -----------------------------
SOUTHTRUST CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0574085
- -------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 North 20th Street, Birmingham, Alabama 35203
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (205) 254-5509
----------------------------
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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of June 30, 1994 .
-----------------
Number of Shares
Title of Class Outstanding
-------------- ----------------
$2.50 par 79,937,397
<PAGE> 2
SOUTHTRUST CORPORATION
Consolidated Statements of Condition
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31
--------------------------------------
(In Thousands) 1994 1993 1993
--------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 511,418 $ 447,939 $ 607,831
Short-term investments:
Federal funds sold and securities purchased
under resale agreements 53,775 9,032 1,975
Interest-bearing deposits in other banks 9,883 8,375 47,651
Assets held for sale 179,295 212,704 258,506
-------------------------------------
Total short-term investments 242,953 230,111 308,132
Securities available for sale 2,326,449 0 2,454,760
Securities held for investment (Fair value of $1,655,052 at
June 30, 1994 and $4,111,559 and $1,327,228 at
June 30, 1993 and December 31, 1993, respectivley) 1,680,685 4,012,291 1,278,007
Loans 10,608,968 8,489,943 9,527,004
Less:
Unearned income 84,915 78,618 78,685
Allowance for loan losses 149,303 118,115 135,233
-------------------------------------
Net loans 10,374,750 8,293,210 9,313,086
Premises and equipment, net 334,666 301,156 321,623
Due from customers on acceptances 27,159 19,771 26,270
Other assets 433,485 368,427 398,255
-------------------------------------
TOTAL ASSETS $15,931,565 $13,672,905 $14,707,964
=====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing $ 9,967,558 $ 9,233,800 $ 9,732,460
Other 1,859,593 1,564,201 1,782,851
-------------------------------------
Total deposits 11,827,151 10,798,001 11,515,311
Federal funds purchased and securities sold
under agreements to repurchase 1,743,899 1,152,914 1,207,026
Other short-term borrowings 630,904 117,943 249,434
Bank acceptances outstanding 27,159 19,771 26,270
Other liabilities 166,007 140,705 188,172
Long-term debt 442,646 488,832 469,985
-------------------------------------
Total liabilities 14,837,766 12,718,166 13,656,198
Stockholders' equity:
Preferred Stock, par value $1.00 a share:
5,000,000 shares authorized; issued and outstanding - none 0 0 0
Common Stock, par value $2.50 a share:
200,000,000 shares authorized; 80,414,703 shares issued
at June 30, 1994 and 77,620,613 and 79,735,663 at
June 30, 1993 and December 31, 1993, respectively 201,037 194,051 199,339
Capital surplus 219,425 193,601 215,113
Retained earnings 687,021 570,061 630,240
Unrealized gain/(loss) on securities available for sale (7,853) 0 10,218
Treasury stock at cost:
474,198 shares at June 30, 1994 and 325,919 and 334,980
shares at June 30, 1993 and December 31, 1993, respectively (5,831) (2,974) (3,144)
-------------------------------------
Total stockholders' equity 1,093,799 954,739 1,051,766
-------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,931,565 $13,672,905 $14,707,964
=====================================
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
SOUTHTRUST CORPORATION
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------------------
(In thousands, except per share data) 1994 1993 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $202,507 $164,739 $385,419 $321,760
Interest on securities:
Taxable 20,349 57,717 36,470 115,314
Non-taxable 5,760 6,481 11,782 13,377
----------------------------------------------
Total interest on investment securities 26,109 64,198 48,252 128,691
Interest on securities available for sale 30,747 0 60,362 0
Interest on short-term investments 2,310 2,972 5,847 5,790
----------------------------------------------
Total interest income 261,673 231,909 499,880 456,241
----------------------------------------------
INTEREST EXPENSE
Interest on deposits 86,120 85,898 168,781 168,189
Interest on short-term borrowings 21,120 9,733 33,623 19,139
Interest on long-term debt 5,507 5,387 10,224 10,010
----------------------------------------------
Total interest expense 112,747 101,018 212,628 197,338
----------------------------------------------
Net interest income 148,926 130,891 287,252 258,903
PROVISION FOR LOAN LOSSES 11,703 11,100 21,892 22,405
----------------------------------------------
Net interest income after
provision for loan losses 137,223 119,791 265,360 236,498
