<PAGE> 1
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Commission File Number 0-3613
SOUTHTRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 63-0574085
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
420 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203
(Address of principal executive officers) (Zip Code)
(205) 254-5530
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934
during the proceeding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
At March 31, 2000, 168,095,733 shares of the Registrant's Common Stock, $2.50
par value were outstanding.
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<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statement Description Page(s)
- -------------------------------------------------------------------------------------------------------
<S> <C>
Consolidated Condensed Balance Sheets
March 31, 2000, December 31, 1999,
and March 31, 1999 3
Consolidated Condensed Statements of Income
Three months ended March 31, 2000 and 1999 4
Consolidated Condensed Statements of Stockholders' Equity
Three months ended March 31, 2000 and 1999 5
Consolidated Condensed Statements of Cash Flows
Three months ended March 31, 2000 and 1999 6
Notes to Consolidated Condensed Financial Statements 7-12
</TABLE>
The Consolidated Condensed Financial Statements were prepared by the
Company without an audit, but in the opinion of Management, reflect all
adjustments necessary for the fair presentation of the Company's financial
position and results of operations for the three month periods ended March 31,
2000 and 1999. Results of operations for the interim 2000 period are not
necessarily indicative of results expected for the full year. While certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission, the Company believes that the disclosures herein are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the Consolidated
Financial Statements and the notes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1999. The accounting
policies employed are the same as those shown in Note A to the Consolidated
Financial Statements on Form 10-K.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The Management's Discussion and Analysis of the registrant is included on Pages
13-30.
2
<PAGE> 3
SOUTHTRUST CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31 MARCH 31
------------- ------------- -------------
(Dollars in thousands) 2000 1999 1999
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 940,935 $ 874,999 $ 926,834
Short-term investments:
Federal funds sold and securities purchased
under resale agreements 26,400 46,350 64,725
Interest-bearing deposits in other banks 424 417 600
Trading securities 70,286 69,508 130,934
Loans held for sale 271,332 251,844 560,190
------------- ------------- -------------
Total short-term investments 368,442 368,119 756,449
Available-for-sale securities 5,296,791 5,061,001 4,024,734
Held-to-maturity securities (1) 2,991,600 2,986,958 2,851,907
Loans 32,091,537 31,972,758 28,477,502
Less:
Unearned income 266,963 274,917 215,638
Allowance for loan losses 453,280 442,343 394,135
------------- ------------- -------------
Net loans 31,371,294 31,255,498 27,867,729
Premises and equipment, net 734,683 730,602 691,449
Due from customers on acceptances 40,681 20,574 24,900
Goodwill and core deposit intangibles 590,808 583,303 555,071
Mortgage servicing rights 78,682 79,450 68,582
Bank owned life insurance 852,610 742,370 714,417
Other assets 599,813 559,638 534,046
------------- ------------- -------------
Total assets $ 43,866,339 $ 43,262,512 $ 39,016,118
============= ============= =============
LIABILITIES
Deposits:
Interest-bearing $ 25,890,282 $ 24,878,183 $ 21,908,435
Other 2,660,199 2,861,162 2,644,029
------------- ------------- -------------
Total deposits 28,550,481 27,739,345 24,552,464
Federal funds purchased and securities sold
under agreements to repurchase 5,518,966 5,191,057 5,855,026
Other short-term borrowings 1,756,317 2,205,933 1,315,251
Bank acceptances outstanding 40,681 20,574 24,900
Federal Home Loan Bank advances 3,350,320 3,530,324 2,830,335
Long-term debt 1,125,475 1,125,483 1,150,435
Other liabilities 549,839 522,367 490,317
------------- ------------- -------------
Total liabilities 40,892,079 40,335,083 36,218,728
STOCKHOLDERS' EQUITY
Common stock, par value $2.50 a share (2) 423,575 423,096 420,858
Capital surplus 754,091 750,820 736,533
Retained earnings 1,962,593 1,886,481 1,658,272
Accumulated other comprehensive income (loss) (141,923) (108,928) (6,081)
Treasury stock, at cost (3) (24,076) (24,040) (12,192)
------------- ------------- -------------
Total stockholders' equity 2,974,260 2,927,429 2,797,390
------------- ------------- -------------
Total liabilities and stockholders' equity $ 43,866,339 $ 43,262,512 $ 39,016,118
============= ============= =============
(1) Held-to-maturity securities-fair value $ 2,857,292 $ 2,863,710 $ 2,863,981
(2) Common shares authorized 500,000,000 500,000,000 500,000,000
Common shares issued 169,429,868 169,238,391 168,343,401
(3) Treasury shares of common stock 1,334,135 1,333,042 1,018,604
</TABLE>
3
<PAGE> 4
SOUTHTRUST CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
(In thousands, except per share data) 2000 1999
----------------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $670,773 $553,168
Available-for-sale securities 86,842 58,364
Held-to-maturity securities 51,257 48,367
Short-term investments 6,635 10,868
----------------------
Total interest income 815,507 670,767
======================
INTEREST EXPENSE
Deposits 295,746 221,147
Short-term borrowings 104,379 79,696
Federal Home Loan Bank advances 41,373 35,594
Long-term debt 17,849 17,826
----------------------
Total interest expense 459,347 354,263
======================
Net interest income 356,160 316,504
Provision for loan losses 30,662 30,362
----------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 325,498 286,142
NON-INTEREST INCOME
Service charges on deposit accounts 54,632 46,491
Mortgage banking operations 8,396 15,219
Bank card fees 7,940 7,619
Trust fees 7,921 7,551
Investment fees 4,763 3,096
Trading account profits and commissions 5,092 5,280
Bank owned life insurance 10,333 9,317
Gains on loans held for sale, net 1,447 4,452
Gains on available-for-sale securities, net 1,725 534
Other 11,227 11,505
----------------------
Total non-interest income 113,476 111,064
======================
NON-INTEREST EXPENSE
Salaries and employee benefits 143,364 134,254
Net occupancy 22,663 19,592
Equipment 17,438 15,498
Professional services 15,175 15,079
Communications 13,174 12,222
Goodwill and core deposit amortization 10,754 10,869
Business development 7,441 7,619
Supplies 6,329 6,288
Other 27,274 21,222
----------------------
Total non-interest expense 263,612 242,643
======================
Income before income taxes 175,362 154,563
Income tax expense 57,274 50,039
----------------------
NET INCOME $118,088 $104,524
======================
Average shares outstanding - basic (in thousands) 168,037 167,270
Average shares outstanding - diluted (in thousands) 168,697 168,587
Net income per share - basic $ 0.70 $ 0.62
Net income per share - diluted 0.70 0.62
Dividends declared per share 0.25 0.22
</TABLE>
4
<PAGE> 5
SOUTHTRUST CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON CAPITAL RETAINED COMPREHENSIVE TREASURY
(Dollars in thousands) STOCK SURPLUS EARNINGS INCOME (LOSS) STOCK TOTAL
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1999 $420,569 $733,577 $ 1,590,686 $ 5,530 $(12,096) $ 2,738,266
Net income 0 0 104,524 0 0 104,524
Change in unrealized loss on available-for-sale
securities, net of tax of $2,458* 0 0 0 (11,611) 0 (11,611)
-----------
Comprehensive income $ 92,913
===========
Dividends declared ($.22 per share) 0 0 (36,938) 0 0 (36,938)
Issuance of 48,473 shares of Common Stock
for stock options exercised 121 874 0 0 0 995
Issuance of 41,606 shares of Common Stock
for dividend reinvestment and stock purchase plans 104 1,363 0 0 0 1,467
Issuance of 25,869 shares of Common Stock
under employee discounted stock purchase plan 64 719 0 0 0 783
Purchase of 2,445 shares of treasury stock
for exercises of stock options 0 0 0 0 (96) (96)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 $420,858 $736,533 $ 1,658,272 $ (6,081) $(12,192) $ 2,797,390
================================================================================================================================
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 2000 $423,096 $750,820 $ 1,886,481 $(108,928) $(24,040) $ 2,927,429
Net income 0 0 118,088 0 0 118,088
Change in unrealized loss on available-for-sale
securities, net of tax of $19,719* 0 0 0 (32,995) 0 (32,995)
-----------
Comprehensive income $ 85,093
===========
Dividends declared ($.25 per share) 0 0 (41,976) 0 0 (41,976)
Issuance of 98,042 shares of Common Stock
for stock options exercised 245 739 0 0 0 984
Issuance of 49,371 shares of Common Stock
for dividend reinvestment and stock
purchase plans 124 1,559 0 0 0 1,683
Issuance of 44,064 shares of Common Stock under
