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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
------------ ------------
COMMISSION FILE NUMBER 0-3613
SOUTHTRUST CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant specified in its charter)
DELAWARE 63-574085
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 NORTH 20TH STREET,
BIRMINGHAM, ALABAMA 35203
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(Address of principal executive offices) (Zip Code)
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. X
---
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 29, 1996.
Common Stock, par value $2.50 per share -- $2,172,500,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of February 29, 1996.
Common Stock, par value $2.50 per share -- 88,028,826 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended December
31, 1995, are incorporated by reference into Parts I and II.
Portions of the annual proxy statement for the annual meeting of
stockholders on April 17, 1996 are incorporated by reference into Part III.
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<PAGE> 2
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, 1995 SouthTrust had twelve bank
subsidiaries and nine bank-related subsidiaries. Of the twelve bank
subsidiaries, two are located in Alabama, two are located in Florida,
three are located in Georgia, two are located in North Carolina, one
is located in South Carolina, one is located in Tennessee, and one is
located in Mississippi. At December 31, 1995, SouthTrust had
consolidated total assets of $20.8 billion, which ranked it as the
largest bank holding company headquartered in Alabama and one of the
thirty-two largest bank holding companies in the United States. Of
SouthTrust's approximately $20.8 billion in total assets at December
31, 1995, approximately $11.1 billion were in Alabama, approximately
$3.8 billion were in Florida and approximately $4.1 billion were in
Georgia. SouthTrust has no significant foreign operations.
The Company employs approximately 7,800 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 bank related subsidiaries.
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 participation, 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 investment and
money market checking accounts, personal money management accounts,
passbook savings
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accounts and various other time deposit savings programs, loans
(including business, personal, automobile, mortgage, home improvement
and educational 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, 1995, SouthTrust had twelve subsidiary banks
with 447 banking offices, total assets of $20.8 billion, total loans
of $14.7 billion, total deposits of $14.7 billion, and total
stockholders' equity of $1.4 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 $3.8 billion in assets, $2.7 billion in
deposits and operated 84 banking offices in the greater metropolitan
Atlanta, Georgia area at December 31, 1995. At December 31, 1995
approximately 54% of the Company's bank assets were in Alabama, 20%
were in Georgia, 18% were in Florida, 4% were in North Carolina; and
the remainder were in South Carolina, Tennessee and Mississippi.
BANK-RELATED SUBSIDIARIES
The bank-related subsidiaries of SouthTrust are SouthTrust
Mortgage Corporation, a mortgage banking company servicing
approximately $4.8 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
Securities, Inc., an investment services company; SouthTrust Estate &
Trust Company, a trust company located in Florida; SouthTrust Estate
and Trust Company of Georgia, N.A., a trust company located in
Georgia; and SouthTrust Estate and Trust Services of the Carolinas,
Inc., a trust company.
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BUSINESS COMBINATIONS
During 1995 the Company completed the following acquisitions:
<TABLE>
<CAPTION>
(In Millions)
- -------------
Date Institution Assets Loans Deposits Location
- ---- ----------- ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
Feb 10 Plant State Bank ("Plant State") $ 44.4 $ 29.8 $ 40.9 Plant City, FL
March 10 Anchor Savings Bank -
("Anchor") - 2 branches 264.8 0.3 264.3 St. Pete/Ft. Myers
May 5 CNB Capital Corporation ("CNB") 76.2 39.4 65.2 Pascagoula, MS
June 30 Southern Bank Group - ("SBG") 108.9 65.2 94.1 Atlanta, GA
July 28 Bank United - 4 branches 130.6 0 130.3 Sarasota/Ft. Myers, FL
Sept 12 First Commercial Financial
Corporation -("FCFC") 36.6 24.4 33.6 Manatee, FL
Sept 22 FBC Holding Company, Inc.("FBC") 51.5 22.4 46.5 Crestview, FL
------ ------ ------
TOTALS $713.0 $181.5 $674.9
------ ------ ------
</TABLE>
The acquisitions of Anchor and Bank United
were accounted for as purchases of assets and assumptions of
liabilities. The acquisition of all of the outstanding
shares of FCFC was accounted for as a purchase. 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 Plant State, CNB, SBG,
and FBC 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
1995 aggregated approximately $34.5 million in cash and
2,157,993 shares of SouthTrust Corporation Common Stock with a
total market value at time of issuance of approximately $48.9
million. Total intangible assets recognized in these
transactions were approximately $32.0 million.
During 1994, the Company completed nine
acquisitions with aggregate total assets of $709.3 million,
loans of $413.0 million and total deposits of $665.2 million.
The Company has entered into four separate
definitive agreements and one separate letter of intent to
acquire financial institutions with aggregate total assets of
approximately $1.4 billion. 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 1996. The aggregate purchase price of all pending
acquisitions is approximately $17.6 million in cash and
approximately 6.7 million shares of SouthTrust Corporation
common stock.
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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 non-banking
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 quarterly
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 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
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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 for 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, the Financial Institutions Code of
Georgia, and the Mississippi Code of 1972. In addition, a
national bank may not pay a dividend in an amount greater than
its net profits then on hand after deducting its loan 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, 1995, approximately $332.8 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 way
that would 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. 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
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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 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
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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
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
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federal banking agencies. FDICIA is not expected to
have a material effect on the results of operations of
SouthTrust.
At December 31, 1995, 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 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
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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
(59) Officer
Frederick W. Murray, Jr. Executive Vice President 1980
(57)
James W. Rainer, Jr. Executive Vice President 1982
(53)
William R. Cranford Executive Vice President 1992 (1)
(50)
Aubrey D. Barnard Secretary, Treasurer and 1968
(59) Controller
Julian Banton Chairman, President and Chief 1982
(55) Executive Officer-SouthTrust
Bank of Alabama, N.A.
J. Michael Battle Executive Vice President 1992 (2)
(51) SouthTrust Bank of Alabama, N.A.
Fred C. Crum Executive Vice President 1986
(51) SouthTrust Bank of Alabama, N.A.
R. Glenn Eubanks Executive Vice President 1990
(47) SouthTrust Bank of Alabama, N.A.
William C. Patterson Executive Vice President 1979
(53) SouthTrust Bank of Alabama, N.A.
William E. Pearson Executive Vice President 1991 (3)
(46) SouthTrust Bank of Alabama, N.A.
C. Perry Relfe Executive Vice President 1981
(53) SouthTrust Bank of Alabama, N.A.
E. Frank Schmidt Executive Vice President 1994 (4)
(54) 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. 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.
(4) 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, 1995,
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 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.
In addition, subsidiaries of the Company have been
named as
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defendants in suits that allege fraudulent, deceptive or
collusive practices in connection with certain financing
activities (including the sale of insurance). These suits,
which in some cases are filed as class actions, name
unaffiliated corporations as co-defendants, and the Company's
insurance carrier is defending these suits under a reservation
of rights. These suits are typical of complaints that have
been filed in recent years challenging financial transactions
between plaintiffs and various financial institutions. The
complaints in such cases frequently seek punitive damages in
transactions involving fairly small amounts of actual damages,
and in recent years, have resulted in large punitive damage
awards to plaintiffs.
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, 1995, 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, 1995, 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, 1995, 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, 1995, and are
incorporated herein by reference.
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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, 1995, and is incorporated herein by
reference.
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
NONE
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 17, 1996 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
12 through 20, inclusive, of the Company's proxy statement for the
annual meeting of stockholders, April 17, 1996 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 17, 1996, and is incorporated herein by reference.
Item 13 Certain Relationships and Related Transactions
Information relating to this item is contained on page 20 of the
Company's proxy statement for the annual meeting of stockholders,
April 17, 1996, 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, 1995.
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)
(b) Reports on Form 8-K filed in the fourth quarter of
1995: None. The Company filed a current report on
Form 8-K on January 9, 1996 disclosing the fourth
quarter reversal of certain accruals related to
deposit insurance premiums, which were originally
recorded in the third quarter of 1995.
(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, 1996
----------------
/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, 1996
- --------------------------- Officer, Director
Wallace D. Malone, Jr.
/s/ Aubrey D. Barnard Secretary, Treasurer and March 25, 1996
- --------------------------- Controller (Principal
Aubrey D. Barnard Accounting and Financial
Officer)
* Director March 25, 1996
- ---------------------------
Herbert Stockham
* Director March 25, 1996
- ---------------------------
F. Crowder Falls
* Director March 25, 1996
- ---------------------------
T.W. Mitchell
* Director March 25, 1996
- ---------------------------
William C. Hulsey
* Director March 25, 1996
- ---------------------------
John M. Bradford
</TABLE>
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<TABLE>
<S> <C> <C>
* Director March 25, 1996
- ---------------------------
Wm. Kendrick Upchurch, Jr.
* Director March 25, 1996
- ---------------------------
Charles G. Taylor
Director March 25, 1996
- ---------------------------
Allen J. Keesler, Jr.
Director March 25, 1996
- ---------------------------
H. Allen Franklin
/s/ William L. Prater
- ---------------------------
William L. Prater
Attorney-in-fact
</TABLE>
16
<PAGE> 18
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
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, 1995 are incorporated herein by
reference in Item 8:
Consolidated Statements of Condition - December 31, 1995
and December 31, 1994
Consolidated Statements of Income - Years ended December 31,
1995, 1994, and 1993
Consolidated Statements of Cash Flows - Years ended
December 31, 1995, 1994, and 1993
Consolidated Statements of Shareholders' Equity
December 31, 1995, 1994, and 1993
Notes to Consolidated Financial Statements - Three years
ended December 31, 1995
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.
17
<PAGE> 1
Exhibit No. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED
(In thousands) DECEMBER 31, 1995
-----------------------
EARNINGS
SHARES PER SHARE
-------- ----------
<S> <C> <C>
Weighted average shares outstanding 83,892 $2.37
====== =====
Primary
Average shares outstanding 83,892
Common stock equivalents 509
------
84,401 $2.36
====== =====
Fully Diluted
Average shares outstanding 83,892
Common stock equivalents 593
------
84,485 $2.36
====== =====
</TABLE>
18
<PAGE> 1
Exhibit No. 12
STATEMENT OF COMPUTATION OF RATIOS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Earnings to fixed Charges
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $ 304,044 $ 261,340 $ 224,527 $ 164,892 $ 123,315
Plus:
Fixed charges 800,986 507,940 404,360 388,901 479,405
Less:
Capitalized interest (2,056) (599) (82) (201) (591)
---------- --------- --------- --------- --------
Earnings, including interest on deposits (A) 1,102,974 768,681 628,805 553,592 602,129
Less:
Interest on deposits (564,064) (377,643) (335,708) (337,878) (413,880)
---------- --------- --------- --------- ---------
Earnings, excluding interest on deposits (B) $ 538,910 $ 391,038 $ 293,097 $ 215,714 $ 188,249
---------- --------- --------- --------- ---------
Fixed Charges:
Interest expense $ 791,423 $ 501,067 $ 397,743 $ 382,930 $ 474,453
Capitalized interest 2,056 599 82 201 591
Amortization of debt expense 190 215 195 63 0
Interest portion of rent expense 7,317 6,059 6,340 5,707 4,361
---------- --------- --------- --------- ---------
Total Fixed Charges (C) $ 800,986 $ 507,940 $ 404,360 $ 388,901 $ 479,405
Less:
Interest on deposits (564,064) (377,643) (335,708) (337,878) (413,880)
---------- --------- --------- --------- ---------
Total Fixed Charges excluding
interest expense on deposits (D) $ 236,922 $ 130,297 $ 68,652 $ 51,023 $ 65,525
========== ========= ========= ========= =========
Earnings to fixed charges:
Including interest on deposits (A/C) 1.38x 1.51x 1.56x 1.42x 1.26x
========== ========= ========= ========= =========
Excluding interest on deposits (B/D) 2.27 3.00 4.27 4.23 2.87
========== ========= ========= ========= =========
</TABLE>
19
<PAGE> 1
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
SELECTED FINANCIAL INFORMATION (Table 1)
(Year ended December 31) 1995 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Return on average total assets 1.05% 1.09% 1.10% 1.04% 0.96% 0.85%
Return on average common
stockholders' equity 15.79 15.86 15.84 15.66 15.21 13.29
Dividend pay-out ratio 33.74 31.45 30.70 31.29 33.59 40.66
Average equity to average assets 6.64 6.85 6.96 6.62 6.29 6.37
Non-interest expense as a percent
of average total assets 2.83 3.05 3.19 3.39 3.15 2.85
- ------------------------------------------------------------------------------------------------------------------------
INTEREST YIELDS/RATES:
Taxable equivalent yields earned
on earning assets 8.49% 7.62% 7.52% 8.40% 9.84% 10.66%
Average rate paid on
interest-bearing liabilities 5.13 3.92 3.64 4.33 6.19 7.51
Net interest spread 3.36 3.70 3.88 4.07 3.65 3.15
Net interest margin 4.01 4.23 4.35 4.61 4.32 4.03
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA:
Net income $ 2.36 $ 2.15 $ 1.94 $ 1.66 $ 1.42 $ 1.14
Cash dividends declared 0.80 0.68 0.60 0.52 0.48 0.46
Stockholders' equity at period end 16.28 13.94 13.25 11.55 10.05 8.99
Stock price range
(low) 18 17 16 5/8 14 1/8 6 5/8 5 3/4
(high) 27 1/4 22 1/8 22 1/8 18 1/8 17 1/4 10 3/8
SHARE DATA:
Average shares outstanding (000s) 84,401 80,628 77,772 68,948 63,255 61,148
Shares outstanding
at end of year (000s) 87,904 81,426 79,401 74,477 65,837 61,167
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM PERFORMANCE:
Five-year compound growth rates for:
Period ended December 31, 1995:
Net income 23.34%
Net income per share 15.66
Dividends declared per share 11.70
Year ended December 31, 1995:
Total assets 18.21%
Loans 21.52
Deposits 15.06
Stockholders' equity 21.09
Stockholders' equity per share 12.61
</TABLE>
18
<PAGE> 2
EARNINGS SUMMARY
THREE YEARS ENDED DECEMBER 31, 1995
SouthTrust Corporation ("SouthTrust") reported net income of $199.0 million or
$2.36 per share for the year ended December 31, 1995, compared to net income of
$173.0 million or $2.15 per share for the year ended December 31, 1994. Net
income in 1993 was $150.5 million or $1.94 per share.
The increase in net income in 1995 over 1994 was primarily attributable to
the 20% growth in average earning assets. This increase was partially offset by
the decline in the fully taxable equivalent net interest margin, which
decreased to 4.01% in 1995 from 4.23% in 1994.
Net earnings in 1995 resulted in a return on average assets of 1.05%
compared to 1.09% during 1994, and a return on average stockholders' equity of
15.79% compared to 15.86% during 1994.
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 taxed at
a preferential rate has been adjusted to fully taxable equivalent amounts,
using a statutory federal tax rate of 35%.
Net interest income increased 13% to $707.5 million from $623.6 million in
1994. Net interest income in 1993 totaled $547.5 million. The taxable
equivalent net interest margins for the three years ended December 31, 1995
were 4.01%, 4.23% and 4.35%, respectively. The net interest spread between
interest-earning assets and interest-bearing liabilities decreased 34 basis
points to 3.36% in 1995 from 3.70% in 1994. The net interest spread in 1993 was
3.88%. 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.
