-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SNDgnjBjcBQ4YyhogjShMBNLo7FycSLDjeL5O3Y+zlRn3mj6Wt7K3s0gs0aeehH/ 0ds1f2MYJ5oNuXrtcG67yQ== 0000931763-96-000200.txt : 19960517 0000931763-96-000200.hdr.sgml : 19960517 ACCESSION NUMBER: 0000931763-96-000200 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMSOUTH BANCORPORATION CENTRAL INDEX KEY: 0000003133 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 630591257 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07476 FILM NUMBER: 96564918 BUSINESS ADDRESS: STREET 1: 1400 AMSOUTH SONAT TOWER CITY: BIRMINGHAM STATE: AL ZIP: 35203 BUSINESS PHONE: 2053207151 MAIL ADDRESS: STREET 1: 1400 AMSOUTH SONAT TOWER CITY: BRIMINGHAM STATE: AL ZIP: 35288 FORMER COMPANY: FORMER CONFORMED NAME: ALABAMA BANCORPORATION DATE OF NAME CHANGE: 19810527 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BIRMINGHAM CORP DATE OF NAME CHANGE: 19741107 10-Q 1 FORM 10-Q FOR QUARTER ENDED 3/31/96 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, COMMISSION FILE NUMBER 1-7476 1996 AMSOUTH BANCORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 63-0591257 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 35203 1400 AMSOUTH--SONAT TOWER (ZIP CODE) BIRMINGHAM, ALABAMA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (205) 320-7151 (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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of May 10, 1996, AmSouth Bancorporation had 56,487,752 shares of common stock outstanding. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AMSOUTH BANCORPORATION FORM 10-Q INDEX
PAGE ---- Part I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated Statement of Condition--March 31, 1996, December 31, 1995, and March 31, 1995................................. 3 Consolidated Statement of Earnings--Three months ended March 31, 1996 and 1995........................................... 4 Consolidated Statement of Shareholders' Equity-- Three months ended March 31, 1996.................. 5 Consolidated Statement of Cash Flows--Three months ended March 31, 1996 and 1995........................................... 6 Notes to Consolidated Financial Statements.......... 7 Independent Accountants' Review Report.............. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................ 9 Part II. Other Information Item 1. Legal Proceedings................................... 19 Item 4. Submission of Matters to a Vote of Security Holders.. 19 Item 6. Exhibits and Reports on Form 8-K.................... 19 Signatures............................................................. 20 Exhibit Index.......................................................... 21
2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION (UNAUDITED)
MARCH 31 DECEMBER 31 MARCH 31 1996 1995 1995 ----------- ----------- ----------- (IN THOUSANDS) ASSETS Cash and due from banks................. $ 587,278 $ 651,641 $ 743,786 Federal funds sold and securities pur- chased under agreements to resell...... 1,600 1,775 3,650 Trading securities...................... 3,510 2,978 10,485 Available-for-sale securities........... 2,534,791 2,479,813 481,051 Held-to-maturity securities (market value of $2,565,870, $2,193,421 and $3,206,175, respectively).............. 2,574,911 2,167,009 3,272,626 Mortgage loans held for sale............ 121,672 62,017 79,185 Loans................................... 11,546,007 11,819,809 11,798,102 Less: Allowance for loan losses......... 177,930 178,451 174,398 Unearned income................... 69,810 76,536 52,987 ----------- ----------- ----------- Net loans......................... 11,298,267 11,564,822 11,570,717 Premises and equipment, net............. 279,218 276,426 282,828 Customers' acceptance liability......... 3,311 2,007 8,911 Accrued interest receivable and other assets................................. 509,828 530,307 614,666 ----------- ----------- ----------- $17,914,386 $17,738,795 $17,067,905 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits and interest-bearing liabili- ties: Deposits: Noninterest-bearing demand............. $ 1,795,572 $ 1,834,853 $ 1,840,328 Interest-bearing demand................ 3,819,358 3,912,506 3,935,173 Savings................................ 1,025,472 1,005,099 926,277 Time................................... 5,696,508 5,661,130 5,797,176 Certificates of deposit of $100,000 or more.................................. 915,576 995,243 851,003 ----------- ----------- ----------- Total deposits........................ 13,252,486 13,408,831 13,349,957 Federal funds purchased and securities sold under agreements to repurchase... 1,898,094 1,861,090 1,291,228 Other borrowed funds................... 525,899 490,192 593,225 Long-term debt......................... 660,496 440,899 344,326 ----------- ----------- ----------- Total deposits and interest-bearing liabilities.......................... 16,336,975 16,201,012 15,578,736 Acceptances outstanding................. 3,311 2,007 8,911 Accrued expenses and other liabilities.. 204,546 152,301 145,067 ----------- ----------- ----------- Total liabilities..................... 16,544,832 16,355,320 15,732,714 ----------- ----------- ----------- Shareholders' equity: Preferred stock--no par value: Authorized--2,000,000 shares; Issued and outstanding--none........... -0- -0- -0- Common stock--par value $1 a share: Authorized--200,000,000 shares Issued--60,029,742, 60,030,242 and 59,679,305 shares, respectively....... 60,030 60,030 59,679 Capital surplus......................... 589,989 590,882 582,452 Retained earnings....................... 812,767 788,170 721,149 Cost of common stock in treasury-- 3,583,932, 2,765,000, and 1,500,000 shares, respectively................... (105,479) (73,192) (24,173) Deferred compensation on restricted stock.................................. (5,097) (4,120) (3,716) Unrealized gains/(losses) on available- for-sale securities, net of deferred taxes.................................. 17,344 21,705 (200) ----------- ----------- ----------- Total shareholders' equity............ 1,369,554 1,383,475 1,335,191 ----------- ----------- ----------- $17,914,386 $17,738,795 $17,067,905 =========== =========== ===========
See notes to consolidated financial statements. 3 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS(UNAUDITED)
THREE MONTHS ENDED MARCH 31 --------------------- 1996 1995 ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUE FROM EARNING ASSETS Loans.................................................... $ 250,870 $ 243,934 Securities: Trading securities...................................... 41 153 Available-for-sale securities........................... 38,472 9,899 Held-to-maturity securities............................. 40,221 53,885 ---------- ---------- Total securities........................................ 78,734 63,937 Mortgage loans held for sale............................. 1,406 1,724 Federal funds sold and securities purchased under agree- ments to resell......................................... 354 466 ---------- ---------- Total revenue from earning assets....................... 331,364 310,061 ---------- ---------- INTEREST EXPENSE Interest-bearing demand deposits......................... 30,356 38,110 Savings deposits......................................... 6,682 6,707 Time deposits............................................ 82,600 72,964 Certificates of deposit of $100,000 or more.............. 13,348 11,604 Federal funds purchased and securities sold under agree- ments to repurchase..................................... 21,805 18,369 Other borrowed funds..................................... 8,250 9,620 Long-term debt........................................... 10,618 7,203 ---------- ---------- Total interest expense.................................. 173,659 164,577 ---------- ---------- NET INTEREST INCOME...................................... 157,705 145,484 Provision for loan losses................................ 15,120 8,344 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES...... 142,585 137,140 ---------- ---------- NONINTEREST REVENUES Service charges on deposit accounts...................... 23,126 20,244 Trust income............................................. 13,481 11,405 Credit card income....................................... 3,182 2,872 Consumer investment services............................. 3,488 1,249 Mortgage income.......................................... 1,122 8,342 Interchange income....................................... 1,683 1,092 Letters of credit income................................. 2,034 1,794 Portfolio income......................................... 1,952 3,400 Other operating revenues................................. 5,027 6,409 ---------- ---------- Total noninterest revenues.............................. 55,095 56,807 ---------- ---------- NONINTEREST EXPENSES Salaries and employee benefits........................... 57,239 59,156 Net occupancy expense.................................... 13,190 12,253 Equipment expense........................................ 12,803 11,114 Marketing expense........................................ 4,377 4,542 Postage and office supplies.............................. 5,876 6,135 Telephone expense........................................ 3,350 3,127 Professional fees........................................ 2,225 2,278 FDIC premiums............................................ 2,562 7,211 Foreclosed properties expense............................ 453 64 Amortization of intangibles.............................. 4,167 8,834 Other operating expenses................................. 16,606 16,930 ---------- ---------- Total noninterest expenses.............................. 122,848 131,644 ---------- ---------- INCOME BEFORE INCOME TAXES............................... 74,832 62,303 Income taxes............................................. 27,669 22,193 ---------- ---------- Net income.............................................. $ 47,163 $ 40,110 ========== ========== Average common shares outstanding........................ 57,021 58,103 Earnings per common share................................ $ 0.83 $ 0.69
See notes to consolidated financial statements. 4 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
UNREALIZED COMMON CAPITAL RETAINED TREASURY DEFERRED GAINS/(LOSSES) STOCK SURPLUS EARNINGS STOCK COMPENSATION ON SECURITIES TOTAL ------- -------- -------- --------- ------------ -------------- ---------- (IN THOUSANDS) Balance at January 1, 1996................... $60,030 $590,882 $788,170 $ (73,192) $(4,120) $21,705 $1,383,475 Net income.............. -0- -0- 47,163 -0- -0- -0- 47,163 Cash dividends declared ($0.40 per common share)................. -0- -0- (22,566) -0- -0- -0- (22,566) Common stock transactions: Purchase of common stock................. -0- -0- -0- (39,405) -0- -0- (39,405) Employee stock plans... -0- (924) -0- 5,832 (977) -0- 3,931 Dividend reinvestment.. -0- 31 -0- 1,286 -0- -0- 1,317 Unrealized losses on available-for-sale securities, net of deferred taxes......... -0- -0- -0- -0- -0- (4,361) (4,361) ------- -------- -------- --------- ------- ------- ---------- Balance at March 31, 1996................... $60,030 $589,989 $812,767 $(105,479) $(5,097) $17,344 $1,369,554 ======= ======== ======== ========= ======= ======= ==========
See notes to consolidated financial statements. 5 AMSOUTH BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31 ------------------ 1996 1995 -------- -------- (IN THOUSANDS) OPERATING ACTIVITIES Net income................................................. $ 47,163 $ 40,110 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses................................. 15,120 8,344 Foreclosed property recoveries............................ -0- (273) Depreciation and amortization of premises and equipment... 6,799 6,748 Amortization of premiums and discounts on held-to-maturity securities and available-for-sale securities............. (1,043) (1,477) Net (increase) decrease in mortgage loans held for sale... (59,655) 51,038 Net increase in trading securities........................ (532) (2,171) Net gains on sales of available-for-sale securities....... (1,339) (3,207) Net gains on calls of held-to-maturity securities......... (118) (151) Net decrease in accrued interest receivable and other assets................................................... 20,835 15,972 Net increase in accrued expenses and other liabilities.... 49,247 24,913 Provision for deferred income taxes....................... 5,545 417 Amortization of intangible assets......................... 4,167 8,834 Other..................................................... 451 (904) -------- -------- Net cash provided by operating activities................. 86,640 148,193 -------- -------- INVESTING ACTIVITIES Proceeds from maturities and prepayments of available-for- sale securities........................................... 203,677 7,192 Proceeds from sales of available-for-sale securities....... 303,731 132,494 Purchases of available-for-sale securities................. (299,836) (273,484) Proceeds from maturities, prepayments and calls of held-to- maturity securities....................................... 124,525 64,838 Purchases of held-to-maturity securities................... (532,154) -0- Net decrease in federal funds sold and securities purchased under agreements to resell................................ 175 148,875 Net increase in loans...................................... (20,342) (225,171) Net purchases of premises and equipment.................... (9,591) (5,798) Net cash used for acquisitions............................. -0- (13,221) -------- -------- Net cash used by investing activities..................... (229,815) (164,275) -------- -------- FINANCING ACTIVITIES Net decrease in demand deposits and savings accounts....... (112,056) (201,593) Net (decrease) increase in time deposits................... (44,025) 402,469 Net increase in federal funds purchased and securities sold under agreements to repurchase............................ 37,004 78,505 Net increase (decrease) in other borrowed funds............ 36,008 (81,039) Issuance of long-term debt................................. 220,000 -0- Payments for maturing long-term debt....................... (850) (34,988) Cash dividends paid........................................ (22,566) (22,097) Proceeds from employee stock plans......................... 4,702 1,972 Purchase of common stock................................... (39,405) -0- -------- -------- Net cash provided by financing activities................. 78,812 143,229 -------- -------- (Decrease) increase in cash and cash equivalents........... (64,363) 127,147 Cash and cash equivalents at beginning of period........... 651,641 616,639 -------- -------- Cash and cash equivalents at end of period................. $587,278 $743,786 ======== ========
