AMSOUTH BANCORPORATION - 10-Q Quarterly Report

Forward-Looking Statements. Statements made in this report that are not purely historical are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995), including any statements regarding descriptions of management’s plans, objectives or goals for future operations, products or services, and forecasts of its revenues, earnings or other measures of performance. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. A number of factors-many of which are beyond AmSouth’s control-could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Some of these factors which could cause results to differ materially from current management expectations include, but are not limited to: execution of AmSouth’s strategic initiatives; legislation; general economic conditions, especially in the Southeast; the performance of the stock and bond markets; changes in interest rates, yield curves and interest rate spread relationships; deposit flows; the cost of funds; cost of federal deposit insurance premiums; demand for loan products; demand for financial services; competition; changes in the quality or composition of AmSouth’s loan and investment portfolios including capital market inefficiencies that may affect the marketability and valuation of available-for-sale securities; changes in accounting and tax principles, policies or guidelines; other economic, competitive, governmental, regulatory, and technical factors affecting AmSouth’s operations, products, services and prices; unexpected judicial actions and developments; and the outcome of litigation, which is inherently uncertain and depends on the findings of judges and juries. To the extent that terrorist attacks or other geopolitical conflicts cause a prolonged negative impact on the economy, the effects may include adverse changes in customers’ borrowing, investing or spending patterns; market disruptions; adverse effects on the performance of the United States and foreign equity markets; currency fluctuations; exchange controls; restriction of asset growth; negative effects on credit quality; and other effects that could adversely impact the performance, earnings, and revenue growth of the financial services industry, including AmSouth. Forward-looking statements speak only as of the date they are made. AmSouth does not undertake a duty to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

	June 30 2002			December 31 2001			June 30 2001
	(In thousands)
ASSETS
Cash and due from banks	$	1,124,366		$	1,441,561		$	1,115,681
Federal funds sold and securities purchased under agreements to resell		147,000			400,000			1,015,400
Trading securities		30,006			12,979			13,538
Available-for-sale securities		4,590,271			4,829,512			4,503,894
Held-to-maturity securities (market value of $4,299,533, $4,071,008 and $4,582,237, respectively)		4,177,856			4,002,474			4,508,527
Loans held for sale		203,370			291,782			231,343
Loans		26,381,404			25,852,221			25,202,042
Less: Allowance for loan losses		371,418			363,607			380,663
Unearned income		728,496			727,728			461,618

Net loans		25,281,490			24,760,886			24,359,761
Other interest-earning assets		53,129			40,458			54,422
Premises and equipment, net		771,702			729,383			644,890
Accrued interest receivable and other assets		2,119,913			2,091,379			1,999,767

	$	38,499,103		$	38,600,414		$	38,447,223

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits and interest-bearing liabilities:
Deposits:
Noninterest-bearing demand	$	4,981,783		$	5,280,621		$	4,738,023
Interest-bearing demand		10,378,312			10,518,922			9,819,838
Savings		1,312,141			1,229,871			1,212,610
Time		6,433,294			6,800,056			7,675,598
Foreign time		356,789			309,641			252,860
Certificates of deposit of $100,000 or more		2,066,217			2,027,906			2,285,972

Total deposits		25,528,536			26,167,017			25,984,901
Federal funds purchased and securities sold under agreements to repurchase		2,040,929			2,080,296			2,131,079
Other borrowed funds		150,408			79,454			147,809
Long-term Federal Home Loan Bank advances		5,304,831			5,093,834			5,177,955
Other long-term debt		1,023,682			1,008,421			992,053

Total deposits and interest-bearing liabilities		34,048,386			34,429,022			34,433,797
Accrued expenses and other liabilities		1,376,454			1,216,293			1,105,975

Total liabilities		35,424,840			35,645,315			35,539,772

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—750,000,000 shares; Issued—416,923,000, 416,931,000 and 416,939,000 shares, respectively		416,923			416,931			416,939
Capital surplus		699,786			699,863			691,798
Retained earnings		2,806,383			2,677,933			2,563,007
Cost of common stock in treasury—56,564,000, 53,896,000 and 48,095,000 shares, respectively		(907,950	)		(848,005	)		(738,183	)
Deferred compensation on restricted stock		(16,716	)		(16,624	)		(18,134	)
Accumulated other comprehensive income/(loss)		75,837			25,001			(7,976	)

Total shareholders’ equity		3,074,263			2,955,099			2,907,451

	$	38,499,103		$	38,600,414		$	38,447,223

	Six Months Ended June 30				Three Months Ended June 30
	2002		2001		2002		2001
	(In thousands except per share data)
INTEREST INCOME
Loans	$	850,612	$	1,027,944	$	425,617	$	502,490
Available-for-sale securities		172,008		155,905		86,700		83,483
Held-to-maturity securities		123,561		147,723		62,058		72,897
Trading securities		159		136		92		128
Loans held for sale		7,827		9,502		3,662		7,539
Federal funds sold and securities purchased under agreements to resell		1,151		35,272		406		10,827
Other interest-earning assets		778		1,916		468		1,217

Total interest income		1,156,096		1,378,398		579,003		678,581


INTEREST EXPENSE
Interest-bearing demand deposits		57,955		155,668		29,034		72,061
Savings deposits		3,706		9,550		1,888		4,641
Time deposits		124,879		227,124		60,593		110,539
Foreign time deposits		2,431		6,231		1,329		2,434
Certificates of deposit of $100,000 or more		35,723		72,549		17,086		34,082
Federal funds purchased and securities sold under agreements to repurchase		13,933		48,985		7,704		21,368
Other borrowed funds		2,069		6,726		1,090		2,218
Long-term Federal Home Loan Bank advances		135,508		148,050		68,364		73,695
Other long-term debt		19,565		30,298		9,782		14,169

Total interest expense		395,769		705,181		196,870		335,207


NET INTEREST INCOME

Delaware		63-0591257
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

AmSouth Center
1900 Fifth Avenue North
Birmingham, Alabama		35203
(Address of principal executive offices)		(Zip Code)

			Page
Part I.	Financial Information

	Item 1.	Financial Statements (Unaudited)
		Consolidated Statement of Condition—June 30, 2002, December 31, 2001 and June 30, 2001,	3
		Consolidated Statement of Earnings—Three months and six months ended June 30, 2002 and 2001	4
		Consolidated Statement of Shareholders’ Equity—Six months ended June 30, 2002	5
		Consolidated Statement of Cash Flows—Six months ended June 30, 2002 and 2001	6
		Notes to Consolidated Financial Statements	7
		Independent Accountants’ Review Report	12

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

	Item 3.	Quantitative and Qualitative Disclosures About Market Rate Risk	27

Part II.	Other Information

	Item 1.	Legal Proceedings	27
	Item 4.	Submission of Matters to a Vote of Security Holders	28
	Item 6.	Exhibits and Reports on Form 8-K	28
Signature			29
Exhibit Index			30