NON-INTEREST INCOME
Service charges on deposit accounts 21,277 18,834 41,759 36,110
Mortgage origination and servicing fees 7,342 7,586 15,296 13,928
Trust fees 4,334 3,560 8,639 7,085
Miscellaneous fees 10,294 8,750 21,200 17,272
Securities gains (losses), net (9) 207 57 553
Other 1,449 2,517 4,558 4,587
----------------------------------------------
Total non-interest income 44,687 41,454 91,509 79,535
----------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 63,599 55,308 126,445 109,624
Net occupancy 9,907 9,168 19,390 18,029
Equipment 6,689 6,319 13,123 12,121
FDIC insurance 6,186 5,809 12,368 11,456
Other 32,131 29,192 60,591 57,741
----------------------------------------------
Total non-interest expense 118,512 105,796 231,917 208,971
----------------------------------------------
Income before income taxes 63,398 55,449 124,952 107,062
INCOME TAX EXPENSE 21,006 18,209 41,823 34,978
----------------------------------------------
NET INCOME $ 42,392 $ 37,240 $ 83,129 $ 72,084
==============================================
Average number of shares outstanding (000's) 79,987 77,753 79,917 77,003
Net income per share $ 0.53 $ 0.48 $ 1.04 $ 0.94
Dividends declared per share $ 0.17 $ 0.15 $ 0.34 $ 0.30
</TABLE>
3
<PAGE> 4
SouthTrust Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------
(In Thousands) 1994 1993
------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 83,129 $ 72,084
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision (credit) for:
Loan losses 21,892 22,405
Depreciation of premises and equipment 11,443 10,260
Amortization of intangibles 8,834 7,881
Amortization of security premium 555 4,983
Accretion of security discount (741) (4,616)
Deferred income tax 2,592 3,111
Net realized and unrealized gain on assets held for sale (5,071) (4,530)
Net securities (gains) and losses (57) (531)
Origination and purchase of loans held for sale (359,047) (472,949)
Proceeds of loans held for sale 436,632 455,890
Net (increase) decrease in trading securities 6,697 7,643
Net (increase) decrease in other assets (37,797) 21,853
Net increase (decrease) in other liabilities (19,302) (35,201)
------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 149,759 88,283
INVESTING ACTIVITIES
Proceeds from maturities of securities 719,383 869,110
Proceeds from sales of securities 54,821 21,814
Payments for purchases of:
Securities (1,051,132) (922,547)
Premises and equipment (24,090) (13,095)
Net increase (decrease) in:
Short-term investments (14,032) 114,042
Loans (1,052,527) (510,838)
Purchase of subsidiaries, net of cash acquired 104,343 9,488
------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,263,234) (432,026)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 2,986 1,952
Long-term debt 100,000 123,000
Payments for:
Long-term debt (13,339) (38,466)
Repurchase of Common Stock (2,688) (82)
Cash Dividends (27,825) (20,653)
Net increase (decrease) in:
Deposits 153,609 198,652
Short-term borrowings 804,319 (13,269)
------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,017,062 251,134
------------------------
DECREASE IN CASH AND DUE FROM BANKS (96,413) (92,609)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 607,831 540,548
------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 511,418 $ 447,939
========================
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 211,992 $ 216,833
Income taxes 49,881 38,066
Non-cash transactions:
Assets acquired in business combinations 160,788 665,320
Liabilities acquired in business combinations 157,094 627,242
Loans transferred to Other Real Estate 9,453 9,207
Loans securitized into mortgage-backed securities 294,694 318,916
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note A - Basis Of Presentation
The Consolidated Condensed Financial Statements were prepared by the
Company without audit, but in the opinion of management, reflect all
adjustments necessary for the fair presentation of the Company's financial
position and results of operations for the six month period ended June 30, 1994
and 1993. Results of operations for the interim 1994 period are not
necessarily indicative of results expected for the full year. While certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission, the Company believes that the disclosures herein are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the Consolidated
Financial Statements and the notes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1993. The accounting
policies employed are the same as those shown in Note 1 to the Consolidated
Financial Statements on Form 10-K.