See notes to consolidated financial statements. 6 AMSOUTH BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1995 General--The consolidated financial statements conform to generally accepted accounting principles and to general industry practices. The accompanying interim financial statements are unaudited; however, in the opinion of management, all adjustments necessary for the fair presentation of the consolidated financial statements have been included. All such adjustments are of a normal recurring nature. Certain amounts in the prior year's financial statements have been reclassified to conform with the 1996 presentation. These reclassifications had no effect on net income. The consolidated financial statements include the accounts of AmSouth and its subsidiaries. All significant intercompany balances and transactions have been eliminated. The notes included herein should be read in conjunction with the notes to consolidated financial statements included in AmSouth Bancorporation's (AmSouth) 1995 annual report on Form 10-K. Effective January 1, 1996, AmSouth adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (Statement 121). Statement 121 requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when the sum of the future cash flows (undiscounted and without interest charges expected from the use of the asset and its eventual disposition) is less than the carrying amount of the asset. The adoption of Statement 121 resulted in no material impact on AmSouth's financial condition or results of operations. Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights, an amendment of FASB Statement No. 65" (Statement 122) was adopted by AmSouth effective January 1, 1996. In accordance with Statement 122, the cost of mortgage loans purchased or originated with a definitive plan to sell the loans and retain the mortgage servicing rights is allocated between the loans and the servicing rights based on their estimated fair values at the purchase or origination date. The adoption of Statement 122 resulted in no material impact on AmSouth's financial condition or results of operations. Cash Flows--For the three months ended March 31, 1996 and 1995, AmSouth paid interest of $169,773,000 and $148,987,000, respectively, and income taxes of $4,782,000 and $813,000, respectively. Noncash transfers from loans to foreclosed properties for the three months ended March 31, 1996 and 1995 were $5,105,000 and $3,323,000, respectively, and noncash transfers from foreclosed properties to loans were $91,000 and $274,000, respectively. For the three months ended March 31, 1996, a noncash transfer from loans to available-for- sale securities of approximately $266,814,000 was made in connection with a mortgage loan securitization. Shareholders' Equity--On March 1, 1996, AmSouth purchased 1,000,000 shares of its common stock at a cost of $39,405,000 for the purpose of satisfying requirements of employee benefit and dividend reinvestment plans and other corporate purposes. This repurchase was part of a plan approved in October 1995. All shares have been repurchased as of March 31, 1996. 7 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors AmSouth Bancorporation We have reviewed the accompanying consolidated statement of condition of AmSouth Bancorporation and subsidiaries as of March 31, 1996 and 1995, and the related consolidated statements of earnings and cash flows for the three-month periods ended March 31, 1996 and 1995, and the consolidated statement of shareholders' equity for the three-month period ended March 31, 1996. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated statement of condition of AmSouth Bancorporation and subsidiaries as of December 31, 1995, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated January 31, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of condition as of December 31, 1995, is fairly stated, in all material respects, in relation to the consolidated statement of condition from which it has been derived. /s/ ERNST & YOUNG LLP May 9, 1996 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AmSouth reported net income of $47.2 million for the three months ended March 31, 1996, compared to $40.1 million for the same period of 1995. Earnings per common share were $.83 and $.69, respectively. First quarter earnings resulted in an annualized return on average assets of 1.07% and an annualized return on average equity of 13.78%, compared to .96% and 12.28% for the first quarter of 1995. AmSouth's operating efficiency ratio for the first quarter of 1996 improved to 57.05% compared to 64.14% for the prior year. Net Interest Income Net interest income on a fully taxable equivalent basis for the three months ended March 31, 1996 was $160.3 million compared to $148.8 million for the same period of 1995. The improvement in net interest income was primarily the result of a $961.1 million increase in average earning asset balances. Net interest margin increased three basis points to 3.91%. The increase in average earning assets was primarily due to increases in average securities and average loans net of unearned income. Average securities increased $902.3 million due to the securitization of $352.0 million of variable rate residential first mortgages late in the fourth quarter of 1995 and additional purchases of securities. Average loans net of unearned income increased $111.6 million. Exclusive of residential first mortgages, the increase was $719.7 million, or 10.0%, primarily in commercial, dealer indirect and consumer revolving credit loans. The average balance of interest-bearing liabilities increased $729.8 million, funding 75.9% of the growth in average earning assets. An increase of $427.1 million in average Federal funds purchased and securities sold under agreements to repurchase was the primary reason for the increase. Average interest-bearing deposits, primarily savings and time deposits, increased $107.5 million. Other significant changes include a $217.9 million increase in treasury, tax and loan notes, a $150.3 million increase in parent company subordinated long-term debt, related to the issuance of 6.75% debentures, and a $193.5 million decrease in term Federal funds purchased. The remaining growth in average earning assets was funded by decreases in noninterest- earning assets and increases in noninterest-bearing liabilities and shareholders' equity. Asset/Liability Management and Interest Rate Risk AmSouth maintains a formal asset and liability management process to quantify, monitor and control interest rate risk and to assist management in maintaining stability in the net interest margin under varying interest rate environments. This is accomplished through the development and implementation of lending, funding and pricing strategies designed to maximize net interest income performance under varying interest rate environments subject to specific liquidity and interest rate risk guidelines. The primary tool used by AmSouth to measure interest rate risk is an earnings simulation model which evaluates the impact of different interest rate scenarios on the corporation's projected business plan over a 12 to 24 month horizon. Management feels that a more traditional interest sensitivity gap analysis does not provide a complete picture of the corporation's exposure to interest rate changes since static gap models are a point-in-time measurement and, therefore, do not incorporate the effects of future balance sheet trends, changes in the relationship between yields earned and rates paid, patterns of rate movements in general or changes in prepayment speeds due to changes in rates. AmSouth's earnings simulation model incorporates the effect of these factors in addition to the impact of certain embedded interest rate caps and floors on certain assets and liabilities while also reflecting management's anticipated action under varying interest rate environments. Interest rate scenarios are simulated on a regular basis to determine the range of interest rate risk. Net interest income performance is measured under scenarios ranging from plus or minus 100 basis points to plus or minus 300 basis points over 12 months compared to a stable interest rate environment. The net interest income differential is expressed as a percent of net interest income over twelve months if interest rates are unchanged. As of March 31, 1996, the earnings simulation model results indicated that the corporation was in a relatively neutral interest rate risk position with net interest income in a plus or minus 200 basis point scenario being approximately equal to projected net interest income in a stable interest rate scenario. This level of interest rate risk is well within the corporation's policy guidelines. A very important factor in determining this interest rate risk position is the extent to which pricing on administered rate deposit products, including interest checking, 9 savings and money market accounts, would be affected under varying interest rate scenarios. At AmSouth, pricing for these products is assumed to be more variable in rising rate scenarios than in declining rate scenarios. While these assumptions are somewhat subjective, management reviews the anticipated pricing for these products on a regular basis and alters these assumptions whenever trends or market conditions dictate. Over the last few years, AmSouth has, from time to time, utilized various off-balance sheet instruments such as interest rate swaps, caps and floors to assist in managing interest rate risk. At March 31, 1996, AmSouth had $1.0 billion notional amount of caps outstanding, consisting of $500.0 million of caps sold and $500.0 million of caps purchased, as hedges on $500.0 million of prime rate loans. This transaction effectively locks-in the historically wide 300 basis point spread between Federal funds and the prime rate in a rising rate environment. In addition to the caps, AmSouth had interest rate swaps in the aggregate notional amount of $150.0 million which were purchased to hedge the cost of $150.0 million of 6.75% subordinated debentures issued in the fourth quarter of 1995. These swaps effectively convert the fixed rate applicable to these debentures to a floating rate tied to the one-month LIBOR rate. At March 31, 1996, AmSouth also held other off-balance sheet instruments to provide customers and AmSouth a means of managing the risks of changing interest and foreign exchange rates. These other off-balance sheet instruments were immaterial. At March 31, 1996, no off-balance sheet instruments were held for trading purposes. Credit Quality and Allowance for Loan Losses AmSouth maintains an allowance for loan losses which it believes is adequate to absorb losses inherent in the loan portfolio. A formal review is prepared quarterly to assess the risk in the portfolio and to determine the adequacy of the allowance for loan losses. The review includes analyses of historical performance, the level of nonperforming and adversely rated loans, specific analyses of certain problem loans, loan activity since the previous quarter, reports prepared by the Loan Review Department, consideration of current economic conditions, and other pertinent information. The level of allowance to net loans outstanding will vary depending on the overall results of this quarterly review. The review is then presented to and subsequently approved by senior management and the Audit and Community Responsibility Committee of the Board of Directors. Table 6 presents a five quarter analysis of the allowance for loan losses. At March 31, 1996, the allowance for loan losses was $177.9 million, or 1.55% of loans net of unearned income, compared to $174.4 million, or 1.48%, for the prior year. The coverage ratio of the allowance for loan losses to nonperforming loans increased from 169.74% at March 31, 1995 to 195.70% for the same period in 1996 as the level of nonperforming loans decreased by $11.8 million. For the three months ended March 31, 1996, net charge-offs were $15.6 million, an increase of $8.8 million compared to the same period of 1995. The increase was primarily in the consumer revolving credit and dealer indirect loan portfolios which grew during the period 36.0% and 15.0%, respectively. Declining trends in credit quality in the consumer sector of the economy also contributed to the increase. Annualized net charge-offs to average loans net of unearned income for the three months ended March 31, 1996 was .54% compared to .24% for the same period of the prior year. The increased level of net charge-offs combined with the growth in the consumer loan portfolio, which traditionally has a higher risk of loss, resulted in a provision for loan losses for the period of $15.1 million. Table 7 presents a five quarter comparison of the components of nonperforming assets. As a percentage of loans net of unearned income, foreclosed properties and repossessions, nonperforming assets decreased from 1.10% at March 31, 1995 to .95% at March 31, 1996. The level of nonperforming assets decreased $20.4 million during the same period. Included in nonperforming assets at March 31, 1996 was a recorded investment of $53.2 million in loans that were considered to be impaired, substantially all of which were on a nonaccrual basis. Collateral dependent loans, which were measured at the fair value of the collateral, constituted approximately all of these impaired loans. There was no material balance in the allowance for loan losses specifically allocated to these impaired loans as the recorded investment in these loans approximated the fair value of the collateral at March 31, 1996. The average level of impaired loans during the three months ended March 31, 1996 was $55.2 million. AmSouth recorded no material interest income on its impaired loans during the three months ended March 31, 1996. 10 Noninterest Revenues and Noninterest Expenses --------------------------------------------- Noninterest revenues for the three months ended March 31, 1996 totaled $55.1 million compared to $56.8 million for the same period of the prior year. Compared to the prior year, service charges on deposit accounts increased $2.9 million, or 14.2%. This increase is attributable to a revenue enhancement initiative that was implemented in the second quarter of 1995 to automate the payment of certain demand deposit account service fees. Trust income increased 18.2% to $13.5 million primarily from increased customer activity in personal trusts, new employee benefit plan administration accounts and higher fees. Consumer investment services income increased $2.2 million as a result of higher sales volumes of mutual funds and annuity products. Credit card and interchange income also increased. The 10.8% increase in credit card income reflects a higher level of AmSouth's customers activity and an increased number of cardholder accounts. Interchange income increased 54.1% due to the introduction in 1995 of the AmSouth CheckCard(sm). Offsetting these increases were decreases in mortgage income of $7.2 million, the result of the sale of the corporation's third-party mortgage servicing portfolio in June 1995, and decreases in other operating revenues of $1.4 million related to management's decision to scale down the institutional bond sales area within the correspondent banking division. Excluding income from these areas, noninterest revenues for 1996 increased approximately 15.0% compared to 1995. Noninterest expenses for the three months ended March 31, 1996 totaled $122.8 million compared to $131.6 million for the same period of the prior year. Salaries and employee benefits decreased $1.9 million, or 3.2%. Salaries decreased $2.9 million, reflecting a decline in the number of employees due to branch and business consolidations. Employee benefits increased $1.0 million primarily due to a higher company match of employee thrift plan contributions. Increases in net occupancy expense and equipment expense are related to a lease in a new office complex and investments in technology for the consumer and commercial lines of business. Other significant changes in noninterest expenses include a $4.6 million decrease in Federal Deposit Insurance Corporation (FDIC) premiums and a $4.7 million decrease in the amortization of intangibles. FDIC premiums are lower as a result of the FDIC reducing the premium rate on deposits insured by the Bank Insurance Fund (BIF) to zero beginning in 1996. The decrease in amortization of intangibles is due to the elimination of purchased mortgage servicing rights when the corporation's third-party mortgage servicing portfolio was sold in June 1995. Capital Adequacy and Shareholders' Equity ----------------------------------------- At March 31, 1996, shareholders' equity totaled $1.4 billion or 7.64% of total assets. Since December 31, 1995, shareholders' equity has decreased $13.9 million due to the purchase of 1,000,000 shares of AmSouth common stock for $39.4 million to provide shares for AmSouth's employee benefit and dividend reinvestment plans and other corporate purposes. This purchase completes a program to repurchase 2,265,000 shares. Partially offsetting this decrease was net income of $47.2 million, reduced by dividends of $22.6 million. Table 10 presents the calculation of the risk-adjusted capital ratios for AmSouth at March 31, 1996 and 1995. At March 31, 1996, AmSouth remained above the regulatory minimum required risk-adjusted Tier 1 Capital Ratio of 4.00% and the regulatory minimum required risk-adjusted Total Capital Ratio of 8.00%. In addition, the risk-adjusted capital ratios for AmSouth's banking subsidiaries were above the regulatory minimum and each subsidiary was well- capitalized at March 31, 1996. Regulatory Developments ----------------------- Effective January 1, 1996, the FDIC assessment schedule for BIF deposits ranged from 0 to 27 cents per $100 of such deposits, based on each institution's risk classification. Under this assessment schedule, AmSouth's current assessment for BIF deposits is zero. The FDIC has maintaned the assessment rate schedule of 23 to 31 cents per $100 of deposits insured by the Savings Association Insurance Fund (SAIF). AmSouth's SAIF assessment rate is currently 23 cents per $100 of deposits. At March 31, 1996, AmSouth had a BIF deposit assessment base of $8.5 billion and a SAIF deposit base of $4.6 billion. Legislation has been under consideration in the U.S. Congress which would charge a special one-time assessment on SAIF insured deposits to recapitalize the SAIF to its statutorily mandated minimum designated reserve ratio of 1.25 percent. Under the current proposal, an assessment at a rate of between 75 and 85 cents per $100 of SAIF insured deposits would be 11 imposed. Included in the proposed legislation under consideration is a proposal to lower the special assessment for those institutions with SAIF deposits meeting certain qualifications. The reduction would be achieved by lowering the SAIF deposit assessment base for such institutions by 20 percent prior to the calculation of the special charge. AmSouth believes that most of its SAIF deposits would qualify for this treatment under a current version of this legislation under consideration and, as a result, would incur a one-time cost of approximately $26.0 to $31.0 million on a pre-tax basis if the legislation is passed as currently drafted. The charge to earnings would not occur until the law has been enacted. Due to the uncertain nature of legislative affairs, management cannot predict with any degree of accuracy when the legislation would be enacted, if at all, or what form the final legislation may take. TABLE 1--FINANCIAL SUMMARY