long-term incentive plan 110 973 0 0 0 1,083
Purchase of 1,093 shares of treasury stock
for exercises of stock options 0 0 0 0 (36) (36)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000 $423,575 $754,091 $ 1,962,593 $(141,923) $(24,076) $ 2,974,260
================================================================================================================================
</TABLE>
*See disclosure of reclassification amount in Notes to Consolidated Condensed
Financial Statements
5
<PAGE> 6
SOUTHTRUST CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-----------------------------
(In thousands) 2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 118,088 $ 104,524
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision (credit) for:
Loan losses 30,662 30,362
Depreciation of premises and equipment 9,493 13,613
Amortization of intangibles 14,923 11,286
Amortization of security premium 502 541
Accretion of security discount (851) (1,548)
Deferred income taxes 3,128 (3,611)
Bank owned life insurance (10,333) (9,317)
Net gain on loans held for sale (1,447) (4,452)
Net gain on available-for-sale securities 1,725 (534)
Origination and purchase of loans held for sale (517,871) (818,103)
Proceeds from loans held for sale 499,831 836,723
Net increase in trading securities (778) (57,719)
Net (increase) decrease in other assets (62,959) 2,133
Net increase in other liabilities 41,695 1,501
----------- -----------
Net cash provided by operating activities 125,808 105,399
INVESTING ACTIVITIES
Proceeds from maturities/calls of:
Available-for-sale securities 46,141 294,131
Held-to-maturity securities 42,596 715,330
Proceeds from sales of available-for-sale-securities 55,292 170,117
Purchases of:
Available-for-sale securities (371,474) (669,205)
Held-to-maturity securities (13,284) (577,793)
Premises and equipment (7,573) (12,450)
Net (increase) decrease in:
Short-term investments 21,417 14,646
Loans (30,632) (728,002)
Purchases of bank owned life insurance (100,000) 0
Net cash paid in acquisitions (7,951) (19,807)
----------- -----------
Net cash used in investing activities (365,468) (813,033)
FINANCING ACTIVITIES
Net increase (decrease) in:
Deposits 642,388 (410,651)
Short-term borrowings (122,481) 1,057,248
Proceeds from:
Common Stock issuances 3,750 3,245
Federal Home Loan Bank advances 1,500,003 50,004
Payments for:
Repurchase of common stock (36) (96)
Federal Home Loan Bank advances (1,680,007) (8)
Long-term debt (8) (4,502)
Cash dividends (38,013) (31,550)
----------- -----------
Net cash provided by financing activities 305,596 663,690
----------- -----------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 65,936 (43,944)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 874,999 970,778
----------- -----------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 940,935 $ 926,834
=========== ===========
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A -Pending Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. This Statement establishes
accounting and reporting standards for derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Under certain conditions, a derivative may be specifically
designated as a hedge. Accounting for the changes in fair values of derivatives
will depend on their designation. Management is in the process of assessing the
impact of this Statement on the Company's financial position and results of
operation, but does not expect this impact to be material to the Consolidated
Condensed Financial Statements.
In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133. This Statement amends the effective date of SFAS No. 133,
which will now be effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000.
7
<PAGE> 8
Note B- Earnings per Share Reconciliation
A reconciliation of the numerator and denominator of the basic EPS
computation to the diluted EPS computation is as follows:
<TABLE>
<CAPTION>
Three months ended March 31
(In thousands, except per share data) 2000 1999
-------- --------
<S> <C> <C>
Basic:
Net income $118,088 $104,524
Average common shares
outstanding 168,037 167,270
-------- --------
Earnings per share $ 0.70 $ 0.62
======== ========
Diluted:
Net income $118,088 $104,524
Average common shares
outstanding 168,037 167,270
Dilutive effect of options issued 660 1,317
-------- --------
Average diluted shares
outstanding 168,697 168,587
-------- --------
Earnings per share $ 0.70 $ 0.62
======== ========
</TABLE>
In addition, the Company had 1,761,039 and 150,000 exercisable options
issued that were not included in the calculation of diluted EPS for the three
months ended March 31, 2000 and 1999, respectively, as the exercise price of
these options was in excess of the average market price.
8
<PAGE> 9
Note C- Supplemental Cash Flow Information
The following is supplemental disclosure to the Consolidated Condensed
Statements of Cash Flows for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended March 31
(In thousands) 2000 1999
-------- --------
<S> <C> <C>
Cash paid during period for:
Interest $437,185 $363,155
Income taxes 3,243 10,662
Noncash transactions:
Assets acquired in business combinations 176,642 132,520
Liabilities assumed in business combinations 171,443 124,239
Loans transferred to other real estate 5,852 4,213
Financed sales of foreclosed property 6,722 5,590
Loans securitized into mortgage-backed securities 332,294 0
</TABLE>
Note D- Comprehensive Income
Comprehensive income is the total of net income and all other non-owner
changes in equity. Items that are recognized under accounting standards as
components of comprehensive income are displayed in the Consolidated Condensed
Statements of Stockholders' Equity.
In the calculation of comprehensive income, certain reclassification
adjustments are made to avoid double counting items that are displayed as part
of net income for a period that also had been displayed as part of other
comprehensive income in that period or earlier periods. The disclosure of the
reclassification amount is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
2000 1999
-------- --------
<S> <C> <C>
(In thousands)
Unrealized holding losses
on available-for-sale securities $(50,989) $(13,535)
Less: reclassification adjustment for
gains included in net income (1,725) (534)
-------- --------
Unrealized loss on available-for-sale
securities (52,714) (14,069)
Tax effect 19,719 2,458
-------- --------
Unrealized loss on available-for-sale
securities, net of tax $(32,995) $(11,611)
======== ========
</TABLE>
9
<PAGE> 10
Note E- Business Segments
SFAS No.131, Disclosures about Segments of an Enterprise and Related
Information, requires disclosure of certain information about the reportable
business segments of the Company. The Company segregates financial information
for use in assessing its performance which is ultimately used for allocating
resources to its business segments. The Company has four reportable business
segments which are primarily aligned along customer base or asset/liability
management lines. Each segment is managed by one or more of the Company's
executives who, in conjunction with the Chief Executive Officer, make strategic
business decisions regarding that segment. The four reportable business segments
are Commercial Banking, Regional Banking, Funds Management, and Other.
The Commercial Banking segment derives its revenues from commercial,
industrial and commercial real estate customers (large corporate and
middle-market) throughout all geographic areas covered by the Company. This
business segment also provides cash management, international and commercial
leasing services. The Regional Banking segment generates revenues from retail
lending, depository services, and regional commercial lending not underwritten
by the Commercial Banking division. Branch administration costs are also
included in Regional Banking. The Funds Management segment is responsible for
the Company's asset and liability management, which includes management of
interest rate and liquidity risk. Activities include management of the Company's
securities portfolio, wholesale and long-term funding sources, and the use of
off-balance sheet instruments, including interest rate swap agreements. The
category named Other encompasses business segments that qualify for aggregation
as provided by SFAS No. 131 such as the Company's non-bank subsidiaries which
provide various services such as securities brokerage and asset management to
either external or internal customers. The remaining Company divisions included
within the Reconciliation grouping are divisions that have no operating revenue.
They contain unallocated costs not directly associated with the other reportable
segments such as executive administration, finance, internal auditing, and risk
management. Other items in this grouping included any unallocated provision for
loan losses, income from bank owned life insurance, credits for data processing
and other support function costs allocated to reportable segments, intangible
amortization, and income tax expense. Intercompany eliminations are also
included in the Reconciliation group.
