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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1994 Commission file number 0-3613
SOUTHTRUST CORPORATION
(Exact name of registrant specified in its charter)
<TABLE>
<S> <C>
Delaware 63-574085
(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)
</TABLE>
Registrants telephone number, including area code: (205) 254-5509
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK -- PAR VALUE $2.50 PER SHARE
(Title of Class)
Indicate by a check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of January 31, 1995.
Common Stock, par value $2.50 per share -- $1,568,375,400
---------------------------------------------------------
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of January 31, 1995.
Common Stock, par value $2.50 per share -- 81,474,049 shares
------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended December
31, 1994, are incorporated by reference into Parts I and II.
Portions of the annual proxy statement for the annual meeting of
stockholders on April 19, 1995 are incorporated by reference into Part III.
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PART I
Item 1. BUSINESS
SouthTrust Corporation ("SouthTrust" or the "Company") is a
registered bank holding company incorporated under the laws of
Delaware in 1968. At December 31,1994 SouthTrust had 40 bank
subsidiaries and eight bank-related subsidiaries. Of the 40 bank
subsidiaries, 24 are located in Alabama, eight are located in Florida,
two are located in Georgia, two are located in South Carolina, two are
located in North Carolina, one is located in Tennessee, and one is
located in Mississippi. During January 1995 the Company merged 22 of
the Alabama affiliate banks into the lead bank, SouthTrust Bank of
Alabama, N.A. On a pro forma combined basis at December 31, 1994,
SouthTrust Bank of Alabama, N. A.. had total assets of approximately
$10.0 billion, total deposits of approximately $7.0 billion and total
loans, net of unearned income, of approximately $6.7 billion. At
December 31, 1994, SouthTrust had consolidated total assets of $17.6
billion, which ranked it as the largest bank holding company
headquartered in Alabama and one of the forty largest bank holding
companies in the United States. SouthTrust has no significant foreign
operations.
The Company employs approximately 7,400 persons and considers
that its relations with these employees are good.
BANKING SERVICES
Commercial banking is SouthTrust's predominant business and
its subsidiary banks contribute substantially all of the Company's
total operating revenues and total consolidated assets.
The subsidiary banks offer a broad range of banking services,
either directly or through other affiliated banks. Services to
business customers include providing checking and time deposit
accounts, cash management services, various types of lending and
credit services, corporate and other trust services and data
processing. Through loan participations, each of the subsidiary banks
is able to offer credit to businesses in its area up to the maximum
limit available to the combined subsidiary banks. Services provided
to individual customers directly or through other affiliated banks or
corporations include checking accounts, money market
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investment and money market checking accounts, personal money
management accounts, NOW accounts, passbook savings accounts and
various other time deposit savings programs, loans (including
business, personal, automobile, mortgage, home improvements and
education loans), discount brokerage services, investment services and
a variety of trust services. Most of the subsidiary banks offer Visa
and/or Master Card multi-purpose nationally recognized credit card
services.
SUBSIDIARY BANKS
At December 31, 1994, SouthTrust had 40 subsidiary banks with
420 banking offices, total assets of $17.6 billion, total loans of
$12.1 billion, total deposits of $12.8 billion, and total
stockholders' equity of $1.1 billion.
Since 1987, when interstate banking was first permitted in
Alabama, the Company has expanded into 6 other southeastern states
within its permitted operating region. The Company's largest
operation outside of Alabama is SouthTrust Bank of Georgia, N.A.,
which had approximately $3.5 billion in assets, $2.5 billion in
deposits and operated 83 banking offices in greater metropolitan
Atlanta, Georgia area at December 31, 1994. At December 31, 1994
approximately 57% of the Company's bank assets were in Alabama, 20%
were in Georgia, 17% were in Florida, 4% were in North Carolina, 2%
were in South Carolina and the remainder were in Tennessee and
Mississippi.
BANK-RELATED SUBSIDIARIES
The bank-related subsidiaries of SouthTrust are SouthTrust
Mortgage Corporation, a mortgage banking company servicing
approximately $4.3 billion in mortgage loans for long-term investors;
SouthTrust Data Services, Inc., a computer service company;
SouthTrust Life Insurance Company, a credit life insurance company;
SouthTrust Mobile Services, Inc., a mobile home finance servicing
company; SouthTrust Insurance Agency, an insurance agency; SouthTrust
Leasing, Inc., a leasing company; SouthTrust Securities, Inc., an
investment services company; SouthTrust Estate & Trust Company, a
trust company located in Florida; SouthTrust Estate and Trust Company
of Georgia, a trust company located in Georgia.
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BUSINESS COMBINATIONS
During 1994 the Company completed the following acquisitons:
(In Millions)
<TABLE>
<CAPTION>
Date Institution Assets Loans Deposits Location
<S> <C> <C> <C> <C> <C>
May 20 Altus Federal Savings Bank
("Altus") - 11 branches $118.9 $ 0.0 $117.5 Alabama
June 30 Bank of Bradenton ("Bradenton") 41.9 23.6 40.7 Bradenton, FL.
July 8 Homebanc Federal Savings Bank
("Homebanc") 274.4 230.3 256.1 Atlanta, GA
July 28 First Columbus Community Bank
and Trust Co. ("First Columbus") 54.4 35.3 48.8 Columbus, GA
Sept 15 First Jefferson Corporation
("First Jefferson ") 40.5 23.6 36.6 Biloxi, MS
Sept 22 Cirtus National Bank ("Citrus") 40.4 26.9 36.8 Crystal River, FL
Sept 28 Island Bank of Collier County
("Island Bank") 25.9 13.5 21.6 Marco Island, FL
Sept 28 Community Bank of Charlotte County
("Port Charlotte") 48.6 31.3 43.0 Port Charlotte, FL
Dec 9 American National Bank of Florida
("ANB") - 1 branch 64.3 28.5 64.1 Gainesville, FL
---- ---- ----
TOTALS $709.3 $413.0 $665.2
</TABLE>
The acquisitions of Altus, Homebanc and ANB were
accounted for as purchases of assets and assumptions of liabilities.
The acquisitions of all of the outstanding shares of First Jefferson,
Citrus and Island Bank were accounted for as purchases. Under
purchase accounting, the results of operations of all of the above,
subsequent to the respective acquisition dates, are included in the
Consolidated Financial Statements.
The acquisitions of Bradenton, First Columbus, and
Port Charlotte were accounted for as poolings-of-interest; however,
the Company's previously reported consolidated financial results have
not been restated to include the effect of the acquisitions prior to
their respective acquisition dates, since the effect is not material.
Consideration for all acquisitions during 1994
aggregated approximately $36.5 million in cash and 1,585,205 shares of
SouthTrust Corporation Common Stock with a total market value at time
of issuance of approximately $29.3 million. Total intangible assets
recognized in these transactions were approximately $42.0 million.
During 1993, the Company completed fourteen
acquisitions with aggregate total assets of $1,260.6 million, loans of
$699.9 million and total deposits of $1,050.7 million.
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The Company has entered into three separate definitive
agreements and two separate letters of intent to acquire financial
institutions with aggregate total assets of approximately $541
million. These pending acquisitions are subject to shareholder and/or
various regulatory approvals among other conditions and are expected
to close in the first half of 1995. The aggregate purchase price of
all pending acquisitions is approximately $18.6 million in cash and
approximately 2.2 million shares of SouthTrust Corporation common
stock.
SUPERVISION AND REGULATION
SouthTrust is a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as amended (the
"Holding Company Act"), and is registered with the Federal Reserve
Board. SouthTrust's banking subsidiaries are subject to restrictions
under federal law which limit the transfer of funds by the subsidiary
banks to their respective holding companies and nonbanking
subsidiaries, whether in the form of loans, extensions of credit,
investments or asset purchases. Such transfers by any subsidiary bank
to its holding company or any non-banking subsidiary are limited in
amount to 10% of the subsidiary bank's capital and surplus and, with
respect to SouthTrust and all such nonbanking subsidiaries, to an
aggregate of 20% of such bank's capital and surplus. Furthermore,
such loans and extensions of credit are required to be secured in
specified amounts. The Holding Company Act also prohibits, subject to
certain exceptions, a bank holding company from engaging in or
acquiring direct or indirect control of more than 5% of the voting
stock of any company engaged in non-banking activities. An exception
to this prohibition is for activities expressly found by the Federal
Reserve Board to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
As a bank holding company, SouthTrust is required to
file with the Federal Reserve Board semi-annual reports and such
additional information as the Federal Reserve Board may require. The
Federal Reserve Board may also make examinations of SouthTrust and
each of its subsidiaries.
According to Federal Reserve Board policy, bank
holding companies are expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support
each such subsidiary. This support may be required at times which a
bank holding company may not be able to provide
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such support. Furthermore, in the event of a loss suffered or
anticipated by the FDIC -- either as a result of default of a banking
or thrift subsidiary of SouthTrust or related FDIC assistance provided
to a subsidiary in danger of default -- the other banking subsidiaries
of SouthTrust may be assessed for the FDIC's loss, subject to certain
exceptions.
Various federal and state statutory provisions limit
the amount of dividends the subsidiary banks can pay to their holding
companies without regulatory approval. The approval of the OCC is
required for any dividend by a national bank to its holding company if
the total of all dividends declared by such bank in any calendar year
would exceed the total of its net profits, as defined by the OCC, for
that year combined with its retained net profits for the preceding two
years less any required transfers to surplus or a fund for the
retirement of any preferred stock. Comparable prohibitions on the
declaration of dividends are imposed by the Alabama Banking Code, the
Florida Financial Institutions Code, the North Carolina Banking Code,
the South Carolina Banking Code, the Tennessee Banking code and the
Financial Institutions Code of Georgia. In addition, a national bank
may not pay a dividend in an amount greater than its net profits then
on hand after deducting it loans losses and bad debts. For this
purpose, bad debts are defined to include, generally, the principal
amount of loans which are in arrears with respect to interest by six
months or more or are past due as to payment of principal (in each
case to the extent that such debts are in excess of the reserve for
possible credit losses). Under the foregoing laws and regulations, at
December 31, 1994, approximately $284.4 million was available for
payment of dividends to SouthTrust by its bank subsidiaries. The
payment of dividends by any bank also may be affected by other
factors, such as the maintenance of adequate capital for such
subsidiary bank. In addition to the foregoing restrictions, the
Federal Reserve Board has the power to prohibit dividends by bank
holding companies if their actions constitute unsafe or unsound
practices. The Federal Reserve Board has issued a policy statement on
the payment of cash dividends by bank holding companies, which
expresses the Federal Reserve Board's view that a bank holding company
experiencing earnings weaknesses should not pay cash dividends that
exceed its net income or that could only be funded in ways that weaken
the bank holding company's financial health, such as by borrowing.
Furthermore, the OCC also has authority to prohibit the payment of
dividends by a national bank when it determines such payment to be an
unsafe and unsound banking practice.
THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT
In December 1991, the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") became law.
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FDICIA substantially revised the depository institution regulatory and
funding provisions of the Federal Deposit Insurance Act and made
revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal
banking regulators to take prompt corrective action in respect of
depository institutions that do not meet minimum capital requirements.
FDICIA establishes five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." A depository institution is well
capitalized if it significantly exceeds the minimum level required by
regulation for each relevant capital measure, adequately capitalized
if it meets each such measure, undercapitalized if it fails to meet
any such measure, significantly undercapitalized if it is
significantly below such measure and the critically undercapitalized
level occurs where tangible equity is less than 2% of total tangible
assets or less than 65% of the minimum leverage ratio to be prescribed
by regulation (except to the extent that 2% would be higher than such
65% level). 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.
FDICIA generally prohibits a depository institution
from making any capital distribution (including payment of a dividend)
or paying any management fee to its holding company if the depository
institution would thereafter be undercapitalized. Undercapitalized
depository institutions also became subject to restrictions on
borrowing from the Federal Reserve System, effective December 19,
1993. In addition, undercapitalized depository institutions are
subject to growth limitations and are required to submit capital
restoration plans. A depository institution's holding company must
guarantee the capital plan, up to an amount equal to the lesser of 5%
of the depository institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan. The federal banking
agencies may not accept a capital plan without determining, among
other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital.
If a depository institution fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.
Significantly undercapitalized depository
institutions may be subject to a number of requirements and
restrictions, including ordered to sell sufficient voting stock to
become adequately capitalized, requirements to reduce total assets and
cessation of receipt of deposits from
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correspondent banks. Critically undercapitalized depository
institutions are subject to appointment of a receiver or conservator.
FDICIA required the federal banking agencies to
develop, within one year of the date of enactment, uniform accounting
standards and requirements that are consistent with, or no less
stringent than, generally accepted accounting principles. The federal
banking agencies also were required by FDICIA to develop a method for
insured depository institutions to provide supplemental disclosure of
contingent liabilities and the estimated fair market value of assets
and liabilities, to the extent feasible and practicable, for any
balance sheet, financial statement, report of condition or other
report required to be filed with a Federal banking agency. FDICIA
required that, no later than December 1, 1993, the federal banking
agencies prescribe new safety and soundness standards.
FDICIA provides authority for special assessments
against insured deposits and for the development of a general
risk-based deposit insurance assessment system. The risk-based
insurance assessment system would be used to calculate a depository
institution's semiannual deposit insurance assessment based on the
probability (as defined in the statute) that the deposit insurance
fund will incur a loss with respect to the institution. In accordance
with FDICIA, on September 15, 1992, the FDIC approved a transitional
risk-based insurance premium system and an increase in the deposit
insurance premium for commercial banks and thrifts to an average of
25.4 basis points, effective January 1, 1993.
Effective with fiscal years beginning after December
31, 1992, each insured institution having over $500 million in total
assets is required to submit to the FDIC and make available to the
public an annual report on the institution's financial condition and
management's responsibility and assessment of the internal controls
over financial reporting. The institution's independent public
accountant will be required to audit and attest to certain of the
statements made in the annual report.
FDICIA amended prior law with respect to the
acceptance of brokered deposits by insured depository institutions to
permit only a "well capitalized" (as defined in the statute as
significantly exceeding each relevant minimum capital level)
depository institution to accept brokered deposits without prior
regulatory approval. A depository institution which has a capital
level category of "adequately capitalized" may not accept
brokered deposits without prior regulatory approval. FDICIA also
established new uniform disclosure requirements for the interest rates
and
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term of deposit accounts.
FDICIA also contains various provisions related to an
institution's interest rate risk. Under certain circumstances, an
institution may be required to provide additional capital or maintain
higher capital levels to address interest rate risks.
The foregoing necessarily is a general description of
certain provisions of FDICIA and does not purport to be complete.
Several of the provisions of FDICIA are being implemented through the
adoption of regulations by various federal banking agencies. FDICIA
is not expected to have a material effect on the results of operations
of SouthTrust.
At December 31, 1994, all of SouthTrust's subsidiary
banks are considered "well capitalized", the highest of the five
supervisory groups.
THE RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT
In September 1994, the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 (the "Interstate Banking Act")
became law. The Interstate Banking Act has two major provisions
regarding the merger, acquisition and operation of banks across state
lines. First, it provides that effective September 29, 1995,
adequately capitalized and managed bank holding companies will be
permitted to acquire banks in any state. State laws prohibiting
interstate banking or discriminating against out-of-state banks will
be preempted as of the effective date. States cannot enact laws
opting out of this provision; however, states may adopt a minimum age
restriction requiring that target banks located within the state be in
existence for a period of years, up to a maximum of five years, before
such bank may be subject to the Interstate Banking Act. The
Interstate Banking Act established deposit caps which prohibit
acquisitions that would result in the acquirer controlling 30% or more
of the deposits of insured banks and thrifts held in the state in
which the acquisition or merger is occurring or in any state in which
the target maintains a branch or 10% or more of the deposits
nationwide. State-level deposit caps are not preempted as long as
they do not discriminate against out-of-state acquirers, and the
federal deposit caps apply only to initial entry acquisitions.
In addition to the foregoing, the Interstate Banking
Act provided that as of June 1, 1997, adequately capitalized and
managed banks will be able to engage in interstate branching by
merging banks in different states. However, unlike the interstate
banking provision, states may opt out of
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the application of this provision by enacting specific legislation
before June 1, 1997. If a state does opt out, banks will be required
to comply with the such state's provisions with respect to branching
across state lines.
COMPETITION
The commercial banking business is highly competitive
and SouthTrust's subsidiary banks compete actively with national and
state banks for deposits, loans and trust accounts, and with savings
and loan associations and credit unions for deposits and loans. In
addition, SouthTrust's subsidiary banks compete with other financial
institutions, including securities brokers and dealers, personal loan
companies, insurance companies, finance companies, leasing companies
and certain governmental agencies, all of which actively engage in
marketing various types of loans, deposit accounts and other services.
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EXECUTIVE OFFICERS OF THE COMPANY
Positions Held With the Company
-------------------------------
<TABLE>
<CAPTION>
Executive
Officer of the
Name and Age Company Since
------------ --------------
<S> <C> <C>
Wallace D. Malone, Jr. Chairman and Chief Executive 1972
(58) Officer
Frederick W. Murray, Jr. Executive Vice President 1980
(56)
James W. Rainer, Jr. Executive Vice President 1982
(52)
William R. Cranford Executive Vice President 1992(1)
(49)
Aubrey D. Barnard Secretary, Treasurer and 1968
(58) Controller
Julian Banton Chairman, President and Chief 1982
(54) Executive Officer-SouthTrust
Bank of Alabama, N.A.
J. Michael Battle Executive Vice President 1992(2)
(50) SouthTrust Bank of Alabama, N.A.
Fred C. Crum Executive Vice President 1986
(50) SouthTrust Bank of Alabama, N.A.
R. Glenn Eubanks Executive Vice President 1990(3)
(46) SouthTrust Bank of Alabama, N.A.
William C. Patterson Executive Vice President 1979
(52) SouthTrust Bank of Alabama, N.A.
William E. Pearson Executive Vice President 1991(4)
(45) SouthTrust Bank of Alabama, N.A.
C. Perry Relfe Executive Vice President 1981
(52) SouthTrust Bank of Alabama, N.A.
E. Frank Schmidt Executive Vice President 1994(5)
(53) SouthTrust Bank of Alabama, N.A.
</TABLE>
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(1) Mr. Cranford was elected Executive Vice President in December
1992. For the five years prior to December 1992 Mr. Cranford
served as Chairman and Chief Executive Officer of SouthTrust
Bank of Etowah County, N.A.
(2) Mr. Battle was elected Executive Vice President in 1992. From
July 1990 to January 1992, Mr. Battle worked for Pacific
Southwest Bank, F.S.B., serving as President from September
1991 to January 1992, and Executive Vice President before
September 1991. From March 1989 to July 1990, Mr. Battle was
Chief Executive Officer of 7 bank subsidiaries of First
Interstate Bank - Texas.
(3) Mr. Eubanks was elected to Executive Vice President effective
July 1990. From May 1985 to July 1990 Mr. Eubanks held the
position of Senior Vice President of SouthTrust Bank of
Alabama, N.A.
(4) Mr. Pearson was elected to Executive Vice President effective
December 1991. From January 1986 to December 1991, Mr.
Pearson held the position of Senior Vice President of
SouthTrust Corporation.
(5) Mr. Schmidt was elected to Executive Vice President effective
January 1995. Prior to that time Mr. Schmidt held the
position of Chairman and Chief Executive Officer of SouthTrust
Bank of Mobile.
Officers of the Company are re-elected annually at the Board of
Directors meeting immediately following the annual stockholders'
meeting held the third Wednesday in April of each year.
There is no family relationship between any of the above named
officers.
Selected statistical data as required by this item is included on
pages 18 through 39, inclusive, of the Company's annual report to
stockholders for the year ended December 31, 1994, and is incorporated
herein by reference.
Item 2 Properties
The Company's subsidiary banks and companies occupy various offices
throughout Alabama, Florida, Tennessee, Georgia, North Carolina, South
Carolina, and Mississippi. Most of these are owned. Leased
properties constitute primarily land and buildings under long-term
leases in which subsidiary banks maintain offices.
Item 3 Legal Proceedings
Several of the Company's subsidiaries are defendants in various
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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.
Item 4 Submission of Matters to a Vote of Security Holder
None
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters
The information required by this item is contained on page 37 of the
Company's annual report to stockholders for the year ended December
31, 1994, and is incorporated herein by reference.
Item 6 Selected Financial Data
Selected financial data required by this item is contained on page 18
of the Company's annual report to stockholders for the year ended
December 31, 1994, and is incorporated herein by reference.
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Information required by this item is contained on pages 18 through 39,
inclusive, of the Company's annual report to stockholders for the year
ended December 31, 1994, and is incorporated herein by reference.
Item 8 Financial Statements and Supplementary Data
Consolidated financial statements and notes required by this item are
contained on pages 40 through 56, inclusive, of the Company's annual
report to stockholders for the year ended December 31, 1994, and are
incorporated herein by reference.
Selected quarterly financial data required by this item is contained
on page 36 of the Company's annual report to stockholders for the year
ended December 31, 1994, and is incorporated herein by reference.
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
NONE
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PART III
Item 10 Directors and Executive Officers of the Registrant
Information concerning the Company's directors is contained on pages 2
through 5, inclusive, of the Company's proxy statement for the annual
meeting of stockholders, April 19, 1995 and is incorporated herein by
reference.
Information concerning the Company's executive officers is contained
herein in response to Item I of Part I.
Item 11 Executive Compensation
Information relating to executive compensation is contained on pages 8
through 15, inclusive, of the Company's proxy statement for the annual
meeting of stockholders, April 19, 1995 and is incorporated herein by
reference.
Item 12 Security Ownership of Certain Beneficial Owners and
Management
Information required by this item is contained on pages 2 through 5,
inclusive, of the Company's proxy statement for the annual meeting of
stockholders, April 19, 1995, and is incorporated herein by reference.
Item 13 Certain Relationships and Related Transactions
Information relating to this item is contained on page 16 of the
Company's proxy statement for the annual meeting of stockholders,
April 19, 1995, and is incorporated herein by reference.
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PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
On Form 8-K
(a)(1) and (2) The response to this portion of item 14 is submitted
as a separate section of this report.
(3) Exhibits:
No. (3) Restated Certificate of Incorporation and Restated
By-Laws (incorporated herein by reference to
Exhibits 4(a) and 4(b) of Registration Statement
No. 2-84167).
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.
No. (12) Statement of Computation of Ratios.
No. (13) Annual Report to Stockholders for the year ended
December 31, 1994.
No. (21) Subsidiaries of the Registrant.
No. (23) Consents of Experts and Counsel.
No. (24) Powers of Attorney.
No. (27) Financial Data Schedule (for SEC use only)
No. (99) Undertaking Regarding Registration Statement on
Form S-8.
(b) Reports on Form 8-K filed in the fourth quarter of 1994. None.
(c) Exhibits - The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statements Schedules: None
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S I G N A T U R E S
Pursuant to the requirements of Section 13 and 13(d) 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: March 25, 1995
----------------
/s/ Wallace D. Malone, Jr.
-----------------------------------------
Wallace D. Malone, Jr.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Wallace D. Malone, Jr. Chairman, Chief Executive March 25, 1995
--------------------------- Officer, Director
Wallace D. Malone, Jr.