MARCH 31 -------------------------- % 1996 1995 CHANGE ------------ ------------ ----------- (IN THOUSANDS EXCEPT PER SHARE DATA) BALANCE SHEET SUMMARY End-of-period balances: Loans net of unearned income..... $ 11,476,197 $ 11,745,115 (2.3)% Total securities................. 5,113,212* 3,764,162* 35.8 Total assets..................... 17,914,386 17,067,905 5.0 Total deposits................... 13,252,486 13,349,957 (0.7) Shareholders' equity............. 1,369,554 1,335,191 2.6 Year-to-date average balances: Loans net of unearned income..... $ 11,673,313 $ 11,561,740 1.0% Total securities................. 4,748,731* 3,846,149* 23.5 Total assets..................... 17,683,545 16,876,928 4.8 Total deposits................... 13,169,187 13,101,782 0.5 Shareholders' equity............. 1,376,686 1,324,151 4.0 THREE MONTHS ENDED MARCH 31 -------------------------- % 1996 1995 CHANGE ------------ ------------ ----------- EARNINGS SUMMARY Net income....................... $ 47,163 $ 40,110 17.6% Per common share................. 0.83 0.69 20.3 SELECTED RATIOS Return on average assets (annualized).................... 1.07% 0.96% Return on average equity (annualized).................... 13.78 12.28 Average equity to average assets.......................... 7.79 7.85 Allowance for loan losses to loans net of unearned income.... 1.55 1.48 Efficiency ratio................. 57.05 64.14 Dividend payout ratio............ 48.19 55.07 COMMON STOCK DATA Cash dividends declared.......... $ 0.40 $ 0.38 Book value at end of period...... 24.26 22.95 Market value at end of period.... 38.88 31.50 Average common shares outstanding..................... 57,021 58,103
- -------- * Includes adjustment for market valuation on available-for-sale securities of $26,947 and $(343) for end of period balances and $31,764 and $(2,416) for year-to-date average balances for 1996 and 1995, respectively. 12 TABLE 2--QUARTERLY YIELDS EARNED ON AVERAGE EARNING ASSETS AND RATES PAID ON AVERAGE INTEREST-BEARING LIABILITIES
1996 1995 ---------------------------- ---------------------------------------------------------- FIRST QUARTER FOURTH QUARTER THIRD QUARTER ---------------------------- ---------------------------- ---------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE ----------- -------- ------ ----------- -------- ------ ----------- -------- ------ (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS) ASSETS Earning assets: Loans net of unearned income.. $11,673,313 $251,472 8.66% $11,806,113 $257,968 8.67% $11,816,908 $256,878 8.62% Trading securities....... 3,778 41 4.36 5,348 29 2.15 2,797 27 3.83 Available-for- sale securities.. 2,354,687 38,472 6.57 642,444 10,627 6.56 496,588 8,900 7.11 Held-to-maturity securities: Taxable.......... 2,142,855 36,259 6.81 3,158,591 52,453 6.59 2,908,333 48,044 6.55 Tax-free......... 215,647 5,912 11.03 232,750 6,315 10.76 255,893 6,957 10.79 ----------- -------- ----------- -------- ----------- -------- Total held-to- maturity securities....... 2,358,502 42,171 7.19 3,391,341 58,768 6.88 3,164,226 55,001 6.90 ----------- -------- ----------- -------- ----------- -------- Total securities...... 4,716,967 80,684 6.88 4,039,133 69,424 6.82 3,663,611 63,928 6.92 Other earning assets........... 106,629 1,760 6.64 73,533 1,310 7.07 87,315 1,205 5.48 ----------- -------- ----------- -------- ----------- -------- Total earning assets.......... 16,496,909 333,916 8.14 15,918,779 328,702 8.19 15,567,834 322,011 8.21 Cash and other assets........... 1,333,274 1,413,087 1,404,025 Allowance for loan losses...... (178,402) (178,948) (179,588) Market valuation on available-for- sale securities.. 31,764 5,761 4,324 ----------- ----------- ----------- $17,683,545 $17,158,679 $16,796,595 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits.. $ 3,846,787 30,356 3.17 $ 3,823,303 31,756 3.30 $ 3,830,799 33,139 3.43 Savings deposits......... 1,014,277 6,682 2.65 1,002,444 6,810 2.70 986,486 6,805 2.74 Time deposits.... 5,663,879 82,600 5.87 5,709,120 84,805 5.89 5,792,071 85,870 5.88 Certificates of deposit of $100,000 or more............. 928,322 13,348 5.78 997,469 15,120 6.01 919,357 14,018 6.05 Federal funds purchased and securities sold under agreements to repurchase.... 1,674,720 21,805 5.24 1,388,274 19,329 5.52 1,044,177 14,966 5.69 Other interest- bearing liabilities...... 1,251,371 18,868 6.06 894,723 14,911 6.61 913,192 14,908 6.48 ----------- -------- ----------- -------- ----------- -------- Total interest- bearing liabilities..... 14,379,356 173,659 4.86 13,815,333 172,731 4.96 13,486,082 169,706 4.99 -------- ----- -------- ----- -------- ----- Incremental interest spread.. 3.28% 3.23% 3.22% ===== ===== ===== Noninterest- bearing demand deposits......... 1,715,922 1,738,426 1,730,937 Other liabilities...... 211,581 221,993 213,217 Shareholders' equity........... 1,376,686 1,382,927 1,366,359 ----------- ----------- ----------- $17,683,545 $17,158,679 $16,796,595 =========== =========== =========== Net interest income/margin on a taxable equivalent basis............ 160,257 3.91% 155,971 3.89% 152,305 3.88% ===== ===== ===== Taxable equivalent adjustment: Loans............ 602 682 745 Securities....... 1,950 2,083 2,295 -------- -------- -------- Total taxable equivalent adjustment...... 2,552 2,765 3,040 -------- -------- -------- Net interest income.......... $157,705 $153,206 $149,265 ======== ======== ======== 1995 ---------------------------------------------------------- SECOND QUARTER FIRST QUARTER ---------------------------- ---------------------------- AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE ----------- -------- ------ ----------- -------- ------ (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS) ASSETS Earning assets: Loans net of unearned income.. $11,801,298 $254,751 8.66% $11,561,740 $244,691 8.58% Trading securities....... 9,194 106 4.62 10,395 157 6.13 Available-for- sale securities.. 477,809 8,608 7.23 534,967 9,899 7.50 Held-to-maturity securities: Taxable.......... 2,970,284 48,378 6.53 3,019,065 48,770 6.55 Tax-free......... 273,382 7,531 11.05 284,138 7,638 10.90 ----------- -------- ----------- -------- Total held-to- maturity securities....... 3,243,666 55,909 6.91 3,303,203 56,408 6.93 ----------- -------- ----------- -------- Total securities...... 3,730,669 64,623 6.95 3,848,565 66,464 7.00 Other earning assets........... 90,660 1,868 8.26 125,537 2,190 7.07 ----------- -------- ----------- -------- Total earning assets.......... 15,622,627 321,242 8.25 15,535,842 313,345 8.18 Cash and other assets........... 1,479,463 1,516,028 Allowance for loan losses...... (175,616) (172,526) Market valuation on available-for- sale securities.. 1,985 (2,416) ----------- ----------- $16,928,459 $16,876,928 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing demand deposits.. $ 3,901,245 36,849 3.79 $ 4,022,419 38,110 3.84 Savings deposits......... 949,737 7,178 3.03 903,844 6,707 3.01 Time deposits.... 5,874,024 84,198 5.75 5,553,978 72,964 5.33 Certificates of deposit of $100,000 or more............. 911,668 13,537 5.96 865,568 11,604 5.44 Federal funds purchased and securities sold under agreements to repurchase.... 946,492 14,518 6.15 1,247,584 18,369 5.97 Other interest- bearing liabilities...... 993,363 16,102 6.50 1,056,203 16,823 6.46 ----------- -------- ----------- -------- Total interest- bearing liabilities..... 13,576,529 172,382 5.09 13,649,596 164,577 4.89 -------- ----- -------- ----- Incremental interest spread.. 3.16% 3.29% ===== ===== Noninterest- bearing demand deposits......... 1,798,087 1,755,973 Other liabilities...... 212,513 147,208 Shareholders' equity........... 1,341,330 1,324,151 ----------- ----------- $16,928,459 $16,876,928 =========== =========== Net interest income/margin on a taxable equivalent basis............ 148,860 3.82% 148,768 3.88% ===== ===== Taxable equivalent adjustment: Loans............ 784 757 Securities....... 2,488 2,527 -------- -------- Total taxable equivalent adjustment...... 3,272 3,284 -------- -------- Net interest income.......... $145,588 $145,484 ======== ========
- ---- Note: The taxable equivalent adjustment has been computed based on a 35% federal income tax rate. 13 TABLE 3--INTEREST RATE SWAPS, CAPS AND FLOORS
SWAPS ----------------------------------- CAPS RECEIVE FIXED PAY FIXED BASIS OTHER & FLOORS TOTAL ------------- --------- ----- ----- -------- ------ (IN MILLIONS) Balance at January 1, 1996..................... $150 $-0- $-0- $-0- $1,110 $1,260 Additions............... -0- -0- -0- -0- -0- -0- Maturities.............. -0- -0- -0- -0- -0- -0- Calls................... -0- -0- -0- -0- -0- -0- Terminations............ -0- -0- -0- -0- -0- -0- ---- ---- ---- ---- ------ ------ Balance at March 31, 1996..................... $150 $-0- $-0- $-0- $1,110 $1,260 ==== ==== ==== ==== ====== ======
TABLE 4--MATURITIES ON CAPS AND INTEREST RATES EXCHANGED ON SWAPS
MATURE DURING ---------------------------------- 1996 1997 1998 1999 2000 TOTAL ----- ----- ----- ----- ------ ------ (DOLLARS IN MILLIONS) Receive fixed swaps: Notional amount................... $ 150 $ -0- $ -0- $ -0- $ -0- $ 150 Receive rate...................... 6.28% 0.00% 0.00% 0.00% 0.00% 6.28% Pay rate.......................... 5.41% 0.00% 0.00% 0.00% 0.00% 5.41% Caps: Notional amount................... $ 33 $ 77 $ -0- $ -0- $1,000 $1,110
- -------- Note: The maturities and interest rates exchanged are calculated assuming that interest rates remain unchanged from average March 1996 rates. The information presented could change as future interest rates increase or decrease. 14 TABLE 5--LOANS AND CREDIT QUALITY
NET CHARGE- LOANS NONPERFORMING LOANS* OFFS MARCH 31 MARCH 31 MARCH 31 ----------------------- -------------------- --------------- 1996 1995 1996 1995 1996 1995 ----------- ----------- -------------------- ------- ------ (IN THOUSANDS) Commercial.............. $ 3,106,683 $ 2,890,408 $ 17,096 $ 17,465 $ (553) $1,006 Commercial real estate: Mortgages.............. 1,567,291 1,359,761 35,377 33,051 573 185 Real estate construction.......... 586,904 561,346 1,950 12,039 (246) 312 ----------- ----------- --------- ---------- ------- ------ Total commercial real estate................ 2,154,195 1,921,107 37,327 45,090 327 497 ----------- ----------- --------- ---------- ------- ------ Consumer: Residential first mortgages............. 3,410,054 4,387,423 31,141 27,264 784 226 Other residential mortgages............. 701,321 637,925 980 -0- 24 20 Dealer indirect........ 1,074,124 933,655 3,384 859 5,565 1,227 Revolving credit....... 470,292 345,829 -0- -0- 6,388 2,951 Other consumer......... 629,338 681,755 991 12,067 3,106 939 ----------- ----------- --------- ---------- ------- ------ Total consumer......... 6,285,129 6,986,587 36,496 40,190 15,867 5,363 ----------- ----------- --------- ---------- ------- ------ $11,546,007 $11,798,102 $ 90,919 $ 102,745 $15,641 $6,866 =========== =========== ========= ========== ======= ======
- -------- * Exclusive of accruing loans 90 days past due. TABLE 6--ALLOWANCE FOR LOAN LOSSES
1996 1995 ----------- ----------------------------------------------- 1ST QUARTER 4TH QUARTER 3RD QUARTER 2ND QUARTER 1ST QUARTER ----------- ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Balance at beginning of period................. $178,451 $179,550 $179,002 $174,398 $171,167 Loans charged off....... 20,626 13,998 12,290 11,833 9,161 Recoveries of loans previously charged off.................... 4,985 2,809 3,440 4,130 2,295 -------- -------- -------- -------- -------- Net charge-offs......... 15,641 11,189 8,850 7,703 6,866 Addition to allowance charged to expense..... 15,120 10,090 9,398 12,307 8,344 Allowance acquired in acquisitions........... -0- -0- -0- -0- 1,753 -------- -------- -------- -------- -------- Balance at end of period................. $177,930 $178,451 $179,550 $179,002 $174,398 ======== ======== ======== ======== ======== Allowance for loan losses to loans net of unearned income........ 1.55% 1.52% 1.51% 1.50% 1.48% Allowance for loan losses to nonperforming loans.................. 195.70% 185.41% 200.94% 186.25% 169.74% Allowance for loan losses to nonperforming assets................. 163.06% 154.49% 171.73% 153.98% 134.67% Net charge-offs to average loans net of unearned income (annualized)........... 0.54% 0.38% 0.30% 0.26% 0.24%
15 TABLE 7--NONPERFORMING ASSETS
1996 1995 -------- ------------------------------------------- MARCH 31 DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31 -------- ----------- ------------ -------- -------- (DOLLARS IN THOUSANDS) Nonaccrual loans........ $ 90,919 $ 96,246 $ 89,355 $ 96,111 $101,964 Restructured loans...... -0- -0- -0- -0- 781 -------- -------- -------- -------- -------- Total nonperforming loans................ 90,919 96,246 89,355 96,111 102,745 Foreclosed properties... 14,764 16,150 13,144 18,112 24,656 Repossessions........... 3,439 3,114 2,052 2,028 2,097 -------- -------- -------- -------- -------- Total nonperforming assets*.............. $109,122 $115,510 $104,551 $116,251 $129,498 ======== ======== ======== ======== ======== Nonperforming assets* to loans net of unearned income, foreclosed properties and repossessions.......... 0.95% 0.98% 0.88% 0.97% 1.10% Accruing loans 90 days past due............... $ 40,110 $ 39,618 $ 45,548 $ 34,663 $ 33,685
- -------- * Exclusive of accruing loans 90 days past due. 16 TABLE 8--SECURITIES
MARCH 31, 1996 MARCH 31, 1995 --------------------- --------------------- CARRYING MARKET CARRYING MARKET AMOUNT VALUE AMOUNT VALUE ---------- ---------- ---------- ---------- (IN THOUSANDS) Held-to-maturity U.S. Treasury and federal agency securities...................... $2,109,300 $2,093,261 $2,986,023 $2,906,756 State, county and municipal securities...................... 208,929 219,273 280,053 292,955 Other securities................. 256,682 253,336 6,550 6,464 ---------- ---------- ---------- ---------- $2,574,911 $2,565,870 $3,272,626 $3,206,175 ========== ========== ========== ========== Available-for-sale U.S. Treasury and federal agency securities...................... $2,299,853 $ 334,980 Other securities................. 234,938 146,071 ---------- ---------- $2,534,791 $ 481,051 ========== ==========