The Company's management accounting policies generally follow those for
the Company described in Note A to the Consolidated Financial Statements on Form
10-K for the year ended December 31, 1999, except for the following items. The
Company uses a transfer pricing process to aid in assessing business segment
performance. This process involves matched rate transfer pricing of assets and
liabilities to determine a contribution to the net interest margin on a segment
basis. Also, net interest margin is reported on a fully taxable equivalent
basis. The provision for loan losses is charged to each business segment
primarily based on net charge-offs. Data processing and other support function
costs are charged in accordance with the relative operational cost of each
segment.
The Company's management accounting policies are continuously evolving
based on both internal and external factors. Therefore, the Company has restated
the comparative 1999 segment
10
<PAGE> 11
information to conform to the 2000 presentation. The restatement for 1999
includes enhancements to the transfer pricing process, new allocations for
interbranch processing and centralized management and product support, and
organizational structure changes made during 2000. As management accounting
policies change, prior period restatement may also be necessary in the future.
The following tables present the Company's business segment information
for the periods ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------------------------------------------
Commercial Regional Funds Reconciling Total
(In millions) Banking Banking Management Other Items Company
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest margin (FTE)................................ $ 145.8 $ 184.7 $ 32.0 $ 9.1 $ (11.9) $ 359.7
Provision for loan losses................................ 4.6 17.5 0.0 0.1 8.5 30.7
Non-interest income...................................... 26.0 63.5 0.1 13.6 10.3 113.5
Non-interest expense..................................... 71.9 154.5 0.7 13.8 22.7 263.6
--------- --------- ----------- --------- -------- -----------
Income before income
taxes............................................. 95.3 76.2 31.4 8.8 (32.8) 178.9
Income tax expense (FTE)................................. 0.0 0.0 0.0 0.0 60.8 60.8
--------- --------- ----------- --------- -------- -----------
Net income.......................................... $ 95.3 $ 76.2 $ 31.4 $ 8.8 $ (93.6) $ 118.1
========= ========= =========== ========= ======== ===========
Ending assets............................................ $15,905.5 $17,471.2 $ 7,113.5 $ 2,631.9 $ 744.2 $ 43,866.3
========= ========= =========== ========= ======== ===========
<CAPTION>
March 31, 1999
--------------------------------------------------------------------
Commercial Regional Funds Reconciling Total
(In millions) Banking Banking Management Other Items Company
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest margin (FTE)................................ $ 127.6 $ 181.1 $ 23.1 $ 7.1 $ (18.7) $ 320.2
Provision for loan losses................................ 5.0 9.2 0.0 0.0 16.2 30.4
Non-interest income...................................... 23.0 62.6 0.1 13.8 11.6 111.1
Non-interest expense..................................... 66.7 143.5 0.5 12.5 19.4 242.6
--------- --------- --------- --------- -------- -----------
Income before income
taxes............................................. 78.9 91.0 22.7 8.4 (42.7) 158.3
Income tax expense (FTE)................................. 0.0 0.0 0.0 0.0 53.8 53.8
--------- --------- --------- --------- -------- -----------
Net income.......................................... $ 78.9 $ 91.0 $ 22.7 $ 8.4 $ (96.5) $ 104.5
========= ========= ========= ========= ======== ===========
Ending assets............................................ $14,140.3 $15,837.0 $ 5,819.7 $ 2,614.8 $ 604.3 $ 39,016.1
========= ========= ========== ========= ======== ===========
</TABLE>
11
<PAGE> 12
Note F- Business Combinations
During the first three months of 2000, the Company completed the
following acquisition:
<TABLE>
<CAPTION>
(In millions)
Date Institution Assets Loans Deposits Location
- ------------------- ----------------------------------- ---------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Jan 14 Brazos Bancshares, Inc. ("Brazos") $ 176.7 $118.0 $168.7 Waxahachie, Texas
</TABLE>
Consideration for this acquisition was approximately $23 million in
cash. This acquisition was accounted for as a purchase. Under purchase
accounting, the results of operations, subsequent to the acquisition date, are
included in the Consolidated Condensed Financial Statements.
On April 14, 2000, the Company acquired Security Bancorp, Inc. in San
Antonio, Texas for approximately $44 million in cash. This transaction, which
was accounted for as a purchase, added approximately $177.8 million in assets,
$104.1 million in loans, and $161.3 million in deposits.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
BUSINESS
SouthTrust Corporation ("SouthTrust" or the "Company") is a registered
financial holding company incorporated under the laws of Delaware in 1968. The
Company is headquartered in Birmingham, Alabama, and engages, through its
subsidiary bank, SouthTrust Bank, N.A. (SouthTrust Bank) and its non-banking
subsidiaries, in a full range of banking services from 631 banking locations in
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
Tennessee and Texas. As of March 31, 2000, the Company had consolidated total
assets of $43.9 billion, which ranked it as the twenty-second largest bank
holding company in the United States.
SouthTrust Bank offers 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, and corporate
and other trust services. Services provided to individual customers directly or
through other affiliated corporations include checking accounts, money market
investment and money market checking accounts, personal money management
accounts, passbook savings accounts and various other time deposit savings
programs, loans (including business, personal, automobile, mortgage, home
improvement and educational loans), and a variety of trust services. SouthTrust
Bank also offers Visa and/or MasterCard multi-purpose nationally recognized
credit card services. The Company also offers brokerage and other investment
services through its subsidiary SouthTrust Securities, Inc.
Information relating to the Company's business segments can be found in
Note E to the Consolidated Condensed Financial Statements.
FORWARD-LOOKING STATEMENTS
In this report and in documents incorporated herein by reference, the
Company may communicate statements relating to the future results of the Company
that may be considered "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company's actual results
may differ materially from those included in the forward- looking statements.
Forward-looking statements are typically identified by the words "believe,
expect, anticipate, intend, estimate" and similar expressions. These statements
may relate to, among other things, loan loss reserve adequacy, simulation of
changes in interest rates and litigation results. Actual results may differ
materially from those expressed or implied as a result of certain risks and
uncertainties, including, but not limited to the following: changes in political
and economic conditions; interest rate fluctuations; competitive product and
pricing pressures within the Company's markets; equity and fixed income market
fluctuations; personal and corporate customers' bankruptcies; inflation;
acquisitions and integrations of acquired businesses; technological changes;
changes in law; changes in fiscal, monetary, regulatory and tax policies;
monetary fluctuations; success in gaining regulatory approvals when required;
other risks and uncertainties.