/s/ Aubrey D. Barnard Secretary, Treasurer and March 25, 1995
--------------------------- Controller (Principal
Aubrey D. Barnard Accounting and Financial
Officer)
* Director March 25, 1995
---------------------------
Herbert Stockham
* Director March 25, 1995
---------------------------
Bill L. Harbert
* Director March 25, 1995
---------------------------
T.W. Mitchell
* Director March 25, 1995
----------------------------
William C. Hulsey
* Director March 25, 1995
----------------------------
John M. Bradford
</TABLE>
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<TABLE>
<S> <C> <C>
* Director March 25, 1995
----------------------------
Wm. Kendrick Upchurch, Jr.
* Director March 25, 1995
----------------------------
Charles G. Taylor
* Director March 25, 1995
----------------------------
Allen J. Keesler, Jr.
* Director March 25, 1995
----------------------------
H. Allen Franklin
/s/ William L. Prater
---------------------------
William L. Prater
Attorney-in-fact
</TABLE>
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ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994
SOUTHTRUST CORPORATION
BIRMINGHAM, ALABAMA
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FORM 10-K ITEM 14(a)(1) and (2)
SOUTHTRUST CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS
Item 14(a) 1 The following consolidated financial statements of SouthTrust
Corporation and subsidiaries, included in the annual report of
the Company to its stockholders for the year ended December 31,
1994 are incorporated herein by reference in Item 8:
Consolidated Statements of Condition - December 31, 1994
and December 31, 1993
Consolidated Statements of Income - Years ended December 31,
1994, 1993, and 1992
Consolidated Statements of Cash Flows - Years ended
December 31, 1994, 1993, and 1992
Consolidated Statements of Shareholders' Equity
December 31, 1994, 1993, and 1992
Notes to Consolidated Financial Statements - Three years
ended December 31, 1994
Report of Independent Public Accountants
Item 14(a) 2 All schedules to the consolidated financial statements required
by Article 9 of Regulation S-X are omitted since they are either
not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
18
<PAGE> 1
Exhibit No. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED
(In thousands) DECEMBER 31, 1994
-----------------------
EARNINGS
SHARES PER SHARE
-------- ----------
<S> <C> <C>
Weighted average shares outstanding 80,176 $2.16
====== =====
Primary
Average shares outstanding 80,176
Common stock equivalents 452
------
80,628 $2.15
====== =====
Fully Diluted
Average shares outstanding 80,176
Common stock equivalents 602
------
80,778 $2.14
====== =====
</TABLE>
19
<PAGE> 1
Exhibit No. 12
STATEMENT OF COMPUTATION OF RATIOS
(Dollars in Thousands)
Earnings to fixed Charges
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $261,340 $224,527 $164,892 $123,315 $ 90,068
Plus:
Fixed charges 507,940 404,360 388,901 479,405 502,764
Less:
Capitalized interest (599) (82) (201) (591) (949)
-------- --------- --------- --------- ---------
Earnings, including interest on deposits (A) 768,681 628,805 553,592 602,129 591,883
Less:
Interest on deposits (377,643) (335,708) (337,878) (413,880) (411,560)
-------- --------- --------- --------- ---------
Earnings, excluding interest on deposits (B) $391,038 $293,097 $215,714 $188,249 $180,323
-------- --------- --------- --------- ---------
Fixed Charges:
Interest expense $501,067 $397,743 $382,930 $474,453 $498,329
Capitalized interest 599 82 201 591 949
Amortization of debt expense 215 195 63 0 43
Interest portion of rent expense 6,059 6,340 5,707 4,361 3,443
-------- --------- --------- --------- ---------
Total Fixed Charges (C) 507,940 $404,360 $388,901 $479,405 $502,764
Less:
Interest on deposits (377,643) (335,708) (337,878) (413,880) (411,560)
-------- --------- --------- --------- ---------
Total Fixed Charges excluding
interest expense on deposits (D) $130,297 $ 68,652 $ 51,023 $65,525 $ 91,204
======== ========= ========= ======== =========
Earnings to fixed charges:
Including interest on deposits (A/C) 1.51 % 1.56 % 1.42 % 1.26 % 1.18 %
======== ========= ========= ======== =========
Excluding interest on deposits (B/D) 3.00 4.27 4.23 2.87 1.98
======== ========= ========= ======== =========
</TABLE>
20
<PAGE> 1
EXHIBIT 13
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
The financial statements and related information herein were prepared by the
Company and were based on generally accepted accounting principles, appropriate
in the circumstances to reflect in all material respects the financial
condition of the Company at December 31, 1994 and 1993 and the results of
operations and cash flows for the three years ended December 31, 1994. The
financial statements reflect management's best estimates and judgments.
Financial information presented elsewhere in this report has been prepared in a
manner consistent with financial statement disclosures.
Management is responsible for the reliability and integrity of these
statements. In meeting this responsibility, management maintains an accounting
system and related controls to provide reasonable assurance that the financial
records are reliable for preparing financial statements and maintaining
accountability for assets. The Company's systems and controls are also designed
to provide reasonable assurance that assets are safeguarded and that
transactions are executed in accordance with management's authorizations and
recorded properly. The systems and controls and compliance therewith are
reviewed periodically by internal auditors.
The Board of Directors has appointed an Audit Committee composed of
directors who are not officers or employees of the Company. The Committee meets
periodically with management, internal auditors and independent public
accountants.
Arthur Andersen LLP, independent public accountants, has audited the
financial statements in accordance with generally accepted auditing standards
and their report appears herein.
CONTENTS
<TABLE>
<S> <C>
Management's Discussion
and Analysis .........................................18
Consolidated Financial Statements ....................40
Notes to Consolidated
Financial Statements .................................44
Report of Independent
Public Accountants ...................................57
</TABLE>
17
<PAGE> 2
MANAGEMENT'S DISCUSSION
AND ANALYSIS
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
SELECTED FINANCIAL INFORMATION
(TABLE 1)
<TABLE>
<CAPTION>
Year Ended December 31 1994 1993 1992 1991 1990 1989
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Return on average total assets 1.09% 1.10% 1.04% 0.96% 0.85% 1.03%
Return on average common
stockholders' equity 15.86 15.84 15.66 15.21 13.29 15.44
Dividend pay-out ratio 31.45 30.70 31.29 33.59 40.66 35.16
Average equity to average assets 6.85 6.96 6.62 6.29 6.37 6.66
Non-interest expense as a percent
of average total assets 3.05 3.19 3.39 3.15 2.85 2.83
---------------------------------------------------------------------------------------------------------------------------
INTEREST YIELDS/RATES:
Taxable equivalent yields earned
on earning assets 7.62% 7.52% 8.40% 9.84% 10.66% 11.04%
Average rate paid on
interest-bearing liabilities 3.92 3.64 4.33 6.19 7.51 8.06
Net interest spread 3.70 3.88 4.07 3.65 3.15 2.98
Net interest margin 4.23 4.35 4.61 4.32 4.03 4.06
---------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Net income $ 2.15 $ 1.94 $ 1.66 $ 1.42 $ 1.14 $ 1.21
Cash dividends declared 0.68 0.60 0.52 0.48 0.46 0.43
Stockholders' equity at period end 13.94 13.25 11.55 10.05 8.99 8.31
Stock price range (low) 17 16 5/8 14 1/8 6 5/8 5 3/4 8 3/4
(high) 22 1/8 22 1/8 18 1/8 17 1/4 10 3/8 11 1/4
---------------------------------------------------------------------------------------------------------------------------
SHARE DATA:
Average shares outstanding (000s) 80,628 77,772 68,948 63,255 61,148 60,077
Shares outstanding
at end of year (000s) 81,426 79,401 74,477 65,837 61,167 61,013
---------------------------------------------------------------------------------------------------------------------------
LONG-TERM PERFORMANCE:
Five-year compound growth rates for:
Period ended December 31, 1994:
Net income 18.91%
Net income per share 12.18
Dividends declared per share 9.60
Year ended December 31, 1994:
Total assets 17.83%
Loans 20.91
Deposits 16.15
Stockholders' equity 17.49
Stockholders' equity per share 10.90
</TABLE>
18
<PAGE> 3
EARNINGS SUMMARY
THREE YEARS ENDED DECEMBER 31, 1994
SouthTrust Corporation ("SouthTrust") reported net income of $173.0 million or
$2.15 per share for the year ended December 31, 1994, compared to net income of
$150.5 million or $1.94 per share for the year ended December 31, 1993. Net
income in 1992 was $114.2 million or $1.66 per share.
The increase in net income in 1994 over 1993 was primarily attributable to
the 17% growth in average earning assets. This increase was partially offset by
the decline in the fully taxable equivalent net interest margin, which
decreased to 4.23% in 1994 from 4.35% in 1993, as market interest rates
increased significantly during the year and the spread between yields earned
and rates paid decreased from 3.88% during 1993 to 3.70% in 1994.
Net earnings in 1994 resulted in a return on average assets of 1.09%
compared to 1.10% during 1993, and a return on average stockholders' equity of
15.86% compared to 15.84% during 1993.
NET INTEREST INCOME
Net interest income is affected by changes in the volume of and rates
earned/paid on interest-earning assets and interest-bearing liabilities 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% in 1994 and 1993 and 34% in 1992.
Net interest income increased 14% to $623.6 million from $547.5 million in
1993 and $464.8 million in 1992. The taxable equivalent net interest margins
for the three years ended December 31, 1994 were 4.23%, 4.35% and 4.61%,
respectively. The net interest spread between interest-earning assets and
interest-bearing liabilities decreased 18 basis points to 3.70% in 1994 from
3.88% in 1993. The net interest spread in 1992 was 4.07%. The net interest
spread is affected by competitive pressures, Federal Reserve Bank (the "Fed")
monetary policies and the composition of interest-earning assets and
interest-bearing liabilities. During 1994 the Fed raised the interest rate it
charges banks for loans on three different occasions, resulting in the rate
increasing from 3% at the beginning of the year to 4 3/4% at year end. During
this period the Prime rate increased from 6% to 8 1/2%. These increases along
with increases in rates paid on deposits and other borrowed funds have resulted
in decreasing net interest margins. During the fourth quarter of 1994, the net
interest margin decreased to 4.11%, as the Company's liabilities have repriced
at incrementally higher rates than have earning assets.
Interest income increased $179.5 million to $1,124.7 million from $945.2
million in 1993. Interest income in 1992 totaled $847.7 million. The increase
in interest income during 1994 was attributable to an increase in the volume of
average interest-earning assets of 17% to $14.7 billion. Also contributing to
this increase was an increase in the yield on average interest-earning assets
of 10 basis points to 7.62% in 1994 from 7.52% in 1993. An increase in the
volume of interest-earning assets of 25% was also responsible for the $97.5
million increase in interest income from 1992 to 1993. The yield on
interest-earning assets decreased 88 basis points from 8.40% in 1992 to 7.52%
in 1993.
The mix of interest-earning assets shifted during 1994. Increased loan
demand and in-market acquisitions of banks pushed loans to approximately 72.0%
of average earning assets in 1994 compared to approximately 67.0% in 1993. The
increase of loans relative to other interest-earning assets had the effect of
increasing total interest income due to the higher yields on loans as compared
to other interest-earning assets. During 1994, average loans increased 26% to
$10.6 billion from $8.4 billion in 1993. The effect on interest income from
this loan growth was augmented by an increase in the average yield on loans to
8.22% during 1994 from 7.99% during 1993. Interest income on loans increased
30% to $871.8 million in 1994. Short-term investments were approximately 1.5%
of average earning assets in 1994 and produced an average yield of 4.76%.
During 1993 short-term investments accounted for approximately 2.2% of average
earning assets and produced an average yield of 5.04%. Interest income on
short-term investments decreased $3.5 million to $10.6 million in 1994.
Total securities, including investment securities and securities available
for sale, which accounted for approximately 30.8% of average earning assets in
1993, fell to approximately 26.5% of average earning assets during 1994. Their
average yield of 6.18% in 1994 compared to 6.66% in 1993. Interest income on
securities decreased $16.0 million to $242.2 million. The net decrease in
securities income was the result of a decline in the average yield of
securities which reduced interest income on securities by $16.3 million. This
was partially offset by an increase in the average volume of securities. During
1994 the Company primarily acquired short-term securities which resulted in
relatively low yields. This decision was part of an overall asset-liability
management strategy in response to current market interest rates. Table 12,
Interest Rate Sensitivity Analysis, provides a maturity analysis of
interest-earning assets and interest-bearing liabilities.
Interest expense increased $103.3 million or 26% to $501.1 million in
1994. This compares to an increase of $14.8 million or 4% to $397.7 million in
1993 from $382.9 million in 1992. The average rate paid on interest-bearing
liabilities rose in 1994, increasing 28 basis points to 3.92% from 3.64% in
1993, due to increasing market interest rates as a result of the Fed's monetary
policy. The average rate paid on interest-bearing liabilities in 1992 was
4.33%. Additionally, the increase in interest expense was attributable to
continued growth in the average volume of interest-bearing liabilities. During
1994, the volume of average interest-bearing liabilities increased $1.9 billion
or 17% to $12.8 billion which was due to internally generated growth of 12.6%
and 4.7% due to acquisitions. This compared to 1993 growth in volume of $2.1
billion or 24%.
19
<PAGE> 4
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
AVERAGE BALANCES AND INTEREST RATES, INTEREST YIELD/RATES
ON FULLY TAXABLE EQUIVALENT BASIS
(TABLE 2)
The following table details average balances of interest-earning assets and
interest-bearing liabilities, the fully taxable equivalent amount of interest
earned/paid thereon, and the fully taxable equivalent yield/rate for the three
years ended December 31, 1994. The loan averages include loans on which the
accrual of interest has been discontinued. Income on certain non-accrual loans
is recognized on a cash basis.
<TABLE>
<CAPTION>
ASSETS 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------
(Average in Millions; AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
Interest in Thousands) BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of
unearned income $10,606.6 $ 871,831 8.22% $ 8,422.0 $672,888 7.99% $ 6,466.7 $565,517 8.75%
Investment securities:
Taxable 1,224.4 75,721 6.18 3,498.8 217,983 6.23 2,969.9 222,135 7.48
Non-taxable 340.6 35,743 10.49 376.3 40,288 10.71 402.8 45,652 11.33
Securities available for sale 2,339.6 130,772 5.55* 0.0 0 0.00 0.0 0 0.00
Short-term investments 222.5 10,583 4.76 279.1 14,066 5.04 250.7 14,385 5.74
--------------------------------------------------------------------------------------------------------------------
Total interest-
earning assets 14,733.7 1,124,650 7.62* 12,576.2 945,225 7.52 10,090.1 847,689 8.40
Allowance for loan losses (154.1) (118.1) (90.7)
Other assets 1,355.3 1,194.9 1,028.8
--------------------------------------------------------------------------------------------------------------------
Total assets $15,934.9 $13,653.0 $11,028.2
====================================================================================================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings deposits $ 779.8 $ 18,903 2.42% $ 683.2 $ 17,221 2.52% $ 531.5 $ 16,465 3.10%
Interest-bearing
demand deposits 1,467.5 31,122 2.12 1,299.3 27,852 2.14 1,013.3 28,700 2.83
Time deposits 7,805.5 327,618 4.20 7,184.1 290,635 4.05 6,158.2 292,714 4.75
Short-term borrowings 2,259.9 98,189 4.34 1,340.0 41,014 3.06 925.5 31,418 3.39
Long-term debt 463.2 25,235 5.45 415.2 21,021 5.06 206.9 13,634 6.59
---------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 12,775.9 501,067 3.92 10,921.8 397,743 3.64 8,835.4 382,931 4.33
Demand deposits
non-interest bearing 1,849.2 1,606.0 1,293.1
Other liabilities 218.6 174.8 170.1
---------------------------------------------------------------------------------------------------------------------
Total liabilities 14,843.7 12,702.6 10,298.6
Stockholders' equity 1,091.2 950.4 729.6
---------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $15,934.9 $13,653.0 $11,028.2
====================================================================================================================
Net interest income $ 623,583 $547,482 $464,758
====================================================================================================================
Net interest margin 4.23%* 4.35% 4.61%
Net interest spread 3.70* 3.88 4.07
</TABLE>
*Yields were calculated using average amortized cost of securities available
for sale.
<TABLE>
<CAPTION>
TAXABLE EQUIVALENT
ADJUSTMENT ANALYSIS 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------
Taxable Interest Taxable Interest Taxable Interest
Interest Equivalent Income Interest Equivalent Income Interest Equivalent Income
(In Thousands) Income Adjustments (FTE) Income Adjustments (FTE) Income Adjustments (FTE)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $ 868,461 $ 3,370 $ 871,831 $669,495 $ 3,393 $672,888 $561,757 $ 3,760 $565,517
Investment securities:
Taxable 75,721 0 75,721 217,555 428 217,983 221,692 443 222,135
Non-taxable 23,377 12,366 35,743 26,435 13,853 40,288 30,246 15,406 45,652
Securities available for
sale 130,470 302 130,772 0 0 0 0 0 0
Short-term investments 10,583 0 10,583 14,066 0 14,066 14,385 0 14,385
--------------------------------------------------------------------------------------------------------------------
Totals $1,108,612 $16,038 $1,124,650 $927,551 $17,674 $945,225 $828,080 $19,609 $847,689
====================================================================================================================
</TABLE>
20
<PAGE> 5
VOLUME-RATE ANALYSIS
(TABLE 3)
The following table shows a summary of the changes in interest income and
interest expense on a fully taxable equivalent basis resulting from changes in
volume and changes in rates for each category of interest-earning assets and
interest-bearing liabilities for 1994/1993 and 1993/1992. Changes not solely
attributable to a change in rate or volume are allocated proportionately
relative to the absolute total change of rate and volume.
<TABLE>
<CAPTION>
1994 VERSUS 1993 1993 VERSUS 1992
INCREASE (DECREASE) DUE TO CHANGE IN: INCREASE (DECREASE) DUE TO CHANGE IN:
VOLUME YIELD/ VOLUME YIELD/
(In Thousands) OUTSTANDING RATE TOTAL OUTSTANDING RATE TOTAL
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income on:
Loans $179,064 $19,879 $198,943 $159,504 ($52,134) $107,370
Investment securities:
Taxable 4,006 (15,497) (11,491) 36,153 (40,305) (4,152)
Non-taxable (3,762) (783) (4,545) (2,914) (2,449) (5,363)
Short-term investments (2,725) (757) (3,482) 1,532 (1,851) (319)
---------------------------------------------------------------------------------------------------------------------
Total interest income 176,583 2,842 179,425 194,275 (96,739) 97,536
Interest expense on:
Interest-bearing deposits 33,114 8,821 41,935 58,531 (60,701) (2,170)
Short-term borrowings 35,485 21,690 57,175 12,936 (3,340) 9,596
Long-term debt 2,544 1,670 4,214 11,138 (3,751) 7,387
---------------------------------------------------------------------------------------------------------------------
Total interest expense 71,143 32,181 103,324 82,605 (67,792) 14,813
---------------------------------------------------------------------------------------------------------------------
Net interest income $105,440 ($29,339) $ 76,101 $111,670 ($28,947) $ 82,723
=====================================================================================================================
</TABLE>
PROVISION FOR LOAN LOSSES
The provision for loan losses in 1994 was $45.0 million, compared to $45.0
million in 1993 and $43.3 million in 1992. Table 8, Allowance for Loan Losses,
summarizes information concerning the allowance for loan losses for the five
years ended December 31, 1994.
Maintenance of the provision at the 1993 level, despite loan growth
during 1994, was primarily in response to the decreased level of net
charge-offs and improved credit quality indicators, including lower levels of
non-performing loans and potential problem loans. During 1994, net charge-offs
were $19.8 million, or .19% of average loans; a decrease of $4.8 million from
$24.6 million or .29% of average loans in 1993. Net charge-offs during 1992
were $31.5 million or .49% of average loans. At December 31, 1994 total
non-performing loans declined to $52.9 million, and consisted of loans on
non-accrual status of $50.8 million and restructured loans of $2.1 million.
Total non-performing loans at December 31, 1993 and 1992 were $67.4 million and
$72.3 million, respectively. For 1994, total non-performing loans consisted of
construction loans of $1.4 million, 1-4 family residential mortgage loans of
$11.3 million, commercial real estate mortgage loans of $13.9 million,
commercial, financial and agricultural loans of $22.9 million and loans to
individuals of $3.4 million. Accruing loans 90 days or more past due increased
$3.4 million to $16.6 million in 1994 from $13.2 million in 1993. Accruing
loans 90 days or more past due were $11.1 million in 1992. Management considers
portfolio growth and mix, the volume of non-performing loans, potential problem
loans and delinquencies, as well as current economic conditions in determining
the provision for loan losses.
21
<PAGE> 6
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NON-INTEREST INCOME
Total non-interest income increased $10.1 million or 6% to $184.8 million in
1994. Service charges on deposit accounts accounted for the largest portion of
the increase in non-interest income, increasing $9.6 million or 13% to $86.3
million and was due to an increase in the number of deposit accounts and an
increase in certain service charge rates.
Mortgage origination and servicing fees decreased $6.0 million or 18% to
$27.8 million. This decrease in mortgage origination and servicing fees is
largely attributable to the increase in market interest rates, which has
significantly reduced the number of refinancings as well as new loan activity.
During 1994, mortgage origination fees were approximately $11.3 million
compared to $17.7 million in 1993. Most mortgage origination fees are realized
during the period the loans are originated since the majority of such loans are
sold to third-party investors. Loan servicing income increased $0.4 million to
$16.5 million during 1994, as total mortgage loans serviced increased to $4.3
billion on approximately 62,000 loans in 1994 from $3.5 billion on 50,600 loans
in 1993. Mortgage originations are highly sensitive to interest rates and
general economic conditions. Increasing mortgage interest rates as experienced
during 1994 could result in decreased demand, and in turn lower mortgage
origination fee income in future periods.
Trust fees increased $1.7 million to $16.9 million. Securities gains were
$0.3 million in 1994 and $0.6 million in 1993. Other fee income including bank
card fees, investment fees, and other fees increased $5.6 million or 15% to
$43.3 million, and other non-interest income decreased $0.5 million or 5% to
$10.2 million.
For the year ended December 31, 1993, total non-interest income increased
$38.0 million or 28% over the 1992 level of $136.7 million, primarily as a
result of increases in service charge income and increased mortgage origination
income. There were no significant non-recurring non-interest income items
recorded during 1994, 1993 or 1992.
NON-INTEREST INCOME
(TABLE 4)
The following table presents an analysis of non-interest income for 1994, 1993
and 1992 together with the amount and percent change from the prior year for
1994 and 1993:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1994 1993
-------------------------------------------------------------------------------------
(In Millions) 1994 1993 1992 Amount % Amount %
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on
deposit accounts $ 86.3 $ 76.7 $ 63.9 $ 9.6 12.5% $12.8 20.0%
Mortgage origination and
servicing fees 27.8 33.8 22.8 (6.0) (17.8) 11.0 48.2
Trust fees 16.9 15.2 11.9 1.7 10.8 3.3 27.5
Securities gains 0.3 0.6 0.6 (0.3) (45.2) - -
Bank card fees 15.8 12.6 9.7 3.2 26.0 2.9 30.1
Investment fees 10.0 11.3 8.8 (1.3) (11.3) 2.5 28.5
International fees 6.1 4.8 4.5 1.3 25.0 0.3 8.1
Safe deposit fees 3.2 2.9 2.6 0.3 10.7 0.3 12.4
Collection fees 2.7 2.4 2.1 0.3 12.8 0.3 11.5
Cash management fees 2.0 1.7 1.3 0.3 20.3 0.4 26.4
Other fees 3.5 2.0 0.2 1.5 76.0 1.8 849.5
Other 10.2 10.7 8.3 (0.5) (5.0) 2.4 30.5
------------------------------------------------------------------------------------------------------------------------
Totals $184.8 $174.7 $136.7 $10.1 5.8 $38.0 27.8
========================================================================================================================
</TABLE>
22
<PAGE> 7
NON-INTEREST EXPENSE
Total non-interest expense increased $51.0 million or 12% to $486.0 million
from $435.0 million in 1993. The 1994 ratio of non-interest expense to average
total assets of 3.05% compared favorably to the 1993 level of 3.19%. This
result is attributable to Management's commitment to continuously improve the
Company's overall operating efficiency. The operating efficiency ratio improved
to 60.15% in 1994 from 60.28% in 1993.
