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, 2004Commission file number 1-7476
AMSOUTH BANCORPORATION
(Exact Name of registrant as specified in its charter)
| 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 |
(205) 320-7151 | |
| (Address of principal executive offices) | (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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of April 27, 2004, AmSouth Bancorporation had 352,249,000 shares of common stock outstanding.
AMSOUTH BANCORPORATION
FORM 10-Q
| Page | ||||||
| PART I. | FINANCIAL INFORMATION | |||||
| Item 1. | Financial Statements (Unaudited) |
|||||
| Consolidated Statement of Condition—March 31, 2004, December 31, 2003 and March 31, 2003 |
3 | |||||
| Consolidated Statement of Earnings—Three months ended March 31, 2004 and 2003 |
4 | |||||
| Consolidated Statement of Shareholders’ Equity—Three months ended March 31, 2004 |
5 | |||||
| Consolidated Statement of Cash Flows—Three months ended March 31, 2004 and 2003 |
6 | |||||
| 7 | ||||||
| 15 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||||
| Item 3. |
29 | |||||
| Item 4. |
29 | |||||
| PART II. | OTHER INFORMATION | |||||
| Item 1. |
29 | |||||
| Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
30 | ||||
| Item 6. |
30 | |||||
| SIGNATURES | 31 | |||||
| EXHIBIT INDEX | 32 | |||||
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. Factors which could cause results to differ materially from current management expectations include, but are not limited to: the execution of AmSouth’s strategic initiatives; legislation and regulation; 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; prepayment speeds within the loan and investment security portfolios; 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 and regulatory factors affecting AmSouth’s operations, products, services and prices; unexpected judicial actions and developments; results of investigations, examinations and reviews of regulatory and law enforcement authorities; 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 hostilities, including 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.
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 | ||||||||||
| 2004 |
2003 |
2003 |
||||||||||
| (Dollars in thousands) | ||||||||||||
| ASSETS |
||||||||||||
| Cash and due from banks |
$ | 1,074,116 | $ | 1,163,986 | $ | 1,372,188 | ||||||
| Federal funds sold and securities purchased under agreements to resell |
654,000 | -0- | 441,988 | |||||||||
| Trading securities |
552 | 2,721 | 1,060 | |||||||||
| Available-for-sale securities |
6,371,254 | 7,125,971 | 5,110,643 | |||||||||
| Held-to-maturity securities (market value of $6,206,159, $4,948,556 and $4,781,480, respectively) |
6,139,369 | 4,928,195 | 4,682,460 | |||||||||
| Loans held for sale |
234,842 | 102,292 | 10,871 | |||||||||
| Loans |
30,613,623 | 30,088,814 | 28,381,565 | |||||||||
| Less: Allowance for loan losses |
382,450 | 384,124 | 383,936 | |||||||||
| Unearned income |
719,900 | 749,450 | 682,617 | |||||||||
| Net loans |
29,511,273 | 28,955,240 | 27,315,012 | |||||||||
| Other interest-earning assets |
44,735 | 40,218 | 35,027 | |||||||||
| Premises and equipment, net |
993,651 | 964,692 | 864,517 | |||||||||
| Cash surrender value—bank owned life insurance |
1,077,426 | 1,065,996 | 1,029,321 | |||||||||
| Accrued interest receivable and other assets |
1,313,750 | 1,266,205 | 1,236,412 | |||||||||
| $ | 47,414,968 | $ | 45,615,516 | $ | 42,099,499 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Deposits and interest-bearing liabilities: |
||||||||||||
| Deposits: |
||||||||||||
| Noninterest-bearing demand |
$ | 6,544,028 | $ | 6,273,835 | $ | 5,569,319 | ||||||
| Interest-bearing checking |
6,737,060 | 6,183,832 | 5,767,727 | |||||||||
| Money market and savings deposits |
7,887,543 | 7,592,020 | 7,636,685 | |||||||||
| Time |
6,118,682 | 6,278,053 | 6,317,130 | |||||||||
| Certificates of deposit of $100,000 or more |
3,103,575 | 2,818,490 | 2,052,939 | |||||||||
| Foreign |
1,153,804 | 1,294,123 | 656,649 | |||||||||
| Total deposits |
31,544,692 | 30,440,353 | 28,000,449 | |||||||||
| Federal funds purchased and securities sold under agreements to repurchase |
1,927,492 | 2,026,253 | 1,826,851 | |||||||||
| Other borrowed funds |
325,169 | 343,202 | 149,842 | |||||||||
| Long-term Federal Home Loan Bank advances |
5,783,600 | 5,737,952 | 5,732,740 | |||||||||
| Other long-term debt |
2,286,091 | 2,114,482 | 1,550,816 | |||||||||
| Total deposits and interest-bearing liabilities |
41,867,044 | 40,662,242 | 37,260,698 | |||||||||
| Accrued expenses and other liabilities |
2,175,575 | 1,723,605 | 1,713,622 | |||||||||
| Total liabilities |
44,042,619 | 42,385,847 | 38,974,320 | |||||||||
| 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—416,769,000, 416,878,000 and 416,909,000 shares, respectively |
416,769 | 416,878 | 416,909 | |||||||||
| Capital surplus |
714,262 | 715,663 | 706,234 | |||||||||
| Retained earnings |
3,295,748 | 3,228,533 | 3,016,279 | |||||||||
| Cost of common stock in treasury—63,865,000, 64,987,000 and 65,264,000 shares, respectively |
(1,054,734 | ) | (1,076,644 | ) | (1,082,170 | ) | ||||||
| Deferred compensation on restricted stock |
(14,551 | ) | (14,501 | ) | (16,667 | ) | ||||||
| Accumulated other comprehensive income/(loss) |
14,855 | (40,260 | ) | 84,594 | ||||||||
| Total shareholders’ equity |
3,372,349 | 3,229,669 | 3,125,179 | |||||||||
| $ | 47,414,968 | $ | 45,615,516 | $ | 42,099,499 | |||||||
See notes to consolidated financial statements.