13
<PAGE> 14
SELECTED QUARTERLY FINANCIAL DATA TABLE 1
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Quarters Ended
--------------------------------------------------------------
2000 1999
--------- -------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest income $ 815.5 $ 790.3 $ 750.1 $ 695.3 $ 670.8
Interest expense 459.3 432.4 394.4 358.5 354.3
--------- --------- --------- --------- ---------
Net interest income 356.2 357.9 355.7 336.8 316.5
Provision for loan losses 30.7 36.4 42.7 31.8 30.4
--------- --------- --------- --------- ---------
Net interest income after
provision for loan losses 325.5 321.5 313.0 305.0 286.1
Non-interest income 110.3 108.8 108.8 103.7 106.1
Gains on loans held for sale, net 1.5 2.7 4.5 3.6 4.5
Gains on available-for-sale securities, net 1.7 0.6 0.1 (0.3) 0.5
Non-interest expense 263.6 260.2 258.8 248.9 242.6
--------- --------- --------- --------- ---------
Income before income taxes 175.4 173.4 167.6 163.1 154.6
Income taxes 57.3 57.5 54.5 53.4 50.1
--------- --------- --------- --------- ---------
Net income $ 118.1 $ 115.9 $ 113.1 $ 109.7 $ 104.5
========= ========= ========= ========= =========
PER COMMON SHARE:
Net income - basic $ 0.70 $ 0.69 $ 0.67 $ 0.66 $ 0.62
Net income- diluted 0.70 0.69 0.67 0.65 0.62
Cash dividends declared 0.25 0.22 0.22 0.22 0.22
Book value 17.69 17.44 17.20 16.90 16.72
Market value-high 37.063 41.813 38.938 42.875 42.375
Market value-low 20.875 32.750 32.750 36.000 35.375
ENDING BALANCES:
Loans, net of unearned income $31,824.6 $31,697.8 $30,614.0 $29,178.4 $28,261.8
Total assets 43,866.3 43,262.5 42,474.2 40,066.5 39,016.1
Deposits 28,550.5 27,739.3 27,497.2 26,296.7 24,552.5
Federal Home Loan Bank advances 3,350.3 3,530.3 3,480.3 2,855.3 2,830.3
Long-term debt 1,125.5 1,125.5 1,125.5 1,075.5 1,150.4
Stockholders' equity 2,974.3 2,927.4 2,885.5 2,829.5 2,797.4
Common shares (in thousands) 168,096 167,905 167,803 167,476 167,325
AVERAGE BALANCES:
Loans, net of unearned income $31,931.3 $31,071.6 $29,823.5 $28,532.3 $27,762.0
Earning assets 40,292.7 39,548.7 37,919.9 35,849.4 35,051.4
Total assets 43,565.0 42,784.3 41,041.4 38,951.2 38,116.8
Deposits 28,773.6 27,470.9 26,599.7 24,995.9 24,139.9
Stockholders' equity 2,946.0 2,901.4 2,801.0 2,798.8 2,753.4
Common shares (in thousands)
Basic 168,037 167,871 167,654 167,439 167,270
Diluted 168,697 168,970 168,742 168,746 168,587
SELECTED RATIOS:
Return on average total assets 1.09% 1.07% 1.09% 1.13% 1.11%
Return on average stockholders' equity 16.12 15.85 16.01 15.72 15.40
Net interest margin (FTE) 3.57 3.62 3.75 3.81 3.71
Average equity to average assets 6.76 6.78 6.82 7.19 7.22
Non-interest expense as a percent
of average total assets 2.43 2.41 2.50 2.56 2.58
Efficiency ratio 55.91 54.98 54.75 55.58 56.32
</TABLE>
14
<PAGE> 15
AVERAGE BALANCES, INTEREST INCOME AND EXPENSE AND TABLE 2
AVERAGE YIELDS EARNED AND RATES PAID
(DOLLARS IN MILLIONS; YIELDS ON TAXABLE EQUIVALENT BASIS)
<TABLE>
<CAPTION>
Quarters Ended
----------------------------------------------------------------------
March 31, 2000 December 31, 1999
------------------------------ -----------------------------
(1) (1)
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned
income (2) $31,931.3 $671.4 8.46% $31,071.6 $646.7 8.26%
Available-for-sale securities:
Taxable 4,695.0 82.7 6.81 4,775.0 81.9 6.64
Non-taxable 322.9 6.5 7.62 325.2 6.4 7.51
Held-to-maturity securities:
Taxable 2,907.3 49.8 6.89 2,901.5 49.7 6.80
Non-taxable 81.9 2.1 10.13 86.4 2.2 9.80
Short-term investments 354.3 6.6 7.53 389.0 7.1 7.25
------------------------------ -----------------------------
Total interest-earning assets 40,292.7 $819.1 8.14 39,548.7 $794.0 7.94
Allowance for loan losses (448.7) (437.1)
Other assets 3,721.0 3,672.7
------------------------------ -----------------------------
Total assets $43,565.0 $42,784.3
============================== =============================
LIABILITIES
Interest-bearing deposits $26,259.5 $295.7 4.53% $24,637.6 $268.0 4.32%
Short-term borrowings 7,134.4 104.4 5.88 7,331.7 101.9 5.52
Federal Home Loan Bank advances 3,026.0 41.4 5.50 3,432.8 45.4 5.25
Long-term debt 1,125.5 17.9 6.38 1,125.5 17.1 6.02
------------------------------ -----------------------------
Total interest-bearing liabilities 37,545.4 459.4 4.92 36,527.6 432.4 4.70
Demand deposits non-interest bearing 2,514.1 2,833.3
Other liabilities 559.5 522.0
Total liabilities 40,619.0 39,882.9
STOCKHOLDERS' EQUITY 2,946.0 2,901.4
------------------------------ -----------------------------
Total liabilities and stockholders' equity $43,565.0 $42,784.3
------------------------------ -----------------------------
Net interest income $359.7 $361.6
------------------------------ -----------------------------
Net interest margin 3.57% 3.62%
============================== =============================
Net interest spread 3.22% 3.24%
============================== =============================
</TABLE>
(1) YIELDS WERE CALCULATED USING THE AVERAGE AMORTIZED COST OF THE
UNDERLYING ASSETS. ALL YIELDS AND RATES ARE PRESENTED ON AN ANNUALIZED
BASIS.
(2) INCLUDED IN INTEREST ARE NET LOAN FEES OF $17.2 MILLION, $16.8 MILLION,
$17.6 MILLION, $17.4 MILLION, AND $16.4 MILLION FOR THE FIVE QUARTERS
ENDED MARCH 31, 2000, RESPECTIVELY. THE AVERAGES INCLUDE LOANS ON WHICH
THE ACCRUAL OF INTEREST HAS BEEN DISCONTINUED. INCOME ON CERTAIN
NON-ACCRUAL LOANS IS RECOGNIZED ON A CASH-BASIS.
15
<PAGE> 16
TABLE 2
<TABLE>
<CAPTION>
Quarters Ended
- -----------------------------------------------------------------------------------------------------------
September 30, 1999 June 30, 1999 March 31, 1999
- ---------------------------- ---------------------------- ----------------------------
(1) (1) (1)
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$29,823.5 $613.7 8.16% $28,532.3 $575.1 8.09% $27,762.0 $553.8 8.09%
4,352.1 73.5 6.55 3,737.0 60.8 6.48 3,506.7 54.6 6.30
322.9 6.3 7.51 329.3 6.3 7.60 316.1 5.9 7.72
2,913.3 49.6 6.76 2,549.8 43.6 6.85 2,685.8 46.2 6.98
95.5 2.4 9.88 101.7 2.6 10.45 116.8 3.2 11.01
412.6 8.3 8.01 599.3 10.6 7.07 664.0 10.8 6.64
- ---------------------------- ---------------------------- ----------------------------
37,919.9 $753.8 7.87 35,849.4 $699.0 7.81 35,051.4 $674.5 7.80
(415.2) (397.0) (378.1)
3,536.7 3,498.8 3,443.5
- ---------------------------- ---------------------------- ----------------------------
$41,041.4 $38,951.2 $38,116.8
============================ ============================ ============================
$23,839.6 $248.2 4.13% $22,322.6 $225.1 4.05% $21,515.2 $221.1 4.17%
6,941.5 90.9 5.19 6,728.1 80.8 4.82 6,775.9 79.7 4.77
3,120.8 40.2 5.11 2,827.6 36.1 5.12 2,783.7 35.6 5.19
1,084.2 15.1 5.51 1,118.4 16.5 5.91 1,158.9 17.8 6.24
- ---------------------------- ---------------------------- ----------------------------
34,986.1 394.4 4.47 32,996.7 358.5 4.36 32,233.7 354.2 4.46
2,760.1 2,673.3 2,624.7
494.2 482.4 505.0
38,240.4 36,152.4 35,363.4
2,801.0 2,798.8 2,753.4
- ---------------------------- ---------------------------- ----------------------------
$41,041.4 $38,951.2 $38,116.8
============================ ============================ ============================
$359.4 $340.5 $320.3
============================ ============================ ============================
3.75% 3.81% 3.71%
============================ ============================ ============================
3.40% 3.45% 3.34%
============================ ============================ ============================
</TABLE>
16
<PAGE> 17
NET INTEREST INCOME / MARGIN.
The Company's net interest margin decreased 14 basis points from the
first quarter of 1999 to 3.57% for the 2000 first quarter period. Also, the net
interest margin is down 5 basis points from the fourth quarter of 1999. The net
interest spread between interest-earning assets and interest-bearing liabilities
decreased 12 basis points from the first quarter of 1999 to 3.22%. Net interest
spread is also down 2 basis points from the fourth quarter of 1999. The net
interest margin and net interest spread are affected by the composition of
interest-earning assets and interest-bearing liabilities, competitive pressures,
and Federal Reserve Bank (the "Fed") monetary policies.