- -------- Notes: - ----- 1. The weighted average remaining life, which reflects the amortization on mortgage related and other asset-backed securities, and the weighted average yield on the combined held-to-maturity and available-for-sale portfolios at March 31, 1996 were approximately 4.6 years and 6.91%, respectively. Included in the balance was $3.9 billion of mortgage-backed securities, $1.5 billion of which were variable rate. The weighted average remaining life and the weighted average yield of mortgage-backed securities at March 31, 1996 were approximately 5.2 years and 6.88%, respectively. The duration of the combined portfolios, which considers the repricing frequency of variable rate securities, is approximately 2.1 years. 2. The available-for-sale portfolio included a net unrealized gain of $26.9 million and a net unrealized loss of $343 thousand at March 31, 1996 and 1995, respectively. TABLE 9--OTHER INTEREST-BEARING LIABILITIES
MARCH 31 ------------------- 1996 1995 ---------- -------- (IN THOUSANDS) Short-term: Treasury, tax, and loan note............................. $ 283,690 $127,014 Federal Home Loan Bank advances.......................... 183,000 282,950 Term federal funds purchased............................. -0- 158,000 Floating Rate Notes Due 1999............................. 6,899 7,147 Other.................................................... 52,310 18,114 ---------- -------- Total short-term....................................... 525,899 593,225 ---------- -------- Long-term: Federal Home Loan Bank advances.......................... 234,195 68,634 6.75% Subordinated Debentures Due 2025................... 149,832 -0- 7.75% Subordinated Notes Due 2004........................ 149,252 149,160 Subordinated Capital Notes Due 1999...................... 99,602 99,473 7.50% Convertible Subordinated Debentures................ 4,097 3,876 Long-term notes payable.................................. 23,518 23,183 ---------- -------- Total long-term........................................ 660,496 344,326 ---------- -------- Total other interest-bearing liabilities............... $1,186,395 $937,551 ========== ========
17 TABLE 10--CAPITAL RATIOS
MARCH 31 ------------------------ 1996 1995 ----------- ----------- (DOLLARS IN THOUSANDS) Risk-adjusted capital ratio: Total assets....................................... $17,914,386 $17,067,905 Adjusted allowance for loan losses................. 167,914 157,137 Adjustment for risk-weighting of balance sheet items............................................. (6,473,827) (6,023,181) Adjustment for off-balance sheet items............. 2,123,225 1,643,029 Unrealized (gains)/losses on available-for-sale securities........................................ (27,417) 343 Less certain intangible assets..................... (280,556) (291,568) ----------- ----------- Total risk-adjusted assets....................... $13,423,725 $12,553,665 =========== =========== Shareholders' equity............................... $ 1,369,554 $ 1,335,191 Unrealized (gains)/losses on available-for-sale securities (net of deferred taxes)........................... (17,344) 200 Less certain intangible assets..................... (280,556) (291,568) ----------- ----------- Tier I capital..................................... 1,071,654 1,043,823 Adjusted allowance for loan losses................. 167,914 157,137 Qualifying long-term debt.......................... 358,845 229,513 ----------- ----------- Tier II capital.................................... 526,759 386,650 ----------- ----------- Total capital.................................... $ 1,598,413 $ 1,430,473 =========== =========== Tier I capital to total risk-adjusted assets....... 7.98% 8.31% Total capital to risk-adjusted assets.............. 11.91% 11.39% Other capital ratios: Leverage........................................... 6.16% 6.29% Equity to assets................................... 7.64% 7.82% Tangible equity to assets.......................... 6.17% 5.87%
18 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Several of AmSouth's subsidiaries are defendants in legal proceedings arising in the ordinary course of business. Some of these proceedings seek relief or damages that are substantial. The actions relate to AmSouth's lending, collections, servicing, investment, trust and other activities. Among the actions which are pending against AmSouth subsidiaries are actions filed as class actions in the State of Alabama. The actions are similar to others that have been brought in recent years in Alabama against financial institutions in that they seek punitive damage awards in transactions involving relatively small amounts of actual damages. In recent years, juries in Alabama state courts have made large punitive damage awards in such cases. Legislation which would limit these lawsuits has been proposed in the Alabama legislature but has not been enacted into law. AmSouth cannot predict whether any such legislation will be enacted. It may take a number of years to finally resolve some of these legal proceedings pending against AmSouth subsidiaries, due to their complexity and for other reasons. It is not possible to determine with any certainty at this time the corporation's potential exposure from the proceedings. However, based upon the advice of legal counsel, AmSouth's management is of the opinion that the ultimate resolution of these legal proceedings will not have a material adverse effect on AmSouth's financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The regular Annual Meeting of Shareholders of AmSouth was held on April 18, 1996, at which meeting the shareholders (a) elected four nominees as directors and (b) voted to approve the 1996 Long Term Incentive Compensation Plan. The following is a tabulation of the voting on these matters. ELECTION OF DIRECTORS
VOTES BROKER NAME VOTES FOR WITHHELD ABSTENTIONS NONVOTES - ---- ---------- -------- ----------- -------- J. Harold Chandler..................... 47,374,024 317,285 N/A N/A Rodney C. Gilbert...................... 47,371,030 320,279 N/A N/A Elmer B. Harris........................ 47,301,051 390,258 N/A N/A James R. Malone........................ 47,357,838 333,471 N/A N/A
APPROVAL OF 1996 LONG TERM INCENTIVE COMPENSATION PLAN
VOTES FOR VOTES AGAINST ABSTENTIONS BROKER NONVOTES --------- ------------- ----------- --------------- 42,556,355 3,227,778 1,907,176 -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ITEM 6(A)--EXHIBITS The exhibits listed in the Exhibit Index at page 21 of this Form 10-Q are filed herewith or are incorporated by reference herein. ITEM 6(B)--FORMS 8-K No report on Form 8-K was filed by AmSouth during the period January 1, 1996 to March 31, 1996. 19 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AMSOUTH HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. May 13, 1996 /s/ C. Dowd Ritter By: _________________________________ C. Dowd Ritter President and Chief Executive Officer May 13, 1996 /s/ Dennis J. Dill By: _________________________________ Dennis J. Dill Executive Vice President Chief Accounting Officer 20 EXHIBIT INDEX The following is a list of exhibits including items incorporated by reference. 3-a Restated Certificate of Incorporation of AmSouth Bancorporation (1) 3-b Bylaws of AmSouth Bancorporation, as amended 10-a AmSouth Bancorporation 1996 Long Term Incentive Compensation Plan 10-b Amendment to Employment Agreement for C. Dowd Ritter 10-c Amendment to Form of Executive Severance Agreement for Certain Executive Officers 11 Statement Re: Computation of Earnings per Share 15 Letter Re: Unaudited Interim Financial Information 27 Financial Data Schedule
21 NOTES TO EXHIBITS (1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the quarter ended March 31, 1993, incorporated herein by reference. 22 EX-3.B 2 BYLAWS Exhibit 3-b AMSOUTH BANCORPORATION BYLAWS ARTICLE 1 - OFFICES ------------------- SECTION 1.1: PRINCIPAL EXECUTIVE OFFICE AND OTHER OFFICES The principal executive office of the corporation shall be at such place, either within or without the State of Alabama, as may be designated from time to time by the Board of Directors. The corporation may have such other offices, either within or without the State of Alabama, as the Board of Directors may designate or as the business of the corporation may require from time to time. ARTICLE 2 - SHAREHOLDER MEETINGS -------------------------------- SECTION 2.1: ANNUAL MEETING The annual meeting of the shareholders of the corporation shall be held on such date and at such time as may be fixed by resolution of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting is a legal holiday in the state in which the meeting is to be held, the meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day fixed by the Board of Directors for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as convenient. SECTION 2.2: SPECIAL MEETINGS Special meetings of the shareholders, for any purpose or purposes, may be called only as provided in the Restated Certificate of Incorporation. SECTION 2.3: PLACE OF MEETING The place of meeting shall be the principal executive office of the corporation unless some other place, either within or without the State of Alabama, is designated by the Board of Directors. SECTION 2.4: NOTICE OF MEETING: FORM; CONTENTS; DELIVERY METHOD; DELIVERY TIME Written notice stating (a) the place, day, and hour of the meeting and (b) in the case of a special meeting, a meeting that is required by statute to be held for any special purpose, or an annual meeting at which special action is to be taken, the purpose or purposes for which the meeting is called, or the special action proposed to be taken, shall be delivered either personally or by mail, by or at the direction of the Board of Directors, the Chief Executive Officer, the Secretary, or the persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the shareholder at the shareholder's address as it appears on the records of the corporation, with postage thereon prepaid. Any such notice that relates to an annual meeting of shareholders shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting; and any such notice that relates to any special meeting of shareholders shall be delivered as provided in the Restated Certificate of Incorporation. An affidavit of the Secretary or an Assistant Secretary or the transfer agent of the corporation that notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the shareholders may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Any shareholder may waive notice of any meeting in the manner provided in Section 9.1 of these bylaws. Attendance of a shareholder at a meeting of shareholders shall constitute a waiver of notice of such a meeting, except when the shareholder attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. -2- Any previously scheduled meeting of the shareholders (other than a meeting called by shareholders under Section VII(b) of the Restated Certificate of Incorporation) may be postponed, and any special meeting of the shareholders (other than a meeting called by shareholders of the corporation under Section VII(b) of the Restated Certificate of Incorporation) may be cancelled, by resolution of the Board of Directors upon public announcement (as defined in Section 2.12(C)(2) of these bylaws) given prior to the time previously scheduled for such meeting of shareholders. SECTION 2.5: FIXING OF RECORD DATE In order that the corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall be not more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the date next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 2.6: VOTING LISTS The officer having charge of the stock ledger for shares of the corporation shall make, at least ten (10) days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares registered in the name of each shareholder, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any shareholder, for any purpose germane to the meeting, at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock ledger shall be the only evidence as to who are the shareholders entitled to examine such list or stock ledger or books of the corporation or to vote in person or by proxy at any meeting of shareholders. -3- SECTION 2.7: QUORUM A majority of the outstanding shares of the corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares entitled to vote are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting under the original notice. The shareholders present at a duly organized meeting may continue to transact business until the meeting is adjourned, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. SECTION 2.8: PROXIES At all meetings of shareholders, a shareholder may vote by proxy in writing executed by the shareholder or by the shareholder's duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. SECTION 2.9: VOTING OF SHARES Each outstanding share entitled to vote shall be entitled to one (1) vote upon each matter submitted to a vote at a meeting of the shareholders. Directors shall be elected by a plurality of the votes of the shares present in person or represented by a proxy at the meeting and entitled to vote on the election of directors. In all matters other than the election of directors, the affirmative vote of a majority of shares present in person or represented by a proxy at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, except as otherwise provided in the Restated Certificate of Incorporation or as otherwise required by Delaware law. -4- Where a separate vote by class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, and the affirmative vote of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, except as otherwise provided in the Restated Certificate of Incorporation or as otherwise required by Delaware law. The vote on all questions shall be taken in such manner as the Chairman prescribes, provided, however, that all votes taken at any meeting of shareholders, including, without limitation, votes taken with respect to the election of directors, shall be by written ballot. SECTION 2.10: VOTING OF SHARES BY CERTAIN HOLDERS Except as provided in this paragraph, shares of the corporation standing in the name of another corporation may be voted by such officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares of its own capital stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor to be counted for quorum purposes; provided, however, that nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Shares that have been called for redemption shall not be deemed to be outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been irrevocably deposited or set aside to pay the redemption price to the holders of the shares upon surrender of certificates therefor. Shares held by an administrator, executor, guardian, or conservator may be voted by such person, either in person or by proxy, without a transfer of such shares into such person's name. Shares standing in the name of a trustee may be voted by such trustee, either in person or by proxy; but no trustee shall be entitled to vote shares held by such trustee without a transfer of such shares into such trustee's name. -5- Shares standing in the name of a receiver may be voted by such receiver, and shares held or under the control of a receiver may be voted by such receiver without the transfer thereof into such receiver's name if authority so to do is contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares unless in the transfer by the pledgor on the books of the corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the pledgee's proxy, may represent such shares and vote thereon. If shares or other securities of the corporation having voting powers stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) If only one (1) votes, the act of such person binds all; (b) If more than one (1) vote, the act of the majority so voting binds all; (c) If more than one (1) vote, but the vote is evenly split on any particular matter, each fraction may vote the securities in question proportionately. If the instrument so filed shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this section shall be a majority or even split in interest. SECTION 2.11: INSPECTORS Prior to any meeting of shareholders, the Board of Directors or the Chief Executive Officer shall appoint one or more inspectors to act at the meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of shareholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Inspectors may, but are not required to be, employees of the corporation or of its subsidiaries. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. -6- The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at the meeting. No ballot, proxies, or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a shareholder who submits a proxy by telegram, cablegram, or other electronic transmission from which it can be determined that the proxy was authorized by the shareholder, ballots, and the regular books and records of the corporation, except that the inspectors may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the shareholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable. -7- SECTION 2.12: NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS (A) Annual Meetings of Shareholders. -------------------------------- (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the corporation who was a shareholder of record at the time of giving of notice provided for in this bylaw, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.12. (2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of this Section 2.12, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation, and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive office of the corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as -8- amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the corporation's books, and of such beneficial owner and (ii) the class and number of shares of the corporation that are owned beneficially and of record by such shareholder and such beneficial owner. (3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 2.12 to the contrary, if the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least seventy (70) days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation. (B) Special Meetings of Shareholders. Only such business shall be -------------------------------- conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this bylaw, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.12. If the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board of Directors, any such shareholder may nominate a person or persons (as the case may be), for election to such -9- position(s) as specified in the corporation's notice of meeting, if the shareholder's notice required by paragraph (A)(2) of this Section 2.12 shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder's notice as described above. (C) General. ------- (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.12 shall be eligible to serve as directors, and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.12. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.12 and, if any proposed nomination or business is not in compliance with this Section 2.12, to declare that such defective proposal or nomination shall be disregarded. (2) For purposes of this Section 2.12, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provisions of this Section 2.12, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.12. Nothing in this section shall be deemed (a) to affect any rights (i) of shareholders to request inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of preferred stock of the corporation to elect directors under specified circumstances or (b) to grant to any shareholder any right to nominate persons for election to the Board of Directors, or to propose business to be considered by the shareholders, that such shareholder would not have had in the absence of this Section 2.12, it being the intent of this section only to provide for the procedure for making such nominations or proposals of business to be considered. -10- ARTICLE 3 - BOARD OF DIRECTORS ------------------------------ SECTION 3.1: GENERAL POWERS The business and affairs of the corporation shall be managed under the direction of its Board of Directors. SECTION 3.2: NUMBER, TENURE, AND QUALIFICATIONS (a) Subject to the provisions of Paragraph (5) of Section XI of the Restated Certificate of Incorporation relating to the rights of the holders of any class or series of Preferred Stock, as defined in Section IV of the Restated Certificate of Incorporation, to elect under specified circumstances by separate class vote additional directors, the number of directors of the corporation shall be fixed from time to time by the affirmative vote of two-thirds of the total number of directors then in office who have been elected by the holders of the capital stock of the corporation entitled to vote generally for the election of directors. No decrease in the number of directors shall shorten the term of any incumbent director. (b) Directors need not be residents of Alabama or Delaware nor shareholders of the corporation. (c) Any director who has (i) reached the age of sixty-eight (68) years, or (ii) retired or otherwise become permanently separated from the business or professional position that he or she held at the time of his or her election to the Board of Directors, shall retire from the Board of Directors at the annual meeting of shareholders of the corporation next following the event in (i) or (ii) that requires retirement of such director from the Board of Directors. -11- (d) Any director who has become disabled to the extent that (in the judgment of a majority of the remaining outside directors) he or she is unable to perform the duties of a director of the corporation on an ongoing basis shall be deemed to have retired on the date on which the remaining outside directors have determined that such director is so disabled. For purposes of these bylaws a director will not be considered an "outside" director if he or she is, at the time of determination, an employee of the corporation or any of its subsidiaries. (e) Any director who is an officer of the corporation, or of any subsidiary thereof, shall resign as a director effective on the earliest date on which he or she is neither an officer of the corporation nor an officer of any subsidiary thereof. (f) On recommendation of the Director Affairs Committee, the application to any individual of any provision of subsection (c)(i) or (ii) or subsection (e) of this Section 3.2 may be waived by the Board of Directors; provided, however, that any such waiver shall be effective only on a year-to-year basis. (g) Any director may resign at any time upon written notice to the corporation. Any director or the entire Board of Directors may be removed at any time, but only for cause and only as provided in the Restated Certificate of Incorporation. SECTION 3.3: REGULAR MEETINGS A regular meeting of the Board of Directors shall be held without other notice than this bylaw at 1:00 p.m., local time, on the third Thursday of January, March, April, June, July, October, and December (unless such date shall fall on a holiday observed by AmSouth Bank of Alabama, in which event the meeting shall be held on the next succeeding business day and at the same hour or at such other hour as may be designated by the Board of Directors). Regular meetings of the Board of Directors shall be held at the principal executive office of the corporation or such other location as may be determined by the Board of Directors or as permitted by law. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Alabama, for the holding of additional or substitute regular meetings without other notice than such resolution. -12- SECTION 3.4: SPECIAL MEETINGS Special meetings of the Board of Directors may be called by or at the request of the Chief Executive Officer or any three (3) directors. A special meeting of the Board of Directors shall be held at the principal office of the corporation unless all directors agree in advance and in writing that it be held at another place, either within or without the State of Alabama. SECTION 3.5: PARTICIPATION BY CONFERENCE TELEPHONE Members of the Board of Directors, or of any committee thereof, may participate in any meeting of the Board of Directors or of any such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other; and participation in a meeting in such manner shall constitute presence in person at the meeting. SECTION 3.6: ACTION BY CONSENT WITHOUT A MEETING Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or committee. SECTION 3.7: NOTICE At least one (1) day's notice of any special meeting of the Board of Directors or of any meeting of a committee of the Board of Directors shall be given to all directors or committee members, as the case may be, unless, in the opinion of the officer or directors calling the meeting, an emergency exists that requires less than one (1) day's notice; in that event, only such notice need be given as such officer or directors shall direct. Any director may waive notice of any meeting, as provided in Section 9 of these bylaws. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. -13- SECTION 3.8: FEES By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof and may be paid a fixed sum for attendance at each such meeting or a stated salary as director, or both. SECTION 3.9: QUORUM Except as otherwise provided in Section XI of the Restated Certificate of Incorporation, a majority of the sum of (i) the number of directors determined pursuant to Paragraph (2) of Section XI of the Restated Certificate of Incorporation and Section 3.2(a) of these bylaws, and (ii) the number of directors, if any, elected under specified circumstances by a separate class vote of the holders of any class or series of Preferred Stock, as defined in Section IV of the Restated Certificate of Incorporation, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; but, if less than such quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 3.10: MANNER OF ACTING Except as provided in Sections VIII and XI of the Restated Certificate of Incorporation and Section 3.2(a) and Section 3.12 of these bylaws, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 3.11: VACANCIES Any vacancy occurring in the Board of Directors and any directorship to be filled by reason of an increase in the number of directorships or any other reason shall be filled according to the provisions of Section XI of the Restated Certificate of Incorporation. -14- SECTION 3.12: COMMITTEES OF THE BOARD The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, which, to the extent provided in such resolution or resolutions, shall have, and may during intervals between the meetings of the Board of Directors exercise, all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers that may require it. Each such committee or committees shall consist of one or more of the directors of the corporation and shall have such name or names as may be determined from time to time by resolution or resolutions adopted by the Board of Directors. The designation of any such committee or committees and the delegation thereto of authority shall not operate to relieve the Board of Directors, nor any member thereof, of any responsibility imposed upon it, him, or her by law. SECTION 3.13: EMERITUS BOARD OF DIRECTORS The Board of Directors may designate an "Emeritus Board of Directors", which shall consist of directors of the corporation who have retired, either by reason of age or because of being retired or otherwise permanently separated from the business or professional position that he or she held at the time of his or her election to the Board of Directors. If the Board of Directors designates an Emeritus Board of Directors, it will also specify the frequency of the meetings thereof, eligibility for continued service thereon, and compensation for service thereon. ARTICLE 4 - OFFICERS -------------------- SECTION 4.1: GENERAL (a) NUMBER. The officers of the corporation shall consist of a Chairman of the Board of Directors, a President, one or more Vice Presidents (one or more of whom may be designated by the Board of Directors as Senior Executive Vice President, Executive Vice President, Senior Vice President, or such other title as the Board of Directors may determine), a Chief Accounting Officer, and a Corporate Secretary and may also include such other officers as the Board of Directors may from time to time determine, including, but not limited to, one or more Vice Chairmen and one or more Assistant Secretaries. Either the Chairman of the Board or the President shall be designated by the Board of Directors as the Chief Executive Officer of the corporation; the President, a Vice Chairman, or one of the Vice Presidents may be designated by the Board as the Chief Operating Officer of the corporation; and, other officers may be designated by other titles such as "Chief Compliance Officer", "Chief Financial Officer", "Chief Credit Officer", and the like. -15- (b) EXECUTIVE OFFICERS; ORDER OF AUTHORITY. As used in these bylaws, the term "Executive Officers" shall include the Chairman of the Board (if, but only if, he or she also is the Chief Executive Officer), the President (regardless of whether he or she is the Chief Executive Officer), any Vice Chairman of the Board, the Senior Executive Vice Presidents, and the Executive Vice Presidents; provided, however, that nothing herein contained is intended to have any bearing on whether or not an officer of the corporation is an "executive officer" of the corporation for any purpose other than for convenient reference in these bylaws, including but not limited to the purpose of determining whether or not any officer of the corporation is an "officer" within the meaning of (S) 16 of the Exchange Act or an "executive officer" under Regulation O of the Federal Reserve Board. Their "order of authority" shall be the order designated by resolution of the Board of Directors or, if not so designated by the Board of Directors, as designated by the Chief Executive Officer. (c) DUAL OFFICES. Any two or more offices in the corporation may, except where prohibited by law, be held by the same individual. In cases where an individual holds more than one office, that person shall have the authority of all offices so held and shall occupy the "order of authority" provided in these bylaws for the more or most senior of the offices held. (d) MANNER OF ELECTION; TERM OF OFFICE. Except as provided below, all officers shall be elected annually by the Board of Directors at their first meeting next following the Annual Meeting of Shareholders of the corporation, or as soon thereafter as is practicable; and their terms of office shall be for one (1) year, commencing upon election, or until their successors are elected and qualified, whichever occurs later. The Board of Directors may, at any time and for any reason sufficient to them, elect such other officers as they may deem desirable. -16- Each of the two (2) Executive Officers having the highest order of authority shall have the power to elect or appoint, or delegate to any other officer of the corporation the power to elect or appoint, all employees and all officers holding a title at or below that of Senior Vice President. (e) RESIGNATION; REMOVAL FROM OFFICE. Each officer shall hold his or her office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the corporation. All officers and employees serve at the will of this corporation and may be removed from office and employment at any time, with or without cause. Only the Board of Directors or its Executive Committee may remove from office the Chief Executive Officer, the Chairman of the Board, or the President. All other officers and employees may be removed from office by either of the two (2) Executive Officers having the highest order of authority or by any person authorized so to do by the personnel policies of the corporation; and, unless one of the said two (2) Executive Officers acts directly in a particular instance, removal from office or employment shall be as provided in the personnel policies of the corporation, as they may from time to time be adopted, amended, and modified. (f) VACANCIES. Vacancies in offices above the level of Senior Vice President becoming vacant may be filled by the Board of Directors or the Executive Committee. In the event of a vacancy in any of the offices of the Executive Officers, any of the other Executive Officers remaining may be elected to fill the vacancy in such office for such period as the Board of Directors may determine or until further action by the Board. SECTION 4.2: CHIEF EXECUTIVE OFFICER Subject to the direction of the Board of Directors, of the Executive Committee, and of other committees of the Board having authority, the Chief Executive Officer shall be vested with authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law; shall have general charge of the corporation and of its business and affairs, including authority over the operations of the corporation and over its employees; and, subject to the limitations stated, shall have full