Interest income increased $374.3 million to $1,498.9 million from $1,124.7
million in 1994. Interest income in 1993 totaled $945.2 million. The increase
in interest income during 1995 was attributable to an increase in the volume of
average interest-earning assets of 20% to $17.6 billion. Also contributing to
this increase was an increase in the yield on average interest-earning assets
of 87 basis points to 8.49% in 1995 from 7.62% in 1994. An increase in the
volume of interest-earning assets of 17% was also primarily responsible for the
$179.5 million increase in interest income from 1993 to 1994, since the yield
on interest-earning assets increased only 10 basis points from 7.52% in 1993 to
7.62% in 1994.
The mix of interest-earning assets shifted during 1995. Increased loan
demand and in-market acquisitions of banks pushed loans to approximately 76% of
average earning assets in 1995 compared to approximately 72% in 1994. 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 1995, average loans increased 26% to
$13.3 billion from $10.6 billion in 1994. The effect on interest income from
this loan growth was augmented by an increase in the average yield on loans to
9.09% during 1995 from 8.22% during 1994. Interest income on loans increased
39% to $1,211.9 million in 1995.
Total securities, including investment securities and securities available
for sale, which accounted for approximately 27% of average earning assets in
1994, fell to approximately 23% of average earning assets during 1995. Their
average yield of 6.71% in 1995 compared to 6.18% in 1994. Interest income on
securities increased $29.2 million to $271.5 million. The net increase in
securities income was primarily the result of an increase in the yield of
securities. The average volume of the securities portfolio increased only 4%
from 1994 to $4.0 billion as strong loan demand in 1995 enabled the Company to
invest a higher portion of earning assets in loans, which generally offer a
higher yield than securities.
Short-term investments were approximately 1% of average earning assets in
1995 and produced an average yield of 6.41%. During 1994 short-term investments
accounted for approximately 2% of average earning assets and produced an
average yield of 4.76%. Interest income on short-term investments increased
$4.9 million to $15.5 million in 1995.
Interest expense increased $290.4 million or 58% to $791.4 million in
1995. This compares to an increase of $103.4 million or 26% to $501.1 million
in 1994 from $397.7 million in 1993. The average rate paid on interest-bearing
liabilities rose in 1995, increasing 121 basis points to 5.13% from 3.92% in
1994, due to increasing market interest rates as a result of the Fed's monetary
policy. The average rate paid in interest-bearing liabilities in 1993 was
3.64%. Additionally, the increase in interest expense was attributable to
continued growth in the average volume of interest-bearing liabilities. During
1995, the volume of average interest-bearing liabilities increased $2.6 billion
or 21% to $15.4 billion. Approximately $572.2 million of this increase was due
to acquisitions. This compared to 1994 growth in volume of $1.9 billion or 17%.
19
<PAGE> 3
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, 1995. 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 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
(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 $ 13,326.1 $1,211,927 9.09% $10,606.6 $ 871,831 8.22% $ 8,422.0 $672,888 7.99%
Investment securities:
Taxable 1,558.8 100,831 6.47 1,224.4 75,721 6.18 3,498.8 217,983 6.23
Non-taxable 279.5 30,839 11.03 340.6 35,743 10.49 376.3 40,288 10.71
Securities available for sale 2,209.4 139,813 6.22* 2,339.6 130,772 5.55* 0.0 0 0.00
Short-term investments 242.4 15,528 6.41 222.5 10,583 4.76 279.1 14,066 5.04
- ------------------------------------------------------------------------------------------------------------------------
Total interest-
earning assets 17,616.2 1,498,938 8.49* 14,733.7 1,124,650 7.62* 12,576.2 945,225 7.52
Allowance for loan losses (187.1) (154.1) (118.1)
Other assets 1,554.8 1,355.3 1,194.9
- ------------------------------------------------------------------------------------------------------------------------
Total assets $ 18,983.9 $15,934.9 $ 13,653.0
========================================================================================================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings deposits $ 806.9 $ 21,520 2.67 $ 779.8 $ 18,903 2.42% $ 683.2 $ 17,221 2.52%
Interest-bearing
demand deposits 1,556.7 41,437 2.66 1,467.5 31,122 2.12 1,299.3 27,852 2.14
Time deposits 9,225.3 501,107 5.43 7,805.5 327,618 4.20 7,184.1 290,635 4.05
Short-term borrowings 2,995.9 174,330 5.82 2,259.9 98,189 4.34 1,340.0 41,014 3.06
Long-term debt 837.1 53,029 6.33 463.2 25,235 5.45 415.2 21,021 5.06
- ------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 15,421.9 791,423 5.13 12,775.9 501,067 3.92 10,921.8 397,743 3.64
Demand deposits
non-interest bearing 2,023.3 1,849.2 1,606.0
Other liabilities 277.9 218.6 174.8
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 17,723.1 14,843.7 12,702.6
Stockholders' equity 1,260.8 1,091.2 950.4
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 18,983.9 $15,934.9 $ 13,653.0
- ------------------------------------------------------------------------------------------------------------------------
Net interest income $ 707,515 $ 623,583 $547,482
========================================================================================================================
Net interest margin 4.01%* 4.23%* 4.35%
Net interest spread 3.36* 3.70* 3.88
</TABLE>
*Yields were calculated using average amortized cost of securities available
for sale.
<TABLE>
<CAPTION>
TAXABLE EQUIVALENT
ADJUSTMENT ANALYSIS 1995 1994 1993
Taxable Interest Taxable Interest Income 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 $1,208,209 $ 3,718 $1,211,927 $ 868,461 $ 3,370 $ 871,831 $669,495 $ 3,393 $672,888
Investment securities:
Taxable 100,831 0 100,831 75,721 0 75,721 217,555 428 217,983
Non-taxable 20,604 10,235 30,839 23,377 12,366 35,743 26,435 13,853 40,288
Securities available
for sale 139,451 362 139,813 130,470 302 130,772 0 0 0
Short-term investments 15,528 0 15,528 10,583 0 10,583 14,066 0 14,066
- ---------------------------------------------------------------------------------------------------------------------------
Totals $1,484,623 $14,315 $1,498,938 $1,108,612 $16,038 $1,124,650 $927,551 $17,674 $945,225
===========================================================================================================================
</TABLE>
20
<PAGE> 4
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 1995/1994 and 1994/1993. 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>
1995 versus 1994 1994 versus 1993
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 $240,349 $ 99,746 $340,095 $ 179,064 $19,879 $198,943
Securities:
Taxable 12,267 21,886 34,153 4,006 (15,497) (11,491)
Non-taxable (6,671) 1,767 (4,904) (3,762) (783) (4,545)
Short-term investments 1,011 3,933 4,944 (2,725) (757) (3,482)
- ---------------------------------------------------------------------------------------------------------------------------
Total interest income 246,956 127,332 374,288 176,583 2,842 179,425
Interest expense on:
Interest-bearing deposits 63,519 122,902 186,421 33,114 8,821 41,935
Short-term borrowings 37,290 38,851 76,141 35,485 21,690 57,175
Long-term debt 23,128 4,666 27,794 2,544 1,670 4,214
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense 123,937 166,419 290,356 71,143 32,181 103,324
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income $123,019 ($ 39,087) $ 83,932 $105,440 ($29,339) $ 76,101
===========================================================================================================================
</TABLE>
PROVISION FOR LOAN LOSSES
The provision for loan losses in 1995 was $61.3 million, compared to $45.0
million in 1994 and $45.0 million in 1993. Table 8, Allowance for Loan Losses,
summarizes information concerning the allowance for loan losses for each of the
five years in the period ended December 31, 1995.
The increase in the provision for loan losses during 1995 was in response
to the increased level of non-performing loans and potential problem loans.
During 1995, net charge-offs remained relatively low in comparison to
historical averages and totaled $29.5 million, or .22% of average loans; an
increase of $9.7 million from $19.8 million or .19% of average loans in 1994.
Net charge-offs during 1993 were $24.6 million or .29% of average loans. At
December 31, 1995, total non-performing loans increased to $76.0 million, and
consisted of loans on non-accrual status of $73.1 million and restructured
loans of $2.9 million. Total non-performing loans at December 31, 1994 and 1993
were $52.9 million and $67.4 million, respectively. For 1995, total
non-performing loans consisted of construction loans of $3.8 million, 1-4
family residential mortgage loans of $13.0 million, commercial real estate
mortgage loans of $12.8 million, commercial, financial and agricultural loans
of $42.3 million and loans to individuals of $4.1 million. Accruing loans 90
days or more past due increased $19.7 million to $36.3 million in 1995 from
$16.6 million in 1994. Accruing loans 90 days or more past due were $13.2
million in 1993. The increase in loans 90 days or more past due and accruing at
December 31, 1995 include a mixture of types of loans. Management believes that
the majority of these loans are past due for reasons that are likely curable by
the borrowers and should result in the loans returning to current status rather
than the loans being placed on non-accrual status or being restructured. In the
opinion of Management, the increases in non-performing assets and loans 90 days
or more past due and accruing during 1995 is not the result of trends in
economic conditions that are likely to affect overall credit quality or loan
charge-offs over the foreseeable future. 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.
NON-INTEREST INCOME
Total non-interest income increased $23.9 million or 13% to $208.7 million in
1995. Other fee income accounted for the largest portion of the increase in
non-interest income, increasing $9.1 million or 21% to $52.5 million. Other fee
income in 1995 included Bank Card fees of $18.7 million, investment fees of
$9.3 million, international department fees of $8.2 million and other fee
income of $16.3 million.
Service charges on deposit accounts increased $7.0 million or 8% to $93.3
million. This increase is attributable to an increased number of deposit
accounts and increases in certain service charge rates.
Income from mortgage banking operations including servicing fees increased
$3.9 million or 14% to $31.7 million. During 1995, mortgage origination fees
were approximately $13.6 million, a 20% increase from $11.3 million in 1994.
Mortgage origination fees are highly sensitive to interest rates on mortgage
loans and other economic conditions as well as consumer outlook. The increases
in originations during 1995 reflect the stabilizing of interest rates in 1995
relative to 1994 when increases in mortgage interest rates slowed demand for
new loans and refinancings which declined sharply from 1993. Most mortgage
origination fees are realized during
21
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
the period the loans are originated since the majority of such loans are sold
to third-party investors. Loan servicing income increased $2.9 million to $18.1
million during 1995, as total mortgage loans serviced increased to $4.8 billion
on approximately 68,500 loans in 1995 from $4.3 billion on 62,000 loans in
1994.
Trust fees increased $2.0 million or 12% to $18.9 million. Securities
gains were $0.2 million in 1995 and $0.3 million in 1994. Other non-interest
income increased $1.9 million or 19% to $12.1 million.
For the year ended December 31, 1994, total non-interest income increased
$10.1 million or 6% over the 1993 level of $174.7 million, primarily as a
result of increases in service charges on deposit accounts of $9.6 million and
increased other fee income of $5.7 million. These increases were partially
offset by a decrease in income from mortgage banking operations, which
decreased $6.0 million due to lower levels of loan originations in 1994 than in
1993. There were no significant non-recurring non-interest income items
recorded during 1995, 1994 or 1993.
NON-INTEREST INCOME (Table 4)
The following table presents an analysis of non-interest income for 1995,
1994 and 1993 together with the amount and percent change from the prior year
for 1995 and 1994:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
(In Millions) 1995 1994 1993 Amount % Amount %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on
deposit accounts $ 93.3 $ 86.3 $ 76.7 $ 7.0 8.1% $ 9.6 12.5%
Mortgage banking
operations income 31.7 27.8 33.8 3.9 14.0 (6.0) (17.8)
Trust fees 18.9 16.9 15.2 2.0 12.3 1.7 10.8
Securities gains 0.2 0.3 0.6 (0.1) (41.5) (0.3) (45.2)
Bank card fees 18.7 15.8 12.6 2.9 18.0 3.2 26.0
Investment fees 9.3 10.0 11.3 (0.7) (7.1) (1.3) (11.3)
International fees 8.2 6.1 4.8 2.1 35.5 1.3 25.0
Safe deposit fees 3.6 3.2 2.9 0.4 11.0 0.3 10.7
Collection fees 3.9 2.7 2.4 1.2 43.5 0.3 12.8
Cash management fees 1.7 2.0 1.7 (0.3) (17.4) 0.3 20.3
Business services 4.7 1.9 0.4 2.8 158.1 1.5 375.0
Other fees 2.4 1.6 1.6 0.8 48.0 0 0
Other 12.1 10.2 10.7 1.9 18.6 (0.5) (5.0)
- ---------------------------------------------------------------------------------------------------------------------------
Totals $208.7 $184.8 $174.7 $23.9 12.9% $10.1 5.8%
===========================================================================================================================
</TABLE>
NON-INTEREST EXPENSE
Total non-interest expense increased $50.5 million or 10% to $536.5 million
from $486.0 million in 1994. The 1995 ratio of non-interest expense to average
total assets of 2.83% compared favorably to the 1994 level of 3.05%. This
result is attributable to Management's commitment to continuously improve the
Company's overall operating efficiency. The operating efficiency ratio improved
to 58.57% in 1995 from 60.15% in 1994.
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 1995, salaries and employee benefits were $281.5 million, an
increase of $23.9 million or 9% over 1994. This was primarily reflective of the
increase in the number of full-time equivalent employees by 6% to approximately
7,800 employees at December 31, 1995. These additional employees were added in
response to the growth experienced by the Company during the year, including
the acquisition of other financial institutions. Net occupancy expense
increased $3.1 million or 8% to $43.4 million as the number of branches
increased 6% to 447 at December 31, 1995 from 420 at December 31, 1994.
Equipment expense increased $3.1 million or 11% to $31.0 million in 1995.
During 1995, deposit insurance expense decreased $8.8 million or 34% to $16.9
million as a result of a reduction in the insurance rate charged by the Federal
Deposit Insurance Corporation for insured deposits, to 4 basis points from 23
basis points in 1994. The Company's deposit liabilities include approximately
$1.9 billion of deposits, which were obtained through the acquisitions of
various thrift institutions that are insured by the Savings Association
Insurance Fund ("SAIF"). During 1995 the rate charged on SAIF insured
22
<PAGE> 6
deposits remained at 23 basis points. The SAIF fund is undercapitalized as a
result of losses sustained during the S&L crisis during the late 1980s and
early 1990s. While failures of thrift institutions have diminished during the
past two years, the premiums charged on SAIF deposits have not adequately
recapitalized the fund, because of interest paid on debt incurred to pay
depositors of failed institutions. To adequately recapitalize the SAIF fund,
Congress has proposed legislation to levy a one-time assessment on SAIF
deposits. While this proposed legislation has not been enacted into law,
various proposals generally would require payment of up to 85 basis points on
SAIF deposits. Under what is believed to be the most widely accepted proposal,
banks that obtained SAIF deposits through acquisitions would receive a 20%
discount to allow for deposit runoff that occurs subsequent to acquisitions.
This proposal is part of the 1996 Budget Reconciliation Act and as of year-end
1995 had not been signed into law. Should passage of such legislation occur,
the Company will record a one-time charge estimated to be approximately $12.7
million under the present proposal.