Salaries and employee benefits accounted for the largest portion of
non-interest expense and the largest portion of the increase during all three
years. During 1994, salaries and employee benefits were $257.6 million, an
increase of $30.6 million or 14% over 1993. This was reflective of the increase
in the number of full-time equivalent employees by 6% to approximately 7,400
employees at December 31, 1994. These additional employees were added in
response to the growth experienced by the Company during the year. Net
occupancy expense increased $3.5 million or 10% to $40.3 million as the number
of branches increased 6% to 420 at December 31, 1994 from 396 at December 31,
1993. Equipment expense increased $2.5 million or 10% to $27.9 million in 1994.
During 1994, FDIC insurance expense increased $2.2 million or 10% to $25.7
million as a result of increased deposits of 11% from 1993 to 1994. All other
non-interest expense items increased $12.2 million or 10% to $134.5 million for
1994, primarily as a result of growth in the general level of business
throughout the Company. From 1992 to 1993, non-interest expense increased $61.4
million or 16% primarily as a result of increased salaries and benefits, and
other operating expenses, reflecting the growth experienced by the Company
during 1993. There were no significant non-recurring non-interest expense items
recorded during any of the three years in the period ended December 31, 1994.
NON-INTEREST EXPENSE
(TABLE 5)
The following table presents an analysis of non-interest expense for 1994, 1993
and 1992 together with the amount and percent change from the prior year for
1994 and 1993:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1994 1993
-------------------------------------------------------------------------------------
(In Millions) 1994 1993 1992 Amount % Amount %
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $257.6 $227.0 $184.9 $30.6 13.5% $42.1 22.8%
Net occupancy expense 40.3 36.8 32.3 3.5 9.5 4.5 14.0
Equipment expense 27.9 25.4 20.7 2.5 10.0 4.7 22.6
Professional services 27.2 25.4 18.9 1.8 7.2 6.5 34.4
FDIC insurance 25.7 23.5 19.6 2.2 9.5 3.9 19.7
Communications 22.1 20.0 18.1 2.1 10.6 1.9 10.7
Business development 16.1 12.8 10.8 3.3 25.8 2.0 18.8
Supplies 10.2 9.9 9.6 0.3 3.4 0.3 3.2
Other insurance 10.2 8.3 6.6 1.9 22.8 1.7 26.4
Data processing 6.9 6.0 7.2 0.9 14.0 (1.2) (16.6)
Other 41.8 39.9 44.9 1.9 4.6 (5.0) (11.5)
---------------------------------------------------------------------------------------------------------------------
Totals $486.0 $435.0 $373.6 $51.0 11.7 $61.4 16.4
=====================================================================================================================
</TABLE>
INCOME TAXES
Income tax expense increased $14.3 million or 19% to $88.3 million for the year
ended December 31, 1994, resulting in an effective tax rate of 34% compared to
33% and 31% in 1993 and 1992, respectively. The statutory federal tax rate was
35% during 1994 and 1993 and 34% during 1992.
A reconciliation of the differences between income tax expense and income
taxes calculated by applying the applicable statutory federal tax rates is
provided in Note K of the Consolidated Financial Statements. The largest
component of this difference during all three years is attributable to
tax-exempt interest income.
23
<PAGE> 8
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
BALANCE SHEET SUMMARY
Total assets at December 31, 1994, were $17.6 billion, representing an increase
of 20% over the 1993 level of $14.7 billion. Of the total asset growth in 1994,
76% was internally generated. Average total assets increased 17% to $15.9
billion during 1994 from $13.7 billion in 1993. As of December 31, 1994, the
five-year compound growth rate in total assets and average total assets of the
Company were both 18%.
During 1994, the Company consummated nine business combinations in which
the Company acquired additional assets of $709.3 million, including loans of
$413.0 million and deposits assumed of $665.2 million. During 1993, the Company
acquired $1,260.6 million in assets, including $699.6 million in loans and
deposits assumed of $1,050.7 million. Note B, "Business Combinations," of the
Consolidated Financial Statements, included elsewhere in this report, provides
additional information regarding business combinations. In the normal course of
business, the Company regularly investigates acquisition and expansion
opportunities, and expects this process will continue.
Average earning assets during 1994 were $14.7 billion, up $2.2 billion or
17% from 1993. Average earning assets were 92.5% of average total assets in
1994 and 92.1% in 1993.
Average interest-bearing liabilities were $12.8 billion and $10.9 billion
for 1994 and 1993, respectively, and accounted for 80.2% of average liabilities
and stockholders' equity in 1994 and 80.0% in 1993.
Table 2, Average Balances and Interest Rates, includes average balances of
assets and liabilities and stockholders' equity, and the rates earned/paid on
major categories of earning assets and interest-bearing liabilities for each of
the three years in the period ended December 31, 1994.
LOANS
Loans comprise the major portion of earning assets of the Company, accounting
for 72.0% and 67.0% of average earning assets in 1994 and 1993, respectively.
At December 31, 1994, loans, net of unearned income, totaled $12,121.9 million,
up 28% from the December 31, 1993 level of $9,448.3 million. Of the total
increase of $2,673.6 million from 1993 to 1994, $413.0 million represent loans
obtained in acquisitions. This represents an internal growth rate for loans of
24% for 1994.
As of December 31, 1994, the Company reclassified approximately $1,574.9
million of loans previously classified as commercial real estate mortgage loans
to the commercial, financial and agricultural loan category. The
reclassification represents loans which are secured by owner occupied business
premises for commercial or service related businesses. Management believes that
classifying such loans as commercial loans is more consistent with their
underwriting criteria, and also more accurately reflects the credit risk
associated with such loans. The amount of such loans reclassified for December
31, 1993 is approximately $1,280.3 million. The changes in loans addressed in
the remainder of this discussion are based on the reclassified amounts applied
retroactively.
Demand for all types of loans was strong during 1994. The largest portion
of the increase in total loans was attributable to an increase in commercial,
financial and agricultural loans, which increased $964.0 million to $5,058.4
million or 41.4% of total loans at December 31, 1994.
Commercial real estate mortgage loans increased $461.9 million or 35% to
$1,776.1 million or 14.6% of total loans at December 31, 1994. Commercial real
estate loans represent the Company's largest credit concentration.
Approximately 21% of the properties securing commercial real estate mortgage
loans are located in Alabama, approximately 23% are located in Florida,
approximately 27% are in Georgia, and the remainder of the properties are
dispersed throughout other states, primarily in the Southeast.
Real estate construction loans increased $226.6 million or 51% to $675.2
million or 5.5% of total loans at December 31, 1994, from $448.6 million or
4.7% of total loans at December 31, 1993.
Loans to individuals at December 31, 1994 were $1,745.9 million, up
$398.2 million from December 31, 1993. Loans to individuals accounted for 14.3%
and 14.2% of total loans at year-end 1994 and 1993, respectively.
Unearned income at December 31, 1994 was $93.7 million, up $15.0 million
from the December 31, 1993 level of $78.7 million.
24
<PAGE> 9
LOAN PORTFOLIO
(TABLE 6)
The following table presents loans by type and percent of total at the end of
each of the last five years.
<TABLE>
<CAPTION>
December 31
----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------------------------------------
(In Millions) Amount % Amount % Amount % Amount % Amount %
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 5,058.4 41.4% $4,094.4 43.0% $3,475.9 45.6% $2,714.3 45.0% $2,441.2 43.5%
Real estate construction 675.2 5.5 448.6 4.7 332.5 4.4 382.2 6.3 518.7 9.2
Commercial real estate
mortgage 1,776.1 14.6 1,314.2 13.8 928.7 12.2 734.6 12.2 558.4 10.0
Residential real estate
mortgage 2,960.0 24.2 2,322.1 24.4 1,736.6 22.8 1,160.2 19.2 1,041.7 18.6
---------------------------------------------------------------------------------------------------------------------
Total real estate loans 5,411.3 44.3 4,084.9 42.9 2,997.8 39.4 2,277.0 37.7 2,118.8 37.8
Loans to individuals 1,745.9 14.3 1,347.7 14.1 1,151.2 15.0 1,047.0 17.3 1,046.4 18.7
---------------------------------------------------------------------------------------------------------------------
12,215.6 100.0 9,527.0 100.0 7,624.9 100.0 6,038.3 100.0 5,606.4 100.0
Unearned income (93.7) (78.7) (78.3) (73.3) (75.0)
---------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 12,121.9 9,448.3 7,546.6 5,965.0 5,531.4
Allowance for loan losses (171.7) (135.2) (103.8) (80.4) (70.8)
---------------------------------------------------------------------------------------------------------------------
Net Loans $11,950.2 $9,313.1 $7,442.8 $5,884.6 $5,460.6
=====================================================================================================================
</TABLE>
As of December 31, 1994, contractual maturities of loans in the indicated
classifications and sensitivity to changes in interest rates on certain of
these loans were as follows:
<TABLE>
<CAPTION>
Maturities Loans Maturing After One Year
----------------------------------------------------------------------------------------------------------------------
Predetermined Adjustable
One Year One to Over Interest Interest
(In Millions) or Less Five Years Five Years Totals Rate Rate
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real estate - construction $ 391.6 $ 144.6 $ 139.1 $ 675.3 $ 142.2 $ 141.5
Real estate - commercial mortgage 644.3 785.7 346.1 1,776.1 592.3 539.6
Real estate - residential mortgage 573.9 617.0 1,769.2 2,960.1 1,051.1 1,335.0
Loans to individuals 592.1 824.8 328.9 1,745.8 901.9 251.8
Lease financing 136.7 128.3 37.5 302.5 117.4 48.4
Commercial, financial,
agricultural and other 1,998.9 1,507.5 1,249.4 4,755.8 1,255.9 1,501.0
Foreign 0.0 0.0 0.0 0.0 0.0 0.0
---------------------------------------------------------------------------------------------------------------------
Total loans $4,337.5 $4,007.9 $3,870.2 12,215.6 $4,060.8 $3,817.3
---------------------------------------------------------------------------------------------------------------------
Unearned income 93.7
---------------------------------------------------------------------------------------------------------------------
Loans net of unearned income $12,121.9
=====================================================================================================================
</TABLE>
The following table presents details of the geographic distribution of
commercial real estate mortgage loans at December 31, 1994:
<TABLE>
<CAPTION>
(In Millions) Ala. Fla. Ga. Tenn. Carolinas Va. Other Total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Secured by income producing properties:
Land $ 14.0 $ 14.9 $ 12.3 $ 3.0 $ 2.9 $ 0.2 $ 4.0 $ 51.3
Retail 84.6 82.3 126.6 29.5 12.1 3.6 80.0 418.7
Office 55.0 42.5 68.4 25.7 9.1 0.0 17.3 218.0
Office-Warehouse 27.7 39.8 25.7 6.6 16.1 0.0 11.4 127.3
Apartments 73.7 128.9 99.6 6.0 30.4 22.7 96.7 458.0
Condominiums/Townhouses 1.7 0.6 3.6 0.2 0.3 0.0 0.3 6.7
Motels/Hotels 25.4 7.1 3.1 0.0 1.7 1.6 10.0 48.9
Industrial 7.5 11.3 28.8 2.0 2.5 0.0 3.7 55.8
Other 82.9 72.8 118.5 16.9 11.1 0.2 89.0 391.4
---------------------------------------------------------------------------------------------------------------------
Total commercial real estate mortgages $372.5 $400.2 $486.6 $89.9 $86.2 $28.3 $312.4 $1,776.1
=====================================================================================================================
</TABLE>
25
<PAGE> 10
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NON-PERFORMING ASSETS
Non-performing assets at December 31, 1994 were $102.7 million or 0.84% of net
loans, plus other real estate owned ("OREO"). This represents a decrease of
$10.4 million from the December 31, 1993 level of $113.1 million or 1.19% of
net loans, plus OREO. At December 31, 1994, total non-performing assets
included $50.8 million in loans on non-accrual status, $2.1 million in
restructured loans, and $49.8 million in OREO. During 1994, the total OREO
obtained through acquisitions was $7.6 million.
Total non-performing loans, consisting of loans on non-accrual status and
restructured loans, included real estate construction loans of $1.4 million,
commercial real estate mortgage loans of $13.9 million, residential real estate
mortgage loans of $11.3 million, commercial, financial and agricultural loans
of $22.9 million, and loans to individuals of $3.4 million. Combined
non-performing real estate loans and properties taken in foreclosure of real
estate loans totaled $76.4 million at December 31, 1994. This represented 74% of
total non-performing assets as compared to $76.0 million or 67% at December 31,
1993.
In addition to loans on non-performing status at December 31, 1994, the
Company had loans of approximately $18.7 million for which Management has
serious doubts as to the ability of the borrowers to comply with the present
repayment terms, which may result in the loan 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. At December 31, 1993, potential problem loans totaled $22.1
million.
Loans 90 days past due and accruing were $16.6 million at December 31,
1994, compared to $13.2 million at December 31, 1993.
NON-PERFORMING ASSETS
(TABLE 7)
The following table summarizes the Company's non-performing assets and accruing
loans 90 days or more past due as of December 31 for the last five years.
<TABLE>
<CAPTION>
(In Millions) 1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual loans $ 50.8 $ 58.6 $ 71.6 $ 70.6 $ 42.0
Restructured loans 2.1 8.8 0.7 3.7 8.7
----------------------------------------------------------------------------------------------------------------------
Total non-performing loans 52.9 67.4 72.3 74.3 50.7
Other real estate owned 49.8 45.7 56.5 68.3 60.4
----------------------------------------------------------------------------------------------------------------------
Total non-performing assets 102.7 113.1 128.8 142.6 111.1
Accruing loans 90 days or more past due 16.6 13.2 11.1 12.0 13.9
----------------------------------------------------------------------------------------------------------------------
Total non-performing assets and accruing
loans 90 days or more past due $119.3 $126.3 $139.9 $154.6 $125.0
======================================================================================================================
Provision for loan losses $ 45.0 $ 45.0 $ 43.3 $ 38.0 $ 44.6
Net charge-offs 19.8 24.6 31.5 31.7 37.0
Ratios:
For the Period Ended:
Net charge-offs as a % of average net loans 0.19% 0.29% 0.49% 0.55% 0.74%
Provision for loan losses as a % of net
charge-offs 227.46 182.95 137.31 120.04 120.65
Period End:
Allowance as a % of net loans 1.42 1.43 1.38 1.35 1.28
Allowance as a % of non-performing loans 324.55 200.70 143.35 108.23 139.54
Allowance as a % of non-performing assets 167.17 119.59 80.54 56.39 63.73
Allowance as a % of non-performing assets
and accruing loans 90 days or more past due 143.89 107.06 74.14 52.02 56.62
Non-performing loans as a % of net loans 0.44 0.71 0.96 1.25 0.92
Non-performing assets as a % of loans
net of unearned income plus OREO 0.84 1.19 1.69 2.36 1.99
Non-performing assets and accruing loans
90 days or more past due as a % of loans
net of unearned income plus OREO 0.98 1.33 1.84 2.56 2.24
</TABLE>
As of December 31, 1994, the Company had loans of approximately $18.7 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.
26
<PAGE> 11
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses increased $36.5 million to $171.7 million at
December 31, 1994. As a percentage of net loans, the Company maintained the
allowance for loan losses at 1.42%; virtually consistent with the previous year
allowance of $135.2 million or 1.43% of net loans. Maintenance of the allowance
at this level represented an increase in the allowance for loan loss coverage
of non-performing loans from 201% to 325% over that period. The increase in
coverage resulted from a decrease in non-performing loans and maintenance of
the provision for loan losses at a level comparable to the 1993 level. This is
considered appropriate by Management due to the strong loan growth experienced
during 1994. During 1994, the provision for loan losses added $45.0 million to
the allowance for loan losses and net charge-offs reduced the allowance for
loan losses by $19.8 million. Existing allowances for loan losses of acquired
institutions totaled $11.3 million and also augmented the total allowance. The
allowance for loan losses is established to cover losses inherent in the
portfolio. As asset quality and economic conditions change, the allowance for
loan losses will be increased or decreased accordingly.
Net charge-offs during 1994 totaled $19.8 million or .19% of average net
loans, a decrease of $4.8 million from $24.6 million or .29% of net loans
during 1993. During 1994, total loans charged off were $29.8 million and total
recoveries of previously charged-off loans were $10.0 million. Net charge-offs
by major category during 1994 were commercial, financial and agricultural loans
of $7.2 million, real estate construction loans of $.5 million, commercial real
estate mortgage loans of $1.8 million, residential real estate mortgage loans
of $1.1 million, and loans to individuals of $9.2 million. In maintaining the
allowance level, Management has taken into consideration present economic
trends and conditions, portfolio growth, the level of risk in the portfolio,
the level of potential problem loans, and delinquencies. While the allowance is
established to cover losses inherent in the portfolio as a whole, the Company
allocates its allowance to the individual loan classifications to assist in the
analysis of the allowance. This allocation is presented in Table 8. Management
considers the allowance for loan losses to be adequate.
27
<PAGE> 12
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
ALLOWANCE FOR LOAN LOSSES
(TABLE 8)
The following table summarizes information concerning the allowance for loan
losses:
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------
(In Millions) 1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans outstanding at year end, net of unearned income $12,121.9 $9,448.3 $7,546.6 $5,965.0 $5,531.4
===================================================================================================================
Average loans outstanding, net of unearned income $10,606.6 $8,422.0 $6,466.7 $5,718.0 $5,003.6
===================================================================================================================
(In Thousands)
Balance beginning of year $ 135,233 $103,770 $ 80,393 $ 70,812 $ 59,679
Loans charged-off:
Commercial, financial and agricultural 9,773 14,830 15,902 16,856 23,591
Real estate construction 582 657 603 1,201 499
Commercial real estate mortgage 2,256 884 1,212 1,581 677
Residential real estate mortgage 1,581 2,545 1,402 902 1,227
Loans to individuals 15,594 17,704 20,943 21,046 17,973
-------------------------------------------------------------------------------------------------------------------
Total loans charged-off 29,786 36,620 40,062 41,586 43,967
-------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial, financial and agricultural 2,617 4,317 3,025 5,445 3,281
Real estate construction 70 260 22 46 48
Commercial real estate mortgage 517 278 92 86 21
Residential real estate mortgage 446 367 235 90 155
Loans to individuals 6,360 6,783 5,150 4,228 3,467
-------------------------------------------------------------------------------------------------------------------
Total recoveries 10,010 12,005 8,524 9,895 6,972
-------------------------------------------------------------------------------------------------------------------
Net loans charged-off 19,776 24,615 31,538 31,691 36,995
Additions to allowance charged to expense 44,984 45,032 43,305 38,042 44,635
Subsidiaries' allowance at date of purchase 11,251 11,046 11,610 3,230 3,493
-------------------------------------------------------------------------------------------------------------------
Allowance for loan losses, end of year:
Commercial, financial and agricultural 58,186 56,515 32,281 25,045 31,362
Real estate construction 11,405 4,786 12,062 10,358 8,990
Commercial real estate mortgage 44,065 24,551 7,664 4,549 4,580
Residential real estate mortgage 20,010 14,032 12,972 8,858 8,297
Loans to individuals 26,240 15,565 29,071 24,914 13,127
Unallocated portion of reserve 11,786 19,784 9,720 6,669 4,456
-------------------------------------------------------------------------------------------------------------------
Balance end of year $ 171,692 $135,233 $103,770 $ 80,393 $ 70,812
===================================================================================================================
Ratios:
End-of-year allowance to net loans outstanding 1.42% 1.43% 1.38% 1.35% 1.28%
Net loans charged-off to net average loans 0.19 0.29 0.49 0.55 0.74
Provision for loan losses to net charge-offs 227.46 182.95 137.31 120.04 120.65
Provision for loan losses to net average loans 0.42 0.53 0.67 0.67 0.89
End-of-year allowance to net average loans 1.62 1.61 1.60 1.41 1.42
</TABLE>
See Note A to Consolidated Financial Statements for discussion of the
determination of the provision for loan losses.
28
<PAGE> 13
INVESTMENT SECURITIES AND
SECURITIES AVAILABLE FOR SALE
At December 31, 1994, total securities were $3,952.5 million. Investment
securities amounted to $1,671.7 million and securities classified as available
for sale amounted to $2,280.8 million.
Investment securities increased 31% from the year-end 1993 level to
$1,671.7 million, and included U.S. Government agency securities of $978.8
million, Collateralized mortgage obligations (CMOs) of $117.8 million, other
mortgage backed securities of $189.2 million, State, County and Municipal
securities of $307.0 million and other securities of $78.9 million.
Securities available for sale included U.S. Treasury securities of $632.3
million, U.S. Government agency securities of $296.0 million, CMOs of $1,013.3
million, other mortgage backed securities of $224.0 million and other
securities of $115.2 million.
At December 31, 1994, the Company's investment portfolio included $1,131.1
million in CMOs. Of this amount, approximately $907.1 million had floating
interest rates, and $224.0 million had fixed interest rates. CMOs present some
degree of risk that the mortgages collateralizing the securities can prepay,
thereby affecting the yield of the securities and their carrying amounts. Such
an occurrence is most likely in periods of low interest rates when many
borrowers refinance their mortgages, creating prepayments on their existing
mortgages.
Additionally, the Company's investment portfolio included approximately
$940.5 million in Agency Securities with forward coupon rate increases,
commonly known as "step-ups." $865.5 million of the step-ups held by the
Company have maturities through 1999, and the remaining $75.0 million matures
in 2004. The Company has invested in step-ups utilizing a strategy to avoid
purchasing fixed rate securities that the Company believes would have provided
lower than desirable yields in a rising rate environment. Step-ups are callable
by the issuer at predetermined call dates, generally on each interest payment
date. Step-ups present some degree of risk that the security will be called in
a declining rate environment, resulting in the Company reinvesting the proceeds
at a lower yield than was available at a fixed longer-term rate when the
security was originally purchased, and the risk that yield increases in a
rising rate environment will be less than the yield that would currently be
available in the marketplace at the time of scheduled rate increases.
Also included in U.S. Government Agency Securities at December 31, 1994
were $132.5 million in structured notes. $130.0 million of these structured
notes mature through 1997. The remaining $2.5 million have maturities through
2000. All structured notes have floating interest rates. Of the total $132.5
million, $127.5 million are dual index bonds which present the risk of
narrowing spreads between the floating indices, resulting in a lower yield on
the bonds. The remaining $5.0 million is an "Inverse Floater," which pays
interest at a rate determined by a formula of 12.9% less the six-month LIBOR
rate. This security matures in 1997. Inverse floaters present the risk of
decreasing yields in rising rate environments.