power and authority to do and perform in the name of the corporation all acts necessary or proper in his or her opinion to be done and performed and to execute for and in the name of the corporation all instruments, agreements, and deeds which may be authorized to be executed on behalf of the corporation or which may be required by law. -17- SECTION 4.3: CHAIRMAN OF THE BOARD The Chairman of the Board, or in his or her absence, the President or other Executive Officers, in their order of authority, shall preside at all regular, called, or special meetings of the Board of Directors, the Executive Committee, and the shareholders, and at adjournments thereof. SECTION 4.4: PRESIDENT The President shall, subject to the direction of the Board of Directors, the Executive Committee, other committees of the Board of Directors having authority (and, if he or she is not the Chief Executive Officer, then also subject to the direction of the Chief Executive Officer), be vested with authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law. The President, regardless of whether he or she is also the Chief Executive Officer, shall have the same power to sign for the corporation as is prescribed in these bylaws for the Chief Executive Officer. The President shall perform all duties incidental to the office and shall perform such other duties as may be assigned from time to time by the Board of Directors or the Chief Executive Officer. SECTION 4.5: OTHER EXECUTIVE OFFICERS Each of the Executive Officers shall (subject to the direction of the Board of Directors and of the committees of the Board having authority and to the direction of the Chief Executive Officer) have and may exercise authority to act for the corporation in all matters to the extent that such delegation of authority may not be contrary to law and, in general, to discharge the functions and to exercise the authority vested in the Chief Executive Officer in matters not otherwise acted upon by the Chief Executive Officer or by other Executive Officers senior in the order of authority. Subject to the limitations stated above, the authority of each Executive Officer shall include authority over the operations of the corporation within his or her assigned areas of responsibility and over assigned employees, and authority to do and perform in the name of the corporation all acts necessary or proper in his or her opinion to be done and performed and to execute for and in the name of the corporation all instruments, agreements, and deeds which may be authorized to be executed on behalf of the corporation or required by law. -18- SECTION 4.6: VICE PRESIDENTS Any Vice President shall have the authority to execute in the name of the corporation transfers, conveyances, certificates, releases, satisfactions, authentications, options, proxies, leases, including oil, gas, and other mineral leases, agreements, including but not limited to agreements relating to depository accounts of the corporation, or other instruments pertaining to investment, assets or operations of the corporation or powers held or controlled by the corporation. The Vice Presidents shall have such other powers as are from time to time conferred upon them by the Board of Directors, committees of the Board, and the Executive Officers. SECTION 4.7: CHIEF ACCOUNTING OFFICER OR CONTROLLER An officer of the corporation shall be appointed "Chief Accounting Officer" or "Controller" and shall have custody of the corporation's general accounting records, shall prepare financial statements, tax returns, profit plans and reports to regulatory authorities, and shall have such other duties as the Chief Executive Officer or other Executive Officer may assign him from time to time. SECTION 4.8: THE SECRETARY The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one (1) or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and affix, or cause to be affixed, the seal of the corporation to all documents the execution of which on behalf of the corporation under its seal is appropriate; (d) keep a record of the post office address of each shareholder, which shall be furnished to the Secretary by such shareholder; (e) have general charge of the stock transfer books of the corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by these bylaws, by the Chief Executive Officer, or by the Board of Directors. The Secretary may, from time to time, delegate to other officers of the corporation, including but not limited to Assistant Secretaries, any or all of the duties and powers of the Secretary hereunder. -19- SECTION 4.9: EXERCISE OF AUTHORITY OF CHIEF EXECUTIVE OFFICER BY OTHER EXECUTIVE OFFICERS In case of the disqualification, disability, death, resignation, or removal of the Chief Executive Officer, and until the Board of Directors has filled the vacancy, the Executive Officers, in their order of authority, shall act as such Chief Executive Officer and with his full authority. SECTION 4.10: MANAGEMENT COMMITTEE There shall be an officers' committee of the corporation (the "Management Committee"), which shall consist of such officers of the corporation and its subsidiaries as may be appointed to sit thereon by the Chief Executive Officer. The chairman of the committee shall be the Chief Executive Officer, and the committee shall meet at the chairman's call. The Management Committee shall develop, publish, and implement policies and procedures for the operation of the corporation and its subsidiaries and affiliates. The Board of Directors shall have the right to amend or revoke actions of the Management Committee. The Management Committee may amend, make additions to, or deletions from, or revoke such policies and procedures, to the extent the committee deems such actions to be necessary and desirable. In addition to the duties prescribed above, the Management Committee shall have such other and further duties and responsibilities as may from time to time be assigned to it by the Board of Directors or the Chief Executive Officer. -20- ARTICLE 5 - SHARES; PROXIES --------------------------- SECTION 5.1: CERTIFICATES FOR SHARES Certificates shall be issued only for whole shares and no certificate will be issued for a fractional share. Certificates representing whole shares of the corporation shall be in such form as shall be determined by the Board of Directors and shall be signed in the manner provided by the General Corporation Law of Delaware by the Chairman or Vice-Chairman of the Board of Directors, or by the President or any Vice-President, and by the Treasurer or an Assistant Treasurer, or by the Secretary or an Assistant Secretary. Such signatures may be in facsimile form. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled, and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that the corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the corporation may require the owner of the lost, stolen, or destroyed certificate, or such owner's legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of such new certificate, as the Board of Directors may prescribe. SECTION 5.2: TRANSFER OF SHARES Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by such holder's legal representative, who shall furnish proper evidence of authority to transfer, or by such holder's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. -21- SECTION 5.3: PROXIES Unless otherwise provided by resolution of the Board of Directors, the Chief Executive Officer may cast, or from time to time appoint an attorney or agent of the corporation to cast, the votes that the corporation may be entitled to cast as the holder of stock or other securities in any other corporation any of the stock or other securities of which may be held by the corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name and on behalf of the corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed, in the name and on behalf of the corporation and under its corporate seal or otherwise, all such written proxies or other instruments as the Chief Executive Officer may deem necessary or proper in the premises. ARTICLE 6 - FISCAL YEAR ----------------------- SECTION 6.1: The fiscal year of the corporation shall begin on January 1 and end on December 31 in each year. ARTICLE 7 - DIVIDENDS; RECORD DATE ---------------------------------- SECTION 7.1: The Board of Directors or the Executive Committee may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. SECTION 7.2: In order that the corporation may determine the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the shareholders entitled to exercise any rights with respect to any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto. -22- ARTICLE 8 - SEAL ---------------- SECTION 8.1: The corporate seal of the corporation shall be a circular die around which shall be the words "AmSouth Bancorporation." ARTICLE 9 - WAIVERS OF NOTICE ----------------------------- SECTION 9.1: Whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of these bylaws, the Restated Certificate of Incorporation, or the provisions of law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders, directors, or members of a committee of directors need be specified in any written waiver of notice except as required by the Restated Certificate of Incorporation or these bylaws. ARTICLE 10 - AMENDMENTS TO BYLAWS --------------------------------- SECTION 10.1: POWER OF DIRECTORS TO AMEND The Board of Directors shall have the power to alter, amend, and repeal the bylaws of the corporation or adopt new bylaws for the corporation at any regular or special meeting of the Board. SECTION 10.2: POWER OF SHAREHOLDERS TO AMEND (a) The shareholders may alter, amend, or repeal the bylaws of the corporation or adopt new bylaws for the corporation at any annual meeting or at a special meeting called for the purpose, and all bylaws made by the directors may be altered, amended, or repealed by the shareholders; provided, however, that: -23- (1) the affirmative vote of the holders of sixty-seven percent (67%) of the combined voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Section VII of the Restated Certificate of Incorporation of the corporation, or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with the provisions of Section VII of the Restated Certificate of Incorporation of the corporation; (2) the affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Section XI of the Restated Certificate of Incorporation of the corporation or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with the provisions of Section XI of the Restated Certificate of Incorporation of the corporation; (3) the affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal any provision of Paragraph (a) of Section 3.2 of these bylaws or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with the provisions of Paragraph (a) of Section 3.2 of these bylaws; and (4) the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of the voting stock and the affirmative vote of the holders of not less than sixty-seven percent (67%) of the voting stock held by shareholders other than an Interested Stockholder (as defined in Section VIII of the Restated Certificate of Incorporation) shall be required for the shareholders to alter, amend, or repeal Section VIII of the Restated Certificate of Incorporation of the corporation, or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with the provisions of Section VIII of the Restated Certificate of Incorporation of the corporation. -24- (b) The affirmative vote of the holders of sixty-seven percent (67%) of the combined voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (1) of this Section 10.2 of these bylaws or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with Paragraph (a) (1) of this Section 10.2 of these bylaws. (c) The affirmative vote of the holders of eighty percent (80%) of the combined voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally for the election of directors, voting together as a single class, shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (2) or (a) (3) of this Section 10.2 of these bylaws or to adopt any provision of these bylaws inconsistent with Paragraph (a) (2) or (a) (3) of this Section 10.2 of these bylaws. (d) The affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of the voting stock and the affirmative vote of the holders of not less than sixty-seven percent (67%) of the voting stock held by shareholders other than an Interested Stockholder (as defined in Section VIII of the Restated Certificate of Incorporation) shall be required for the shareholders to alter, amend, or repeal Paragraph (a) (4) of this Section 10.2 or to adopt any provision of these bylaws that would cause these bylaws to be inconsistent with Paragraph (a) (4) of this Section 10.2 of these bylaws. -25- EX-10.A 3 LONG TERM INCENTIVE COMPENSATION PLAN EXHIBIT 10-a AMSOUTH BANCORPORATION 1996 LONG TERM INCENTIVE COMPENSATION PLAN CONTENTS
PAGE Article 1. Establishment, Objectives, and Duration........................ A-2 Article 2. Definitions.................................................... A-2 Article 3. Administration................................................. A-4 Article 4. Shares Subject to the Plan and Maximum Awards.................. A-4 Article 5. Eligibility and Participation.................................. A-5 Article 6. Stock Options.................................................. A-5 Article 7. Stock Appreciation Rights...................................... A-6 Article 8. Restricted Stock............................................... A-6 Article 9. Performance Measures........................................... A-7 Article 10. Beneficiary Designation........................................ A-8 Article 11. Deferrals...................................................... A-8 Article 12. Rights of Employees............................................ A-8 Article 13. Change in Control.............................................. A-8 Article 14. Amendment, Modification, and Termination....................... A-8 Article 15. Withholding.................................................... A-9 Article 16. Indemnification................................................ A-9 Article 17. Successors..................................................... A-9 Article 18. Legal Construction............................................. A-9