All other non-interest expense items increased $29.3 million or 22% to
$163.7 million for 1995, primarily as a result of growth in the general level
of business throughout the Company. From 1993 to 1994, non-interest expense
increased $51.0 million or 12% primarily as a result of increased salaries and
benefits, and other operating expenses, reflecting the growth experienced by
the Company during 1994. There were no significant non-recurring non-interest
expense items recorded during any of the three years in the period ended
December 31, 1995.
NON-INTEREST EXPENSE (Table 5)
The following table presents an analysis of non-interest expense for 1995,
1994 and 1993 together with the amount and percent change from the prior year
for 1995 and 1994:
<TABLE>
<CAPTION>
Change from Prior Year
Year Ended December 31 1995 1994
-----------------------------------------------------------------------------------------
(In Millions) 1995 1994 1993 Amount % Amount %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $281.5 $257.6 $227.0 $23.9 9.3% $30.6 13.5%
Net occupancy expense 43.4 40.3 36.8 3.1 7.8 3.5 9.5
Equipment expense 31.0 27.9 25.4 3.1 10.9 2.5 10.0
Professional services 34.8 27.2 25.4 7.6 27.7 1.8 7.2
Deposit insurance 16.9 25.7 23.5 (8.8) (34.4) 2.2 9.5
Communications 25.2 22.1 20.0 3.1 13.7 2.1 10.6
Business development 21.2 16.1 12.8 5.1 31.9 3.3 25.8
Supplies 12.0 10.2 9.9 1.8 17.6 0.3 3.4
Other insurance 11.8 10.2 8.3 1.6 15.6 1.9 22.8
Data processing 6.3 6.9 6.0 (0.6) (8.2) 0.9 14.0
Other 52.4 41.8 39.9 10.6 25.4 1.9 4.6
- ---------------------------------------------------------------------------------------------------------------------------
Totals $536.5 $486.0 $435.0 $50.5 10.4 $51.0 11.7
===========================================================================================================================
</TABLE>
INCOME TAXES
Income tax expense increased $16.7 million or 19% to $105.0 million for the
year ended December 31, 1995, resulting in an effective tax rate of 35%
compared to 34% and 33% in 1994 and 1993, respectively. The statutory federal
tax rate was 35% during all three years.
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> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
BALANCE SHEET SUMMARY
Total assets at December 31, 1995, were $20.8 billion, representing an increase
of 18% over the 1994 level of $17.6 billion. Of the total asset growth in 1995,
77% was internally generated. Average total assets increased 19% to $19.0
billion during 1995 from $15.9 billion in 1994. As of December 31, 1995, the
five-year compound growth rate in total assets was 18%.
During 1995, the Company consummated seven business combinations in which
the Company acquired additional assets of $713.0 million, including loans of
$181.5 million and deposits assumed of $674.9 million. During 1994, the Company
acquired $709.3 million in assets, including $413.0 million in loans and
deposits assumed of $665.2 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 1995 were $17.6 billion up $2.9 billion or
20% from 1994. Average earning assets were 92.8% of average total assets in
1995 and 92.5% in 1994.
Average interest-bearing liabilities were $15.4 billion in 1995 and $12.8
billion in 1994, and accounted for 81.2% of average liabilities and
stockholders' equity in 1995 and 80.2% in 1994.
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, 1995.
LOANS
Loans comprise the major portion of earning assets of the Company, accounting
for 76% and 72% of average earning assets in 1995 and 1994, respectively. At
December 31, 1995, loans, net of unearned income, totaled $14,655.1 million, up
21% from the December 31, 1994 level of $12,121.9 million. Of the total
increase of $2,533.3 million from 1994 to 1995, only $181.5 million represent
loans obtained in acquisitions. This represents an internal growth rate for
loans of 19% for 1995.
Demand for all types of loans was strong during 1995. The largest portion
of the increase in total loans was attributable to an increase in commercial
financial and agricultural loans, which increased $907.5 million to $5,965.9
million or 40.4% of total loans at December 31, 1995.
Commercial real estate mortgage loans increased $488.6 million or 28% to
$2,264.7 million or 15.4% of total loans at December 31, 1995. Commercial real
estate loans represent the Company's largest credit concentration.
Approximately 24% of the properties securing commercial real estate mortgage
loans are located in Alabama, approximately 28% are located in Florida,
approximately 23% are in Georgia, and the remainder of the properties are
dispersed throughout other states, primarily in the Southeast.
Real estate construction loans increased $570.6 million or 85% to $1,245.8
million or 8.4% of total loans at December 31, 1995, from $675.2 million or
5.5% of total loans at December 31, 1994. At December 31, 1995 construction
loans included approximately $347.9 million in loans on residential
properties, loans on income producing commercial real estate totaling $746.9
million, and $151.0 million of loans secured by owner occupied real estate.
Residential real estate mortgage loans increased $261.3 million or 9% to
$3,221.3 million or 21.8 % of total loans in 1995 compared to $2,960.0 million
or 24.2% of loans in 1994.
Loans to individuals at December 31, 1995 were $2,059.3 million, up $313.4
million from December 31, 1994. Loans to individuals accounted for 14.0% and
14.3% of total loans at year-end 1995 and 1994, respectively.
Unearned income at December 31, 1995 was $101.9 million, up $8.2 million
from the December 31, 1994 level of $93.7 million.
24
<PAGE> 8
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
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
(In Millions) Amount % Amount % Amount % Amount % Amount %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 5,965.9 40.4% $ 5,058.4 41.4% $4,094.4 43.0% $3,475.9 45.6% $2,714.3 45.0%
Real estate construction 1,245.8 8.4 675.2 5.5 448.6 4.7 332.5 4.4 382.2 6.3
Commercial real estate
mortgage 2,264.7 15.4 1,776.1 14.6 1,314.2 13.8 928.7 12.2 734.6 12.2
Residential real estate
mortgage 3,221.3 21.8 2,960.0 24.2 2,322.1 24.4 1,736.6 22.8 1,160.2 19.2
- ---------------------------------------------------------------------------------------------------------------------------
Total real estate loans 6,731.8 45.6 5,411.3 44.3 4,084.9 42.9 2,997.8 39.4 2,277.0 37.7
Loans to individuals 2,059.3 14.0 1,745.9 14.3 1,347.7 14.1 1,151.2 15.0 1,047.0 17.3
- ---------------------------------------------------------------------------------------------------------------------------
14,757.0 100.0 12,215.6 100.0 9,527.0 100.0 7,624.9 100.0 6,038.3 100.0
Unearned income (101.9) (93.7) (78.7) (78.3) (73.3)
- ---------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned
income 14,655.1 12,121.9 9,448.3 7,546.6 5,965.0
Allowance for loan
losses (206.6) (171.7) (135.2) (103.8) (80.4)
- ---------------------------------------------------------------------------------------------------------------------------
Net Loans $14,448.5 $ 11,950.2 $9,313.1 $7,442.8 $5,884.6
===========================================================================================================================
</TABLE>
As of December 31, 1995, 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 $ 751.8 $ 289.6 $ 204.4 $ 1,245.8 $ 174.1 $ 319.9
Real estate - commercial mortgage 747.4 970.2 547.1 2,264.7 771.3 746.0
Real estate - residential mortgage 587.1 584.5 2,049.7 3,221.3 1,083.1 1,551.1
Loans to individuals 232.6 1,543.4 283.3 2,059.3 1,771.5 55.2
Lease financing 45.4 386.4 30.2 462.0 416.6 0.0
Commercial, financial,
agricultural and other 2,685.8 1,784.3 1,033.8 5,503.9 1,248.7 1,569.4
Foreign 0.0 0.0 0.0 0.0 0.0 0.0
- ---------------------------------------------------------------------------------------------------------------------------
Total loans $5,050.1 $5,558.4 $4,148.5 $14,757.0 $5,465.3 $4,241.6
- ---------------------------------------------------------------------------------------------------------------------------
Unearned income 101.9
- ---------------------------------------------------------------------------------------------------------------------------
Loans net of unearned income $14,655.1
===========================================================================================================================
</TABLE>
The following table presents details of the geographic distribution of
commercial real estate mortgage loans at December 31, 1995:
<TABLE>
<CAPTION>
(In Millions) Ala. Fla. Ga. Tenn. Carolinas Va. Other Total
- ---------------------------------------------------------------------------------------------------------------------------
Secured by income producing properties:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land $ 16.7 $ 17.6 $ 15.3 $ 2.2 $ 1.4 $ 0.2 $ 8.3 $ 61.7
Retail 104.4 105.5 105.0 32.1 17.5 3.8 108.1 476.4
Office 89.6 82.9 66.2 29.2 13.9 12.2 21.7 315.7
Office-Warehouse 45.2 58.0 28.3 6.8 7.1 0.0 20.1 165.5
Apartments 100.5 218.0 142.2 30.2 22.2 41.8 70.1 625.0
Condominiums/Townhouses 4.4 2.2 3.8 0.3 0.2 0.0 0.4 11.3
Motels/Hotels 40.6 11.6 3.3 0.0 3.8 0.0 13.7 73.0
Industrial 13.8 18.3 27.2 0.0 1.9 0.0 3.5 64.7
Other 128.3 115.6 123.1 1.4 45.7 0.0 57.3 471.4
- ---------------------------------------------------------------------------------------------------------------------------
Total commercial real estate
mortgages $543.5 $629.7 $514.4 $102.2 $113.7 $58.0 $303.2 $2,264.7
===========================================================================================================================
</TABLE>
25
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
NON-PERFORMING ASSETS
Non-performing assets at December 31, 1995 were $122.1 million or .83% of net
loans, plus other real estate owned ("OREO"). This represents an increase of
$19.4 million from the December 31, 1994 level of $102.7 million or .84% of net
loans, plus OREO. At December 31, 1995, total non-performing assets included
$73.1 million in loans on non-accrual status, $2.9 million in restructured
loans, and $46.1 million in OREO. During 1995, the total OREO obtained through
acquisitions was $0.9 million.
Total non-performing loans, consisting of loans on non-accrual status and
restructured loans, included real estate construction loans of $3.8 million,
commercial real estate mortgage loans of $12.8 million, residential real estate
mortgage loans of $13.0 million, commercial, financial and agricultural loans
of $42.3 million, and loans to individuals of $4.1 million. Combined
non-performing real estate loans and properties taken in foreclosure of real
estate loans totaled $75.7 million at December 31, 1995. This represented 62%
of total non-performing assets as compared to $76.4 million or 74% at December
31, 1994.
In addition to loans on non-performing status at December 31, 1995, the
Company had loans of approximately $32.2 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, 1994, potential problem loans totaled $18.7
million.
Loans 90 days past due and accruing were $36.3 million at December 31,
1995, compared to $16.6 million at December 31, 1994.
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) 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual loans $ 73.1 $ 50.8 $ 58.6 $ 71.6 $ 70.6
Restructured loans 2.9 2.1 8.8 0.7 3.7
- ---------------------------------------------------------------------------------------------------------------------------
Total non-performing loans 76.0 52.9 67.4 72.3 74.3
Other real estate owned 46.1 49.8 45.7 56.5 68.3
- ---------------------------------------------------------------------------------------------------------------------------
Total non-performing assets 122.1 102.7 113.1 128.8 142.6
Accruing loans 90 days or more past due 36.3 16.6 13.2 11.1 12.0
===========================================================================================================================
Total non-performing assets and accruing
loans 90 days or more past due 158.4 $ 119.3 $ 126.3 $ 139.9 $ 154.6
- ---------------------------------------------------------------------------------------------------------------------------
Provision for loan losses $ 61.3 $ 45.0 $ 45.0 $ 43.3 $ 38.0
Net charge-offs 29.5 19.8 24.6 31.5 31.7
Ratios:
For the Period Ended:
Net charge-offs as a % of average net loans 0.22% 0.19% 0.29% 0.49% 0.55%
Provision for loan losses as a % of net charge-offs 207.95 227.46 182.95 137.31 120.04
Period End:
Allowance as a % of net loans 1.41 1.42 1.43 1.38 1.35
Allowance as a % of non-performing loans 271.88 324.55 200.70 143.35 108.23
Allowance as a % of non-performing assets 169.27 167.17 119.59 80.54 56.39
Allowance as a % of non-performing assets
and accruing loans 90 days or more past due 130.43 143.89 107.06 74.14 52.02
Non-performing loans as a % of net loans 0.52 0.44 0.71 0.96 1.25
Non-performing assets as a % of loans
net of unearned income plus OREO 0.83 0.84 1.19 1.69 2.36
Non-performing assets and accruing loans
90 days or more past due as a % of loans
net of unearned income plus OREO 1.08 0.98 1.33 1.84 2.56
</TABLE>
As of December 31, 1995, the Company had loans of approximately $32.2 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> 10
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses increased $34.9 million to $206.6 million at
December 31, 1995. As a percentage of net loans, the Company maintained the
allowance for loan losses at 1.41%, virtually consistent with the previous year
allowance of $171.7 million or 1.42% of net loans. At year-end 1995, the
allowance for loan losses was 272% of total non-performing loans compared to
325% at the end of 1994. During 1995, the provision for loan losses added $61.3
million to the allowance for loan losses, and net charge-offs reduced the
allowance for loan losses by $29.5 million. Existing allowances for loan losses
of acquired institutions totaled $3.1 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 1995 totaled $29.5 million or .22% of average net
loans, an increase of $9.7 million from $19.8 million or .19% of net loans
during 1994. During 1995, total loans charged-off were $41.1 million and total
recoveries of previously charged-off loans were $11.6 million. Net charge-offs
by major category during 1995 were commercial, financial and agricultural loans
of $7.6 million, real estate construction loans of $0.1 million, commercial
real estate mortgage loans of $2.0 million, loans to individuals of $17.8
million, and residential real estate mortgage loans of $2.0 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> 11
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) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans outstanding at year end, net of
unearned income $14,655.1 $12,121.9 $ 9,448.3 $ 7,546.6 $5,965.0
========================================================================================================================
Average loans outstanding, net of unearned income $13,326.1 $10,606.6 $ 8,422.0 $ 6,466.7 $5,718.0
========================================================================================================================
(In Thousands)
Balance beginning of year $ 171,692 $ 135,233 $ 103,770 $ 80,393 $ 70,812
Loans charged-off:
Commercial, financial and agricultural 10,753 9,773 14,830 15,902 16,856
Real estate construction 160 582 657 603 1,201
Commercial real estate mortgage 4,543 2,256 884 1,212 1,581
Residential real estate mortgage 2,351 1,581 2,545 1,402 902
Loans to individuals 23,328 15,594 17,704 20,943 21,046
- ------------------------------------------------------------------------------------------------------------------------
Total charge-offs 41,135 29,786 36,620 40,062 41,586
- ------------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial, financial and agricultural 3,176 2,617 4,317 3,025 5,445
Real estate construction 10 70 260 22 46
Commercial real estate mortgage 2,584 517 278 92 86
Residential real estate mortgage 332 446 367 235 90
Loans to individuals 5,561 6,360 6,783 5,150 4,228
- ------------------------------------------------------------------------------------------------------------------------
Total recoveries 11,663 10,010 12,005 8,524 9,895
- ------------------------------------------------------------------------------------------------------------------------
Net loans charged-off 29,472 19,776 24,615 31,538 31,691
Additions to allowance charged to expense 61,286 44,984 45,032 43,305 38,042
Subsidiaries' allowance at date of purchase 3,132 11,251 11,046 11,610 3,230
- ------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses, end of year:
Commercial, financial and agricultural 67,206 58,186 56,515 32,281 25,045
Real estate construction 15,883 11,405 4,786 12,062 10,358
Commercial real estate mortgage 24,874 44,065 24,551 7,664 4,549
Residential real estate mortgage 24,071 20,010 14,032 12,972 8,858
Loans to individuals 45,200 26,240 15,565 29,071 24,914
Unallocated portion of reserve 29,404 11,786 19,784 9,720 6,669
- ------------------------------------------------------------------------------------------------------------------------
Balance end of year $ 206,638 $ 171,692 $ 135,233 $ 103,770 $ 80,393
========================================================================================================================
Ratios:
End-of-year allowance to net loans outstanding 1.41% 1.42% 1.43% 1.38% 1.35%
Net loans charged-off to net average loans 0.22 0.19 0.29 0.49 0.55
Provision for loan losses to net charge-offs 207.95 227.46 182.95 137.31 120.04
Provision for loan losses to net average loans 0.46 0.42 0.53 0.67 0.67
End-of-year allowance to net average loans 1.55 1.62 1.61 1.60 1.41
</TABLE>
See Note A to Consolidated Financial Statements for discussion of the
determination of the provision for loan losses.