5
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1994
(Unaudited)
EARNINGS SUMMARY
Net income for this second quarter of 1994 was $42.4 million, an
increase of 14% over the second quarter 1993 level of $37.2 million. For the
six months ended June 30, 1994, net income was $83.1 million, up 15% over the
1993 six month level of $72.1 million. Net income for the quarter was $0.53
per share compared to $0.48 in the second quarter of 1993. For the first six
months of 1994, earnings per share was $1.04 compared to $0.94 in the same
period of 1993. The return on average assets was 1.10% for the quarter and
1.11% for the six months ended June 30, 1994. The 1994 returns on average
stockholder equity were 15.80% for the quarter and 15.71% for the six month
period.
NET INTEREST INCOME
Net interest income is the difference between interest income and
interest expense and is the major component of net income of the Company. For
purposes of this discussion, income that is either exempt from federal income
taxes or is taxed at a preferential rate has been adjusted to fully taxable
equivalent amounts using a statutory federal tax rate of 35 percent.
Net interest income in the second quarter of 1994 was $152.9 million,
up $17.8 million or 13% from $135.1 million for the second quarter of 1993.
For the quarter, total interest income increased 13% to $265.7 million as
average interest earning assets increased 15% to $14,303.3 million and the
average rate earned decreased 15 basis points to 7.45%. For the six months
ended June 30, 1994, net interest income increased 10% to $295.3 million from
the comparable period in 1993. Average interest-earning assets were up 14% to
$13,913.0 million for the six month period, while the average yeild over the
period decreased 35 basis points from 1993 to 7.36%. The decrease in yeilds
earned reflects the decrease in market interest rates.
Total interest expense for the quarter was $112.7 million, an increase
of 12% from the second quarter of 1993. Average interest bearing liabilities
during the quarter were up 14% from the second quarter of 1993 to $12,362.2
million. The average rate paid on interest-bearing liabilities was 3.66%, down
7 basis points from the second quarter of 1993. For the six months ended June
30, 1994, total interest expense was $212.6 million, an increase of 8% from the
comparable period in 1993. During the six month period, average interest
bearing-liabilities were $12,000.9 million, an increase of 13% over the same
period in 1993. During the six month period, the average rate paid on
interest-bearing liabilities was 3.57%, reflecting a decrease of 18 basis
points from the average rate paid during the first six months of 1993.
The taxable equivalent net interest margin for the second quarter was
4.29%, down from 4.35% during the same period 1993. The net interest spread
for the second quarter was 3.79% compared to 3.87% during the second quarter of
1993. For the six months ended June 30, 1994 the net interest margin was 4.28%
compared to 4.43% in 1993. For the six month period the net interest spread
was 3.79% in 1994 compared to 3.96% in 1993.
6
<PAGE> 7
PROVISIONS FOR LOAN LOSSES
The provision for loan losses was $11.7 million for the second quarter
of 1994 compared to $11.1 million in the second quarter of 1993; and $21.9
million for the six months ended June 30, 1994 compared to $22.4 million in the
comparable period of 1993. Net charge-offs for the quarter were $5.4 million
or 0.22% of average net loans, compared to $4.9 million or 0.24% during the
second quarter of 1993. Year-to-date net charges-offs through June 30, 1994
were $8.2 million or 0.17% of average net loans compared to $12.8 million or
0.32% during the first six months of 1993. For the year ended December 31,
1993, net charge-offs were $24.6 million or 0.29% of the average net loans.
Further information on loan charge-offs is included in the discussion of the
allowance for loan losses.