At December 31, 1994, the book value of investment securities exceeded the
fair value by $53.3 million, compared to an unrealized gain of $49.2 million at
December 31, 1993. For securities available for sale, the amortized cost
exceeded the fair value by $74.4 million, resulting in an after-tax adjustment
to stockholders' equity of $46.3 million. This unrealized loss, which
Management believes is temporary, compares to a net of tax unrealized gain of
$10.2 million at December 31, 1993. The decrease in fair values of securities
is attributable to rising interest rates and general uncertainty in the bond
market over future interest rate trends.
At December 31, 1994, the gross unrealized gains for the entire securities
portfolio were $15.4 million and gross unrealized losses were $143.1 million.
During 1994, proceeds from sales of securities available for sale were 9.6% of
the average securities available for sale portfolio and resulted in gross gains
of $0.5 million and gross losses of $0.2 million. The gross unrealized gains
and losses in the securities portfolio are not expected to have a material
impact on future income, liquidity or capital resource trends.
SHORT-TERM INVESTMENTS
At December 31, 1994, total short-term investments were $201.0 million, a
decrease of $107.1 million from the $308.1 million level at year-end 1993. At
year-end 1994, short-term investments included $18.3 million in federal funds
sold, $4.3 million in securities purchased under agreements to resell, $13.9
million in interest-bearing deposits with other banks, and assets held for sale
of $164.5 million. Assets held for sale consisted of $147.7 million in mortgage
loans in the process of being securitized and sold to third-party investors,
and the remainder are investment securities held for trading purposes which
primarily represented inventory at the Company's brokerage subsidiary. Mortgage
loans held for sale are carried at the lower of cost or fair value. Trading
account securities are carried at fair value.
The Company's Asset/Liability 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.
29
<PAGE> 14
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
INVESTMENT SECURITIES AND SECURITIES AVAILABLE FOR SALE
(TABLE 9)
The following table provides an analysis of amortized cost and fair value of
investment securities and securities available for sale as well as their
maturities and year-end yields at December 31, 1994.
<TABLE>
<CAPTION>
Investment Securities Securities Available for Sale
--------------------------------------------------------------------
December 31,1994 Amortized Fair Year-end Amortized Fair Year-end
(Dollars in Millions) Cost Value Yield Cost Value Yield
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ - $ - - $ 566.7 $ 561.5 4.89%
One to five years - - - 71.7 69.8 6.10
Five to 10 years - - - 0.0 0.0 0.00
More than 10 years - - - 1.1 1.0 7.27
----------------------------------------------------------------------------------------------------------------------
Total - - - 639.5 632.3 5.03
----------------------------------------------------------------------------------------------------------------------
U.S. Government agencies:
Within one year 15.7 15.6 5.51% 76.2 76.9 7.56
One to five years 842.6 787.2 5.53 226.3 215.4 5.45
Five to 10 years 97.5 93.4 6.48 3.6 3.2 6.33
More than 10 years 23.0 21.0 4.69 0.5 0.5 6.00
----------------------------------------------------------------------------------------------------------------------
Total 978.8 917.2 5.60 306.6 296.0 6.01
----------------------------------------------------------------------------------------------------------------------
Collateralized mortgage obligations:
Within one year 3.0 3.0 7.93 7.6 7.8 7.21
One to five years 54.0 53.4 5.93 78.4 77.5 6.51
Five to 10 years 22.2 22.1 6.77 232.1 226.9 6.43
More than 10 years 38.6 38.8 8.45 731.4 701.1 5.86
----------------------------------------------------------------------------------------------------------------------
Total 117.8 117.3 6.96 1,049.5 1,013.3 6.07
----------------------------------------------------------------------------------------------------------------------
Other mortgage-backed securities:
Within one year 2.6 2.6 7.67 33.0 32.2 4.84
One to five years 85.4 83.5 8.03 147.9 132.0 6.31
Five to 10 years 47.9 48.3 8.98 21.2 20.8 8.23
More than 10 years 53.3 54.4 8.81 41.3 39.0 7.02
----------------------------------------------------------------------------------------------------------------------
Total 189.2 188.8 8.49 243.4 224.0 6.40
----------------------------------------------------------------------------------------------------------------------
States and political subdivisions:
Within one year 14.2 14.3 10.34 - - -
One to five years 88.8 91.1 11.25 - - -
Five to 10 years 75.9 78.0 10.31 - - -
More than 10 years 128.1 131.1 10.93 - - -
----------------------------------------------------------------------------------------------------------------------
Total 307.0 314.5 10.84 - - -
----------------------------------------------------------------------------------------------------------------------
Other securities:
Within one year 37.2 37.5 8.47 32.9 35.9 6.68
One to five years 16.5 16.6 5.99 39.9 43.4 6.03
Five to 10 years 2.3 2.3 6.42 10.0 10.8 6.00
More than 10 years 22.9 24.2 8.55 33.4 25.1 6.90
----------------------------------------------------------------------------------------------------------------------
Total 78.9 80.6 7.95 116.2 115.2 6.18
----------------------------------------------------------------------------------------------------------------------
Total:
Within one year 72.7 73.0 8.15 716.4 714.3 5.29
One to five years 1,087.3 1,031.8 6.22 564.2 538.1 5.95
Five to 10 years 245.8 244.1 8.18 266.9 261.7 6.56
More than 10 years 265.9 269.5 9.40 807.7 766.7 5.93
----------------------------------------------------------------------------------------------------------------------
Total investment securities and
securities available for sale $1,671.7 $1,618.4 7.10% $2,355.2 $2,280.8 5.81%
======================================================================================================================
</TABLE>
30
<PAGE> 15
FUNDING
The Company's funding sources can be divided into three broad categories:
deposits, short-term borrowings, and long-term borrowings.
Total borrowed funds at December 31, 1994 were $16.3 billion, up 21% from
the 1993 level of $13.4 billion.
DEPOSITS
Deposits are the Company's primary source of funding. At December 31, 1994,
total deposits were $12,801.2 million, up $1,285.9 million or 11% from the 1993
level of $11,515.3 million. During 1994, the Company acquired deposits of
financial institutions totaling approximately $665.2 million.
The largest portion of the increase in total deposits was an increase in
consumer time and savings deposits of $790.5 million or 10% to $9,065.2
million. Other time deposits, consisting of time deposits of $100,000 and over,
increased $238.5 million or 16% to $1,696.3 million. Non-interest-bearing
demand deposits increased $256.9 million or 14% to $2,039.7 million.
Non-interest-bearing demand deposits accounted for 15.9% and 15.5% of total
deposits at December 31, 1994 and 1993, respectively.
Core deposits are defined as demand deposits and time deposits under
$100,000. At December 31, 1994 core deposits totaled $11,104.9 million or 86.7%
of total deposits, compared to $10,057.5 million or 87.3% of total deposits at
December 31, 1993.
DEPOSITS
(TABLE 10)
The average daily balance of deposits and rates paid on such deposits are
summarized for the periods indicated in the following table.
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------------------------------------
1994 1993 1992
----------------------------------------------------------------------------------------------------------------------
(In Millions) Amount Rate Amount Rate Amount Rate
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits:
Non-interest-bearing $ 1,849.2 $ 1,606.0 $1,293.1
Interest-bearing 1,467.5 2.12% 1,299.3 2.14% 1,013.3 2.83%
Savings deposits 779.8 2.42 683.2 2.52 531.5 3.10
Time deposits 7,805.5 4.20 7,184.1 4.05 6,158.2 4.75
----------------------------------------------------------------------------------------------------------------------
Totals $11,902.0 $10,772.6 $8,996.1
======================================================================================================================
</TABLE>
Maturities of time certificates of deposit and other time deposits of $100,000
or more outstanding at December 31, 1994, are summarized as follows:
<TABLE>
<CAPTION>
Time Other
Certificates Time
(In Millions) of Deposit Deposits Total
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Within three months $ 692.0 $ 96.4 $ 788.4
After three through six months 168.3 8.1 176.4
After six through 12 months 263.1 53.5 316.6
After 12 months 411.7 3.2 414.9
----------------------------------------------------------------------------------------------------------------------
Totals $1,535.1 $161.2 $1,696.3
======================================================================================================================
</TABLE>
31
<PAGE> 16
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
SHORT-TERM BORROWINGS
Short-term borrowings consist of federal funds purchased, securities sold under
agreements to repurchase, and miscellaneous other borrowed funds.
Total short-term borrowings increased $1,371.5 million, or 94%, to
$2,828.0 million at December 31, 1994 from $1,456.4 million at December 31,
1993. At December 31, 1994, total short-term borrowings included federal funds
purchased of $984.3 million, securities sold under agreements to repurchase of
$901.5 million, and other borrowed funds of $942.2 million, including $500.0
million in short-term senior notes payable, $288.5 million in short-term
Federal Home Loan Bank advances, the current portion of long-term debt of $20.0
million, and other short-term borrowings of $133.7 million.
At year-end 1994, total short-term borrowings were 17.4% of total funding
compared to 10.8% at December 31, 1993.
SHORT-TERM BORROWINGS
(TABLE 11)
The following table presents the federal funds purchased, securities sold under
agreements to repurchase, and other borrowed funds; the weighted-average
interest rate at December 31, 1994, 1993 and 1992; the average outstanding
borrowings; the daily weighted-average interest rate for each year; and the
maximum outstanding balance of federal funds purchased, and securities sold
under agreements to repurchase, and other borrowed funds at any month end
during each year. Such short-term borrowings are issued on normal banking
terms.
<TABLE>
<CAPTION>
Federal Funds
Purchased and Securities Other
Sold Under Agreements Short-term
(Dollars In Millions) to Repurchase Borrowings
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Year Ended December 31:
1994 $1,885.8 $942.2
1993 1,207.0 249.4
1992 1,181.7 149.4
----------------------------------------------------------------------------------------------------------------------
Weighted-average interest rate at year end:
1994 5.49% 5.96%
1993 2.99 3.58
1992 3.04 1.77
----------------------------------------------------------------------------------------------------------------------
Maximum amount outstanding at any month end:
1994 $2,057.6 $942.2
1993 1,487.4 249.4
1992 1,284.9 149.4
----------------------------------------------------------------------------------------------------------------------
Average amount outstanding during the year:
1994 $1,661.3 $598.6
1993 1,227.2 112.8
1992 838.5 87.0
----------------------------------------------------------------------------------------------------------------------
Weighted-average interest rate during the year:
1994 4.26% 4.59%
1993 3.03 3.41
1992 3.48 2.55
----------------------------------------------------------------------------------------------------------------------
</TABLE>
LONG-TERM DEBT
Long-term debt at December 31, 1994 totaled $640.7 million compared to $470.0
million at December 31, 1993. During 1994, the Company issued $100 million in 7
5/8% Subordinated Notes due 2004 in a public offering. The Company also
obtained $165.0 million in long-term debt consisting primarily of Federal Home
Loan Bank advances. Payments of long-term debt during 1994 totaled $74.3
million, and $20.0 million in long-term debt was reclassified to other
short-term borrowings as it has become due in less than one year. Note H -
Long-Term Debt, of the Consolidated Financial Statements, included elsewhere in
this report, provides details of long-term debt issues, scheduled maturities,
and other terms of the debt agreements.
At December 31, 1994, the Company's long-term debt to equity ratio was
56.4% compared to 44.7% at December 31, 1993.
Scheduled maturities of long-term debt are not expected to have a
significant impact on the Company's liquidity. There are no plans at present to
repay any significant amounts of outstanding indebtedness prior to the
scheduled maturity.
LIQUIDITY
Liquidity refers to the ability of the Company to meet its cash-flow
requirements in the normal course of business. The Company may achieve its
desired liquidity objectives from management of assets and liabilities and
through funds provided by operations. Funds invested in marketable instruments,
the continuous maturity of other earning assets, the possible sale of
securities available for sale and the ability to securitize certain types of
loans, provide sources of liquidity from the asset perspective. The liability
base provides sources of liquidity through deposits, the maturity structure of
liabilities, and the accessibility to market sources of funds.
32
<PAGE> 17
Net cash provided through operating activities during 1994 of $332.8
million included net income of $173.0 million, adjusted for the provision for
loan losses of $45.0 million and other non-cash charges to income, primarily
depreciation of fixed assets and amortization of intangible assets. The
Consolidated Statements of Cash Flows included elsewhere in this report
provides an analysis of cash from operating, investing, and financing
activities for each of the three years in the period ended December 31, 1994.
Table 6, Loan Portfolio, included elsewhere in this report, shows
scheduled loan maturities as of December 31, 1994. Approximately 36% of total
loans mature within one year. Of the $7,878.1 million maturing after one year,
$3,817.3 million or 48% had adjustable interest rates. Repayments of loans and
scheduled loan maturities represent a substantial source of liquidity.
The Company has designated $2,280.8 million in securities as available for
sale. Though management has no present plans to dispose of the securities
available for sale, such securities do represent saleable assets to meet
liquidity needs. Table 9, Investment Securities and Securities Available for
Sale, included elsewhere in this report, shows the maturity distribution of the
Company's securities portfolio by major category. At December 31, 1994,
securities classified as investment securities included $72.7 million or 4% of
the portfolio which had maturities of one year or less, and $1,087.3 million or
65% that mature within one to five years. Note D of the Consolidated Financial
statements includes an analysis of the amortized cost and fair values of the
securities portfolio by contractual maturity, and an analysis of gross
unrealized gains and gross unrealized losses in the securities portfolio at
December 31, 1994 by major category. For investment securities, gross
unrealized gains at December 31, 1994 were $14.1 million and gross unrealized
losses were $67.4 million.
Core deposits, defined as total deposits less time deposits of $100,000
and over, constitute the Company's primary source of funding. Significant
growth in core deposits, $1.0 billion or 10% in 1994, provides a great deal of
liquidity. Table 10, Deposits, included elsewhere in the report, details
average balances of deposits by type, the weighted average rate paid by type,
and a maturity distribution of deposits of $100,000 or more.
Short-term funds secured from external sources include federal funds
purchased, securities sold under agreements to repurchase, and other borrowed
funds. Average short-term borrowings during 1994 were $2,259.9 million, and
average short-term investments were $222.5 million, resulting in an average
short-term borrowing position of $2,037.4 million in 1994.
The primary source of funds available to SouthTrust Corporation, the
Parent Company, is payment of dividends from its subsidiaries. Banking laws and
other regulations limit the amount of dividends a bank subsidiary may pay
without prior regulatory approval. At December 31, 1994, $284.4 million of the
net assets of subsidiaries was available for payment as dividends without prior
regulatory approval. Substantially all other net assets were restricted as to
payments to the Parent Company.
No trends in the sources or uses of cash by the Company are expected to
have an impact on the Company's liquidity position. The Company believes that
the level of liquidity is sufficient to meet current and future liquidity
requirements.
INTEREST RATE RISK MANAGEMENT
SouthTrust's asset/liability strategies are designed to optimize net interest
income while minimizing fluctuations caused by changes in the interest rate
environment. To achieve this, the Company uses various modeling techniques to
simulate interest rate stress on interest earning assets and interest bearing
liabilities that will reprice during the next year. Important elements of these
modeling techniques include the mix of floating versus fixed rate assets and
liabilities, and the scheduled, as well as expected, repricing and maturing
volumes and rates of the existing balance sheet. Table 12 presents the balance
sheet structure at December 31, 1994.
In conjunction with the Company's asset/liability management strategies,
the Company utilizes interest rate swap agreements ("Swaps") to hedge certain
longer-term liabilities, converting the effective rate paid on the hedged
liabilities to a floating rate from a fixed rate. All Swaps employed by the
Company represent end-user activities designed as hedges and, accordingly,
fluctuations in the fair value of such contracts are not included in the
results of operations.
During 1994, the average notional amount of Swaps outstanding was $680
million, the average rate received under the contracts was 6.18% and the
average rate paid was 4.80% resulting in a reduction in interest expense of
$0.9 million. During 1993, the average notional amount outstanding was $413
million and the average rates received and paid were 6.31% and 3.38%,
respectively, and reduced interest expense by $1.2 million.
At December 31, 1994, the contractual maturities of Swaps were as follows:
<TABLE>
<CAPTION>
Notional
In Millions Amount Expiration Liabilities Hedged
--------------------------------------------------------------
<S> <C> <C>
$305 1995 Deposit liabilities
10 1995 Long-term debt
200 1996 Deposit liabilities
100 2003 Long-term debt
200 2004 Long-term debt
--------------------------------------------------------------
$815
</TABLE>
The Company has also terminated one Swap agreement prior to the
contractual maturity. Since the Swap was designed as a hedge, the gain realized
on the termination of this contract has been deferred and is amortized to
reduce interest expense over the remaining life of the hedged liabilities. At
December 31, 1994 and 1993, the remaining deferred gain related to such
termination was $3.8 million and $5.4 million, respectively. The effect of
amortization of the deferred gain reduces interest expense by approximately
$1.6 million through 1997.
From time to time, the Company utilizes interest rate options to hedge
mortgage loans held for sale. During 1994, the effect on net income from use of
options was insignificant. At December 31, 1994, there were no option contracts
outstanding.
33
<PAGE> 18
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
INTEREST RATE SENSITIVITY ANALYSIS
(TABLE 12)
<TABLE>
<CAPTION>
December 31, 1994 0-30 31-90 91-180 181-365 Over 1 Noninterest
(In Millions) Days Days Days Days Year Sensitive Total
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Variable-rate commercial and
real estate loans $4,768.8 $ 372.3 $ 262.5 $ 483.2 $ 461.2 $ 0.0 $ 6,348.0
Fixed-rate commercial and
real estate loans 278.0 209.0 319.0 395.0 2,853.0 0.0 4,054.0
Loans to individuals 134.4 323.8 228.2 434.1 599.4 0.0 1,719.9
----------------------------------------------------------------------------------------------------------------------
Total loans 5,181.2 905.1 809.7 1,312.3 3,913.6 0.0 12,121.9
Securities 1,287.8 330.0 723.9 871.9 738.9 0.0 3,952.5
Other earning assets 129.4 71.7 0.0 0.0 0.0 0.0 201.1
----------------------------------------------------------------------------------------------------------------------
Total earning assets 6,598.4 1,306.8 1,533.6 2,184.2 4,652.5 0.0 16,275.5
Other assets 0.0 0.0 0.0 0.0 0.0 1,528.3 1,528.3
Less: Allowance for loan losses 0.0 0.0 0.0 0.0 0.0 (171.7) (171.7)
----------------------------------------------------------------------------------------------------------------------
Total Assets $6,598.4 $1,306.8 $1,533.6 $2,184.2 $4,652.5 $1,356.6 $17,632.1
======================================================================================================================
Non-interest-bearing demand deposits $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $2,039.7 $ 2,039.7
Interest-bearing demand deposits 1,551.1 0.0 0.0 0.0 0.0 0.0 1,551.1
Money market deposits 1,870.2 0.0 0.0 0.0 0.0 0.0 1,870.2
Savings deposits 780.1 0.0 0.0 0.0 0.0 0.0 780.1
Time deposits under $100,000 411.1 1,484.3 629.1 758.1 1,580.3 0.0 4,862.9
Other time deposits 647.1 414.1 145.0 187.0 304.1 0.0 1,697.3
----------------------------------------------------------------------------------------------------------------------
Total deposits 5,259.6 1,898.4 774.1 945.1 1,884.4 2,039.7 12,801.3
Short-term borrowings 2,728.0 100.0 0.0 0.0 0.0 0.0 2,828.0
Long-term debt 137.6 100.0 0.0 0.0 403.1 0.0 640.7
Other liabilities 0.0 0.0 0.0 0.0 0.0 226.8 226.8
Stockholders' equity 0.0 0.0 0.0 0.0 0.0 1,135.3 1,135.3
----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders'
equity $8,125.2 $2,098.4 $ 774.1 $ 945.1 $2,287.5 $3,401.8 $17,632.1
======================================================================================================================
Interest rate gap ($ 1,527) ($ 792) $ 760 $ 1,239 $ 2,365 ($ 2,045)
Effect of interest rate swaps (310) (230) (30) 60 510
----------------------------------------------------------------------------------------------------------------------
Cumulative interest rate gap ($ 1,837) ($ 2,859) ($ 2,129) ($ 830) $ 2,045
======================================================================================================================
Cumulative gap as a percentage of
earning assets - December 31, 1994 (11.29%) (17.56%) (13.08%) (5.10%) 12.57%
- December 31, 1993 1.98% (2.32%) (2.43%) (2.86%) 0.37%
======================================================================================================================
</TABLE>
Significant assumptions:
(1)Allocations to specific interest sensitivity periods are based on the
earlier of the repricing or maturity dates. These allocations have not been
adjusted for any estimated early principal payoffs with the exception of
trading and held for sale assets. Since trading and held for sale assets are
expected to be sold in the short-term, they have been classified in "0-30" or
"31-90" based on anticipated future sales.
(2)Since interest-bearing demand, money market and savings deposit accounts can
theoretically be repriced at any time, all such balances have been included
in 0-30 days. If these amounts were spread based upon expected repricing
characteristics, the cumulative gap would have been significantly reduced.
(3)Non-accrual loans are included in their respective loan categories and are
classified in the "Over one year" repricing period.
34
<PAGE> 19
CAPITAL
The assessment of capital adequacy is dependent on several factors including
asset quality, earnings trends, liquidity, and economic conditions. The Company
continually monitors current and projected capital adequacy positions of both
the Company and its subsidiaries. Maintaining adequate capital levels is
integral to provide stability to the Company, to provide resources to achieve
the Company's growth objectives, and to provide a return to the stockholders in
the form of dividends.
Stockholders' equity at December 31, 1994 was $1,135.3 million or 6.44% of
year-end assets compared to $1,051.8 million or 7.15% in 1993. During 1994, net
income added $173.0 million to stockholders' equity and dividends declared
totaled $54.4 million, resulting in an internal common equity generation rate
of 5.6% in 1994 compared to 11.0% in 1993.
During 1994, sales of common stock through the dividend reinvestment plan,
the employee stock purchase plan, the stock option plans, and the conversion of
debentures totaling 583,588 shares added $6.3 million to equity. During 1994,
1,585,205 shares of common stock were issued in connection with acquisitions of
financial institutions, adding $17.6 million to equity. The net unrealized loss
after tax on securities available for sale was $46.3 million at December 31,
1994, a decrease of $56.5 million from the unrealized gain after tax amount of
$10.2 million at December 31, 1993. Treasury stock purchases for 143,916 shares
reduced equity by $2.8 million.
The annual dividend rate during 1994 was $0.68 per share, representing a
13% increase over 1993. For 1995 the indicated annual dividend rate is $0.80
per share, marking the twenty-fifth consecutive year in which SouthTrust has
increased its dividend. The dividend pay-out ratio during 1994 was 31.5%. Table
1, Selected Financial Information, includes a six-year history of the dividend
pay-out ratio.
The Federal Reserve Board, which is the regulatory agency governing bank
holding companies, has guidelines for determining ratios to aid in the analysis
and determination of capital levels required to support a company's operations.
Likewise, the Office of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation prescribe various minimum levels of capital which must be
held by the Company's subsidiary banks. The Federal Reserve Board and each
bank's primary regulator have adopted risk-based capital guidelines that
incorporate factors weighing the relative credit risk of assets and items with
off-balance sheet exposure. The guidelines also define regulatory capital,
placing strong emphasis on the equity components of regulatory capital.