28
<PAGE> 12
INVESTMENT SECURITIES AND
SECURITIES AVAILABLE FOR SALE
At December 31, 1995, total securities were $4,200.4 million. Investment
securities amounted to $1,585.6 million and securities classified as available
for sale amounted to $2,614.8 million.
Investment securities decreased 5% from the year-end 1994 level to
$1,585.6 million, and included U.S. Treasury securities of $9.6 million, U.S.
Government agency securities of $1,006.0 million, collateralized mortgage
obligations ("CMOs") and mortgage backed securities of $252.3 million,
obligations of state and political subdivisions of $254.6 million and other
securities of $63.1 million.
Securities available for sale included U.S. Treasury securities of $240.3
million, U.S. Government agency securities of $962.7 million, CMOs and mortgage
backed securities of $1,253.3 million, obligations of states and political
subdivisions of $5.9 million and other securities of $152.6 million.
At December 31, 1995, the Company's investment portfolio included
approximately $1,505.6 million in CMOs and mortgage backed securities.
Approximately 65% of this amount were securities with floating interest rates,
and 35% were fixed interest rate securities. CMOs and mortgage backed
securities 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.
At December 31, 1995, the Company's investment portfolio included
approximately $658.4 million in Agency securities with forward coupon rate
increases, commonly known as "step-ups." $656.5 million of the step-ups held by
the Company have maturities through 1999, and the remaining $1.9 million
matures through 2009. 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, 1995
were $133.0 million in structured notes which mature through 2001. All
structured notes have floating interest rates. Of the total $133.0 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 $5.5 million are "Inverse Floaters," which pay interest at a rate
determined by a formula of a predetermined fixed rate less a floating variable
rate. These securities mature through 1997. Inverse floaters present the risk
of decreasing yields in rising rate environments.
At December 31, 1995, the fair value of investment securities exceeded the
amortized cost by $33.5 million, compared to an unrealized loss of $53.3
million at December 31, 1994. For securities available for sale, the amortized
cost exceeded the fair value by $15.6 million, resulting in an after-tax
adjustment to stockholders' equity of $9.6 million. This unrealized loss, which
Management believes is temporary, compares to a net of tax unrealized loss of
$46.3 million at December 31, 1994. The increase in fair values relative to
amortized cost is attributable to decreasing interest rates in the bond market
from the prevailing rates in the previous year.
At December 31, 1995, the gross unrealized gains for the entire securities
portfolio were $51.0 million and gross unrealized losses were $33.1 million.
During 1995, proceeds from sales of securities available for sale were $113.3
million and resulted in gross gains of $0.3 million and gross losses of $0.1
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, 1995, total short-term investments were $356.1 million, an
increase of $155.1 million from the $201.0 million level at year-end 1994. At
year-end 1995, short-term investments included $7.8 million in federal funds
sold, $92.5 million in securities purchased under agreements to resell, $18.7
million in interest-bearing deposits with other banks, and assets held for sale
of $237.1 million. Assets held for sale consisted of $221.5 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> 13
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, 1995.
<TABLE>
<CAPTION>
Investment Securities Securities Available for Sale
--------------------------------------------------------------------
December 31, 1995 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 $ 5.0 $ 5.0 5.50% $ 87.2 $ 87.8 6.45%
One to five years 4.6 4.6 4.99 149.3 151.4 6.10
Five to 10 years 0.0 0.0 0.00 0.0 0.0 0.00
More than 10 years 0.0 0.0 0.00 1.0 1.1 7.27
- ----------------------------------------------------------------------------------------------------------------------
Totals 9.6 9.6 5.29 237.5 240.3 6.24
- ----------------------------------------------------------------------------------------------------------------------
U.S. Government agencies:
Within one year 32.2 32.1 5.36 233.7 234.1 5.73
One to five years 942.1 948.4 6.56 579.4 582.7 6.46
Five to 10 years 22.9 23.1 5.60 145.1 145.6 6.51
More than 10 years 8.8 8.9 5.54 0.3 0.3 6.24
- ----------------------------------------------------------------------------------------------------------------------
Totals 1,006.0 1,012.5 6.50 958.5 962.7 6.29
- ----------------------------------------------------------------------------------------------------------------------
Collateralized Mortgage Obligations and
Mortgage backed securities:
Within one year 17.5 17.8 7.55 61.5 61.4 7.36
One to five years 105.6 107.4 7.34 105.1 104.4 5.96
Five to 10 years 66.5 68.1 8.17 385.4 376.4 5.69
More than 10 years 62.7 63.9 8.75 723.5 711.1 5.96
- ----------------------------------------------------------------------------------------------------------------------
Totals 252.3 257.2 7.92 1,275.5 1,253.3 5.95
- ----------------------------------------------------------------------------------------------------------------------
States and political subdivisions:
Within one year 24.3 24.7 10.86 0.8 0.8 6.22
One to five years 88.2 93.2 10.46 5.1 5.1 6.25
Five to 10 years 57.2 61.7 10.19 0.0 0.0 0.00
More than 10 years 84.9 94.9 10.87 0.0 0.0 0.00
- ----------------------------------------------------------------------------------------------------------------------
Totals 254.6 274.5 10.58 5.9 5.9 6.25
- ----------------------------------------------------------------------------------------------------------------------
Other securities:
Within one year 0.9 0.9 8.96 27.1 31.9 7.31
One to five years 48.5 48.7 8.85 40.9 43.0 7.00
Five to 10 years 1.5 0.5 6.37 0.1 0.1 6.00
More than 10 years 12.2 15.2 10.81 84.9 77.6 7.00
- ----------------------------------------------------------------------------------------------------------------------
Totals 63.1 65.3 9.19 153.0 152.6 7.06
- ----------------------------------------------------------------------------------------------------------------------
Total:
Within one year 79.9 80.5 7.56 410.3 416.0 6.25
One to five years 1,189.0 1,202.3 7.01 879.8 886.6 6.36
Five to 10 years 148.1 153.4 8.53 530.6 522.1 5.92
More than 10 years 168.6 182.9 9.80 809.7 790.1 6.07
- ----------------------------------------------------------------------------------------------------------------------
Totals $1,585.6 $1,619.1 7.48 $2,630.4 $2,614.8 6.17
======================================================================================================================
</TABLE>
30
<PAGE> 14
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 31,1995 were $19.0 billion, up 17% from the 1994 level of $16.3
billion.
DEPOSITS
Deposits are the Company's primary source of funding. At December 31, 1995,
total deposits were $14,575.1 million, up $1,773.9 million or 14% from the 1994
level of $12,801.2 million. During 1995, the Company acquired deposits of
financial institutions totaling approximately $674.9 million.
The largest portion of the increase in total deposits was an increase in
consumer time and savings deposits of $1,264.0 million or 14% to $10,329.2
million. Other time deposits, consisting of time deposits of $100,000 and over,
increased $277.6 million or 16% to $1,973.9 million. Non-interest-bearing
demand deposits increased $232.2 million or 11% to $2,272.0 million.
Non-interest-bearing demand deposits accounted for 15.6% and 15.9% of total
deposits at December 31, 1995 and 1994, respectively.
Core deposits are defined as demand deposits and time deposits less than
$100,000. At December 31, 1995, core deposits totaled $12,601.2 million or
86.5% of total deposits, compared to $11,104.9 million or 86.7% of total
deposits at December 31, 1994.
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
- ---------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
(In Millions) Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits:
Non-interest-bearing $ 2,023.3 $ 1,849.2 $ 1,606.0
Interest-bearing 1,556.7 2.66% 1,467.5 2.12% 1,299.3 2.14%
Savings deposits 806.9 2.67 779.8 2.42 683.2 2.52
Time deposits 9,225.3 5.43 7,805.5 4.20 7,184.1 4.05
- ---------------------------------------------------------------------------------------------------------------------
Totals $ 13,612.2 $11,902.0 $10,772.6
=====================================================================================================================
</TABLE>
Maturities of time certificates of deposit and other time deposits of $100,000
or more outstanding at December 31, 1995, are summarized as follows:
<TABLE>
<CAPTION>
Time Other
Certificates Time
(In Millions) of Deposit Deposits Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Within three months $ 648.2 $ 72.4 $ 720.6
After three through six months 348.8 17.3 366.1
After six through 12 months 442.8 51.7 494.5
After 12 months 390.0 2.7 392.7
- ------------------------------------------------------------------------------------------------------------------------
Totals $1,829.8 $144.1 $1,973.9
========================================================================================================================
</TABLE>
SHORT-TERM BORROWINGS
Short-term borrowings consist of federal funds purchased, securities sold under
agreements to repurchase, and miscellaneous other borrowed funds.
Short-term borrowings are becoming an increasingly used funding source by
the Company. Access to alternative short-term funding sources allows the
Company to meet its liquidity needs without relying solely on increasing
deposits on a short-term basis, which could have the effect of increasing
deposit rates on a substantial portion of the deposit base to obtain an
incremental level of funding. Total short-term borrowings increased $379.4
million, or 13%, to $3,207.4 million at December 31, 1995 from $2,828.0 million
at December 31, 1994. At December 31, 1995, total short-term borrowings
included federal funds purchased of $1,601.2 million, securities sold under
agreements to repurchase of $1,034.3 million, and other borrowed funds of
$571.9 million, including $350.0 million in short-term bank notes payable,
$83.1 million in short-term Federal Home Loan Bank advances, and other
short-term borrowings of $138.8 million.
At year-end 1995, total short-term borrowings were 16.9% of total funding
compared to 17.4% at December 31, 1994.
31
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
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, 1995, 1994 and 1993; 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:
1995 $2,635.5 $571.9
1994 1,885.8 942.2
1993 1,207.0 249.4
- ---------------------------------------------------------------------------------------------------------------------------
Weighted-average interest rate at year end:
1995 5.65% 5.75%
1994 5.49 5.96
1993 2.99 3.58
- ---------------------------------------------------------------------------------------------------------------------------
Maximum amount outstanding at any month end:
1995 $2,661.9 $766.7
1994 2,057.6 942.2
1993 1,487.4 249.4
- ---------------------------------------------------------------------------------------------------------------------------
Average amount outstanding during the year:
1995 $2,333.7 $662.2
1994 1,661.3 598.6
1993 1,227.2 112.8
- ---------------------------------------------------------------------------------------------------------------------------
Weighted-average interest rate during the year:
1995 5.80% 5.88%
1994 4.26 4.59
1993 3.03 3.41
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
LONG-TERM DEBT
Long-term debt at December 31, 1995 totaled $1,187.3 million compared to $640.7
million at December 31, 1994. At December 31, 1995, total long-term debt
included $651.9 million of Federal Home Loan Bank advances which are
obligations of various of the Company's subsidiary banks. Such obligations
represent medium-term funding sources to the subsidiary banks. Virtually all of
these advances mature through 2001. Such medium-term funding allows the banks
to employ an assets/liability management strategy that links the maturity of
such liabilities with similarly scheduled maturities of earning assets without
use of interest rate swaps or other measures to minimize interest rate risk.
During 1995, the Company increased long-term borrowings by $616.0 million,
including $466.0 million of Federal Home Loan Bank advances maturing through
2000, and $150.0 million of subordinated notes which mature in 2025. The $150.0
million of subordinated notes contain a put option giving holders the option to
terminate the notes at par value in 2005. Repayments of long-term debt during
1995 totaled $69.4 million and included $66.0 million in repayments on Federal
Home Loan Bank advances. 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, 1995, the Company's long-term debt to equity ratio was
83.0% compared to 56.4% at December 31, 1994.
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 short-term marketable
instruments, the continuous maturing 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> 16
Net cash provided through operating activities during 1995 of $367.8
million included net income of $199.0 million, adjusted for the provision for
loan losses of $61.3 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 provide
an analysis of cash from operating, investing, and financing activities for
each of the three years in the period ended December 31, 1995.
Table 6, Loan Portfolio, included elsewhere in this report, shows
scheduled loan maturities as of December 31, 1995. Approximately 34% of total
loans mature within one year. Of the $9,706.9 million maturing after one year,
$4,241.6 million or 44% had adjustable interest rates. Repayments of loans and
scheduled loan maturities represent a substantial source of liquidity.
The Company has $2,614.8 million in securities designated 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
Corporation's securities portfolio by major category. At December 31, 1995,
securities classified as investment securities included $79.9 million or 5% of
the portfolio which had maturities of one year or less, and $1,189.0 million or
75% 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, 1995 by major category. For investment securities, gross
unrealized gains at December 31, 1995 were $35.8 million and gross unrealized
losses were $2.3 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, $1,496.3 million or 13% in 1995, 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 1995 were $2,995.9 million, and
average short-term investments were $242.4 million, resulting in an average
short-term borrowing position of $2,753.5 million in 1995.
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, 1995, $332.8 million of the
net assets of subsidiaries were 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, 1995.
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 values of such contracts are not included in the
results of operations.
During 1995, the average notional amount of Swaps outstanding was $697.4
million; the average rate received under the contracts was 6.60% and the
average rate paid was 6.03% resulting in a reduction in interest expense of
$4.0 million. During 1994, the average notional outstanding amount was $680.0
million and the average rates received and paid were 6.18% and 4.80%,
respectively and reduced interest expense by $9.4 million.
<TABLE>
<CAPTION>
Notional
(In Millions) Amount Expiration Liabilities Hedged
- ---------------------------------------------------------------
<S> <C> <C> <C>
$200 1996 Deposit liabilities
100 2003 Long-term debt
200 2004 Long-term debt
150 2005 Long-term debt
- ---------------------------------------------------------------
$650
===============================================================
</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, 1995 and 1994 the remaining deferred gain related to such
termination was $2.2 million and $3.8 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 1995 the effect on net income from use of
options was insignificant. At December 31, 1995 there were no option contracts
outstanding.