3
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
| Three Months Ended March 31 | ||||||
| 2004 |
2003 | |||||
| (In thousands except per share data) | ||||||
| INTEREST INCOME |
||||||
| Loans |
$ | 375,715 | $ | 398,543 | ||
| Available-for-sale securities |
83,419 | 77,682 | ||||
| Held-to-maturity securities |
62,593 | 60,865 | ||||
| Trading securities |
72 | 55 | ||||
| Loans held for sale |
2,627 | 160 | ||||
| Federal funds sold and securities purchased under agreements to resell |
151 | 166 | ||||
| Other interest-earning assets |
59 | 154 | ||||
| Total interest income |
524,636 | 537,625 | ||||
| INTEREST EXPENSE |
||||||
| Interest-bearing checking |
7,346 | 8,035 | ||||
| Money market and savings deposits |
9,315 | 13,997 | ||||
| Time deposits |
44,807 | 52,293 | ||||
| Certificates of deposit of $100,000 or more |
17,241 | 15,486 | ||||
| Foreign deposits |
2,589 | 1,684 | ||||
| Federal funds purchased and securities sold under agreements to repurchase |
6,645 | 5,919 | ||||
| Other borrowed funds |
1,981 | 1,145 | ||||
| Long-term Federal Home Loan Bank advances |
60,469 | 66,718 | ||||
| Other long-term debt |
14,746 | 9,306 | ||||
| Total interest expense |
165,139 | 174,583 | ||||
| NET INTEREST INCOME |
359,497 | 363,042 | ||||
| Provision for loan losses |
28,100 | 44,700 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
331,397 | 318,342 | ||||
| NONINTEREST REVENUES |
||||||
| Service charges on deposit accounts |
93,215 | 75,556 | ||||
| Trust income |
28,880 | 26,027 | ||||
| Consumer investment services income |
20,411 | 16,310 | ||||
| Interchange income |
16,299 | 16,687 | ||||
| Bank owned life insurance policies |
11,669 | 13,834 | ||||
| Bankcard income |
6,856 | 6,201 | ||||
| Mortgage income |
7,512 | 10,016 | ||||
| Portfolio income |
9,667 | 5,930 | ||||
| Other noninterest revenues |
25,921 | 22,324 | ||||
| Total noninterest revenues |
220,430 | 192,885 | ||||
| NONINTEREST EXPENSES |
||||||
| Salaries and employee benefits |
173,706 | 154,065 | ||||
| Net occupancy expense |
35,252 | 31,525 | ||||
| Equipment expense |
30,544 | 27,968 | ||||
| Postage and office supplies |
12,958 | 11,939 | ||||
| Marketing expense |
11,746 | 9,158 | ||||
| Professional fees |
8,330 | 8,412 | ||||
| Communications expense |
6,412 | 7,563 | ||||
| Amortization of intangibles |
1,163 | 1,198 | ||||
| Other noninterest expenses |
42,163 | 37,778 | ||||
| Total noninterest expenses |
322,274 | 289,606 | ||||
| INCOME BEFORE INCOME TAXES |
229,553 | 221,621 | ||||
| Income taxes |
69,454 | 66,265 | ||||
| NET INCOME |
$ | 160,099 | $ | 155,356 | ||
| Average common shares outstanding |
351,196 | 351,981 | ||||
| Earnings per common share |
$ | .46 | $ | .44 | ||
| Diluted average common shares outstanding |
356,908 | 355,265 | ||||
| Diluted earnings per common share |
$ | .45 | $ | .44 | ||
See notes to consolidated financial statements.
4
AMSOUTH BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)
| Common Stock |
Capital Surplus |
Retained Earnings |
Treasury Stock |
Deferred Compensation on Restricted Stock |
Accumulated Other Comprehensive Income/(Loss) |
Total |
||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
| BALANCE AT JANUARY 1, 2004 |
$ | 416,878 | $ | 715,663 | $ | 3,228,533 | $ | (1,076,644 | ) | $ | (14,501 | |||||||||||||||||