The rules require a risk-based capital ratio of 8%, at least one-half of
which must be made up of Core or Tier I capital elements. Tier I capital
generally consists of common stock, capital surplus and retained earnings less
treasury stock and goodwill. Total risk-based capital includes Tier I capital,
and supplemental capital elements which consist of certain subordinated debt
and the allowance for loan losses subject to certain limitations. The
guidelines also impose a leverage requirement, defined as the ratio of Tier I
capital to average assets subject to certain adjustments. The leverage ratio
generally must exceed 4% and is driven by evaluation and discretion of the
regulators. At December 31, 1994, SouthTrust had a total risk-based capital
ratio of 11.71% consisting of Tier I capital elements of 7.68%, and
supplemental capital elements of 4.03%, and a leverage ratio of 6.10%. The
Federal Deposit Insurance Corporation Improvement Act of 1993 provided further
guidance as to capital levels to be maintained by insured depository
institutions and corresponding supervisory treatments. Under these guidelines
the capital level at all of SouthTrust's bank subsidiaries is considered "well
capitalized," the highest of the five supervisory groupings.
Table 13, Capital Position, presents relevant capital ratios for 1994 and
1993.
CAPITAL POSITION
(TABLE 13)
<TABLE>
<CAPTION>
December 31
------------------------
1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Tier I capital ratio 7.68% 8.55%
Supplemental capital elements 4.03 3.84
--------------------------------------------------------------------------
Total risk-based capital ratio 11.71 12.39
==========================================================================
Leverage ratio 6.10% 6.51%
==========================================================================
</TABLE>
35
<PAGE> 20
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
QUARTERLY INCOME INFORMATION
(TABLE 14)
The Company's unaudited consolidated operating results for each quarter of 1994
and 1993 are summarized in the table below.
<TABLE>
<CAPTION>
(In Thousands, except per share amounts) 1994 1993
--------------------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
--------------------------------------------------------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $316,504 $292,228 $261,673 $238,207 $236,101 $235,209 $231,909 $224,332
Interest expense 155,210 133,229 112,747 99,881 100,306 100,099 101,018 96,320
Net interest income 161,294 158,999 148,926 138,326 135,795 135,110 130,891 128,012
Securities gains (losses), net 213 60 (9) 66 34 16 207 346
Provision for
loan losses 11,712 11,380 11,703 10,189 10,909 11,718 11,100 11,305
Income before
income taxes 69,365 67,023 63,398 61,554 59,150 58,315 55,449 51,613
Net income 45,367 44,506 42,392 40,737 39,380 39,071 37,240 34,844
Net income per share $ 0.56 $ 0.55 $ 0.53 $ 0.51 $ 0.50 $ 0.50 $ 0.48 $ 0.46
Dividends declared per share 0.17 0.17 0.17 0.17 0.15 0.15 0.15 0.15
--------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 21
CAPITAL STOCK
(TABLE 15)
SouthTrust Common Stock is traded in the over-the-counter market and quoted on
the NASDAQ national market system under the symbol SOTR. As of November 25,
1994, approximately 12,329 shareholders of record owned Company stock. The
following table summarizes the historical book value per share and dividends
per share for each quarter of the past two years. Also included are the stock
market price ranges of SouthTrust shares, as reported by NASDAQ's national
market system.
<TABLE>
<CAPTION>
Book Value per Share at Stock Market Price Range Dividends
End of Period Low High per Share
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
First Quarter $13.45 $17 7/8 $19 5/8 $0.17
Second Quarter 13.68 18 1/8 22 1/8 0.17
Third Quarter 13.89 19 3/8 21 7/8 0.17
Fourth Quarter 13.94 17 0/0 20 1/4 0.17
Year 13.94 17 0/0 22 1/8 0.68
--------------------------------------------------------------------------------------------------------------------
1993
First Quarter $12.00 $16 5/8 $21 3/8 $0.15
Second Quarter 12.35 17 3/4 22 1/8 0.15
Third Quarter 12.70 18 3/8 21 1/4 0.15
Fourth Quarter 13.25 17 1/4 19 7/8 0.15
Year 13.25 16 5/8 22 1/8 0.60
--------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 22
MANAGEMENT'S DISCUSSION
AND ANALYSIS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
SIX-YEAR CONDENSED STATEMENTS OF CONDITION
(TABLE 16)
<TABLE>
<CAPTION>
Growth Rates
------------------
One Five-year
(In Millions) 1994 1993 1992 1991 1990 1989 Year Compound
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCES:
Loans, net of unearned income $10,606.6 $ 8,422.0 $ 6,466.7 $ 5,718.0 $5,003.6 $4,345.3 25.94% 19.54%
Investment securities:
Taxable 1,224.4 3,498.8 2,969.9 2,245.3 1,858.3 1,412.6 (65.01) (2.82)
Non-taxable 340.6 376.3 402.8 434.7 442.3 441.3 (9.49) (5.05)
--------------------------------------------------------------------------------------------------------------------
Total investment securities 1,565.0 3,875.1 3,372.7 2,680.0 2,300.6 1,853.9 (59.61) (3.33)
Securities available for sale 2,339.6 0 0 0 0 0 0.00 0.00
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 21.3 54.5 57.3 48.0 54.7 95.7 (60.92) (25.96)
Interest-bearing deposits
in other banks 12.6 19.4 46.3 57.9 58.5 76.3 (35.05) (30.25)
Assets held for sale 188.6 205.2 147.1 96.1 94.0 77.8 (8.09) 19.37
--------------------------------------------------------------------------------------------------------------------
Total short-term investments 222.5 279.1 250.7 202.0 207.2 249.8 (20.28) (2.29)
--------------------------------------------------------------------------------------------------------------------
Total earning assets 14,733.7 12,576.2 10,090.1 8,600.0 7,511.4 6,449.0 17.16 17.97
Allowance for loan losses (154.1) (118.1) (90.7) (75.5) (64.0) (56.9) 30.48 22.05
Other assets 1,355.3 1,194.9 1,028.8 887.2 780.9 686.4 13.42 14.58
--------------------------------------------------------------------------------------------------------------------
Total assets $15,934.9 $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 $7,078.5 16.71 17.62
====================================================================================================================
DEPOSITS:
Interest-bearing $10,052.8 $ 9,166.6 $ 7,703.0 $ 6,648.8 $5,568.8 $4,702.4 9.67% 16.41%
Other 1,849.2 1,606.0 1,293.1 997.6 924.6 882.2 15.14 15.95
--------------------------------------------------------------------------------------------------------------------
Total deposits 11,902.0 10,772.6 8,996.1 7,646.4 6,493.4 5,584.6 10.48 16.34
Federal funds purchased and other
short-term borrowed funds 2,259.9 1,340.0 925.5 868.7 921.9 736.0 68.65 25.15
Long-term debt 463.2 415.2 206.9 142.9 148.5 146.8 11.56 25.84
Other liabilities 218.6 174.8 170.1 161.9 140.0 139.6 25.06 9.38
Stockholders' equity 1,091.2 950.4 729.6 591.8 524.5 471.5 14.81 18.27
--------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $15,934.9 $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 $7,078.5 16.71 17.62
====================================================================================================================
BALANCES AT YEAR END:
Loans, net of unearned income $12,121.9 $ 9,448.3 $ 7,546.6 $ 5,965.0 $5,531.4 $4,690.5 28.30% 20.91%
Investment securities:
Taxable 1,364.6 921.6 3,366.2 2,681.0 2,001.7 1,616.4 48.07 (3.33)
Non-taxable 307.1 356.4 390.0 423.3 447.6 451.1 (13.83) (7.40)
--------------------------------------------------------------------------------------------------------------------
Total investment securities 1,671.7 1,278.0 3,756.2 3,104.3 2,449.3 2,067.5 30.81 (4.16)
Securities available for sale 2,280.8 2,454.8 0 0 0 0 (7.09) 0.00
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 22.6 2.0 49.1 20.5 16.0 41.4 1,030.00 (11.40)
Interest-bearing deposits in other
banks 13.9 47.6 50.5 38.2 44.7 116.7 (70.80) (34.66)
Assets held for sale 164.6 258.5 198.8 105.3 84.1 100.7 (36.32) 10.33
--------------------------------------------------------------------------------------------------------------------
Total short-term investments 201.1 308.1 298.4 164.0 144.8 258.8 (34.73) (4.92)
--------------------------------------------------------------------------------------------------------------------
Total earning assets 16,275.5 13,489.2 11,601.2 9,233.3 8,125.5 7,016.8 20.66 18.33
Allowance for loan losses (171.7) (135.2) (103.8) (80.4) (70.8) (59.7) 27.00 23.53
Other assets 1,528.3 1,354.0 1,217.0 1,005.2 951.2 806.1 12.87 13.65
--------------------------------------------------------------------------------------------------------------------
Total assets $17,632.1 $14,708.0 $12,714.4 $10,158.1 $9,005.9 $7,763.2 19.88 17.83
====================================================================================================================
DEPOSITS:
Interest-bearing $10,761.5 $ 9,732.5 $ 8,484.5 $ 7,171.6 $6,175.4 $5,125.5 10.57% 15.99%
Other 2,039.7 1,782.9 1,597.8 1,105.6 1,052.6 929.0 14.40 17.03
--------------------------------------------------------------------------------------------------------------------
Total deposits 12,801.2 11,515.4 10,082.3 8,277.2 7,228.0 6,054.5 11.17 16.15
Federal funds purchased and other
short-term borrowed funds 2,828.0 1,456.4 1,331.1 902.9 917.5 895.7 94.18 25.85
Long-term debt 640.7 470.0 258.2 140.2 148.8 144.8 36.32 34.64
Other liabilities 226.9 214.4 182.4 175.8 162.0 161.1 5.83 7.09
Stockholders' equity 1,135.3 1,051.8 860.4 662.0 549.6 507.1 7.94 17.49
--------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $17,632.1 $14,708.0 $12,714.4 $10,158.1 $9,005.9 $7,763.2 19.88 17.83
====================================================================================================================
</TABLE>
38
<PAGE> 23
SIX-YEAR SUMMARY OF EARNINGS
(TABLE 17)
<TABLE>
<CAPTION>
Growth Rates
---------------------
One Five-year
(In Thousands, except per share data) 1994 1993 1992 1991 1990 1989 Year Compound
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 868,461 $669,495 $561,757 $581,839 $554,262 $500,889 29.72% 11.64%
Interest on investment securities:
Taxable 75,721 217,555 221,692 193,297 168,613 123,767 (65.19) (9.36)
Non-taxable 23,377 26,435 30,246 33,654 34,833 35,562 (11.57) (8.05)
--------------------------------------------------------------------------------------------------------------------------
Total interest on
investment securities 99,098 243,990 251,938 226,951 203,446 159,329 (59.38) (9.06)
Interest on securities available
for sale 130,470 0 0 0 0 0 0.00 0.00
Interest on federal funds sold
and securities purchased under
resale agreements 875 1,637 2,056 2,862 4,700 8,829 (46.55) (37.02)
Interest on time deposits in
other banks 539 890 2,001 3,760 5,000 7,224 (39.44) (40.49)
Interest on assets held for sale 9,169 11,539 10,328 8,313 9,253 8,353 (20.54) 1.88
--------------------------------------------------------------------------------------------------------------------------
Total interest income 1,108,612 927,551 828,080 823,725 776,661 684,624 19.52 10.12
INTEREST EXPENSE:
Deposits 377,643 335,708 337,878 413,880 411,560 370,216 12.49 0.40
Short-term borrowings 98,189 41,014 31,418 49,133 73,333 65,880 139.40 8.31
Long-term debt 25,235 21,021 13,634 11,440 13,436 14,051 20.05 12.42
--------------------------------------------------------------------------------------------------------------------------
Total interest expense 501,067 397,743 382,930 474,453 498,329 450,147 25.98 2.17
--------------------------------------------------------------------------------------------------------------------------
Net interest income 607,545 529,808 445,150 349,272 278,332 234,477 14.67 20.98
Provision for loan losses 44,984 45,032 43,305 38,042 44,635 21,166 (0.11) 16.27
--------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 562,561 484,776 401,845 311,230 233,697 213,311 16.05 21.40
NON-INTEREST INCOME:
Service charges on deposit accounts 86,304 76,716 63,894 49,379 39,435 31,896 12.50 22.03
Mortgage origination and
servicing fees 27,760 33,771 22,794 17,427 14,959 12,394 (17.80) 17.50
Trust fees 16,863 15,224 11,938 9,819 9,932 8,984 10.77 13.42
Securities gains, net 330 603 634 680 464 178 (45.27) 13.14
Other fee income 43,313 37,649 29,193 18,831 22,035 16,965 15.04 20.62
Other 10,208 10,739 8,230 12,745 4,259 8,269 (4.94) 4.30
--------------------------------------------------------------------------------------------------------------------------
Total non-interest income 184,778 174,702 136,683 108,881 91,084 78,686 5.77 18.62
NON-INTEREST EXPENSE:
Salaries and employee benefits 257,637 227,017 184,921 149,521 121,812 109,110 13.49 18.75
Net occupancy expense 40,273 36,775 32,254 25,273 18,514 15,830 9.51 20.53
Equipment expense 27,899 25,353 20,687 16,819 13,513 12,272 10.04 17.85
FDIC insurance 25,747 23,512 19,649 15,119 7,681 4,374 9.51 42.55
Other 134,443 122,294 116,125 90,064 73,193 58,561 9.93 18.08
--------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 485,999 434,951 373,636 296,796 234,713 200,147 11.74 19.41
--------------------------------------------------------------------------------------------------------------------------
Income before income taxes 261,340 224,527 164,892 123,315 90,068 91,850 16.40 23.26
Income tax expense 88,338 73,992 50,646 33,309 20,360 19,075 19.39 35.87
--------------------------------------------------------------------------------------------------------------------------
Net income $ 173,002 $150,535 $114,246 $ 90,006 $ 69,708 $ 72,775 14.92 18.91
==========================================================================================================================
Average number of shares
outstanding (000s) 80,628 77,772 68,948 63,255 61,148 60,077
Net income per share $ 2.15 $ 1.94 $ 1.66 $ 1.42 $ 1.14 $ 1.21
Dividends declared per share 0.68 0.60 0.52 0.48 0.46 0.43
</TABLE>
39
<PAGE> 24
CONSOLIDATED STATEMENTS
OF CONDITION
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
December 31
-------------------------------------
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 650,433 $ 607,831
Short-term investments:
Federal funds sold and securities purchased
under resale agreements 22,645 1,975
Interest-bearing deposits in other banks 13,875 47,651
Assets held for sale 164,528 258,506
---------------------------------------------------------------------------------------------------------------------
Total short-term investments 201,048 308,132
Securities available for sale 2,280,849 2,454,760
Investment securities (Fair Value of $1,618,411 and
$1,327,228 in 1994 and 1993, respectively) 1,671,673 1,278,007
Loans 12,215,599 9,527,004
Less:
Unearned income 93,692 78,685
Allowance for loan losses 171,692 135,233
---------------------------------------------------------------------------------------------------------------------
Net loans 11,950,215 9,313,086
Premises and equipment, net 364,642 321,623
Due from customers on acceptances 34,111 26,270
Other assets 479,088 398,255
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $17,632,059 $14,707,964
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing $10,761,495 $ 9,732,460
Other 2,039,744 1,782,851
---------------------------------------------------------------------------------------------------------------------
Total deposits 12,801,239 11,515,311
Federal funds purchased and securities sold
under agreements to repurchase 1,885,838 1,207,026
Other short-term borrowings 942,174 249,434
Bank acceptances outstanding 34,111 26,270
Other liabilities 192,713 188,172
Long-term debt 640,716 469,985
---------------------------------------------------------------------------------------------------------------------
Total liabilities 16,496,791 13,656,198
Stockholders' equity:
Preferred Stock, par value $1.00 a share:
5,000,000 shares authorized; issued and outstanding - none 0 0
Common Stock, par value $2.50 a share:
200,000,000 shares authorized; 81,904,456 shares issued
in 1994 and 79,735,663 in 1993 204,761 199,339
Capital surplus 231,975 215,113
Retained earnings 750,699 630,240
Unrealized gain (loss) on securities available for sale, net (46,304) 10,218
Treasury stock at cost (478,896 shares in 1994 and
334,980 shares in 1993) (5,863) (3,144)
---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,135,268 1,051,766
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,632,059 $14,707,964
=====================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
40
<PAGE> 25
CONSOLIDATED STATEMENTS
OF INCOME
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------
(In Thousands, except per share data ) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 868,461 $669,495 $561,757
Interest on investment securities:
Taxable 75,721 217,555 221,692
Non-taxable 23,377 26,435 30,246
---------------------------------------------------------------------------------------------------------------------
Total interest on investment securities 99,098 243,990 251,938
Interest on securities available for sale 130,470 0 0
Interest on short-term investments 10,583 14,066 14,385
---------------------------------------------------------------------------------------------------------------------
Total interest income 1,108,612 927,551 828,080
---------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 377,643 335,708 337,878
Interest on short-term borrowings 98,189 41,014 31,418
Interest on long-term debt 25,235 21,021 13,634
---------------------------------------------------------------------------------------------------------------------
Total interest expense 501,067 397,743 382,930
---------------------------------------------------------------------------------------------------------------------
Net interest income 607,545 529,808 445,150
PROVISION FOR LOAN LOSSES 44,984 45,032 43,305
---------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 562,561 484,776 401,845
NON-INTEREST INCOME
Service charges on deposit accounts 86,304 76,716 63,894
Mortgage origination and servicing fees 27,760 33,771 22,794
Trust fees 16,863 15,224 11,938
Other fee income 43,313 37,649 29,193
Securities gains, net 330 603 634
Other 10,208 10,739 8,230
---------------------------------------------------------------------------------------------------------------------
Total non-interest income 184,778 174,702 136,683
---------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 257,637 227,017 184,921
Net occupancy expense 40,273 36,775 32,254
Equipment expense 27,899 25,353 20,687
FDIC insurance 25,747 23,512 19,649
Other 134,443 122,294 116,125
---------------------------------------------------------------------------------------------------------------------
Total non-interest expense 485,999 434,951 373,636
---------------------------------------------------------------------------------------------------------------------
Income before income taxes 261,340 224,527 164,892
INCOME TAX EXPENSE 88,338 73,992 50,646
---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 173,002 $150,535 $114,246
=====================================================================================================================
Average number of shares outstanding (000s) 80,628 77,772 68,948
Net income per share $ 2.15 $ 1.94 $ 1.66
Dividends declared per share 0.68 0.60 0.52
</TABLE>
See notes to Consolidated Financial Statements.
41
<PAGE> 26
CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Common Capital Retained Unrealized Treasury
(In Thousands) Stock Surplus Earnings Gain, net Stock Total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 $165,322 $ 60,665 $438,420 $ 0 ($2,407) $ 662,000
Net income 0 0 114,246 0 0 114,246
Dividends declared ($.52 per share) 0 0 (35,743) 0 0 (35,743)
Issuance of 708,920 shares of Common
Stock for stock options exercised 1,773 2,912 0 0 0 4,685
Issuance of 111,990 shares of Common
Stock under dividend reinvestment and
stock purchase plan 280 1,557 0 0 0 1,837
Issuance of 21,737 shares of Common Stock
under employee discounted stock purchase plan 55 247 0 0 0 302
Issuance of 7,350 shares of Common
Stock for conversion of debentures 18 22 0 0 0 40
Issuance of 4,571,250 shares of Common
Stock through public offering 11,428 58,972 0 0 0 70,400
Pooling-of-interests with Carolina Financial
Corporation; 1,317,306 shares issued 3,293 5,218 3,820 0 0 12,331
Issuance of 1,931,211 shares of Common
Stock for acquisition of subsidiaries 4,828 25,911 0 0 0 30,739
Purchase of 28,898 shares of treasury stock 0 0 0 0 (485) (485)
---------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 $186,997 $155,504 $520,743 $ 0 ($2,892) $ 860,352
Net income 0 0 150,535 0 0 150,535
Dividends declared ($.60 per share) 0 0 (46,213) 0 0 (46,213)
Issuance of 194,377 shares of Common
Stock for stock options exercised 486 1,394 0 0 0 1,880
Issuance of 124,930 shares of Common
Stock under dividend reinvestment
and stock purchase plan 312 2,059 0 0 0 2,371
Issuance of 29,059 shares of Common Stock
under employee discounted stock purchase plan 73 378 0 0 0 451
Pooling-of-interests with County Bancshares,
Inc.; 562,500 shares issued 1,406 407 4,801 0 0 6,614
Pooling-of-interests with Commercial
Bancorporation, Inc.; 578,262 shares issued 1,445 4,511 374 0 0 6,330
Issuance of 3,447,845 shares of Common
Stock for acquisition of subsidiaries 8,620 50,860 0 0 0 59,480
Unrealized gain, net, on assets available for sale 0 0 0 10,218 0 10,218
Purchase of 13,500 shares of treasury stock 0 0 0 0 (252) (252)
---------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 $199,339 $215,113 $630,240 $10,218 ($3,144) $1,051,766
Net income 0 0 173,002 0 0 173,002
Dividends declared ($.68 per share) 0 0 (54,402) 0 0 (54,402)
Issuance of 234,537 shares of Common
Stock for stock options exercised 586 1,246 0 0 0 1,832
Issuance of 155,963 shares of Common Stock
under dividend reinvestment and stock purchase
plan 390 2,635 0 0 0 3,025
Issuance of 37,244 shares of Common Stock under
employee discounted stock purchase plan 93 486 0 0 0 579
Issuance of 155,844 shares of Common Stock
for conversion of debentures 390 458 0 0 0 848
Pooling-of-interests with First Columbus Community
Bank and Trust Company; 500,000 shares issued 1,250 3,774 711 (227) 0 5,508
Pooling-of-interests with Community Bank of
Charlotte County; 383,171 shares issued 958 3,964 361 0 0 5,283
Pooling-of-interests with Bank of Bradenton;
407,504 shares issued 1,019 2,008 684 (19) 0 3,692
Issuance of 294,530 shares of common stock
for acquisition of subsidiaries 736 2,291 103 0 0 3,130
Unrealized loss, net, on securities available
for sale 0 0 0 (56,276) 0 (56,276)
Purchase of 143,916 shares of treasury stock 0 0 0 0 (2,719) (2,719)
======================================================================================================================
BALANCE AT DECEMBER 31, 1994 $204,761 $231,975 $750,699 ($46,304) ($5,863) $1,135,268
======================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
42
<PAGE> 27
CONSOLIDATED STATEMENTS
OF CASH FLOWS
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 173,002 $ 150,535 $ 114,246
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision (credit) for:
Loan losses 44,984 45,031 43,305
Depreciation of premises and equipment 24,438 21,431 16,608
Amortization of intangibles 16,178 16,419 12,928
Amortization of security premium 3,124 10,069 9,048
Accretion of security discount (4,539) (12,035) (9,449)
Deferred income tax provision (benefit) 5,397 (3,313) (185)
Net gain on assets held for sale (8,061) (9,874) (6,590)
Net securities (gains) and losses (330) (603) (634)
Origination and purchase of loans held for sale (501,571) (945,869) (945,897)
Proceeds of loans held for sale 598,719 898,534 847,941
Net (increase) decrease in trading securities 4,891 (2,538) 11,114
Net (increase) decrease in other assets (32,577) (8,935) 17,955
Net increase (decrease) in other liabilities 9,149 30,048 (27,585)
---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 332,804 188,900 82,805
INVESTING ACTIVITIES
Proceeds from maturities of:
Investment securities 238,174 2,174,346 1,245,274
Securities available for sale 670,729 - -
Proceeds from sales of:
Investment securities 0 25,686 14,210
Securities available for sale 223,723 - -
Purchase of:
Investment securities (543,173) (1,836,402) (1,851,540)
Securities available for sale (775,635) - -
Premises and equipment (55,400) (29,636) (46,065)
Net (increase) decrease in:
Short-term investments 21,253 111,559 (26,940)
Loans (2,277,259) (1,206,850) (727,560)
Purchase of subsidiaries, net of cash acquired 111,155 76,825 412,818
---------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,386,433) (684,472) (979,803)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 6,284 4,696 120,334
Long-term debt 250,000 200,000 100,000
Payments for:
Long-term debt (74,307) (84,959) (2,689)
Repurchase of Common Stock (2,719) (252) (485)
Cash Dividends (55,239) (52,124) (34,118)
Net increase (decrease) in:
Deposits 620,684 382,378 449,620
Short-term borrowings 1,351,528 113,116 373,691
---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,096,231 562,855 1,006,353
---------------------------------------------------------------------------------------------------------------------
DECREASE IN CASH AND DUE FROM BANKS 42,602 67,283 109,355
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 607,831 540,548 431,193
---------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 650,433 $ 607,831 $ 540,548
=====================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
43
<PAGE> 28
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NOTE A - ACCOUNTING POLICIES
The significant accounting policies followed by SouthTrust Corporation and its
subsidiaries ("the Company") and the method of applying those policies are
summarized below:
CONSOLIDATION
The Consolidated Financial Statements include accounts of the Company and its
subsidiaries. All significant inter-company transactions have been eliminated
in preparing the Consolidated Financial Statements.