33
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
INTEREST RATE SENSITIVITY ANALYSIS (Table 12)
<TABLE>
<CAPTION>
December 31, 1995 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 $ 5,420.9 $ 309.1 $ 252.8 $ 451.5 $ 437.4 $ 0.0 $ 6,871.7
Fixed-rate commercial and
real estate loans 385.9 197.3 296.0 406.3 3,568.6 0.0 4,854.1
Loans to individuals 593.8 369.0 225.4 450.0 1,291.1 0.0 2,929.3
- ---------------------------------------------------------------------------------------------------------------------------
Total Loans 6,400.6 875.4 774.2 1,307.8 5,297.1 0.0 14,655.1
Securities 1,238.6 422.2 508.7 721.7 1,309.2 0.0 4,200.4
Other earning assets 208.4 147.7 0.0 0.0 0.0 0.0 356.1
- ---------------------------------------------------------------------------------------------------------------------------
Total earning assets 7,847.6 1,445.3 1,282.9 2,029.5 6,606.3 0.0 19,211.6
Other assets 0.0 0.0 0.0 0.0 0.0 1,782.0 1,782.0
Less: Allowance for loan losses 0.0 0.0 0.0 0.0 0.0 (206.6) (206.6)
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets $ 7,847.6 $1,445.3 $ 1,282.9 $ 2,029.5 $6,606.3 $1,575.4 $20,787.0
===========================================================================================================================
Non-interest-bearing demand
deposits $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $2,272.0 $ 2,272.0
Interest-bearing demand deposits 1,773.2 0.0 0.0 0.0 0.0 0.0 1,773.2
Money market deposits 1,986.2 0.0 0.0 0.0 0.0 0.0 1,986.2
Savings deposits 858.1 0.0 0.0 0.0 0.0 0.0 858.1
Time deposits under $100,000 515.0 1,332.5 945.6 1,317.7 1,600.9 0.0 5,711.7
Other time deposits 553.4 397.3 291.9 360.6 370.7 0.0 1,973.9
- ---------------------------------------------------------------------------------------------------------------------------
Total deposits 5,685.9 1,729.8 1,237.5 1,678.3 1,971.6 2,272.0 14,575.1
Short-term borrowings 3,044.9 12.2 11.8 99.1 39.4 0.0 3,207.4
Long-term debt 155.0 100.0 0.0 355.0 577.3 0.0 1,187.3
Other liabilities 0.0 0.0 0.0 0.0 386.3 0.0 386.3
Stockholders' equity 0.0 0.0 0.0 0.0 1,430.9 0.0 1,430.9
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 8,885.8 $1,842.0 $ 1,249.3 $ 2,132.4 $4,405.5 $2,272.0 $20,787.0
===========================================================================================================================
Interest rate gap ($ 1,038.2) ($ 396.7) $ 33.6 ($ 102.9) $2,200.8 ($ 696.6)
Effect of interest rate swaps (200.0) (225.0) (200.0) 175.0 450.0
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative interest rate gap ($ 1,238.2) ($1,859.9) ($ 2,026.3) ($ 1,954.2) $ 696.6
===========================================================================================================================
Cumulative gap as a percentage
of earning assets -
December 31, 1995 (6.45%) (9.68%) (10.55%) (10.17%) 3.63%
- December 31, 1994 (11.29%) (17.56%) (13.08%) (5.10%) 12.57%
===========================================================================================================================
</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> 18
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, 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, 1995 was $1,430.9 million or 6.88% of
year-end assets compared to $1,135.3 million or 6.44% in 1994. During 1995, net
income added $199.0 million to stockholders' equity and dividends declared
totaled $67.2 million, resulting in an internal common equity generation rate
of 10.5% in 1995 compared to 5.6% in 1994.
During 1995, sales of common stock through the dividend reinvestment plan,
the employee stock purchase plan, the stock option plans, and the conversion of
debentures totaling 560,749 shares added $7.9 million to equity. During 1995
shares issued in business combinations totaled 2,157,993 shares and added $28.4
million to equity. A public offering totaling 3,775,000 shares increased equity
by $90.5 million. The net unrealized gain, after tax, on securities available
for sale was $37.3 million during 1995, compared to an unrealized net loss of
$56.3 million during 1994. Treasury stock purchases for 15,619 shares reduced
equity by $0.4 million.
The annual dividend rate during 1995 was $0.80 per share, representing a
18% increase over 1994. For 1996 the indicated annual dividend rate is $0.88
per share, marking the twenty-sixth consecutive year in which SouthTrust has
increased its dividend. The dividend pay-out ratio during 1995 was 33.7%. 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, sets 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, 1995, SouthTrust had a total risk-based capital
ratio of 12.21% consisting of Tier I capital elements of 7.76% and supplemental
capital elements of 4.45%, and a leverage ratio of 6.35%. The Federal Deposit
Insurance Corporation Improvement Act of 1994 provided further guidance as to
capital levels to be maintained by insured depository institutions and
corresponding supervisory treatments. Under these guidelines the capital levels
at all of SouthTrust's bank subsidiaries are considered "well capitalized," the
highest of the five supervisory groupings.
Table 13, Capital Position, presents relevant capital ratios for 1995 and
1994.
<TABLE>
<CAPTION>
CAPITAL POSITION (Table 13)
December 31
1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier I capital ratio 7.76% 7.68%
Supplemental capital element 4.45 4.03
- ---------------------------------------------------------------------------------------------------------------------------
Total risk-based capital ratio 12.21 11.71
===========================================================================================================================
Leverage ratio 6.35 6.10
===========================================================================================================================
</TABLE>
35
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
QUARTERLY INCOME INFORMATION (Table 14)
The Company's unaudited consolidated operating results for each quarter of 1995
and 1994 are summarized in the table below.
<TABLE>
<CAPTION>
In Thousands, except per share amounts) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
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 $399,788 $382,821 $362,412 $339,602 $316,504 $292,228 $261,673 $238,207
Interest expense 212,554 206,744 195,117 177,008 155,210 133,229 112,747 99,881
Net interest income 187,234 176,077 167,295 162,594 161,294 158,999 148,926 138,326
Securities gains (losses),
net 31 22 45 95 213 60 (9) 66
Provision for
loan losses 21,797 13,392 13,555 12,542 11,712 11,380 11,703 10,189
Income before
income taxes 82,346 77,702 72,957 71,039 69,365 67,023 63,398 61,554
Net income $ 53,589 $ 50,547 $ 48,029 $ 46,840 $ 45,367 $ 44,506 $ 42,392 $ 40,737
Net income per share $ 0.61 $ 0.60 $ 0.58 $ 0.57 $ 0.56 $ 0.55 $ 0.53 $ 0.51
Dividends declared per share 0.20 0.20 0.20 0.20 0.17 0.17 0.17 0.17
</TABLE>
36
<PAGE> 20
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 24,
1995, approximately 13,633 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>
Dividends Book Value per Share at Stock Market Price Range Dividends
End of Period Low High per Share
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
First Quarter $14.47 $18 0/0 $21 3/8 $0.20
Second Quarter 15.07 20 5/8 23 3/8 0.20
Third Quarter 15.83 23 0/0 27 1/4 0.20
Fourth Quarter 16.28 24 3/8 26 0/0 0.20
Year 16.28 18 0/0 27 1/4 0.80
- ---------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
SOUTHTRUST CORPORATION
SIX-YEAR CONDENSED STATEMENTS OF CONDITION (Table 16)
<TABLE>
<CAPTION>
Growth Rate
----------------
One Five-year
(In Millions) 1995 1994 1993 1992 1991 1990 Year Compound
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCES:
Loans, net of unearned income $13,326.1 $10,606.6 $ 8,422.0 $ 6,466.7 $ 5,718.0 $5,003.6 25.64% 21.64%
Investment securities:
Taxable 1,558.8 1,224.4 3,498.8 2,969.9 2,245.3 1,858.3 27.31 (3.45)
Non-taxable 279.5 340.6 376.3 402.8 434.7 442.3 (17.94) (8.77)
- ------------------------------------------------------------------------------------------------------------------------
Total investment securities 1,838.3 1,565.0 3,875.1 3,372.7 2,680.0 2,300.6 17.46 (4.39)
Securities available for sale 2,209.4 2,339.6 0 0 0 0 (5.57) 0.00
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 29.6 21.3 54.5 57.3 48.0 54.7 38.97 (11.56)
Interest-bearing deposits
in other banks 16.8 12.6 19.4 46.3 57.9 58.5 33.33 (22.08)
Assets held for sale 196.0 188.6 205.2 147.1 96.1 94.0 3.92 15.83
- ------------------------------------------------------------------------------------------------------------------------
Total short-term investments 242.4 222.5 279.1 250.7 202.0 207.2 8.94 3.19
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets 17,616.2 14,733.7 12,576.2 10,090.1 8,600.0 7,511.4 19.56 18.59
Allowance for loan losses (187.1) (154.1) (118.1) (90.7) (75.5) (64.0) 21.41 23.93
Other assets 1,554.8 1,355.3 1,194.9 1,028.8 887.2 780.9 14.72 14.77
- ------------------------------------------------------------------------------------------------------------------------
Total assets $18,983.9 $15,934.9 $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 19.13 18.20
========================================================================================================================
DEPOSITS:
Interest-bearing $11,588.9 $10,052.8 $ 9,166.6 $ 7,703.0 $ 6,648.8 $5,568.8 15.28 15.79
Other 2,023.3 1,849.2 1,606.0 1,293.1 997.6 924.6 9.41 16.96
- ------------------------------------------------------------------------------------------------------------------------
Total deposits 13,612.2 11,902.0 10,772.6 8,996.1 7,646.4 6,493.4 14.37 15.96
Federal funds purchased and other
short-term borrowed funds 2,995.9 2,259.9 1,340.0 925.5 868.7 921.9 32.57 26.58
Long-term debt 837.1 463.2 415.2 206.9 142.9 148.5 80.72 41.32
Other liabilities 277.9 218.6 174.8 170.1 161.9 140.0 27.13 14.70
Stockholders' equity 1,260.8 1,091.2 950.4 729.6 591.8 524.5 15.54 19.17
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $18,983.9 $15,934.9 $13,653.0 $11,028.2 $ 9,411.7 $8,228.3 19.13 18.20
========================================================================================================================
BALANCES AT YEAR END:
Loans, net of unearned income $14,655.1 $12,121.9 $ 9,448.3 $ 7,546.6 $ 5,965.0 $5,531.4 20.90 21.52
Investment securities:
Taxable 1,330.9 1,364.6 921.6 3,366.2 2,681.0 2,001.7 (2.47) (7.84)
Non-taxable 254.7 307.1 356.4 390.0 423.3 447.6 (17.06) (10.66)
- ------------------------------------------------------------------------------------------------------------------------
Total investment securities 1,585.6 1,671.7 1,278.0 3,756.2 3,104.3 2,449.3 (5.15) (8.33)
Securities available for sale 2,614.8 2,280.8 2,454.8 0 0 0 14.64 0.00
Short-term investments:
Federal funds sold and securities
purchased under resale agreements 100.3 22.6 2.0 49.1 20.5 16.0 343.81 44.36
Interest-bearing deposits in other
banks 18.7 13.9 47.6 50.5 38.2 44.7 34.53 (15.99)
Assets held for sale 237.1 164.6 258.5 198.8 105.3 84.1 44.05 23.03
- ------------------------------------------------------------------------------------------------------------------------
Total short-term investments 356.1 201.1 308.1 298.4 164.0 144.8 77.08 19.72
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets 19,211.6 16,275.5 13,489.2 11,601.2 9,233.3 8,125.5 18.04 18.78
Allowance for loan losses (206.6) (171.7) (135.2) (103.8) (80.4) (70.8) 20.33 23.89
Other assets 1,782.0 1,528.3 1,354.0 1,217.0 1,005.2 951.2 16.60 13.38
- ------------------------------------------------------------------------------------------------------------------------
Total assets $20,787.0 $17,632.1 $14,708.0 $12,714.4 $10,158.1 $9,005.9 17.89 18.21
========================================================================================================================
DEPOSITS:
Interest-bearing $12,303.1 $10,761.5 $ 9,732.5 $ 8,484.5 $ 7,171.6 $6,175.4 14.33 14.78
Other 2,272.0 2,039.7 1,782.9 1,597.8 1,105.6 1,052.6 11.39 16.64
- ------------------------------------------------------------------------------------------------------------------------
Total deposits 14,575.1 12,801.2 11,515.4 10,082.3 8,277.2 7,228.0 13.86 15.06
Federal funds purchased and other
short-term borrowed funds 3,207.4 2,828.0 1,456.4 1,331.1 902.9 917.5 13.42 28.44
Long-term debt 1,187.3 640.7 470.0 258.2 140.2 148.8 85.31 51.49
Other liabilities 386.3 226.9 214.4 182.4 175.8 162.0 70.25 18.98
Stockholders' equity 1,430.9 1,135.3 1,051.8 860.4 662.0 549.6 26.04 21.09
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $20,787.0 $17,632.1 $14,708.0 $12,714.4 $10,158.1 $9,005.9 17.89 18.21
========================================================================================================================
</TABLE>
38
<PAGE> 22
SIX-YEAR SUMMARY OF EARNINGS (Table 17)
<TABLE>
<CAPTION>
Growth Rates
--------------
One Five-year
(In Thousands, except per share data) 1995 1994 1993 1992 1991 1990 Year Compound
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,208,209 $ 868,461 $669,495 $561,757 $ 581,839 $554,262 39.12% 16.87%
Interest on investment securities:
Taxable 100,831 75,721 217,555 221,692 193,297 168,613 33.16 (9.77)
Non-taxable 20,604 23,377 26,435 30,246 33,654 34,833 (11.86) (9.97)
- ------------------------------------------------------------------------------------------------------------------------
Total interest on
investment securities 121,435 99,098 243,990 251,938 226,951 203,446 22.54 (9.81)
Interest on securities available
for sale 139,451 130,470 0 0 0 0 6.88 0.00
Interest on federal funds sold
and securities purchased under
resale agreements 1,743 875 1,637 2,056 2,862 4,700 99.20 (18.00)
Interest on time deposits in
other banks 1,079 539 890 2,001 3,760 5,000 100.19 (26.41)
Interest on assets held for sale 12,706 9,169 11,539 10,328 8,313 9,253 38.58 6.55
- ------------------------------------------------------------------------------------------------------------------------
Total interest income 1,484,623 1,108,612 927,551 828,080 823,725 776,661 33.92 13.84
INTEREST EXPENSE:
Deposits 564,064 377,643 335,708 337,878 413,880 411,560 49.36 6.51
Short-term borrowings 174,330 98,189 41,014 31,418 49,133 73,333 77.55 18.91
Long-term debt 53,029 25,235 21,021 13,634 11,440 13,436 110.14 31.60
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense 791,423 501,067 397,743 382,930 474,453 498,329 57.95 9.69
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 693,200 607,545 529,808 445,150 349,272 278,332 14.10 20.02
Provision for loan losses 61,286 44,984 45,032 43,305 38,042 44,635 36.24 6.55
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 631,914 562,561 484,776 401,845 311,230 233,697 12.33 22.01
NON-INTEREST INCOME:
Service charges on deposit accounts 93,276 86,304 76,716 63,894 49,379 39,435 8.08 18.79
Mortgage banking operations 31,712 27,760 33,771 22,794 17,427 14,959 14.24 16.22
Bank card fees 18,699 15,847 12,574 9,667 4,239 3,271 18.00 41.72
Trust fees 18,936 16,863 15,224 11,938 9,819 9,932 12.29 13.78
Securities gains, net 193 330 603 634 680 464 (41.52) (16.09)
Other fee income 33,758 27,466 25,075 19,526 14,592 18,764 22.91 12.46
Other 12,090 10,208 10,739 8,230 12,745 4,259 18.44 23.20
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest income 208,664 184,778 174,702 136,683 108,881 91,084 12.93 18.03
NON-INTEREST EXPENSE:
Salaries and employee benefits 281,546 257,637 227,017 184,921 149,521 121,812 9.28 18.24
Net occupancy expense 43,423 40,273 36,775 32,254 25,273 18,514 7.82 18.59
Equipment expense 30,932 27,899 25,353 20,687 16,819 13,513 10.87 18.01
Deposit insurance 16,893 25,747 23,512 19,649 15,119 7,681 (34.39) 17.07
Other 163,740 134,443 122,294 116,125 90,064 73,193 21.79 17.47
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 536,534 485,999 434,951 373,636 296,796 234,713 10.40 17.98
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 304,044 261,340 224,527 164,892 123,315 90,068 16.34 27.55
Income tax expense 105,039 88,338 73,992 50,646 33,309 20,360 18.91 38.84
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 199,005 $ 173,002 $150,535 $114,246 $ 90,006 $ 69,708 15.03 23.34
========================================================================================================================
Average number of shares
outstanding (000s) 84,401 80,628 77,772 68,948 63,255 61,148
Net income per share $2.36 $2.15 $1.94 $1.66 $1.42 $1.14
Dividends declared per share 0.80 0.68 0.60 0.52 0.48 0.46
</TABLE>
39
<PAGE> 23
CONSOLIDATED STATEMENTS OF CONDITION
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