In response to outstanding growth in the economy, the Fed has raised
short-term interest rates on five separate occasions since mid-1999. On each
occasion, rates were increased 25 basis points in an attempt to control
inflationary pressures. Since the Company's interest-earning assets are
repricing at a slower rate than its interest-bearing liabilities, the Company's
net interest margin and net interest spread are being compressed. Since economic
growth remains strong, further increases in interest rates could be expected
from the Fed in the near future.
Growth in net interest margin has slowed down due in part to the rising
rate environment. In addition, in an effort to mitigate the effects of changes
in interest rates, the Company is emphasizing diversification of the portfolio
mix. As part of this diversification, the Company is placing more emphasis on
variable rate assets than in previous periods.
See Table 2 for detailed information concerning quarterly average
volumes, interest, yields earned and rates paid.
PROVISION FOR LOAN LOSSES.
During the first quarter of 2000, the Company recorded a $30.7 million
provision for loan losses. This compares to a provision of $30.4 million for the
quarter ended March 31, 1999. Provisions for loan losses are charged to income
to bring the allowance to a level deemed appropriate by Management based on the
factors as described in "Allowance for Loan Losses" later in Management's
Discussion and Analysis of Financial Condition and Results of Operations
Earnings Summary.
17
<PAGE> 18
NON-INTEREST INCOME.
Total non-interest income for the quarter ended March 31, 2000 was
$113.5 million, an increase of $2.4 million or 2.2% over the same period in
1999. Service charges on deposit accounts, which represent the largest portion
of non-interest income, increased in the first quarter of 2000 by 17.5% from the
comparable year-ago period. This increase is attributable to an increased number
of deposit accounts and increases in certain service charge rates. In
particular, service charges increased from increased usage of Visa debit cards
and ATMs. Mortgage banking operations income decreased 44.8% compared to the
1999 first quarter. Mortgage interest rates have increased significantly
compared to the first quarter of 1999, and loan production and related income
have declined accordingly. Fee income related to Bank Card and Trust operations
has also increased, 4.2% and 4.9%, respectively, over the year ago quarter. Both
were related to higher volume and various rate increases. Investment fee income
rose by $1.7 million or 53.8 % compared to the quarter ended March 31, 1999,
which was driven by increased revenue from sales of annuity and mutual fund
products. Trading account profits and commissions totaled $5.1 million for the
first quarter of 2000. Income from bank owned life insurance for the first
quarter of 2000 increased $1.0 million or 10.9% from the first quarter of 1999.
Sales of loans during the three months ended March 31, 2000 resulted
in gains of approximately $1.5 million. Gains on sales of available-for-sale
securities were $1.7 million in the first quarter of 2000.
There were no other significant non-recurring non-interest income items
recorded in 2000 or 1999.
NON-INTEREST INCOME TABLE 3
(In millions)
<TABLE>
<CAPTION>
Quarters Ended
---------------------------------------------------------------
2000 1999
------ -------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts $ 54.6 $ 56.0 $ 52.3 $ 49.2 $ 46.5
Mortgage banking operations 8.4 8.3 9.2 11.5 15.2
Bank card fees 8.0 8.3 8.0 7.3 7.6
Trust fees 7.9 7.8 7.4 7.5 7.6
Investment fees 4.8 4.7 4.9 5.4 3.1
Trading account profits and commissions 5.1 4.2 4.0 4.1 5.3
Bank owned life insurance 10.3 10.1 12.4 9.6 9.3
Gains on loans held-for-sale, net 1.5 2.7 4.5 3.6 4.5
Gains (losses) on available-for-sale securities, net 1.7 0.6 0.1 (0.3) 0.5
Other 11.2 9.4 10.6 9.1 11.5
------ ------ ------ ------ ------
Total $113.5 $112.1 $113.4 $107.0 $111.1
====== ====== ====== ====== ======
</TABLE>
18
<PAGE> 19
NON-INTEREST EXPENSE.
Total non-interest expense increased 8.6% to $263.6 million in the
first quarter of 2000 as compared to the same period in 1999. Salaries and
employee benefits expense is the largest component of non-interest expense,
accounting for $143.4 million or 54.4% of all non-interest expense for the
quarter ended March 31, 2000. The March 31, 2000 quarter over March 31, 1999
quarter increase in salary and employee benefits expense was $9.2 million or
6.8%, related mainly to annual merit increases and an increase in the number of
full-time equivalent employees of 4% to approximately 12,500 at March 31, 2000.
Occupancy and equipment expenses were also up in the first quarter of 2000.
These increases are attributable to a higher number of banking offices,
including branches and other offices, as of March 31, 2000 compared to March 31,
1999. The efficiency ratio, a measure of non-interest expense to net interest
income plus non-interest income, was 55.91% for the three month period ended
March 31, 2000, an improvement from the year ago ratio of 56.32%. This
improvement reflects the Company's continuing efforts to control expense growth.
There were no significant non-recurring non-interest expense items
recorded in 2000 or 1999.
NON-INTEREST EXPENSE TABLE 4
(In millions)
<TABLE>
<CAPTION>
Quarters Ended
-----------------------------------------------------------------------
2000 1999
------ -------------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits $143.4 $136.0 $136.5 $133.7 $134.2
Net occupancy 22.6 21.6 20.9 19.9 19.6
Equipment 17.4 17.9 17.8 16.5 15.5
Professional services 15.2 17.6 17.0 17.7 15.1
Communications 13.2 13.5 12.7 13.1 12.2
Goodwill and core deposit amortization 10.8 10.6 8.0 11.1 10.9
Business development 7.4 8.4 7.4 7.7 7.6
Supplies 6.3 6.9 6.2 5.9 6.3
Other 27.3 27.7 32.3 23.3 21.2
------ ------ ------ ------ ------
Total $263.6 $260.2 $258.8 $248.9 $242.6
====== ====== ====== ====== ======
</TABLE>
INCOME TAX EXPENSE.
Income tax expense for the first quarter of 2000 was $57.3 million for
an effective tax rate of 32.7% compared to $50.1 million or an effective rate of
32.4% in the first quarter of 1999. The statutory federal income tax rate was
35% in 2000 and 1999.
19
<PAGE> 20
LOANS.
Loans, net of unearned income at March 31, 2000 were $31,824.6 million,
an increase of $126.8 million over the December 31, 1999 level. Of the total
loan increase, $118.0 million was obtained in the acquisition of Brazos
Bancshares, Inc. on January 14, 2000. Internal growth accounted for the
remaining $8.8 million of the increase. Loan growth has slowed down in the first
quarter of 2000 when compared to previous periods as a result of the increasing
interest rate environment. Given the recent and possible future interest rate
increases from the Fed, economic growth in general is expected to slow down,
which will continue to slow anticipated loan growth. Also contributing to slower
loan growth, the Company is emphasizing diversification of its loan portfolio
mix, which includes a greater emphasis on variable rate loans. In addition, the
Company securitized approximately $332.3 million of 1-4 family mortgages into
mortgage-backed securities during the first quarter of 2000. The Company
retained these securities, and they are reported under available-for-sale
securities. The primary purpose of the securitization was to enable greater
liquidity for these assets.
The Company regularly participates in loan sales in the secondary
market, which allow the Company to actively manage its loan portfolio.
Specifically, these sales allows the Company to manage credit concentrations,
while continuing to extend credit to customers. This activity has slowed in
recent months due to less favorable market conditions. Loans sold, consisting
mainly of 1-4 family mortgages, amounted to approximately $170.6 million during
the three month period ended March 31, 2000.