Certain amounts in the 1992 and 1993 financial statements have been
reclassified to conform to the 1994 presentation. Such reclassification had no
effect on net income or total assets.
SECURITIES
On December 31, 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." In adopting SFAS No. 115, securities have been classified
as either trading, available for sale or investment based on Management's
current intent.
Securities classified as trading are intended to be sold in the near term.
Trading securities are carried at fair value and unrealized gains and losses
are included in earnings. Securities classified as investment are carried at
amortized cost, as the Company has the ability and positive intent to hold
these securities to maturity. All securities not considered investment or part
of the trading portfolio have been designated as available for sale and are
carried at fair value. The unrealized difference between amortized cost and
fair value on securities available for sale is excluded from earnings and is
reported net of deferred taxes as a component of stockholders' equity. This
caption includes securities that Management intends to use as part of its
asset/liability management strategy; or that may be sold in response to changes
in interest rates, changes in prepayment risk, liquidity needs, or for other
purposes.
Amortization of premium and accretion of discount are computed under the
interest method. The adjusted cost of the specific certificate sold is used to
compute gain or loss on the sale of securities.
ASSETS HELD FOR SALE
Assets held for sale consist primarily of mortgage loans in the process of
being sold to third-party investors and are carried at the lower of cost or
fair value. Also included in this caption are trading securities carried at fair
value. Trading securities primarily represent the inventory of securities held
in the Company's brokerage subsidiary.
LOANS
Interest is credited to income based upon the principal amount outstanding. The
net amount of non-refundable loan origination fees and costs associated with
the lending process, including commitment fees, are deferred and amortized to
interest income over the lives of the loans using a method that approximates
the level-yield method. If loan commitments expire, income is recognized upon
expiration of the commitment. Interest accrual on loans is generally stopped if
principal or interest payments become 90 days past due or Management considers
the collectibility of principal or interest to be in question. When a loan is
placed on non-accrual status, interest income credited in the current year is
reversed by a charge to income.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level that Management
considers to be adequate to absorb losses inherent in the loan portfolio.
Management's estimation of the amount of the allowance is based on a continuing
evaluation of the loan portfolio and includes such factors as economic
conditions, analysis of individual loans, and overall portfolio characteristics
and delinquencies. Changes in the allowance can result from changes in economic
events or changes in the credit worthiness of the borrowers. The effect of
these changes is reflected when known. The amount of the allowance is
maintained through the provision for loan losses.
During 1993, The Financial Accounting Standards Board issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." In October 1994, the FASB
issued SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures," an amendment to SFAS No. 114. Both SFAS No. 114
and No. 118 are effective for fiscal years beginning after December 15, 1994.
SFAS No. 114 requires that impaired loans be valued based on the present value
of those loans' estimated cash flows at each loan's effective interest rate,
the fair value of the collateral or based on the loan's observable market
price. Management has elected not to adopt the provisions of the standards
before the required date, but believes adoption will not have a significant
impact on the financial condition or results of operations.
OTHER REAL ESTATE
Other real estate includes foreclosed properties and loans in which conditions
indicate that substantive repossession of the property has occurred. Total
other real estate is included in other assets and amounted to $49,802,000 and
$45,702,000 at December 31, 1994 and 1993, respectively. Such properties are
carried at the lower of the recorded investment in the loan or fair value of
the properties less estimated selling costs. The recorded investment is the sum
of the outstanding principal loan balance plus any accrued interest that has
not been received and acquisition costs associated with the property. Any
excess of the recorded investment over the fair value of the property received
at the time of foreclosure is charged to allowance for loan losses. Any
subsequent write-downs are charged against other non-interest expenses.
Revenues and expenses associated with operating or disposing of foreclosed
properties are recorded in non-interest expense during the period in which they
are incurred.
44
<PAGE> 29
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are computed principally on the
straight-line method over the estimated useful lives of the assets.
OTHER ASSETS
Goodwill, which is not deductible for federal income tax purposes, is amortized
on a straight-line basis, primarily over 20-25 years. Total goodwill was
$82,458,000 and $83,810,000 at December 31, 1994 and 1993, respectively.
Intangible assets attributable to core deposits purchased are amortized over
the estimated life of the deposit base, not to exceed 10 years. Core deposit
intangible assets are amortized on a straight-line basis. Core deposit
intangibles totaled $60,555,000 and $28,499,000 at December 31, 1994 and 1993,
respectively.
The cost of mortgage servicing rights purchased and the value of servicing
fees in excess of normal servicing fees is being amortized over the estimated
lives of the related servicing contracts by a method which approximates a
constant rate of return on the servicing assets. The realization of these
assets is periodically evaluated in relation to net servicing revenues using a
discounted cash flow analysis, and is adjusted appropriately for any impairment
of the underlying assets. Purchased mortgage servicing rights were $29,947,000
and $32,632,000 at December 31, 1994 and 1993, respectively.
INCOME TAXES
The Consolidated Financial Statements have been prepared on an accrual basis.
Because some income and expense items are recognized in different periods for
financial reporting purposes and for purposes of computing currently payable
income taxes, a provision or credit for deferred income taxes is made for such
temporary differences at currently enacted income tax rates applicable to the
period in which realization or settlement is expected. As changes in tax laws
or rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
INTEREST RATE RISK MANAGEMENT
The Company entered into interest rate swap contracts as a means of balancing
interest rate risk. The interest differential applicable to interest rate
swaps, which hedge specific liabilities, is accrued over the lives of the
contracts and reported as an adjustment to interest expense. Fees on interest
rate swaps are deferred and amortized over the term of the contracts. Gains on
terminated contracts are recognized as rate adjustments of the underlying
liabilities over the remaining original term of the contract.
EARNINGS PER SHARE AND DIVIDENDS
Earnings per share are based on the weighted-average number of shares of Common
Stock outstanding, excluding treasury stock; and dividends declared per share
reflect the actual dividend rate of the Company. Total dividends declared
during the year are based on shares outstanding, excluding treasury shares.
STATEMENTS OF CASH FLOWS
The Company includes cash, due from banks, and certain cash items, as cash
equivalents in preparing the Statement of Cash Flows.
The following is supplemental disclosure to the statements of cash flows
for the three years ended December 31, 1993:
<TABLE>
<CAPTION>
(In Thousands) Year Ended
Cash paid during -------------------------------
the period for: 1994 1993 1992
--------------------------------------------------------
<S> <C> <C> <C>
Interest $484,733 $412,150 $389,561
Income taxes 94,150 69,380 52,195
Non-cash transactions:
Assets acquired
in business
combinations 709,276 1,260,582 1,489,414
Liabilities assumed
in business
combinations 684,375 1,176,535 1,445,090
Loans transferred to
Other Real Estate 34,217 18,667 18,414
Loans securitized into
mortgage-backed
securities 400,503 636,626 637,832
Sales of foreclosed
property 21,733 29,821 26,573
--------------------------------------------------------
</TABLE>
45
<PAGE> 30
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NOTE B - BUSINESS COMBINATIONS
During 1994 the Company completed the following acquisitions:
<TABLE>
<CAPTION>
(In Millions)
---------------------------------------------------------------------------------------------------------------------------
Date Institution Assets Loans Deposits Locations
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
May 20 Altus Federal Savings Bank ("Altus") - 11 branches $118.9 $ 0.0 $117.5 Alabama
June 30 Bank of Bradenton ("Bradenton") 41.9 23.6 40.7 Bradenton, FL
July 8 Homebanc Federal Savings Bank ("Homebanc") 274.4 230.3 256.1 Atlanta, GA
July 28 First Columbus Community Bank and Trust Co. ("First Columbus") 54.4 35.3 48.8 Columbus, GA
September 15 First Jefferson Corporation ("First Jefferson") 40.5 23.6 36.6 Biloxi, MS
September 22 Citrus National Bank ("Citrus") 40.4 26.9 36.8 Crystal River, FL
September 28 Island Bank of Collier County ("Island Bank") 25.9 13.5 21.6 Marco Island, FL
September 28 Community Bank of Charlotte County ("Port Charlotte") 48.6 31.3 43.0 Port Charlotte, FL
December 9 American National Bank of Florida ("ANB") - 1 branch 64.3 28.5 64.1 Gainesville, FL
---------------------------------------------------------------------------------------------------------------------------
TOTALS $709.3 $413.0 $665.2
===========================================================================================================================
</TABLE>
The acquisitions of Altus, Homebanc and ANB were accounted for as purchases of
assets and assumptions of liabilities. The acquisitions of all of the
outstanding shares of First Jefferson, Citrus and Island Bank were accounted
for as purchases. Under purchase accounting, the results of operations of all
of the above, subsequent to the respective acquisition dates, are included in
the Consolidated Financial Statements.
The acquisitions of Bradenton, First Columbus, and Port Charlotte were
accounted for as poolings-of-interest; however, the Company's previously
reported consolidated financial results have not been restated to include the
effect of the acquisitions prior to their respective acquisition dates, since
the effect is not material.
Consideration for all acquisitions during 1994 aggregated approximately
$36.5 million in cash and 1,585,205 shares of SouthTrust Corporation Common
Stock with a total market value at time of issuance of approximately $29.3
million. Total intangible assets recognized in these transactions were
approximately $42.0 million.
During 1993, the Company completed fourteen acquisitions with aggregate
total assets of $1,260.6 million, loans of $699.6 million and total deposits of
$1,050.7 million.
Assuming the 1994 acquisitions of Bradenton, First Columbus, First
Jefferson, Citrus, Island Bank and Port Charlotte and the 1993 acquisitions of
Prime Bancshares, Inc., Gulf Harbor Banks, Inc., County Bancshares, Inc.,
Central National Bank, Commercial Bancorporation, Inc., Cypress Banks, Inc.,
BMR Financial Group, Inc. and Gulf and Southern Financial Corporation had
occurred on January 1, 1993, the consolidated results of operations on a pro
forma basis for 1994 and 1993 would have been approximately as follows
(unaudited):
<TABLE>
<CAPTION>
(In Thousands except per share data) 1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Net interest income $614,385 $560,624
Net income 172,518 149,834
Net income per share 2.11 1.84
------------------------------------------------------------------------
</TABLE>
The pro forma effect of the purchase and assumption transactions is not
presented since the results of the acquired operations differ substantially
from the historical results of the sellers and, therefore, the pro forma
results would not be meaningful.
The Company has entered into three separate definitive agreements and
two separate letters of intent to acquire financial institutions with aggregate
total assets of approximately $541 million. These pending acquisitions are
subject to shareholder and/or various regulatory approvals among other
conditions and are expected to close in the first half of 1995. The aggregate
purchase price of all pending acquisitions is approximately $18.6 million in
cash and approximately 2.2 million shares of SouthTrust Corporation common
stock.
NOTE C - REGULATORY REQUIREMENTS AND RESTRICTIONS ON CERTAIN ASSETS
The Company's banking subsidiaries are required either by law or regulation to
maintain cash reserves with the Federal Reserve Bank or in accounts with other
banks. The average amount of reserve balances for the year ended December 31,
1994, was approximately $169,781,000.
At December 31, 1994 and 1993, securities with a par value of
$2,085,217,000 and $1,966,070,000, respectively, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other
purposes.
The primary source of funds available to the Company is payment of
dividends from the Company's subsidiaries. Banking laws and other regulations
limit the amount of dividends a bank subsidiary may pay without prior
regulatory approval. At December 31, 1994, $284,448,158 of the net assets of
subsidiaries was available for payment without prior regulatory approval.
Substantially all other net assets of the Company's subsidiaries were
restricted as to payments to the Company.
The Company and its subsidiary banks are required by the various
depository institution regulatory agencies to maintain certain capital-to-asset
ratios. At December 31, 1994, all such ratios were above the prescribed
minimums.
46
<PAGE> 31
NOTE D - INVESTMENT SECURITIES AND SECURITIES AVAILABLE FOR SALE
The carrying amount, gross gains and losses, and approximate fair value at
December 31, 1994 and 1993, are as follows:
<TABLE>
<CAPTION>
Investment Securities
-------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gross Gain Gross Loss Value Cost Gross Gain Gross Loss Value
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities $ 0 $ 0 $ 0 $ 0 $ 6,077 $ 8 $ 0 $ 6,085
U.S. Government
agency securities 978,745 18 61,592 917,171 349,237 3,856 283 352,810
Collateralized mortgage
obligations 117,771 84 545 117,310 199,124 6,392 149 205,367
Other mortgage-backed
securities 189,248 3,549 3,994 188,803 244,434 7,848 183 252,099
Obligations of
states and political
subdivisions 307,048 8,690 1,229 314,509 356,402 28,075 31 384,446
Other securities 78,861 1,761 4 80,618 122,733 3,688 0 126,421
---------------------------------------------------------------------------------------------------------------------
Total $1,671,673 $14,102 $67,364 $1,618,411 $1,278,007 $49,867 $646 $1,327,228
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Securities Available for Sale
----------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gross Gain Gross Loss Value Cost Gross Gain Gross Loss Value
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities $ 639,483 $ 7 $ 7,229 $ 632,261 $ 648,331 $ 3,676 $ 103 $ 651,904
U.S. Government
agency securities 306,593 669 11,259 296,003 398,590 9,235 571 407,254
Collateralized mortgage
obligations 1,049,547 125 36,337 1,013,335 1,204,506 4,494 1,669 1,207,331
Other mortgage-backed
securities 243,342 407 19,693 224,056 113,918 1,048 273 114,693
Obligations of
states and political
subdivisions - - - - - - - -
Other securities 116,205 172 1,183 115,194 73,054 612 88 73,578
---------------------------------------------------------------------------------------------------------------------
Total $2,355,170 $1,380 $75,701 $2,280,849 $2,438,399 $19,065 $2,704 $2,454,760
=====================================================================================================================
</TABLE>
The carrying amounts and approximate fair value of securities at December 31,
1994, by contractual maturity, are shown below:
<TABLE>
<CAPTION>
Investment Securities Securities Available for Sale
---------------------------------------------------------------------------------------------------------------------
Amortized Fair Amortized Fair
(In Millions) Cost Value Cost Value
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 72,687 $ 73,022 $ 716,449 $ 714,309
Due after one year through five years 1,087,267 1,031,861 564,339 538,224
Due after five years through 10 years 245,771 243,990 266,800 261,689
Due after 10 years 265,948 269,538 807,582 766,627
---------------------------------------------------------------------------------------------------------------------
Total $1,671,673 $1,618,411 $2,355,170 $2,280,849
=====================================================================================================================
</TABLE>
Proceeds from sales of securities during 1994 were $223,723,000. Gross gains of
$514,000 and gross losses of $184,000 were realized on those sales.
Proceeds from sales of securities during 1993 were $25,686,000. Gross gains of
$1,006,000 and gross losses of $403,000 were realized on those sales.
The change in the net unrealized holding loss on available for sale securities
that has been included in the separate component of shareholders' equity
amounted to $56,606,000 during 1994 and 0 in 1993 and 1992.
The income tax provision applicable to securities transactions for the years
1994, 1993, and 1992 were $124,000, $226,000, and, $231,000 respectively.
47
<PAGE> 32
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NOTE E - LOANS
The classifications of loans at December 31 are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 5,058,372 $4,094,351
Real estate construction 675,217 448,619
Commercial real estate mortgage 1,776,107 1,314,208
Residential real estate mortgage 2,960,041 2,322,088
Loans to individuals 1,745,862 1,347,738
---------------------------------------------------------------------------------------------------------------------
12,215,599 9,527,004
Unearned interest (93,692) (78,685)
Allowance for loan losses (171,692) (135,233)
---------------------------------------------------------------------------------------------------------------------
NET LOANS $11,950,215 $9,313,086
=====================================================================================================================
</TABLE>
In the normal course of business, loans are made to directors and
executive officers of the Company and its subsidiaries and their associates.
These loans are made on substantially the same terms, including interest rates
and collateral, as those prevailing for comparable transactions with others.
Such loans do not involve more than normal risk of collectibility nor do they
present other unfavorable features. As of December 31, 1994 and 1993,
respectively, $121,354,000 and $127,393,000 of these loans were outstanding.
During 1994, $195,049,000 of new loans were made and repayments totaled
$201,088,000.
The Company's largest credit concentration is commercial, financial and
agricultural loans, which totaled $5,058.4 million or 41.4% of total loans at
December 31, 1994 and $4,094.4 million or 43.0% of total loans at December 31,
1993. There were no significant industry concentrations within the loan
portfolio and the Company's geographic loan distribution is concentrated in the
Southeast markets served by the Company at December 31, 1994 and 1993.
In 1994, interest income of $788,000 and $34,000 was recorded on
non-accrual and restructured loans, respectively. Had income on these loans
been recorded under original terms, $4,010,000 of interest on non-accrual loans
and $62,000 of interest on restructured loans would have been recorded.
NOTE F - ALLOWANCE FOR LOAN LOSSES
The following is an analysis of changes in the allowance for loan losses for
the years ended December 31:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $135,233 $103,770 $ 80,393
Additions (deductions):
Provisions charged to operations 44,984 45,032 43,305
Recoveries on loans previously charged off 10,010 12,005 8,524
Loans charged off (29,786) (36,620) (40,062)
Allowances of purchased subsidiaries 11,251 11,046 11,610
---------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $171,692 $135,233 $103,770
=====================================================================================================================
</TABLE>
NOTE G - PREMISES AND EQUIPMENT
The following is a summary of premises and equipment at December 31:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 98,687 $ 84,913
Buildings and improvements 251,032 213,499
Equipment 176,430 160,108
---------------------------------------------------------------------------------------------------------------------
526,149 458,520
Less accumulated depreciation 161,507 136,897
---------------------------------------------------------------------------------------------------------------------
TOTALS $364,642 $321,623
=====================================================================================================================
</TABLE>
48
<PAGE> 33
NOTE H - LONG-TERM DEBT
A summary of long-term debt at December 31 follows:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
8-5/8% Subordinated notes, due May 15, 2004 $100,000 $100,000
7% Debentures, due May 15, 2003 100,000 100,000
7-5/8% Subordinated Notes, due May 1, 2004 100,000 0
9.95% Subordinated Capital Notes, due June 1, 1999 75,000 75,000
Floating Rate Notes, due December 28, 1994,
average rate of 4.54% in 1994 and 3.76% in 1993 0 20,000
9.08% Senior Notes, due March 28, 1995 0 10,000
Federal Home Loan Bank advances 251,887 145,849
Other 13,829 19,136
---------------------------------------------------------------------------------------------------------------------
TOTALS $640,716 $469,985
=====================================================================================================================
</TABLE>
During 1994 the Company issued $100,000,000 in 7-5/8% Subordinated Notes
due in 2004. These notes, along with the 8-5/8% Subordinated Notes and the 7%
Debentures, are not subject to redemption prior to maturity, and no sinking
fund is required.
The Floating Rate Notes were redeemed in 1994.
The 9.95% Subordinated Capital Notes qualify as supplemental capital under
the Capital Adequacy Guidelines of the Federal Reserve Board. These notes will
be redeemed, at the Company's option, in cash from the proceeds of the sale of
capital securities, or exchanged for qualifying capital securities, having a
market value equal to the principal amount of the notes. These notes are
unsecured and subordinated to all present and future senior indebtedness of the
Company. These notes may not be redeemed prior to maturity, except upon the
occurrence of certain events relating to the federal income tax treatment of
the notes by the Company.
$225.0 million of the Federal Home Loan Bank Advances are at variable
rates. $26.9 million are at fixed rates ranging from 3.50% to 8.55%.
Scheduled maturities of long-term debt in 1995 are approximately $20.0
million. Maturities during 1996, 1997, 1998, and 1999 are approximately $148.0
million, $50.8 million, $52.0 million, and $75.5 million, respectively.
NOTE I - COMMITMENTS AND CONTINGENCIES
LITIGATION
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.
LEASES
At December 31, 1994, the Company and its subsidiaries were obligated under
various cancelable and non-cancelable leases for premises and equipment.
Certain leases contain various renewal options that are priced at market rates.
Total rental expense for the years ended December 31, 1994, 1993, and 1992 was
$16,776,000, $14,476,000 and $13,262,000. Future minimum rental commitments as
of December 31, 1994 for all non-cancelable leases with initial or remaining
terms of more than one year are as follows:
<TABLE>
<CAPTION>
(In Thousands) Premises Equipment Total
---------------------------------------------------------
<S> <C> <C> <C>
1995 $ 17,610 $ 788 $ 18,398
1996 15,649 170 15,819
1997 13,552 162 13,714
1998 12,069 150 12,219
1999 9,874 108 9,982
After 1999 53,327 34 53,361
---------------------------------------------------------
TOTALS $122,081 $1,412 $123,493
=========================================================
</TABLE>
STANDBY LETTERS OF CREDIT AND COMMITMENTS
The Company's subsidiary banks had standby letters of credit outstanding of
approximately $527,718,000 and $347,767,000 at December 31, 1994 and 1993,
respectively.
The Company's subsidiary banks had outstanding commitments to extend
credit of approximately $3,872,987,000 at December 31, 1994, and $3,160,560,000
at December 31, 1993. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.
The Company's policies as to collateral and assumption of credit risk for
off-balance-sheet commitments are essentially the same as those for extension
of credit to its customers.
49
<PAGE> 34
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
ASSETS SOLD WITH RECOURSE
The Company's 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. The total amount of loans outstanding subject to such recourse
was $1,275.0 million at December 31, 1994 and $1,284.2 million at December 31,
1993. Under terms of the recourse agreements, the Company would be required to
repurchase certain loans if they become non-performing. All such loans sold had
a loan-to-collateral ratio of 80% or less, or mortgage insurance to cover
losses up to 80% of the collateral value, at the times the various loans were
originated. The underlying collateral to these mortgages are generally 1-4
family residential properties. Potential losses under these recourse agreements
are affected by the collateral value of the particular loans involved. Losses
are recognized when the mortgage is repurchased or the obligation is otherwise
satisfied.