December 31
------------------------------------
(Dollars in Thousands) 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 773,656 $ 650,433
Short-term investments:
Federal funds sold and securities purchased
under resale agreements 100,273 22,645
Interest-bearing deposits in other banks 18,715 13,875
Assets held for sale 237,139 164,528
- -------------------------------------------------------------------------------------------------------------------------
Total short-term investments 356,127 201,048
Securities available for sale 2,614,803 2,280,849
Investment securities (Fair Value of $1,619,050 and
$1,618,411 in 1995 and 1994, respectively) 1,585,562 1,671,673
Loans 14,757,093 12,215,599
Less-
Unearned income 101,931 93,692
Allowance for loan losses 206,638 171,692
- -------------------------------------------------------------------------------------------------------------------------
Net loans 14,448,524 11,950,215
Premises and equipment, net 433,527 364,642
Due from customers on acceptances 13,244 34,111
Other assets 561,581 479,088
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $20,787,024 $17,632,059
=========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest-bearing $12,303,089 $10,761,495
Other 2,271,988 2,039,744
- -------------------------------------------------------------------------------------------------------------------------
Total deposits 14,575,077 12,801,239
Federal funds purchased and securities sold
under agreements to repurchase 2,635,556 1,885,838
Other short-term borrowings 571,871 942,174
Bank acceptances outstanding 13,244 34,111
Other liabilities 373,094 192,713
Long-term debt 1,187,312 640,716
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 19,356,154 16,496,791
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; 88,398,198 shares issued
in 1995 and 81,904,456 in 1994 220,996 204,761
Capital surplus 340,608 231,975
Retained earnings 885,129 750,699
Unrealized loss on securities available for sale, net (9,635) (46,304)
Treasury stock at cost (494,515 shares in 1995 and
478,896 shares in 1994) (6,228) (5,863)
- -------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,430,870 1,135,268
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $20,787,024 $17,632,059
=========================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
40
<PAGE> 24
CONSOLIDATED STATEMENTS OF INCOME
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------
(In Thousands, except per share data) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $1,208,209 $ 868,461 $ 669,495
Interest on investment securities:
Taxable 100,831 75,721 217,555
Non-taxable 20,604 23,377 26,435
- ------------------------------------------------------------------------------------------------------------------------
Total interest on investment securities 121,435 99,098 243,990
Interest on securities available for sale 139,451 130,470 0
Interest on short-term investments 15,528 10,583 14,066
- ------------------------------------------------------------------------------------------------------------------------
Total interest income 1,484,623 1,108,612 927,551
- ------------------------------------------------------------------------------------------------------------------------
Interest Expense
Interest on deposits 564,064 377,643 335,708
Interest on short-term borrowings 174,330 98,189 41,014
Interest on long-term debt 53,029 25,235 21,021
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense 791,423 501,067 397,743
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 693,200 607,545 529,808
PROVISION FOR LOAN LOSSES 61,286 44,984 45,032
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 631,914 562,561 484,776
Non-Interest Income
Service charges on deposit accounts 93,276 86,304 76,716
Mortgage banking operations 31,712 27,760 33,771
Bank card fees 18,699 15,847 12,574
Trust fees 18,936 16,863 15,224
Other fee income 33,758 27,466 25,075
Securities gains, net 193 330 603
Other 12,090 10,208 10,739
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest income 208,664 184,778 174,702
- ------------------------------------------------------------------------------------------------------------------------
Non-Interest Expense
Salaries and employee benefits 281,546 257,637 227,017
Net occupancy expense 43,423 40,273 36,775
Equipment expense 30,932 27,899 25,353
Depositinsurance 16,893 25,747 23,512
Other 163,740 134,443 122,294
- ------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 536,534 485,999 434,951
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 304,044 261,340 224,527
INCOME TAX EXPENSE 105,039 88,338 73,992
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 199,005 $ 173,002 $150,535
========================================================================================================================
Average number of shares outstanding (000s) 84,401 80,628 77,772
Net income per share $2.36 $2.15 $1.94
Dividends declared per share 0.80 0.68 0.60
</TABLE>
See notes to Consolidated Financial Statements.
41
<PAGE> 25
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Common Capital Retained Unrealized Treasury
(In Thousands) Stock Surplus Earnings Gain/(Loss), net Stock Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
Issuance of 1,140,762 shares of Common Stock for
acquisitions accounted for as pooling-of-
interests 2,851 4,918 5,175 0 0 12,944
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 390,381shares of Common
Stock for stock options exercised 976 1,704 0 0 0 2,680
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 1,290,675 shares of Common Stock
for acquisitions accounted for as pooling-of-
interests 3,227 9,746 1,756 (246) 0 14,483
Issuance of 294,530 shares of Common Stock
for acquisition of subsidiaries 736 2,291 103 0 0 3,130
Increase in 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) $1,135,268
Net income 0 0 199,005 0 0 199,005
Dividends declared ($.80 per share) 0 0 (67,153) 0 0 (67,153)
Issuance of 214,750 shares of Common Stock
for stock options exercised 537 1,941 0 0 0 2,478
Issuance of 182,328 shares of Common Stock
under dividend reinvestment and stock purchase
plan 456 3,573 0 0 0 4,029
Issuance of 77,484 shares of Common Stock under
employee discounted stock purchase plan 194 769 0 0 0 963
Issuance of 86,187 shares of Common Stock
for conversion of debentures 215 254 0 0 0 469
Issuance of 2,157,993 shares of Common Stock
for acquisitions accounted for as pooling-of-
interests 5,395 21,065 2,578 (644) 0 28,394
Issuance of 3,775,000 shares of Common Stock
in secondary offering 9,438 81,031 0 0 0 90,469
Decrease in unrealized loss, net,
on securities available for sale 0 0 0 37,313 0 37,313
Purchase of 15,619 shares of treasury stock 0 0 0 0 (365) (365)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 $220,996 $340,608 $885,129 ($ 9,635) ($6,228) $1,430,870
========================================================================================================================
</TABLE>
See notes to Consolidated Financial Statements.
42
<PAGE> 26
CONSOLIDATED STATEMENTS OF CASH FLOWS
SOUTHTRUST CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 199,005 $ 173,002 $ 150,535
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision (credit) for:
Loan losses 61,286 44,984 45,032
Depreciation of premises and equipment 26,965 24,438 21,431
Amortization of intangibles 20,493 16,178 16,419
Amortization of security premium 1,396 3,124 10,069
Accretion of security discount (5,430) (4,539) (12,035)
Deferred income taxes 1,595 5,397 (3,313)
Net gain on assets held for sale (6,314) (8,061) (9,874)
Net securities gains (193) (330) (603)
Origination and purchase of loans held for sale (1,106,881) (501,571) (945,869)
Proceeds from loans held for sale 1,033,481 598,719 898,534
Net (increase) decrease in trading securities 7,103 4,891 (2,538)
Net increase in other assets (20,615) (32,577) (8,935)
Net increase in other liabilities 155,956 9,149 30,047
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 367,847 332,804 188,900
INVESTING ACTIVITIES
Proceeds from maturities of:
Investment securities 731,581 238,174 2,174,346
Securities available for sale 729,901 670,729 0
Proceeds from sales of:
Investment securities 4,710 0 25,686
Securities available for sale 108,621 223,723 0
Purchases of:
Investment securities (593,125) (543,173) (1,836,402)
Securities available for sale (1,103,104) (775,635) 0
Premises and equipment (88,962) (55,400) (29,636)
Net (increase) decrease in:
Short-term investments (54,691) 21,253 111,559
Loans (2,376,266) (2,277,259) (1,206,850)
Purchases of subsidiaries, net of cash acquired 346,926 111,155 76,825
- ------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,294,409) (2,386,433) (684,472)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 98,408 6,284 4,696
Long-term debt 616,022 250,000 200,000
Payments for:
Long-term debt (69,426) (74,307) (84,959)
Repurchase of Common Stock (365) (2,719) (252)
Cash Dividends (69,817) (55,239) (52,124)
Net increase (decrease) in:
Deposits 1,098,961 620,684 382,378
Short-term borrowings 376,002 1,351,528 113,116
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,049,785 2,096,231 562,855
- ------------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND DUE FROM BANKS 123,223 42,602 67,283
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 650,433 607,831 540,548
- ------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 773,656 $ 650,433 $ 607,831
========================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
43
<PAGE> 27
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:
NATURE OF OPERATIONS
The Company is a regional multi-bank holding company which operates more
than 445 banking offices with locations in Alabama, Georgia, Florida, North
Carolina, South Carolina, Tennessee and Mississippi. SouthTrust is engaged in a
full range of banking services and, through its bank-related subsidiaries, also
offers a range of other services, including; trust, mortgage banking, data
processing, leasing and investment and brokerage services.
PRESENTATION
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates and
assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain amounts in the 1993 and 1994 financial statements have been
reclassified to conform to the 1995 presentation. Such reclassification had no
effect on net income or total assets.
SECURITIES
The Company classifies securities as either trading, available for sale or
investment based on Management's intention at the time of purchase.
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 investments are carried at
amortized cost, as the Company has the ability and positive intent to hold
these securities to maturity. All securities not considered investments or part
of the trading portfolio have been designated as available for sale and are
carried at fair value. Unrealized gains and losses on securities available for
sale are excluded from earnings and are 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 premiums and accretion of discounts 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 direct 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.
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures," an amendment to
SFAS No. 114. These standards require that impaired loans be valued based on
the present value of these loans' estimated cash flows at each loans effective
interest rate, the fair value of the collateral or based on the loans
observable market price. Adoption of the above standards did not have a
significant impact on the financial condition or results of operations.
LONG-LIVED ASSETS
During 1995 the Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of," which establishes
accounting standards for recognizing impairment of long-lived assets which are
held and used in the operations of the Company and to be disposed of. Such
long-lived assets include premises and equipment, other real estate and
goodwill related to such assets; but exclude financial instruments, core
deposit intangibles, mortgage servicing rights and deferred tax assets.
44
<PAGE> 28
The Company continually evaluates whether events and circumstances have
occurred that indicate that such long-lived assets have been impaired.
Measurement of the impairment of such long-lived assets is based on those
assets fair values. There were no significant impairment losses recorded during
1995.
OTHER REAL ESTATE
Total other real estate is included in other assets and amounted to $46,073,000
and $49,802,000 at December 31, 1995 and 1994, 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, less estimated selling costs, is charged to the
allowance for loan losses. Any subsequent write-downs are recorded in 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.
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 is amortized on a straight-line basis, primarily over 20-25
years. Total goodwill was $80,661,000 and $82,458,000 at December 31, 1995 and
1994, respectively. Intangible assets attributable to core deposits purchased
are amortized over the estimated life of the deposit base, not to exceed 10
years, on a straight-line basis. Core deposit intangibles totaled $82,613,000
and $60,555,000 at December 31, 1995 and 1994, respectively. If circumstances
indicate that the value of intangibles has been impaired, management will
adjust the carrying amount of such intangibles using an estimate of net income
over the remaining life of the intangibles.
On July 1, 1995, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights." This standard requires that the Company record, as
separate assets, rights to service mortgage loans for others whether the loans
were acquired through the purchasing or origination of the loans. This standard
also requires that impairment be measured for mortgage servicing assets based
on the fair values of groups of such assets with common risk characteristics.
Prior to the adoption of SFAS No. 122, no asset was recognized for servicing
rights attributed to the Company's own mortgage loan origination process.
The cost of mortgage servicing rights is being amortized in proportion to
and over the period of estimated net servicing income. 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. Mortgage servicing rights were $27,568,000 and
$29,947,000 at December 31, 1995 and 1994, respectively.
INCOME TAXES
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.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swap contracts ("Swaps") to manage interest rate
risk arising from certain of the Company's fixed-rate funding sources, such as
long-term debt and certain deposit liabilities. All swaps employed by the
Company represent end-user activities designed as hedges and therefore changes
in fair values of such derivatives are not included in the results of
operations. Interest receivable or payable from such contracts is accrued and
recognized as an adjustment to interest expense related to the specific
liability being hedged.
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, 1995:
<TABLE>
<CAPTION>
(In Thousands)
Cash paid during Year Ended
----------------------------------
the period for: 1995 1994 1993
- -----------------------------------------------------------
<S> <C> <C> <C>
Interest $722,180 $484,733 $ 412,150
Income taxes 99,231 94,150 69,380
Non-cash transactions:
Assets acquired
in business
combinations 713,022 709,276 1,260,582
Liabilities assumed
in business
combinations 684,512 684,375 1,176,535
Loans transferred to
Other Real Estate 11,575 34,217 18,667
Loans securitized into
mortgage-backed
securities 396,476 400,503 636,626
Financed sales of
foreclosed property 21,673 21,733 29,821
- --------------------------------------------------------------
</TABLE>
45
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SOUTHTRUST CORPORATION
PENDING ACCOUNTING PRONOUNCEMENTS
During 1995, SFAS No. 123, "Accounting for Stock Based Compensation" was
issued. The new standard allows companies to continue to record compensation
cost under Accounting Principles Board Opinion ("APB") No. 25 or to record
compensation cost based on the fair value of stock based awards. Management has
decided to continue using its current accounting policy under APB No. 25; and
as a result, adoption of SFAS No. 123 will not affect the financial condition
or results of operations of the Company. SFAS No. 123 does, however, require
certain pro forma disclosures reflecting what compensation cost would have been
if the fair value based method of recording compensation expense for stock
based compensation had been adopted. The disclosure requirements of SFAS No.