A-1 ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION 1.1. ESTABLISHMENT OF THE PLAN. AmSouth Bancorporation, a Delaware corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the "AmSouth Bancorporation 1996 Long Term Incentive Compensation Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, and Restricted Stock. Subject to approval by the Company's stockholders, the Plan shall become effective as of April 18, 1996 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof. 1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the profitability and growth of the Company through incentives which are consistent with the Company's objectives and which link the interests of Participants to those of the Company's stockholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company's success and to allow Participants to share in the success of the Company. 1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after April 18, 2006. ARTICLE 2. DEFINITIONS Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized: 2.1. "AWARD" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, or Restricted Stock. 2.2. "AWARD AGREEMENT" means an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan. 2.3. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. 2.4. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the Company. 2.5. "CAUSE" shall be determined by the Committee, in exercise of good faith and reasonable judgment, and shall mean the occurrence of any one or more of the following: (i) The willful and continued failure by the Participant to substantially perform his duties (other than any such failure resulting from the Participant's Disability), after a written demand for substantial performance is delivered by the Committee to the Participant that specifically identifies the manner in which the Committee believes that the Participant has not substantially performed his duties, and the Participant has failed to remedy the situation within thirty (30) calendar days of receiving such notice; or (ii) The Participant's conviction for committing an act of fraud, embezzlement, theft, or another act constituting a felony; or (iii) The willful engaging by the Participant in gross misconduct materially and demonstrably injurious to the Company, as determined by the Committee. However, no act or failure to act, on the Participant's part shall be considered "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. 2.6. "CHANGE IN CONTROL" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied: (a) Any Person (other than those Persons in control of the Company as of the Effective Date, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (b) During any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority thereof; or (c) The stockholders of the Company approve: (i) a plan of complete liquidation of the Company; or (ii) an agreement for the sale or disposition of all or substantially all the Company's assets; or (iii) a merger, consolidation, or reorganization of the Company with A-2 or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least fifty percent (50%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. However, in no event shall a Change in Control be deemed to have occurred, with respect to the Participant, if the Participant is part of a purchasing group which consummates the Change-in-Control transaction. The Participant shall be deemed "part of a purchasing group" for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the nonemployee Directors who were Directors prior to the transaction, and who continue as Directors following the transaction). 2.7. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. 2.8. "COMMITTEE" means the Executive Compensation and Benefits Committee of the Board, as specified in Article 3 herein, or such other Committee appointed by the Board to administer the Plan with respect to grants of Awards. 2.9. "COMPANY" means AmSouth Bancorporation, and also means any corporation of which a majority of the voting capital stock is owned directly or indirectly by AmSouth Bancorporation or by any of its Subsidiaries, and any other corporation designated by the Committee as being a Company hereunder (but only during the period of such ownership or designation). 2.10. "COVERED EMPLOYEE" means a Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of "covered employees," as defined in the regulations promulgated under Code Section 162(m), or any successor statute. 2.11. "DIRECTOR" means any individual who is a member of the Board of Directors of the Company. 2.12. "DISABILITY" as applied to a Participant, means that the Participant (i) has established to the satisfaction of the Committee that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months (all within the meaning of Section 22(e) (3) of the Code), and (ii) has satisfied any requirement imposed by the Committee in regard to evidence of such disability. 2.13. "EFFECTIVE DATE" shall have the meaning ascribed to such term in Section 1.1 hereof. 2.14. "EMPLOYEE" means any key officer or employee of the Company. Directors who are not employed by the Company shall not be considered Employees under this Plan. 2.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. 2.16. "FAIR MARKET VALUE" shall be determined on the basis of the closing sale price on the principal securities exchange on which the Shares are traded or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported. 2.17. "FREESTANDING SAR" means an SAR that is granted independently of any Options, as described in Article 7 herein. 2.18. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code Section 422. 2.19. "INSIDER" shall mean an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act. 2.20. "NONEMPLOYEE DIRECTOR" means an individual who is a member of the Board of Directors of the Company but who is not an Employee of the Company. 2.21. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Code Section 422. 2.22. "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein. 2.23. "OPTION PRICE" means the price at which a Share may be purchased by a Participant pursuant to an Option. 2.24. "PARTICIPANT" means an Employee who has outstanding an Award granted under the Plan. The term "Participant" shall not include Nonemployee Directors. 2.25. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception from the tax deductibility limitations of Code Section 162(m). 2.26. "PERIOD OF RESTRICTION" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares of Restricted Stock are subject to a substantial risk of forfeiture, as provided in Article 8 herein. 2.27. "PERSON" shall have the meaning ascribed to such A-3 term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof. 2.28. "RESTRICTED STOCK" means an Award granted to a Participant pursuant to Article 8 herein. 2.29. "RETIREMENT" as applied to a Participant, means the Participant's termination of employment in a manner which qualifies the Participant to receive immediately payable retirement benefits under the AmSouth Bancorporation Retirement Plan, under the successor or replacement of such Retirement Plan if it is then no longer in effect, or under any other retirement plan maintained or adopted by the Company which is determined by the Committee to be the functional equivalent of such Retirement Plan. 2.30. "SHARES" means common stock of AmSouth Bancorporation, par value $1.00 per share. 2.31. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein. 2.32. "SUBSIDIARY" means any corporation, partnership, joint venture or other entity in which the Company has a majority voting interest. 2.33. "TANDEM SAR" means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled). ARTICLE 3. ADMINISTRATION 3.1. THE COMMITTEE. The Plan shall be administered by the Committee of the Board, or by any other Committee appointed by the Board, which Committee shall satisfy the "disinterested administration" rules of Rule 16b-3 under the Exchange Act, or any successor provision. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. 3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, including Section 3.4, the Committee shall have full power to select Employees who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan as they apply to Employees; establish, amend, or waive rules and regulations for the Plan's administration as they apply to Employees; and (subject to the provisions of Article 14 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan, as the Plan applies to Employees. As permitted by law, the Committee may delegate its authority as identified herein. 3.3. DECISIONS BINDING. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries. 3.4. GRANTS TO NON-INSIDERS BY CHIEF EXECUTIVE OFFICER. To the extent permissible under governing rules and regulations, and, in particular, Section 141(c) of the General Corporation Law of Delaware, the Chief Executive Officer of the Company shall have the authority to make and administer grants of Awards under this Plan to non-Insiders upon such terms and conditions as the Chief Executive Officer shall determine; provided, however, that the total number of Awards granted by the Chief Executive Officer each year shall be subject to approval by the Committee. ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS 4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided in Section 4.3 herein, the number of Shares hereby reserved for issuance to Participants under the Plan shall be two million, seven hundred fifty thousand (2,750,000). Notwithstanding the foregoing, the maximum number of Shares of Restricted Stock granted pursuant to Article 8 herein shall be an amount equal to thirty percent (30%) of the total number of Shares reserved for issuance under the Plan. Unless and until the Committee determines that an Award to a Covered Employee shall not be designed to comply with the Performance-Based Exception, the maximum aggregate number of Shares that may be granted or that may vest, as applicable, pursuant to any Award granted in any one fiscal year to any single Covered Employee shall be two hundred fifty thousand (250,000). 4.2. LAPSED AWARDS. If any Award granted under this Plan is canceled, terminates, expires, or lapses for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of the corresponding Tandem SAR), any Shares subject to such Award again shall be available for the grant of an Award under the Plan. 4.3. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, such adjustment shall be made in A-4 the number and class of Shares which may be delivered under Section 4.1, in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and in the Award limits set forth in Section 4.1, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number. ARTICLE 5. ELIGIBILITY AND PARTICIPATION 5.1. ELIGIBILITY. Persons eligible to participate in this Plan include all Employees of the Company, including Employees who are members of the Board. 5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine the nature and amount of each Award. ARTICLE 6. STOCK OPTIONS 6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. 6.2. AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO within the meaning of Code Section 422, or an NQSO whose grant is intended not to fall under the provisions of Code Section 422. 6.3. OPTION PRICE. The Option Price for each grant of an Option under this Plan shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. 6.4. DURATION OF OPTIONS. Each Option granted to an Employee shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5. DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents in connection with Options granted under this Plan. Such dividend equivalents may be payable in cash or in Shares, upon such terms as the Committee, in its sole discretion, deems appropriate. 6.6. EXERCISE OF OPTIONS. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. 6.7. PAYMENT. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) if permitted in the governing Award Agreement, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) if permitted in the governing Award Agreement, by a combination of (a) and (b). The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.8. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.9. TERMINATION OF EMPLOYMENT. Each Option, to the extent it has not been previously exercised, shall terminate upon the earliest to occur of: (i) the expiration of the Option period set forth in the Option Award Agreement; (ii) for ISOs, the expiration of three (3) months following the Participant's Retirement (following the Participant's Retirement, NQSOs shall terminate upon the expiration of the Option period set forth in the Option Award Agreement); (iii) the expiration of twelve (12) months following the Participant's death or Disability; (iv) immediately upon termination for Cause; or (v) the expiration of thirty (30) days following the Participant's termination of employment for any reason other than Cause, Change in Control, death, Disability, or Retirement. Upon a termination of employment related to a Change in Control, Options shall be treated in the manner set forth in Article 13. 6.10. NONTRANSFERABILITY OF OPTIONS. (a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. A-5 (b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant. ARTICLE 7. STOCK APPRECIATION RIGHTS 7.1. GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR. The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs. The grant price of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option. 7.2. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO. 7.3. EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them. 7.4. SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine. 7.5. TERM OF SARS. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that such term shall not exceed ten (10) years. 7.6. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (a) The difference between the Fair Market Value of a Share on the date of exercise over the grant price; by (b) The number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. 7.7. RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of an SAR (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Section 16 of the Exchange Act (or any successor rule). 7.8. TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. 7.9. NONTRANSFERABILITY OF SARS. Except as otherwise provided in a Participant's Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. ARTICLE 8. RESTRICTED STOCK 8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts as the Committee shall determine. Without limiting the generality of the foregoing, Restricted Shares may be granted in connection with payouts under other compensation programs of the Company. 8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine. 8.3. TRANSFERABILITY. Except as provided in this Article 8, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier A-6 satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Award Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 8.4. OTHER RESTRICTIONS. Subject to Article 9 herein, the Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance objectives (Company-wide, business unit, and/or individual), time-based restrictions on vesting following the attainment of the performance objectives, and/or restrictions under applicable federal or state securities laws. At the discretion of the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied. Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction. 8.5. VOTING RIGHTS. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 8.6. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may be credited with regular cash dividends paid with respect to the underlying Shares while they are so held. Such dividends may be paid currently, accrued as contingent cash obligations, or converted into additional shares of Restricted Stock, upon such terms as the Committee establishes. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Shares granted to a Covered Employee is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Restricted Shares, such that the dividends and/or the Restricted Shares maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a "derivative security" or an "equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid. 8.7. TERMINATION OF EMPLOYMENT. Upon a Participant's death, Disability, or Retirement, all Restricted Shares shall vest immediately subject to any limitations under Code Section 162(m). Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to retain unvested Restricted Shares following termination of the Participant's employment with the Company in all other circumstances. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment; provided, however, that, except in the cases of terminations connected with a Change in Control and terminations by reason of death or Disability, the vesting of Shares of Restricted Stock which qualify for the Performance-Based Exception and which are held by Covered Employees shall occur at the time they otherwise would have, but for the employment termination. ARTICLE 9. PERFORMANCE MEASURES Unless and until the Committee proposes for stockholder vote and stockholders approve a change in the general performance measures set forth in this Article 9, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Covered Employees which are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants shall be chosen from among the following alternatives: (a) Net Income; (b) Return on Equity; (c) Earnings per Share; (d) Return on Assets; (e) Total Shareholder Return; and (f) Return on Investment. Subject to the terms of the Plan, each of these measures shall be defined by the Committee on a corporation or subsidiary basis or in comparison with peer group performance, and may include or exclude specified extraordinary items, as determined by the Company's auditors. The Committee shall have the discretion to adjust the determinations of the degree of attainment of the preestablished performance objectives; provided, however, that Awards which are designed to qualify for the Performance-Based Exception, and which are held by Covered Employees, may not be adjusted upward (the Committee shall retain the discretion to adjust such Awards downward). In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining A-7 stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards which shall not qualify for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Code Section 162(m). ARTICLE 10. BENEFICIARY DESIGNATION Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. ARTICLE 11. DEFERRALS The Committee may permit or require a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or objectives with respect to Performance Units/Shares. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. ARTICLE 12. RIGHTS OF EMPLOYEES 12.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. 12.2. PARTICIPATION. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. ARTICLE 13. CHANGE IN CONTROL 13.1. TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges: (a) Any and all Options and SARs granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term; and (b) Any restriction periods and restrictions imposed on Shares of Restricted Stock shall lapse; provided, however, that the degree of vesting associated with Restricted Stock which has been conditioned upon the achievement of performance conditions pursuant to Section 8.4 herein shall be determined in the manner set forth in Section 8.7 herein. 13.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL PROVISIONS. Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 13 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award theretofore granted under the Plan without the prior written consent of the Participant with respect to said Participant's outstanding Awards. ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION 14.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 13.2 herein, the Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part; provided, however, that no amendment which requires stockholder approval in order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act, including any successor to such Rule, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company entitled to vote thereon. The Committee shall not have the authority to cancel outstanding Awards and issue substitute Awards in replacement thereof. 14.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.3 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided, however, that Awards which are designed to qualify for the Performance-Based Exception, and which are held by Covered Employees, may only be adjusted to the extent permissible under Code Section 162(m). 14.3. AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award. 14.4. COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section 162(m) is applicable, all Awards granted under this Plan shall comply with the requirements of Code Section 162(m); provided, however, that in the event the Committee determines that such compliance is not A-8 desired with respect to any Award or Awards available for grant under the Plan, then compliance with Code Section 162(m) will not be required. In addition, in the event that changes are made to Code Section 162(m) to permit greater flexibility with respect to any Award or Awards available under the Plan, the Committee may, subject to this Article 14, make any adjustments it deems appropriate. ARTICLE 15. WITHHOLDING 15.1. TAX WITHHOLDING. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan. 15.2. SHARE WITHHOLDING. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be withheld on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. ARTICLE 16. INDEMNIFICATION Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgement in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE 17. SUCCESSORS All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, of all or substantially all of the business and/or assets of the Company, or a merger, consolidation, or otherwise. ARTICLE 18. LEGAL CONSTRUCTION 18.1. GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 18.2. SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 18.3. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 18.4. SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 18.5. GOVERNING LAW. To the extent not preempted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the state of Alabama. A-9 EX-10.B 4 AMENDMENT TO EMPLOYMENT AGREEMENT Exhibit 10-b AMSOUTH BANCORPORATION AMENDMENT TO EMPLOYMENT AGREEMENT THIS AMENDMENT to the Employment Agreement dated June 15, 1995 (the "Employment Agreement") by and between AmSouth Bancorporation, a Delaware Corporation (hereinafter referred to as the "Company"), and C. Dowd Ritter (hereinafter referred to as the "Executive") is effective as of the 21st day of March, 1996. Unless otherwise defined, all capitalized terms herein shall have the meaning ascribed to them in the Employment Agreement. W I T N E S S E T H: WHEREAS, the Executive is presently employed by the Company in the capacity of President and Chief Executive Officer pursuant to the Employment Agreement; WHEREAS, the Executive and the Company do not believe the Employment Agreement clearly reflects their agreement with respect to the excise tax gross-up; WHEREAS, the Company and the Executive believe it necessary to clarify certain provisions of the Employment Agreement related to the excise tax gross-up; and WHEREAS, the Company and the Executive desire to enter into this amendment to provide for such changes to the Employment Agreement. NOW THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of his advice and counsel, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive agree to amend the Employment Agreement as follows: Section 8.1 is hereby deleted and replaced with the following text: 8.1 EQUALIZATION PAYMENT. In the event that the Executive becomes entitled to severance benefits under Section 6.4 or 6.6 herein ("Severance Benefits"), if any of the Executive's "Total Payments", as defined herein, will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any similar tax that may hereafter be imposed), the Company shall pay to the Executive in cash an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive after deduction of (i) any Excise Tax on the Total Payments and (ii) any federal, state, and local income tax and Excise Tax upon the Gross-Up Payment provided for by this Section 8.1, shall be equal to the Total Payments. Such payment shall be made by the Company to Executive as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. As used in this Article 8, "Total Payments" means the sum of the Executive's Severance Benefits and all other payments and benefits provided to the Executive by the Company which constitute "excess parachute payments" within the meaning of Code Section 280G(b)(1). Without limiting the generality of the foregoing, Total Payments shall include any and all excess parachute payments associated with outstanding long-term incentive grants. Section 8.2 TAX COMPUTATION. is hereby amended to replace all references to "Severance Benefits" with the term "Total Payments". IN WITNESS WHEREOF, the parties have executed this Amendment to the Employment Agreement on this _______ day of ___________________, 1996. AMSOUTH BANCORPORATION EXECUTIVE: By: ------------------------------- -------------------------------- Its Executive Vice President C. DOWD RITTER and Human Resources Director Attest: -------------------------- Its Secretary EX-10.C 5 AMENDMENT TO EXECUTIVE SEVERANCE AGRMNT Exhibit 10-c AMSOUTH BANCORPORATION AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT THIS AMENDMENT to the Executive Severance Agreement dated [DAY], (the "ESA") by and between AmSouth Bancorporation, a Delaware Corporation (hereinafter referred to as the "Company"), and [EXNAME] (hereinafter referred to as the "Executive") is made and entered into as of the 21ST DAY OF MARCH, 1996. Unless otherwise defined, all capitalized terms herein shall have the meanings ascribed to them in the ESA. W I T N E S S E T H: WHEREAS, should the possibility of a Change in Control of the Company arise, the Board believes it imperative that the Company and the Board should be able to rely upon the Executive to continue in [gender] position, and that the Company should be able to receive and rely upon the executive's advice, if requested, as to the best interests of the Company and its shareholders without concern that the Executive might be distracted by the personal uncertainties and risks created by the possibility of a Change in Control; WHEREAS, should the possibility of a Change in Control arise, in addition to [gender] regular duties, the Executive may be called upon to assist in the assessment of such possible Change in Control, advise management and the Board as to whether such Change in Control would be in the best interests of the Company and its shareholders, and to take such other actions as the Board might determine to be appropriate; WHEREAS, to assure the Company that it will have the continued dedication of the Executive and the availability of [gender] advice and counsel notwithstanding the possibility, threat, or occurrence of a Change in Control of the Company and to induce the Executive to remain the employ of the Company, the Company and the Executive entered into the ESA; WHEREAS, the Company and the Executive believe it necessary to clarify certain provisions of the ESA and to extend the time period within which protection is provided to the Executive for a Change in Control; and WHEREAS, the Company and the Executive desire to enter into this amendment to provide for such changes to the ESA. NOW THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of [gender] advice and counsel notwithstanding the possibility, threat, or occurrence of a Change in Control of the Company, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive agree to amend the ESA as follows: Paragraphs (u) and (v) are hereby added to the end of the section entitled ARTICLE 1. DEFINITIONS: (u) "Total Payments" means the sum of the Executive's Severance Benefits and all other payments and benefits provided to the Executive by the Company which constitute "excess parachute payments" within the meaning of Code Section 280G(b)(1). Without limiting the generality of the foregoing, Total Payments shall include any and all excess parachute payments associated with outstanding long-term incentive grants (to include, but not be limited to, early vesting of stock options or restricted stock). (v) "Window Period" means the time period commencing upon a Change in Control, as defined in Section (g) of this Article 1, and ending twenty-four months after the latter to occur of: (i) any of the events defined as a Change in Control in Section 1(g); or (ii) final consummation of the liquidation, sale or disposition of assets, or the merger, consolidation or reorganization of the Company as described in Section 1(g)(iii). 1 The first paragraph of Section 2.1 is hereby deleted and replaced with the following text: 2.1 RIGHT TO SEVERANCE BENEFITS. The Executive shall be entitled to receive from the Company Severance Benefits as described in Section 2.4 herein, if there has been a Change in Control of the Company and if, within the Window Period, the Executive's employment with the Company shall end for any reason specified in Section 2.3 herein. The first clause of Section 2.3 is hereby deleted and replaced with the following text: 2.3 QUALIFYING TERMINATION. The occurrence of any one or more of the following events within the Window Period shall trigger the payment of Severance Benefits to the Executive under this Agreement: The second sentence of item (f) of SECTION 2.4. DESCRIPTION OF SEVERANCE BENEFITS is hereby deleted and replaced with the following sentence: For this purpose, the Executive's interest under the Supplemental Retirement plan shall be fully vested as of the effective date of the Change in Control and such benefits shall be calculated under the assumption that the Executive's employment continued following the Effective Date of Termination for the number of years equal to the Severance Multiplier (i.e., additional years of service credits shall be added); provided, however, that for purposes of determining "final average pay" under the benefit calculation, the Executive's actual pay history as of the Effective Date of Termination shall be used. Section 4.1 is hereby deleted and replaced with the following text: 4.1 EQUALIZATION PAYMENT. In the event that the Executive becomes entitled to Severance Benefits, if any of the Executive's Total Payments will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall pay to the Executive in cash an additional amount (the "Gross-up Payment") such that the net amount retained by the Executive after deduction of any Excise Tax on the Total Payments and any federal, state, and local income tax and Excise Tax upon the Gross- up Payment provided for by this Section 4.1, shall be equal to the Total Payments. Such payment shall be made by the Company to the Executive as soon as practicable following the Effective Date of Termination, but in no event beyond thirty (30) days from such date. Section 4.2 TAX COMPUTATION. is hereby amended to replace all references to "Severance Benefits" with the term "Total Payments". Section (i) of the second paragraph of ARTICLE 6. TERM OF AGREEMENT is hereby deleted and replaced with the following text: (i) the duration of the Window Period; IN WITNESS WHEREOF, the parties have executed this Amendment to the ESA on this _______ day of ___________________, 1996. AMSOUTH BANCORPORATION EXECUTIVE BY: ------------------------------------------ ------------------------------- ITS PRESIDENT AND CHIEF EXECUTIVE OFFICER [EXNAME] ATTEST: --------------------------- ITS SECRETARY 2 EX-11 6 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 AMSOUTH BANCORPORATION STATEMENT REGARDING COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED MARCH 31 --------------- 1996 1995 ------- ------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net income..................................................... $47,163 $40,110 ======= ======= Average shares of common stock outstanding..................... 57,021 58,103 ======= ======= Earnings per common share...................................... $ 0.83 $ 0.69 ======= =======
EX-15 7 UNAUDITED INTERIM FINANCIAL INFORMATION Exhibit 15--Letter Re: Unaudited Interim Financial Information Board of Directors AmSouth Bancorporation We are aware of the incorporation by reference in the following Registration Statements and in their related Prospectuses, of our report dated May 9, 1996, relating to the unaudited consolidated financial statements of AmSouth Bancorporation and subsidiaries which are included in its Form 10-Q for the quarter ended March 31, 1996; Form S-3 No. 33-55683 pertaining to the Dividend Reinvestment and Common Stock Purchase Plan; Form S-8 No. 33-52243 pertaining to the assumption by AmSouth Bancorporation of FloridaBank Stock Option Plan and FloridaBank Stock Option Plan-- 1993; Form S-8 No. 33-52113 pertaining to the 1989 Long Term Incentive Compensation Plan; Form S-3 No. 33-50363 pertaining to the Debt Shelf Registration; Form S-8 No. 33-35218 pertaining to the 1989 Long Term Incentive Compensation Plan; Form S-8 No. 33-37905 pertaining to the AmSouth Bancorporation Thrift Plan; Form S-8 No. 33-9368 pertaining to the Long Term Incentive Compensationm Plan; Form S-8 No. 33-2927 (as amended) pertaining to the Employee Stock Purchase Plan; Form S-8 No. 2-97464 pertaining to the Long Term Incentive Compensation Plan; Form S-3 No. 33-35280 pertaining to the Dividend Reinvestment and Common Stock Purchase Plan; Form S-8 No. 33-19016 pertaining to the Long Term Incentive Compensation Plan; Form S-8 No. 33-18653 pertaining to the 1987 Substitute Stock Option Plan; Form S-8 No. 33-58777 pertaining to the Director Restricted Stock Plan; and, Form S-8 No. 333-02099 pertaining to the AmSouth Bancorporation Thrift Plan. Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not part of the registration statements prepared or certified by accountants within the meaning of Sections 7 or 11 of the Securities Act of 1933. /s/ ERNST & YOUNG LLP May 9, 1996 EX-27 8 ARTICLE 9 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF CONDITION, THE CONSOLIDATED STATEMENT OF EARNINGS, AND TABLES 2, 6, AND 7 OF ITEM 2 OF THE AMSOUTH BANCORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 587,278 0 1,600 3,510 2,534,791 2,574,911 2,565,870 11,546,007 177,930 17,914,386 13,252,486 2,423,993 207,857 660,496 0 0 60,030 1,309,524 17,914,386 250,870 78,734 1,760 331,364 132,986 173,659 157,705 15,120 0 122,848 74,832 74,832 0 0 47,163 0.83 0.83 3.91 90,919 40,110 0 0 178,451 20,626 4,985 177,930 0 0 0
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