LOAN PORTFOLIO TABLE 5
(In millions)
<TABLE>
<CAPTION>
Quarters Ended
-------------------------------------------------------------------------------------
2000 1999
--------- ------------------------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural $11,357.2 $11,265.2 $10,734.5 $10,222.4 $10,102.5
Real estate construction 4,369.9 4,342.9 4,270.5 4,006.6 3,744.3
Commercial real estate mortgage 6,266.1 6,029.2 5,560.8 5,507.0 5,157.5
Residential real estate mortgage 6,616.2 6,773.4 6,716.7 6,359.4 6,279.0
Loans to individuals 3,482.1 3,562.0 3,591.8 3,316.8 3,194.2
--------- --------- --------- --------- ---------
32,091.5 31,972.7 30,874.3 29,412.2 28,477.5
Unearned income (266.9) (274.9) (260.3) (233.8) (215.7)
--------- --------- --------- --------- ---------
Loans, net of unearned income 31,824.6 31,697.8 30,614.0 29,178.4 28,261.8
Allowance for loan losses (453.3) (442.3) (434.8) (405.5) (394.1)
--------- --------- --------- --------- ---------
Net loans $31,371.3 $31,255.5 $30,179.2 $28,772.9 $27,867.7
========= ========= ========= ========= =========
</TABLE>
20
<PAGE> 21
ALLOWANCE FOR LOAN LOSSES
The Company maintains an allowance for loan losses to absorb losses
inherent in the loan portfolio. The allowance is based upon Management's
estimated range of those losses. Actual losses for these loans can vary
significantly from this estimate. The Company's subsidiary bank is regulated by
the Office of the Comptroller of the Currency ("OCC"). Management also considers
recommendations from the OCC in concluding on the adequacy of the allowance for
loan losses. The methodology and assumptions used to calculate the allowance are
continually reviewed as to their appropriateness given the most recent
estimation of probable losses realized and other factors that influence the
estimation process. The model and resulting allowance level are adjusted
accordingly as these factors change. The historical and migration loss rates
described below which are used in determining the allowance also provide a
self-correcting feature to the methodology.
Loans are separated by internal risk ratings into two categories for
assessment of their estimated allowance level needs; Non-problem and Watch-list.
The allowance for Non-problem loans is calculated by applying historical
Non-problem loss factors to outstanding Non-problem loans within each loan type.
The loss factors represent either the average of the last four years' losses or,
in some cases, the most recent years' loss experience if in Management's
judgement that loss rate is more representative of current trends in a
particular loan type. Watch-list loans include any loans that have an internal
credit review or regulatory rating of less than "good" or, loans that are sound
and collectible, but contain certain characteristics that require review by
Management. The allowance associated with Watch-list loans is calculated by
applying loss factors determined either through a migration analysis or an
average of the last four years' loss experience, both of which are specific to
Watch-list loans. The migration analysis is performed periodically and measures
losses in relation to the internal risk ratings assigned to loans. Additionally,
certain Watch-list loans (generally large commercial credits) are specifically
reviewed. This specific review considers estimates of future cash flows, fair
values of collateral and other indicators of the borrowers' ability to repay the
loan.
In addition to the above, the Company considers other risk elements in
establishing the reserve for both Non-problem and Watch-list loans. These risk
elements are based on Management's evaluation of various conditions that affect
inherent losses which are not directly measured by applying the historical or
migration loss rates. Also, in most cases, the impact of these risk elements has
not yet been reflected in the level of non-performing loans or in the internal
risk grading process. Evaluation of these elements involves a higher degree of
uncertainty since they are not directly associated with specific problem
credits. These elements are discussed below.
The Company's loan portfolio has historically experienced growth rates
in excess of our peers. While the Company strives to use prudent underwriting
and credit management standards, such growth and related underwriting risks lead
to increased losses, which are not realized until after period end.
Additionally, loans acquired through the various business combinations carry
additional credit risk due to uncertainties associated with the underwriting
process and deviations from the Company's credit underwriting standards at the
acquired institutions. The Company is also subject to risk associated with
certain industry concentrations. Commercial real estate mortgage loans represent
the Company's largest concentration and although this segment of the portfolio
has performed well in recent years, Management considers the associated risk
within the commercial real
21
<PAGE> 22
estate portfolio as part of the other risk elements. The Company has established
a sound credit policy which guides the manner in which loans are underwritten.
Exceptions from this policy may be necessary to facilitate the lending process.
The associated exception risk has also been considered in computing the
allowance.
Based on the methodology outlined above, the allowance for loan losses
allocated to Non-problem and Watch-list loans was $318.7 million and $134.6
million, respectively, at March 31, 2000 and $285.5 million and $156.8 million,
respectively, at December 31, 1999. As a percentage of outstanding loans, the
total allowance for loan losses was 1.42%, compared to the December 31, 1999
level of 1.40%. Net charge-offs during the three months ended March 31, 2000
totaled $22.6 million or .28% of average net loans on an annualized basis, an
increase of $7.2 million from the 1999 first quarter.
ALLOWANCE FOR LOAN LOSSES TABLE 6
(In thousands)
<TABLE>
<CAPTION>
Quarters Ended
---------------------------------------------------------------------------
2000 1999
-------- ----------------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance beginning of quarter $442,343 $434,771 $405,513 $ 394,135 $377,525
Loans charged-off:
Commercial, financial and agricultural 9,912 20,961 13,605 7,870 5,176
Real estate construction 0 1 59 331 30
Commercial real estate mortgage 0 2 78 90 100
Residential real estate mortgage 1,215 991 804 961 637
Loans to individuals 14,519 10,795 10,591 14,714 13,306
-------- -------- -------- --------- --------
Total charge-offs 25,646 32,750 25,137 23,966 19,249
======== ======== ======== ========= ========
Recoveries of loans previously charged-off:
Commercial, financial and agricultural 1,371 1,553 999 1,297 1,390
Real estate construction 0 0 0 0 0
Commercial real estate mortgage 0 0 3 6 3
Residential real estate mortgage 112 21 70 222 63
Loans to individuals 1,544 2,311 2,414 2,047 2,354
-------- -------- -------- --------- --------
Total recoveries 3,027 3,885 3,486 3,572 3,810
======== ======== ======== ========= ========
Net loans charged-off 22,619 28,865 21,651 20,394 15,439
Additions to allowance charged to expense 30,662 36,354 42,757 31,776 30,362
Subsidiaries' allowance at date of purchase 2,894 83 8,152 (4) 1,687
-------- -------- -------- --------- --------
Balance at end of quarter $ 453,280 $ 442,343 $ 434,771 $ 405,513 $ 394,135
======== ======== ======== ========= ========
(In millions)
Loans outstanding at quarter end,
net of unearned income $31,824.6 $31,697.8 $30,614.0 $29,178.4 $28,261.8
Average loans outstanding,
net of unearned income $31,931.3 $31,071.6 $29,823.5 $28,532.3 $27,762.0
Ratios:
Allowance to net loans outstanding 1.42% 1.40% 1.42% 1.39% 1.39%
Net loans charged-off to average net loans 0.28 0.37 0.29 0.29 0.23
Provision for loan losses to net charge-offs 135.56 125.94 197.48 155.81 196.66
Provision for loan losses to average net loans 0.39 0.46 0.57 0.45 0.44
</TABLE>
22
<PAGE> 23
NON-PERFORMING ASSETS.
Non-performing assets, which include non-accrual and restructured
loans, other real estate owned and other repossessed assets were $183.8 million
at March 31, 2000, an increase of $21.1 million from December 31, 1999. The
ratio of non-performing assets to total loans plus other non-performing assets
was .58% at March 31, 2000, while the allowance to non-performing loans ratio
was 339.80% for the same period.
In addition to loans on non-performing status at March 31, 2000, the
Company had loans of approximately $56.5 million for which Management had
serious doubts as to the ability of the borrowers to comply with the present
repayment terms, which may result in the loans' repayment terms being
restructured and/or the loans being placed on non-performing status. These
potential problem loans are current with respect to principal and interest
payments and are not presently on non-accrual status; however, they are
continuously reviewed by Management and their classification may be changed if
conditions warrant. At December 31, 1999, potential problem loans totaled $67.6
million.