123 will be adopted by the Company in 1996.
NOTE B - BUSINESS COMBINATIONS
During 1995 the Company completed the following acquisitions:
<TABLE>
<CAPTION>
(In Millions)
- ---------------------------------------------------------------------------------------------------------------------------
Date Institution Assets Loans Deposits Locations
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
February 10 Plant State Bank ("Plant State") $ 44.4 $ 29.8 $ 40.9 Plant City, FL
March 10 Anchor Savings Bank ("Anchor")
- 2 branches 264.8 0.3 264.3 St. Petersburg and Ft. Myers, FL
May 5 CNB Capital Corporation ("CNB") 76.2 39.4 65.2 Pascagoula, MS
June 30 Southern Bank Group ("SBG") 108.9 65.2 94.1 Atlanta, GA
July 28 Bank United - 4 branches 130.6 0 130.3 Sarasota and Ft. Myers, FL
September 12 First Commercial Financial Corp ("FCFC") 36.6 24.4 33.6 Manatee, FL
September 22 FBC Holding Company, Inc. ("FBC") 51.5 22.4 46.5 Crestview, FL
- ---------------------------------------------------------------------------------------------------------------------------
Totals $ 713.0 $ 181.5 $ 674.9
===========================================================================================================================
</TABLE>
The acquisitions of the Anchor and Bank United branches were accounted for
as purchases of assets and assumptions of liabilities. The acquisition of all
of the outstanding shares of FCFC was accounted for as a purchase. 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 Plant State, CNB, SBG, and FBC were accounted for as
pooling-of-interests; 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 1995 aggregated approximately
$34.5 million in cash and 2,157,993 shares of SouthTrust Corporation common
stock with a total market value at time of issuance of approximately $48.9
million. Total intangible assets recognized in these transactions were
approximately $32.0 million.
During 1994, the company completed nine acquisitions with aggregate total
assets of $709.3 million, loans of $413.0 million and total deposits of $665.2
million.
The Company has entered into four separate definitive agreements and one
separate letter of intent to acquire financial institutions with aggregate
total assets of approximately $1.4 billion. These pending acquisitions are
subject to shareholder and various regulatory approvals among other conditions
and are expected to close in the first half of 1996. The aggregate purchase
price of all pending acquisitions is approximately $17.6 million in cash and
approximately 6.7 million shares of SouthTrust Corporation common stock.
Assuming the 1995 acquisitions of Plant State, CNB, SBG, FCFC and FBC, the
1994 acquisitions of Bank of Bradenton, First Columbus Community Bank and
Trust, First Jefferson Corporation, Citrus National Bank, Island Bank of
Collier County and Community Bank of Charlotte County and the five pending
acquisitions had occurred on January 1, 1994, the consolidated results of
operations on a pro forma basis for 1995 and 1994 would have been approximately
as follows:
<TABLE>
<CAPTION>
(In Thousands, except per share data) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Net interest income $749,857 $674,449
Net income 214,330 188,009
Net income per share 2.33 2.08
</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.
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,
1995, was approximately $229,912,000.
At December 31, 1995 and 1994, securities with a par value of
$2,499,855,000 and $2,085,217,000, respectively, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other
purposes.
46
<PAGE> 30
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, 1995, $332,803,816 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, 1995, all such ratios were above the prescribed
minimums.
NOTE D - INVESTMENT SECURITIES AND SECURITIES AVAILABLE FOR SALE
The amortized costs, gross gains and losses, and approximate fair values at
December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
Investment Securities
- ------------------------------------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------------------
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 $ 9,580 $ 3 $ 0 $ 9,583 $ 0 $ 0 $ 0 $ 0
U.S. Government
agency securities 1,005,889 7,241 582 1,012,548 978,745 18 61,592 917,171
Collateralized mortgage
obligations and
mortgage backed
securities 252,314 6,580 1,705 257,189 307,019 3,633 4,539 306,113
Obligations of
states and political
subdivisions 254,633 19,837 10 274,460 307,048 8,690 1,229 314,509
Other securities 63,146 2,124 0 65,270 78,861 1,761 4 80,618
- ------------------------------------------------------------------------------------------------------------------------
Totals $1,585,562 $35,785 $ 2,297 $1,619,050 $1,671,673 $14,102 $67,364 $1,618,411
========================================================================================================================
<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 $ 237,519 $ 2,912 $ 61 $ 240,370 $ 639,483 $ 7 $ 7,229 $ 632,261
U.S. Government
agency securities 958,483 5,182 876 962,789 306,593 669 11,259 296,003
Collateralized mortgage
obligations and
mortgage backed
securities 1,275,559 4,030 26,358 1,253,231 1,292,889 532 56,030 1,237,391
Obligations of
states and political
subdivisions 5,842 9 0 5,851 0 0 0 0
Other securities 153,040 3,079 3,557 152,562 116,205 172 1,183 115,194
- ------------------------------------------------------------------------------------------------------------------------
Totals $2,630,443 $15,212 $30,852 $2,614,803 $2,355,170 $1,380 $75,701 $2,280,849
========================================================================================================================
</TABLE>
The amortized costs and approximate fair values of securities at December 31,
1995, by contractually scheduled maturity, are shown below:
<TABLE>
<CAPTION>
Investment Available for Sale
- ------------------------------------------------------------------------------------------------------------------------
Amortized Fair Amortized Fair
(In Thousands) Cost Value Cost Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 79,900 $ 80,531 $ 410,291 $ 416,015
Due after one year through five years 1,188,922 1,202,278 879,849 886,640
Due after five years through 10 years 148,131 153,377 530,626 522,044
Due after 10 years 168,609 182,864 809,677 790,104
- ------------------------------------------------------------------------------------------------------------------------
Totals $ 1,585,562 $1,619,050 $ 2,630,443 $ 2,614,803
========================================================================================================================
</TABLE>
Proceeds from sales of securities were $113,331,000, $223,723,000 and
$25,686,000 in 1995, 1994 and 1993, respectively. Gross gains of $267,000,
$514,000 and $1,006,000 and gross losses of $74,000, $184,000 and $403,000 were
realized on those sales. The Company sold $4,710,000 in investments during 1995
and realized a gain of $53,000. The sales of such investments were prompted by
the credit deterioration of the issuer.
The income tax provision applicable to securities transactions for the years
1995, 1994, and 1993 were $72,000, $124,000, and $226,000, respectively.
47
<PAGE> 31
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) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 5,965,949 $ 5,058,372
Real estate construction 1,245,828 675,217
Commercial real estate mortgage 2,264,675 1,776,107
Residential real estate mortgage 3,221,322 2,960,041
Loans to individuals 2,059,319 1,745,862
- ------------------------------------------------------------------------------------------------------------------------
14,757,093 12,215,599
Unearned income (101,931) (93,692)
Allowance for loan losses (206,638) (171,692)
- ------------------------------------------------------------------------------------------------------------------------
Net Loans $14,448,524 $11,950,215
========================================================================================================================
</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, 1995 and 1994,
respectively, $160,793,000 and $121,354,000 of these loans were outstanding.
During 1995, $155,626,000 of new loans were made and repayments totaled
$116,187,000.
The Company's largest credit concentration is commercial, financial and
agricultural loans, which totaled $5,965.9 million or 40.4% of total loans at
December 31, 1995 and $5,058.4 million or 41.4% of total loans at December 31,
1994. 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, 1995 and 1994.
In 1995, interest income of $1,508,000 and $92,000 was recorded on
non-accrual and restructured loans, respectively. Had income on these loans
been recorded under original terms, $5,634,000 of interest on non-accrual loans
and $104,000 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) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $171,692 $135,233 $103,770
Additions (deductions):
Provisions charged to operations 61,286 44,984 45,032
Recoveries on loans previously charged off 11,663 10,010 12,005
Loans charged off (41,135) (29,786) (36,620)
Allowances of purchased subsidiaries 3,132 11,251 11,046
- ------------------------------------------------------------------------------------------------------------------------
Balance at End of Year $206,638 $171,692 $135,233
========================================================================================================================
</TABLE>
The recorded investment in impaired loans at December 31, 1995 was $76.0
million of which $29.9 million had a reserve of $21.0 million and the remaining
impaired loans did not have any reserve because they were adequately
collateralized or written down to fair value. The average investment in these
loans for the year ended December 31, 1995 amounted to $61.3 million.
NOTE G - PREMISES AND EQUIPMENT
The following is a summary of premises and equipment at December 31:
<TABLE>
<CAPTION>
(In Thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $110,466 $ 98,687
Buildings and improvements 291,767 251,032
Equipment 202,904 176,430
- ------------------------------------------------------------------------------------------------------------------------
605,137 526,149
Less accumulated depreciation 171,610 161,507
- ------------------------------------------------------------------------------------------------------------------------
Totals $433,527 $ 364,642
========================================================================================================================
</TABLE>
48
<PAGE> 32
NOTE H - LONG-TERM DEBT
A summary of long-term debt at December 31, 1995 follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<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 100,000 100,000
9.95% Subordinated Capital Notes, due June 1, 1999 75,000 75,000
7.69% Subordinated Capital Notes, due May 15, 2025 100,000 0
7.74% Subordinated Capital Notes, due May 15, 2025 50,000 0
Federal Home Loan Bank advances 651,881 251,887
Other 10,431 13,829
- ------------------------------------------------------------------------------------------------------------------------
Totals $1,187,312 $640,716
========================================================================================================================
</TABLE>
During 1995 the Company issued $100,000,000 in 7.69% Subordinated Capital Notes
due in 2025, and $50,000,000 in 7.74% Subordinated Capital Notes due in 2025.
Both of these notes include a "Put" feature which gives the holder the option
to terminate the notes at par value in the year 2005. These notes, along with
the 7-5/8% and 8-5/8% Subordinated Notes and the 7% Debentures, are not
callable prior to maturity, and no sinking fund is required. All of these notes
and debentures qualify as supplemental capital under the Capital Adequacy
Guidelines of the Federal Reserve Board.
The 9.95% Subordinated Capital Notes also qualify as supplemental capital.
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.
Variable rate Federal Home Loan Bank Advances total $326.0 million and
$325.9 million are at fixed rates ranging from
4.47% to 8.10%.
Scheduled maturities of long-term debt in 1996 are approximately $53.0
million. Maturities during 1997, 1998, 1999, and 2000 are approximately $151.8
million, $77.0 million, $75.0 million and $370.0 million, respectively.
NOTE I - COMMITMENTS
AND CONTINGENCIES
The Company has $1.9 billion in deposits resulting from acquisitions of savings
associations or other deposits which are insured through the Savings
Association Insurance Fund ("SAIF"). The deposits continue to be assessed at
$.23 per $100 for deposit insurance coverage, though proposed legislation would
reduce such assessment from $.23 to $.04. However, if enacted, such legislation
would also require a one-time assessment which the Company believes will be
approximately $12.7 million. Additionally, certain pending acqusitions also
maintain deposits insured through the SAIF. The assessment related to these
acquisitions, if enacted, could result in an additional charge. These amounts
would be reported in income upon enactment.
LITIGATION
Several of the Company's subsidiaries are defendants in various 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.
In addition, subsidiaries of the Company have been named as defendants in
suits that allege fraudulent, deceptive or collusive practices in connection
with certain financing activities (including the sale of insurance). These
suits, which in some cases are filed as class actions, name unaffiliated
corporations as co-defendants, and the Company's insurance carrier is defending
these suits under a reservation of rights. These suits are typical of
complaints that have been filed in recent years challenging financial
transactions between plaintiffs and various financial institutions. The
complaints in such cases frequently seek punitive damages in transactions
involving fairly small amounts of actual damages, and in recent years, have
resulted in large punitive damage awards to plaintiffs.
Although it is not possible to determine, with any certainty at this point
in time, the potential exposure related to punitive damages in connection with
these suits, the Company, in the opinion of management, and based upon
consultation with legal counsel, believes that the ultimate resolutions of
these proceedings will not have a material adverse effect on the Company's
financial statements.
LEASES
At December 31, 1995, the Company was 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, 1995, 1994 and 1993 was $18,579,000,
$16,776,000 and $14,476,000. Future minimum rental commitments as of December
31, 1995 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>
1996 $ 18,532 $216 $ 18,748
1997 16,472 207 16,679
1998 14,378 186 14,564
1999 11,964 115 12,079
2000 9,993 34 10,027
After 2000 49,268 0 49,268
- --------------------------------------------------------------
Totals $ 120,607 $758 $121,365
==============================================================
</TABLE>
49
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SOUTHTRUST CORPORATION
STANDBY LETTERS OF CREDIT AND COMMITMENTS
The Company's subsidiary banks had standby letters of credit outstanding of
approximately $608,830,000 at December 31, 1995.
The Company's subsidiary banks had outstanding commitments to extend
credit of approximately $4,715,933,000 at December 31, 1995. 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.
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 $1,209.0 million at December 31, 1995 and $1,275.0 million at December 31,
1994. 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.
Estimates of losses are recognized when the mortgages are sold.
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 $697 million in 1995 and $680 million in
1994. The effective notional amounts outstanding at December 31, 1995 and 1994
were $650 million and $815 million, respectively. During 1995, the average rate
paid under the agreements was 6.03% and the average rate earned was 6.60%. For
1994, the average rate paid was 4.80% and the average rate earned was 6.18%.
Credit risk represents the potential loss that may occur due to the
nonperformance by a party to a contract. The Company controls credit risk for
interest rate swap contracts by applying uniform credit standards maintained
for other activities with credit risk. The Company maintains a listing of
credit risk limits previously approved as a result of the credit review and
also enters into collateralization agreements with each counterparty.
At December 31, 1995, the credit risks and contractual maturities of Swaps
are as follows (in millions):
<TABLE>
<CAPTION>
Effective Credit Liabilities
Notional Amount Risk Expiration Hedged
- -------------------------------------------------------------
<S> <C> <C> <C>
$200 $ 0 1996 Deposit liabilities
100 3 2003 Long-term debt
200 14 2004 Long-term debt
150 1 2005 Long-term debt
- -------------------------------------------------------------
$650 $ 18
=============================================================
</TABLE>
The Company 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 being amortized to reduce
interest expense over the remaining life of the hedged liabilities. At December
31, 1995 and 1994 the remaining deferred gain related to such termination was
$2.2 million and $3.8 million, respectively. The effect of amortization of the
deferred gain will reduce interest expense by approximately $1.6 million in
1996 and $0.6 million in 1997.
From time to time, the Company utilizes interest rate options to hedge
mortgage loans held for sale. During 1995 the effect on net income from use of
options was insignificant. At December 31, 1995 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 other plans 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 7.5% in 1995, 8.5% in 1994 and 7.5% in 1993. The rate of
increase in future compensation levels for all defined benefit plans was 5.5%
in 1995, 1994 and 1993. The rate of expected return on plan assets for the
Trusteed Plan in 1995, 1994 and 1993 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.