NON-INTEREST INCOME
Total non-interest income increased $3.2 million or 8% to $44.7
million for the second quarter of 1994 and $12.0 million or 15% to $91.5
million for the six months ended June 30, 1994. The largest portion of the
increase is attributable to increased service charges on deposit accounts,
which increased $2.4 million or 13% to $21.3 million for the quarter and $5.6
million or 16% to $41.8 million for the six months ended June 30, 1994. This
increase it attributable to an increased number of deposit accounts and various
rate increases for certain service charges. Mortgage origination and service
fees decreased $0.2 million or 3% to $7.3 million for the quarter and increased
$1.4 million or 10% to $15.3 million for the first six months of 1994.
Security losses for the second quarter of 1994 were $9,000 compared to
gains of $207,000 during the second quarter of 1993. For the first six months
of 1994 securities gains totaled $57,000 compared to $553,000 in the first six
months of 1993. Trust fees increased $0.8 million or 22% to $4.3 million for
the quarter and $1.6 million or 22% to $8.6 million for the first six months of
1994. Other fee income increased $1.5 million or 18% to $10.3 million for the
quarter and $3.9 million or 23% to $21.2 million for the six months ended June
30, 1994. Other non-interest income decreased $1.1 million or 42% for the
quarter to $1.4 million. For the six months ended June 30, 1994, other
non-interest income was $4.6 million, virtually unchanged from the comparable
period of 1993. There were no significant non-recurring non-interest income
items recorded in 1994 or 1993.
NON-INTEREST EXPENSE
Total non-interest expense for the quarter was $118.5 million, an
increase of $12.7 million or 12% from the $105.8 million reported in the second
quarter of 1993. For the six months ended June 30, 1994, total non-interest
expense increased $22.9 million or 11% to $231.9 million.
Salaries and employee benefits accounted for the largest portion of
the increase for the quarter and six month period. For the quarter salaries
and employee benefits increased $8.3 million or 15% to $63.6 million. For the
six months ended June 30, 1994, salaries and employee benefits increased $16.8
million or 15% to $126.4 million. The number of full time equivalent employees
rose to 7,243 at June 30, 1994, an increase of 7% from the June 30, 1993 level
of 6,791. Net occupancy expense increased $0.7 million or 8% to $9.9 million
for the quarter and $1.4 million or 8% to $19.4 million for the six month
period. Equipment expense increased 6% for the quarter and 8% for the six
month period ended June 30, 1994 over the
7
<PAGE> 8
comparable periods in 1993 to $6.7 million and $13.1 million, respectively.
Increases in occupancy and equipment expenses are primarily attributable to an
increase in the number of branches from 372 at June 30, 1993 to 400 at June 30,
1994. FDIC insurance expense increased 6% for the quarter and 8% on a
year-to-date basis to $6.2 million and $12.4 million as a result of an increase
in deposits. All other non-interest expense items increased $2.9 million or
10% to $32.1 million for the quarter and $2.8 million or 5% to $60.6 million
for the first six months of 1994. There were no significant non-recurring
non-interest expense items recorded in 1994 or 1993.
Income tax expense for the second quarter of 1994 was $21.0 million
for an effective tax rate of 33.1% compared to $18.2 million or an effective
rate of 32.8% in the second quarter of 1993. For the six months ended June 30,
1994, income tax expense was $41.8 million for an effective tax rate of 33.5%
compared to $35.0 million and an effective tax rate of 32.7% for the first six
months of 1993. The increase in the effective tax rate was due primarily to a
decline in the proportional amount of revenue on non- taxable investment
securities, the 100% disallowance of interest expense deemed attributable to
debt used to carry non-taxable investment securities, and an increase in the
statutory federal corporate income tax rate to 35% in 1994 from 34% in 1993.
SUMMARY OF FINANCIAL CONDITION
Total assets at June 30, 1994 were $15.9 billion, representing an
increase of $2.3 billion or 17% from June 30, 1993. At December 31, 1993 total
assets were $14.7 billion. Average total assets for the quarter were $15.5
billion compared to $13.5 billion for the second quarter of 1993.