NON-PERFORMING ASSETS TABLE 7
(Dollars in millions)
<TABLE>
<CAPTION>
Quarters Ended
----------------------------------------------------------------
2000 1999
-------- --------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-performing loans
Commercial, financial, and agricultural $ 92.5 $ 78.7 $ 69.7 $ 67.6 $ 72.5
Real estate construction 4.2 3.8 4.2 7.0 9.8
Commercial real estate mortgage 5.5 12.2 10.1 10.6 23.9
Residential real estate mortgage 15.7 14.7 21.5 24.9 21.5
Loans to individuals 15.5 2.6 3.1 3.4 3.2
-------- -------- -------- -------- --------
Total non-performing loans 133.4 112.0 108.6 113.5 130.9
-------- -------- -------- -------- --------
Other real estate owned 37.1 38.3 39.6 42.8 44.6
Other repossessed assets 13.3 12.4 11.1 12.9 17.4
-------- -------- -------- -------- --------
Total non-performing assets $ 183.8 $ 162.7 $ 159.3 $ 169.2 $ 192.9
======== ======== ======== ======== ========
Accruing loans past due 90 days or more $ 60.6 $ 71.5 $ 72.5 $ 76.6 $ 70.3
Ratios:
Non-performing loans to total loans 0.42% 0.35% 0.35% 0.39% 0.46%
Non-performing assets to total loans
plus other non-performing assets 0.58 0.51 0.52 0.58 0.68
Non-performing assets and accruing loans
90 days or more past due to total loans
plus other non-performing assets 0.77 0.74 0.76 0.84 0.93
Allowance to non-performing loans 339.80 394.83 400.20 357.43 300.99
</TABLE>
23
<PAGE> 24
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES.
The investment portfolio is managed to maximize yield over an entire
interest rate cycle while providing liquidity and minimizing risk. Securities
classified as held-to-maturity are carried at amortized cost, as the Company
has the ability and Management has the positive intent to hold these securities
to maturity. All securities not considered held-to-maturity or part of the
trading portfolio have been designated as available-for-sale and are carried at
fair value. Unrealized gains and losses on available-for-sale securities 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.
Total securities, including those designated as available-for-sale and
held-to-maturity, have increased $240.4 million since December 31, 1999.
Securities obtained through the acquisition of another financial institution
were $34.1 million during the first three months of 2000.
The Company's investment in collateralized mortgage obligations
presents 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 declining interest
rates when many borrowers refinance their mortgages, creating prepayments on
their existing mortgages. The Company doesn't consider this risk to be
significant. The Company's investment in structured notes and other derivative
investment securities is nominal and would not have a significant effect on the
Company's net interest margin.
24
<PAGE> 25
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES TABLE 8
<TABLE>
<CAPTION>
Available-for-Sale Securities
-------------------------------------------------------
March 31, 2000 December 31, 1999
------------------------- -------------------------
Amortized Fair Amortized Fair
(Dollars in millions) Cost Value Cost Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 53.5 $ 53.2 $ 39.1 $ 38.9
U.S. Government agency securities 2,354.1 2,228.9 2,354.5 2,234.6
Collateralized mortgage obligations
and mortgage backed securities 2,395.7 2,312.9 2,070.3 2,037.6
Obligations of states and political
subdivisions 288.2 274.3 288.4 271.9
Other debt securities 72.3 68.5 71.3 67.2
Equity securities 359.1 359.0 410.8 410.8
---------- ---------- ---------- ----------
Total $ 5,522.9 $ 5,296.8 $ 5,234.4 $ 5,061.0
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Held-to-Maturity Securities
-------------------------------------------------------
March 31, 2000 December 31, 1999
------------------------- -------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 5.3 $ 5.3 $ 6.9 $ 6.8
U.S. Government agency securities 2,507.2 2,384.0 2,489.3 2,372.9
Collateralized mortgage obligations
and mortgage backed securities 266.9 262.1 277.9 275.5
Obligations of states and political
subdivisions 81.1 83.1 85.0 87.4
Other debt securities 131.1 122.8 127.9 121.1
---------- ---------- ---------- ----------
Total $ 2,991.6 $ 2,857.3 $ 2,987.0 $ 2,863.7
========== ========== ========== ==========
</TABLE>
25
<PAGE> 26
SHORT-TERM INVESTMENTS.
Short-term investments at March 31, 2000 totaled $368.4 million,
reflecting an increase of $0.3 million from the December 31, 1999 level of
$368.1 million. At March 31, 2000, short-term investments consisted of $26.4
million in federal funds sold and securities purchased under resale agreements,
$0.4 million in time deposits with other banks, $70.3 million in trading
securities and $271.3 million in loans held for sale. Securities held for
trading purposes are primarily inventory at the Company's brokerage subsidiary
and are carried at fair value. Loans held for sale, primarily 1-4 mortgage
loans in the process of being securitized and sold to third party investors,
are carried at the lower of cost or 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.
FUNDING.
The Company's overall funding level is governed by current and
expected asset demand and capital needs. The Company's funding sources can be
divided into four broad categories: deposits, short-term borrowings, Federal
Home Loan Bank ("FHLB") advances, and long-term debt. The mixture of these
funding types depends upon the Company's maturity and liquidity needs, the
current rate environment, and the availability of such funds.
The Company monitors certain ratios and liability concentrations to
ensure funding levels are maintained within established policies. These
policies include a maximum short-term liability to total asset ratio of 40% and
a limit on funding concentrations from any one source as a percent of total
assets of 20%. Various maturity limits have also been established.
Deposits are the Company's primary source of funding. Total deposits
at March 31, 2000 were $28,550.5 million, up $811.2 million or 2.9% from the
December 31, 1999 level of $27,739.3 million. Of the total increase in
deposits, $168.7 million were obtained in the acquisition of Brazos Bancshares,
Inc. At March 31, 2000, total deposits included interest-bearing deposits of
$25,890.3 million and other deposits of $2,660.2 million.
Short-term borrowings at March 31, 2000 were $7,275.3 million and
included federal funds purchased of $3,897.9 million, securities sold under
agreements to repurchase of $1,621.1 million and other borrowed funds of
$1,756.3 million. At March 31, 2000, total short-term borrowings were 16.6% of
total liabilities and stockholders' equity. This compares to total short-term
borrowings of $7,397.0 million or 17.1% of total liabilities and stockholders'
equity at December 31, 1999.
FHLB advances totaled $3,350.3 million at March 31, 2000. The current
quarter end balance is down $180.0 million from the level outstanding at
December 31, 1999. The Company uses FHLB advances as an alternative to other
funding sources with similar maturities. These advances generally offer more
attractive rates when compared to other mid-term financing options. They are
26
<PAGE> 27
also flexible, allowing the Company to quickly obtain the necessary maturities
and rates that best suit its overall asset/liability management strategy.
At March 31, 2000 and December 31, 1999, total long-term debt was
$1,125.5 million.
CAPITAL.
The Company continually monitors current and projected capital
adequacy positions of both the Company and its subsidiary bank. Maintaining
adequate capital levels is integral to providing stability to the Company,
resources to achieve the Company's growth objectives, and returns to
stockholders in the form of dividends.
The Company is subject to various regulatory capital requirements that
prescribe quantitative measures of the Company's assets, liabilities, and
certain off-balance sheet items. The Company's regulators have also imposed
qualitative guidelines for capital amounts and classifications such as risk
weighting, capital components, and other details. The quantitative measures to
ensure capital adequacy require that the Company maintain Tier 1 and Total
capital to risk-weighted assets of 4% and 8%, respectively, and Tier 1 capital
to adjusted quarter average total assets of 4%. Failure to meet minimum capital
requirements can initiate certain actions by regulators that, if undertaken,
could have a direct material effect on the Company's financial statements. As
of the periods ended below, the Company meets all capital adequacy requirements
imposed by its regulators.
The March 31, 2000 Tier 1 and Total capital to risk weighted assets
were 6.82% and 10.60%, respectively, compared to the December 31, 1999 ratios
of 6.65% and 10.41%.