50
<PAGE> 34
NOTE J - EMPLOYEE BENEFITS (Continued)
Provisions for contributions to the deferred profit sharing plan were
approximately $12.2 million in 1995, $11.5 million in 1994 and $10.5 million in
1993.
As of December 31, 1995, the Trusteed Plan and the profit sharing plan
owned 411,768 and 1,756,985 shares of the Company's common stock, and received
dividends on those shares of $317,000 and $1,291,000, respectively.
STOCK OPTION PLAN
Stock options for a total of 1,379,991 shares awarded to key employees under
the Company's Stock Option Plan were outstanding at December 31, 1995. Exercise
prices range from $6.22 to $19.13 per share and average $14.58 per share.
During 1995, options on 214,750 shares were exercised at an average price of
$11.54 per share while options for 1,074,076 shares were exercisable as of
December 31, 1995.
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, 1995 and
1994 and for each of the three years in the period ended December 31, 1995:
<TABLE>
<CAPTION>
(In Thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $49,594 in 1995 and $35,082 in 1994 ($56,940) ($39,746)
========================================================================================================================
Projected benefit obligation for service rendered to date ($70,090) ($48,379)
Plan assets at fair value, primarily listed stocks and U.S. Government securities 65,028 51,085
- ------------------------------------------------------------------------------------------------------------------------
Plan assets over (under) projected benefit obligation (5,062) 2,706
Unrecognized net loss from past experience different from that assumed
and effects of changes in assumptions 6,451 115
Prior service cost not yet recognized in net periodic pension cost 42 48
Unrecognized net asset at January 1, 1995 and 1994 (3,640) (4,161)
- ------------------------------------------------------------------------------------------------------------------------
Accrued pension cost included in other liabilities ($ 2,209) ($ 1,292)
========================================================================================================================
</TABLE>
Net pension cost for 1995, 1994 and 1993 includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 3,155 $ 3,837 $ 2,961
Interest cost on projected benefit obligation 4,191 3,835 3,451
Actual return on plan assets (15,126) 1,948 (3,734)
Net amortization and deferral 9,919 (7,388) (1,426)
- ------------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 2,139 $ 2,232 $ 1,252
========================================================================================================================
</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, 1995 and
1994 and for each of the three years ended December 31, 1995:
<TABLE>
<CAPTION>
(In Thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $7,412 in 1995
and $4,999 in 1994 ($7,754) ($5,292)
========================================================================================================================
Projected benefit obligation for service rendered to date ($9,510) ($6,482)
Plan assets at fair value 0 0
- ------------------------------------------------------------------------------------------------------------------------
Excess of projected benefit obligation over plan assets (9,510) (6,482)
Unrecognized net (gain) loss from past experience different from that assumed
and effects of changes in assumptions 1,677 (237)
Prior service cost not yet recognized in net periodic pension cost 2,563 2,762
Unrecognized net liability at January 1, 1995 and 1994 138 207
Additional periodic liability (2,622) (2,015)
- ------------------------------------------------------------------------------------------------------------------------
Accrued pension cost included in other liabilities ($7,754) ($5,765)
========================================================================================================================
</TABLE>
51
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SOUTHTRUST CORPORATION
NOTE J - EMPLOYEE BENEFITS (Continued)
Net pension cost for 1995, 1994 and 1993 includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 544 $ 516 $344
Interest cost on projected benefit obligation 588 465 274
Net amortization and deferral 268 272 150
- ------------------------------------------------------------------------------------------------------------------------
Net periodic pension cost $1,400 $1,253 $768
========================================================================================================================
</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.
Net postretirement health care cost for 1995, 1994 and 1993 includes the
following components:
<TABLE>
<CAPTION>
(In Thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $265 $234 $220
Interest cost on accumulated postretirement benefit obligation 233 233 215
Amortization of transition obligation over 20 years 88 106 106
- ------------------------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit costs $586 $573 $541
========================================================================================================================
</TABLE>
For measurement purposes, a 10%, 15% and 14% annual rate of increase in the per
capita cost of covered health care claims was assumed for 1995, 1994 and 1993,
respectively; the rate is assumed to remain stable for three years, then
decrease to 7% for years thereafter. The health care cost trend rate assumption
has a negative 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, 1995, by
$439,000 and the aggregate of the components of net periodic postretirement
benefit cost for the year then ended by $90,000. The weighted-average discount
rate used in determining the accumulated postretirement benefit obligation was
7.5% in 1995 and 8.5% in 1994 and 1993.
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 $3,134,000 at
December 31, 1995, with $536,000 related to retirees and $2,598,000 for other
active employees, and an unrecognized transition obligation of $1,794,000,
resulting in an accrued liability of $1,960,000.
NOTE K - INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
- -----------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 91,290 $84,394 $69,392
State 12,154 9,221 7,913
- -----------------------------------------------------------------------------------------------------------
103,444 93,615 77,305
- -----------------------------------------------------------------------------------------------------------
Deferred (Prepaid):
Federal 2,124 (5,314) (3,753)
State (529) 37 440
- -----------------------------------------------------------------------------------------------------------
1,595 (5,277) (3,313)
- -----------------------------------------------------------------------------------------------------------
Totals $105,039 $88,338 $73,992
===========================================================================================================
</TABLE>
The differences between the provision for income taxes and the amount computed
by applying the statutory federal income tax rate to income before taxes were
as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income at statutory rates $106,415 35% $ 91,469 35% $ 78,584 35%
Add (deduct):
State income tax, net of federal
tax benefit 7,556 3% 6,017 2% 5,429 2%
Tax-exempt interest income (9,581) (3%) (10,317) (4%) (11,279) (5%)
Other 649 0% 1,169 1% 1,258 1%
- ------------------------------------------------------------------------------------------------------------------------
Totals $105,039 35% $ 88,338 34% $ 73,992 33%
========================================================================================================================
</TABLE>
52
<PAGE> 36
NOTE K - INCOME TAXES (Continued)
The components of net deferred tax assets as of December 31, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
- -----------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Allowance for loan losses $ 73,826 $ 58,014
Net unrealized losses on securities 1,605 27,875
Other 37,311 30,555
- -----------------------------------------------------------------------------------------------------------
Total deferred tax assets 112,742 116,444
- -----------------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
Depreciation (8,067) (10,743)
Leasing (57,685) (34,561)
Other (7,017) (4,731)
- -----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (72,769) (50,035)
- -----------------------------------------------------------------------------------------------------------
Net Deferred Tax Asset $ 39,973 $ 66,409
===========================================================================================================
</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.
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) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other expense:
Communications $ 25,157 $ 22,136 $ 20,017
Professional services 34,785 27,242 25,420
Business development 21,221 16,090 12,795
Other 82,577 68,975 64,062
- ------------------------------------------------------------------------------------------------------------------------
Totals $163,740 $134,443 $122,294
========================================================================================================================
</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, 1995 December 31, 1994
- --------------------------------------------------------------------------------------------------------------------
Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 773,656 $ 773,656 $ 650,433 $ 650,433
Federal funds sold and other
short-term investments 118,988 118,988 36,520 36,520
Assets held for sale 237,139 237,139 164,528 164,528
Securities available for sale 2,614,803 2,614,803 2,280,849 2,280,849
Investment securities 1,585,562 1,619,050 1,671,673 1,618,411
Loans, net 13,986,409 12,699,929 11,647,688 11,106,972
Interest receivable and
other assets 217,328 217,328 185,143 185,143
Liabilities:
Deposits 14,575,077 14,144,611 12,801,239 12,469,473
Federal funds purchased and
other short-term borrowings 3,207,427 3,207,427 2,828,012 2,828,012
Interest payable and other
liabilities 327,265 327,265 168,140 168,140
Long-term debt 187,312 580,393 640,716 589,461
Off-balance sheet instruments asset
(liability):
Interest rate swaps in a net
receivable position 11,865 56,201 13,624 (22,587)
Commitments to extend credit (13,459) (32,622) (11,065) (20,122)
Standby letters of credit (693) (693) (1,065) (1,065)
====================================================================================================================
</TABLE>
53
<PAGE> 37
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 underlying 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 values of deposit liabilities with no stated maturity are
considered to be the amounts 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> 38
NOTE N - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
SouthTrust Corporation Parent Company
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31
- ------------------------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash-on-demand deposit* $ 1,400 $ 3,105
Interest-bearing time deposits* 45,634 22,111
Investment securities 10,585 8,799
Securities available for sale 153,937 90,633
Loans 153,040 2,074
Loans to subsidiaries* 73,604 160,658
Investment in subsidiaries*:
Banks and bank holding companies 1,496,174 1,270,503
Non-banks 14,456 13,482
Other assets 54,202 41,375
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 2,003,032 $ 1,612,740
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Short-term borrowings $ 121,381 $ 34,417
Other liabilities 75,781 68,055
Long-term debt 375,000 375,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 572,162 477,472
STOCKHOLDERS' EQUITY 1,430,870 1,135,268
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,003,032 $ 1,612,740
========================================================================================================================
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
- ------------------------------------------------------------------------------------------------------------------------
(In Thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
From subsidiaries:*
Dividends
Banks $ 73,267 $ 87,094 $ 54,966
Non-banks 7,047 9,134 3,891
Interest 12,721 8,290 5,844
Service fees 48,115 42,669 37,895
Other 7,040 3,025 1,014
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 148,190 150,212 103,610
- ------------------------------------------------------------------------------------------------------------------------
Expense:
Salaries and employee benefits 20,541 20,574 21,741
Interest 26,589 21,142 16,343
Other 28,259 22,604 17,749
- ------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE 75,389 64,320 55,833
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed
net income of subsidiaries 72,801 85,892 47,777
Income taxes (credit) (3,293) (4,834) (4,176)
- ------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARIES 76,094 90,726 51,953
Equity in undistributed net income of subsidiaries:*
Banks and bank holding companies 122,732 80,964 97,224
Non-banks 179 1,312 1,358
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME $199,005 $ 173,002 $ 150,535
========================================================================================================================
</TABLE>
* Eliminated in consolidation.
55
<PAGE> 39
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) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 199,005 $ 173,002 $ 150,535
Less equity in undistributed net income of subsidiaries (122,911) (82,276) (98,582)
- ------------------------------------------------------------------------------------------------------------------------
Income before equity in undistributed net
income of subsidiaries 76,094 90,726 51,953
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision (credit) for:
Depreciation of premises and equipment 1,197 1,131 1,072
Amortization of intangibles 2,583 2,487 2,504
Deferred income tax benefit (3,551) (4,491) (1,748)
Realized net (gain) loss on sales of securities 9 (48) 231
Net increase in other assets (9,588) (7,478) (7,096)
Net increase in other liabilities 10,390 7,606 20,813
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 77,134 89,933 67,729
INVESTING ACTIVITIES
Proceeds from maturities of:
Investment securities 0 142 20,362
Securities available for sale 58,344 10,956 0
Proceeds from sales of:
Investment securities 0 0 0
Securities available for sale 24,964 70,968 0
Purchases of:
Investment securities (108) 0 (80,366)
Securities available for sale (147,603) (108,819) 0
Capital contributions (37,644) (47,419) (44,318)
Net (increase) decrease in:
Short-term investments (23,524) 37,843 40,444
Loans to subsidiaries 87,054 (87,852) (23,075)
Loans (150,966) 412 2,010
Premises and equipment (2,707) (1,193) (1,138)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (192,190) (124,962) (86,081)
FINANCING ACTIVITIES
Proceeds from issuance of:
Common Stock 96,568 6,284 4,697
Long-term debt 0 100,000 100,000
Payments for:
Long-term debt 0 (20,000) (30,783)
Repurchase of common stock (365) (2,719) (252)
Cash dividends (69,817) (55,239) (52,124)
Net increase (decrease) in short-term borrowings 86,965 8,499 (3,723)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 113,351 36,825 17,815
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (1,705) 1,796 (537)
- ------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 3,105 1,309 1,846
- ------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $ 1,400 $ 3,105 $ 1,309
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR INTEREST $ 31,790 $ 26,955 $ 15,829
========================================================================================================================
</TABLE>
56
<PAGE> 40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
SOUTHTRUST CORPORATION
TO SOUTHTRUST CORPORATION:
We have audited the accompanying consolidated statements of condition of
SouthTrust Corporation and subsidiaries (a Delaware corporation) as of December
31, 1995 and 1994, 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, 1995. 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 auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 respects, the consolidated financial position of
SouthTrust Corporation and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Birmingham, Alabama
February 9, 1996
57
<PAGE> 1
Exhibit (21)
SUBSIDIARIES OF THE REGISTRANT
State of
Incorporation
--------------
<TABLE>
<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
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 Russell County ................... Alabama
Wind Creek Insurance Agency, Inc................. Alabama
SouthTrust Bank of Columbus, N.A. ................... (1)
SouthTrust of Florida, Inc. ......................... Florida
SouthTrust Bank of Florida, N.A.................. (1)
SouthTrust Estate & Trust Company ............. Florida
SouthTrust Bank of Northwest Florida ............ Florida
Holmes Capital Corporation .................... Florida
SouthTrust of South Carolina, Inc.................... South Carolina
SouthTrust Bank of South Carolina, 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)
Southern Mortgage Group, Inc................... Georgia
Olympic City, Inc. ............................ Delaware
Dekalb Finance Subsidiary, Inc. ............... Georgia
Consumer Financial Services, Inc. ............. Georgia
SouthTrust Bank of North Georgia................. 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
SouthTrust Capital Management, Inc. ............. North Carolina
SouthTrust Estate and Trust Services of
the Carolinas, 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
</TABLE>
20
<PAGE> 2
EXHIBIT (21)
SUBSIDIARIES OF THE REGISTRANT
State of
Incorporation
--------------
<TABLE>
<S> <C>
SouthTrust Life Insurance Company ................... Arizona
SouthTrust Community Reinvestment Corporation ....... Alabama
Reef Resorts, Incorporated .......................... Florida
Finance South, Inc................................... Alabama
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.
21
<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, 33-52717, 33-55069, 33-55746, 33-61407, and 33-61823.
Birmingham, Alabama
March 26, 1996
<PAGE> 1
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, 1995 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 14th day of March, 1996.
/s/ W. K. Upchurch, Jr. (L.S.)
----------------------------------------
W. K. Upchurch, 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, 1995 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, 1996.
/s/ John M. Bradford (L.S.)
---------------------------------------
John M. Bradford
<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, 1995 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, 1996.
/s/ T. W. Mitchell (L.S.)
------------------------------------
T. W. Mitchell
<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, 1995 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 18th day of March, 1996.
/s/ Charles G. Taylor (L.S.)
--------------------------------------
Charles G. Taylor
<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, 1995 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, 1996.
/s/ William C. Hulsey (L.S.)
------------------------------------
William C. Hulsey
<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, 1995 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 18th day of March, 1996.
/s/ F. Crowder Falls (L.S.)
------------------------------------
F. Crowder Falls
<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, 1995 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 14th day of March, 1996.
/s/ Herbert Stockham (L.S.)
-------------------------------------
Herbert Stockham
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<PERIOD-START> JAN-01-1995
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