Average earning assets for the second quarter and first six months
were $14.3 billion and $13.9 billion respectively, representing an increase of
15% and 14% over the comparable periods in 1993. Average interest-bearing
liabilities for the quarter and six months ended June 30, 1994 were $12.4
billion and $12.0 billion, respectively, increases of 14% and 13% over the
comparable levels in 1993.
LOANS
Loans, net of unearned income at June 30, 1994 totaled $10,524.1
million compared to $9,448.3 million at December 31, 1993.
Commercial real estate mortgage loans increased $299.0 million from
December 31, 1993 to $2,893.5 million, or 27.3% of total loans. This category
represents the Company's largest credit concentration and includes all real
estate mortgage loans except 1-4 family residential mortgage loans. Residential
real estate mortgage loans at June 30, 1994 were $2,533.2 million or 23.9% of
total loans compared to $2,322.1 million or 24.4% at December 31, 1993. Real
estate construction loans were $532.5 million or 5.0% of total loans up from
$448.6 milion or 4.7% of total loans at December 31, 1993.
Commercial, financial and agricultural loans at June 30, 1994 were
$3,102.2 million or 29.2% of total loans, compared to $2,814.1 million or 29.5%
of total loans at December 31, 1993. This segment is widely diversified and
there were no significant industry concentrations.
Loans to individuals at June 30, 1994 totaled $1,547.6 million or
14.6% of total loans, compared to $1,347.7 million or 14.2% of total loans at
December 31, 1993.
Unearned income was $84.9 million at June 30, 1994 and $78.7 million
at December 31, 1993.
8
<PAGE> 9
NON-PERFORMING ASSETS
Non-performing assets at June 30, 1994 were $100.3 million or .95% of
net loans and other real estate owned, representing a decrease of $12.8 million
or 11% from the December 31, 1993 level of $113.1 million. Loans 90 days past
due and accruing were $13.4 at June 30, 1994 compared to $13.2 million at
December 31, 1993. Included in non-performing assets at June 30, 1994 were
$59.9 million of loans on non-accrual status, other real estate owned totaling
$38.2 million, and $2.2 million of restructured loans.
As of June 30, 1994, the Company had loans of approximately $20.0
million for which management has serious doubts as to the ability of the
borrowers to comply with the present repayment terms, and may result in the
loans' repayment terms being restructured, and/or the loans going on
non-performing status. Such loans are continuously reviewed by management, and
their classification may be changed if conditions warrant.
Net charge-offs during the quarter totaled $5.4 million or 0.22% of
average net loans on an annualized basis compared to $4.9 million or 0.24%
during the second quarter of 1993. For the six months ended June 30, 1994, net
charge-offs were $8.1 million or 0.17% of average net loans on an annualized
basis, compared to $12.8 million or 0.32% during the same period in 1993. The
provision for loan losses as a percentage of net charge-offs was 215% during
the second quarter of 1994 and 224% during the second quarter of 1993. For the
1994 six month period the provision for loan losses was 268% of net charge-offs
compared to 176% during the comparable period of 1993.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at June 30, 1994 was $149.3 million or
1.42% of net loans compared to $135.2 million or 1.43% at December 31, 1993.
Market interest rates, including the prime lending rate have recently
increased. Although Management does not believe that the recent rate increases
will have any significant impact on non-performing assets or net charge-offs,
substantial rate increases could result in higher debt service cost to
borrowers, and in turn result in higher delinquencies and non-performing loans.
Management has taken into consideration present and expected economic
conditions, the level of risk in the portfolio, the level of non-performing
assets, potential problem loans, and delinquencies in assessing the allowance
for loan losses and considers the allowance for loan losses to be adequate.
SECURITIES AND SECURITIES AVAILABLE FOR SALE
On December 31, 1993, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
The initial adoption of SFAS No. 115 resulted in designating $2,454.8
million securities as available for sale, which were recorded at fair value, and
the recording of an increase in stockholders' equity, net of deferred income
taxes, in the amount $10.2 million. These securities were classified as
available for sale in order to proivide a source of liquidity to the Company.