INTEREST RATE SWAPS
The Company has entered into interest rate swap agreements ("Swaps"), which
provide for the Company to pay interest based on the Floating London Interbank
Offered Rate while receiving payments on a fixed rate. The average notional
face amount of these agreements was $680 million in 1994 and $413 million in
1993. The notional amounts outstanding at December 31, 1994 and 1993 were $815
million and $490 million, respectively. During 1994, the average rate paid
under the agreements was 4.80% and the average rate earned was 6.18%. For 1993,
the average rate paid was 3.38% and the average rate earned was 6.31%.
At December 31, 1994, the contractual maturities of Swaps are as follows:
<TABLE>
<CAPTION>
(In Millions) Notional Amount Expiration Liabilities Hedged
------------------------------------------------------------
<S> <C> <C>
$305 1995 Deposit liabilities
10 1995 Long-term debt
200 1996 Deposit liabilities
100 2003 Long-term debt
200 2004 Long-term debt
------------------------------------------------------------
$815
============================================================
</TABLE>
The Company has also terminated one Swap agreement prior to the
contractual maturity. Since the Swap was designed as a hedge, the gain realized
on the termination of this contract has been deferred and is amortized to
reduce interest expense over the remaining life of the hedged liabilities. At
December 31, 1994 and 1993 the remaining deferred gain related to such
termination was $3.8 million and $5.4 million, respectively. The effect of
amortization of the deferred gain reduces interest expense by approximately
$1.6 million through 1997.
From time to time, the Company utilizes interest rate options to hedge
mortgage loans held for sale. During 1994 the effect on net income from use of
options was insignificant. At December 31, 1994 there were no option contracts
outstanding.
NOTE J - EMPLOYEE BENEFITS
DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS
The Company has a trusteed defined benefit pension plan for the benefit of
substantially all employees of the Company and its subsidiaries, the "Trusteed
Plan." The Company also maintains a supplemental defined benefit plan, the
"Supplemental Plan," a deferred compensation plan, the "Deferred Plan," and an
incentive pay plan, the "Incentive Plan," for certain key executives. The
Company's funding policy with respect to the Trusteed Plan is to contribute
amounts to the plan sufficient to meet minimum funding requirements as set by
law. The Supplemental Plan and the Deferred Plan are unfunded.
The weighted-average discount rate and rate used in determining the
actuarial present value of the projected benefit obligations for all defined
benefit plans was 8.5% in 1994, 7.5% in 1993 and 8.5% in 1992. The rate of
increase in future compensation levels for all defined benefit plans was 5.5%
in 1994 and 1993 and 6% in 1992. The rate of expected return on plan assets for
the Trusteed Plan in 1994, 1993, and 1992 was 9.25%. Prior service costs for
all defined benefit plans are being amortized on a straight-line basis.
The Company also maintains a defined contribution deferred profit sharing
plan that meets the requirements of section 401(k) of the Internal Revenue
Code. Company contributions to the deferred profit sharing plan are based on a
pre-determined formula of up to 15% of participants' salaries, which is the
maximum amount deductible for federal income tax purposes. Provisions for
contributions to the deferred profit sharing plan were approximately $11.5
million in 1994, $10.5 million in 1993, and $8.4 million in 1992.
As of December 31, 1994, the Trusteed Plan and the profit sharing plan
owned 411,768 and 1,570,619 shares of the Company's common stock, and received
dividends on those shares of $272,000 and $969,000, respectively.
STOCK OPTION PLAN
Stock options for a total of 1,216,707 shares awarded to key employees under
the Company's Stock Option Plan were outstanding at December 31, 1994. Exercise
prices range from $6.22 to $18.75 per share and average $13.01 per share.
During 1994, options on 234,537 shares were exercised at an average price of
$7.90 per share while options for 979,575 shares were exercisable as of
December 31, 1994.
50
<PAGE> 35
NOTE J - EMPLOYEE BENEFITS (Continued)
TRUSTEED PLAN
The following table sets forth the plan's funded status and amounts recognized
in the Company's Consolidated Financial Statements at December 31, 1994 and
1993, and for each of the three years in the period ended December 31, 1994:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $35,082 in 1994 and $36,704 in 1993 ($39,746) ($43,019)
=====================================================================================================================
Projected benefit obligation for service rendered to date ($48,379) ($53,184)
Plan assets at fair value, primarily listed stocks and U.S. Government securities 51,085 53,331
---------------------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 2,706 147
Unrecognized net (gain) loss from past experience different from that assumed
and effects of changes in assumptions 115 3,355
Prior service cost not yet recognized in net periodic pension cost 48 437
Unrecognized net asset at January 1, 1994 and 1993 (4,161) (4,682)
---------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) pension cost included in other assets (liabilities) ($ 1,292) ($ 743)
=====================================================================================================================
</TABLE>
Net pension cost for 1994, 1993, and 1992 includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $3,837 $2,961 $ 2,311
Interest cost on projected benefit obligation 3,835 3,451 2,931
Actual return on plan assets 1,948 (3,734) (2,745)
Net amortization and deferral (7,388) (1,426) (2,412)
---------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $2,232 $1,252 $ 85
=====================================================================================================================
</TABLE>
SUPPLEMENTAL, DEFERRED AND INCENTIVE PLANS
The following table sets forth the plans' funded status and amounts recognized
in the Company's Consolidated Financial Statements at December 31, 1994 and
1993, and for each of the three years ended December 31, 1994:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $4,999 in 1994 and $2,904
in 1993 ($5,292) ($3,166)
=====================================================================================================================
Projected benefit obligation for service rendered to date ($6,482) ($4,209)
Plan assets at fair value 0 0
---------------------------------------------------------------------------------------------------------------------
Excess of projected benefit obligation over plan assets (6,482) (4,209)
Unrecognized net (gain) loss from past experience different from that assumed
and effects of changes in assumptions (237) 571
Prior service cost not yet recognized in net periodic pension cost 2,762 848
Unrecognized net (asset) liability at January 1, 1994 and 1993 207 (804)
Additional periodic liability (2,014) 0
---------------------------------------------------------------------------------------------------------------------
Accrued pension cost included in other liabilities ($5,764) ($3,594)
=====================================================================================================================
</TABLE>
Net pension cost for 1994, 1993 and 1992 includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 516 $344 $310
Interest cost on projected benefit obligation 465 274 272
Net amortization and deferral 272 150 215
---------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $1,253 $768 $797
=====================================================================================================================
</TABLE>
POSTRETIREMENT BENEFITS
The Company sponsors an unfunded defined benefit postretirement health care
plan. All employees who retire under the plan at age 55 or later with 10 or
more years of service are eligible to receive certain limited postretirement
health care benefits until age 65. The plan is identical to the specific
medical plan covering the employee prior to retirement. The plan is
contributory, with retiree contributions adjusted annually.
51
<PAGE> 36
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
Net postretirement health care cost for 1994, 1993 and 1992 includes the
following components:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $234 $220 $220
Interest cost on accumulated postretirement benefit obligation 233 215 215
Amortization of transition obligation over 20 years 106 106 131
---------------------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit costs $573 $541 $566
=====================================================================================================================
</TABLE>
For measurement purposes, a 15%, 14% and 15% annual rate of increase in
the per capita cost of covered health care claims was assumed for 1994, 1993
and 1992, respectively; the rate was assumed to remain stable for four years,
then decrease to 7% for years thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. Increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of December 31,
1994, by $443,000 and the aggregate of the components of net periodic
postretirement benefit cost for the year then ended by $103,000. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8.5% in 1994, 1993 and 1992.
The Company has elected to amortize the unfunded transition obligation
over a 20-year period as permitted by the standard.
The plan's accumulated postretirement benefit obligation was $3,162,000 at
December 31, 1994, with $614,000 related to retirees and $2,548,000 for other
active employees, and an unrecognized transition obligation of $1,899,000,
resulting in an accrued liability of $1,452,000.
NOTE K - INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------------
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $84,394 $69,392 $43,889
State 9,221 7,913 6,942
---------------------------------------------------------------------------------------------------------------------
93,615 77,305 50,831
Deferred (Prepaid):
Federal (5,314) (3,753) 368
State 37 440 (553)
---------------------------------------------------------------------------------------------------------------------
(5,277) (3,313) (185)
---------------------------------------------------------------------------------------------------------------------
TOTALS $88,338 $73,992 $50,646
=====================================================================================================================
</TABLE>
The differences between the provision for income taxes and the amount computed
by applying the statutory federal income tax rate (35% in 1994 and 1993, and
34% in 1992) to income before taxes were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Pre-tax income at statutory rates $ 91,469 35% $ 78,584 35% $ 56,063 34%
Add (deduct):
State income tax, net of federal tax benefit 6,017 2% 5,429 2% 4,380 3%
Tax-exempt interest income (10,317) (4%) (11,279) (5%) (12,677) (8%)
Non-deductible interest expense 1,262 1% 964 1% 1,160 1%
Amortization of goodwill 1,654 1% 1,499 1% 1,101 1%
Other (1,747) (1%) (1,205) (1%) 619 0%
---------------------------------------------------------------------------------------------------------------------
TOTALS $ 88,338 34% $ 73,992 33% $ 50,646 31%
=====================================================================================================================
</TABLE>
The components of the net deferred tax assets as of December 31, 1994 and 1993
were as follows:
<TABLE>
<S> <C> <C>
Deferred Tax Assets:
Allowance for loan losses $ 58,014 $ 48,687
Net unrealized losses on securities 27,875 0
Other 30,555 26,792
---------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 116,444 75,479
---------------------------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
Depreciation (10,743) (8,551)
Leasing (34,561) (23,736)
Other (4,731) (15,175)
---------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (50,035) (47,462)
---------------------------------------------------------------------------------------------------------------------
Net Deferred Tax Asset $ 66,409 $ 28,017
=====================================================================================================================
</TABLE>
The deferred tax asset above is net of an insignificant valuation allowance.
The Company has sufficient refundable taxes paid in available carryback years
to realize its recorded deferred tax asset.
The Company's federal and state tax returns are subject to examination by
various taxing authorities. In the opinion of Management, any adjustment
thereto will not be material.
52
<PAGE> 37
NOTE L - SUPPLEMENTAL INCOME STATEMENT INFORMATION
The following provides further analysis of other non-interest expense for the
years ended December 31:
<TABLE>
<CAPTION>
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other expense:
Communications $ 22,136 $ 20,017 $ 18,085
Professional services 27,242 25,420 18,909
Business development 16,090 12,795 10,771
Other 68,975 64,062 68,360
---------------------------------------------------------------------------------------------------------------------
$134,443 $122,294 $116,125
=====================================================================================================================
</TABLE>
NOTE M - FAIR VALUES OF FINANCIAL INSTRUMENTS
This summarizes the Company's disclosure of fair values of financial
instruments made in accordance with the requirements of SFAS No. 107:
<TABLE>
<CAPTION>
(In Thousands) December 31, 1994 December 31, 1993
----------------------------------------------------------------------------------------------------------------------------
Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 650,433 $ 650,433 $ 607,831 $ 607,831
Federal funds sold and other
short-term investments 36,520 36,520 49,626 49,626
Assets held for sale 164,528 164,528 258,506 258,506
Securities held to maturity 1,671,673 1,618,411 1,278,007 1,327,228
Investment securities 2,280,849 2,280,849 2,454,760 2,454,760
Loans, net 11,647,688 11,106,972 9,115,342 9,336,909
Interest receivable and other assets 185,143 185,143 132,966 132,966
Liabilities:
Deposits 12,801,239 12,469,473 11,515,311 11,555,463
Federal funds purchased and
other short-term borrowings 2,828,012 2,828,012 1,456,460 1,456,460
Interest payable and other liabilities 168,140 168,140 156,280 156,280
Long-term debt 640,716 589,461 469,985 422,781
Off-balance sheet instruments -
asset (liability):
Interest rate swaps in a net
receivable position 13,624 (22,587) 10,568 29,428
Commitments to extend credit (11,065) (20,122) (8,883) (22,716)
Standby letters of credit (1,065) (1,065) (573) (573)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 38
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
In cases where quoted market prices are not available, fair values have
been estimated using present value or other valuation techniques. These methods
are highly sensitive to the assumptions used, such as those concerning
appropriate discount rates and estimates of future cash flows. In that regard,
estimates presented herein are not necessarily indicative of the amounts the
Company could realize in a current settlement of the underlying financial
instruments, and they are not intended to represent a measure of the
under-lying value of the Company.
The following methods and assumptions were used by the Company in
estimating the fair value provided above:
CASH AND DUE FROM BANKS, FEDERAL FUNDS SOLD AND OTHER SHORT-TERM INVESTMENTS
The carrying value of highly liquid instruments, such as cash on hand, interest
and noninterest bearing deposits in financial institutions, and federal funds
sold and other short-term investments are considered to approximate their fair
values.
ASSETS HELD FOR SALE AND SECURITIES
Substantially all of the Company's securities held for investment and assets
held for sale, consisting primarily of loans held for sale to third-party
investors, have a readily determinable fair value. Fair values for these
securities are based on quoted market prices, where available. If not
available, fair values are based on market prices of comparable instruments.
The carrying amount of accrued interest on securities approximates its fair
value.
LOANS, NET
For loans with rates that are repriced in coordination with movements in market
rates and with no significant change in credit risk, fair value estimates are
based on carrying values. The fair values for other types of loans are
estimated by discounting future cash flows using current rates at which loans
with similar terms would be made to borrowers of similar credit ratings. The
carrying amount of accrued interest on loans approximates its fair value.
DEPOSITS
The fair value of deposit liabilities with no stated maturity are disclosed as
the amount payable on demand at the reporting date (i.e., at their carrying or
book value). The fair values of fixed maturity deposits are estimated using a
discounted cash flow calculation that applies rates currently offered for time
deposits of similar remaining maturities. The carrying amount of accrued
interest payable on deposits approximates its fair value.
The economic value attributable to the long-term relationship with
depositors who provide low-cost funds to the Company is considered to be a
separate intangible asset and is excluded from the presentation above.
SHORT-TERM BORROWINGS
The carrying amounts of federal funds purchased, borrowings under repurchase
agreements, and other short-term borrowings approximate their fair values.
LONG-TERM DEBT
The fair values of the Company's long-term debt are based on quoted market
prices of similar instruments or estimates using the Company's incremental
borrowing rates for similar types of instruments.
OFF-BALANCE-SHEET INSTRUMENTS
Off-balance-sheet financial instruments include commitments to extend credit,
standby letters of credit, interest rate swaps, and similar instruments. The
fair value of such instruments is estimated using current settlement values or
based on fees currently charged for similar arrangements in the market place,
adjusted for changes in terms and credit risk as appropriate.
54
<PAGE> 39
NOTE N - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
SouthTrust Corporation Parent Company
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31
------------------------------
(In Thousands) 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash-on-demand deposit* $ 3,105 $ 1,309
Interest-bearing time deposits* 22,111 59,954
Securities 99,432 71,669
Loans 2,074 2,486
Loans to subsidiaries* 160,658 72,806
Investment in subsidiaries*
Banks and bank holding companies 1,270,503 1,184,312
Non-banks 13,482 12,025
Other assets 41,375 29,408
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,612,740 $1,433,969
=====================================================================================================================
LIABILITIES
Short-term borrowings $ 34,417 $ 15,918
Other liabilities 68,055 61,285
Long-term debt 375,000 305,000
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 477,472 382,203
STOCKHOLDERS' EQUITY 1,135,268 1,051,766
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,612,740 $1,433,969
=====================================================================================================================
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
(In Thousands) 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
From subsidiaries:*
Dividends
Banks $ 87,094 $ 54,966 $ 39,436
Non-banks 9,134 3,891 2,806
Management fees 42,669 37,895 30,262
Interest 8,290 5,844 4,459
Other 3,025 1,014 2,191
---------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 150,212 103,610 79,154
---------------------------------------------------------------------------------------------------------------------
Expense:
Salaries and employee benefits 20,574 21,741 16,494
Interest 21,142 16,343 13,981
Other 22,604 17,749 22,731
---------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE 64,320 55,833 53,206
---------------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed
net income of subsidiaries 85,892 47,777 25,948
Income taxes (credit) (4,834) (4,176) (5,091)
---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARIES 90,726 51,953 31,039
Equity in undistributed net income of subsidiaries:*
Banks and bank holding companies 80,964 97,224 81,850
Non-banks 1,312 1,358 1,357
---------------------------------------------------------------------------------------------------------------------
NET INCOME $173,002 $150,535 $114,246
=====================================================================================================================
</TABLE>
*Eliminated in consolidation.
55
<PAGE> 40
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
NOTE N - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (Continued)
SouthTrust Corporation Parent Company
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------
(In Thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 173,002 $150,535 $ 114,246
Less equity in undistributed net income of subsidiaries (82,276) (98,582) (83,207)
---------------------------------------------------------------------------------------------------------------------
Income before equity in undistributed net
income of subsidiaries 90,726 51,953 31,039
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for:
Depreciation of premises and equipment 1,131 1,072 723
Amortization of intangibles 2,487 2,504 2,513
Deferred income tax provision (benefit) (4,491) (1,748) (8,940)
Realized net (gain) loss on sale of securities (48) 231 106
Net (increase) decrease in other assets (7,478) (7,096) 2,257
Net increase (decrease) in other liabilities 7,606 20,813 4,359
---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 89,933 67,729 32,057
INVESTING ACTIVITIES
Proceeds for maturities of:
Investment securities 142 20,362 4,041
Available for sale securities 10,956 - -
Proceeds from sales of:
Investment securities 0 0 13,031
Available for sale securities (108,819) - -
Purchases of:
Investment securities 0 (80,366) (15,289)
Available for sale securities 70,968 - -
Capital contributions (47,419) (44,318) (113,914)
Purchase of subsidiaries 0 0 (41,746)
Net (increase) decrease in:
Short-term investments 37,843 40,444 (25,189)
Loans to subsidiaries (87,852) (23,075) (30,969)
Loans 412 2,010 4,946
Premises and equipment (1,193) (1,138) (7,016)
---------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (124,962) (86,081) (212,105)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 6,284 4,696 120,334
Long-term debt 100,000 100,000 100,000
Payments for:
Long-term debt (20,000) (30,783) (2,515)
Repurchase of Common Stock (2,719) (252) (485)
Cash dividends (55,239) (52,124) (34,118)
Net increase (decrease) in short-term borrowings 8,499 (3,722) (3,273)
---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 36,825 17,815 179,943
---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 1,796 (537) (105)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 1,309 1,846 1,951
---------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 3,105 $ 1,309 $ 1,846
=====================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR INTEREST $ 26,955 $ 15,829 $ 12,971
=====================================================================================================================
</TABLE>
56
<PAGE> 41
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
--------------------------------------
SOUTHTRUST CORPORATION
TO THE BOARD OF DIRECTORS OF
SOUTHTRUST CORPORATION:
We have audited the accompanying consolidated statements of condition of
SouthTrust Corporation and subsidiaries (a Delaware corporation) as of December
31, 1994 and 1993, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's Management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted audited
standards. Those standards required that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit also includes assessing the accounting
principles used and significant estimates made by Management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material aspects the consolidated financial position of
SouthTrust Corporation and subsidiaries as of December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note A to the Consolidated Financial Statements, effective
December 31, 1993, the Company changed its method of accounting for investment
securities.
Birmingham, Alabama,
February 8, 1995
57
<PAGE> 42
<TABLE>
<S> <C>
SOUTHTRUST BANK OF SOUTHTRUST BANK OF SELMA
MARION COUNTY
George P. Evans; J. Mel Gilmer, Jr.;
Jimmy Brumley, President; Alan C. Byrd Looper; William E. McHugh;
Cantrell; Fred McCluskey; Robert Donald C. Overstreet; John E. Pilcher;
McGuire; Lex Moore; Paul Ray; Wayne Stephen C. Rogers, Chairman, President
L. Riggs; Marlis E. Sanderson; Vann and Chief Executive Oficer;
Scott; E.T. Sims, Jr; Lee Watkins, D.M. Russell, Jr.; Harold Speir
Chairman and Chief Executive Officer;
William R. West SOUTHTRUST BANK OF
TALLADEGA COUNTY
SOUTHTRUST BANK OF
MARSHALL COUNTY Billy T. Bobbitt; James T. Clark,
Chairman and Chief Executive Officer;
William P. Ainsworth; Michael W. Alred, James E. Hobson; J. Taylor Pursell;
Chairman and Chief Executive Officer, Steve Sprayberry; Frank S. Teel;
John W. Boggess, IV; Joe Van Bunch; Barry D. Vaughn
Guy H. Caffey, III, President, Joseph J.
Chorba; Jack Hamilton; Frank T. SOUTHTRUST BANK OF
Mastin, Jr.; Jackie NeSmith; Ellis F. TUSCALOOSA COUNTY
Porch, Jr.; J.D. Reynolds, Jr.; John
Carey Ross; Gerald R. Rowe, Jr.; Morris Acker; Karen Bryan;
Braxton F. Smith; James W. Stewart; G. Norman Carlson; Jerry Cooper;
Robert J. Weathers Jon R. Farmer; James I. Harrison, III;
Cecil Ingram; Chris Mobley; Joseph R.
SOUTHTRUST BANK OF MOBILE O'Hara, Chairman, President and Chief
Executive Officer; W. Omar Smith;
Billy C. Bond; F.T. Boudreau, III; Paul R. Sullivan; Gene Ray Taylor;
Thomas B. Clement; David J. Cooper, Miller Welborn
Randy Delchamps; Don R. Grady;
B.J. Heggeman, Jr.; F. Martin Lester; SOUTHTRUST BANK OF
Gaylord C. Lyon, Jr.; Charles E. McNeil, Jr.; WALKER COUNTY
John T. Mostellar, Richard Murray, III;
Robert L. Ray, III; E. Frank Schmidt, Lionel F. Baxter, Jr., Chairman, President
Chairman and Chief Executive Officer, and Chief Executive Oficer; Billy J.
Norvell Smith; William S. Stimpson; Duncan; Fara L. Lawson; James M.
Marion E. Ward; Robert S. Reynolds; Daniel M. Scarbrough;
Wilbanks, President Patrick Willingham; Robert T.
Wilson, Jr.
SOUTHTRUST BANK, MONTGOMERY
FLORIDA
Jack L. Capell; John L. Capell;
Robert L. Carter; W. Stephen Cawood; SOUTHTRUST BANK OF
Michael D. Henig; Knox Kershaw; CENTRAL FLORIDA
E. Kyle Kyser; John W. Morgan;
Ray B. Petty, Chairman, President T. Richard Barber, Jr.; Andy S. Crabb;
and Chief Executive Officer, William B. John Crider; M. Terry Eiland; Nolan C.