27
<PAGE> 28
CAPITAL RATIOS TABLE 9
(Dollars in millions)
<TABLE>
<CAPTION>
2000 1999
---------- -------------------------------------------------------------
Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Tier 1 capital:
Stockholders' equity $ 2,974.3 $ 2,927.4 $ 2,885.5 $ 2,829.5 $ 2,797.4
Intangible assets other than
servicing rights (590.8) (583.3) (593.9) (544.5) (555.1)
Unrealized (gain)/loss on
available-for-sale securities 141.9 108.9 69.3 50.9 6.1
---------- ---------- ---------- ---------- ----------
Total Tier 1 capital 2,525.4 2,453.0 2,360.9 2,335.9 2,248.4
---------- ---------- ---------- ---------- ----------
Tier 2 capital:
Allowable reserve for loan losses 453.3 442.3 434.8 405.5 394.1
Allowable long-term debt 945.0 945.0 945.0 895.0 955.0
---------- ---------- ---------- ---------- ----------
Total Tier 2 capital 1,398.3 1,387.3 1,379.8 1,300.5 1,349.1
---------- ---------- ---------- ---------- ----------
Total risk-based capita l $ 3,923.7 $ 3,840.3 $ 3,740.7 $ 3,636.4 $ 3,597.5
========== ========== ========== ========== ==========
Risk-weighted assets $ 37,035.7 $ 36,888.4 $ 36,382.4 $ 34,726.8 $ 33,722.3
Risk-based ratios:
Tier 1 capital 6.82% 6.65% 6.49% 6.73% 6.67%
Total capital 10.60 10.41 10.28 10.47 10.67
Leverage ratio 5.88 5.81 5.84 6.08 5.99
</TABLE>
COMMITMENTS.
The Company's subsidiary bank had standby letters of credit
outstanding of approximately $852.9 million at March 31, 2000 and $876.6
million at December 31, 1999.
The Company's subsidiary bank had outstanding commitments to extend
credit of approximately $10,301.8 million at March 31, 2000 and $10,818.6
million at December 31, 1999. 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 mortgage banking subsidiary had outstanding commitments
to sell mortgage loans and mortgage-backed securities of approximately $132.0
million at March 31, 2000 and $180.1 million at December 31, 1999.
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.
Presently the Company has no commitments for significant capital
expenditures.
28
<PAGE> 29
INTEREST RATE RISK MANAGEMENT.
The Company's primary market risk is its exposure to interest rate
changes. This risk has not changed materially since December 31, 1999. Interest
rate risk management strategies are designed to optimize net interest income
while minimizing fluctuations caused by changes in the interest rate
environment. It is through these strategies that the Company seeks to manage
the maturity and repricing characteristics of its balance sheet.
The modeling techniques used by SouthTrust simulate changes in net
interest income under various rate scenarios. Important elements of these
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.
The Company has entered into interest rate swap agreements, which
provide for the Company to pay interest based on the Floating London Interbank
Offered Rate ("LIBOR") while receiving payments on a fixed rate. The fair value
of interest rate swap agreements is estimated by discounting future cash flows
based on current market rates.
INTEREST RATE SWAPS TABLE 10
March 31, 2000
(Dollars in millions)
<TABLE>
<CAPTION>
Average
Maturity In Average Rate Average Rate
Notional Value Fair Value Months Paid Received
-------------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gain position $ 600.0 $ 3.0 48.6 5.87% 6.94%
Loss position 1,175.0 (29.1) 74.2 5.93 6.58
-------- -------- -------- -------- --------
Total $1,775.0 $ (26.1) 66.2 5.91% 6.69%
======== ======== ======== ======== ========
</TABLE>
Credit risk represents the potential loss of the net accrued
receivable 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 monitors transactions under credit risk limits previously approved as a
result of the credit review and also enters into collateralization agreements
with each counterparty.
CONTINGENCIES.
Certain 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 defendants
in suits that allege fraudulent, deceptive or collusive practices in connection
with certain financing and deposit-taking activities, including suits filed as
class actions. 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
29
<PAGE> 30
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, Management, 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.
30
<PAGE> 31
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Pursuant to Rule 14a-4(c) of the Securities Exchange Act of 1934, as
amended, if a stockholder who intends to present a proposal at the 2001 annual
meeting of stockholders does not notify the Company of such proposal on or
prior to January 28, 2001, then the Board of Directors' proxies would be
allowed to use their discretionary voting authority to vote on the proposal
when the proposal is raised at the annual meeting, even though there is no
discussion of the proposal in the 2001 proxy statement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Exhibits
<S> <C> <C>
* 3(i)- Composite Restated Certificate of Incorporation of
SouthTrust Corporation which was filed as Exhibit 3
to SouthTrust Corporation's Registration Statement
on Form S-3 (Registration No. 333-34947).
* 3(ii)- Composite Restated Bylaws of SouthTrust Corporation
which was filed as Exhibit 4(e) to the Registration
Statement on Form S-4 of SouthTrust Corporation
(Registration No. 33-61557).
* 4(a)- Articles FOURTH, SIXTH, SEVENTH, and ELEVENTH of the
Restated Certificate of Incorporation of SouthTrust
Corporation (included at Exhibit 3)
* 4(b)- Certificate of Designation on Preferences and Rights
of Series 1999 Junior Participating Preferred Stock,
adopted December 16, 1998, which was filed as
Exhibit A to Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No.
001-14781)
* 4(c)- Stockholders' Rights Agreement, dated as of January
12, 1999 and effective as of the close of business
on February 22, 1999, between SouthTrust Corporation
and Chase Mellon Shareholder Services, L.L.C.,
Rights Agent, which was filed as Exhibit 1 to
SouthTrust Corporation's Registration Statement on
Form 8-A (File No. 1-3613).
* 4(d)- Indenture, dated as of May 1, 1987, between
SouthTrust Corporation and National Westminster Bank
USA, which was filed as Exhibit 4(a) to SouthTrust
Corporation's Registration Statement on Form S-3
(Registration No. 33-13637).
</TABLE>
31
<PAGE> 32
<TABLE>
<S> <C> <C>
* 4(e)- Subordinated Indenture, dated as of May 1, 1992,
between SouthTrust Corporation and Chemical Bank,
which was filed as Exhibit 4(b)(ii) to the
Registration Statement on Form S-3 of SouthTrust
Corporation (Registration No. 33-52717).
* 4(f)- Composite Restated Bylaws of SouthTrust Corporation
which was filed as Exhibit 4(e) to the Registration
Statement on Form S-4 of SouthTrust Corporation
(Registration No. 33-61557).
* 4(g)(i)- Form of Senior Indenture which was filed as Exhibit
4(b)(i) to the Registration Statement on Form S-3 of
SouthTrust Corporation (Registration No. 33-52717).
27- Financial Data Schedule (for SEC use only)
* Incorporated herein by reference
(b) Reports on Form 8-K filed in the first quarter of 2000: none.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHTRUST CORPORATION
Date: May 12 , 2000 /s/ Wallace D. Malone, Jr.
--------------------------
Wallace D. Malone, Jr.
Chairman and Chief
Executive Officer
Date: May 12, 2000 /s/ Alton E. Yother
--------------------------
Alton E. Yother
Secretary, Treasurer and
Controller
32
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTHTRUST CORPORATION FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 940,935
<INT-BEARING-DEPOSITS> 424
<FED-FUNDS-SOLD> 26,400
<TRADING-ASSETS> 341,618
<INVESTMENTS-HELD-FOR-SALE> 5,296,791
<INVESTMENTS-CARRYING> 2,991,600
<INVESTMENTS-MARKET> 2,857,292
<LOANS> 31,824,574
<ALLOWANCE> 453,280
<TOTAL-ASSETS> 43,866,339
<DEPOSITS> 28,550,481
<SHORT-TERM> 7,275,283
<LIABILITIES-OTHER> 549,839
<LONG-TERM> 1,125,475
0
0
<COMMON> 423,575
<OTHER-SE> 2,550,685
<TOTAL-LIABILITIES-AND-EQUITY> 43,866,339
<INTEREST-LOAN> 670,773
<INTEREST-INVEST> 144,734
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 815,507
<INTEREST-DEPOSIT> 295,746
<INTEREST-EXPENSE> 459,347
<INTEREST-INCOME-NET> 356,160
<LOAN-LOSSES> 30,662
<SECURITIES-GAINS> 1,725
<EXPENSE-OTHER> 263,612
<INCOME-PRETAX> 175,362
<INCOME-PRE-EXTRAORDINARY> 118,088
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,088
<EPS-BASIC> 0.70
<EPS-DILUTED> 0.70
<YIELD-ACTUAL> 8.14
<LOANS-NON> 133,398
<LOANS-PAST> 60,615
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 56,474
<ALLOWANCE-OPEN> 442,343
<CHARGE-OFFS> 25,646
<RECOVERIES> 3,027
<ALLOWANCE-CLOSE> 453,280
<ALLOWANCE-DOMESTIC> 453,280
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