At June 30, 1994, securities available for sale totaled $2,326.4
million, reflecting a decrease of $128.4 million from December 31, 1993.
Securities held to maturity totaled $1,680.7 million at June 30, 1994,
an increase of $402.7 million from the December 31, 1993 level of $1,278.0
million.
At June 30, 1994, the book value of securities held to maturity
exceeded the fair value by $25.6 million, compared to an unrealized gain $49.2
million at December 31, 1993. The
9
<PAGE> 10
after-tax unrealized loss on securities available for sale was $5.8 million at
June 30, 1994 compared to an after-tax unrealized gain of $10.2 million at
December 31, 1993. The decrease in unrealized gains from December 31, 1993 to
June 30, 1994 was a result of decreasing values in the bond market due to
increasing interest rates and general market uncertainty.
SHORT-TERM INVESTMENTS
Short-term investments at June 30, 1994 totaled $243.0 million,
reflecting a decrease of $65.1 million from the December 31, 1993 level of
$308.1. At June 30, 1994 short-term investments consisted of $53.6 million in
federal funds sold, $0.2 million in securities purchased under resale
agreements, $9.9 million in time deposits with other banks, and $179.3 million
in assets held for sale. Assets held for sale consisted of $167.1 million in
mortgage loans in the process of being securitized and sold to third party
investors and $12.2 million in securities held for trading purposes. Mortgage
loans held for sale are carried at the lower of cost or fair value. Trading
account securities are carried at fair value with unrealized gains and losses
recognized in net income.
The Company's Asset/Liablility Management Committee monitors current
and future expected economic conditions, as well as the Company's liquidity
position in determining desired balances of short-term investments and
alternative uses of such funds.
OTHER ASSETS
Other assets at June 30, 1994 were $795.3 million compared to $746.1
million at December 31, 1993. At June 30, 1994 other assets included $334.7
million in premises and equipment, due from customers on acceptances of $27.2
million, and other non-earning assets of $433.4 million.
Cash and due from banks was $511.4 million at June 30, 1994, a
decrease of $96.4 million from $607.8 million at December 31, 1993.
FUNDING
The Company's funding sources can be divided into three broad
categories: deposits, short-term borrowings and long-term borrowings.
Deposits are the Company's primary source of funding. Total deposits
at June 30, 1994 were $11,827.2 million up 3% from the December 31, 1993 level
of $11,515.3 million. At June 30, 1994 total deposits included
interest-bearing deposits of $9,967.6 million and other deposits of $1,859.6
million.
Core deposits, defined as demand deposits and time deposits under
$100,000, totaled $10,377.9 million or 87.7% of total deposits at June 30,
1994. This compares to core deposits of $10,057.5 million or 87.3% at December
31, 1993.
Short-term borrowings at June 30, 1994 were $2,374.8 million and
included federal funds purchased of $876.0 million, securities sold under
agreements to repurchase of $867.9 million and other borrowed funds of $630.9
million. At June 30, 1994 total short-term borrowings were 14.9% of total
liabilities and stockholders' equity. This compares to total short-term
borrowings of $1,456.5 million or 9.9% of total liabilities and stockholders'
equity at December 31, 1993.
At June 30, 1994 total long-term debt was $442.6 million representing
a decrease of $27.4 million from the December 31, 1993 level of $470.0 million.
During the first quarter of 1994, the Company filed a shelf registration
statement for $200 million in subordinated debt securities. During the second
quarter of 1994 the Company issued $100 million of 7 5/8%
10
<PAGE> 11
Subordinated Notes due 2004 under the shelf registration. Repayment of
long-term debt during the six months ended June 30, 1994 totaled $13.3 million
and $114.0 million was reclassified to short-term borrowings since it has
become payable within one year.