Shadburn; John Walter Stowers; Galloway, Jr.; Clyde Larramore;
Todd R. Strange; Adolph Weil, III; E.E. Phinney, Chairman, President
Clyde H. Wood and Chief Executive Officer; E. George
Rusaw; Charles K. Ruse, Jr.;
SOUTHTRUST BANK OF Russell C. Still
MORGAN COUNTY
SOUTHTRUST BANK OF
Jack E. Allen; Larry Beasley; Horace NORTHEAST FLORIDA
W. Broom; Robert W. Clemons;
James Kevin Corum; Charles M. Hamilton J. Bisbee; Clayton
Howse; Robert Peck; Dow M. Perry, Bromberg; Charles E. Commander, III;
Jr.; William E. Shinn, Jr.; Alton F. W. Patrick Cusick; Michael F. Dawes;
Sulcer; William B. Watson, Jr. Corey J. Coughlin, Chairman and Chief
Chief Executive Officer; B.F. Wear, Jr.; Executive Officer; W. Radford Lovett, II;
William M. Weaver Lee F. Mercier; William H. Morris;
Willard Payne; Jerald Pietan;
SOUTHTRUST BANK OF OZARK Gert Schmidt
Jerry G. Beasley; Billy J. Blackmon; SOUTHTRUST BANK OF
J.H. Godwin, Chairman, President NORTHWEST FLORIDA
and Chief Executive Oficer; James B.
Graham; Gene L. Hughes; William B. William F. Brunner; Gary Cowen;
Matthews; Janey H. Stephens R. Hunter Daffin, Jr.; Richard W.
D'Alemberte; Terry DuBose, Chairman
SOUTHTRUST BANK OF and Chief Executive Officer; Bobby
THE QUAD CITIES George; Griff Godfrey; Creshull C.
Harrison, Jr.; Hallie Hearn; John W.
Laughlin Ashe; John D. Clement, Jr.; Keith, Jr., President; Chuck Morgan;
Jerrie K. Crosswhite; Ernest A. Fite; Quen Rahal
Harry J. Hall; Charles Ray Henry; John
E. Higginbotham; Freddie L. Hogan; SOUTHTRUST BANK OF ORLANDO
Lee E. Moncrief; Chairman, President
and Chief Executive Officer; Hulon R. Van Bogan, Chairman, President
Newton; Conrad C. Pitts and Chief Executive Officer, Lawrence E.
Cappleman, Jr.; Grady M. Cooksey, Jr.;
SOUTHTRUST BANK OF Kenneth F. Faliero; William D. Long, Sr.;
RANDOLPH COUNTY Andrew L. McCorkle; Joan Schirm;
Ernest L. Wilding
Joseph Ballow; Jerry H. Cotney;
Don Green; John A. Tinney; Ralph L. SOUTHTRUST BANK OF
Watkins, Chairman, President and Chief THE SUNCOAST
Executive Officer
John W. Chidsey; Robert H. Elliott;
SOUTHTRUST BANK OF Charles O. Murphy, Chairman,
RUSSELL COUNTY President and Chief Executive Officer;
Russell S. Natherson; Charles E.
Charles H. Adams; James A. Baker; Richards, Jr.; George T. Smith
Robert D. Hemker; R. Michael
Raiford; Jerry R. Richards, Chairman,
President and Chief Executive Officer;
Robert Scott; Patricia L. Waldrop;
Daniel Windsor
</TABLE>
59
<PAGE> 43
BOARD OF DIRECTORS (CONTINUED)
------------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<S> <C>
SOUTHTRUST BANK OF NORTH CAROLINA
SOUTHWEST FLORIDA
SOUTHTRUST BANK OF
Richard C. Ackert, Chairman CENTRAL CAROLINA
and Chief Executive Officer; Clifford
Bardsdale; H. Quillan Jones; Paul F. F. Crowder Falls, Chairman, William S.
McQueen; Richmond H. Powell; Paul Fisher; Thomas M. Grady; F. Donald
Staffile; E. Bruce Strayhorn; Gay Rebel Graham; Dewitt P. Hodges; Chares A.
Thompson; Harvey B. Youngquist James; Elaine M. Lyerly; Bailey W.
Patrick; Trent D. Propst; N. Bradley
SOUTHTRUST BANK OF Thompson, Jr, President and Chief
VOLUSIA COUNTY Executive Officer; Russell W. Wallace, Jr.
Seware Fleet; James H. Ford, SOUTHTRUST BANK OF
Chairman, President and Chief NORTH CAROLINA
Executive Officer; Raiford G.
Hagstrom; Reid B. Hughes; Charles S. Suzanne Babcock; James A. Beck,
Lichtigman; Donald Malmborg; Chairman, President and Chief
Randall J. Marshall; David A. Monaco; Executive Officer; Don Fraley; Dave
John W. Morris, III; Daniel M. O'Brien; Gospodarek; Michael D. Mangum;
J. Daniel Peterson; James H. Powell, Sr.; Norman C. Mason; Gary R. Sheffield;
Jack B. Shuman; Jeffrey L. Timko; Tom Vande Guchte
Gerald S. Williams
SOUTH CAROLINA
SOUTHTRUST BANK OF
WEST FLORIDA SOUTHTRUST BANK OF CHARLESTON
Marion U. Ballard; William T. Branch; Vincent D. Adams; Lester A.
Frank G. Cisneros; Kenneth Delarbre; Butler, Jr., Chairman, President and
Ted DeLaVergne, Jr.; John C. Dew; Chief Executive Officer; J. Palmer
J. Eugene Fogarty, Jr.; Dorothy T. Gaillard, Jr.; James A. Grimsely, Jr.;
Hendry; Carl K. Lambrecht; Robert M. Thomas F. Hartnett; Linda M.
Menke; Harry M. Moorefield; Walter L. O'Quinn, A. Bert Pruitt; James M.
Ogle; L. Eugene Oliver, Jr., Chairman Stelling; Richard T. Widman;
and Chief Executive Officer; Robert R. R. Michael Williams; Thomas
Sharp; Ralph E. Stevens, Jr.; Robert L. Dewey Wise
Ulrich; John P. Wallace
SOUTHTRUST BANK OF
GEORGIA DILLON COUNTY
SOUTHTRUST BANK OF COLUMBUS Carroll G. Allen; John R. Braddy;
R. Walton Brown, President and
Wilson W. Blackmon; N.R. Boyd Jr.; Chief Executive Officer; M. H. Cox, Jr.;
Dennis W. Calhoun, Chairman; Robert T. D. M. Dew, Jr.; Frank R. Ellerbe, Jr.;
Flournoy; D. Clyde Fountain; Murray D. R. H. Gaddy, Chairman; Moses
Gray; Lee R. Grogan, Sr.; Morton A. Kornblut; A. LaFon LeGette, Jr.;
Harris; Mitchell W. Hunt, Jr., President R. T. Stephens, Jr.
and Chief Executive Officer; George W.
Jeter; D. L. Dordan; C. E. McDaniel; SOUTHTRUST BANK OF THE MIDLANDS
Jack W. McGuire; W. Richard
McGuire; T. Samuel Rawls, Jr.; Carl Russell L. Bauknight; Ronald H.
A. Rhodes; M.S. Roberts, Jr.; John D. Burkett; John R. Capes; F. Ashton
Watson, Jr.; Sandra T. Willis Cribbs, III, Chairman, President
and Chief Executive Officer; Sam Elkins;
SOUTHTRUST BANK OF GEORGIA Richard M. Kennedy, Jr.; David L.
Kulbersh; Sue D. Young
Thomas H. Coley, Chairman and
Chief Executive Officer; Robert F. Kern; TENNESSEE
H. Ray McPhail; Richard A. Newton;
Gary Waddell; George B. Williamson SOUTHTRUST BANK OF
TENNESSEE, NASHVILLE
MISSISSIPPI
George R. Archer, Jr., Chairman,
SOUTHTRUST BANK OF President and Chief Executive Officer;
SOUTH MISSISSIPPI William G. Coble; Willie K. Davis;
Steve G. Fridrich; Dale L. Gish;
Harry A. Danielson; Tanya Lyons; Jeffrey E. Powell; Joyce Rice
William J. Meyer; Harrell S. Pace;
Victor Pringle, Jr.; Edwain H. Saylor; SOUTHTRUST BANK OF
D'Auby H. Schiel, Chairman and Chief TENNESSEE, MEMPHIS
Executive Officer; Harry J. Schmidt;
Susan O'Keefe Snyder; Gene Warr; Michael E. Harris; Jerry D. Mooney;
David J. Washer Jack T. Shannon, Jr.; Thomas R.
Stephenson, President and Chief
Executive Officer; Tom Watson
*Director Emeritus
</TABLE>
60
<PAGE> 44
BOARD OF
DIRECTORS
---------------------------------------------------------------------------
SOUTHTRUST CORPORATION
<TABLE>
<S> <C>
SOUTHTRUST
CORPORATION
John M. Bradford Wallace D. Malone, Jr.
President President and
Mrs. Stratton's Salads Inc. Chief Executive Officer
SouthTrust Corporation
H. Allen Franklin
President and T. W. Mitchell
Chief Executive Officer Chairman and
Georgia Power Company Chief Executive Officer
Stuart Construction Co. Inc.
Roy W. Gilbert, Jr.
President and Herbert Stockham
Chief Operating Officer Chairman
SouthTrust Corporation Stockham Valves and Fittings
Bill L. Harbert Charles G. Taylor
Chairman and President and
Chief Executive Officer Chief Executive Officer
Bill Harbert International The Taylor Group Inc.
Construction Inc.
W. Kendrick Upchurch, Jr.
William C. Hulsey Chairman
Chairman W. K. Upchurch
Arlington Properties Inc. Construction Co. Inc.
Allen J. Keesler, Jr.
President and
Chief Executive Officer
Florida Power Corporation
</TABLE>
<TABLE>
<S> <C>
AFFILIATE DIRECTORS
ALABAMA SOUTHTRUST BANK OF
COVINGTON COUNTY
SOUTHTRUST BANK OF ALABAMA
Robert Breedlove; Jack Goolsby;
Julian W. Banton, Chairman, President John F. Gresham, Chairman,
and Chief Executive Officer; Gene President and Chief Executive Officer;
Bartow; Thomas E. Bradford, Jr.; Wheeler A. Gunnels; Seth Hammett;
Merrill N. Bradley; Ronald G. Bruno; Earl V. Johnson; Richard E. Jones;
Sallie C. Creel; Paul E. Harris; W. Carl Tommy Northrop; James H. Smith;
Jernigan; Rex J. Lysinger; Judy M. J. H. Sorrells; Philip Stanley;
Merritt; Emmet O'Neal, III; Van L. Sidney E. Timbie
Richey; William E. Smith, Jr.;
R. Neal Travis SOUTHTRUST BANK OF CULLMAN
SOUTHTRUST BANK, AUBURN R. Clyne Adams; W. Donald David,
Chairman, President and Chief Executive
N. E. Botta; J. Ab Conner; Robert C. Officer; W. Elliot Free; Thomas J.
Jackson; Earl M. Lancaster; Wayne L. Hagan; Betty Leeth Haynes; James B.
McLaughlin; James W. Nunn; William T. Hill; Billy W. Jackson; Danny McAfee;
Wadsworth; John P. Wilson, Chairman, Bertis E. McGriff; Keith Parrish
President and Chief Executive Officer
SOUTHTRUST BANK OF DOTHAN
SOUTHTRUST BANK OF
BALDWIN COUNTY Curtis L. Adams; Charles H.
Chapman, III; Ronald A. DeVane,
James H. Faulkner, Jr.; Van P. Finger; President; Paul R. Flowers, Jr.; Phillip L.
C. Craig Helms; Robert M. Hodgson; Forrester; James F. House, Chairman
Thomas A. McMillan; Thomas E. and Chief Executive Officer; H. Clay
Mitchell; P. Chris Myers; David B. Howell, III; Don F. McMullan; Ed R.
Nelson; Willard H. Penry; Bill C. Peters; Malone; Lamar A. Miller, Jr.; Mike
Ronald H. Pippin, Chairman, Mullins; Morris M. Slingluff; Ralph
President and Chief Executive Officer; Smith; O. D. Warren; Tom A. West, III
James E. Stewart; Albert M. Thompson, III;
Robert A. Wills SOUTHTRUST BANK OF
ETOWAH COUNTY
SOUTHTRUST BANK OF
CALHOUN COUNTY Charles F. Boman; Alan Cohn;
W. R. Cranford, Chairman; Michael D.
Aaron P. Acker; H. M. Burt, Jr.; Harris; Thomas E. Hughes; George R.
G. C. Colyer, Jr.; Thomas P. Houf; Hundley; James C. Inzer, III; Nestor
Hoyt W. Howell, Jr.; Glenn G. Huie, Kampakis; John H. Mackin, President
Chairman, President, and Chief Executive and Chief Executive Officer;
Officer; Bobby N. Kennamer; Theresa M. B. McCartney; Wallace Donald
R. Kisor; James S. Nolen; Ruth B. Piper; McNair; Joyce Parker
Sam L. Routman*; J. Henry Smith, III;
W. Ronald Smith; Cynthia A. Wingo SOUTHTRUST BANK OF HUNTSVILLE
SOUTHTRUST BANK OF Pat E. Burlison; William L. Fleming;
CENTRAL ALABAMA L. Hoyt Harris; Chris H. Horgen;
Howard L. Hunter; Dean O'Farrell,
Robert E. Bice; C. Mark Bowen; Chairman, President and Chief Executive
Steve Crowe, Chairman, President Officer; Richard J. Rutenberg;
and Chief Executive Officer; William F. Mike Segrest
Dobbs; Charles A. Farrow; Ralph
Frohsin, Jr.; J. Victor Hamilton;
H. Scott Howell; Robert Riley
SOUTHTRUST BANK OF
COFFEE COUNTY
J. R. Brunson; Jackie J. Brunson;
C. P. Hayes, III; Mary Alice Lee; William
Ted Roberts, Chairman, President and
Chief Executive Officer; H. M. Sessions, Jr.;
Oscar Vaughan, Jr.
</TABLE>
58
<PAGE> 1
Exhibit (21)
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of
Incorporation
-------------
<S> <C>
SouthTrust Corporation ............................... Not Applicable
SouthTrust Bank of Alabama, N.A. (1)
SouthTrust Mortgage Corporation ................. Delaware
SouthTrust Mobile Services, Inc. ................ Alabama
SC Realty, Inc. ................................. Delaware
Jackson, Incorporated ........................... Delaware
Magic City, Inc. ................................ Delaware
Magic City Three, Inc. ........................ Delaware
Magic City Two, Inc. ............................ Delaware
SouthTrust Data Services, Inc. .................. Alabama
SouthTrust Technology, Inc. ................... Alabama
SouthTrust Capital Funding Corporation........... Delaware
SouthTrust Investment Services, Inc. ............ Delaware
SouthTrust Fiduciary Services, Inc............... Delaware
SouthTrust Bank of Dothan, N.A. ..................... (1)
Wiregrass, Inc. ................................. Delaware
SouthTrust Bank of Calhoun County, N.A. ............. (1)
Piedmont, Inc. .................................. Delaware
SouthTrust Bank of Mobile ........................... Alabama
SouthTrust Bank of Huntsville, N.A. ................. (1)
Redstone, Inc. .................................. Delaware
SouthTrust of Covington County, Inc. ................ Delaware
SouthTrust Bank, N.A. ........................... (1)
Riverboat, Inc. ............................... Delaware
SouthTrust Bank of Central Alabama .............. Alabama
Wind Creek Insurance Agency, Inc. ............. Alabama
SouthTrust Bank of Covington County, N.A. ....... (1)
Rodeo, Inc. ................................... Delaware
Finance South, Inc. ............................. Alabama
SouthTrust Bank of Cullman, N.A. .................... (1)
Germantown, Inc. ................................ Delaware
SouthTrust Bank of Etowah County, N.A. .............. (1)
Noccolula, Inc. ................................. Delaware
SouthTrust Bank of Baldwin County ................... Alabama
SouthTrust Bank of Marion County .................... Alabama
SouthTrust Bank of the Quad Cities .................. Alabama
SouthTrust Bank of Marshall County, N.A. ............ (1)
Lakeside, Inc. .................................. Delaware
SouthTrust Bank of Selma, N.A. ...................... (1)
SouthTrust Bank ..................................... Alabama
SouthTrust Bank of Randolph County, N.A. ............ (1)
SouthTrust Bank of Tuscaloosa County, N.A. .......... (1)
SouthTrust Bank of Russell County ................... Alabama
SouthTrust Bank of Coffee County .................... Alabama
SouthTrust Bank of Talladega County ................. Alabama
SouthTrust Bank of Ozark ............................ Alabama
SouthTrust Bank of Morgan County .................... Alabama
</TABLE>
21
<PAGE> 2
Exhibit (21) (continued)
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of
Incorporation
-------------
<S> <C>
SouthTrust Bank of Walker County .................... Alabama
SouthTrust Bank of Columbus, N.A. ................... (1)
SouthTrust of Florida, Inc. ......................... Florida
SouthTrust Bank of Northwest Florida .............. Florida
Holmes Capital Corporation ...................... Florida
SouthTrust Bank of Central Florida ................ Florida
SouthTrust Bank of Volusia County ................. Florida
SouthTrust Bank of the Suncoast ................... Florida
SouthTrust Bank of Northeast Florida, N.A. ........ (1)
SouthTrust Bank of Orlando ........................ Florida
SouthTrust Bank of West Florida ................... Florida
SouthTrust Estate & Trust Company ............... Florida
SouthTrust Bank of Southwest Florida, N.A. ........ (1)
SouthTrust of South Carolina, Inc. .................. South Carolina
SouthTrust Bank of Dillon County .................. South Carolina
SouthTrust Bank of Charleston, N.A. ............... (1)
SouthTrust of Tennessee, Inc. ....................... Tennessee
SouthTrust Bank of Tennessee ...................... Tennessee
SouthTrust of Georgia, Inc. ......................... Georgia
SouthTrust Bank of Georgia, N.A. .................. (1)
SouthTrust Estate & Trust Company of
Georgia, N.A. ................................. (1)
Olympic City, Inc. .............................. Delaware
Dekalb Finance Subsidiary, Inc. ................. Georgia
Consumer Financial Services, Inc. ............... Georgia
SouthTrust of North Carolina, Inc. .................. North Carolina
SouthTrust Bank of North Carolina, N.A. ............. (1)
SouthTrust Bank of Central Carolina ................. North Carolina
Friendly Financial Center, Inc. ................... North Carolina
First State Service Corporation ................... North Carolina
CK Insurance Agency, Inc. ......................... North Carolina
SouthTrust Leasing, Inc. ............................ Delaware
SouthTrust Financial Services, Inc. ................. Alabama
Southern Financial Advisors, Inc. ................... Alabama
SouthTrust Securities, Inc. ......................... Delaware
SouthTrust Insurance Agency, Inc. ................... Alabama
SouthTrust Life Insurance Company ................... Arizona
SouthTrust Community Reinvestment Corporation ....... Alabama
Reef Resorts, Incorporated .......................... Florida
SouthTrust of Mississippi, Inc. ..................... Mississippi
SouthTrust Bank of South Mississippi .............. Mississippi
First Jefferson Mortgage Company ................ Mississippi
First Jefferson Financial Company ............... Mississippi
</TABLE>
(1) National Banks are chartered under the laws of the United States.
22
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report incorporated by reference in this Form 10-K, into the Company's
previously filed Registration Statements File Nos. 33-25513, 33-33187,
33-46804, 33-50107, 33-52717, 33-55069, and 33-55746.
/s/ Arthur Andersen LLP
------------------------
Arthur Andersen LLP
Birmingham, Alabama
March 30, 1995
<PAGE> 1
EXHIBIT 24
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 28th day of March, 1995.
Wallace D. Malone, Jr. (L.S.)
-----------------------------
Wallace D. Malone, Jr.
<PAGE> 2
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 28th day of March, 1995.
Charles G. Taylor (L.S.)
------------------------
Charles G. Taylor
<PAGE> 3
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 28th day of March, 1995.
H. Allen Franklin (L.S.)
------------------------
H. Allen Franklin
<PAGE> 4
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 17th day of March, 1995.
Allen J. Keesler, Jr. (L.S.)
-----------------------------
Allen J. Keesler, Jr.
<PAGE> 5
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 17th day of March, 1995.
Herbert C. Stockham (L.S.)
-----------------------------
Herbert C. Stockham
<PAGE> 6
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 28th day of March, 1995.
T. W. Mitchell (L.S.)
-----------------------------
T. W. Mitchell
<PAGE> 7
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 15th day of March, 1995.
John M. Bradford (L.S.)
-----------------------------
John M. Bradford
<PAGE> 8
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 16th day of March, 1995.
Bill L. Harbert (L.S.)
-----------------------------
Bill L. Harbert
<PAGE> 9
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 15th day of March, 1995.
William C. Hulsey (L.S.)
-----------------------------
William C. Hulsey
<PAGE> 10
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT:
The undersigned director of SouthTrust Corporation, a Delaware
corporation (the "Company") hereby constitutes and appoints William L. Prater
and Aubrey D. Barnard, and each of them (with full power of each of them to act
alone), his true and lawful attorney-in-fact and agent for him and on his
behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file with the United States Securities
and Exchange Commission and any other regulatory authority, the annual report
of the Company for the year ended December 31, 1994 on Form 10-K under the
Securities Exchange Act of 1934, as amended, including any amendment or
amendments thereto, and any and all documents required to be filed with respect
thereto, granting unto said attorneys and each of them 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 in order to effectuate the same as fully and to
all intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents, or
any of them may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand
and seal this 15th day of March, 1995.
W. K. Upchurch, Jr. (L.S.)
-----------------------------
W. K. Upchurch, Jr.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF SOUTHTRUST FOR THE YEAR ENDED DECEMBER 1, 1994, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-01-1994
<CASH> 650,433
<INT-BEARING-DEPOSITS> 13,875
<FED-FUNDS-SOLD> 22,645
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 164,528
<INVESTMENTS-CARRYING> 1,671,673
<INVESTMENTS-MARKET> 1,618,411
<LOANS> 12,121,907
<ALLOWANCE> 171,692
<TOTAL-ASSETS> 17,632,059
<DEPOSITS> 12,801,239
<SHORT-TERM> 2,828,012
<LIABILITIES-OTHER> 226,824
<LONG-TERM> 640,716
<COMMON> 204,761
0
0
<OTHER-SE> 930,507
<TOTAL-LIABILITIES-AND-EQUITY> 17,632,059
<INTEREST-LOAN> 868,461
<INTEREST-INVEST> 229,568
<INTEREST-OTHER> 10,583
<INTEREST-TOTAL> 1,108,612
<INTEREST-DEPOSIT> 377,643
<INTEREST-EXPENSE> 501,067
<INTEREST-INCOME-NET> 607,545
<LOAN-LOSSES> 44,984
<SECURITIES-GAINS> 330
<EXPENSE-OTHER> 485,999
<INCOME-PRETAX> 261,340
<INCOME-PRE-EXTRAORDINARY> 173,002
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173,002
<EPS-PRIMARY> 2.15
<EPS-DILUTED> 2.14
<YIELD-ACTUAL> 4.12
<LOANS-NON> 50,800
<LOANS-PAST> 16,600
<LOANS-TROUBLED> 2,100
<LOANS-PROBLEM> 18,700
<ALLOWANCE-OPEN> 135,233
<CHARGE-OFFS> 29,786
<RECOVERIES> 10,010
<ALLOWANCE-CLOSE> 171,692
<ALLOWANCE-DOMESTIC> 171,692
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99
Undertaking Regarding Registration Statement on Form S-8
For purposes of complying with the amendments to the rules governing
Form S-8 under the Securities Act of 1933, the undersigned registrant hereby
undertakes as follows, which undertaking shall be incorporated by reference
into the registrant's Registration Statement on Form S-8 No. 33-33187 filed
January 26, 1990:
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 Securities Act of 1933 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 shareholder in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the 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.
23