CAPITAL
At June 30, 1994 total stockholders' equity was $1,093.8 million or
6.87% of total assets compared to $1,051.8 million or 7.15% at December 31,
1993. During the first six months of 1994 net income added $83.1 million to
capital. Sales of common stock through the Dividend Reinvestment Plan, the
employee stock purchase and stock option plans for $3.0 million represented the
issuance of 271,549 shares. Treasury stock purchases for 142,326 shares
reduced equity by $2.7 million. Dividends declared during the period totaled
$27.0 million, and the net unrealized gain on securities available for sale
decreased $18.1 million from an unrealized gain of $10.2 million at December
31, 1993 to an unrealized loss of $7.9 million at June 30, 1994. Stock issued
in a business combination during 1994 added $3.7 million to equity.
The Company is subject to the capital adequacy guidelines adopted by
the Federal Reserve Board, which is the regulatory agency governing bank
holding companies. The Company's capital ratios and those of subsidiary banks
are in excess of these regulatory requirements and Management expects that
these ratios will continue to be maintained above the minimum levels required
by the regulators.
At June 30, 1994, the Company had a total risk-based capital ratio of
12.67%, consisting of a Tier I capital ratio of 8.27% and supplemental capital
elements of 4.40%; and a leverage ratio of 6.41%.
COMMITMENTS
The Company's subsidiary banks had standby letters of credit
outstanding of approximately $285.5 million at June 30, 1994 and $347.8 million
at December 31, 1993.
The Company's subsidiary banks had outstanding commitments to extend
credit of approximately $4,009.4 million at June 30, 1994 and $3,160.0 million
at December 31, 1993.
The Company's policies as to collateral and assumption of credit risk
for off-balance sheet commitments is essentially the same as those for
extension of credit to its customers.
Presently the Company has no commitments for significant capital
expenditures.
The Company subsidiaries regularly originate and sell loans, consisting
primarily of mortgage loans sold to third party investors, which contain various
recourse provisions to the seller. Losses historically realized through the
repurchase or other satisfaction of these recourse provisions are insignificant.
Contingencies
Several of the Company's subsidiaries are defendants in various legal
proceedings arising in the normal course of business. These claims relate to
the lending and investment advisory services provided by the Company and
include alleged compensatory and punitive damages. Although it is not possible
to determine, with any certainty, the potential exposure related to punitive
damages, in the opinion of Management, based upon consultation with legal
counsel, the ultimate resolution of these proceedings will not have a material
effect on the Company's financial statements.
11
<PAGE> 12
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No. (4) SouthTrust Corporation Shareholders' Rights
Agreement. (Incorporated herein by reference from
Registration Statement No. 1-3613).
No. (11) Statement of Computation of Earnings Per Share.
(b) Reports on Form 8-K
During the three months ended June 30, 1994 the Company did
not file a Form 8-K current report with the Securities and
Exchange Commission.
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.
SOUTHTRUST CORPORATION
Date: August 5, 1994 /s/ Wallace D. Malone, Jr.
--------------- --------------------------
Wallace D. Malone, Jr.
Chairman and Chief
Executive Officer
Date: August 5, 1994 /s/ Aubrey D. Barnard
--------------- ---------------------
Aubrey D. Barnard
Secretary, Treasurer and Controller
12
<PAGE> 1
Exhibit No. 11
Statement of Computation of Earnings Per Share
<TABLE>
<CAPTION>
Six Months
----------------------------------------------------------
(In thousands, June 30, 1994 June 30, 1993
except per share data) ----------------------------- -------------------------
Earnings Earnings
Shares Per Share Shares Per Share
------ --------- ------ ---------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 79,461 76,437
Common stock equivalents for
stock options 456 566
------ ------
Primary Earnings per share 79,917 $1.04 77,003 $0.94
====== ===== ====== =====
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 79,461 76,437
Common stock equivalents for
stock options and convertible
debentures 665 836
------ ------
Fully diluted earnings per share 80,126 $1.04 77,273 $0.93
====== ===== ====== =====
</TABLE>
13
